Exhibit 10.19
Terms Annex 2002-A
This Terms Annex 2002-A forms a part of the Master Repurchase Agreement
dated as of March 20, 2002 (the "Repurchase Agreement") between LIQUID FUNDING,
LTD. ("Buyer") and LNR CMBS HOLDINGS CORP. (the "Seller"). This Terms Annex
2002-A shall apply to Transactions in which Liquid Funding, Ltd. is the Buyer of
certain subordinated commercial mortgage-backed securities ("CMBS") issued by
securitization trusts (each a "Trust") with respect to pools of commercial
mortgage loans, which pools qualify under sections 860A through 860G of the
Internal Revenue Code as real estate mortgage investment conduits ("REMIC"),
from Seller in accordance with the terms described below (each, a "CMBS
Transaction"). For the avoidance of doubt, all CMBS Transactions between Seller
and Buyer will be subject to the Repurchase Agreement, Annex I, Annex I-A, and
if so specified in the confirmation under the Repurchase Agreement, this Terms
Annex 2002-A (collectively, the "Agreement") and each Purchased CMBS shall
constitute a Purchased Security under this Agreement. Each CMBS Transaction
shall constitute a sale by Seller to Buyer of the related CMBS. Capitalized
terms used but not defined in this Terms Annex 2002-A shall have the meanings
ascribed to them in the Repurchase Agreement, Annex I or Annex I-A, as
applicable.
1. Determination of Pricing Rate and Payment of Price Differential
(a) The Pricing Rate for each Transaction will be LIBOR plus the
Relevant Spread and will be reset on each Reset Date.
(b) All accrued Price Differential incurred in connection with each
Transaction in each calendar month will be due and payable to Buyer on
the Reset Date following each month end.
2. Determination of Purchase Price, Margin Ratio, Margin Excess Amount
and Margin Deficit Amount
(a) The Purchase Price shall be determined separately for all
Purchased Securities within a Ratings Category based on the Purchase
Price set forth in the Applicable Table which corresponds to the
Ratings Category for such Purchased Securities.
(b) The Buyer's Margin Ratio shall be determined separately for each
Ratings Category based on the "Buyer's Margin Ratio" set forth in the
Applicable Table corresponding to such Ratings Category.
(c) If there is no Applicable Table, either because the Purchased
Securities have been issued by fewer than five Trusts or because the
Diversity Percentage exceeds
25%, then the Purchase Price and Buyer's Margin Ratio will be determined by
Buyer in its sole discretion.
(d) Margin Excess Amounts and Margin Deficit Amounts shall each be
determined separately for each Ratings Category and then aggregated.
3. Purchase Fee
In connection with each Transaction, the Seller will pay the Buyer, in lieu
of a portion of the Pricing Rate, an amount upfront on the date of purchase
equal to the sum of the following: (a) the product of 1.14% multiplied by
that amount of the Purchase Price for the Transaction which is less than or
equal to PPF, plus (b) the product of 1.50% multiplied by that amount of
the Purchase Price for the Transaction which is greater than PPF. For
purposes of calculating the Purchase Fee, PPF shall be determined as
follows:
PPF = $100,000,000 - APP, provided PPF shall never be less than 0, and
where APP is the combined aggregate amount of Purchase Prices paid by
Buyer with respect to all Transactions under both Terms Annex 2002-A
and Terms Annex 2002-B which have been entered into prior to the
Transaction for which the Purchase Fee is being calculated. Provided,
however, that the foregoing fee shall not be payable in connection
with any repricing pursuant to Section 6 below or any substitution of
securities permitted under the Agreement.
4. Change in Ratings Category of Purchased Securities
(a) If the rating on a particular Purchased Security is upgraded and such
upgrade results in a change in the Ratings Category of such Purchased
Security, then, at Seller's written request, the resulting change in the
Purchase Price and the Buyer's Margin Ratio of such Purchased Security
shall be effected on the first Business Day following Buyer's receipt of
such request.
(b) If the rating on a particular Purchased Security is downgraded and such
downgrade results in a change in the Ratings Category of such Purchased
Security, then the resulting change in the Purchase Price and the Buyer's
Margin Ratio of such Purchased Security shall be effected automatically on
the first Business Day after the date on which Buyer becomes aware of such
downgrade.
(c) If the rating on a particular Purchased Security is upgraded or
downgraded and such upgrade or downgrade results in a change in the Ratings
Category of such Purchased Security, then the resulting change in the
Pricing Rate of such Purchased Security shall be effected automatically on
the first Reset Date after the date of such upgrade or downgrade.
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5. Change of Applicable Tables
If a change in the number of Trusts included in the Purchased Securities or
an increase or decrease of the Diversity Percentage rating causes a
different Applicable Table to apply, then the resulting change in the
Purchase Price and the Buyer's Margin Ratio of the applicable Purchased
Securities shall be effected automatically on the first Business Day after
the date on which Buyer becomes aware of such change.
6. Repricing
If the Purchase Price of a Purchased Security is to be changed pursuant to
the terms hereof, then as of the date on which such Purchase Price is to be
changed (each, a "Repricing Date"), (i) the Repurchase Date with respect to
the applicable Purchased Security will be accelerated automatically to the
Repricing Date, (ii) the Repurchase Price and any other amounts owed by
Seller with respect to such Transaction (excluding accrued Price
Differential not yet due) shall be due and payable, (iii) Buyer shall be
obligated to purchase such Purchased Security as a new Transaction at the
new Purchase Price, and (iv) the amounts owing pursuant to subparagraphs
(ii) and (iii) of this Section 6 shall be offset and any net amount shall
be due and payable by Buyer or Seller, as applicable.
7. Early Termination of Transactions
Seller may elect to terminate any Transaction and repurchase Purchased
Securities from Buyer on five Business Days' notice by paying a termination
fee (the "Exit Fee") calculated as follows: the sum of (a) the product of
(i) the Repurchase Price, multiplied by (ii) 2.0%, if the time remaining to
the scheduled Repurchase Date is greater than 48 months, 1.75% if the time
remaining to the scheduled Repurchase Date is greater than 42 months and
less than or equal to 48 months, 1.50% if the time remaining to the
scheduled Repurchase Date is greater than 36 months and less than or equal
to 42 months, 1.25% if the time remaining to the scheduled Repurchase Date
is greater than 24 months and less than or equal to 36 months, 1.00% if the
time remaining to the scheduled Repurchase Date is greater than 12 months
and less than or equal to 24 months, or the product of 0.0833% and the
number of whole and partial months remaining to the Repurchase Date if the
time remaining to the scheduled Repurchase Date is less than or equal to 12
months plus (b) any costs, losses, damages or fees incurred in connection
with any hedge entered into or unwound by Buyer in contemplation of such
termination.
The Seller shall pay the Exit Fee with respect to all Purchased Securities
transferred to Seller on any such Repurchase Date that precedes the
Termination Date with respect to such Purchased Securities. The
acceleration of such Repurchase Date for any reason shall not excuse Seller
from paying the Exit Fee, except if such acceleration results from (i) an
Event of Default where the Buyer is
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the defaulting party or (ii) the occurrence of an Enforcement Event. No
Exit Fee shall be payable upon (i) a repricing pursuant to Section 6 of
this Terms Annex or (ii) a substitution of securities as permitted under
the Agreement, provided that the Exit Fee shall be payable to Buyer upon
any termination resulting from Buyer's election to not accept a
substitution of securities.
8. Control
(a) Seller acknowledges that Buyer will not enter into a Transaction with
respect to a Purchased Security in a Ratings Category lower than
Ba3/BB-/BB- unless Seller or an affiliate thereof has Affirmative Control
or Contiguous Affirmative Control with respect to such Purchased Security
(each such affiliate, a "Control Affiliate"). Seller shall deliver to Buyer
no later than the Purchase Date for the relevant Purchased Security such
documentation as Buyer may reasonably request to effect or confirm Buyer's
right to exercise Affirmative Control or Contiguous Affirmative Control
with respect to such Purchased Security. Notwithstanding anything to the
contrary herein, for so long as no Event of Default has occurred (which has
not been cured to the satisfaction of the Buyer) with respect to Seller
under the Agreement, and any other agreement between Seller and Buyer or
any agreement between a Control Affiliate and Buyer with respect to the
granting to Buyer of Contiguous Affirmative Control, Buyer grants Seller or
the applicable Control Affiliate, a license to exercise Affirmative Control
or Contiguous Affirmative Control with respect to the Purchased Securities
and pursuant to such license Seller or such Control Affiliate, shall have
the sole and exclusive right to exercise Affirmative Control or Contiguous
Affirmative Control. Immediately upon notice by the Buyer to Seller of the
occurrence of an Event of Default with respect to Seller or such Control
Affiliate, the foregoing license shall terminate automatically, and all
rights of Affirmative Control or Contiguous Affirmative Control shall
automatically re-vest in Buyer until such time, if any, as such Event of
Default is waived by Buyer in its sole discretion by written notice to
Seller. Buyer and Seller and if applicable, a Control Affiliate, shall
enter into such agreements, give such notices and obtain such
acknowledgements as may be necessary or desirable for Seller or such
Control Affiliate to have the right to exercise Affirmative Control or
Contiguous Affirmative Control prior to the occurrence of any Event of
Default and for Buyer to have the right to exercise Affirmative Control or
Contiguous Affirmative Control, as applicable, upon the occurrence of such
Event of Default on a Trust by Trust basis. This Paragraph 8(a) shall
survive any transfer by Buyer of an interest in (including by way of
pledge, sale, hypothecation, repurchase agreement or other means) the
Purchased Securities and shall be binding on any transferee of the
Purchased Securities and Buyer shall notify any purchaser of the Purchased
Securities of this provision to the extent such transferee would otherwise
have such rights. Seller shall indemnify and hold Buyer harmless from and
against any and all losses, damages, liabilities, obligations, penalties,
judgments and awards arising from or related to claims, and to pay, on
demand, all direct and indirect costs, liabilities and damages incurred by
Buyer (including, without limitation, costs of collection,
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reasonable third-party attorneys' fees, court costs and other expenses
arising from or related to the foregoing, but excluding any actual or
alleged diminution in the Market Value of any of the Purchased
Securities) in connection with any action or failure to take action by
Seller or any Control Affiliate with respect to the foregoing license
of Affirmative Control or Contiguous Affirmative Control ("Control
Costs"). In each case, whether or not demand has been made therefor,
Buyer may, in its sole discretion, treat the Control Costs as a Margin
Deficit. This indemnity shall survive the termination of this
Agreement.
(b) If at any time during this Agreement, subject only to the license
described in paragraph 8(a) above, Buyer does not have Affirmative
Control or Contiguous Affirmative Control with respect to any
Transaction relating to a Purchased Security in a Ratings Category
lower than Ba3/BB-/BB-, then (i) Buyer shall have the right to cancel
such Transaction and (ii) Seller agrees to pay to Buyer within five
Business Days of notice (which date shall constitute a Repurchase Date)
any Purchase Price paid by Buyer plus any accrued Price Differential
plus any costs, losses, damages or fees incurred in connection with any
hedge entered into or unwound by Buyer as a result of such
cancellation.
(c) Seller may not exercise its right to terminate any Transaction and
repurchase Purchased Securities pursuant to Section 7 of this Terms
Annex with respect to Purchased Securities that are required by Seller
for it to exercise Affirmative Control with respect to a Trust unless
(i) Seller or a Control Affiliate provides to Buyer Affirmative Control
or Contiguous Affirmative Control with respect to such Trust at the
time of such repurchase (subject to any license from the Buyer to the
Seller or a Control Affiliate to exercise Affirmative Control or
Contiguous Affirmative Control pursuant to Paragraph 8(a)) or (ii)
Seller also so accelerates with respect to all Purchased Securities
issued by such Trust in a Rating Category lower than Ba3/BB-/BB-.
(d) Seller shall cause each Control Affiliate which has Contiguous
Affirmative Control of any Related Purchased Security, with respect to
a Purchased Security in a Ratings Category lower than Ba3/BB-/BB-
which are subject to a Transaction hereunder, to enter into an
agreement with Buyer (subject only to the license described in
Paragraph 8(a) above) providing to Buyer Contiguous Affirmative
Control with respect to such Purchased Security and agreeing to
provide to Buyer information with respect to the Related Purchase
Security as required to be provided by Seller to Buyer with respect to
Purchased Securities pursuant to Paragraph 10 of Annex I-A.
9. Certain Definitions
"Affirmative Control" shall mean, with respect to any Purchased
Security, the ability to exercise the rights of the Controlling Class
(by whatever name denominated in the documents governing the applicable
Trust) with respect to the
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Trust which issued such Purchased Securities or otherwise to direct,
approve or consent to or vote on specified actions to be taken with
respect to the underlying commercial mortgage loans or the applicable
Trusts, or, if such Trust does not provide for a Controlling Class, to
appoint, retain or remove the Trust's special servicer, such ability
to be exercisable without interruption, regardless of any change in
the Controlling Class or future reductions in the principal balance of
the securities issued by the Trust.
"Applicable Table" shall mean "Table II" during any time period in
which the Purchased Securities have been issued by more than eight
Trusts and the Diversity Percentage does not exceed 15% or, if Table
II is not applicable, then "Table I" during any time period in which
the Purchased Securities have been issued by five or more Trusts and
the Diversity Percentage does not exceed 25%.
"Contiguous Affirmative Control" shall mean, with respect to any
Purchased Securities, the ability of the holder of Related Purchased
Securities to exercise Affirmative Control, without interruption,
regardless of any change in the Controlling Class or future reductions
in the principal balance of the Related Purchased Securities, unless
and until (i) only one Related Purchased Security remains outstanding
and (ii) such Related Purchased Security no longer qualifies as the
Controlling Class.
"Controlling Class" shall mean, with respect to each Trust, the class
of certificates issued by it that vests the holders in the aggregate
of such certificates with the right to appoint, retain or remove the
transaction's special servicer (and to otherwise exercise the rights
of the controlling class, however denominated in the issuing Trust's
governing documentation).
"Diversity Percentage" shall mean (a) the Repurchase Price of all
Purchased Security issued by the single Trust whose Purchased
Securities have the highest aggregate Repurchase Price divided by (b)
the Repurchase Price of all Purchased Securities.
"LIBOR" shall mean the rate for deposits in U.S. Dollars for a period
of one month as such rate appears on Telerate Page 3750 as of 11:00
a.m., London Time, on the day that is two "London Business Day"
(meaning a day on which commercial banks are open for business in
London) preceding a given Reset Date. If such rate does not appear on
the Telerate Page 3750, the rate for that Reset Date shall be
determined by reference to "USD-LIBOR-Reference Banks."
"USD-LIBOR-Reference Banks" means, for purposes of this definition,
the rates at which deposits in U.S. Dollars are offered by four
reference banks selected by Buyer at approximately 11:00 a.m., London
time, on the day that is two London Business Days preceding a given
Reset Date to prime banks in the London interbank market for a period
equal to one month commencing on that Reset Date and in a
representative amount. Buyer shall request the principal London office
of each of the reference banks to provide a quotation of its LIBOR
rate. If at least
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two such quotations are received, the rate for the Reset Date will be
the arithmetic mean of such quotations. If fewer than two quotations
are received, the rate for that Reset Date will be the arithmetic mean
of the rates quoted by major banks in New York City (selected by
Buyer), at approximately 11:00 a.m. New York City time on that Reset
Date, for loans in U.S. Dollars to leading European banks for a period
of one month commencing on that Reset Date and in a representative
amount.
"Maximum Amount" shall equal $100,000,000.
"Ratings Category" means the following groupings of ratings, each of
which shall be a separate Ratings Category:
(i) Ba1/BB+/BB+ or above
(ii) Ba2/BB/BB
(iii) Ba3/BB-/BB-
(iv) B1/B+/B+
(v) B2/B/B
(vi) B3/B-/B-
(vii) Below B3/B-/B- or Not Rated
The foregoing ratings are as published by Xxxxx'x Investors Service,
Standard & Poor's Investors Service or Fitch Inc. (in that order) on
Purchased Securities. If more than one rating agency rates the
Purchased Securities, the lowest of the ratings shall set the Ratings
Category. If either (i) no rating agency rates the Purchased
Securities or (ii) any rating agency withdraws its rating of the
Purchased Securities, the Ratings Category "Not Rated" shall apply.
"Relevant Spread" means for each Purchased Security the applicable
amount set forth below corresponding to the Ratings Category for such
Purchased Security as of the Purchase Date and on each subsequent
Reset Date:
Ratings Category
Ba1/BB+/BB+ 1.50%
or above
Ba2/BB/BB 1.50%
Ba3/BB-/BB- 1.50%
B1/B+/B+ 2.00%
B2/B/B 2.00%
B3/B-/B- 2.00%
Below B3/B-/B- or 2.50%
Not Rated
"Related Purchased Securities" shall mean any CMBS issued by the
issuing Trust that issued the Purchased Securities.
"Reset Date" shall mean the date on which LIBOR is reset with respect
to a Transaction, which date shall be the 15th day (or, if such day is
not a Business
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Day, the next following Business Day unless that day falls in the next
calendar month, in which case that date will be the first preceding
day that is a Business Day) of each month or on such other date as
Buyer may specify in the Confirmation in connection with such
Transaction.
"Termination Date" shall be that date which is five (5) calendar years
from the date on which the first Transaction occurs under this
Agreement.
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LIQUID FUNDING, LTD. LNR CMBS HOLDINGS CORP.
BY: _______________________ BY:__________________________________
Name:__________________ Name:_____________________________
TITLE:_________________ TITLE:____________________________
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Table I
(5 to 7 Trusts)
(Maximum Diversity Percentage: 25%)
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Ratings Category Purchase Price Buyer's Margin Ratio
--------------------------------------------------------------------------------
Ba1/BB+/BB+ or above 60.0% 70.0%
Ba2/BB/BB
Ba3/BB-/BB-
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B1/B+/B+ 45.0% 55.0%
B2/B/B
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B3/B-/B- 33.0% 43.0%
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Below B3/B-/B- or Not Rated 20.0% 30.0%
--------------------------------------------------------------------------------
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Table II
(8 or More Trusts)
(Maximum Diversity Percentage: 15%)
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Ratings Category Purchase Price Buyer's Margin Ratio
--------------------------------------------------------------------------------
Ba1/BB+/BB+ or above 65.0% 75.0%
Ba2/BB/BB
Ba3/BB-/BB-
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B1/B+/B+ 50.0% 60.0%
B2/B/B
--------------------------------------------------------------------------------
B3/B-/B- 45.0% 55.0%
--------------------------------------------------------------------------------
Below B3/B-/B- or Not Rated 25.0% 35.0%
--------------------------------------------------------------------------------
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