EXHIBIT 10.10
[THE BOND MARKET ASSOCIATION LOGO]
MASTER REPURCHASE AGREEMENT
SEPTEMBER 1996 VERSION
Dated as of March 24, 2003
Between:
WACHOVIA BANK, NATIONAL ASSOCIATION
and
CAPITALSOURCE REPO FUNDING LLC
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;
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(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 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) 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 Paragraphs 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;
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(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.
(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
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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 the 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 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
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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.
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.
*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
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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
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.
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(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 bid
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 for any excess of the
price paid (or deemed paid) by the nondefaulting party for Replacement
Securities over the Repurchase Price for such 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 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, dam-age, 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
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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.
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 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.
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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
herefrom 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.
(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 in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in the 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,"
September 1996. Master Repurchase Agreement
9
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;
(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.
CAPITALSOURCE REPO FUNDING LLC
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ BANK, NATIONAL ASSOCIATION.
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: March 24, 2003
September 1996. Master Repurchase Agreement
10
ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
This Annex I forms a part of the Master Repurchase Agreement dated as March 24,
2003 (the "Agreement") between:
WACHOVIA BANK, NATIONAL ASSOCIATION AND
CAPITALSOURCE REPO FUNDING LLC
Capitalized terms used herein but not defined in this Annex I shall have the
meanings ascribed to them in the Agreement. Paragraph references are to
paragraphs in the Agreement. To the extent that the terms of this Annex I
conflict with the terms of the Agreement, the terms of this Annex I shall
control.
1. Additional Definitions. Whenever used in the Agreement (including all
Annexes), the following words and phrases, unless the context otherwise
requires, shall have the meanings set forth below. Capitalized terms
defined above in the Agreement whose definitions are also defined by
this Annex I shall, for all purposes of the Agreement, be deemed to
have been modified by this Annex I.
(a) "Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly, controls, is controlled by or
under common control with such Person, or is a director or
officer of such Person. For purposes of this definition,
"control" (including the terms "controlling," "controlled by"
and "under common control with") when used with respect to any
specified Person means the possession, direct or indirect, of
the power to vote 20% or more of the voting securities of such
Person or to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
(b) "Business Day" means any day other than a Saturday or a Sunday
on which (i) banks are not required or authorized to be closed
in Minneapolis, Minnesota, New York, New York or Charlotte,
North Carolina and (b) if the term "Business Day" is used in
connection with the determination of LIBOR, dealings in United
States dollar deposits are carried on in the London interbank
market.
(c) "Buyer" means Wachovia Bank, National Association.
(d) "Buyer's Margin Percentage" means, with respect to any
Transaction, 133.33%.
(e) "Capital Commitment Agreement" means the Capital Commitment
Agreement, dated as of March 24, 2003, by and between
CapitalSource Finance LLC and Wachovia Bank, National
Association.
(f) "Charged-Off Loan" means an Eligible Loan as to which any of
the following first occurs: (i) all or any portion of any one
or more payments remains unpaid for at least ninety (90) days
from the original due date for such payment, (ii) the Obligor
thereof or any Person obligated thereon is generally unable to
meet its financial obligations and (iii) the Obligor or any
Person obligated thereon has suffered a material adverse
change which materially affects its viability as an ongoing
concern.
(g) "Confirmation" is defined in Section 5 of this Annex I.
(h) "Custodial Agreement" means the Custodial Undertaking in
connection with the Master Repurchase Agreement, dated as of
March 24, 2003, by and among the
I-1
Buyer, the Seller and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as custodian.
(i) "Eligible Loan" has the meaning ascribed to such term in the
Third Amended and Restated Loan Certificate and Servicing
Agreement, but, as used herein, shall exclude the terms of
clause (z) in the definition of "Eligible Loan" in the Third
Amended and Restated Loan Certificate and Servicing Agreement.
(j) "Income" means, with respect to any Security at any time, any
principal, interest and other amounts payable thereof pursuant
to any Underlying Document.
(k) "LIBOR" means, with respect to the Transactions, the rate per
annum equal to the rate appearing as one-month LIBOR on
Telerate page 3750 as of 11:00 a.m., London time, (or if not
so reported, then as determined by Buyer from another
recognized source or interbank quotation), rounded up to the
nearest one-eighth of one percent (1/8%), as calculated on the
second London Business Day before the Purchase Date and as
subsequently adjusted on the first day of the first calendar
month following the Purchase Date and on the first day of each
calendar month through and until the date of determination.
(l) "Loan" means any Senior Secured Loan or Subordinated Loan sold
or contributed to the Seller and included as part of the
outstanding assets of the Seller.
(m) "London Business Day" means a day of the year on which
dealings in United States dollars are carried on in the London
interbank market and banks are not required or authorized to
close in London or in New York, New York.
(n) "Market Value" means, with respect to any Securities as of any
date, the price determined by Buyer in its sole and absolute
discretion; provided, however, that in the event that (i) all
or any portion of any one or more payments due under any
Security is not paid when due (after giving effect to any
grace period) or would be so delinquent but for any amendment,
modification, waiver or variance made to such Security
resulting from the Obligor's inability to pay such Security in
accordance with its terms, (ii) any Security is classified as
delinquent by the Buyer, (iii) the related Obligor is not
paying any of the accrued and unpaid interest on a current
basis, (iv) any Security becomes a Charged-Off Loan, (v) any
Act of Insolvency with respect to the Seller occurs, (vi) any
other default occurs that would, individually or in the
aggregate, result in a Material Adverse Effect or (vii) the
Purchased Securities have not been transferred from Buyer to
Seller at the Repurchase Price on the Termination Date (unless
such inaction is waived by the Buyer), the Market Value shall
equal zero (0).
(o) "Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance,
properties or prospects of the Seller, the Servicer or
CapitalSource Finance LLC, (b) the validity, enforceability or
collectibility of this Agreement, the Custodial Agreement or
the Sale Agreement or the validity, enforceability or
collectibility of the Purchased Securities generally or any
material portion of the Purchased Securities, (c) the rights
and remedies of the Buyer, (d) the ability of the Seller, the
Servicer or the CapitalSource Finance LLC to perform its
obligations under this Agreement, the Custodial Agreement or
the Sale Agreement, or (e) the status, existence, perfection,
priority or enforceability of the Buyer's interest in the
Purchased Securities.
(p) "Obligor" means, with respect to any Eligible Loan, any Person
or Persons obligated to make payments pursuant to or with
respect to such Eligible Loan, including any guarantor
thereof.
(q) "Permitted Liens" means the liens granted in the Underlying
Documents (other than the promissory notes) in respect of the
CapitalSource Commercial Loan Trust 2002-1 Transaction (as
defined in the Third Amended and Restated Loan Certificate and
Servicing Agreement), CapitalSource Commercial Loan Trust
2002-2 Transaction (as defined in the Third Amended and
Restated Loan Certificate and Servicing Agreement), the Third
Amended and Restated Loan Certificate and Servicing Agreement,
the private placement transaction of commercial loan-backed
notes contemplated with respect to CapitalSource Commercial
Loan Trust 2003-1 and, subject to prior written approval by
the Buyer, any other asset-backed commercial paper or private
placement transaction.
(r) "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock
company, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
(s) "Pricing Rate" means LIBOR plus two hundred fifty (250) basis
points; provided that after the occurrence and during the
continuation of an Event of Default, the Pricing Rate shall
mean LIBOR plus four hundred fifty (450) basis points.
(t) "Purchase Date" means the purchase date specified on the
Confirmation.
(u) "Purchase Price" means (i) on the Purchase Date, the amount
equal to 75% of the of aggregate principal amount of the
Purchased Securities as of such date minus any deferred
interest that is added to the principal amount of any
Purchased Security, and (ii) thereafter decreased by the
amount of any cash transferred by Seller to Buyer pursuant to
Paragraph 4(a) of the Agreement or applied to reduce Seller's
obligations under Paragraph 5 of the Agreement.
(v) "Purchased Securities" means the Securities transferred by
Seller to Buyer in a Transaction under the Agreement, which
Securities shall be a minimum of five (5) Securities (in the
aggregate) at all times on and after the initial Purchase Date
until the Repurchase Date. The term "Purchased Securities"
with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to
Paragraph 4(a) of the Agreement. The Buyer shall have sole and
absolute discretion in determining whether it will purchase
any Security from the Seller.
(w) "Revolving Loan" has the meaning ascribed to such term in the
Third Amended and Restated Loan Certificate and Servicing
Agreement. Any Revolving Loan referred to herein shall be
subject to the terms of Section 13.8 of the Third Amended and
Restated Loan Certificate and Servicing Agreement.
(x) "Sale Agreement" means the Sale Agreement, dated as of March
24, 2003, by and among CapitalSource Finance LLC, as seller,
and Seller, as buyer.
(y) "Securities" means any Loan that, as of its Purchase Date,
satisfies each of the following criteria: (i) such Loan is an
Eligible Loan, (ii) the Buyer in its sole and absolute
discretion has approved such Loan for purchase by the Seller,
(iii) such Loan is a Revolving Loan or a Term Loan, and (iv)
the outstanding principal amount of such Loan does not exceed
$20,000,000.
(z) "Seller" means CapitalSource REPO Funding LLC.
(aa) "Senior Secured Loan" any Loan secured by a first priority
lien on an Obligor's assets and which has a Loan-to-Value
Ratio (as defined in the Third Amended and Restated Loan
Certificate and Servicing Agreement) of less than 90%.
(bb) "Servicer" means CapitalSource Finance LLC, in its capacity as
servicer under the Sale Agreement.
(cc) "Subordinated Loan" means any type of Loan other than a Senior
Secured Loan.
(dd) "Term Loan" means a Loan that is a term loan that has been
fully funded and does not contain any unfunded commitment.
(ee) "Termination Date" means the date which is ninety days (90)
from the date of the Agreement, provided that this date shall
be automatically extended for one additional ninety day (90)
period unless the Buyer or Seller provides 20 days' prior
written notice to the other party that it does not wish to
have the Termination Date so extended.
(ff) "Third Amended and Restated Loan Certificate and Servicing
Agreement" means the Third Amended and Restated Loan
Certificate and Servicing Agreement, dated as of February 25,
2003, as amended by Amendment No. 1 to Third Amendment and
Restated Loan Certificate and Servicing Agreement, dated as of
March 3, 2002, by and among CapitalSource Funding LLC, as the
seller, CapitalSource Finance LLC, as the originator and as
the servicer, Variable Funding Capital Corporation, Fairway
Finance Corporation, Eiffel Funding, LLC, and Hannover Funding
Company LCC, as the purchasers, Wachovia Bank, National
Association., as the administrative agent and as the VFCC
agent, BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp., as the Fairway agent, CDC
Financial Products Inc., as the Eiffel agent, Norddetsche
Landesbank Girozentrale, as the Hannover agent, and ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as the backup
servicer and the collateral custodian, as amended, modified,
waived, supplemented or restated from time to time.
(gg) "UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdiction or jurisdictions.
(hh) "Underlying Documents" means, with respect to the applicable
Purchased Security, any note, security instrument, guaranty or
other instrument or loan document executed in connection with
the indebtedness evidenced by such Purchased Security.
2. Additional Representations. In addition to the representations and
warranties set forth in Paragraph 10 of the Agreement, Seller
additionally represents and warrants to Buyer that as of the date of
the Agreement and as of each Purchase Date, or such other date or dates
indicated below:
(a) Immediately prior to the Transactions, Seller shall own the
Securities free and clear of all pledges, liens, security
interests, encumbrances, charges and other adverse claims
(other than Permitted Liens), and upon the consummation of the
Transactions, Buyer shall (i) be the owner of the Securities
free and clear of any adverse claim and (ii) obtain a valid,
perfected first priority security interest in the Securities;
(b) There is no action, suit, proceeding, investigation or
arbitration pending or threatened against Seller which may
result in any material adverse change in the business,
operations, financial conditions, properties or assets of
Seller or which may have an adverse effect on the validity of
the Agreement or the Purchased Securities or any action taken
or to be taken in connection with the obligations of Seller
contemplated in the Agreement;
(c) Seller has the power and authority and the legal right to
execute and deliver, to perform its obligations under the
Agreement and has taken all necessary action to authorize its
execution, delivery and performance of the Agreement;
(d) The Agreement constitutes Seller's legal, valid and binding
obligation, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally;
(e) The consummation of the transactions contemplated by the
Agreement and the fulfillment of the terms thereof will not
(i) conflict with, result in any material breach of any of the
terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, Seller's operating
agreement or other organizational documents, (ii) result in
the creation or imposition of any lien, adverse claim or other
encumbrance upon any of Seller's assets, other than as
expressly created under the Agreement, or (iii) violate any
law or order, rule or regulation applicable to Seller of any
court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over Seller or any of its assets;
(f) All material actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency that are
necessary in connection with Seller's execution, delivery and
performance of the Agreement, have been duly taken, given or
obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by
the Agreement and the performance of its obligations under the
Agreement; and
(g) Except as explicitly set forth in this Agreement: (i) there
are no agreements on the part of Seller to issue, sell or
distribute the Purchased Securities, other than the Agreement;
and (ii) Seller has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any securities or any
interest therein or to pay any dividend or make any
distribution in respect of the Purchased Securities.
3. Additional Covenants of Seller. While there is an outstanding
Transaction, Seller hereby agrees as follows:
(a) Seller shall promptly deliver or cause to be delivered to
Buyer, upon receipt by Seller, (i) notice of any "default" or
"event of default", however defined, under any Underlying
Document, (ii) any report or notice received by Seller
pursuant to the Underlying Documents that is required to be
delivered to the registered holder of the Purchased Securities
promptly following receipt thereof and (iii) any other such
document or information relating to the Purchased Securities
as Buyer may reasonably request from time to time.
(b) If Seller shall receive any rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any
Purchased Securities, or otherwise in respect thereof, Seller
shall accept the same as Buyer's agent, hold the same in trust
for Buyer and deliver the same forthwith to Buyer in the exact
form received, together with duly executed instruments of
transfer or assignment in blank and such other documentation
as Buyer shall reasonably request. If any sums of money or
property are paid or distributed in respect of the Purchased
Securities and received by Seller, Seller shall promptly pay
or deliver such money
or property to Buyer and, until such money or property is so
paid or delivered to Buyer, hold such money or property in
trust for Buyer, segregated from other funds of Seller.
(c) At any time and from time to time, upon the written request of
Buyer, and at the sole expense of Seller, Seller will promptly
and duly execute and deliver such further instruments and
documents and take such further actions as Buyer may
reasonably request for the purposes of obtaining or preserving
the full benefits of the Agreement and all Underlying
Documents and of the rights and powers therein granted.
(d) Seller shall pay, and save Buyer harmless from, any and all
liabilities with respect to, or resulting from, any and all
stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Purchased
Securities or in connection with any of the transactions
contemplated by the Agreement and all Underlying Documents,
including any delay in the payment thereof, other than income
taxes of Buyer.
(e) Upon five (5) Business Days' prior written notice to Buyer,
Seller may amend or modify, or waive any term or condition of,
or settle or compromise any claim in respect of, any item of
the Purchased Securities, Underlying Documents or any related
rights. In connection therewith, the Seller herby acknowledges
that such amendment or compromise may result in an adjustment
by the Buyer of the Market Value of the Purchased Securities;
provided that if the Seller disagrees with such adjusted
Market Value, its sole remedy shall be to tender the
Repurchase Price.
(f) Seller shall promptly notify Buyer upon receipt of notice or
actual knowledge of the occurrence of any Event of Default.
4. Additional Covenant of Seller and Buyer. Each of the Seller and Buyer
agrees that it will not institute against, or join any other Person in
instituting against, the Seller any Act of Insolvency so long as there
shall not have elapsed one (1) year and one (1) day since the
Repurchase Date.
5. Modification of Subparagraph 3(b) of the Agreement. Subparagraph 3(b)
of the Agreement is deleted and replaced with the following:
"(b) Upon agreeing to enter into a Transaction under the
Agreement, Buyer or Seller (or both), as shall be agreed, shall deliver
to the other party a written confirmation of each Transaction in the
form attached as Annex III to this Agreement (a "Confirmation") at
least two (2) Business Days' prior to the Purchase Date for such
Transaction. 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 of such Confirmation. In the event of any
conflict between the terms of such Confirmation and this Agreement,
this Agreement shall prevail."
6. Modification of Paragraph 4 of the Agreement.
(a) Subparagraph 4(d) of the Agreement is deleted and replaced
with the following:
"(d) Any cash transferred pursuant to this
Paragraph shall be applied by Buyer as a reduction against the
Repurchase Price."
(b) Subparagraph 4(e) of the Agreement is deleted and replaced
with the following:
"Seller and Buyer agree, with respect to any or all
Transactions hereunder, that the rights of Buyer under
subparagraph (a) of this Paragraph may be exercised only where
a Margin Deficit 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)."
(c) Subparagraph 4(f) of the Agreement is deleted and replaced
with the following:
"Seller and Buyer agree, with respect to any or all
Transactions hereunder, that the rights of Buyer under
subparagraph (a) of this Paragraph to require the elimination
of a Margin Deficit may be exercised whenever such a Margin
Deficit exists with respect to any single Transaction
hereunder (calculated without regard to any other Transaction
outstanding under this Agreement)."
7. Modification of Paragraph 5 of the Agreement. Paragraph 5 is deleted
and replaced with the following:
"(a) With respect to Income from any interest, fees or other
similar payment made pursuant to any Underlying Document
("Interest Income"), Seller shall be entitled to receive an
amount equal to the Interest Income paid or distributed on or
in respect of the Purchased Securities, to the full extent it
would be so entitled if the Securities had not been sold to
Buyer; provided, however, the Seller shall not be entitled to
receive any Interest Income in the event that, at the time
such Interest Income is paid or distributed, (i) a Margin
Deficit exists or (ii) an Event of Default with respect to
Seller (including an Event of Default relating to the
Underlying Documents) has occurred and is then continuing.
Such amounts referred to in the preceding proviso shall then
be treated as Principal Income (as defined in clause (b)
below), and shall reduce the Market Value of the Purchased
Securities on which such amounts are paid or distributed in
accordance with the terms of clause (b) below.
(b) With respect to Income from any principal or cash payment made
pursuant to any Underlying Document ("Principal Income"), the
Market Value of the Purchased Securities on which such
Principal Income is paid or distributed shall be reduced by
the amount of such Principal Income, which reduction shall
result in a Margin Deficit. In accordance with Section 4(a),
Seller shall be required to transfer to the Buyer within two
(2) Business Days cash or 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.
8. Modification of Paragraph 6 of the Agreement. Paragraph 6 of the
Agreement is deleted and replaced with the following:
"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 and any and all rights of Seller
under the Underlying Documents. Seller hereby authorizes Buyer to file
a financing statement indicating Seller as debtor and Buyer as secured
party and describing as the collateral covered thereby "all of the
debtor's personal property or assets" or words to that effect,
notwithstanding that such wording may be broader in scope than the
collateral described in this Agreement."
9. Modification of Paragraph 7 of the Agreement. Clause (iii) of Paragraph
7 is deleted and replaced with the following:
"(iii) shall be transferred in accordance with the
terms of the Custodial Agreement."
10. Modification of Paragraph 8 of the Agreement. Paragraph 8 of the
Agreement is deleted and replaced with the following:
"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."
11. Modification of Paragraph 11 of the Agreement.
(a) The following language is added to the first paragraph of
Paragraph 11 as new clauses (viii) and (ix):
"(viii) Seller shall fail to perform or comply with,
admit its inability to perform or state its intention not to
perform or comply with its obligations and covenants under
this Agreement; and
(ix) Either (A) this Agreement, the Custodial
Agreement, the Sale Agreement and Underlying Documents
(including endorsements and assignments reflecting the
transfer of the Purchased Securities) and related deliverables
shall for any reason not cause, or shall cease to cause, Buyer
to be the owner free and clear of any adverse claim to any of
the Purchased Securities subject to the Transactions, or, in
the alternative (as contemplated by Paragraph 6 of this
Agreement), (B) this Agreement and Underlying Documents
(including endorsements and assignments reflecting the
transfer of the Purchased Securities) and related custodial
deliveries shall for any reason not create, or shall cease to
create, a valid, perfected first priority security interest in
favor of Buyer in any of the Purchased Securities subject to
the Transactions."
(b) In addition to the rights under Paragraph 11(a) of the
Agreement, upon an Event of Default relating to Seller, Buyer
shall no longer be obligated to enter into any additional
Transactions pursuant to any outstanding Confirmation.
12. Modification of Paragraph 13 of the Agreement. Paragraph 13 of the
Agreement is deleted and replaced with the following:
"13. Notices and Other Communications. Any and all notices,
statements, demands or other communications under this Agreement may be
given by a party to the other by mail, facsimile, electronic mail,
telegraph, messenger or otherwise to the address specified in Annex II
to this Agreement, or so sent to such party at any other place
specified in a notice of change of address hereafter received by the
other; provided, however, that with respect to notice delivered by
electronic mail or facsimile, such notice shall not be deemed to have
been received unless the sender has received confirmation of receipt."
13. Conditions Precedent. Buyer's obligation to purchase Securities under
the Agreement shall be subject to the following terms and conditions:
(a) The Agreement and this Annex I shall have been executed and
delivered by a duly authorized officer of Buyer and Seller;
(b) Buyer shall have received a Confirmation on each related
Purchase Date, executed and delivered by a duly authorized
officer of Seller;
(c) The representations and warranties of Seller in Paragraph 10
of the Agreement and Paragraph 3 of this Annex I shall be true
and correct as of each Purchase Date;
(d) No Event of Default relating to Seller shall have occurred and
be continuing;
(e) No "default" shall have occurred under the Underlying
Documents relating to such Securities;
(f) In connection only with the original purchase, Buyer shall
have received opinions of counsel to Seller, in form and
substance satisfactory to Buyer;
(g) In connection only with the original purchase, Buyer shall
have received such other and further documents and legal
opinions as Buyer in its sole discretion shall require; and
(h) Buyer shall receive written confirmation from Custodian that
Custodian has received the Required Loan Documents (as defined
in the Custodial Agreement).
14. Assignment of the Sale Agreement. The Seller hereby assigns to the
Buyer all of the Seller's right, title and interest in and to, but none
of its obligations under, the Sale Agreement, the Custodial Agreement,
the Capital Commitment Agreement and any UCC financing statements filed
under or in connection therewith. In furtherance and not in limitation
of the foregoing, the Seller hereby assigns to the Buyer its right to
indemnification under Article VIII of the Sale Agreement. The Seller
confirms that the Buyer shall have the sole right to enforce the
Seller's rights and remedies under the Sale Agreement, the Custodial
Agreement, the Capital Commitment Agreement and any UCC financing
statements filed under or in connection therewith.
15. Payment of Pricing Differential. Notwithstanding anything to the
contrary herein, the parties agree that on each day after the initial
Purchase Date that LIBOR is adjusted, the Seller shall pay to Buyer in
accordance with the terms of Section 7 an amount equal to the Pricing
Differential as of such date.
16. Servicing the Purchased Securities. The Seller and Buyer agree that the
Servicer shall service the Purchased Securities in accordance with
Section 1.6 of the Sale Agreement.
17. Indemnification.
(a) Seller agrees to hold Buyer, and its Affiliates and their
officers, directors, employees, agents and advisors (each an
"Indemnified Party") harmless from and indemnify any
Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind (including the costs
and expenses of legal counsel) which may be imposed on,
incurred by or asserted against such Indemnified Party
(collectively, the "Costs") relating to or arising out of the
Agreement, the Custodial Agreement, the Capital Commitment
Agreement, the Underlying Documents or any transaction
contemplated hereby or thereby, or any amendment, supplement
or modification of, or any waiver or consent under or in
respect of, the Agreement, the Custodial Agreement, the
Capital Commitment Agreement, the Underlying Documents or any
transaction contemplated hereby or thereby, that, in each
case, results from anything other than any Indemnified
Party's gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Seller agrees to
hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all
Purchased Securities relating to or arising out of any
violation or alleged violation of any law, rule or regulation
that, in each case, results from anything other than such
Indemnified Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by an Indemnified Party
in connection with any Purchased Security for any sum owing
under such Purchased Securities, or to enforce any provisions
of any Purchased Security or any Underlying Document, Seller
will save, indemnify and hold such Indemnified Party harmless
from and against all expense, loss or damage suffered by
reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or
obligor under such Purchased Securities, arising out of a
breach by Seller of any obligation under such Purchased
Securities or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such account
debtor or obligor or its successors from Seller. Seller also
agrees to reimburse an Indemnified Party as and when billed by
such Indemnified Party for all such Indemnified Party's
reasonable costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party's
rights under the Agreement, any Underlying Document or any
transaction contemplated hereby or thereby, including without
limitation the reasonable fees and disbursements of its
counsel.
(b) Seller agrees to pay as and when billed by Buyer all the
reasonable due diligence, inspection, testing and review costs
and expenses incurred by Buyer with respect to Purchased
Securities under the Agreement, including, but not limited to,
those reasonable costs and expenses incurred by Buyer and
reimbursable by Seller pursuant to Subparagraph 10(a) above.
(c) The remedies provided for above are in addition to any rights
or remedies that Buyer may have pursuant to Paragraph 11 or
any other provision of the Agreement and are in addition to
any other rights or remedies that Buyer may have at equity or
law.
18. No Margin Excess; No Retention; No Substitution. Notwithstanding
anything to the contrary in the Agreement, the parties agree that
Seller shall have no right to (A) require Buyer to transfer cash or
Purchased Securities upon the occurrence of a Margin Excess, or (B)
substitute other Securities for Purchased Securities as contemplated by
Paragraph 9 of the Agreement. In accordance with such agreement between
the parties, the following terms and conditions of the Agreement are
hereby rendered inoperative and void:
(a) All of Subparagraphs 2(h), 2(s) and 2(t);
(b) All of Subparagraph 4(b); and
(c) All of Paragraph 9 of the Agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
19. Counterparts. The Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed an original,
and such counterparts shall constitute but one and the same instrument.
WACHOVIA BANK, NATIONAL CAPITALSOURCE REPO FUNDING
ASSOCIATION LLC
/s/ Yu-▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:_________________________ By:____________________________
Yu-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:_______________________ Name:__________________________
MD Senior Vice President
Title:______________________ Title:_________________________
ANNEX II
NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES
IF TO SELLER:
CapitalSource REPO Funding LLC
c/o CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
IF TO BUYER:
Wachovia Bank, National Association. Wachovia Bank, National Association.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ One Wachovia Center, Mail Code: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ E-mail: ▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Wachovia Bank, National Association. Wachovia Bank, National Association.
One Wachovia Center, Mail Code: NC0601 One Wachovia Center, Mail Code: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ E-mail: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
II-1
with a copy to:
Mayer, Brown, ▇▇▇▇ & Maw
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
ANNEX III
FORM OF CONFIRMATION
CONFIRMATION OF TRADE
[DATE]
CapitalSource REPO Funding LLC
c/o CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Master Repurchase Agreement, dated as of ▇▇▇▇▇
▇▇, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Agreement") between Wachovia Bank, National
Association. (the "Buyer") and CapitalSource REPO Funding LLC (the "Seller").
Capitalized terms used but not defined herein shall have the respective meanings
given to such terms in the Master Repurchase Agreement. The Buyer and the Seller
hereby confirm the Buyer's purchase on the date hereof from the Seller under the
Master Repurchase Agreement of Purchased Securities listed on Schedule A
attached hereto.
Purchase Date: ____________, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Date: ____________, 2003
Total Market Value: $______________
Total Purchase Price $______________
(Total Market Value x 75%):
Terminable on Demand? (Y/N) _______________
Pricing Rate Margin: _______________%
Buyer's Margin Percentage: _______________%
Margin Notice Deadline: _____________ p.m. ET
All Securities Listed on Schedule A
Approved by Buyer as Purchased Securities? (Y/N) ________________
Kindly acknowledge your agreement to the foregoing by signing
and returning the copy of this letter.
III-1
Sincerely,
WACHOVIA BANK, NATIONAL ASSOCIATION.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Acknowledged and Agreed to:
CAPITALSOURCE REPO FUNDING LLC
By:___________________________________________
Name:_________________________________________
Title:________________________________________
SEE ATTACHED SCHEDULE B FOR WIRE INSTRUCTIONS.
III-2
SCHEDULE A
SCHEDULE OF PURCHASED SECURITIES
▇▇▇▇▇'▇
Primary CS Lending Industry
Loan Name Lending Type Loan Type Collateral Group Description Market Value Purchase Price
--------- ------------ --------- ---------- ---------- ----------- ------------ --------------
A-1
SCHEDULE B
WIRE INSTRUCTIONS
Bank: Bank of America, Baltimore, MD
Account: 003930250176
ABA: ▇▇▇▇▇▇▇▇▇
Account Name: CapitalSource Finance LLC
B-1