EXHIBIT 10.22
MASTER REPURCHASE AGREEMENT
Effective as of July 1, 2000 by and between Xxxx & Xxxxxxx Indemnity
Company ("C&F Indemnity") and Fairfax Financial Holdings Limited ("Fairfax").
WHEREAS, C&F Indemnity, in the normal course of its business, may from time
to time agree to pay claims to policyholders that require it to sell or
otherwise liquidate certain securities or other invested assets in order to
raise sufficient cash to make such payments; and
WHEREAS, C&F Indemnity typically pays policyholder claims prior to
receiving reimbursement for such claims from its reinsurers, requiring C&F
Indemnity to make cash payments on claims that can greatly exceed its ultimate
net liability for such claims and creating a timing gap between payments by C&F
Indemnity and recovery from its reinsurers; and
WHEREAS, Fairfax, as the indirect owner of C&F Indemnity, has an interest
in maximizing the return on invested assets of C&F Indemnity; and
WHEREAS, Fairfax seeks to assist C&F Indemnity in managing its cash flow to
eliminate or minimize investment losses resulting from the sale or liquidation
of securities in order to cover short-term cash requirements.
NOW, THEREFORE, for due and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. TRANSACTIONS
From time to time, the parties hereto may enter in to transactions (each a
"Transaction") in which C&F Indemnity agrees to transfer to Fairfax certain
securities ("Securities") against the transfer of an amount in United
States dollars equal to the fair market value of such Securities on the
date of transfer, such amount not to exceed U.S. $5,000,000 singly or, when
combined with amounts then outstanding from any other Transaction, in the
aggregate (the "Purchase Price") by Fairfax to C&F Indemnity and Fairfax
agrees to transfer to C&F Indemnity such Securities on a date to be agreed
by Fairfax and C&F Indemnity and which shall be on or before December 31 of
the year during which such transfer is made (the "Repurchase Date"),
against the transfer of funds by C&F Indemnity.
2. REPURCHASE
C&F Indemnity shall repurchase the Securities from Fairfax on or before the
Repurchase Date for an amount not to exceed the sum of the Purchase Price
and the aggregate amount obtained by daily application of the stated
interest rate of each Security to the Purchase Price paid for such Security
on a 360 day per year basis for the actual number of days during the period
commencing on the (and including) the Purchase Date and ending on (but
excluding) the Repurchase Date.
3. INCOME PAYMENTS
C&F Indemnity shall be entitled to receive, with respect to any Security at
any time, an amount equal to any principal thereof and all interest,
dividends or other distributions thereon ("Income") paid or distributed in
respect of the Securities that are not otherwise received by C&F Indemnity
to the full extent it would be so entitled if the Securities had not been
sold to Fairfax. Fairfax shall, as the parties may agree (or, in the
absence of any such agreement, as Fairfax shall reasonably determine in its
discretion), on the date such Income is paid or distributed either (i)
transfer to or credit to the accounts of C&F Indemnity such Income with
respect to any Securities 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 Fairfax by C&F Indemnity upon termination of the
Transaction.
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4. SECURITY INTEREST
Although the parties intend that the Transaction be a sale and purchase and
not a loan, in the event the Transaction is deemed to be a loan, C&F
Indemnity shall be deemed to have pledged to Fairfax as security for the
performance by C&F Indemnity of its obligations under the Transaction, and
shall be deemed to have granted to Fairfax a security interest in, all of
the Securities and all income thereon and other proceeds thereof.
5. 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 C&F Indemnity and Fairfax.
6. SEGREGATION OF SECURITIES
To the extent required by applicable law, all Securities in the possession
of Fairfax 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 C&F Indemnity's interest in the Securities shall pass
to Fairfax on the Purchase Date and, unless otherwise agreed by Fairfax and
C&F Indemnity, nothing in this Agreement shall preclude Fairfax from
engaging in repurchase transactions with the Securities or otherwise
selling, transferring, pledging or hypothecating the Securities, but no
such transaction shall relieve Fairfax of its obligations to transfer
Securities to C&F Indemnity pursuant to Paragraph 2 hereof, or of Fairfax's
obligation to credit or pay Income to, or apply Income to the obligations
of, C&F Indemnity pursuant to Paragraph 3 hereof.
7. NOTICES AND OTHER COMMUNICATIONS
Any and all notices or other communications hereunder shall be given by
mail or facsimile as follows:
To Fairfax: Fairfax Financial Holdings Limited
00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Facsimile: 000-000-0000
Attention: Chief Financial Officer
To C&F Indemnity: Xxxx & Xxxxxxx Indemnity Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attention: Chief Financial Officer
8. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
concerning the subject matter hereof. 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.
9. GOVERNING LAW
This Agreement shall be governed by the laws of the State of
New York
without giving effect to the conflict of law principles thereof.
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10. COUNTERPARTS
This Agreement may be executed in two counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
FAIRFAX FINANCIAL HOLDINGS LIMITED
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Title: Vice President
XXXX & XXXXXXX INDEMNITY COMPANY
By: /s/ XXXX XXXX XXXXXXXXX
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Xxxx Xxxx Xxxxxxxxx
Title: Executive Vice President,
CFO and Treasurer
By: /s/ XXXXXXX XXXXXXXX
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By: Xxxxxxx Xxxxxxxx
Title: Secretary
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