EXHIBIT 10.7
[LOGO AND LETTERHEAD OF PUBLIC SECURITIES ASSOCIATION APPEARS HERE]
MASTER REPURCHASE AGREEMENT
DATED AS OF ___________ ___, _____
BETWEEN: ___________________________
AND
___________________________
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which one
party ("Seller") agrees to transfer to the other ("Buyer") securities or other
assets ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a date
certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the commencement by such
party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, moratorium, dissolution, delinquency or similar
law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of creditors
for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of 1970, which (A) is
consented to or not timely contested by such party, (B) results in the entry of
an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party's inability to pay such party's debts as they become
due;
(b) "Additional Purchased Securities", Securities provided by Seller to Buyer
pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any date, the
amount obtained by application of the Buyer's Margin Percentage to the
Repurchase Price for such Transaction as of such date;
(d) "Buyer's Margin Percentage", with respect to any Transaction as of any date,
a percentage (which may
be equal to the Seller's Margin Percentage) agreed to by Buyer and Seller or, in
the absence of any such agreement, the percentage obtained by dividing the
Market Value of the Purchased Securities on the Purchase Date by the Purchase
Price on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any principal thereof
and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice
requiring same-day satisfaction of margin maintenance obligations as provided in
Paragraph 4 hereof (or, in the absence of any such agreement, the deadline for
such purposes established in accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the price for
such Securities on such date obtained from a generally recognized source agreed
to by the parties or the most recent closing bid quotation from such a source,
plus accrued Income to the extent not included therein (other than any Income
credited or transferred to, or applied to the obligations of, Seller pursuant to
Paragraph 5 hereof) as of such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", with respect to any Transaction as of any date, the
aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Purchase Price for such Transaction on a 360 day per year
basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
(l) "Pricing Rate", the per annum percentage rate for determination of the Price
Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in The
Wall Street Journal (or, if more than one such rate is published, the average of
such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which Purchased
Securities are transferred by Seller to Buyer, and (ii) thereafter, except where
Buyer and Seller agree otherwise, such price increased by the amount of any cash
transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased
by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph
4(a) hereof or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer in a
Transaction hereunder, and any Securities substituted therefor in accordance
with Paragraph 9 hereof. The term "Purchased Securities" with respect to any
Transaction at any time also shall include Additional Purchased Securities
delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities
returned pursuant to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the Purchased
Securities from Buyer, including any date determined by application of the
provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of any date,
the amount obtained by application of the Seller's Margin Percentage to the
Repurchase Price for such Transaction as of such date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Buyer's Margin Percentage) agreed
to by Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction.
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or in writing at
the initiation of either Buyer or Seller. On the Purchase Date for the
Transaction, the Purchased Securities shall be transferred to Buyer or its agent
against the transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or
both), as shall be agreed, shall promptly deliver to the other party a written
confirmation of each Transaction (a "Confirmation"). The Confirmation shall
describe the Purchased Securities (including CUSIP number, if any), identify
Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price,
(iii) the Repurchase Date, unless the Transaction is to be terminable on demand,
(iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v)
any additional terms or conditions of the Transaction not inconsistent with this
Agreement. The Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between Buyer and Seller with respect to
the Transaction to which the Confirmation relates, unless with respect to the
Confirmation specific objection is made promptly after receipt thereof. In the
event of any conflict between the terms of such Confirmation and this Agreement,
this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall be
made by Buyer or Seller, no later than such time as is customary in accordance
with market practice, by telephone or otherwise on or prior to the business day
on which such termination will be effective. On the date specified in such
demand, or on the date fixed for termination in the case of Transactions having
a fixed term, termination of the Transaction will be effected by transfer to
Seller or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against
the transfer of the Repurchase Price to an account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Buyer is less than the aggregate Buyer's Margin Amount for all such Transactions
(a "Margin Deficit"), then Buyer may by notice to Seller require Seller in such
Transactions, at Seller's option, to transfer to Buyer cash or additional
Securities reasonably acceptable to Buyer ("Additional Purchased Securities"),
so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which such Buyer
is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at
such time (a "Margin Excess"), then Seller may by notice to Buyer require Buyer
in such Transactions, at Buyer's option, to transfer cash or Purchased
Securities to Seller, so that the aggregate Market Value of the Purchased
Securities, after deduction of any such cash or any Purchased Securities so
transferred, will thereupon not exceed such aggregate Seller's Margin Amount
(increased by the amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or (b) of
this Paragraph at or before the Margin Notice Deadline on any business day, the
party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such day. If any such notice is given after the Margin
Notice Deadline, the party receiving such notice shall transfer such cash or
Securities no later than the close of business in the relevant market on the
next business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to such
Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin
Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount
or a specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit or
a Margin Excess, as the case may be, may be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
Agreement).
5. INCOME PAYMENTS
Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise received by
Seller, to the full extent it would be so entitled if the Securities had not
been sold to Buyer. Buyer shall, as the parties may agree with respect to any
Transaction (or, in the absence of any such agreement, as Buyer shall reasonably
determine in its discretion), on the date such Income is paid or distributed
either (i) transfer to or credit to the account of Seller such Income with
respect to any Purchased Securities subject to such Transaction or (ii) with
respect to Income paid in cash, apply the Income payment or payments to reduce
the amount, if any, to be transferred to Buyer by Seller upon termination of
such Transaction. Buyer shall not be obligated to take any action pursuant to
the preceding sentence (A) to the extent that such action would result in the
creation of a Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities sufficient to
eliminate such Margin Deficit, or (B) if an Event of
Default with respect to Seller has occurred and is then continuing at the time
such Income is paid or distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all Income thereon and
other proceeds thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds. All Securities transferred by one party hereto to
the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer.
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.
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REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS CUSTODY OF
THE PURCHASED SECURITIES
Seller is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer's securities segregated at all times,
unless in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that Buyer's
securities will likely be commingled with Seller's own securities during the
trading day. Buyer is advised that, during any trading day that Buyer's
securities are commingled with Seller's securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and
may be used by Seller for deliveries on other securities transactions. Whenever
the securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy [the
clearing]* [any]** lien or to obtain substitute securities.
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*Language to be used under 17 C.F.R. (S)403.4(e) if Seller is a government
securities broker or dealer other than a financial institution.
**Language to be used under 17 C.F.R. (S)403.5(d) if Seller is a financial
institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer, substitute
other Securities for any Purchased Securities. Such substitution shall be made
by transfer to Buyer of such other Securities and transfer to Seller of such
Purchased Securities. After substitution, the substituted Securities shall be
deemed to be Purchased Securities.
(b) In Transactions in which 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, by-law or rule applicable to it or any agreement by which it is bound
or by which any of its assets are affected. On the Purchase Date for any
Transaction Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to
repurchase or Buyer fails to transfer Purchased Securities upon the applicable
Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof,
(iv) Buyer fails, after one business day's notice, to comply with Paragraph 5
hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi)
any representation made by Seller or Buyer shall have been incorrect or untrue
in any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):
(a) The nondefaulting party may, at its option (which option shall be deemed to
have been exercised immediately upon the occurrence of an Act of Insolvency),
declare an Event of Default to have occurred hereunder and, upon the exercise or
deemed exercise of such option, the Repurchase Date for each Transaction
hereunder shall, if it has not already occurred, be deemed immediately to occur
(except that, in the event that the Purchase Date for any Transaction has not
yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting party shall
(except upon the occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such option as promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller, if
the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, (i) the defaulting party's
obligations in such Transactions to repurchase all Purchased Securities, at the
Repurchase Price therefor on the Repurchase Date determined in accordance with
subparagraph (a) of this Paragraph, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the nondefaulting
party any Purchased Securities subject to such Transactions then in the
defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer, upon
tender by the nondefaulting party of payment of the aggregate Repurchase Prices
for all such Transactions, all right, title and interest in and entitlement to
all Purchased Securities subject to such Transactions shall be deemed
transferred to the nondefaulting party, and the defaulting party shall deliver
all such Purchased Securities to the nondefaulting party.
(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 nondefaulting party for interest on any amounts owing by the
defaulting party hereunder, from the date the defaulting party becomes liable
for such amounts hereunder until such amounts are (i) paid in full by the
defaulting party or (ii) satisfied in full by the exercise of the nondefaulting
party's rights hereunder. Interest on any sum payable by the defaulting party to
the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees (i) to perform all of its obligations in respect
of each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications hereunder may
be given by a party to the other by mail, facsimile, telegraph, messenger or
otherwise to the address specified in Annex II hereto, or so sent to such party
at any other place specified in a notice of change of address hereafter received
by the other. All notices, demands and 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 herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan Party") in a Transaction, the Plan Party
shall so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not constitute
a prohibited transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required so to
proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such
Transaction shall proceed only if Seller furnishes or has furnished to Buyer its
most recent available audited statement of its financial condition and its most
recent subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller shall be
deemed (i) to represent to Buyer that since the date of Seller's latest such
financial statements, there has been no material adverse change in Seller's
financial condition which Seller has not disclosed to Buyer, and (ii) to agree
to provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long
as it is a Seller in any outstanding Transaction involving a Plan Party.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement" as
that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Securities subject to such Transaction or
the term of such Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets subject to
such Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate Securities delivered
to it in connection with Transactions hereunder or to exercise any other
remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in 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.
[Name of Party] [Name of Party]
By_________________________ By__________________________
Title______________________ Title_______________________
Date_______________________ Date________________________
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ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
This Annex I forms a part of the Master Repurchase Agreement dated as of
__________________, 19__ (the "Agreement") between _______________________ and
______________________. Capitalized terms used but not defined in this Annex I
shall have the meanings ascribed to them in the Agreement.
1. OTHER APPLICABLE ANNEXES. In addition to this Annex I and Annex II, the
following Annexes and any Schedules thereto shall form a part of the Agreement
and shall be applicable thereunder:
[Annex III (International Transactions)]
[Annex IV (Party Acting as Agent)]
[Annex V (Margin for Forward Transactions)]
[Annex VI (Buy/Sell Back Transactions)]
[Annex VII (Transactions Involving Registered Investment Companies)]
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ANNEX II
NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES
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ANNEX III
INTERNATIONAL TRANSACTIONS
This Annex III (including any Schedules hereto) forms a part of the Master
Repurchase Agreement dated as of _________________, 19__ (the "Agreement")
between _______________________ and ______________________. Capitalized terms
used but not defined in this Annex III shall have the meanings ascribed to them
in the Agreement.
1. DEFINITIONS. For purposes of the Agreement and this Annex III:
(a) The following terms shall have the following meanings:
"Base Currency", United States dollars or such other currency as Buyer and
Seller may agree in the Confirmation with respect to any International
Transaction or otherwise in writing;
"Business Day" or "business day":
i. in relation to any International Transaction which (A) involves an
International Security and (B) is to be settled through CEDEL or
Euroclear, a day on which CEDEL or, as the case may be, Euroclear is open
to settle business in the currency in which the Purchase Price and the
Repurchase Price are denominated;
ii. in relation to any International Transaction which (A) involves an
International Security and (B) is to be settled through a settlement
system other than CEDEL or Euroclear, a day on which that settlement
system is open to settle such International Transaction;
iii. in relation to any International Transaction which involves a delivery of
Securities not falling within (i) or (ii) above, a day on which banks are
open for business in the place where delivery of the relevant Securities
is to be effected; and
iv. in relation to any International Transaction which involves an obligation
to make a payment not falling within (i) or (ii) above, a day other than a
Saturday or Sunday on which banks are open for business in the principal
financial center of the country of which the currency in which the payment
is denominated is the official currency and, if different, in the place
where any account designated by the parties for the making or receipt of
the payment is situated (or, in the case of ECU, a day on which ECU
clearing operates);
"CEDEL", CEDEL Bank, societe anonyme;
"Contractual Currency", the currency in which the International Securities
subject to any International Transaction are denominated or such other
currency as may be specified in the Confirmation with respect to any
International Transaction;
"Euroclear", Xxxxxx Guaranty Trust Company of New York, Brussels Branch,
as operator of the Euroclear System;
"International Security", any Security that (i) is denominated in a
currency other than United States dollars or (ii) is capable of being
cleared through a clearing facility outside the United States;
"International Transaction", any Transaction involving (i) an
International Security or (ii) a party organized under the laws of a
jurisdiction other than the United States or having its principal place of
business outside the United States;
"LIBOR", in relation to any sum in any currency, the offered rate for
deposits for such sum in such currency for a period of three months which
appears on the Reuters Screen LIBO page as of 11:00 A.M., London time, on
the date on which it is to be determined (or, if more than one such rate
appears, the arithmetic mean of such rates);
"Spot Rate", where an amount in one currency is to be converted into a
second currency on any date, the spot rate of exchange of a comparable
amount quoted by a major money-center bank in the New York interbank
market, as agreed by Buyer and Seller, for the sale by such bank of such
second currency against a purchase by it of such first currency.
(b) Notwithstanding Paragraph 2 of the Agreement, the term "Prime Rate" shall
mean, with respect to any International Transaction, LIBOR plus a spread, as may
be specified in the Confirmation with respect to any International Transaction
or otherwise in writing.
2. MANNER OF TRANSFER. All transfers of International Securities (i) shall be in
suitable form for transfer and accompanied by duly executed instruments of
transfer or assignment in blank (where required for transfer) and such other
documentation as the transferee may reasonably request, or (ii) shall be
transferred through the book-entry system of Euroclear or CEDEL, or (iii) shall
be transferred through any other agreed securities clearing system or (iv) shall
be transferred by any other method mutually acceptable to Seller and Buyer.
3. CONTRACTUAL CURRENCY.
(a) Unless otherwise mutually agreed, all funds transferred in respect of the
Purchase Price or the Repurchase Price in any International Transaction shall be
in the Contractual Currency.
(b) Notwithstanding subparagraph (a) of this Paragraph 3, the payee of any
payment may, at its option, accept tender thereof in any other currency;
provided, however, that, to the extent permitted by applicable law, the
obligation of the payor to make such payment will be discharged only to the
extent of the amount of the Contractual Currency that such payee may, consistent
with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) for delivery within the
customary delivery period for spot transactions in respect of the relevant
currency.
(c) If for any reason the amount in the Contractual Currency so received,
including amounts received after conversion of any recovery under any judgment
or order expressed in a currency other than the Contractual Currency, falls
short of the amount in the Contractual Currency due in respect of the Agreement,
the party required to make the payment shall (unless an Event of Default has
occurred and such party is the nondefaulting party) as a separate and
independent obligation (which shall not merge with any judgment or any payment
or any partial payment or enforcement of payment) and to the extent permitted by
applicable law, immediately pay such additional amount in the Contractual
Currency as may be necessary to compensate for the shortfall.
(d) If for any reason the amount of the Contractual Currency received by one
party hereto exceeds the amount in the Contractual Currency due such party in
respect of the Agreement, then (unless an Event of Default has occurred and such
party is the nondefaulting party) the party receiving the payment shall refund
promptly the amount of such excess.
4. NOTICES. Any and all notices, statements, demands or other communications
with respect to International Transactions shall be given in accordance with
Paragraph 13 of the Agreement and shall be in the English language.
5. TAXES.
(a) Transfer taxes, stamp taxes and all similar costs with respect to the
transfer of Securities shall be paid by Seller.
(b) (i)Unless otherwise agreed, all money payable by one party (the "Payor") to
the other (the "Payee") in respect of any International Transaction shall be
paid free and clear of, and without withholding or
deduction for, any taxes or duties of whatsoever nature imposed, levied,
collected, withheld or assessed by any authority having power to tax (a "Tax"),
unless the withholding or deduction of such Tax is required by law. In that
event, unless otherwise agreed, Payor shall pay such additional amounts as will
result in the net amounts receivable by Payee (after taking account of such
withholding or deduction) being equal to such amounts as would have been
received by Payee had no such Tax been required to be withheld or deducted. The
parties acknowledge and agree, for the avoidance of doubt, that the amount of
Income required to be transferred, credited or applied by Buyer for the benefit
of Seller under Paragraph 5 of the Agreement shall be determined without taking
into account any Tax required to be withheld or deducted from such Income,
unless otherwise agreed.
(ii) In the case of any Tax required to be withheld or deducted from any money
payable to a party hereto acting as Payee by the other party hereto acting as
Payor, Payee agrees to deliver to Payor (or, if applicable, to the authority
imposing the Tax) any certificate or document that would entitle Payee to an
exemption from, or reduction in the rate of, withholding or deduction of Tax
from money payable by Payor to Payee.
(iii) Each party hereto agrees to notify the other party of any circumstance
known or reasonably known to it (other than a Change of Tax Law, as defined in
Paragraph 6 hereof) that causes a certificate or document provided by it
pursuant to subparagraph (b)(ii) of this Paragraph to fail to be true.
(iv) Notwithstanding subparagraph (b)(i) of this Paragraph, no additional
amounts shall be payable by Payor to Payee in respect of an International
Transaction to the extent that such additional amounts are payable as a result
of a failure by Payee to comply with its obligations under subparagraph (b)(ii)
or (b)(iii) of this Paragraph with respect to such International Transaction.
6. TAX EVENT.
(a) This Paragraph 6 shall apply if either party notifies the other, with
respect to a Tax required to be collected by withholding or deduction, that -
i. any action taken by a taxing authority or brought in a court of competent
jurisdiction after the date an International Transaction is entered into,
regardless of whether such action is taken or brought with respect to a
party to the Agreement; or
ii. a change in the fiscal or regulatory regime after the date an
International Transaction is entered into, (each, a "Change of Tax Law")
has or will, in the notifying party's reasonable opinion, have a material
adverse effect on such party in the context of an International
Transaction.
(b) If so requested by the other party, the notifying party will furnish the
other party with an opinion of a suitably qualified adviser that an event
referred to in subparagraph (a)(i) or (a)(ii) of this Paragraph 6 has occurred
and affects the notifying party.
(c) Where this Paragraph 6 applies, the party giving the notice referred to in
subparagraph (a) above may, subject to subparagraph (d) below, terminate the
International Transaction effective from a date specified in the notice, not
being earlier (unless so agreed by the other party) than 30 days after the date
of such notice, by nominating such date as the Repurchase Date.
(d) If the party receiving the notice referred to in subparagraph (a) of this
Paragraph 6 so elects, it may override such notice by giving a counter-notice to
the other party. If a counter-notice is given, the party
which gives such counter-notice will be deemed to have agreed to indemnify the
other party against the adverse effect referred to in subparagraph (a) of this
Paragraph 6 so far as it relates to the relevant International Transaction and
the original Repurchase Date will continue to apply.
(e) Where an International Transaction is terminated as described in this
Paragraph 6, the party which has given the notice to terminate shall indemnify
the other party against any reasonable legal and other professional expenses
incurred by the other party by reason of the termination, but the other party
may not claim any sum constituting consequential loss or damage in respect of a
termination in accordance with this Paragraph 6.
(f) This Paragraph 6 is without prejudice to Paragraph 5 of this Annex III; but
an obligation to pay additional amounts pursuant to Paragraph 5 of this Annex
III may, where appropriate, be a circumstance which causes this Paragraph 6 to
apply.
7. MARGIN. In the calculation of "Margin Deficit" and "Margin Excess" pursuant
to Paragraph 4 of the Agreement, all sums not denominated in the Base Currency
shall be deemed to be converted into the Base Currency at the Spot Rate on the
date of such calculation.
8. EVENTS OF DEFAULT.
(a) In addition to the Events of Default set forth in Paragraph 11 of the
Agreement, it shall be an additional "Event of Default" if either party fails,
after one business day's notice, to perform any covenant or obligation required
to be performed by it under this Annex III, including, without limitation, the
payment of taxes or additional amounts as required by Paragraph 6 of this Annex
III.
(b) In addition to the other rights of a nondefaulting party under Paragraph 11
of the Agreement, following an Event of Default, the nondefaulting party may, at
any time at its option, effect the conversion of any currency into a different
currency of its choice at the Spot Rate on the date of the exercise of such
option and offset obligations of the defaulting party denominated in different
currencies against each other.
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SCHEDULE III.A
INTERNATIONAL TRANSACTIONS RELATING TO [RELEVANT COUNTRY]
This Schedule III.A forms a part of Annex III to the Master Repurchase Agreement
dated as of __________________, 19__ (the "Agreement") between
_______________________ and ______________________. Capitalized terms used but
not defined in this Schedule III.A shall have the meanings ascribed to them in
Annex III.
[Insert provisions applicable to relevant country.]
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