EX-10.28
19
b80759a2exv10w28.htm
EX-10.28
Exhibit 10.28
Dated as of March 26, 2010
PEERLESS INSURANCE COMPANY
(AS “SELLER”)
LIBERTY MUTUAL INSURANCE COMPANY
(AS “GUARANTOR”)
AND
MITSUBISHI UFJ SECURITIES (USA), INC.
(AS “BUYER”)
MASTER REPURCHASE AGREEMENT
SEPTEMBER 1996 VERSION
| 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; |
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| | (e) | | “Confirmation”, the meaning specified in Paragraph 3(b) hereof; |
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| | (f) | | “Income”, with respect to any Security at any time, any principal thereof and
all interest, dividends or other distributions thereon; |
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| | (g) | | “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; |
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| | (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); |
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| | (l) | | “Pricing Rate”, the per annum percentage rate for determination of the Price
Differential; |
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| | (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); |
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| | (n) | | “Purchase Date”, the date on which Purchased Securities are to be transferred
by Seller to Buyer; |
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| | (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; |
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| | (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; |
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| | (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. |
| |
| | (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. |
| | (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. |
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| 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. |
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| 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 Paragraph 3, 4 or 11 hereof, or of Buyer’s
obligation to credit or pay Income to, or apply Income to the obligations of, Seller
pursuant to Paragraph 5 hereof. |
| |
| | | Required Disclosure for Transactions in Which the Seller
Retains Custody of the Purchased Securities |
| |
| | | 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. β403.4(e) if Seller is a government
securities broker or dealer other than a financial institution. |
| |
| | ** | | Language to be used under 17 C.F.R. β403.5(d) if Seller is a financial
institution. |
| | (a) | | Seller may, subject to agreement with and acceptance by Buyer, substitute other
Securities for any Purchased Securities. Such substitution shall be made by transfer
to Buyer of such other Securities and transfer to Seller of such Purchased Securities.
After substitution, the substituted Securities shall be deemed to be Purchased
Securities. |
| |
| | (b) | | In Transactions in which Seller retains custody of Purchased Securities, the
parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of
this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller
of other Securities for Purchased Securities; provided, however, that such other
Securities shall have a Market Value at least |
| | | | equal to the Market Value of the Purchased Securities for which they are substituted. |
| 10. | | Representations |
| |
| | | Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized
to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and
to perform its obligations hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (ii) it will engage in such Transactions as principal
(or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any
Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf
of any such disclosed principal), (iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and the Transactions hereunder
and such authorizations are in full force and effect and (v) the execution, delivery and
performance of this Agreement and the Transactions hereunder will not violate any law,
ordinance, charter, bylaw 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 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. |
| |
| | (d) | | If the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, the nondefaulting party, without
prior notice to the defaulting party, may: |
| | (i) | | as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or otherwise in a
commercially reasonable manner) at such price or prices as the nondefaulting
party may reasonably deem satisfactory, any or all Purchased Securities subject
to such Transactions and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder
or (B) in its sole discretion elect, in lieu of selling all or a portion of
such Purchased Securities, to give the defaulting party credit for such
Purchased Securities in an amount equal to the price therefor on such date,
obtained from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid Repurchase Prices
and any other amounts owing by the defaulting party hereunder; and |
| |
| | (ii) | | as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or otherwise in a
commercially reasonable manner) at such price or prices as the nondefaulting
party may reasonably deem satisfactory, securities (“Replacement Securities”)
of the same class and amount as any Purchased Securities that are not delivered
by the defaulting party to the nondefaulting party as required hereunder or (B)
in its sole discretion elect, in lieu of purchasing Replacement Securities, to
be deemed to have purchased Replacement Securities at the price therefor on
such date, obtained from a generally recognized source or the most recent
closing offer quotation from such a source. |
Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Securities subject to any Transaction hereunder are instruments traded in a
recognized market, (2) in the absence of a generally recognized source for prices or bid or offer quotations for any Security, the nondefaulting party may establish
the source therefor in its sole discretion and (3) all prices, bids and offers shall
be determined together with accrued Income (except to the extent contrary to market
practice with respect to the relevant Securities).
| | (e) | | As to Transactions in which the defaulting party is acting as Buyer, the
defaulting party shall be liable to the nondefaulting party for any excess of the price
paid (or deemed paid) by the nondefaulting party for Replacement Securities over the
Repurchase Price for the Purchased Securities replaced thereby and for any amounts
payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. |
| |
| | (f) | | For purposes of this Paragraph 11, the Repurchase Price for each Transaction
hereunder in respect of which the defaulting party is acting as Buyer shall not
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 non-defaulting party for interest on any amounts owing by the defaulting party
hereunder, from the date the defaulting party becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in
full by the exercise of the nondefaulting party’s rights hereunder. Interest on any
sum payable by the defaulting party to the nondefaulting party under this Paragraph
11(h) shall be at a rate equal to the greater of the Pricing Rate for the relevant
Transaction or the Prime Rate. |
| |
| | (i) | | The nondefaulting party shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or applicable law. |
| 12. | | Single Agreement |
| |
| | | Buyer and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that, all
Transactions hereunder constitute a single business and contractual relationship and have |
| | | been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i)
to perform all of its obligations in respect of each Transaction hereunder, and that a
default in the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off
claims and apply property held by them in respect of any Transaction against obligations
owing to them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other transfers in
respect of any other Transactions hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted. |
| 13. | | Notices and Other Communications |
| |
| | | Any and all notices, statements, demands or other communications hereunder may be given by a
party to the other by mail, facsimile, telegraph, messenger or otherwise to the address
specified in Annex II hereto, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices, demands and
requests hereunder may be made orally, to be confirmed promptly in writing, or by other
communication as specified in the preceding sentence. |
| |
| 14. | | Entire Agreement; Severability |
| |
| | | This Agreement shall supersede any existing agreements between the parties containing
general terms and conditions for repurchase transactions. Each provision and agreement
herein shall be treated as separate and independent from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement. |
| |
| 15. | | Non-assignability; Termination |
| | (a) | | The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written consent of
the other party, and any such assignment without the prior written consent of the other
party shall be null and void. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties and
their respective successors and assigns. This Agreement may be terminated by either
party upon giving written notice to the other, except that this Agreement shall,
notwithstanding such notice, remain applicable to any Transactions then outstanding. |
| |
| | (b) | | Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its interest in any
sum payable to it under Paragraph 11 hereof. |
| 16. | | Governing Law |
| |
| | | This Agreement shall be governed by the laws of the State of New York without giving effect
to the conflict of law principles thereof. |
| 17. | | No Waivers, Etc. |
| |
| | | No express or implied waiver of any Event of Default by either party shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by any party
shall constitute a waiver of its right to exercise any other remedy hereunder. No
modification or waiver of any provision of this Agreement and no consent by any party to a
departure here-from shall be effective unless and until such shall be in writing and duly
executed by both of the parties hereto. Without limitation on any of the foregoing, the
failure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a
waiver of any right to do so at a later date. |
| 18. | | Use of Employee Plan Assets |
| | (a) | | If assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either
party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the
other party prior to the Transaction. The Plan Party shall represent in writing to the
other party that the Transaction does not constitute a prohibited transaction under
ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance
thereon but shall not be required so to proceed. |
| |
| | (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. |
| | (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 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; |
| |
| | (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. |
| | | | | | | |
|
| PEERLESS INSURANCE COMPANY | | MITSUBISHI UFJ SECURITIES (USA), INC. |
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| By:
| | /s/ | | By: | | /s/ |
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| | Title:
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| | Date:
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| LIBERTY MUTUAL INSURANCE COMPANY | | | | |
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| By:
| | /s/ | | | | |
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| | Title:
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| | Date:
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ANNEX 1
SUPPLEMENTAL TERMS AND CONDITIONS
| | | | | |
|
| 1. OTHER APPLICABLE ANNEXES
| | | 2 | |
| 2. DEFINITIONS
| | | 2 | |
| 3. AVAILABILITY
| | | 8 | |
| 4. PROCEDURES
| | | 9 | |
| 5. CONDITIONS
| | | 10 | |
| 6. REPRESENTATIONS AND WARRANTIES
| | | 12 | |
| 7. MARGIN
| | | 18 | |
| 8. MARKET VALUE
| | | 18 | |
| 9. EVENTS OF DEFAULT
| | | 18 | |
| 10. SUBSTITUTION
| | | 20 | |
| 11. INCREASED COST EVENT AND TERMINATION EVENT
| | | 21 | |
| 12. CLOSE OUT
| | | 22 | |
| 13. ROLL-OVER TRANSACTIONS
| | | 22 | |
| 14. INCEPTION FAILURE
| | | 23 | |
| 15. AFFIRMATIVE COVENANTS
| | | 23 | |
| 16. NEGATIVE COVENANTS
| | | 28 | |
| 17. FORCE MAJEURE
| | | 28 | |
| 18. FEE
| | | 29 | |
| 19. TAXES
| | | 30 | |
| 20. DESIGNATED OFFICES
| | | 31 | |
| 21. SUBMISSION TO JURISDICTION AND WAIVER OF IMMUNITY
| | | 32 | |
| 22. EXPENSES; INDEMNITY; DAMAGE WAIVER
| | | 32 | |
| 23. WAIVER OF JURY TRIAL
| | | 33 | |
| 24. USA PATRIOT ACT NOTICE
| | | 33 | |
| 25. ASSIGNMENT
| | | 33 | |
| 26. GUARANTEE
| | | 34 | |
This Annex I forms a part of the Master Repurchase Agreement (September 1996 Version) dated as of
March 26, 2010 (the “Agreement”) among Peerless Insurance Company (the “Seller”), Liberty Mutual
Insurance Company (the “Guarantor”) and Mitsubishi UFJ Securities (USA), Inc. (the “Buyer”).
Capitalized terms used but not defined in this Annex I shall have the meanings ascribed to them in
the Agreement. Buyer and Seller hereby agree to enter into Transactions governed by the Agreement,
as expressly modified and supplemented hereby.
If there is any inconsistency between this Annex I and the Agreement, this Annex I shall control.
References herein to “Paragraphs” shall be to paragraphs of the Agreement, as amended, if
applicable, by this Annex I, unless the context indicates otherwise. References to “Sections”
shall be to sections of this Annex I.
| 1. | | OTHER APPLICABLE ANNEXES |
| |
| | | In addition to this Annex I and the Schedules attached hereto, the following Annexes and any
Schedules thereto shall form a part of the Agreement and shall be applicable thereunder: |
| |
| | | Annex II (Names and Addresses for Communications Between Parties) — Not Applicable. |
| |
| | | Annex III (International Transactions) — Not Applicable. |
| |
| | | Annex IV (Party Acting as Agent) — Not Applicable. |
| |
| | | Annex V (Margin for Forward Transactions) — Not Applicable. |
| |
| | | Annex VI (Buy/Sell Back Transactions) — Not Applicable. |
| |
| | | Annex VII (Transactions Involving Registered Investment Companies) — Not Applicable. |
| 2. | | DEFINITIONS |
| |
| | | “Alternative Clearing Corporation” means an institution, reasonably acceptable to Buyer,
that provides substantially similar clearing and settlement services as the FICC to market
participants who regularly engage in securities repurchase transactions. |
| |
| | | “Applicable Laws” means statutes and rules and regulations thereunder and interpretations
thereof by any Governmental Authority charged with the administration or the interpretation
thereof, and orders, requests, directives, judgments, determinations, decrees, instructions
and notices of any Governmental Authority. |
| |
| | | “Applicable Spread” has the meaning set out the following table: |
| | | | | | | | | | | | | |
| | | | | | | Applicable Spread | | | | |
| | | (interest spread over LIBOR) |
| | | | | | | U.S. Agency | | |
| Status of Guarantor | | U.S. Treasuries | | Securities | | U.S. Agency MBS |
| Level I Status
| | | 0.10 | % | | | 0.15 | % | | | 0.20 | % |
| Level II Status
| | | 0.12 | % | | | 0.18 | % | | | 0.23 | % |
| Level III Status
| | | 0.17 | % | | | 0.23 | % | | | 0.28 | % |
| | | “Available Commitment” means, at any time, (i) the Commitment Amount less (ii) the Drawn
Amount. |
| | | “Business Day” means, whenever used in the Agreement, a day on which banks are open for
business in New York except that, in relation to any notice or other communication under the
Agreement, it shall mean any day other than a Saturday or a Sunday on which banks are open
for business in the place specified in the address for notices and communications most
recently provided by the recipient. |
| |
| | | “Buyer’s Margin Percentage” means, with respect to each Transaction, the percentage
specified in the following table for the relevant Security Type: |
| | | | | |
| Security Type | | Margin Percentage |
| U.S. Treasuries
| | | 105 | % |
| U.S. Agency Securities
| | | 105 | % |
| U.S. Agency MBS
| | | 110 | % |
| | | “Clearing Account” means the clearing account held by MUS USA at The Bank of New York
Mellon, a New York banking organization and any permitted successor thereto. |
| |
| | | “Clearing Firm” means The Bank of New York Mellon, a New York banking organization and any
permitted successor thereto. |
| |
| | | “Commitment Amount” means, at any time, unless reduced, suspended or terminated pursuant to
any applicable provision of the Agreement, USD250,000,000. |
| |
| | | “Consolidated Tangible Net Worth” shall have the meaning set forth in the Revolver and shall
be calculated in accordance with the terms set forth in the Revolver. |
| |
| | | “Contingent Obligation” means, in relation to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness for Borrowed Money
of another Person if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation that such
Indebtedness for Borrowed Money will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such Indebtedness for Borrowed Money
will be protected (in whole or in part) against loss in respect thereof. Contingent
Obligations shall include any direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the Indebtedness for Borrowed Money of
another Person. |
| |
| | | “Contractual Obligations” means, as to any Person, any provision of any security issued by
such Person or of any Instrument or other undertaking to which such Person is a party or by
which it or any of its Property is bound. |
| |
| | | “Cost of Funds” means, in respect of a Transaction, the rate of interest, expressed as an
annual percentage, quoted by Buyer, in its sole discretion, to Seller as Buyer’s cost in
making available an amount of USD equal to the Purchase Price for such Transaction for a
term equal to the Term of such Transaction. |
| | | “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor
relief laws of the United States or other applicable jurisdictions from time to time in
effect and affecting the rights of creditors generally. |
| |
| | | “Default” means any event which, with the giving of notice or lapse of time, or both, would
become an Event of Default. |
| |
| | | “Drawn Amount” means, at any time, the aggregate Purchase Price of all Transactions in
respect of which the Repurchase Price has not been received by Buyer at such time. |
| |
| | | “Early Termination” has the meaning given to it in Section 4.5 of this Annex I. |
| |
| | | “Effective Date” means March 26, 2010. |
| |
| | | “Event of Default” has the meaning set forth in Paragraph 11 of the Agreement, as modified
by Section 9.1 of this Annex I. |
| |
| | | “Expiration Date” means the date falling three calendar years after the Effective Date,
subject to early termination pursuant to any applicable provision of the Agreement. |
| |
| | | “FICC” means the Fixed Income Clearing Corporation (or any successor thereto). |
| |
| | | “Financial Officer” means, with respect to any Person, the chief financial officer, the
principal accounting officer, a financial vice president, the treasurer or an assistant
treasurer of such Person. |
| |
| | | “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of government, including any Insurance Regulatory Authority, and
any court or arbitrator. |
| |
| | | “Guarantee” means the Guarantee between Buyer and Guarantor, as set forth in Section 26 of
this Annex I. |
| |
| | | “Increased Costs Event” has the meaning given in Section 11.1 of this Annex I. |
| |
| | | “Indebtedness for Borrowed Money” means, as to any Person, all indebtedness, obligations and
liabilities of such Person, whether direct or indirect, joint or several, matured or
unmatured, liquidated or unliquidated, secured or unsecured, (a) in respect of any money
borrowed by such Person, or (b) created or evidenced by any loan or credit agreement,
promissory note, debenture, bond or other similar written obligation to pay money. |
| |
| | | “Instrument” means any contract, agreement, indenture, mortgage or other document or writing
(whether a formal agreement, letter or otherwise) under which any indebtedness,
|
| | | obligation or liability is evidenced, assumed or undertaken, or any right to any Lien is
granted or perfected. |
| |
| | | “Insurance Regulatory Authority” means, in relation to any particular jurisdiction, any
insurance regulatory authority, commission, agency, board or other authority of or in that
jurisdiction, including, without limitation, the National Association of Insurance
Commissioners. |
| |
| | | “Level” means the ratings corresponding to Level I Status, Level II Status or Level III
Status, as appropriate. |
| |
| | | “Level I Status” means the Status that exists at any date if, at such date, Guarantor has
(a) a long-term credit rating better than or equal to “A” by S&P, and also (b) a long-term
credit rating better than or equal to “A2” by Moody’s. For split ratings, see definition of
“Status” in this Annex I. |
| |
| | | “Level II Status” means the Status that exists at any date if, at such date, Guarantor has
(a) a long-term credit rating equal to “A-” by S&P, and also (b) a long-term credit rating
equal to “A3” by Moody’s. For split ratings, see definition of “Status” in this Annex I. |
| |
| | | “Level III Status” means the Status that exists at any date if, at such date, Guarantor has
(a) a long-term credit rating equal to “BBB+” by S&P, and also (b) a long-term credit rating
equal to “Baa1” by Moody’s. For split ratings, see definition of “Status” in this Annex I. |
| |
| | | “London Banking Day” means any day on which commercial banks in London are open for general
business (including dealings in foreign exchange and foreign currency deposits). |
| |
| | | “LIBOR” means, with respect to a Transaction, the rate which appears on the Reuters Screen
LIBOR01 Page as of 11:00 a.m., London time, on the Purchase Date for such Transaction, for
deposits in USD with a term equivalent to the term of such Transaction. If such rate is not
available at such time for any reason, then “LIBOR” means, with respect to a Transaction,
the rate per annum determined by Buyer to be the rate at which deposits in USD for such
Transaction in same day funds in the approximate amount of the Purchase Price for such
Transaction and with a term equivalent to the term of such Transaction would be offered by
The Bank of Tokyo-Mitsubishi UFJ, Ltd.’s London Branch to major banks in the London
eurodollar interbank market at their request at approximately 11:00 a.m. (London time). |
| |
| | | “Lien” means any mortgage, pledge, lien, security interest, conditional sale or other title
retention agreement or other similar encumbrance. |
| |
| | | “LMIC Repo Agreement” means the Master Repurchase Agreement (including Annex I thereto)
between Guarantor (in its capacity as Seller thereunder) and Buyer, dated as of March 26,
2010. |
| |
| | | “LMGI” means Liberty Mutual Group Inc., a Massachusetts corporation. |
| | | “LMHCI” means Liberty Mutual Holding Company Inc., a Massachusetts corporation. |
| |
| | | “Margin Notice Deadline” means 10:00 a.m., on any given day. |
| |
| | | “Materially Adverse Effect” means, in relation to any event, occurrence or development of
whatever nature (including, without limitation, any change in law or adverse determination
in any litigation, arbitration or governmental investigation or proceeding), |
| | (a) | | a materially adverse effect on the business, Property, operations or condition,
financial or otherwise, of (i) Seller (ii) LMGI, (iii) Seller and its Significant
Subsidiaries, taken as a whole, (iv) LMGI and its Significant Subsidiaries, taken as a
whole; (v) Guarantor, or (vi) Guarantor and its Significant Subsidiaries, taken as a
whole; |
| |
| | (b) | | a materially adverse effect on the ability of Seller or Guarantor to perform
any of its payment or other material obligations under the Agreement or, with respect
to Guarantor, the Guarantee; or |
| |
| | (c) | | a material impairment of the validity or enforceability of the Agreement or the
Guarantee or any material impairment of any of the material rights, remedies or
benefits available to Buyer under the Agreement or the Guarantee. |
| | | “Obligations” means all debts, liabilities, obligations, covenants and duties of Seller
arising under the Agreement and each Transaction, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the commencement by or
against Seller of any proceeding under any Debtor Relief Laws naming Seller as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims in such
proceeding. |
| |
| | | “Person” means an individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority or other entity of
whatever nature. |
| |
| | | “Pricing Rate” means, with respect to a Transaction, LIBOR plus the Applicable Spread;
provided, however, if for any reason LIBOR is not available, then “Pricing Rate” shall mean,
with respect to a Transaction, Cost of Funds plus the Applicable Spread. |
| |
| | | “Property” means any interest in any kind of property or asset, whether real, personal or
mixed, and whether tangible or intangible. |
| |
| | | “Ratings Event” means the occurrence on any date of any of the following: (i) Guarantor’s
long term credit rating by S&P is lower than BBB+ and Guarantor’s long term credit rating by
Xxxxx’x is lower than Baa1, or (ii) Guarantor’s long term credit rating by S&P is lower than
BBB, or (iii) Guarantor’s long term credit rating by Xxxxx’x is lower than Baa2, or (iv)
Guarantor ceases to have a credit rating by S&P or a credit rating by Moody’s. |
| | | “Regulatory Change” means any change, through legislative or administrative action or
otherwise, in Applicable Laws, or in the rules or regulations of any self-regulatory agency,
which, in Buyer’s reasonable judgment, is reasonably expected to materially and adversely
impact (i) Buyer’s secured position with respect to any Transaction or any other rights or
remedies of Buyer, including, without limitation, (a) a material limitation of Buyer’s
ability to exercise its rights under the Agreement (including this Annex I) (following an
Event of Default or otherwise), or (b) Buyer being treated as an unsecured (or partially
secured) creditor with respect to all or part of a Transaction, or (ii) the broader
functioning of the securities repurchase market. |
| |
| | | “Repo Request” means a written request in the form of Schedule 2 hereto with all of the
relevant information (including the proposed Purchase Price; the Market Value (determined as
at the close of business on the Business Day immediately preceding the Request Date) of the
proposed Purchased Securities on which the proposed Purchase Price is based; the Security
Type of the proposed Purchased Securities and the related Buyer’s Margin Percentage(s); the
Repurchase Date; and the CUSIP and/or ISIN codes (when applicable) and other data relating
to the related Purchased Securities’ Security Types) duly completed. |
| |
| | | “Request Date” has the meaning specified in Section 3 of this Annex I. |
| |
| | | “Requirement of Law” means, as to any Person, any Applicable Law binding upon such Person or
any of its Property or to which such Person or any of its Property is subject. |
| |
| | | “Revolver” means the Three-Year Revolving Credit Agreement, dated as of December 14, 2009 by
and among LMGI, as Borrower, the Lenders referred to therein, and Bank of America, N.A., as
administrative agent for the Lenders and as the Fronting L/C Issuer and the Several L/C
Agent; provided that, for the purposes of the Agreement and without prejudice to the rights
of the parties to the Revolver to amend, waive or otherwise modify any and all terms and
conditions of the Revolver, any provisions or terms in the Agreement that reference the
Revolver shall reference the Revolver as of December 14, 2009 and shall not include any
amendment, waiver or modification to the Revolver unless such amendment, waiver or
modification has been approved for the purposes of the Agreement, in writing, by each party
hereto. |
| |
| | | “Securities” means, notwithstanding Paragraph 1, the following types of securities only:
(i) U.S. Treasuries, (ii) U.S. Government Agency Securities, and (iii) U.S. Agency MBS. |
| |
| | | “Security Type” means a type of Security as characterized by (i) issuer or guarantor, as the
case may be, (ii) issue, and (iii) nominal value and description, with the same CUSIP or
ISIN number. |
| |
| | | “Seller’s Margin Percentage” means a percentage equal to the respective Buyer’s Margin
Percentage. |
| |
| | | “Significant Subsidiary” means, at any time, any Subsidiary of any Person the assets of
which as at such time exceed fifteen percent (15%) of the assets of such Person as reflected
on the most recent financial statements of such Person. |
| | | “Status” means, as to Guarantor, the existence of Level I Status, Level II Status, or Level
III Status, as the case may be. If Guarantor’s long-term credit rating by S&P and long-term
credit rating by Moody’s are “split” such that no Status actually exists, (a) the Status
that corresponds to the higher rating shall be deemed to exist if such ratings are split by
one Level and (b) the Status that is one Level above (Level I being the highest Level and
Level III being the lowest Level) the Status that corresponds to the lower rating shall be
deemed to exist if such ratings are split by more than one Level. For example, (i) if
Guarantor’s long-term credit rating is “A” by S&P and Guarantor’s long-term issuer rating is
“A3” by Moody’s, Level I Status shall be deemed to exist, and (ii) if Guarantor’s long-term
credit rating is “A” by S&P and Guarantor’s long-term credit rating is “Baa1” by Moody’s,
Level II Status shall be deemed to exist. |
| |
| | | “Subsidiary” means, as to any Person, (i) any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency), (ii) any partnership of which at least
a majority of the voting partnership interests, and (iii) any other entity, the majority of
the voting interests of which are at the time owned by such Person, or by one or more
Subsidiaries of such Person, or by such Person and one or more of its Subsidiaries. |
| |
| | | “Termination Event” has the meaning given in Section 11.3 of this Annex I. |
| |
| | | “Total Debt to Total Capitalization Ratio” shall have the meaning set forth in the Revolver
and shall be calculated in accordance with the terms set forth in the Revolver. |
| |
| | | “U.S. Treasuries” means debt obligations (other than index-linked obligations) issued by the
United States Treasury Department which mature within 11 years after the Purchase Date with
respect to such debt obligations. |
| |
| | | “U.S. Government Agency Securities” means any debt obligations (other than U.S. Agency MBS)
which (A) mature within 11 years after the Purchase Date with respect to such obligations
and (B) are issued or guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. |
| |
| | | “U.S. Agency MBS” means pass-through mortgage-backed securities which (A) mature within 30
years after the Purchase Date with respect to such securities and (B) are issued or
guaranteed by the Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation. |
| |
| | | “USD” means the lawful currency of the United States of America. |
| 3. | | AVAILABILITY |
| |
| | | Subject to the terms and conditions set forth in the Agreement (including this Annex I),
Buyer hereby agrees that, if so requested by Seller in a Repo Request (in the form
|
| | | attached hereto as Schedule 2) on a Business Day (each such day, a “Request Date”), it shall
enter into a Transaction with a specified Purchase Date, Buyer’s Margin Percentage, Purchase
Price, Repurchase Date and Pricing Rate (each as determined in accordance with this Annex
I), which terms shall be set forth in a Confirmation (in the form of Schedule 1 to this
Annex I) pursuant to this Agreement. |
| 4. | | PROCEDURES |
| |
| 4.1 | | If Seller delivers a Repo Request to Buyer (with a copy to the Clearing Firm) on or prior to
10:00 a.m. on the Request Date, the Purchase Date in respect of the Transaction will be one
Business Day after the Request Date. If Seller delivers a Repo Request to Buyer (with a copy
to the Clearing Firm) after 10:00 a.m. on the Request Date, the Purchase Date in respect of
the Transaction will be two Business Days after the Request Date. If requested by Seller,
Buyer may, in its sole and absolute discretion, designate the Request Date with respect to a
proposed Transaction as the Purchase Date, so long as, for the avoidance of doubt, all other
terms and conditions in the Agreement are complied with in respect of such proposed
Transaction |
| |
| 4.2 | | Prior to 3:00 p.m. on the Business Day immediately prior to the Purchase Date (or on the
Purchase Date if, in respect of such Transaction, the Request Date is the Purchase Date),
Buyer shall (a) confirm to Seller that the portfolio of Securities specified in the Repo
Request meets the requirements set out herein and (b) notify Seller of the minimum Market
Value (based on the Purchase Price and the applicable Buyer’s Margin Percentage) of the
Securities to be delivered by Seller on the Purchase Date. |
| |
| 4.3 | | Prior to 10:00 a.m. on the Purchase Date, Seller shall notify Buyer that there are sufficient
Securities in its account held with the Clearing Firm and which are to be delivered by it in
relation to the proposed Transaction. |
| |
| 4.4 | | Paragraph 3(a) is amended by deleting the words “orally or” and “either Buyer or”. |
| |
| 4.5 | | Paragraph 3(c) of the Agreement shall be deleted and replaced with the following:
“Notwithstanding anything contained in the Agreement, no Transaction shall be a Transaction
terminable “on demand”, and the Agreement and Annex I shall be construed accordingly; provided
that, subject to Paragraph 11(g) (as amended pursuant to Section 12.3 of Annex I), Seller
shall have the right to terminate any Transaction on demand with five Business Days’ prior
notice to Buyer (any such termination, an “Early Termination”). On the termination date
specified in such demand, 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 of the Agreement) against the payment by Seller of the Repurchase
Price to an account of Buyer.” |
| |
| 4.6 | | In relation to Paragraph 3(b), Buyer shall deliver each Confirmation in the form of Schedule
1 to this Annex I. |
| 4.7 | | All transfers of funds required pursuant to the terms of the Agreement shall be made to the
account specified by the recipient of the funds. |
| 5. | | CONDITIONS |
| |
| 5.1 | | Buyer will not be obliged to enter into any Transaction if |
| | 5.1.1 | | as of the Purchase Date in respect of such Transaction, were such
Transaction entered into, the aggregate Purchase Price of all outstanding Transactions
would exceed the Commitment Amount at such Purchase Date (and, in the event that Seller
delivers a Repo Request which would result in the Commitment Amount being exceeded, the
Purchase Price specified therein shall be deemed to be such lesser amount as would
result in the aggregate Purchase Price of all outstanding Transactions equaling the
Commitment Amount); |
| |
| | 5.1.2 | | Seller has not, at or before 10:00 a.m. on the Purchase Date and in
accordance with the Agreement, delivered to the Clearing Firm on behalf of Buyer
sufficient Securities (including the Purchased Securities) to cover any Margin Deficit
of Buyer for which a notice has been given under Paragraph 4 of the Agreement as of the
close of business in New York on the Business Day prior to the Purchase Date (provided
that, where the Request Date and the Purchase Date are the same, the Margin Deficit is
for these purposes to be calculated without regard to the Transaction contemplated by
the Repo Request); |
| |
| | 5.1.3 | | a Regulatory Change has occurred, other than any Regulatory Change that
Buyer determines, in its reasonable discretion, is adequately remedied by the Increased
Costs Event provisions of Section 11 of this Annex I; |
| |
| | 5.1.4 | | the proposed Transaction would, if entered into, result in a Termination Event
5.1.5 the Consolidated Tangible Net Worth of LMGI is less than $6,155,000,000; or |
| |
| | 5.1.6 | | the Total Debt to Total Capitalization Ratio of LMGI is greater than .35 to 1.00. |
| 5.2 | | Buyer will not be obliged to enter into any Transaction unless, |
| | 5.2.1 | | Seller has first transferred to Buyer’s Clearing Account Securities with a
Market Value equal to the product of (a) the Purchase Price with respect to the
Transaction and (b) the applicable Buyer’s Margin Percentage with respect to such
Securities; |
| |
| | 5.2.2 | | the portfolio of proposed Purchased Securities listed in the Repo Request
provided by Seller in respect of such Transaction meets the requirements set out
herein; |
| |
| | 5.2.3 | | the Purchase Date in respect of such Transaction falls within the period
commencing on and including the Effective Date and ending on, but excluding, the
Expiration Date; |
| | 5.2.4 | | the Repurchase Date in respect of such Transaction is 2 weeks, 1 month, 2
months or 3 months (as selected by Seller) after the Purchase Date and does not fall on
a day that is after the Expiration Date; |
| |
| | 5.2.5 | | Buyer has access to the services and facilities of the FICC or an
Alternative Clearing Corporation to settle and clear Transactions; and |
| |
| | 5.2.6 | | Guarantor’s Status is equal to or better than Level III Status. |
| 5.3 | | Buyer’s obligation to pay the Purchase Price in respect of any Transaction is subject to the
satisfaction of each of the following conditions: |
| | 5.3.1 | | each of the representations and warranties made by Seller and Guarantor in
or pursuant to the Agreement (including, without limitation, pursuant to Paragraph 10
of the Agreement and Section 6 of this Annex I) are true and correct in all material
respects on and as of the Purchase Date in respect of such Transaction; |
| |
| | 5.3.2 | | no events or circumstances have arisen that would cause the conditions in
Section 4.02 of the Revolver not to be met on the Purchase Date (as if such Transaction
was a Loan (as such term is defined in the Revolver) under the Revolver), before or
after giving effect to such Transaction (excluding any failure by LMGI to provide
timely notice of borrowing pursuant to Section 4.02(a) of the Revolver); |
| |
| | 5.3.3 | | no events or developments have occurred since the Effective Date which,
individually or in the aggregate, have had or are reasonably likely to have a
Materially Adverse Effect on Seller or Guarantor; |
| |
| | 5.3.4 | | no Default or Event of Default has occurred and is continuing or would
result from such Transaction; |
| |
| | 5.3.5 | | none of the following has occurred and is continuing: |
| | (a) | | an Act of Insolvency with respect to Seller or Guarantor; |
| |
| | (b) | | Seller is unable to make the statement required by Paragraph 5
of the form of Repo Request attached hereto as Schedule 2 in relation to such
Transaction; |
| |
| | (c) | | any event which generally affects market participants who
regularly participate in Securities sale and repurchase transactions which, in
Buyer’s reasonable judgment, materially disturbs or inhibits the functioning of
the securities repurchase market; |
| |
| | (d) | | Seller has failed to comply with Paragraph 4 within the
applicable grace period (if any); or |
| | (e) | | Seller has failed to pay any Repurchase Price due and payable
(other than on a Repurchase Date to which Section 13 of this Annex I applies)
by it to Buyer whether on an accelerated Repurchase Date or otherwise and
Guarantor has also failed to pay such due and payable Repurchase Price; |
| | 5.3.6 | | Seller and Guarantor have delivered to Buyer all such documents as Buyer may
reasonably request; and |
| |
| | 5.3.7 | | none of the proposed Purchased Securities have a maturity date that is
earlier than the proposed Repurchase Date in respect of such Transaction. |
| 5.4 | | Buyer will not be required to enter into any Transaction unless it has received on the
Effective Date: |
| | 5.4.1 | | from Seller, a certificate of the Assistant Secretary of Seller,
substantially in the form set forth in Schedule 3 to this Annex I or in a form
otherwise acceptable to Buyer; |
| |
| | 5.4.2 | | from Guarantor, an opinion of counsel (which may be from Guarantor’s
internal counsel) substantially in the form set forth in Schedule 4 to this Annex I or
in a form otherwise acceptable to Buyer; |
| |
| | 5.4.3 | | from Guarantor, a certificate of the Assistant Secretary of Guarantor,
substantially in the form set forth in Schedule 5 to this Annex I or in a form
otherwise acceptable to Buyer; and |
| |
| | 5.4.4 | | an opinion of Xxxxxxxx Chance US LLP substantially in the form set forth in
Schedule 6 to this Annex I or in a form otherwise acceptable to Buyer. |
| 6. | | REPRESENTATIONS AND WARRANTIES. |
| |
| 6.1 | | In addition to the representations contained in Paragraph 10 of the Agreement, Seller
represents and warrants to Buyer as follows on the Effective Date and on each Purchase Date
and on any date on which Purchased Securities or Additional Purchased Securities are to be
transferred under any Transaction, Seller shall be deemed to repeat the following
representations and warranties: |
| | 6.1.1 | | Neither it nor LMGI is in contravention of (i) the Revolver (including,
without limitation, Sections 6.04 and 6.05 of the Revolver), or (ii) to the extent any
such contravention could reasonably be expected to have a Material Adverse Effect, any
other Contractual Obligation binding on it, any of its Significant Subsidiaries, LMGI
or any of LMGI’s Significant Subsidiaries; |
| |
| | 6.1.2 | | None of the Purchased Securities are subject to any Lien; |
| |
| | 6.1.3 | | Buyer is not acting as its fiduciary or advisor; |
| | 6.1.4 | | Financial Condition: |
| | (a) | | The annual statement of Seller as of December 31, 2009 as filed
with the Insurance Regulatory Authorities of The State of New Hampshire,
together with the related exhibits, schedules and explanations therein
contained or thereto annexed, copies of which have been delivered to Buyer, are
a full and true statement of all assets and liabilities and of the condition
and affairs of Seller as of such date and of its income and deductions
therefrom for the year then ended (within the meaning of applicable regulations
and practices of the Insurance Regulatory Authorities of The State of New
Hampshire), and such annual statement is accompanied by an opinion of the
Corporate Actuary of Seller to the effect that the amounts carried in the
balance sheet of Seller contained therein of certain actuarial items (i) meet
the requirements of the insurance Applicable Laws of The State of New
Hampshire, (ii) are computed in accordance with accepted loss reserving
standards and principles, and (iii) make a reasonable provision for all unpaid
loss and loss expense obligations of Seller under the terms of its policies and
agreements; |
| |
| | (b) | | The audited balance sheet of LMHCI as of December 31, 2009 and
the related statements of income and retained earnings and cash flows for the
fiscal year then ended, reported on by Ernst & Young LLP, a copy of which has
been, in each case, delivered to Buyer, fairly present, in conformity with
GAAP, the financial position of LMHCI as of such date and its results of
operations and cash flows for such fiscal year; and |
| |
| | (c) | | Since December 31, 2009, there has been no event, occurrence or
development which has had or could reasonably be expected to have a Materially
Adverse Effect; |
| | 6.1.5 | | Except as otherwise disclosed in the annual statement of Seller as of
December 31, 2009, no litigation, investigation or proceeding of or before any
Governmental Authority is pending or, to the knowledge of Seller, threatened by or
against Seller or against any of its Properties or revenues (a) with respect to the
Agreement, any related documents or any of the arrangements or Transactions
contemplated hereby or thereby, or (b) which involves a probable risk of an adverse
determination which could reasonably be expected to have a Materially Adverse Effect. |
| |
| | 6.1.6 | | No part of the Purchase Price in respect of a Transaction will be used by
Seller for “buying,” “purchasing” or “carrying” any “margin stock” within the
respective meanings of each of such quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now or from time to time in effect or for
any purpose which violates the provisions of any of the Regulations of such Board of
Governors. |
| | 6.1.7 | | Seller is not an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940, as
amended. |
| |
| | 6.1.8 | | Seller is in compliance in all material respects with all material
provisions of ERISA, except to the extent that any failures so to be in compliance
could not reasonably be expected to have a Materially Adverse Effect. |
| |
| | 6.1.9 | | Seller is in all material respects in compliance with all Applicable Laws
and requirements of Governmental Authorities, except to the extent that any failures so
to be in compliance could not reasonably be expected to have a Materially Adverse
Effect. |
| |
| | 6.1.10 | | No report, financial statement or other written information furnished by or
on behalf of Seller to Buyer pursuant to Section 6.1.4 or Section 15 of this Annex I
contains or will contain any material misstatement of fact or omits or will omit to
state any material fact necessary to make the statements therein, in light of the
circumstances under which they were, are or will be made, not materially misleading. |
| |
| | 6.1.11 | | On the Effective Date, LMHCI indirectly owns and controls, both legally and
beneficially, with full power to vote, one hundred percent (100%) of the outstanding
shares of capital stock of LMGI. After the Effective Date, LMHCI indirectly owns and
controls, both legally and beneficially, with full power to vote, not less than
fifty-one percent (51%) of the outstanding shares of capital stock of LMGI. On the
Effective Date, LMGI owns and controls, both legally and beneficially, with full power
to vote, one hundred percent (100%) of the outstanding shares of the capital stock of
Guarantor. After the Effective Date, LMGI owns and controls, both legally and
beneficially, with full power to vote, not less than fifty-one percent (51%) of the
outstanding shares of the capital stock of Guarantor. On the Effective Date, LMHCI
indirectly owns and controls, both legally and beneficially, with full power to vote,
one hundred percent (100%) of the outstanding shares of the capital stock of Seller.
After the Effective Date, Guarantor indirectly owns and controls, both legally and
beneficially, with full power to vote, not less than fifty-one percent (51%) of the
outstanding shares of the capital stock of Seller. |
| 6.2 | | Guarantor represents and warrants to Buyer as follows on the Effective Date and on each
Purchase Date and on any date on which Purchased Securities or Additional Purchased Securities
are to be transferred under any Transaction, Guarantor shall be deemed to repeat the following
representations and warranties: |
| | 6.2.1 | | Neither it nor LMGI is in contravention of (i) the Revolver (including,
without limitation, Sections 6.04 and 6.05 of the Revolver), or (ii) to the extent any
such contravention could reasonably be expected to have a Material Adverse Effect, any
other Contractual Obligation binding on it, any of its Significant Subsidiaries, LMGI
or any of LMGI’s Significant Subsidiaries; |
| | 6.2.2 | | Buyer is not acting as its fiduciary or advisor; |
| |
| | 6.2.3 | | Financial Condition: |
| | (a) | | The annual statement of Guarantor as of December 31, 2009 as
filed with the Insurance Regulatory Authorities of The Commonwealth of
Massachusetts, together with the related exhibits, schedules and explanations
therein contained or thereto annexed, copies of which have been delivered to
Buyer, are a full and true statement of all assets and liabilities and of the
condition and affairs of Guarantor as of such date and of its income and
deductions therefrom for the year then ended (within the meaning of applicable
regulations and practices of the Insurance Regulatory Authorities of The
Commonwealth of Massachusetts), and such annual statement is accompanied by an
opinion of the Corporate Actuary of Guarantor to the effect that the amounts
carried in the balance sheet of Guarantor contained therein of certain
actuarial items (i) meet the requirements of the insurance Applicable Laws of
The Commonwealth of Massachusetts, (ii) are computed in accordance with
accepted loss reserving standards and principles, and (iii) make a reasonable
provision for all unpaid loss and loss expense obligations of Guarantor under
the terms of its policies and agreements; and |
| |
| | (b) | | Since December 31, 2009, there has been no event, occurrence or
development which has had or could reasonably be expected to have a Materially
Adverse Effect; |
| | 6.2.4 | | It has the corporate power and authority, and the legal right, to make,
deliver and perform the Guarantee as contemplated hereby. Guarantor has taken all
necessary corporate action to authorize the execution, delivery and performance of the
Guarantee and any related documents to which it is or is to become a party. Except as
has already been obtained, filed, given or performed, no consent or authorization of
any Governmental Authority (including any Insurance Regulatory Authority) or any other
Person is required in connection with the execution, delivery, performance or
enforceability of the Guarantee. The Guarantee has been duly executed and delivered by
and on behalf of Guarantor. The Guarantee constitutes a legal, valid and binding
obligation of Guarantor enforceable against it in accordance with its terms. The
enforceability of the Guarantee and any related document to which Guarantor is or is to
become a party or by which Guarantor is or is to become bound shall be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and to general equitable
principles (whether enforcement is sought by proceedings in equity or at law). |
| |
| | 6.2.5 | | The execution, delivery and performance of the Guarantee and any related
documents will not violate any Requirement of Law or any Contractual Obligation of
Guarantor and will not result in, or require, the creation or |
| | | | imposition of any Lien on any of the Properties or revenues of Guarantor pursuant to
any such Requirement of Law or Contractual Obligation. |
| |
| | 6.2.6 | | Except as otherwise disclosed in the annual statement of Guarantor as of
December 31, 2009, no litigation, investigation or proceeding of or before any
Governmental Authority is pending or, to the knowledge of Guarantor, threatened by or
against Guarantor or against any of its Properties or revenues (a) with respect to the
Agreement, the Guarantee, any related documents or any of the arrangements or
Transactions contemplated hereby or thereby, or (b) which involves a probable risk of
an adverse determination which could reasonably be expected to have a Materially
Adverse Effect. |
| |
| | 6.2.7 | | Guarantor is not an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940, as
amended. |
| |
| | 6.2.8 | | Guarantor is in compliance in all material respects with all material
provisions of ERISA, except to the extent that any failures so to be in compliance
could not reasonably be expected to have a Materially Adverse Effect. |
| |
| | 6.2.9 | | Guarantor is in all material respects in compliance with all Applicable Laws
and requirements of Governmental Authorities, except to the extent that any failures so
to be in compliance could not reasonably be expected to have a Materially Adverse
Effect. |
| |
| | 6.2.10 | | No report, financial statement or other written information furnished by or
on behalf of Guarantor to Buyer pursuant to Section 6.2.3 or Section 15 of this Annex I
contains or will contain any material misstatement of fact or omits or will omit to
state any material fact necessary to make the statements therein, in light of the
circumstances under which they were, are or will be made, not materially misleading. |
| |
| | 6.2.11 | | On the Effective Date, LMHCI indirectly owns and controls, both legally and
beneficially, with full power to vote, one hundred percent (100%) of
the outstanding shares of capital stock of LMGI. After the Effective Date, LMHCI indirectly owns and
controls, both legally and beneficially, with full power to vote, not less than
fifty-one percent (51%) of the outstanding shares of capital stock of LMGI. On the
Effective Date, LMGI owns and controls, both legally and beneficially, with full power
to vote, one hundred percent (100%) of the outstanding shares of the capital stock of
Guarantor. After the Effective Date, LMGI owns and controls, both legally and
beneficially, with full power to vote, not less than fifty-one percent (51%) of the
outstanding shares of the capital stock of Guarantor. On the Effective Date, LMHCI
indirectly owns and controls, both legally and beneficially, with full power to vote,
one hundred percent (100%) of the outstanding shares of the capital stock of Seller.
After the Effective Date, Guarantor indirectly owns and controls, both legally and
beneficially, with full |
| | | | power to vote, not less than fifty-one percent (51%) of the outstanding shares of
the capital stock of Seller. |
| | 6.3.1 | | make to Buyer all the representations and warranties set out in Paragraph 10
(other than representation and warranty (ii) of Paragraph 10) on the Effective Date;
and |
| |
| | 6.3.2 | | be deemed to repeat to Buyer all the representations and warranties set out
in Paragraph 10 (other than representation and warranty (ii) of Paragraph 10) on any
date on which Purchased Securities or Additional Purchase Securities are to be
transferred under any Transaction. |
| 6.4 | | In addition to the representations contained in Paragraph 10 of the Agreement, each party
(including Guarantor) hereto represents and warrants to the other party as follows, and on
each Payment Date and on any date on which Purchased Securities or Additional Purchased
Securities are to be transferred under any Transaction, each party hereto shall be deemed to
repeat the following: |
| | 6.4.1 | | No Termination Event has occurred or would occur by reason of its entering
into or performing its obligations under the Agreement or any Transaction; |
| |
| | 6.4.2 | | Notwithstanding any arrangements which it may have with any third party, it
will be liable as a principal for its obligations under the Agreement and each
Transaction; |
| |
| | 6.4.3 | | It has not relied on any representations of the other party to the
Agreement, other than those representations expressly set forth in the Agreement; |
| |
| | 6.4.4 | | It has not received any assurances from the other party in respect of the
Agreement or any Transaction other than as set forth in the Agreement; |
| |
| | 6.4.5 | | In connection with its entry into the Agreement and each Transaction it has
consulted, to the extent it considers necessary, its own advisors (including, without
limitation, any legal advisors and any accountants and auditors); |
| |
| | 6.4.6 | | It is a sophisticated institution that has a full understanding of all of
the terms, conditions and risks of the Agreement and each Transaction; |
| |
| | 6.4.7 | | It (i) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) has the corporate power and
authority, and the legal right, to own its Property and to conduct the business in
which it is currently engaged, and (iii) is duly qualified to do business and in good
standing under the laws of each jurisdiction where its ownership, lease or operation of
its Property or the conduct of its business requires such qualification, except to the
extent that any failures to be so qualified or in good standing could not have a
Materially Adverse Effect; |
| | 6.4.8 | | It has the corporate power and authority, and the legal right, to make,
deliver and perform the Agreement as contemplated hereby, and to enter into
Transactions. It has taken all necessary corporate action to authorize the
Transactions on the terms and conditions of the Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of the Agreement
and any related documents to which it is or is to become a party. Except as has
already been obtained, filed, given or performed, no consent or authorization of any
Governmental Authority (including any Insurance Regulatory Authority) or any other
Person is required in connection with the Transactions hereunder or in connection with
the execution, delivery, performance or enforceability of the Agreement. The Agreement
has been duly executed and delivered by and on its behalf. The Agreement constitutes a
legal, valid and binding obligation of it enforceable against it in accordance with the
Agreement’s terms. The enforceability of the Agreement and any related document to
which it is or is to become a party or by which it is or is to become bound shall be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and to general
equitable principles (whether enforcement is sought by proceedings in equity or at
law); and |
| |
| | 6.4.9 | | The execution, delivery and performance of the Agreement and any related
documents, the Transactions and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of it and will not result in, or
require, the creation or imposition of any Lien on any of the Properties or revenues of
it pursuant to any such Requirement of Law or Contractual Obligation. |
| 7. | | MARGIN |
| |
| | | On any day on which Buyer or Seller delivers, or is required to deliver, Purchased
Securities or Additional Purchased Securities, each of Buyer and Seller will determine the
aggregate amount or value of such delivery or transfer of such securities and the amount or
value of each Security Type delivered or to be delivered, and will notify the other party of
its determinations. |
| 8. | | MARKET VALUE |
| |
| | | For the purpose of Paragraph 2(j), the generally recognized source for the determination of
Market Value shall be the price determined by the Clearing Firm and approved by Buyer in its
reasonable discretion; provided that, if the Clearing Firm does not determine the price, the
generally recognized source for the determination of Market Value shall be the price
determined by Buyer in good faith. |
| 9. | | EVENTS OF DEFAULT |
| |
| 9.1 | | The introductory paragraph of Paragraph 11 is deleted in its entirety and replaced with the
following: |
| |
| | | “In the event that |
| | (i) | | Seller fails to repurchase (and Guarantor has not made such repurchase on
behalf of Seller) or Buyer fails to transfer Purchased Securities upon the applicable
Repurchase Date, |
| |
| | (ii) | | Seller or Buyer fails to comply with Paragraph 4 hereof for a period of one
Business Day, |
| |
| | (iii) | | Buyer fails, after one Business Day’s notice, to comply with Paragraph 5
hereof, |
| |
| | (iv) | | Seller or Buyer fails to pay when due any sum under the Agreement (except in
the case of a Failed Inception Transaction) (and, in the case of Seller’s failure to
pay, Guarantor has not made such payment on behalf of Seller), |
| |
| | (v) | | an Act of Insolvency occurs with respect to Seller, Guarantor or Buyer, |
| |
| | (vi) | | a Default or an Event of Default (each as defined in the Revolver) occurs under
the Revolver (in which case Seller shall be the defaulting party), |
| |
| | (vii) | | a Ratings Event occurs (in which case Seller shall be the defaulting party), |
| |
| | (viii) | | any representation or warranty made or deemed to be made by Seller or Guarantor under
the Agreement or in any certificate, report or notice furnished pursuant to the
Agreement shall prove to have been materially untrue or incorrect on or as of the date
made or deemed to be made, |
| |
| | (ix) | | the Consolidated Tangible Net Worth of LMGI is, at any time, less than
$6,155,000,000 and such condition is not remedied within 30 days, |
| |
| | (x) | | the Total Debt to Total Capitalization Ratio of LMGI is, at any time, greater
than .35 to 1.00 and such condition is not remedied within 30 days, |
| |
| | (xi) | | Seller or Guarantor defaults in the observance of any covenant in Section 16.1
of this Annex I, |
| |
| | (xii) | | Seller or Guarantor defaults in the observance of any other covenant in the
Agreement (excluding any breach in (i) through (xi) of this paragraph) and such breach
is not remedied within 30 days, |
| |
| | (xiii) | | Guarantor defaults in the observance of any covenant or provision of the Guarantee, |
| |
| | (xiv) | | an Event of Default (as such term is defined in the LMIC Repo Agreement)
occurs under the LMIC Repo Agreement and Guarantor (in its capacity as Seller under the
LMIC Repo Agreement) is the defaulting party, |
| |
| | (xv) | | Seller or Guarantor shall (a) default in the payment when due (whether at
stated maturity, by acceleration or otherwise) of $40,000,000 or more of any
Indebtedness for Borrowed Money or Contingent Obligations, and such default |
| | | | shall continue beyond the grace period, if any, provided in the Instrument under
which such Indebtedness for Borrowed Money or Contingent Obligations were created or
are evidenced or secured, or (b) fail to observe or perform any term, covenant,
condition or agreement contained in any Instrument evidencing or governing such
Indebtedness for Borrowed Money or Contingent Obligations if the effect of any
failure referred to in this clause (b) is to cause such Indebtedness for Borrowed
Money or Contingent Obligations to become due prior to its stated maturity, or |
| | (xvi) | | one or more judgments or decrees (a) have been entered against Seller or
Guarantor, (b) have not been vacated, discharged, satisfied, stayed or bonded pending
appeal within 60 days from the entry thereof, and (c) involve a liability (not paid or
fully covered by insurance) of either (I) $50,000,000 or more, in the case of any
single judgment or decree, or (II) $200,000,000 or more in the aggregate, in the case
of all such judgments and decrees |
| | | (each of (i) through (xvi) above, an “Event of Default”) (and, for the avoidance of doubt,
if Guarantor is the defaulting party with respect to an Event of Default, Seller shall also
be the defaulting party):” |
| |
| 9.2 | | If an Event of Default with respect to Seller or Guarantor has occurred and is continuing,
Buyer may, by written notice to Seller and Guarantor, declare the Available Commitment to be
reduced to zero for such time as Buyer may specify. This Section 9.2 shall not preclude Buyer
from exercising any other remedy available to it, including, without limitation, any remedy
available to it under the Agreement. |
| |
| 9.3 | | If, at any time, an Event of Default has occurred and is continuing, the non-defaulting party
shall have the right to terminate the Agreement. |
| |
| 9.4 | | Notwithstanding Paragraph 11(h), interest on any amount payable by Seller or Guarantor
pursuant to Paragraph 11(h) or this Annex I shall be at a rate equal to the greater of (i) the
Pricing Rate for the relevant Transaction plus 1% or (ii) the Prime Rate (as defined in
Paragraph 2 of the Agreement). |
| 10. | | SUBSTITUTION |
| |
| | | The following sentence shall be inserted at the end of Paragraph 9(a): “Notwithstanding the
foregoing, Buyer shall not be obliged to transfer Purchased Securities until it has
determined (at its sole discretion) that sufficient replacement Securities have been
provided by Seller to the Clearing Account. Furthermore, Buyer shall not issue any
instructions to the Clearing Firm to transfer Purchased Securities from the Clearing Account
until the replacement Securities have been transferred to the Clearing Account whereupon
such instruction shall be promptly given and the Purchased Securities shall be transferred.” |
| 11. | | INCREASED COST EVENT AND TERMINATION EVENT |
| 11.1 | | If there shall be (i) any increase in the cost to Buyer of agreeing to enter into, or
entering into, funding or maintaining any Transaction, or (ii) any reduction in any amount or
a decrease in the return receivable by Buyer in respect of any Transaction, in each case other
than with respect to Taxes, which shall be governed solely by Section 19, and such increased
cost, decreased return or reduced amount receivable is due to either: |
| | (a) | | the introduction of or any change in or in the interpretation of any Applicable
Law after the Effective Date hereof; |
| |
| | (b) | | compliance with any guideline or request made after the Effective Date from any
central bank or other Governmental Authority (whether or not having the force of law);
or |
| |
| | (c) | | a Regulatory Change (any such increased cost, reduced amount and decreased
return a “Increased Costs Event”), |
| | | then Seller shall from time to time, upon demand by Buyer, pay to Buyer additional amounts
sufficient to compensate Buyer for such increased cost, reduced amount receivable or
decreased return. |
| |
| 11.2 | | If Buyer shall have reasonably determined that (i) the applicability of any Applicable Law or
guideline adopted prior to or after the Effective Date, or (ii) the adoption after the
Effective Date of any Applicable Law or guideline regarding capital adequacy affecting Buyer,
or (iii) any change arising after the Effective Date in the foregoing or in the interpretation
or administration of any of the foregoing by any Governmental Authority, central bank or other
comparable agency charged with the interpretation or administration thereof, or
(iv) compliance by Buyer, or any holding company for Buyer which is subject to any of the
capital requirements described above, with any request or directive of general application
issued after the date hereof regarding capital adequacy (whether or not having the force of
law) of any such Governmental Authority, central bank or comparable agency, or (v) any
Regulatory Change, has or would have the effect of reducing the rate of return on Buyer’s
capital or on the capital of any such holding company as a consequence of Buyer’s obligations
hereunder to a level below that which Buyer or any such holding company could have achieved
but for such adoption, change or compliance (taking into consideration Buyer’s policies and
the policies of such holding company with respect to capital adequacy) by an amount deemed by
Buyer to be material, then from time to time Buyer may request Seller to pay to Buyer, and
Seller shall pay to Buyer, such additional amounts as will compensate Buyer or any such
holding company for any such reduction suffered. |
| |
| 11.3 | | A “Termination Event” will occur if it becomes unlawful in any applicable jurisdiction for a
party to perform any absolute or contingent obligation to make a payment or delivery of
securities in respect of a Transaction; |
| |
| 11.4 | | If a Termination Event occurs with respect to all Transactions, and is continuing, Buyer may,
by written notice to Seller, reduce the Available Commitment to such amount
|
| | | (including zero) as is specified in such notice, for such period (including permanently) as
is specified in such notice. |
| |
| 11.5 | | Seller may, at any time, upon thirty (30) days written notice to Buyer, terminate the
Agreement; provided that, if Seller terminates the Agreement pursuant to this Section 11.5,
any outstanding Transactions shall be required to be terminated pursuant to all applicable
terms of the Agreement. |
| |
| 12. | | CLOSE OUT |
| |
| 12.1 | | In the event of the occurrence of an Event of Default, the Repurchase Date in respect of each
Transaction shall be deemed to immediately occur and all amounts due on the Repurchase Date in
respect of each Transaction shall then be immediately due and payable, and all Purchased
Securities deliverable on the Repurchase Dates in respect of all of the Transactions shall
then be immediately deliverable. |
| |
| 12.2 | | In the event of the occurrence of a Termination Event, the provisions of Paragraph 11 shall
apply as if such Termination Event were an Event of Default and the defaulting party were the
party in relation to which such Termination Event occurred. |
| |
| 12.3 | | Paragraph 11(g) is hereby deleted in its entirety and replaced with the following: “If a
Transaction is terminated before its agreed Repurchase Date and either (i) such termination is
an Early Termination caused by Seller or Guarantor or (ii) Seller or Guarantor is (x) the
defaulting party or (y) the party in respect of which the unlawfulness occurred (in the case
of a Termination Event), Seller shall indemnify Buyer and hold Buyer harmless from any loss or
reasonable expense which Buyer may sustain or incur as a result of such termination. Such
indemnification shall include, without limitation, (i) any and all losses incurred in
obtaining, liquidating or employing deposits from third parties, and (ii) an amount equal to
the excess, if any, of (x) the amount of interest (in the form of the Price Differential)
Buyer would have received on an amount equal to the Purchase Price had such termination not
occurred, for the period from and including the Termination Date to but excluding the
Repurchase Date relating to such Transaction over (y) the amount of interest which would have
accrued to Buyer on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive the termination
of the Agreement and the payment of all other amounts payable hereunder.” |
| |
| 13. | | ROLL-OVER TRANSACTIONS |
| |
| | | Provided that no Default or Event of Default has occurred and is continuing, on the
Repurchase Date of a Transaction or a replacement Transaction entered into under this
provision (a “Roll-Over Transaction”), Buyer, if so requested by Seller prior to 10:00 a.m.
at least one (1) Business Day prior to such Repurchase Date (the date of the request, the
“Roll-Over Request Date”), will enter into a Roll-Over Transaction in respect of the
Purchased Securities under each such Transaction (subject to satisfaction of the conditions
set forth in Section 4 and Section 5 of this Annex I). The Purchase Date of each Roll-Over
Transaction shall be the Repurchase Date of the immediately preceding
|
| | | Transaction and the Purchase Price and Buyer’s Margin Percentages shall be the same as
those of the immediately preceding Transaction, unless otherwise agreed between the parties.
Buyer will notify Seller of the Market Value (based on the Purchase Price and the
applicable Buyer’s Margin Percentages and determined from the applicable pricing source on
the Roll-Over Request Date) and the Pricing Rate that shall apply to each Roll-Over
Transaction on each respective Repurchase Date. Neither party shall be under any obligation
to enter into any Transaction, whether a Roll-Over Transaction or otherwise, in respect of
which the Repurchase Date would fall after the Expiration Date. |
| |
| 14. | | INCEPTION FAILURE |
| |
| | | Subject to the terms of the Agreement, if Seller delivers a Repo Request and subsequently
fails to deliver Purchased Securities on the Purchase Date specified in such Repo Request,
Seller shall indemnify and hold Buyer harmless from any loss or reasonable expense which
Buyer may sustain or incur as a result of such failure. Such indemnification shall include,
without limitation, (i) any and all losses incurred in obtaining, liquidating or employing
deposits from third parties, and (ii) an amount equal to the excess, if any, of (x) the
amount of interest (in the form of the Price Differential) Buyer would have received on an
amount equal to the Purchase Price had such failure not occurred, for the period from and
including the Purchase Date specified in the Repo Request to but excluding the Repurchase
Date specified in the Repo Request over (y) the amount of interest which would have accrued
to Buyer on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive the
termination of the Agreement and the payment of all other amounts payable hereunder. |
| |
| 15. | | AFFIRMATIVE COVENANTS |
| |
| 15.1 | | Seller hereby agrees with Buyer that, from and after the Effective Date and until the later
of (i) the Expiration Date or (ii) the date on which the Repurchase Price in respect of each
Transaction has been paid in full, Seller shall furnish to Buyer copies of the following
financial statements, reports and other information: |
| | 15.1.1 | | as soon as available and in any event within 90 days after the end of each
fiscal year of Seller, the annual statement of Seller as of the end of such fiscal
year, as filed with (and in the form required under Applicable Laws and regulations of)
the Insurance Regulatory Authorities of The State of New Hampshire (x) accompanied by
an opinion of the Corporate Actuary of Seller covering amounts carried on the balance
sheet of certain actuarial items of Seller in the form required under Applicable Laws
and regulations of the Insurance Regulatory Authorities of The State of New Hampshire,
and (y) certified by a Financial Officer of Seller on behalf of Seller as to
consistency with respect to accounting and actuarial policies and that such annual
statement is a full and true statement of all the assets and liabilities and of the
condition and affairs of Seller as of the end of such fiscal year and of its income and
deductions therefrom for such fiscal year (within the meaning of applicable regulations
and practices of the Insurance Regulatory Authorities of The State of New Hampshire); |
| | 15.1.2 | | as soon as available and in any event within 90 days after the end of each
fiscal year of LMGI, the audited balance sheet of LMGI as of the end of such fiscal
year and the related audited statements of income and retained earnings and cash flows
for such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Ernst & Young LLP or other independent
public accountants of nationally recognized standing without qualification as to the
scope of the audit performed or any material weakness noted in LMGI’s system of
internal controls and all certified as to fairness of presentation, GAAP and
consistency, in each case by a Financial Officer of LMGI; |
| |
| | 15.1.3 | | as soon as available and in any event within 45 days after the end of each
of the first three quarters of each fiscal year of Seller, the quarterly statement of
Seller as of the end of such quarter, as filed with the Insurance Regulatory
Authorities of The State of New Hampshire, certified (subject to year-end accounting
and actuarial adjustments) on behalf of Seller by a Financial Officer of Seller as to
consistency with respect to accounting and actuarial policies and that such quarterly
statement is a full and true statement of all of the assets and liabilities and of the
condition and affairs of Seller as of the end of such quarter and of its income and
deductions therefrom for such quarter and for the portion of Seller’s fiscal year ended
at the end of such quarter (within the meaning of applicable regulations and practices
of the Insurance Regulatory Authorities of The State of New Hampshire); |
| |
| | 15.1.4 | | as soon as available and in any event within 45 days after the end of each
of the first three quarters of each fiscal year of LMGI, the unaudited balance sheet of
LMGI as of the end of such quarter and the related unaudited statements of income for
the portion of LMGI ‘s fiscal year ended at the end of such quarter, all certified
(subject to the absence of footnotes and normal year-end adjustments) as to fairness of
presentation, GAAP and consistency, in each case by a Financial Officer of LMGI; |
| |
| | 15.1.5 | | simultaneously with the delivery of: (i) each set of financial statements
of LMGI referred to in Section 15.1.2 and 15.1.4 a certificate of a Financial Officer
of LMGI (A) stating whether or not (x) the Consolidated Tangible Net Worth of LMGI is
at least $6,155,000,000, and (y) the Total Debt to Capitalization Ratio of LMGI is
greater than .35 to 1.00, as at the last day of the fiscal period covered by such
financial statements, and (B) stating the Consolidated Tangible Net Worth of LMGI and
the Total Debt to Total Capitalization Ratio of LMGI as at the last day of such period,
and (ii) each set of financial statements referred to in Subsections 15.1.1, 15.1.2,
15.1.3 and 15.1.4, a certificate of a Financial Officer of Seller stating whether, to
the knowledge of such Financial Officer, any Default or Event of Default (each as
defined in the Revolver) exists under the Revolver or if any Default or Event of
Default exists under the Agreement on the date of such certificate and, if any Default
or Event of Default (each as defined in the Revolver) then exists under the Revolver or
if any Default or Event of Default then exists under the Agreement, setting forth the
details thereof and the action which Seller |
| | | | or, in the case of the Revolver, LMGI, is taking or proposes to take with
respect thereto; |
| |
| | 15.1.6 | | within fifteen (15) days after any Financial Officer of Seller obtains
knowledge of any Default or Event of Default that exists under the Agreement, if such
Default or Event of Default is then continuing, a certificate of a Financial Officer of
Seller setting forth the details thereof and the action which Seller is taking or
proposes to take with respect thereto; |
| |
| | 15.1.7 | | within fifteen (15) days after any Financial Officer of Seller or LMGI, as
the case may be, obtains knowledge of any Default or Event of Default (each as defined
in the Revolver) that exists under the Revolver, if such Default or Event of Default
(each as defined in the Revolver) under the Revolver is then continuing, a certificate
of a Financial Officer of Seller setting forth the details thereof and the action which
LMGI is taking or proposes to take with respect thereto; provided that, Seller shall
use reasonable efforts to provide any notice of a Default or Event of Default (each as
defined in the Revolver) under the Revolver to Buyer at the same time or as promptly as
practicable after LMGI notifies the lenders under the Revolver of such Default or Event
of Default; |
| |
| | 15.1.8 | | promptly upon the mailing thereof to the policyholders of Seller generally,
copies of all financial statements, reports and proxy statements so mailed; and |
| |
| | 15.1.9 | | promptly upon the filing thereof, (i) in addition to the annual statements
and quarterly statements referred to in 15.1.1 and 15.1.3 above, copies of all other
financial statements of Seller filed with the Insurance Regulatory Authorities of The
State of New Hampshire, and (ii) copies of all registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents), if any, which Seller, LMGI
or LMHCI shall have filed with the Securities and Exchange Commission with respect to
debt securities or preferred or common stock issued by Seller, LMGI or LMHCI, as the
case may be. |
| 15.2 | | Guarantor hereby agrees with Buyer that, from and after the Effective Date and until the
later of (i) the Expiration Date or (ii) the date on which the Repurchase Price in respect of
each Transaction has been paid in full, Guarantor shall furnish to Buyer copies of the
following financial statements, reports and other information: |
| | 15.2.1 | | as soon as available and in any event within 90 days after the end of each
fiscal year of Guarantor, the annual statement of Guarantor as of the end of such
fiscal year, as filed with (and in the form required under Applicable Laws and
regulations of) the Insurance Regulatory Authorities of The Commonwealth of
Massachusetts (x) accompanied by an opinion of the Corporate Actuary of Guarantor
covering amounts carried on the balance sheet of certain actuarial items of Guarantor
in the form required under Applicable Laws and regulations of the Insurance Regulatory
Authorities of The Commonwealth of Massachusetts, and (y) certified by a Financial
Officer of Guarantor on behalf of Guarantor as to
|
| | | | consistency with respect to accounting and actuarial policies and that such annual
statement is a full and true statement of all the assets and liabilities and of the
condition and affairs of Guarantor as of the end of such fiscal year and of its
income and deductions therefrom for such fiscal year (within the meaning of
applicable regulations and practices of the Insurance Regulatory Authorities of The
Commonwealth of Massachusetts); |
| | 15.2.2 | | as soon as available and in any event within 45 days after the end of each
of the first three quarters of each fiscal year of Guarantor, the quarterly statement
of Guarantor as of the end of such quarter, as filed with the Insurance Regulatory
Authorities of The Commonwealth of Massachusetts, certified (subject to year-end
accounting and actuarial adjustments) on behalf of Guarantor by a Financial Officer of
Guarantor as to consistency with respect to accounting and actuarial policies and that
such quarterly statement is a full and true statement of all of the assets and
liabilities and of the condition and affairs of Guarantor as of the end of such quarter
and of its income and deductions therefrom for such quarter and for the portion of
Guarantor’s fiscal year ended at the end of such quarter (within the meaning of
applicable regulations and practices of the Insurance Regulatory Authorities of The
Commonwealth of Massachusetts); |
| |
| | 15.2.3 | | simultaneously with the delivery of: each set of financial statements
referred to in Subsections 15.2.1 and 15.2.2, a certificate of a Financial Officer of
Guarantor stating whether, to the knowledge of such Financial Officer, any Default or
Event of Default (each as defined in the Revolver) exists under the Revolver or if any
Default or Event of Default exists under the Agreement on the date of such certificate
and, if any Default or Event of Default (each as defined in the Revolver) then exists
under the Revolver or if any Default or Event of Default then exists under the
Agreement, setting forth the details thereof and the action which Seller or, in the
case of the Revolver, LMGI, is taking or proposed to take with respect thereto; |
| |
| | 15.2.4 | | simultaneously with the delivery of: each set of financial statements
referred to in Subsections 15.2.1 and 15.2.2, a certificate of a Financial Officer of
Guarantor stating whether, to the knowledge of such Financial Officer, Guarantor is in
default of any of its obligations under the Guarantee and, it is in default of any of
its obligations under the Guarantee, setting forth the details thereof and the action
which Guarantor is taking or proposes to take with respect thereto; |
| |
| | 15.2.5 | | within fifteen (15) days after any Financial Officer of Guarantor obtains
knowledge of any Default or Event of Default that exists under the Agreement, if such
Default or Event of Default is then continuing, a certificate of a Financial Officer of
Guarantor setting forth the details thereof and the action which Seller is taking or
proposes to take with respect thereto; |
| |
| | 15.2.6 | | promptly upon the mailing thereof to the policyholders of Guarantor
generally, copies of all financial statements, reports and proxy statements so mailed;
and |
| | 15.2.7 | | promptly upon the filing thereof, (i) in addition to the annual statements
and quarterly statements referred to in 15.2.1 and 15.2.2 above, copies of all other
financial statements of Guarantor filed with the Insurance Regulatory Authorities of
The Commonwealth of Massachusetts, and (ii) copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or its
equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents), if any,
which Guarantor, LMGI or LMHCI shall have filed with the Securities and Exchange
Commission with respect to debt securities or preferred or common stock issued by
Guarantor, LMGI or LMHCI, as the case may be. |
| 15.3 | | Each of Seller and Guarantor hereby agrees with Buyer that, from and after the Effective Date
and until the later of (i) the Expiration Date or (ii) the date on which the Repurchase Price
in respect of each Transaction has been paid in full, it shall furnish to Buyer copies of the
following notices and other information: |
| | 15.3.1 | | upon obtaining knowledge thereof, written notice (accompanied by a
reasonably detailed explanation with respect thereto) of: |
| | (a) | | any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by Seller to it which has been instituted
or, to its best knowledge (after due inquiry), is threatened against it or its
Significant Subsidiaries or to which any of their respective Property is
subject which |
| | (i) | | involves a probable risk of an adverse
determination which could reasonably be expected to have a Materially
Adverse Effect, or |
| |
| | (ii) | | relates to the Agreement or the Guarantee; and |
| | (b) | | any event or development which, in its reasonable judgment,
could have a Materially Adverse Effect. |
| | 15.3.2 | | within ten (10) Business Days after the occurrence thereof, written notice
of any change in Guarantor’s Status; provided that the failure to provide such notice
shall not delay or otherwise affect any change in the Applicable Spread or any other
amount payable hereunder which is to occur upon a change in Guarantor’s Status pursuant
to the terms of the Agreement. |
| 15.4 | | Each of Seller and Guarantor hereby agrees with Buyer that, from and after the Effective Date
and until the later of (i) the Expiration Date or (ii) the date on which the Repurchase Price
in respect of each Transaction has been paid in full, it shall comply, and cause each
Significant Subsidiary to comply, in all material respects with all Applicable Laws and all
requirements of Governmental Authorities (including, without limitation, all applicable
Insurance Regulatory Authorities), except where a failure to comply therewith could not
reasonably be expected to have a Materially Adverse Effect. |
| 15.5 | | Each of Seller and Guarantor hereby agrees with Buyer that, from and after the Effective Date
and until the later of (i) the Expiration Date or (ii) the date on which the Repurchase Price
in respect of each Transaction has been paid in full, it shall preserve, renew and |
| | | keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its principal lines of business, except to the extent
that any failure to do so could not reasonably be expected to have a Materially
Adverse Effect.
|
| 15.6 | | Buyer agrees with Seller that if, on any Purchase Date,
|
| | 15.6.1 | | Buyer does not have access to the services and facilities of the FICC to
settle and clear Transactions, Buyer shall use reasonable efforts to obtain access to
an Alternative Clearing Corporation to settle and clear Transactions; and |
| |
| | 15.6.2 | | the conditions set out in Section 5.1.3 or 5.3.6(c) of this Annex are not
met on any Request Date, Buyer will use reasonable efforts, in cooperation with Seller,
to obtain relief from any Regulatory Change or market disruption, as the case may be,
so that Buyer may effect a particular proposed Transaction on a basis reasonably
comparable, from a legal, regulatory, risk and commercial perspective, to the basis on
which such proposed Transaction would have been effected had such conditions been met. |
| 16.1 | | Each of Seller and Guarantor hereby agrees with Buyer that, from and after the Effective Date
and until the later of (i) the Expiration Date or (ii) the date on which the Repurchase Price
in respect of each Transaction has been paid in full, it shall not, |
| | 16.1.1 | | directly or indirectly merge or consolidate with any other Person unless
(a) it shall be the surviving corporation, and (b) immediately before and immediately
after giving effect to any such transaction, no Default or Event of Default shall be
continuing; |
| |
| | 16.1.2 | | engage in any sale, transfer or other disposition of all or substantially
all of its Property (either in a single transaction or a series of related
transactions); or |
| |
| | 16.1.3 | | make any offer or commitment to effect or complete any transactions
prohibited by this Section 16.1 or enter into any agreement to do so. |
| | | Buyer shall not be obliged to pay any sums hereunder or to transfer to Seller Purchased
Securities or Additional Purchased Securities, and Seller shall not be obliged to transfer
Purchased Securities or Additional Purchased Securities, if and whenever such payment or
transfer is not reasonably practicable due to the occurrence of a natural or man-made
disaster, armed conflict, act of terrorism, riot, labor disruption, lockout, failure of
electricity supply, failure of telecommunications services, failure of a relevant banking or
payment intermediary or securities clearance or settlement system or impossibility in
effectively instructing the same, or any other circumstance beyond Buyer’s or Seller’s (as
the case may be) control (such as (amongst other events), suspension of trading in the
Additional Purchased Securities or Purchased Securities, as applicable) after the date on
|
| | | which a Transaction is entered into (the date on which any such transfer or payment first
becomes impracticable due to the occurrence of such circumstances, a “Force Majeure Date”).
Should a Force Majeure Date occur on or immediately prior to the Purchase Date of a
Transaction, Buyer and Seller shall each use all commercially reasonable endeavors to effect
such transfer and payment as soon as possible after the proposed Purchase Date (and the date
on which such transfer and payment are effected shall be the Purchase Date of such
Transaction). Should a Force Majeure Date occur on any day when a transfer of Additional
Purchased Securities is due or on the Repurchase Date, Buyer and Seller shall each use all
commercially reasonable endeavors to effect such transfer and payment as soon as possible
after such Force Majeure Date; provided that, if at least 10 Business Days have elapsed
since such Force Majeure Date and Buyer and Seller have not effected such transfer and
payment, the obligations of Buyer or Seller (as the case may be) shall be fully discharged
if Buyer or Seller (as the case may be) transfers to Seller or Buyer (as the case may be) an
amount of money based on the last available price of those securities plus, in the case of
Buyer, the aggregate amount of Income which, as of such date, has accrued but not yet been
paid in respect of the Additional Purchased Securities or Purchased Securities (as
applicable) to the extent not included in such price as of such date. Such event will not
constitute an Event of Default with respect to Buyer or Seller, as applicable, for the
purposes of Paragraph 11 provided that Buyer or Seller, as applicable, complies with its
obligations under this Section. |
| |
| 18. | | FEE |
| |
| 18.1 | | Facility Fee. Seller shall pay to Buyer facility fees (the “Facility Fees”) at the rate per
annum equal to (a) for each day that Guarantor has Level I Status, .1500% of the Commitment,
(b) for each day that Guarantor has Level II Status, .2000% of the Commitment, (c) for each
day that Guarantor has Level III Status, .2500% of the Commitment. Each change in the rate
per annum at which the Facility Fees shall be calculated as a result of a change in
Guarantor’s Status shall become effective on the date upon which such change in Status occurs;
provided, however, that no reduction in such rate per annum shall be effective so long as any
Event of Default shall be continuing. On the first Business Day following the last day of
each calendar quarter and on the Expiration Date, Seller shall pay to Buyer all of the
Facility Fees which accrued during and through the end of the calendar quarter most recently
ended (or, in the case of payment due on the Expiration Date, the portion of the calendar
quarter ending on such date). The Facility Fees shall be based upon the Commitment in effect
from time to time, regardless of the utilization from time to time thereunder. If for any
reason any Transactions remain outstanding after the Commitment has been terminated in full,
the Facility Fees shall be payable on the aggregate Purchase Price in respect of outstanding
Transactions rather than on the Commitment. For the avoidance of doubt, no Facility Fee is
payable for the period occurring after a Termination Event. |
| 18.2 | | Origination Fee. Seller will pay Buyer fifteen (15) basis points of the Commitment Amount
within three (3) Business Days of the Effective Date. |
| 19.1 | | All payments made by Seller and Guarantor under the Agreement shall be made free and clear
of, and without any deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes or any other tax based
upon net income imposed on Buyer as a result of a present or former connection between Buyer
and the jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such connection arising
solely from Buyer having executed, delivered or performed its obligations or received a
payment under, or enforced, the Agreement). If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) are required to be
withheld from any amounts payable under the Agreement to Buyer, the amounts so payable to
Buyer shall be increased to the extent necessary to yield to Buyer (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable under the Agreement at the
rates or in the amounts specified in or pursuant to the Agreement. Whenever any Non-Excluded
Taxes are payable by Seller or Guarantor, as promptly as possible thereafter Seller or
Guarantor shall send to Buyer a certified copy of an original official receipt received by
Seller or Guarantor showing payment thereof. If Seller or Guarantor fails to pay any
Non-Excluded Taxes payable by it when due to the appropriate taxing authority or fails to
remit to Buyer the required receipts or other required documentary evidence, Seller and
Guarantor shall indemnify Buyer for any incremental taxes, interest or penalties that may
become payable by Buyer as a result of any such failure. The agreements of Seller and
Guarantor in this Section 19 shall survive the termination of the Agreement and the payment of
all other obligations payable hereunder. |
| 19.2 | | Buyer represents that the payments made to it pursuant to the Agreement are effectively
connected with the conduct of a trade or business within the United States by Buyer and Buyer
shall, upon the execution of the Agreement or promptly thereafter, provide Seller with two
accurate and complete original signed copies of Internal Revenue Service Form W-8ECI (or any
successor form) with respect to Buyer, certifying thereto. Buyer shall provide two further
copies of such Form (or such successor form) on or before the date that such Form (or such
successor form) expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously provided to Seller. Buyer shall provide Seller upon
Seller’s reasonable request with such other forms or statements certifying Buyer’s entitlement
to any available exemption from any withholding Tax with respect to payments made to Buyer
under the Agreement. Notwithstanding Section 19.1 or any other provision of the Agreement, no
additional amount or other increased payment shall be payable by Seller to Buyer to the extent
it is payable as a result of Buyer’s failure to comply with this Section 19.2. |
| 19.3 | | Each of Guarantor and Seller represents that it is a United States person as defined in
section 7701(a)(30) of the U.S. Internal Revenue Code of 1986, as amended. Each of Guarantor
and Seller shall, upon the execution of the Agreement or promptly thereafter, provide Buyer
with two accurate and complete original signed copies of Internal Revenue
|
| | | Service Form W-9 (or any successor form) with respect to Seller and Guarantor as applicable.
Each of Guarantor and Seller shall provide two further copies of such Form (or such
successor form) on or before the date that such Form (or such successor form) expires or
becomes obsolete and after the occurrence of any event requiring a change in the most recent
form previously provided to Buyer. Each of Guarantor and Seller shall provide Buyer upon
Buyer’s reasonable request with such other forms or statements certifying Seller’s
entitlement or Guarantor’s entitlement, as applicable to any available exemption from any
withholding Tax with respect to payments made to Seller or Guarantor, as applicable under
the Agreement. |
| 19.4 | | Transfer Taxes, stamp Taxes and all similar costs with respect to the transfer of Securities
(“Transfer Costs”) shall be paid by Seller and Guarantor; provided that, unless an Event of
Default with respect to Seller or Guarantor has occurred and is continuing under the
Agreement, all Transfer Costs with respect to the transfer of Securities by Buyer to a party
other than Seller or Seller’s agent shall be paid by Buyer. |
| 19.5 | | For the avoidance of doubt, no amount which Seller is entitled to receive pursuant to
Paragraph 5 shall be reduced by deductions or withholdings imposed by any Governmental
Authority on Income paid or distributed to a holder of Purchased Securities, other than Buyer. |
| 20.1 | | Paragraph 13 is amended by (1) inserting “, e mail” after the word “messenger”, (2) replacing
“in Annex II hereto” by “below.”, and (3) deleting the word “facsimile”. |
| 20.2 | | Address for notices and other communication of an operational nature for Buyer: |
| |
| | | Mitsubishi Securities (UFJ), Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Email: xxxxxxxxxxx@xx.xx.xxxx.xx |
| |
| 20.3 | | Address for notices and other communication for Seller: |
| |
| | | Peerless Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Email: Xxxxxx.Xxxxxxx@XxxxxxxXxxxxx.xxx |
| |
| | | and |
| |
| | | Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Email: Xxxxxxx.Xxxxxx@xxxxxxxxxxxxx.xxx |
| 20.4 | | Address for notices and other communication for Guarantor: |
| |
| | | Liberty Mutual Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Email: Xxxxxx.Xxxxxxx@XxxxxxxXxxxxx.xxx |
| |
| 20.5 | | For the purposes of the Agreement, no process agents are appointed. |
| |
| 21. | | SUBMISSION TO JURISDICTION AND WAIVER OF IMMUNITY |
| 21.1 | | Each party irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction of
any United States Federal or New York State court sitting in the Borough of Manhattan in the
City of New York, and any appellate court from any such court, solely for the purpose of any
suit, action or proceeding brought to enforce its obligations under the Agreement or relating
in any way to the Agreement or any Transaction under the Agreement and (ii) waives, to the
fullest extent it may effectively do so, any defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court and any right of jurisdiction on
account of its place of residence or domicile. |
| |
| 21.2 | | To the extent that any party hereto has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from
set off or any legal process (whether service or notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) with respect
to itself or any of its property, such party hereby irrevocably waives and agrees not to plead
or claim such immunity in respect of any action brought to enforce its obligations under the
Agreement or relating in any way to the Agreement or any Transaction under the Agreement. |
| |
| 22. | | EXPENSES; INDEMNITY; DAMAGE WAIVER. |
| |
| 22.1 | | Costs and Expenses. Other than with respect to Taxes, which shall be governed solely by
Section 19, Seller shall pay all reasonable out-of-pocket expenses incurred by Buyer
(including the reasonable fees, charges and disbursements of any counsel for Buyer), in
connection with the enforcement or protection of its rights (A) in connection with the
Agreement and any other related documents, including its rights under this Section 22, or (B)
in connection with any Transaction entered into hereunder, including all such reasonable
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect
of any Transaction. |
| |
| 22.2 | | Indemnification by Seller. Other than with respect to Taxes, which shall be governed solely
by Section 19, without duplication of the obligations of Seller under Section 11, Seller shall
indemnify Buyer against, and hold Buyer harmless from, any and all losses, claims, damages,
liabilities and related reasonable expenses (including the reasonable fees, charges and
disbursements of any counsel for Buyer) incurred by Buyer or asserted |
| | | against Buyer arising out of, in connection
with, or as a result of (i) the execution or
delivery of the Agreement, any other related
document or any agreement or instrument
contemplated hereby or thereby, the
performance by the parties hereto of their
respective obligations hereunder or
thereunder or the consummation of the
transactions contemplated hereby or thereby,
and (ii) any actual or prospective claim,
litigation, investigation or proceeding
relating to any of the foregoing, whether
based on contract, tort or any other theory,
whether or not Buyer is a party thereto and
whether or not caused by or arising, in part,
out of the comparative or contributory
negligence of Buyer; provided that such
indemnity shall not, as to Buyer, be
available to the extent that such losses,
claims, damages, liabilities or related
expenses (x) are determined by a court of
competent jurisdiction by final and
nonappealable judgment to have resulted from
the gross negligence or willful misconduct of
Buyer or (y) result from a claim brought by
Seller or Guarantor against Buyer, unless
such claim is determined adversely to Seller
or Guarantor by a final and nonappealable
judgment of a court of competent
jurisdiction. |
| |
| 23. | | WAIVER OF JURY TRIAL |
| |
| | | EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THE AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION. |
| 24. | | USA PATRIOT ACT NOTICE. |
| | | Buyer hereby notifies Seller and Guarantor that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies Seller, which
information includes the name and address of Seller and other information that will allow
Buyer to identify Seller in accordance with the Act. |
| |
| 25. | | ASSIGNMENT |
| |
| | | Paragraph 15(a) is hereby deleted in its entirety and replaced by the following: “Having
first obtained the prior consent of Seller (which consent shall not be unreasonably withheld
by Seller), Buyer may assign all or a portion of its rights and obligations under the
Agreement. Notwithstanding the foregoing, if an Event of Default with respect to Seller has
occurred and is continuing, Buyer may assign all or a portion of its rights and obligations
under the Agreement without consent of Seller. Neither Guarantor nor Seller
|
| | | shall be entitled to assign any of it rights or obligations under the Agreement without
prior written consent of Buyer.” |
| |
| 26. | | GUARANTEE |
| 26.1 | | Guarantee. Guarantor unconditionally guarantees to the Buyer, as a primary obligor and not
merely as a surety, the due and punctual payment and performance of the Obligations.
Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation. |
| 26.2 | | Guaranteed Obligations Not Waived. Guarantor waives presentment to, demand of payment from
and protest to Buyer and Seller of any of the Obligations and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. |
| 26.3 | | Guarantee of Payment. Guarantor further agrees that its guarantee hereunder constitutes a
guarantee of payment when due (whether at the stated maturity, by acceleration or otherwise)
and not of collection, and waives any right (i) to require the sale of Purchased Securities or
giving the Seller credit for such Purchased Securities in lieu of a sale, (ii) to require that
any resort be had to any collateral security held for the payment of the Obligations, or (iii)
to any balance of any deposit account or credit on the books of Buyer in favor of Guarantor,
Seller. |
| 26.4 | | No Discharge or Diminishment of Guarantee. |
| | 26.4.1 | | The obligations of Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise (other than
defense of payment or performance). Without limiting the generality of the foregoing,
the obligations of Guarantor hereunder, to the fullest extent permitted by Applicable
Laws, shall not be discharged or impaired or otherwise affected by, and Guarantor
hereby waives any defense to the enforcement hereof by reason of: |
| | (a) | | the failure of the Buyer to assert any claim or demand or to
exercise or enforce any right or remedy under the Agreement or any related
agreement; |
| |
| | (b) | | any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, the Agreement; |
| |
| | (c) | | the failure by Seller to deliver any Purchased Securities; |
| |
| | (d) | | any default, failure or delay, willful or otherwise, in the
performance of the Obligations; |
| | (e) | | any other act or omission that may or might in any manner or to
any extent vary the risk of Guarantor or otherwise operate as a discharge of
Guarantor as a matter of law or equity (other than the payment in full in cash
or immediately available funds of all the Obligations); |
| |
| | (f) | | any illegality, lack of validity or enforceability of any
Obligation; |
| |
| | (g) | | any change in the corporate existence, structure or ownership
of Buyer or Seller, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting Buyer or Seller or any assets of Buyer or Seller
or any resulting release or discharge of any Obligation; |
| |
| | (h) | | the existence of any claim, set-off or other rights that
Guarantor may have at any time against Buyer or any other person, whether in
connection herewith or any unrelated transactions, provided that nothing herein
will prevent the assertion of any such claim by separate suit or compulsory
counterclaim; |
| |
| | (i) | | any action permitted or authorized hereunder; or |
| |
| | (j) | | any other circumstance (including any statute of limitations)
or any existence of or reliance on any representation by Buyer that might
otherwise constitute a defense to, or a legal or equitable discharge of,
Seller, Guarantor, or any other guarantor or surety. |
| | 26.4.2 | | Guarantor expressly authorizes Buyer to release or substitute any one or
more other guarantors upon or in respect of the Obligations, all without affecting the
obligations of Guarantor hereunder. |
| 26.5 | | Defenses Waived. To the fullest extent permitted by Applicable Laws, Guarantor waives any
defense based on or arising out of any defense of Seller or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause of the
liability of Seller, other than the payment in full in cash or immediately available funds of
all the Obligations (other than contingent indemnity or expense reimbursement obligations as
to which no claim has been made). Buyer may, at its election, compromise or adjust any part
of the Obligations, make any other accommodation with Seller or exercise any other right or
remedy available to it against Seller, without affecting or impairing in any way the liability
of Guarantor hereunder except to the extent the Obligations (other than contingent indemnity
or expense reimbursement obligations as to which no claim has been made) have been paid in
full in cash or immediately available funds. To the fullest extent permitted by Applicable
Laws, Guarantor waives any defense arising out of any such election even though such election
operates, pursuant to Applicable Laws, to impair or to extinguish any right of reimbursement
or subrogation or other right or remedy of Guarantor against any other party hereto. |
| 26.6 | | Agreement To Pay; Contribution; Subrogation. |
| | 26.6.1 | | In furtherance of the foregoing provisions of this Section 26 and not in
limitation of any other right that Buyer has at law or in equity against Guarantor by
virtue hereof, upon the failure of Seller to pay or perform any Obligation when and as
the same shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, Guarantor hereby promises to and will forthwith pay in cash or
perform, or cause to be paid in cash or performed, such unpaid or unperformed
Obligations upon demand. Guarantor hereby agrees to make any such payment of unpaid
Obligations in USD. |
| | 26.6.2 | | Upon payment by Guarantor of any sums to Buyer, all rights of such
Guarantor against Seller arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in full in
cash of all the Obligations. In addition, any indebtedness of Seller now or hereafter
held by Guarantor is hereby subordinated in right of payment to the prior payment in
full of the Obligations during the existence of a Default or an Event of Default. If
any amount shall erroneously be paid to Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness
of Seller, such amount shall be held in trust for the benefit of Buyer and shall
forthwith be paid to Buyer to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Agreement. |
| 26.7 | | Information. Guarantor assumes all responsibility for being and keeping itself informed of
the financial condition and assets of Seller, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the risks that
Guarantor assumes and incurs hereunder, and agrees that Buyer will not have any duty to advise
Guarantor of information known to it or any of them regarding such circumstances or risks. |
| 26.8 | | Reinstatement. Guarantor agrees that its guarantee hereunder shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored by Buyer upon the bankruptcy or
reorganization of any party hereto. |
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Annex I to be duly executed as of the
date first above written.
| | | | | |
| | PEERLESS INSURANCE COMPANY,
as Seller
| |
| | By: |
/s/ | |
| | | Name: | | |
| | | Title: | | |
| |
| | | | | |
| | LIBERTY MUTUAL INSURANCE COMPANY,
as Guarantor
| |
| | By: |
/s/ | |
| | | Name: | | |
| | | Title: | | |
| |
| | | | | |
| | MITSUBISHI UFJ SECURITIES (USA), INC.,
as Buyer
| |
| | By: |
/s/ | |
| | | Name: | | |
| | | Title: | | |
Schedule 1
Form of Confirmation [To be delivered by Buyer]
| | | | | |
|
|
| | To:
| | Peerless Insurance Company |
| |
|
| | Fax No:
| | [•] |
| |
|
| | Attention:
| | [•] |
| |
|
| | Email:
| | [•] [Must use scanned document bearing signature] |
| | | | | | | |
|
| From: | | Mitsubishi UFJ Securities (USA), Inc. |
| Date:
| | | | | | |
| |
| Subject:
| | Repurchase Transaction
(Reference Number:)
| | | | |
Dear Sirs,
The purpose of this [letter]/[facsimile] (a “Confirmation” for the purposes of the Master
Repurchase Agreement entered into between us as of March 26, 2010 (as the same may be amended from
time to time) (the “Agreement”)), is to set forth the terms and conditions of the above repurchase
transaction entered into between us with respect to the Purchase Date referred to below.
This Confirmation supplements and forms part of and is subject to the Agreement. All provisions
contained in the Agreement govern this Confirmation except as expressly modified below. Words and
phrases defined in the Agreement and used in this Confirmation shall have the same meaning herein
as in the Agreement.
Purchase Date: [___] [must fall between the Effective Date and before the Expiration Date]
Purchased Securities:
CUSIP, ISIN or other identifying number(s):
Original face amount:
Current factor (if applicable):
Market Price:
Buyer Margin Percentage:
Purchase Price: USD [ ]
Buyer: Mitsubishi UFJ Securities (USA), Inc.
Seller: Peerless Insurance Company
Repurchase Date: [ ]
Pricing Rate: [ ]
Buyer’s Bank Account[s] Details: [ ]
Seller’s Bank Account[s] Details: [ ]
Yours faithfully,
MITSUBISHI UFJ SECURITIES (USA), INC.
as Buyer
Agreed and accepted by PEERLESS INSURANCE COMPANY,
as Seller
Schedule 2
Form of Repo Request
| | | | | |
|
|
| | To:
| | Mitsubishi UFJ Securities (USA), Inc. |
|
| | | | |
|
| | Fax No:
| | [•] |
|
| | | | |
|
| | Attention:
| | [•] |
|
| | | | |
|
| | Email:
| | [•] [Must use scanned document bearing signature] |
|
| | | | |
|
| | Copy:
| | The Bank of New York Mellon |
|
| | | | |
|
| | Fax No:
| | [•] |
|
| | | | |
|
| | Attention:
| | [•] |
|
| | | | |
|
| | Email:
| | [•] [Must use scanned document bearing signature] |
Master Repurchase Agreement dated March 26, 2010 (the “Agreement”)
| 1. | | We refer to the Agreement. This is a Repo Request. Terms defined in the Agreement have the
same meaning in this Repo Request unless given a different meaning in this Repo Request. |
| |
| 2. | | We wish to enter into a Transaction on the following terms: |
| |
| | | Purchase Date: [ ] (or, if that is not a Business Day, the next Business Day) |
| |
| | | Purchased Securities: |
| |
| | | CUSIP, ISIN or other identifying number(s): |
| |
| | | Original face amount: |
| |
| | | Current factor (if applicable): |
| |
| | | Market price: |
| |
| | | Buyer’s Margin Percentage: |
| | | Purchase Price: |
| |
| | | Repurchase Date: [ ] |
| 3. | | The Purchase Price in respect of this Transaction should be credited to [account]. |
| |
| 4. | | We confirm that Seller’s and Guarantor’s assets exceed its liabilities (after taking into
account its contingent liabilities which are probable to occur and can be reasonably estimated
as determined in accordance with US GAAP (reasonably applied) and our subordinated
liabilities) and will continue to do so notwithstanding the entry into by it of this
Transaction. |
| |
| 5. | | We confirm that all of the conditions set forth in Sections 5.1, 5.2 and 5.3 of Annex I to
the Agreement will be satisfied by Seller and Guarantor (as applicable) on the Purchase Date. |
| |
| 6. | | This Repo Request is irrevocable. |
Yours faithfully
| | | | | |
| | |
| | | |
| | authorized signatory for Peerless Insurance Company | |
| | | |
Schedule 3
Form of Assistant Secretary’s Certificate of Peerless Insurance Company
PEERLESS INSURANCE COMPANY
Assistant Secretary’s Certificate
I, Xxxxx X. Xxxx, Assistant Secretary of Peerless Insurance Company (the “Company”), a stock
insurance company organized under the laws of the State of New Hampshire, do hereby certify as
follows that:
| | 1. | | Attached hereto as Exhibit A is a true and complete copy of the Articles of
Organization of the Company as of this date. |
| |
| | 2. | | Attached hereto as Exhibit B is a true and complete copy of the Restated
By-Laws of the Company as of this date. |
| |
| | 3. | | Attached hereto as Exhibit C is a true and complete copy of the Certificate of
Designation of the Vice President and Chief Financial Officer. |
| |
| | 4. | | That the following is a true, correct and complete copy of a resolution duly adopted by
the Board of Directors of the Company as of January 12, 2010, and this resolution is in
full force and effect as of the date hereof and has not been modified or rescinded. |
| | VOTED | | That the Chief Financial Officer, the Chief Investment Officer and the
designees of either of them, either jointly or severally, are authorized on behalf of
the Company to enter into a master repurchase agreement with a commitment amount of up
to $250 million and to sell and repurchase securities pursuant to that agreement. They
are authorized to do all things necessary or desirable and to execute any and all
documents necessary or desirable to effectuate this transaction. The financial terms
and conditions of the transaction shall be satisfactory to the Chief Financial Officer
or his designees. Any documents shall be in a form satisfactory to the General
Counselor his designees. |
I, further certify that the individuals listed below have been duly elected and duly qualified as
an officer of the Company holding the office set forth opposite his name below, and the signatures
set forth opposite their names below are their genuine signatures.
| | | | | |
| NAME | | POSITION | | SIGNATURE |
| Xxxxxxx X. Xxxxxx
| | Vice President and | | |
|
| | Chief Financial Officer | | |
|
| | | | |
|
| | | | |
| Xxxxxx X. Xxxxxxx
| | Assistant Treasurer | | |
|
| | | | |
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf of the Company.
| | | | | |
| | |
| | | |
| | Xxxxx X. Xxxx | |
| | Assistant Secretary
Dated: March ___, 2010 | |
Schedule 4
Form of Opinion of Liberty Mutual Insurance Company
March 26, 2010
Mitsubishi UFJ Securities (USA), Inc.
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Re: $250,000,000 Securities Repurchase Facility
I am a Vice President and Senior Corporate Counsel on the legal staff of Liberty Mutual Insurance
Company and have acted as counsel to Liberty Mutual Insurance Company in connection with the Master
Repurchase Agreement dated as of March [•], 2010 including Annex I thereto and the Guarantee
contained therein (the “Agreement”) between Peerless Insurance Company, Mitsubishi UFJ Securities
(USA), and Liberty Mutual Insurance Company as guarantor (the “Guarantor”). Capitalized terms used
but not defined in this opinion shall have the meanings ascribed to them in the Agreement.
In connection with the legal opinions hereinafter expressed, I have examined and relied on
originals or copies, certified or otherwise identified to my satisfaction, of executed copies of
the Agreement. In addition, I have examined and relied on originals or copies, certified or
otherwise identified to my satisfaction, of such instruments and certificates of public officials,
officers and representatives of the Guarantor and such other persons, and such corporate records of
the Guarantor, and I have made such investigations of law, as I have deemed appropriate as a basis
for the legal opinions expressed below. As to various questions of fact material to this legal
opinion, I have relied with your permission and without independent verification upon the
representations made in the Agreement and upon certificates of and discussions with officers and
other representatives of the Guarantor. In rendering the legal opinions hereinafter set forth, I
have assumed with your permission and without independent verification (i) the authenticity of all
documents and instruments submitted to me as copies, (ii) the genuineness of all signatures (other
than those of persons signing on behalf of the Guarantor), (iii) the power and authority of the
parties to the Agreement (other than the Guarantor) to execute, deliver and perform the Agreement,
(iv) that the Agreement has been duly authorized, executed and delivered by each party thereto
(other than the Guarantor) and is the legal, valid and binding obligation of each party thereto
(other than the Guarantor), enforceable against each such other party in accordance with its terms,
(v) that each such other party is in compliance with all applicable state and federal laws
regulating lenders or the conduct of their business, and (vi) that all parties to the transactions
contemplated by the Agreement have acted and will continue to act in good faith.
As used in this opinion letter, the expressions “to my knowledge,” “to the best of my knowledge” or
“of which I have knowledge,” means as to matters of fact that, based on actual knowledge, and after
an examination of documents referred herein and after inquiries of certain officers of
the Guarantor, no facts have been disclosed to me that have caused me to conclude that the opinions
expressed are factually incorrect; but beyond that I have made no factual investigation for the
purposes of rendering this opinion letter. Specifically, but without limitation, (i) I have
conducted no independent investigation of the matters set forth in connection therewith (including,
without limitation, no search of dockets, records or other matters) and (ii) I have not conducted a
litigation search or other search or investigation with respect to any pending items of litigation
or orders or decrees.
This opinion letter is limited to the laws of the Commonwealth of Massachusetts. I invite your
attention to the fact that the Agreement is governed by the laws of the State of New York. I have
made no investigation of New York law nor consulted with counsel admitted to practice law in the
State of New York. I have not examined the question of what law would govern the interpretation or
enforcement of the Agreement, and my opinion with regard to the validity, binding nature and
enforceability of the Agreement is based upon the assumption that the internal laws of the
Commonwealth of Massachusetts would govern the provisions thereof.
Based upon my examination of and reliance upon the foregoing and subject to the limitations,
exceptions, qualifications and assumptions set forth below and except as set forth in the
Agreement, I am of the opinion that as of the date hereof:
1. The Guarantor (a) is validly existing and in good standing under the laws of the jurisdiction of
its organization, (b) has the corporate power and authority, and the legal right, to own its
property and to conduct the business in which it is currently engaged, and (c) is duly qualified to
do business and is in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such qualification, except to the
extent that any failures so to be duly qualified or in good standing could not have a Materially
Adverse Effect.
2. The Guarantor has the corporate power and authority and the legal right to make, deliver and
perform the Agreement; the Guarantor has taken all necessary corporate action to authorize the
Transactions on the terms and conditions of the Agreement; and the Guarantor has taken all
necessary corporate action to authorize the execution, delivery and performance of the Agreement.
Except as has been given or made, no consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or, to the best of my knowledge, any other
person, is required in connection with the Transactions or with the execution and delivery of the
Agreement, or the performance, validity or enforceability of the Agreement. The Agreement has been
duly executed and delivered on behalf of the Guarantor. The Agreement constitutes legal, valid and
binding obligations of the Guarantor in the case of the Agreement, enforceable against the
Guarantor in accordance with the respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).
3. The execution and delivery of the Agreement, the performance of the Agreement, the Transactions
thereunder, and the use of proceeds thereof, all as contemplated in the Agreement, will not
violate, to the best of my knowledge, any contractual obligation of the Guarantor or any Applicable
Laws, or result in or require the creation or imposition of any lien on any of the
properties or revenues of the Guarantor pursuant to any contractual obligation of Guarantor, except
to the extent that any such violation of any contractual obligation or any Applicable Laws or
creation or imposition of liens could not reasonably be expected to have a Materially Adverse
Effect.
4. Other than our disclosure in the Guarantor’s financials, there is no litigation, investigation
or proceeding of or before any court or other Governmental Authority pending or, to my knowledge
threatened by or against the Guarantor or any of its subsidiaries or against any of its respective
properties or revenues (a) with respect to the Agreement, or any of the transactions contemplated
thereby, or (b) which involves a probable risk of an adverse determination which could reasonably
be expected to have a Materially Adverse Effect.
5. The Guarantor is not an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended.
My opinions expressed above are specifically subject to the following limitations, exceptions,
qualifications and assumptions:
(A) The legality, validity, binding nature and enforceability of the Guarantor’s obligations
under the Agreement may be subject to or limited by (1) bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer and other similar laws affecting the rights of
creditors generally; (2) general principles of equity (whether relief is sought in a proceeding at
law or in equity), including without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the discretion of any court of competent jurisdiction in awarding
specific performance or injunctive relief and other equitable remedies; and (3) the effect of court
decisions and statutes which indicate that provisions of the Agreement which permit you to take
action or make determinations may be subject to a requirement that such action be taken or such
determination be made on a reasonable basis in good faith or that it be shown that such action is
reasonably necessary for your protection.
(B) I express no opinion as to the enforceability under certain circumstances of any
provisions indemnifying a party against, or requiring contributions toward, that party’s liability
for its own wrongful or negligent acts, or where indemnification or contribution is contrary to
public policy or prohibited by law.
(C) I express no opinion as to the enforceability under certain circumstances of any
provisions prohibiting waivers of any terms of the Agreement other than in writing, or prohibiting
oral modifications thereof or modification by course of dealing. In addition, my opinion is
subject to the effect of judicial decisions which may permit the introduction of extrinsic evidence
to interpret the terms of written contracts.
(D) I express no opinion as the effect of any law, federal law or equitable principle which
provides that a court may refuse to enforce, or may limit the application of, a contract or any
clause thereof which the court finds to have been unconscionable at the time it was made or
contrary to public policy.
(E) I express no opinion, and none should be inferred, as to (i) your compliance with any
federal or state law relating to your legal or regulatory status or the nature of your business,
(ii) foreign, federal or state income tax, franchise or other laws, rules or regulations relating
to taxation, (iii) compliance with any federal or state securities laws or regulations, (iv) the
accuracy of any matter of fact or law set forth in the Agreement, except to the extent that any
such matter is also set forth as part of my opinions above, or (v) any documents (including
exhibits to the Agreement) or the effect thereof other than the Agreement.
(F) The enforceability of the first sentence of Paragraph 15 of the Agreement, which
restricts assignment of the Agreement, is subject to Sections 9-405 and 9-407 of the Massachusetts
Uniform Commercial Code.
(G) I express no opinion as to:
(1) The enforceability under certain circumstances of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, or defenses to obligations or
rights granted by law, when such waivers are against public policy or prohibited by law;
(2) The enforceability under certain circumstances of provisions to the effect that rights or
remedies may not be exercised without notice, that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or remedy, that rights or
remedies are not exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, or that election of a particular remedy or remedies
does not preclude recourse to one or more remedies; and
(3) Any provision of the Agreement that purports to exclude conflict of law principles.
(4) Whether the Transactions would be viewed as purchases and sales and not loans as
contemplated under Paragraph 6 of the Agreement.
(5) The provisions of Paragraph 14 of the Agreement on severability or separability.
(6) Paragraph 17 of the Agreement insofar as that provision provides that the terms of the
Agreement may not be waived or modified except in writing, which may be limited under certain
circumstances.
(7) The determinations set out in Paragraph 19 of the Agreement.
(H) My opinions set forth in paragraph 1 with respect to valid existence are based (i) on a
certificate of legal existence, dated March [25], 2010 of the Secretary of The Commonwealth of
Massachusetts and a certificate of compliance, dated March [25], 2010 from the Division of
Insurance of The Commonwealth of Massachusetts.
(I) My opinions set forth in paragraph 2 with respect to the corporate power and authority of
the Guarantor to conduct, execute and deliver the Agreement and consummate the
transactions contemplated thereby are based on my review of the laws of The Commonwealth of
Massachusetts, as well as the Restated Articles of Organization, the Amended and Restated Bylaws,
and the resolution of the Board of Directors, as certified as of the date hereof, by an Assistant
Secretary of the Guarantor.
My opinions expressed herein are subject to the qualification that I express no opinion as to any
obligation of the Guarantor under the Agreement to the extent that such obligation might be deemed
to be inconsistent with public policy.
This opinion is being rendered to you as of the date set forth above. My opinions are limited to
the specific issues addressed herein and are limited to documents, laws and facts existing on the
date hereof. I assume no obligation to advise you of facts, circumstances, events or developments
which hereafter may be brought to my attention and which may alter, affect or modify the opinions
expressed herein.
My opinions herein have been furnished at your request and are solely for your benefit in
connection with the transactions contemplated by the Agreement and may not be otherwise distributed
or relied upon by any other person or entity or quoted or reproduced, in whole or in part, in any
other document or filed with any Governmental Authority without my prior written consent.
Very truly yours,
Xxxxx X. McL. X’Xxxxxx
Schedule 5
Form of Assistant Secretary’s Certificate of Liberty Mutual Insurance Company
LIBERTY MUTUAL INSURANCE COMPANY
Assistant Secretary’s Certificate
I, Xxxxx X. Xxxx, Assistant Secretary of Liberty Mutual Insurance Company (the “Company”), a stock
insurance company organized under the laws of the Commonwealth of Massachusetts, do hereby certify
as follows that:
| | 1. | | Attached hereto as Exhibit A is a true and complete copy of the Restated
Articles of Organization of the Company as of this date. |
| |
| | 2. | | Attached hereto as Exhibit B is a true and complete copy of the Amended and
Restated By-Laws of the Company as of this date. |
| |
| | 3. | | Attached hereto as Exhibit C is a true and complete copy of the Certificate of
Designation of the Senior Vice President and Chief Financial Officer. |
| |
| | 4. | | That the following is a true, correct and complete copy of a resolution duly adopted by
the Board of Directors of the Company as of March 10, 2010, and this resolution is in full
force and effect as of the date hereof and has not been modified or rescinded. |
| | VOTED | | that the Chief Financial Officer and his designees, either jointly or
severally, are authorized on behalf of the Company to enter into a guarantee of
the obligations of Peerless Insurance Company under its master repurchase
agreement with a commitment amount of up to $250 million. This guarantee is
convenient to the conduct, promotion and attainment of the Company’s business.
The persons authorized above are authorized to do all things necessary or
desirable and to execute any and all documents necessary or desirable to
effectuate this transaction. The financial terms and conditions of the
transaction shall be satisfactory to the Chief Financial Officer or his
designees. Any documents shall be in a form satisfactory to the General
Counsel or his designees. |
I, further certify that the individuals listed below have been duly elected and duly qualified as
an officer of the Company holding the office set forth opposite his name below, and the signatures
set forth opposite their names below are their genuine signatures.
| | | | | |
| NAME | | POSITION | | SIGNATURE |
| Xxxxxx X. Xxxxxxxx
| | Senior Vice President and | | |
|
| | Chief Financial Officer | | |
|
| | | | |
|
| | | | |
| Xxxxxx X. Xxxxxxx
| | Assistant Treasurer | | |
|
| | | | |
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf of the Company.
| | | | | |
| | |
| | | |
| | Xxxxx X. Xxxx | |
| | Assistant Secretary
Dated: March ___, 2010 | |
Schedule 6
Form of Opinion of Xxxxxxxx Chance US LLP
March 26, 2010
| To: | | Mitsubishi UFJ Securities (USA), Inc.
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000 |
Master Repurchase Agreement
Dear Sirs:
We have acted as special counsel to Mitsubishi UFJ Securities (USA), Inc. (“MUS (USA)”) in
connection with the Master Repurchase Agreement (the “Agreement”) including Annex I thereto among
MUS (USA), Peerless Insurance Company (“Peerless”) and Liberty Mutual Insurance Company (the
“LMIC”), dated as of March 26, 2010, and certain related matters under the laws of the State of New
York (“New York law”). Unless otherwise defined herein, terms defined in the Agreement are used
herein as defined therein.
In connection with our opinion set forth herein, we have, with your consent, assumed that:
| (i) | | Peerless and LMIC have all requisite capacity and corporate authority to execute, deliver and
perform their obligations under the Agreement and have taken all necessary steps to execute,
deliver and perform the Agreement and all Transactions carried out under the Agreement; |
| |
| (ii) | | the Agreement has been duly authorized, executed and delivered by Peerless and LMIC in
accordance with applicable laws; |
| |
| (iii) | | the execution, delivery and performance of the Agreement by Peerless by LMIC does not
violate, or require any consent not obtained under, any applicable law or regulation of any
jurisdiction or any order, writ, injunction or decree of any court or other governmental
authority binding upon such party; |
| |
| (iv) | | other than by the annexes listed above or as stated in this opinion, none of the terms of the
Agreement have been varied, waived, or discharged in any material respect and Transactions
have been entered into as specified in the Agreement; and |
| |
| (v) | | the requirements of the law governing the transfers of Securities and cash are complied with. |
Based upon the foregoing and subject to the comments and qualifications set forth below, we are of
the opinion that:
| (1) | | The Agreement will constitute a legal, valid and binding obligation of Peerless enforceable
against Peerless in accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or other
similar laws of general applicability affecting the enforcement of creditors’ rights and
(b) the application of general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). |
| |
| (2) | | The Agreement will constitute a legal, valid and binding obligation of LMIC enforceable
against LMIC in accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or other
similar laws of general applicability affecting the enforcement of creditors’ rights and
(b) the application of general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). |
Our opinions set forth above are subject to the following qualifications and limitations:
| (i) | | We express no opinion as to Paragraph 17 of the Agreement insofar as that provision provides
that the terms of the Agreement may not be waived or modified except in writing, which may be
limited under certain circumstances. |
| |
| (ii) | | We wish to point out that the provisions of the Agreement which permit a party to take action
or make determinations may be subject to a requirement that such action be taken or such
determinations be made on a reasonable basis and in good faith. |
| |
| (iii) | | We express no opinion as to the provisions of Paragraph 14 of the Agreement on severability
or separability. |
| |
| (iv) | | The enforceability of the first sentence of Paragraph 15 of the Agreement, which restricts
assignment of the Agreement, is subject to Sections 9-406 and 9-408 of the New York Uniform
Commercial Code. |
| |
| (v) | | In this opinion, we do not address the determinations set out in Paragraph 19 of the
Agreement. |
| |
| (vi) | | Paragraph 6 of the Agreement states that the parties intend that the Transactions be sales
and purchases. We believe that Transactions would be viewed as purchases and sales and not
loans. However, there is a risk that a court may characterize the Transactions as |
| | | secured loans. In Lombard-Wall Inc. v. Columbus Bank & Trust Co.,1 the
Bankruptcy Court of the Southern District of New York held that repurchase agreements are a
type of secured loan. It is this decision that is most often cited as creating a risk of
recharacterization. However, more recent court decisions generally have found, in the
context of commercial law and federal securities law, repurchase agreements to be purchases
and sales.2 This is particularly the case where the agreement clearly
sets forth the intent of the parties to treat the transactions as purchases and sales, as in
the Agreement. |
We are members of the bar of New York and we express no opinion herein as to any matters governed
by any laws other than New York law. This opinion is rendered solely to you for your sole benefit.
This opinion may not be relied upon for any other purpose, or quoted or relied upon by any other
person, firm or corporation for any purpose, without our prior written consent.
Very truly yours,
| | |
| 1 | | No. 82-B-11556 (Bankr. S.D.N.Y. 1982) |
| |
| 2 | | See In re Xxxxxx, Xxxxxxx &
Xxxxxxxx Asset Management Corp., 67 B.R. 557 (D.N.J. 1986); SEC x. Xxxxxxxx
Sec. Corp., 785 F. 2d 38 (2d Cir. 1986); Granite Partners, L.P. v. Bear,
Xxxxxxx & Co. Inc., 17 F. Supp. 2d 275 (S.D.N.Y. 1998); In re Residential
Resources Mortgage Investments Corp., 98 B.R. 2 (Bankr. D. Ariz. 1989). We
note, however, that a decision by the Federal bankruptcy court for the district
of Maryland, found a repurchase agreement “on its face reasonably susceptible
to more than one interpretation” and thus could not conclude as a matter of law
that the agreement did not constitute a secured lending. The court accordingly
concluded that the issue of proper characterization of the contract must be
resolved upon a full evidentiary hearing. In re: Criimi Mae, Inc., 251 B.R.
796 (Bankr. D. Md. 2000). |
