Exhibit 10.24.a
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PSA THE BOND MARKET
TRADE ASSOCIATION
MASTER REPURCHASE AGREEMENT
September 1996 Version
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Dated as of February 19, 2002
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Between:
LIQUID FUNDING, LTD.
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and
CT LF FUNDING CORP.
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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;
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(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 transferred by
Seller to Buyer;
(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) 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 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.
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(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.
(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
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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.
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 Paragraphs 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.
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Required Disclosure for Transactions in Which the Seller 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.
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* Language to be used under 17 C.F.R. Section 403.4(e) if Seller is a government
securities broker or dealer other than a financial institution.
** Language to be used under 17 C.F.R. Section 403.5(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 the 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.
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 the
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.
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11. Events of Default.
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Repurchase Date, (ii) Seller 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 cancelled. 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 therefore on the Repurchase Date
determined 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.
(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 reasonably 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 bid quotation form 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.
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(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 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 subparagraph (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 nondefaulting 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 request hereunder may be made orally, to
be confirmed promptly in writing, or by other communication as specified in the
preceding sentence.
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.
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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 subparagraphs 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.
(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
outstanding 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 connection 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 institution," as such term is defined 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 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;
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7
(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, the Federal Savings and Loan
Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable.
LIQUID FUNDING, LTD. CT LF FUNDING CORP.
-----------------------------
PARTY A PARTY B
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
--------------------------------- -------------------------------
NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇ NAME: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
------------------------------- -------------------------------
TITLE: Director TITLE: Vice President
------------------------------ -------------------------------
DATE: 27 February 2002 DATE: 2/28/02
------------------------------ -------------------------------
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8
Annex I
Supplemental Terms and Conditions
This Annex I forms a part of the Master Repurchase Agreement dated as of
February 19, 2002 (the "Agreement") between LIQUID FUNDING, LTD. ("Buyer") and
CT LF FUNDING CORP. ("Seller"). Capitalized terms used but not defined in this
Annex I shall have the meanings ascribed to them in the Agreement.
1. Other Applicable Annexes. Please select any/all of the optional Annexes
below to form a part of the Agreement. The Annexes which are initialed
will apply hereunder.
Initials
--------
(a) Annex III (International Transactions) ________
(b) Annex IV (Party Acting as Agent) ________
(c) Annex V (Margin for Forward Transactions) ________
(d) Annex VI (Buy/Sell Back Transactions) ________
(e) Annex VII (Transactions Involving Registered Investment Companies) ________
2. "Margin Notice Deadline" means 10:00 a.m. (New York time).
3. Margin calls may be made orally and need not be confirmed in writing.
4. Definitions. The following definition shall be added to Paragraph 2:
(u) "Transaction", with respect to this Master Repurchase
Agreement, means all transactions under this Master Repurchase
Agreement and does not include transactions under any other
master repurchase agreement or any other agreement.
5. 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(a)(i) 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)(i) (including for purposes of the
definition of "Additional Purchased Securities").
6. The following 2 paragraphs shall be added to Paragraph 9 of the
Agreement:
(c) in the case of any Transaction for which the Repurchase Date is
other than the business day immediately following the Purchase Date and
with respect to which Seller does not have any existing right to
substitute substantially the same Securities for the Purchased
Securities, Seller shall have the right, subject to the proviso to this
sentence, upon notice to Buyer, which notice shall be given at or prior
to 10 a.m. (New York time) on such business day, to substitute
substantially the same Securities for any Purchased
Securities; provided, however, that Buyer may elect, by the close of
business on the business day notice is received, or by the close of the
next business day if notice is given after 10 a.m. (New York time) on
such day, not to accept such substitution. In the event such
substitution is accepted by Buyer, such substitution shall be made by
Seller's transfer to Buyer of such other Securities and Buyer's transfer
to Seller of such Purchased Securities, and after such substitution, the
substituted Securities shall be deemed to be Purchased Securities. In
the event Buyer elects not to accept such substitution, Buyer shall
offer Seller the right to terminate the Transaction.
(d) In the event Seller exercises its right to substitute or terminate
under sub-paragraph (c), Seller shall be obligated to pay to Buyer, by
the close of the business day of such substitution or termination, as
the case may be, an amount equal to (A) Buyer's actual cost (including
all reasonable out-of-pocket fees, expenses and commissions) of (i)
entering into replacement transactions; (ii) entering into or
terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like transactions with third parties in
connection with or as a result of such substitution or termination, and
(B) to the extent Buyer determines not to enter into replacement
transactions, the loss incurred by Buyer directly arising or resulting
from such substitution or termination. The foregoing amounts shall be
solely determined and calculated by Buyer in good faith.
7. Mandatory Early Repurchase Date
(a) Notwithstanding any provision of the Master Repurchase Agreement,
and subject to no condition precedent, the tenth (10th) Business Day
following the date on which an "Enforcement Event" (as defined below)
occurs shall automatically and irrevocably become the Repurchase Date in
respect of all Transactions hereunder (the "Mandatory Early Repurchase
Date"), whether or not the Enforcement Event is then continuing. In the
event of the occurrence of an Enforcement Event, in lieu of the delivery
of the Repurchase Price by Seller on the Mandatory Early Repurchase
Date, Seller shall be obliged to pay to Buyer an amount equal to the
Repurchase Price as of the Mandatory Early Repurchase Date minus the
value (positive or negative) of any agreement entered into by Buyer for
the purpose of hedging its interest rate exposure resulting from its
entry into each Transaction hereunder (the "Hedge Value"). Buyer shall
promptly notify Seller of the occurrence of an Enforcement Event and of
the resulting Mandatory Early Repurchase Date, which notice shall state
that on the Mandatory Early Repurchase Date all Transactions will be
terminated in their entirety and the amount of the Repurchase Price and
Hedge Value as of the Mandatory Early Repurchase Date. Further, Buyer
shall promptly notify Seller upon the downgrading of any of Buyer's debt
ratings.
(b) "Enforcement Event" will have the meaning specified in the Offering
Circular dated November 9, 2001 for Buyer's Global Medium Term Note
Program. A copy of the relevant excerpt is attached hereto as Exhibit A.
(c) "Security Trustee" means The Chase Manhattan Bank, or such other
person as may then be acting as security trustee for certain of Buyer's
creditors.
8. Miscellaneous.
(a) Non-Petition. Seller hereby agrees (which agreement shall, pursuant
to the terms of this Master Repurchase Agreement, be binding upon its
successors and assigns) that it shall not institute against, or join any
other person in instituting against, Buyer any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding, or
other proceeding under any Bermuda or United States federal or state
bankruptcy or similar law, for one year and a day after the latest
maturing commercial paper note, medium term note or other rated
indebtedness issued by Buyer is paid. The provisions of this Paragraph
8(b) shall survive the termination of this Master Repurchase Agreement.
(b) Acknowledgement of Security. Pursuant to that certain Collateral
Trust and Security Agreement dated as of November 9, 2001 among Buyer,
The Chase Manhattan Bank, as trustee (the "Security Trustee") and Bear
▇▇▇▇▇▇▇ Securities Corp., as securities intermediary, Buyer has granted
to the Security Trustee a first priority security interest in all of
Buyer's right, title and interest in and to this Master Repurchase
Agreement and each Transaction hereunder. Seller acknowledges such
security interest and understands that the Security Trustee has the
right to enforce the rights of Buyer hereunder, including the right of
Buyer to give notices to Seller, to declare a Termination Date on behalf
of Buyer hereunder, to determine Market Value and to calculate the
Repurchase Price and Hedge Value as of the Mandatory Early Repurchase
Date, that the Security Trustee is an express third party beneficiary of
this Master Repurchase Agreement and in no event will the Security
Trustee incur any obligations or liabilities hereunder.
(c) No Recourse. No recourse shall be had against any incorporator,
shareholder, officer, director or employee of Buyer or Seller with
respect to any of the covenants, agreements, representations or
warranties of the other party hereto contained in this Master Repurchase
Agreement.
(e) Pricing Information. Seller agrees to make available to Buyer any
password in the possession of Seller which Buyer may reasonably require
to enable Buyer to determine the Market Value of any Purchased Security
(including the cashflows due thereon).
LIQUID FUNDING, LTD. CT LF FUNDING CORP.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
--------------------------------- -------------------------------
TITLE: Director TITLE: Vice President
------------------------------ -------------------------------
DATE: 27 February 2002 DATE: 2/28/02
------------------------------ -------------------------------
Exhibit A
Excerpt from Offering Circular
(a complete copy of the Offering Circular will be provided upon request)
The occurrence of any of the following events shall constitute an "Enforcement
Event":
(i) the occurrence of an "Event of Default" with respect to the Notes of any
Series (subject to any applicable cure period);
(ii) a failure of the Issuer to make a payment with respect to Commercial
Paper which shall not have been cured within one (1) Business Day;
(iii) the declaration of an "Early Termination Date" as a result of the
occurrence of an "Event of Default" under any Hedging Transaction where
the Issuer is the defaulting party;
(iv) the occurrence of an "Event of Default" under any Liquidity Facility
(subject to any applicable cure period);
(v) any Note shall be rated below "A" or "A2" (as the case may be) by any
Rating Agency which has been engaged by the Issuer to provide a rating
on such Note;
(vi) the occurrence of a Capital Adequacy Failure;
(vii) the failure of the Interest Rate Neutrality Test to be satisfied for
five (5) consecutive Business Days; or
(viii) the failure of the Liquidity Sufficiency Test to be satisfied for five
(5) consecutive Business Days.
ANNEX I-A
This Annex I-A forms a part of the Master Repurchase Agreement dated as of
February 19, 2002 (the "Repurchase Agreement") between LIQUID FUNDING, LTD.
("Buyer") and CT LF FUNDING CORP. (the "Seller"). This Annex I-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, this Annex I-A (including the attached Terms
Annex issued hereunder), Annex II and each confirmation under the Repurchase
Agreement (collectively, the "Agreement") and each purchased CMBS shall
constitute a Purchased Security under this Agreement. If there is any
inconsistency between the Repurchase Agreement, a confirmation under the
Repurchase Agreement, Annex I and this Annex I-A, this Annex I-A (including the
Terms Annex issued hereunder) shall control. Each CMBS Transaction shall
constitute a sale by Seller to Buyer of the related CMBS. Capitalized terms used
but not defined in this Annex I-A shall have the meanings ascribed to them in
the Repurchase Agreement or Annex I, as applicable.
1. Definitions.
"Amount of Transactions" shall mean the aggregate of all Purchase Prices
paid for all Purchased Securities hereunder and not repaid to the Buyer.
"Business Day" shall mean each day on which commercial banks in New York
City and the New York Stock Exchange are open for business.
"Buyer's Margin Ratio" shall mean, with respect to each Purchased
Security, the Buyer's Margin Ratio determined in accordance with the
attached Terms Annex.
"Margin Deficit Amount" shall mean, when referring to CMBS Transactions
under the Agreement, the amount, if any, by which the aggregate of the
Repurchase Prices for all Purchased Securities exceeds the aggregate of
the products of (a) the applicable Buyer's Margin Ratio and (b) the
Market Value of each Purchased Security.
"Margin Excess Amount" shall mean, when referring to CMBS Transactions
under the Agreement, the amount, if any, by which the aggregate of the
Repurchase Prices for all Purchased Securities is less than the
aggregate of the products of (a) the applicable Buyer's Margin Ratio and
(b) the Market Value of each Purchased Security.
"Market Value" shall mean with respect to all Purchased Securities, the
market value determined by Buyer daily in its sole discretion acting in
good faith.
"Maximum Amount" shall have the meaning set forth in the Terms Annex.
"Purchased Security" shall mean all Securities transferred by Seller to
Buyer in a Transaction under the Agreement that have not been
repurchased or liquidated pursuant to this Agreement. The term
"Purchased Security" with respect to any Transaction also shall include
CMBS delivered pursuant to Paragraph 4(a) of the Repurchase Agreement.
"Terms Annex" means the Terms Annex attached hereto setting out certain
additional terms applicable to Transactions hereunder.
2. (a) Buyer and Seller may enter into certain CMBS Transactions, subject
to the terms of the Agreement. Each CMBS Transaction shall be subject to
the approval of Buyer in its sole discretion. Each CMBS Transaction
shall constitute a Transaction under the Repurchase Agreement. The
transfer of each Purchased Security by Seller to Buyer under the
Agreement shall constitute a separate Transaction and be subject to the
terms and conditions set forth in the Agreement. The Purchase Price,
Buyer's Margin Ratio and Pricing Rate for each Transaction shall be
determined in accordance with the Terms Annex. The aggregate amount of
CMBS Transactions outstanding at any time with respect to the Agreement
shall not exceed the Maximum Amount.
(b) Each offer by Seller to sell Securities to Buyer in a CMBS
Transaction (i) shall disclose any confidentiality agreement or other
agreement that might prevent Seller from disclosing or limit Seller's
ability to disclose information with respect to the Security subject to
such offer to Buyer and (ii) shall include a copy of any and all such
agreements. Seller shall use commercially reasonable efforts to add
Buyer, any entity designated by Buyer and any transferee of an interest
in such Security from any of the foregoing as permitted recipients of
any information which Seller receives or has the right to receive in
respect of any Purchased Security. Prior to the Purchase Date, Seller
shall provide Buyer with any form of confidentiality agreement that is
required to be used in connection with providing Buyer with such
information.
3. All Purchased Securities with respect to CMBS Transactions shall be
repurchased by Seller on the Termination Date set forth in the Terms
Annex, notwithstanding that a Confirmation may state a Repurchase Date
other than such Termination Date; provided, however, if Buyer, in its
sole discretion, enters into new CMBS Transactions with respect to the
Terms Annex (including, without limitation, "rolling" any outstanding
CMBS Transactions) after such date, the Agreement shall continue to
control such CMBS Transactions.
4. On the Termination Date set forth in the Terms Annex, all Repurchase
Prices and other amounts owed by Seller with respect to all CMBS
Transactions will be due and payable and Seller shall pay all such
amounts to Buyer.
5. Intentionally Omitted.
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6. Paragraphs 4(a) and 4(b) of the Repurchase Agreement are deleted and the
following substituted therefor:
"(a) Notwithstanding anything in the Agreement to the contrary,
if on any day there is a Margin Deficit Amount, Buyer may by
notice to Seller require Seller to (i) transfer to Buyer
sufficient cash or additional securities acceptable to Buyer in
its sole discretion, which cash or additional securities shall
constitute Additional Purchased Securities within the meaning of
Paragraph 2(b) of the Repurchase Agreement, and/or (at Seller's
election) (ii) pay such amount of the Purchase Price so that,
after such transfer(s) and/or payment of Purchase Price, there is
no Margin Deficit Amount, provided that any such payment of the
Purchase Price shall be considered an early termination of a CMBS
Transaction and be subject to the payment of an Exit Fee by the
Seller to the Buyer as provided in the Terms Annex. If Seller is
required to transfer Additional Purchased Securities, Seller
shall make such transfer by the close of the Federal Reserve wire
for money transactions on the date notice is given if such notice
is given before 10:00 a.m. (New York time) or, if such notice is
given after 10:00 a.m. (New York time), by the close of the
Federal Reserve wire for money transactions on the next Business
Day.
(b) Notwithstanding anything in the Agreement to the contrary, if
on any day there is a Margin Excess Amount, Seller may by notice
to Buyer require Buyer, at Seller's option, to transfer cash or
other Purchased Securities to Seller, so that, after such
transfer(s), there is no Margin Excess Amount."
7. Price Differential shall be paid periodically in the manner set out in
the Terms Annex.
8. Buyer and Seller shall give notice to the other party of any change in
the rating of a Purchased Security within two (2) Business Days after
Buyer or Seller, as applicable, becomes aware of such change.
9. (a) Seller shall deliver to Buyer all of the Securities proposed to be
purchased hereunder, and, if necessary, a complete set of all transfer
documents in form sufficient to allow transfer and registration of such
Purchased Security to Buyer no later than the proposed Purchase Date for
the relevant Security. Seller shall deliver to Buyer the related
Prospectus or Private Placement Memorandum and such other documentation
as Buyer shall request no later than two (2) Business Days prior to the
proposed Purchase Date for the relevant Security.
(b) If an issuer (in the case of physical Purchased Securities) and/or
Depository Trust Company (in the case of book entry Purchased
Securities) fails or refuses to transfer or register the Purchased
Securities into the name of Buyer, (i) Buyer shall have the right to
cancel any CMBS Transaction with respect to such Purchased Securities
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
-3-
plus any actual out-of pocket costs, losses, damages or fees incurred in
connection with any hedge entered into or unwound by Buyer as a result
of such cancellation.
10. Seller shall provide to Buyer (a) any reports or other written
information that Seller provides to its shareholders relating to the
Purchased Securities within two (2) Business Days of delivery thereof by
Seller and (b) any material written information received by Seller from
the trustee or the master servicer for any issuer of Purchased
Securities, including, without limitation, watch lists and borrower or
periodic summary property financial reports but excluding (i) any
periodic bond remittance reports that are otherwise available to Buyer
directly from the applicable trustee and (ii) any loan files
corresponding to loans that have been transferred from the applicable
master servicer to the applicable special servicers, within two (2)
Business Days of receipt thereof by Seller (Seller shall make items
(b)(i) and (ii) available to Buyer upon Buyer's request). Seller shall
notify Buyer of any material information relating to any mortgage loans
underlying any Purchased Securities and any material correspondence that
Seller receives with respect to any such underlying mortgage loans,
including without limitation information that could materially affect
the performance or Market Value of any Purchased Security. Seller shall
make such notification within three (3) Business Days of Seller's
receipt of such information (except in the case of information
respecting the timing and amount of receipt of loan payments, Seller
shall make such notification no earlier than permitted under the issuing
trust's governing documentation). Seller's asset management and credit
surveillance staff shall be made reasonably available to Buyer to
respond to periodic inquiries from Buyer regarding the status of the
Purchased Securities and the status of assets underlying the Purchased
Securities.
11. Paragraph 11 of the Repurchase Agreement is amended to delete the word
"or" before (vii) and to add the following after "obligations hereunder"
and prior to "(each an "Event of Default")":
"(viii) Seller fails to make any payment of Price Differential within
one Business Days after such payment becomes due, (ix) Seller fails to
comply with any other obligation to Buyer and such failure continues for
a period of thirty days after notice thereof is given to Seller by
Buyer, (x) Seller fails to comply with Paragraph 10 of Annex I-A and
such failure continues for a period of ten days after notice thereof is
given to Seller by Buyer, or (xi) Seller (1) defaults under a Specified
Transaction and, after giving effect to any applicable notice
requirement or grace period, there occurs a liquidation of, an
acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any
applicable notice requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date of, or any
payment on early termination of, a Specified Transaction (or such
default continues for at least three Business Days if there is no
applicable notice requirement or grace period) or (3) disaffirms,
disclaims, repudiates or rejects, in whole or in part, a Specified
Transaction (or such action is taken by any person or entity appointed
or empowered to operate it or act on its behalf); where "Specified
Transaction" means (a) any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between Seller
and any financial institution which is a rate swap transaction, basis
swap,
-4-
forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of these
transactions), (b) all other financial transactions and agreements
entered into between Seller and any financial institution, including,
without limitation, futures, stock lending agreements, repurchase
agreements and reverse repurchase agreements, loans of any kind,
purchases and sales of equity and debt securities of any kind, including
mortgages, whether or not on margin, and (c) any combination of these
transactions."
Upon the occurrence of any Event of Default under the Agreement, the
defaulting party shall give immediate notice thereof to the
nondefaulting party.
12. Buyer's sole recourse under this Agreement shall be to Purchased
Securities, all Purchased Securities under all Transactions under the
Repurchase Agreement, any and all of Seller's right, title and interest
in this Agreement, the CMBS Transactions under this Agreement, all
Transactions under the Repurchase Agreement, all payments and
performance due under this Agreement and the Repurchase Agreement and
all other property held by or for Seller at or by the Buyer or any agent
thereof, and Buyer shall have no recourse to other assets or revenues of
Seller or any of its affiliates or any legal representatives, successors
or assigns of any of the foregoing, except that the foregoing does not
apply to damages sustained by Buyer if Seller or any affiliate of Seller
has committed fraud, was grossly negligent, willfully impaired Buyer's
ability to exercise any rights or remedies under this Agreement, acted
in bad faith or failed to provide Buyer with any material information,
in each case with respect to this Agreement or any Purchased Security;
provided, however, that Seller shall have no liability for
consequential, incidental, special, exemplary, punitive or similar
damages. Notwithstanding the proviso at the end of the preceding
sentence, Seller shall be liable for any actual costs, losses, damages
and fees incurred in connection with any hedge entered into or unwound
by Buyer after an Event of Default by Seller. The provisions of this
section shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by this Agreement; (b)
affect the validity or enforceability of, or any guaranty made in
connection with, this Agreement; (c) impair the rights of Buyer to
obtain the appointment of a receiver; (d) constitute a prohibition
against Buyer seeking a judgment against Seller in order to commence any
action or proceeding in order for Buyer to exercise its remedies against
the Purchased Security, cash or property described in the first sentence
of this paragraph or any payments or performance due under this
Agreement; or (e) constitute a waiver of the right of Buyer to enforce
the liability and obligation of Seller, by money judgment or otherwise,
to the extent of any loss, damage, cost, expense, liability, claim or
other obligation by Buyer (including attorneys' fees and costs
reasonably incurred) not incurred under this Agreement.
This Section 12 shall be omitted upon the execution of a guaranty in
favor of Buyer substantially in the form attached hereto as Exhibit A,
provided that the Guarantor (as
-5-
defined in Exhibit A) is acceptable to Buyer in its absolute discretion.
In the event that Seller has received a counterparty rating of B- by
Standard & Poor's Investors Service, B3 by ▇▇▇▇▇'▇ Investors Service or
B- by Fitch Inc., then Buyer and Seller may enter into a new repurchase
transaction (the "Subsequent Repurchase Agreement") concerning CMBS
Transactions and such Subsequent Repurchase Agreement shall be in
substantially the same form as this Agreement; provided, however, that
(1) such Subsequent Repurchase Agreement shall provide full recourse
against the Seller and all of Seller's assets for any of Seller's
obligations under the Subsequent Repurchase Agreement and (2) the
Relevant Spread (set forth in such Subsequent Repurchase Agreement) for
each Ratings Category shall be reduced by 0.25%.
13. Seller's obligations under the Agreement consist of a single obligation,
notwithstanding that the CMBS Transactions are margined on a
Transaction-by-Transaction basis. Upon an Event of Default, all
Purchased Securities, all cash and other property held pursuant to the
Repurchase Agreement (including but not limited to all principal and
interest payments received by Buyer as the owner of the Purchased
Securities under all Transactions under the Repurchase Agreement), and
all payments and performance due under the Repurchase Agreement may be
utilized by Buyer to satisfy Seller's obligations under the Agreement.
14. Notwithstanding anything to the contrary in the Agreement, Buyer shall
not be deemed to have waived any right which it may have or be deemed to
have under Section 506(a), 506(b), 1111(b) or any other provisions of
the U.S. Bankruptcy Code to file a claim for the full amount due and
owing under the provisions of the Agreement.
15. If the Amount of Transactions exceed the Maximum Amount at any time,
Seller shall repurchase sufficient Purchased Securities to reduce the
Amount of Transactions to not greater than the Maximum Amount not later
than the first Business Day after notice from the Buyer (which date
shall constitute a Repurchase Date with respect to the Purchased
Securities to be repurchased hereunder and for the purpose of Section
11(ii) of the Repurchase Agreement).
16. At all times the pool of mortgage loans relating to the Purchased
Securities shall be qualified as a REMIC. If at any time any pool of
mortgage loans relating to a Purchased Security is not qualified as a
REMIC, then the Market Value of such Purchased Security shall be deemed
to be zero.
17. To the extent Seller enters into any derivative transaction which it
intends to designate as a hedge to its exposure under any Transaction
for purposes of Financial Accounting Standards Board Statement 133 ("FAS
133"), Buyer agrees, if requested by Seller, to use reasonable efforts
to consider any structural change to a Transaction proposed by Seller
which may enable Seller to comply with the requirements of FAS 133 to
designate such derivative as a hedge to such Transaction, provided that
Buyer may in its absolute discretion determine not to enter into any
such Transaction and Seller agrees that Buyer is not providing Seller
with any advice with regard to FAS 133, Seller is acting independently
in making any decisions to enter into any Transaction hereunder and
Seller
-6-
shall hold harmless and indemnify Buyer with respect to any action or
omission of Buyer pursuant to this Section 17.
18. Each party to the Agreement shall bear its own costs and expenses in
connection with the negotiation and documentation of the Agreement;
provided, however, that Seller shall pay the actual legal fees and
expenses of outside counsel to Buyer in connection with the Agreement up
to a maximum of $50,000.
19. Buyer shall provide Seller with a written confirmation for each
Transaction within five business days of the Purchase Date.
20. The Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersede all
prior agreements, understandings, negotiations and discussions between
the parties hereto, whether verbal or written, with respect to such
subject matter.
LIQUID FUNDING, LTD. CT LF FUNDING CORP.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------- -------------------------
Title: Director Title: Vice President
--------------------- ------------------------
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Annex II
Names and Addresses for Communications Between Parties
TO LIQUID FUNDING, LTD.:
Cedar House
41 Cedar Avenue
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Bermuda
With a copy to:
BEAR ▇▇▇▇▇▇▇ BANK PLC, Investment Manager
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Fax (▇▇▇-▇) ▇▇▇-▇▇▇▇
TO CT LF FUNDING CORP.:
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
and
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Fax (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
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Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇ ▇▇▇▇▇▇, Esq.