Dated as of November 17, 2005 Between: Citigroup Global Markets Inc. (as “Buyer”) and CSE Mortgage LLC (as “Seller”)
Exhibit 10.42
EXECUTION
Master Repurchase Agreement |
September 1996 Version
Dated as of
|
November 17, 2005 | |
Between:
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Citigroup Global Markets Inc. (as “Buyer”) | |
and
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CSE Mortgage LLC (as “Seller”) |
1. | Applicability | |
From time to time the parties hereto may enter into transactions in which one party (“Seller”) agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto and in any other annexes identified herein or therein as applicable hereunder. | ||
2. | Definitions |
(a) | “Act of Insolvency”, with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the appointment or election of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election, (ii) the commencement of any such case or proceeding against such party, or another seeking such an appointment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by such party of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such party’s inability to pay such party’s debts as they become due; | ||
(b) | “Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to Paragraph 4(a) hereof; |
(c) | “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of such date; | ||
(d) | “Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction; | ||
(e) | “Confirmation”, the meaning specified in Paragraph 3(b) hereof; | ||
(f) | “Income”, with respect to any Security at any time, any principal thereof and all interest, dividends or other distributions thereon; | ||
(g) | “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; | ||
(h) | “Margin Excess”, the meaning specified in Paragraph 4(b) hereof; | ||
(i) | “Margin Notice Deadline”, the time agreed to by the parties in the relevant Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline for such purposes established in accordance with market practice); | ||
(j) | “Market Value”, with respect to any Securities as of any date, the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof ) as of such date (unless contrary to market practice for such Securities); | ||
(k) | “Price Differential”, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction); | ||
(l) | “Pricing Rate”, the per annum percentage rate for determination of the Price Differential; | ||
(m) | “Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street Journal (or, if more than one such rate is published, the average of such rates); | ||
(n) | “Purchase Date”, the date on which Purchased Securities are to be transferred by Seller to Buyer; |
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September 1996 • Master Repurchase Agreement
(o) | “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of Paragraph 5 hereof; | ||
(p) | “Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Securities” with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; | ||
(q) | “Repurchase Date”, the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11 hereof; | ||
(r) | “Repurchase Price”, the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination; | ||
(s) | “Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Seller’s Margin Percentage to the Repurchase Price for such Transaction as of such date; | ||
(t) | “Seller’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction. |
3. | Initiation; Confirmation; Termination |
(a) | An agreement to enter into a Transaction may be made orally or in writing at the initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller. | ||
(b) | Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless |
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September 1996 • Master Repurchase Agreement
with respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail. | |||
(c) | In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof ) against the transfer of the Repurchase Price to an account of Buyer. |
4. | Margin Maintenance |
(a) | If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer (“Additional Purchased Securities”), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer’s Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller). | ||
(b) | If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller’s Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer). | ||
(c) | If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subparagraph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice. | ||
(d) | Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. |
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(e) | Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions). | ||
(f) | Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement). |
5. | Income Payments | |
Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall reasonably determine in its discretion), on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed. | ||
6. | Security Interest | |
Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof. | ||
7. | Payment and Transfer | |
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. |
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September 1996 • Master Repurchase Agreement
8. | Segregation of Purchased Securities | |
To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a clearing corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. | ||
Required Disclosure for Transactions in Which the Seller
Retains Custody of the Purchased Securities
Retains Custody of the Purchased Securities
Seller is not permitted to substitute other securities for those subject
to this
Agreement and therefore must keep Buyer’s securities segregated at all times, unless
in this Agreement Buyer grants Seller the right to substitute other securities. If
Buyer grants the right to substitute, this means that Buyer’s securities will likely be
commingled with Seller’s own securities during the trading day. Buyer is advised
that, during any trading day that Buyer’s securities are commingled with Seller’s
securities, they [will]* [may]** be subject to liens granted by Seller to [its clearing
bank]* [third parties]** and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller’s ability to resegregate
substitute securities for Buyer will be subject to Seller’s ability to satisfy
[the clearing] *[any]** lien or to obtain substitute securities.
* Language to be used under 17 C.F.R. ß403.4(e) if Seller is a
government securities broker
or dealer other than a financial institution.
** Language to be used under 17 C.F.R. ß403.5(d) if Seller is a financial institution.
9. | Substitution |
(a) | Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities. | ||
(b) | In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted. |
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September 1996 • Master Repurchase Agreement
10. | Representations | |
Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it. | ||
11. | Events of Default | |
In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an “Event of Default”): |
(a) | The nondefaulting party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable. | ||
(b) | In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party’s obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date deter-mined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party’s possession or control. |
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September 1996 • Master Repurchase Agreement
(c) | In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions, all right, title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party. | ||
(d) | If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, the nondefaulting party, without prior notice to the defaulting party, may: |
(i) | as to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Securities, to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and | ||
(ii) | as to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, securities (“Replacement Securities”) of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor on such date, obtained from a generally recognized source or the most recent closing offer quotation from such a source. |
Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Securities subject to any Transaction hereunder are instruments traded in a recognized
market, (2) in the absence of a generally recognized source for prices or bid or offer
quotations for any Security, the nondefaulting party may establish the source therefor in
its sole discretion and (3) all prices, bids and offers shall be determined together with
accrued Income (except to the extent contrary to market practice with respect to the
relevant Securities).
(e) | As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. | ||
(f) | For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not |
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September 1996 • Master Repurchase Agreement
increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in sub-paragraph (a) of this Paragraph. | |||
(g) | The defaulting party shall be liable to the nondefaulting party for (i) the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction. | ||
(h) | To the extent permitted by applicable law, the defaulting party shall be liable to the non-defaulting party for interest on any amounts owing by the defaulting party hereunder, from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable by the defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. | ||
(i) | The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law. |
12. | Single Agreement | |
Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. | ||
13. | Notices and Other Communications | |
Any and all notices, statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex II hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence. |
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14. | Entire Agreement; Severability | |
This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. |
15. | Non-assignability; Termination |
(a) | The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding. | ||
(b) | Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charging or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof. |
16. | Governing Law | |
This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof. |
17. | No Waivers, Etc. | |
No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here-from shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. |
18. | Use of Employee Plan Assets |
(a) | If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed. |
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(b) | Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition. | ||
(c) | By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any out-standing Transaction involving a Plan Party. |
19. | Intent |
(a) | The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). | ||
(b) | It is understood that either party’s right to liquidate Securities delivered to it in connec-tion with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. | ||
(c) | The parties agree and acknowledge that if a party hereto is an “insured depository insti-tution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). | ||
(d) | It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA). |
20. | Disclosure Relating to Certain Federal Protections | |
The parties acknowledge that they have been advised that: |
(a) | in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection |
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Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; | |||
(b) | in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and | ||
(c) | in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. |
Citigroup Global Markets Inc.
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
CSE Mortgage LLC
By: CapitalSource Inc., as Manager
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Senior Vice President and Chief Financial Officer
EXECUTION
ANNEX I
Supplemental Terms and Conditions
This Annex I supplements and forms a part of the Master Repurchase Agreement dated as of November
17, 2005 (the “Agreement”) between Citigroup Global Markets Inc. and CSE Mortgage LLC. Capitalized
terms used but not defined in this Annex I shall have the meanings ascribed to them in the
Agreement.
1. Other Applicable Annexes. In addition to this Annex I and Annex II, the following
Annexes and any Schedules thereto shall form a part of the Agreement and shall be applicable
thereunder.
Annex IV – Party Acting as Investment Manager
Schedule A – Letter Repo Acceptable Collateral
Schedule A – Letter Repo Acceptable Collateral
2. Definitions. For purposes of the Agreement and this Annex I, the following terms shall
have the following meanings:
“Margin Notice Deadline” means 10:00 A.M. New York time.
“Business Day” or “business day”, with respect to any Transaction hereunder, a day on which regular
trading may occur in the principal market for the Purchased Securities subject to such Transaction,
which includes shortened trading days, days on which trades are permitted to occur but do not in
fact occur and days on which the Purchased Securities are subject to percentage of movement or
volume limitations, provided, however, that for purposes of calculating Market Value, such
term shall mean a day on which regular trading occurs in the principal market for the assets the
value of which is being determined. Notwithstanding the foregoing, (i) for purposes of Paragraph 4
of the Agreement, “business day” shall mean any day on which regular trading occurs in the
principal market for any Purchased Securities or for any assets constituting Additional Purchased
Securities under any outstanding Transaction hereunder and “next business day” shall mean the next
day on which a transfer of Additional Purchased Securities may be effected in accordance with
Paragraph 7 of the Agreement, and (ii) in no event shall a Saturday or Sunday be considered a
business day.
3. Initiation; Confirmation: Termination. Paragraph 3 (a) is hereby amended and restated
in its entirety to read as follows:
“(a) An agreement to enter into a Transaction may be made orally or in writing at the
initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased
Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to
an account of Seller. Buyer hereby agrees that its agent for such purposes shall be Citigroup
Global Markets Inc.
4. Threshold Amount. Paragraph 4(e) is hereby amended and restated in its entirety to read
as follows:
“(e) Seller and Buyer hereby agree, with respect to all Transactions hereunder, that the
respective rights of Buyer or Seller under subparagraphs (a) and (b) of this Paragraph may be
exercised only where a Margin Deficit or Margin Excess, as the case may be, exceeds the lesser of
(a) $500,000 USD, or (ii) 1% of the aggregate Purchase Price for all Transactions outstanding
hereunder on such day.”
5. Purchase Price Maintenance.
(a) The parties agree that in any Transaction hereunder whose term extends over an Income payment
date for the Securities subject to such transaction, Buyer shall on the date such income is paid
transfer to or credit to the account of Seller an amount equal to such Income payment or payments
pursuant to Paragraph 5(i) and shall not apply the Income payment or payments to reduce the amount
to be
transferred to Buyer or Seller upon termination of the Transaction pursuant to Paragraph 5(ii) of
the Agreement.
(b) Notwithstanding the definition of Purchase Price in Paragraph 2 of the Agreement and the
provisions of Paragraph 4 of the Agreement, the parties agree (i) that the Purchase Price will not
be increased or decreased by the amount of any cash transferred by one party to the other pursuant
to Paragraph 4 of the Agreement and (ii) that transfer of such cash shall be treated as if it
constituted a transfer of Securities (with a Market Value equal to the U.S. dollar amount of such
cash) pursuant to Paragraph 4(a) or (b), as the case may be (including for purposes of the
definition of “Additional Purchased Securities”).
(c ) The parties agree that any cash transferred by Seller to Buyer pursuant to Paragraph 4 of the
Agreement shall earn interest at a rate equal to the Fed Funds effective rate.
6. Submission to Jurisdiction and Waiver of Immunity.
Each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any United
States Federal or New York State court sitting in Manhattan, and any appellate court from any such
court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction under the Agreement
and (ii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court and any right of
jurisdiction on account of its place of residence or domicile.
To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise)
from any legal action, suit or proceeding, from jurisdiction of any court or from set off or any
legal process (whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to itself or any of its
property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in
respect of any action brought to enforce its obligations under the Agreement or relating in any way
to the Agreement or any Transaction under the Agreement.
Each party hereto hereby irrevocably waives all right to trial by jury in any action or proceeding
arising out of or relating to this Agreement or any Transaction hereunder.
7. Cross Default.
Each party to this agreement (such party, “Party X”) agrees that, upon (a) the insolvency of Party
X or any of its affiliates, or (b) the default of Party X or any of its affiliates under any
transaction with the other party hereto or any of such other party’s affiliates (such other party
or any of its affiliates, a “Non-Defaulting Party”) and the exercise by such Non-Defaulting Party
of its rights and remedies under such transaction as a result of such default, then each
Non-Defaulting Party may, without prior notice to Party X: (i) liquidate any transaction between
Party X and any Non-Defaulting Party (which liquidation may include the conversion of amounts
denominated in multiple currencies into a single currency if deemed necessary or desirable by the
Non-Defaulting Party), (ii) reduce any amounts due and owing to Party X under any transaction
between Party X and any Non-Defaulting Party by setting off against such amounts any amounts due
and owing to a Non-Defaulting Party by Party X, and (iii) treat all security for, and all amounts
due and owing to Party X under, any transaction between Party X and any Non-Defaulting Party as
security for all transactions between Party X and any Non-Defaulting Party; provided,
however, that the exercise of the remedies described in clauses (i), (ii) and (iii) above
(or in any other similar provision in any agreement between the parties) shall be deemed to occur
immediately subsequent to, but independent of, the exercise of any netting, liquidation, set-off or
other similar provision contained in any master agreement between the parties; provided
further that each provision and agreement hereof shall be treated as independent from any
other provision or agreement herein and shall be enforceable notwithstanding the unenforceability
of any such other provision or agreement. For purposes of the foregoing, the term “affiliate”
shall not include any entity that controls or is under common control with Citigroup Global Markets
Holdings Inc., but in any event such term shall include
Citigroup Global Markets Holdings Inc. and any entity controlled by it; for purposes of this
Agreement, CSE Mortgage LLC shall be deemed to have no affiliates.
8. “Open” Transactions.
Whenever the parties enter into a Transaction on an “open basis”, it is understood that the
Transaction will terminate on the next succeeding Business Day, and that on any day that a
Transaction is terminating, the parties may enter into a new Transaction (which may be accomplished
by resetting the rate) which will, itself, terminate on the next succeeding Business Day. In all
cases, unless the parties have agreed otherwise, “open” Transactions will settle following
termination in accordance with the normal timeframe determined in accordance with market practice.
9. Resale of Purchased Securities.
The parties hereto acknowledge that from time to time the Purchased Securities may consist of
Securities that have not been registered under the United States Securities Act of 1933 (the
“Securities Act”). Accordingly, Buyer agrees that if any Purchased Securities consist of
Securities that have not been registered under the Securities Act, Buyer will not resell or
otherwise transfer such Purchased Securities except in accordance with Regulation S or Rule
144A or other available exemption under the Securities Act and in accordance with all
applicable laws and regulations in each jurisdiction in which it offers, sells or delivers
Purchased Securities. In addition, if any Purchased Securities consist of bearer debt
securities issued by a non-U.S. entity and if Buyer resells or otherwise transfers any such
obligations, Buyer agrees that it will do so only under procedures adequate to satisfy the
restrictions of applicable U.S. Treasury regulations relating to an original issuance of bearer
bonds.
10. Representations. The following additional representation and warranty shall be added to
Paragraph 10 of the Agreement:
(vi) from and after December 31, 2005, as of the last day of each calendar month, CSE
Mortgage LLC shall have a minimum shareholder’s equity of $300 million and maximum leverage
(calculated as the ratio of liabilities to shareholder’s equity) of 20 to 1, in each case
as determined by reference to the unaudited balance sheet of CSE Mortgage LLC as of the
last day of such calendar month.
11. Limited Recourse. Paragraph 11(i) of the Agreement is hereby amended and restated in
its entirety to read as follows:
“(i) The nondefaulting party shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement, or applicable law; provided,
however, that notwithstanding any other provision of this Agreement, Buyer shall have no
recourse to Seller in excess of the Recourse Amount (as defined below), and Seller shall have no
obligation to Buyer in excess of the Recourse Amount, with respect to (i) any claims against Seller
(either in law or equity) arising under or in connection with this Agreement or otherwise in
connection with the transactions contemplated hereby, or (ii) the payment or performance of any
other debt, liability, obligation, covenant or duty owing under this Agreement or otherwise in
connection with the transactions contemplated hereby. For purposes of this Agreement, “Recourse
Amount” means, as of any date upon which an Event of Default occurs hereunder, an aggregate amount
equal to 10% of the aggregate Purchase Price of all Transactions outstanding hereunder on such day.
For the avoidance of doubt, in the case of an Event of Default in which the defaulting party is
Seller hereunder, nothing in this Paragraph 11(i) shall in any way limit or impair the rights of
Buyer to exercise its rights pursuant to Paragraph 11(d) of the Agreement and to have full recourse
against all Purchased Securities subject to Transactions on the date of such Event of Default.”
12. Delivery by Buyer of Purchased Securities on Repurchase Date. For the avoidance of
doubt, Buyer and Seller hereby acknowledge and agree that on each Repurchase Date, Buyer shall
transfer back to Seller all right, title and interest to the exact same Purchased Securities that
were transferred to Buyer by Seller on the Purchase Date.
13. Intent. Paragraph 19 is hereby amended by adding the following:
“(e) For the avoidance of doubt, the parties clarify that they intend to treat each
Transaction as a secured financing transaction for purposes of U.S. federal income tax, and agree
not to act in a manner inconsistent with such treatment of each Transaction.”
In the event of any inconsistency between the provisions of this Annex and the provisions of the
Master Repurchase Agreement attached hereto, the terms contained in this Annex shall prevail.
Citigroup Global Markets Inc. | CSE Mortgage LLC | |||||||
By: CapitalSource Inc., as Manager | ||||||||
By:
|
/s/ Xxxxxx Xxxxxxxxxx | /s/ Xxxxxx X. Xxxx | ||||||
Name:
|
||||||||
Managing Director | Title: Senior Vice President and Chief | |||||||
Financial Officer |
ANNEX II
Names and Addresses for Communications Between Parties
CITIGROUP GLOBAL MARKETS INC.
Contract Issues: |
||
Citigroup Global Markets Inc. | ||
Attention: Xxxx Xxxxxxx | ||
110 Xxxx Xxxxxx, 0xx Xxxxx | ||
Xxx Xxxx, XX 00000 | ||
Telephone: 000-000-0000 | ||
Telefax: 000-000-0000 | ||
Operations Issues: |
||
Citigroup Global Markets Inc. | ||
Xxxxxxx Xxxxx | ||
330 Xxxx 00xx Xxxxxx –0xx Xxxxx | ||
Xxx Xxxx, XX 00000 | ||
Telephone: 000-000-0000 | ||
CSE MORTGAGE LLC | ||
Contract Issues: |
||
CSE Mortgage LLC | ||
4400 Xxxxxxx Xxx. 00xx Xxxxx | ||
Xxxxx Xxxxx, XX 00000 | ||
Attn: General Counsel | ||
Facsimile No.: 000-000-0000 | ||
Other Issues: |
||
CSE Mortgage LLC | ||
4400 Xxxxxxx Xxx. 00xx Xxxxx | ||
Xxxxx Xxxxx, XX 00000 | ||
Attn: Treasury | ||
Facsimile No.: 000-000-0000 |
EXECUTION
Annex IV
Party Acting as Investment Manager
Party Acting as Investment Manager
This Annex IV forms a part of the Master Repurchase Agreement dated as of November 17, 2005
(the “Agreement”) between CSE Mortgage LLC (“CSE”) and Citigroup Global Markets Inc. (“CGMI”).
This Annex IV sets forth the terms and conditions governing all transactions in which BlackRock
Financial Management, Inc. (“Investment Manager”) is authorized to enter into on behalf of CSE in
accordance with the terms of the Investment Manager Agreement dated as of November 14, 2005.
Capitalized terms used but not defined in this Annex IV shall have the meanings ascribed to them in
the Agreement.
1. | Additional Representations. The Investment Manager hereby makes, for the benefit of CSE and CGMI, the representations set forth in Paragraph 10 of the Agreement. In addition, the Investment Manager hereby makes the following representations, which shall continue during the term of any Transaction: CSE has duly authorized the Investment Manager to execute and deliver the Agreement on its behalf, has the power to so authorize Investment Manager and to enter into the Transactions contemplated by the Agreement and to perform the obligations of Seller or Buyer, as the case may be, under such Transactions, and has taken all necessary action to authorize such execution and delivery by Investment Manager and such performance by it. | ||
2. | Limitation of Investment Manager’s Liability. The parties expressly acknowledge that if the representations of the Investment Manager under the Agreement, including this Annex IV, are true and correct in all material respects during the term of any Transaction and the Investment Manager otherwise complies with the provisions of this Annex IV, then (a) the Investment Manager’s obligations under the Agreement shall not include a guarantee of performance by CSE and (b) the other party’s remedies shall not include a right of setoff in respect of rights or obligations, if any, of the Investment Manager arising in other transactions in which the Investment Manager is acting as principal. | ||
3. | Interpretation of Terms. All references to “Seller” or “Buyer”, as the case may be, in the Agreement shall, subject to the provisions of this Annex IV (including, among other provisions, the limitations on the Investment Manager’s liability in Paragraph 2 of this Annex IV), be construed to reflect that (i) CSE shall have, in connection with any Transaction or Transactions entered into by the Investment Manager on its behalf, the rights, responsibilities, privileges and obligations of a “Seller” or “Buyer”, as the case may be, directly entering into such Transaction or Transactions with the other party under the Agreement, and (ii) CSE has designated the Investment Manager as its sole Investment Manager for performance of Seller’s obligations to Buyer or Buyer’s obligations to Seller, as the case may be, and for receipt of performance by Buyer of its obligations to Seller or Seller of its obligations to Buyer, as the case may be, in connection with any Transaction or Transactions under the Agreement (including, among other things, as Investment Manager for CSE in connection with transfers of Securities, cash or other property and as the Investment Manager for giving and receiving all notices under the Agreement). Both the Investment Manager and CSE shall be deemed “parties” to the Agreement and all references to a “party” or “either party” in the Agreement shall be deemed revised accordingly (excluding any Act of Insolvency with respect to Investment Manager). An Event of Default by Investment Manager under Paragraph 11 |
of the Agreement (excluding any Act of Insolvency with respect to Investment Manager) shall be deemed an Event of Default by Seller or Buyer, as the case may be. |
Citigroup Global Markets Inc. | CSE Mortgage LLC | |||||||
By: CapitalSource Inc., as Manager | ||||||||
By:
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/s/ Xxxxxx Xxxxxxxxxx | /s/ Xxxxxx X. Xxxx | ||||||
Name:
|
||||||||
Managing Director | Title: Chief Financial Officer and | |||||||
Senior Vice President |
Acknowledged and Agreed to by:
BlackRock Financial Management, Inc. as
Investment Manager for CSE Mortgage LLC
Investment Manager for CSE Mortgage LLC
By:
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/s/ Xxxxxx X. Xxxxxx | |||
Name:
|
||||
Title:
|
Vice Chairman |