SECOND AMENDED AND RESTATED PARENT GUARANTY AND INDEMNITY

Exhibit 10.8

SECOND AMENDED AND RESTATED PARENT GUARANTY AND INDEMNITY

This SECOND AMENDED AND RESTATED PARENT GUARANTY AND INDEMNITY (this “ Guaranty ”) is made as of May 15, 2009, by ANTHRACITE CAPITAL, INC., a Maryland corporation (“ Guarantor ”) in favor of MORGAN STANLEY MORTGAGE SERVICING LIMITED (“ Security Trustee ”), as security trustee under the Loan Agreement (hereinafter defined), and MORGAN STANLEY PRINCIPAL FUNDING, INC., a Delaware corporation (“ Agent ”; Agent and Security Trustee being sometimes referred to each as a “ Finance Party ” and collectively the “ Finance Parties ”), as agent and lender under the Loan Agreement.

W I T N E S S E T H:

WHEREAS, Security Trustee, Morgan Stanley Bank, a Utah corporation (“ Original Agent ”), and AHR Capital MS Limited, a company incorporated in the Republic of Ireland with Company Number 411989 (“ Borrower ”), and the other parties thereto are party to that certain Multicurrency Revolving Facility Agreement dated as of February 17, 2006 (the “ Original Loan Agreement ”).

WHEREAS, Guarantor directly owns one hundred percent (100%) of the legal and beneficial interest in Borrower.

WHEREAS, pursuant to that certain Parent Guaranty and Indemnity dated as of February 17, 2006 (the “ Original Guaranty ”), made by Guarantor in favor of Security Trustee and Original Agent, Guarantor, among other things, guaranteed the obligations of Borrower under the Original Loan Agreement.

WHEREAS, pursuant to that certain Amended and Restated Multicurrency Revolving Facility Agreement dated as of July 20, 2007 (the “ A&R Loan Agreement ”), among Borrower, Security Trustee, Original Agent and the other parties thereto, the Original Loan Agreement was amended and restated to, among other things, increase the maximum credit thereunder to $300,000,000.

WHEREAS, pursuant to the Original Guaranty, Guarantor guaranteed the obligations under the A&R Loan Agreement.

WHEREAS, on February 15, 2008, Original Agent resigned as agent under the A&R Loan Agreement and appointed Agent in its place.

WHEREAS, pursuant to that certain Second Amended and Restated Multicurrency Revolving Facility Agreement dated as of February 15, 2008 (the “ Second A&R Loan Agreement ”), among Borrower, Security Trustee, Agent and the other parties thereto, the A&R Loan Agreement was amended and restated to, among other things, extend the term thereof and amend the pricing thereunder.

WHEREAS, the Original Guaranty was amended and restated pursuant to that certain Amended and Restated Parent Guaranty and Indemnity dated as of February 15, 2008 (the “ A&R Guaranty ”), made by Guarantor in favor of Security Trustee and Agent.

WHEREAS, the A&R Guaranty was amended by Guarantor, Security Trustee and Agent pursuant to (as so amended, the “ Existing Guaranty ”): (i) that certain First Amendment to Amended and Restated Parent Guaranty and Indemnity dated as of April 14, 2008; (ii) that certain Second Amendment to Amended and Restated Parent Guaranty and Indemnity dated as of December 31, 2008; (iii) that certain Third Amendment and Waiver to Amended and Restated Parent Guaranty and Indemnity dated as of March 17, 2009; (iv) that certain Fourth Amendment and Waiver to Amended and Restated Parent Guaranty and Indemnity dated as of April 1, 2009; (v) that certain Fifth Amendment and Waiver to Amended and Restated Parent Guaranty and Indemnity dated as of April 15, 2009; (vi) that certain Sixth Amendment and Waiver to Amended and Restated Parent Guaranty and Indemnity dated as of April 24, 2009; (vii)

that certain Seventh Amendment and Waiver to Amended and Restated Parent Guaranty and Indemnity dated as of April 30, 2009; and (viii) that certain Eighth Amendment and Waiver to Amended and Restated Guaranty and Indemnity dated as of May 8, 2009.

WHEREAS, the Second A&R Loan Agreement was amended and restated pursuant to that certain Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of December 31, 2008 (the “ Third A&R Loan Agreement ”), among Borrower, Security Trustee, Agent and the other parties thereto.

WHEREAS, the Third A&R Loan Agreement was amended by Borrower, Security Trustee and the other parties thereto pursuant to (as so amended, the “ Existing Loan Agreement ”): (i) that certain First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of March 17, 2009; (ii) that certain Amendment Deed to the First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of April 1, 2009; (iii) that certain Second Amendment Deed to the First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of April 15, 2009; (iv) that certain Third Amendment Deed to the First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of April 24, 2009; (iv) that certain Fourth Amendment Deed to the First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of April 30, 2009; and (v) that certain Fifth Amendment Deed to the First Amendment to Third Amended and Restated Multicurrency Revolving Facility Agreement dated as of May 8, 2009.

WHEREAS, pursuant to that certain Fourth Amended and Restated Multicurrency Revolving Facility Agreement dated as of the date hereof, among Borrower, Security Trustee, Agent and the other parties thereto (the Existing Loan Agreement, as amended by said agreement, and as said agreement may be modified, amended or restated from time to time, the “ Loan Agreement ”), the Existing Loan Agreement was amended and restated.

WHEREAS, it is a condition to the effectiveness of the Loan Agreement that Guarantor execute and deliver this Guaranty for the benefit of the Finance Parties and, as such, Guarantor desires to amend and restate the Existing Guaranty in its entirety as set forth herein and Security Trustee and Agent desire to accept this Guaranty in lieu of the Existing Guaranty from and after the date hereof.

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained in this Guaranty, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree that from and after the date hereof the terms and conditions of the Existing Guaranty are hereby superseded by the following terms and conditions:

Section 1. Capitalized Terms . All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in the Loan Agreement. As used herein:

“ 1934 Act ” shall mean the Securities and Exchange Act of 1934, as amended.

“ A&R Guaranty ” shall have the meaning set forth in the Recitals.

“ A&R Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Affiliate ” shall mean, in respect of any specified Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. For the purposes of this definition, “Control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise and “controlling” and “controlled” shall have meanings correlative thereto; provided , that any Person which owns directly or indirectly 25% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 25% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other

 

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Person) shall be deemed to control such corporation or other Person. Notwithstanding the forgoing, for all purposes hereunder, neither Blackrock, Guarantor nor any direct or indirect Subsidiary thereof shall be an “Affiliate” of Bank of America Corporation or any of its Subsidiaries (except Blackrock, Guarantor or any such direct or indirect Subsidiary thereof).

“ Agent ” shall have the meaning set forth in the Preamble.

“ AHR Ireland ” shall mean AHR Capital Limited a private limited company incorporated in Ireland with regulation number 3983571.

“ AHR Ireland Property ” shall have the meaning set forth in Section 9(z)(i).

“ AHR Ireland Security Documents ” shall have the meaning set forth in Section 9(z)(i).

“ Anthracite Collateral Asset ” shall have the meaning set forth in the Loan Agreement.

“ Anthracite Party ” shall mean Borrower, Guarantor and/or any of their respective Subsidiaries, together with their respective successors and assigns.

“ Anthracite Restructuring Party ” shall mean Borrower, Guarantor, Anthracite Secured Interest LLC, a Delaware limited liability company, AHR Capital BofA Limited, a private limited company incorporated in Ireland, Anthracite Capital BOFA Funding LLC, a Delaware limited liability company, Anthracite Funding, LLC, a Delaware limited liability company, and AHR Ireland, together with their respective successors and assigns.

“ Asset ” shall have the meaning set forth in the Loan Agreement.

“ Asset Specific Loan Balance ” shall have the meaning set forth in the Loan Agreement.

“ Bankruptcy Code ” shall have the meaning set forth in the Loan Agreement.

“ BlackRock Credit Agreement ” shall mean that certain Credit Agreement dated as of March 7, 2008, between the Guarantor and BlackRock Holdco 2, Inc.

“ BlackRock ” shall mean BlackRock Financial Management, Inc., a Delaware corporation.

“ BlackRock Management Agreement ” means that certain Amended and Restated Investment Advisory Agreement dated as of March 31, 2008, between BlackRock and Guarantor, as amended by that certain First Amendment and Extension dated as of March 11, 2009, between BlackRock and Guarantor.

“ BoA Credit Agreement ” shall mean that certain Credit Agreement dated as of March 17, 2006, by and among AHR Capital BofA Limited, as borrower, Guarantor, as borrower agent, and Bank of America, N.A., as lender, as amended, restated, supplemented or otherwise modified from time to time.

“ BoA Finance Documents ” shall have the meaning set forth in the Loan Agreement.

“ BoA Repurchase Agreement ” shall mean that certain Master Repurchase Agreement dated as of July 20, 2007, by and among Anthracite Capital BofA Funding LLC, as seller, Bank of America, N.A. and Banc of America Mortgage Capital Corporation, as buyers, and Bank of America, N.A., as buyer agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Borrower ” shall have the meaning set forth in the Recitals.

“ Budget ” shall have the meaning set forth in the Loan Agreement.

“ Business Day ” shall have the meaning set forth in the Loan Agreement.

 

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“ Capital Lease Obligations ” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Guaranty, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

“ Cash Income ” shall mean, for any period, the sum of Net Income and (a) depreciation and amortization; (b) Cash Interest Expense; (c) the net (gain) or loss on real estate held for sale; (d) the net (gain) or loss on securities; (e) income taxes; (f) GAAP earnings from equity investments; (g) loss on impairment of assets; (h) hedge cost write off; (i) management and incentive fees paid in form of the issuance of Guarantor’s common stock; (j) hedge ineffectiveness; (k) amortization of debt; (l) interest accretion (amortization); and (m) cash distributions from equity investments

“ Cash Interest Expense ” shall mean, for any period, total interest expense, both expensed and capitalized, of Guarantor and its consolidated Subsidiaries for such period with respect to the Total Indebtedness of Guarantor and its consolidated Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under interest rate protection agreements), determined on a consolidated cash basis for such period, and net of interest accretions, whether in favor or against, with respect to debt.

“ Cash Management Account ” shall have the meaning set forth in the Loan Agreement.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“ Collateral Agent ” shall have the meaning set forth in the Loan Agreement.

“ Collateral Obligor ” shall have the meaning set forth in the Loan Agreement.

“ Custodial and Account Control Agreement ” shall mean that certain Custodial and Account Control Agreement dated as of the date hereof, among Anthracite Secured Interest LLC, as pledgor, Bank of America, N.A., as collateral agent, and Bank of America, N.A., as custodian, as amended, restated, supplemented or otherwise modified from time to time.

“ DB Finance Documents ” shall have the meaning set forth in the Loan Agreement.

“ DB Repurchase Agreement ” shall mean that certain Master Repurchase Agreement dated as of December 23, 2004, by and between Anthracite Funding, LLC, as seller, and Deutsche Bank AG, as amended, restated, supplemented or otherwise modified from time to time.

“ Debt Service Coverage Ratio ” shall mean, for the period of time for which calculation is being made, the ratio of Cash Income to Cash Interest Expense.

“ Default ” shall have the meaning set forth in the Loan Agreement.

“ Dollars ” and “ $ ” shall mean lawful money of the United States of America.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ Event of Default ” shall have the meaning set forth in the Loan Agreement.

“ Exception ” shall have the meaning set forth in the Custodial Agreement with respect to the Assets, and the Custodial and Account Control Agreement in the case of the Anthracite Collateral Assets (other than the Assets).

 

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“ Existing Guaranty ” shall have the meaning set forth in the Recitals.

“ Existing Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Extension Criteria ” shall mean, collectively (i) the “Extension Criteria,” as defined in the BoA Credit Agreement; (ii) the “Extension Criteria,” as defined in the BoA Repurchase Agreement; (iii) the “Extension Criteria,” as defined in the DB Repurchase Agreement; and (iv) the criteria set forth in Section 9.3 of the Loan Agreement.

“ Facility Documents ” shall have the meaning set forth in the Intercreditor Agreement.

“ Finance Party ” and “ Finance Parties ” shall have the meaning set forth in the Preamble.

“ GAAP ” shall mean generally accepted accounting principles as in effect from time to time in the United States.

“ Governmental Authority ” shall have the meaning set forth in the Loan Agreement.

“ Guarantee ” shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a Mortgaged Property, to the extent required by Buyer. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “ Guarantee ” and “ Guaranteed ” used as verbs shall have correlative meanings.

“ Guaranteed Obligations ” shall have the meaning set forth in Section 2(a).

“ Guarantor ” shall have the meaning set forth in the Preamble.

“ Guaranty ” shall have the meaning set forth in the Preamble.

“ Indebtedness ” shall mean, for any Person: (i) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (ii) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (iii) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (iv) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (v) Capital Lease Obligations of such Person; (vi) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (vii) Indebtedness of others Guaranteed by such Person; (viii) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; and (ix) Indebtedness of general partnerships of which such Person is a general partner.

 

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“ Independent Director ” shall mean a director meeting the criteria for an “independent director” as set forth in NYSE, Inc., Listed Company Manual § 303(A) (or such successor regulation or standard); provided that, in addition, references to “the company” therein shall include BlackRock and its Affiliates.

“ Intangible Assets ” shall mean the excess of the cost over book value of assets acquired, patents, trademarks, trade names, copyrights, franchises and deferred charges (excluding the value of any residual securities and the value of any owned or purchased mortgage servicing rights).

“ Intercreditor Agreement ” shall mean that certain Intercreditor Agreement dated as of the date hereof, among Deutsche Bank AG, Cayman Islands Branch, the Finance Parties, Bank of America, N.A., as lender under the BoA Credit Agreement, Banc of America Mortgage Capital Corporation and Bank of America, N.A., as buyer under the BoA Repurchase Agreement, and Bank of America, N.A., as collateral agent.

“ Investment ” shall mean in respect of any Person, any loan or advance to such Person, any purchase or other acquisition of any equity or beneficial interest of such Person, any capital contribution to such Person or any other investment or interest in such Person.

“ Lien ” shall mean any mortgage, lien, pledge, charge, security interest or similar encumbrance.

“ Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Loan Documents ” shall mean the Loan Agreement and all documents and agreements executed by Borrower, Guarantor and/or any of their respective Affiliates at any time in connection with the Loan Agreement together with any and all amendments, modifications, restatements or replacements thereto, including without limitation, the Transaction Documents (as defined in the Loan Agreement).

“ Material Adverse Effect ” shall have the meaning set forth in the Loan Agreement.

“ Net Income ” shall mean, for any period, the net income of Guarantor and its consolidated Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP.

“ Operating Earnings ” shall mean total interest income in accordance with GAAP less interest expense, general and administrative expense and management fees, exclusive of any net income and net losses attributable to Carbon Capital I, Inc. or Carbon Capital II, Inc.

“ Organizational Documents ” shall mean, with respect to a Person that is not a natural person, a certificate of incorporation, charter, by-laws, certificate of limited partnership, partnership agreement, certificate of formation, articles of organization, limited liability company agreement, operating agreement, declaration of trust, trust agreement and any certificates evidencing ownership in any Person, and all amendments or modifications of any of the foregoing, and all other agreements, instruments and/or other organizational or governing documents of or relating to such Person.

“ Original Agent ” shall have the meaning set forth in the Recitals.

“ Original Guaranty ” shall have the meaning set forth in the Recitals.

“ Original Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Paydown Targets ” shall mean the quarterly paydown targets in respect of each Secured Creditor, as specified in (i) Section 2.06(f) and Schedule 2.06(f) of the BOA Credit Agreement; (ii) Section 3.14 and Exhibit XI of the BOA Repurchase Agreement; (iii) the definition of the term “Paydown Targets” in the DB Repurchase Agreement and Exhibit C of the DB Repurchase Agreement; and (iv) Schedule 18 of the MS Loan Agreement.

 

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“ Permitted Blackrock Payments ” shall mean any of the following:

 

(i)

the payment of interest by Guarantor under the Blackrock Credit Agreement; so long as (i) such payments are made solely from cash flow from Guarantor’s investment in Carbon Capital II, Inc.; and (ii) no Default has occurred and is continuing; provided that, BlackRock Holdco 2, Inc. may accept the collateral securing the obligations under the Blackrock Credit Agreement in full satisfaction thereof;

 

(ii)

payments made by issuers of collateralized debt obligations and other third parties (excluding Guarantor and/or any other Anthracite Party) directly to BlackRock in respect of administrative, accounting and service fees pursuant to the existing agreements for said services; and

 

(iii)

payments to BlackRock pursuant to the Budget.

“ Permitted CDO Acquisition ” shall mean an investment made by an issuer of a collateralized debt obligation in any transaction or series of transactions (i) made using cash of such issuer not permitted to be released to its equity holders; and (ii) not resulting in a reduction of such issuer’s free cash flow from the amount of free cash flow that existed immediately prior to such transaction or transactions.

“ Person ” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).

“ Property ” shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

“ REIT ” shall mean a real estate investment trust under Section 856 of the Code.

“ Reserved Matter ” shall mean any modification to the contractual relations between a Secured Creditor and any Anthracite Party which does or could:

 

(i)

cause the date on which a payment is due from that Anthracite Party to fall sooner than agreed;

 

(ii)

increase the overall amount which that Anthracite Party is or will be obliged to pay over the life of those contractual relations or increase the amount of principal, interest fees or other amounts payable under those contractual relations or change the basis on which such amounts are calculated;

 

(iii)

change the Paydown Targets;

 

(iv)

change the way in which funds paid by that Anthracite Party are to be applied to amounts payable by that Anthracite Party;

 

(v)

change the currency in which amounts due are payable;

 

(vi)

change the conditions of disposing of any interest in an asset of that Anthracite Party;

 

(vii)

change the ability of that Anthracite Party to agree to modify agreements between it and any of its debtors or other obligors;

 

(viii)

change way in which amounts payable to that Anthracite Party are to be applied;

 

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(ix)

change the Extension Criteria;

 

(x)

postpone, release or modify any obligation of that Anthracite Party to provide information, meet financial performance thresholds, not incur further Indebtedness or not grant new security;

 

(xi)

effect a change to the Secured Creditors or the Anthracite Parties;

 

(xii)

change any consent mechanism;

 

(xiii)

vary the nature, scope or terms of any guarantee and indemnity; or

 

(xiv)

have a material adverse effect on the ability of the Anthracite Parties to fully and timely perform any of their obligations under any of the Loan Documents or any other Secured Creditor’s rights under its respective Facility Documents.

“ Responsible Officer ” shall mean, as to any Person, the chief executive officer, chairman of the board, president, executive vice president or vice president of such Person.

“ Restrictive Covenant ” has the meaning set forth in Section 9(n).

“ Release Price ” has the meaning set forth in the Loan Agreement.

“ SEC ” shall mean the Securities and Exchange Commission.

“ Second A&R Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Second Deferred Restructuring Fee ” shall have the meaning set forth in the Loan Agreement.

“ Secured Creditor ” or “ Secured Creditors ” shall have the meaning set forth in the Intercreditor Agreement.

“ Security Trustee ” shall have the meaning set forth in the Preamble.

“ Subsidiary ” shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

“ Tangible Net Worth ” shall mean, as of a particular date, all amounts which would be included under stockholder’s equity on a consolidated balance sheet of Guarantor and its consolidated Subsidiaries at such date, determined in accordance with GAAP, less (i) amounts owing to Guarantor or any consolidated Subsidiary from Affiliates; and (ii) Intangible Assets on the consolidated balance sheet of Guarantor.

“ Termination Date ” shall have the meaning set forth in the Loan Agreement.

“ Third A&R Loan Agreement ” shall have the meaning set forth in the Recitals.

“ Transfer Agreement ” shall have the meaning set forth in Section 8(q).

“ Total Indebtedness ” shall mean, for any period, the aggregate Indebtedness of Guarantor and its consolidated Subsidiaries (excluding non-recourse Indebtedness) during such period.

 

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Section 2. Guaranty .

(a) Guarantor hereby unconditionally and irrevocably guarantees to the Finance Parties the due and punctual payment and performance when due, whether at the stated due date, by acceleration or otherwise, of any and all monetary and non-monetary obligations, indemnities, liabilities, Indebtedness and other amounts of every kind arising out of the Loan Documents (other than the payment of the Second Deferred Restructuring Fee), all amounts in respect to indemnities provided for in the Loan Documents, and all damages provided for in the Loan Documents, in respect of a failure or refusal by any Anthracite Party to make any such payment or performance, howsoever created, arising or evidenced, voluntary or involuntary, whether direct or indirect, absolute or contingent, now or hereafter existing or owing to the Finance Parties (all the foregoing obligations and undertakings (irrespective of the application of the limited recourse language in Section 39 of the Loan Agreement or clauses of similar import in the other Loan Documents) collectively referred to hereinafter as the “ Guaranteed Obligations ”).

(b) This Guaranty is an absolute and unconditional guaranty of payment and performance when due under the Loan Documents and not of collection of any Indebtedness contained in or arising under the Loan Documents. Guarantor’s liability under this Guaranty is primary and not secondary. This Guaranty is in no way conditioned upon any attempt to collect from any Anthracite Party or upon any other event or contingency, and shall be binding upon and enforceable against Guarantor without regard to the validity or enforceability of the Loan Documents, or of any term thereof. If for any reason any Anthracite Party shall fail or be unable duly and punctually to pay any such amount when due under the Loan Documents, Guarantor will forthwith pay, if not already paid by such Anthracite Party, the same immediately upon written demand.

(c) In case any of the Loan Documents shall be terminated as a result of the rejection thereof by any trustee, receiver, examiner, liquidator or liquidating agent of an Anthracite Party or any of its properties in any bankruptcy, insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution, examinership, winding-up or similar proceeding, Guarantor’s obligations hereunder shall continue to the same extent as if such agreement had not been so rejected. Guarantor agrees that this Guaranty shall continue to be effective or shall be, reinstated, as the case may be, if at any time payment to any Finance Party of the Guaranteed Obligations or any part thereof is rescinded or must otherwise be returned by such Finance Party upon the insolvency, bankruptcy, examinership, liquidation, winding-up or reorganization of an Anthracite Party, or otherwise, as though such payment to such Finance Party had not been made.

(d) Without duplication of the Guaranteed Obligations, Guarantor shall pay on demand all reasonable costs, expenses and damages incurred by any of the Finance Parties (including, without limitation, attorneys’ fees and disbursements) in connection with the enforcement of the obligations of Guarantor under this Guaranty and any of the Facility Documents.

Section 3. Obligations Unconditional . Guarantor hereby agrees that its obligations under this Guaranty shall be continuing and unlimited, shall not be subject to any non-compulsory counterclaim, set-off, deduction or defense (other than payment) based upon any claim Guarantor may have against the Finance Parties or Borrower or any other Person, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by any circumstance or condition (whether or not Guarantor shall have any knowledge or notice thereof) whatsoever that might constitute a legal or equitable discharge or defense, and shall be unconditional, irrespective of:

(a) the validity, enforceability, avoidance, novation or subordination of any of the Guaranteed Obligations, the Loan Documents, this Guaranty, or any other document relating thereto;

 

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(b) the absence of any attempt by, or on behalf of, any Finance Party to collect, or to take any other action to enforce, all or any part of the Guaranteed Obligations, whether from or against Borrower, Guarantor, or any other Person;

(c) the election of any remedy by, or on behalf of, any Finance Party with respect to all or any part of the Guaranteed Obligations;

(d) the waiver, rescission, compromise, acceleration, consent, extension, forbearance or granting of any indulgence by, or on behalf of, any Finance Party with respect to, or the amendment or modification of, or any release of any party from, any of the terms and provisions of, any provision of the Loan Documents or any related document;

(e) the failure of any Finance Party to take any steps to perfect and maintain its security interest in, or to preserve its rights to, any security or collateral, if any, for the Guaranteed Obligations;

(f) the election by, or on behalf of, any Finance Party, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the “ Bankruptcy Code ”), of the application of Section 1111(b)(2) of the Bankruptcy Code;

(g) the disallowance, under Section 502 of the Bankruptcy Code or any other applicable law, of all or any portion of the claims of any Finance Party for repayment of all or any part of the Guaranteed Obligations or any expenses associated therewith;

(h) the failure of any Finance Party to assert any claim or demand or to enforce any right or remedy against Borrower or any other Person under the provisions of the Loan Documents or any related document or other agreement or otherwise;

(i) any change in respect of any Anthracite Party, including, without limitation, as a result of any sale of assets, merger, consolidation, dissolution, liquidation, recapitalization, or other change of legal form or status, whether or not permitted under the Loan Documents;

(j) the release, exchange, waiver or foreclosure of any security held by any Finance Party for any of the Guaranteed Obligations or the invalidity or nonperfection of any security interest securing the Guaranteed Obligations or this Guaranty, or any other defect of any kind pertaining to the Guaranteed Obligations or any guaranty or collateral security in respect thereof;

(k) the release or substitution of Borrower, Guarantor or any other Anthracite Party;

(l) any other circumstance that might otherwise, but for this specific agreement of Guarantor to the contrary, result in a discharge of or the exoneration of Guarantor hereunder, at law or in equity, it being the intent of the parties hereto that the obligations of Guarantor hereunder shall be absolute and unconditional under any and all circumstances; or

(m) any reduction occurring in, or other arrangement being made relating to the Guaranteed Obligations as a result of any compromise, scheme of arrangement or composition, made pursuant to any of the provisions of the Companies (Amendment) Act 1990, as amended, of the Republic of Ireland or any analogous provisions or made pursuant to any proceedings or actions whatsoever and whether or not following the appointment of an administrator, administrative receiver, trustee, liquidator, receiver or examiner or any similar officer or any analogous event occurring under the laws of any jurisdiction relevant to Borrower or over all or a substantial part of the assets of Borrower, and Guarantor hereby agrees with and acknowledges to the Finance Parties that the amount recoverable by the Finance Parties from Guarantor hereunder will be and will continue to be the full amount which would have been recoverable by the Finance Parties from Borrower in respect of the Guaranteed Obligations had no such compromise, scheme of arrangement or composition or event as aforesaid been entered into.

 

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Section 4. Enforcement . The Finance Parties may proceed directly against Guarantor to collect and recover the full amount (or any portion) of the Guaranteed Obligations, without first proceeding against Borrower or any other Person, or against any security or collateral for the Guaranteed Obligations.

Section 5. Waivers .

(a) Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of receivership, liquidation, dissolution, examinership, winding-up or similar proceedings or bankruptcy of any Anthracite Party, protest or notice (except any applicable notices required to be given to Borrower under the Loan Documents) with respect to the Guaranteed Obligations, all setoffs and counterclaims and all presentments, demands for performance, notices of nonperformance (except any applicable notices required to be given under the Loan Documents), protests, notices of protest, notices of dishonor and notices of acceptance of this Guaranty and all other demands (except any applicable demands required to be given under the Loan Documents) whatsoever (and shall not require that the same be made on any Anthracite Party as a condition precedent to the obligations of Guarantor hereunder, except as required by the Loan Documents), and covenants that this Guaranty will not be discharged, except by complete payment (in cash) of the Guaranteed Obligations and any other obligations contained herein and the termination of the Loan Documents. Guarantor further waives all notices of the existence, creation or incurring of new or additional Indebtedness, arising from loans extended to Borrower or any other Person under the Loan Documents.

(b) The Finance Parties are hereby authorized, without notice or demand and without affecting the liability of Guarantor hereunder, from time to time, (i) to renew, extend, accelerate or otherwise change the time for payment of, or other terms relating to, all or any part of the Guaranteed Obligations, or to otherwise modify, amend or change the terms of the Loan Documents to which any Finance Party is a party or any other related document; (ii) to accept partial payments on all or any part of the Guaranteed Obligations; (iii) to take and hold security or collateral for the payment of all or any part of the Guaranteed Obligations, this Guaranty, or any other guaranties of all or any part of the Guaranteed Obligations or other liabilities of Guarantor or Borrower; (iv) to exchange, enforce, waive and release any such security or collateral; (v) to apply such security or collateral and direct the order or manner of sale thereof as in its discretion it may determine; and (vi) to settle, release, exchange, enforce, waive, compromise, collect or otherwise liquidate all or any part of the Guaranteed Obligations, and any security or collateral for the Guaranteed Obligations. Any of the foregoing may be done in any manner, without affecting or impairing the obligations of Guarantor hereunder.

(c) In recognition of the risks associated with the Finance Parties execution of the Loan Documents and in consideration of the waivers of certain rights of the Finance Parties contained in such amendments, including without limitation, margin payments and the minimum liquidity covenant, Guarantor agrees that in the event that any Anthracite Party becomes subject to any bankruptcy or insolvency proceedings, the Finance Parties shall be entitled to relief from any automatic stay imposed by Section 362 of the Bankruptcy Code, or otherwise, on or against the exercise of the rights and remedies otherwise available to the Finance Parties as provided in the Loan Documents, and as otherwise provided by law, and Guarantor, on its behalf and on behalf of the other Anthracite Parties, hereby waives the benefit of such automatic stay and agrees not to raise any objection to such relief.

Section 6. Setoff . At any time after all or any part of the Guaranteed Obligations have become due and payable, any Finance Party may, without notice to Guarantor and regardless of the acceptance of any security or collateral for the payment hereof, appropriate and apply toward the payment of all or any part of the Guaranteed Obligations (i) any Indebtedness due or to become due from any Finance Party or any of their respective Affiliates to Guarantor, and (ii) any moneys, credits or other property belonging to Guarantor at any time held by or coming into the possession of any Finance Party or any of their respective Affiliates.

 

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Section 7. Financial Information . Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of Borrower and any and all endorsers and/or other guarantors of all or any part of the Guaranteed Obligations, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations (or any part thereof) that diligent inquiry would reveal, and Guarantor hereby agrees that the Finance Parties shall have no duty to advise Guarantor of information known to it regarding such condition or any such circumstances.

Section 8. Representations and Warranties . Guarantor hereby represents and warrants to the Finance Parties that as of the date hereof and throughout the term of this Guaranty:

(a) Legal Name . The exact legal name of Guarantor is Anthracite Capital, Inc. and except as disclosed in Guarantor’s public filings with the SEC, Guarantor has not used any previous names, assumed names or trade names.

(b) Existence . Guarantor (i) is a corporation duly organized and validly existing under the laws of the jurisdiction of its organization, (ii) has all requisite power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect on its Property, business or financial condition or prospects; and (iii) is qualified to do business, validly existing and is, to the extent determinable, in good standing, in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its business, operations, Property, condition (financial or otherwise) or prospects.

(c) Guarantor Information . All information furnished to any Finance Party regarding the assets and liabilities of Guarantor and its consolidated Subsidiaries, if any, is true, correct and complete in all material respects and remains unmodified in any material respect.

(d) Action .

(i) Guarantor has all necessary power, authority and legal right to execute, deliver and perform its obligations under this Guaranty; the execution, delivery and performance by Guarantor has been duly authorized by all necessary action on its part; and this Guaranty has been duly and validly executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms except as enforceability may be limited or varied by bankruptcy, insolvency, reorganization, liquidation or other similar laws of general application relating to enforcement of the rights of a creditor and by general equitable principals.

(ii) Each Anthracite Party has all necessary power, authority and legal right to execute, deliver and perform its obligations under the Loan Documents to which it is a party; the execution, delivery and performance by each Anthracite Party has been duly authorized by all necessary action on its part; and each Loan Document has been duly and validly executed and delivered by the applicable Anthracite Party and constitutes a legal, valid and binding obligation of such Anthracite Party, enforceable against such Anthracite Party in accordance with its terms except as enforceability may be limited or varied by bankruptcy, insolvency, reorganization, liquidation or other similar laws of general application relating to enforcement of the rights of a creditor and by general equitable principals.

(e) Litigation . There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened in writing) or other legal or arbitrable proceedings affecting any Anthracite Party or affecting any of their respective Property before any Governmental Authority that (i) questions or challenges the validity or enforceability of this Guaranty or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim or claims against any Anthracite Party in an aggregate amount greater than One Million Dollars

 

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($1,000,000) (or the Dollar equivalent thereof (at the then current spot rate)), (iii) which, individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect in the case of Borrower and Guarantor, or, to the best of Guarantor’s knowledge, a material adverse effect on the business, operations, Property, condition (financial or otherwise) or prospects of any other Anthracite Party, or (iv) requires filing with the SEC in accordance with the 1934 Act or any rules thereunder which filing has not been made.

(f) No Breach .

(i) The execution and delivery of this Guaranty does not and will not conflict with or result in a breach of the articles of incorporation or by-laws (or equivalent documents) of Guarantor or any applicable law, rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, or any other material agreement or instrument to which Guarantor is a party or by which it or any of its Property is bound or to which it is subject, or constitute a default under any such material agreement or instrument or