Exhibit 10.2
 
 

 
 

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AMENDMENT NO. 2 TO MASTER REPURCHASE AGREEMENT AND ANNEX I TO
MASTER REPURCHASE AGREEMENT SUPPLEMENTAL TERMS AND
CONDITIONS

AMENDMENT NO. 2 TO MASTER REPURCHASE AGREEMENT AND ANNEX I TO MASTER REPURCHASE
AGREEMENT SUPPLEMENTAL TERMS AND CONDITIONS, dated as of July 8, 2008 (this
“Amendment”), by and between ANTHRACITE FUNDING, LLC (“Seller”) and DEUTSCHE
BANK AG, CAYMAN ISLANDS BRANCH, a branch of a German banking institution
(“Buyer”), and agreed to and accepted by AHR CAPITAL DB LIMITED, an Irish
private limited company (“Removed Seller”) and DEUTSCHE BANK AG, LONDON BRANCH,
a branch of a German banking institution (“Removed Buyer”).  Capitalized terms
used but not otherwise defined herein shall have the meanings given to them in
the Repurchase Agreement (as hereinafter defined).

RECITALS

WHEREAS, Seller, Removed Seller, Buyer and Removed Buyer are parties to that
certain Master Repurchase Agreement and Annex I to Master Repurchase Agreement
Supplemental Terms And Conditions (“Annex I”), dated as of December 23, 2004, as
supplemented by the English Loan Supplement dated December 23, 2004, the
Joinder, dated August 24, 2005, and the Joinder, dated October 24, 2005, and as
amended by that certain Amendment No. 1 to Annex I to Master Repurchase
Agreement Supplemental Terms and Conditions, dated February 8, 2007 (and as
otherwise amended, restated, supplemented or otherwise modified from time to
time, including by this Amendment, the “Repurchase Agreement”); and

WHEREAS, Seller, Removed Seller, Buyer and Removed Buyer wish to further amend
the Repurchase Agreement, as more particularly set forth herein.

NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:

SECTION 1. Amendments.

(a)         Commencing on the date hereof and thereafter, all references in the
Repurchase Agreement and the Transaction Documents to the “Seller” shall be
deemed to refer only to Anthracite Funding, LLC, and not the Removed Seller.

(b)         Commencing on the date hereof and thereafter, all references in the
Repurchase Agreement and the Transaction Documents to the “Buyer” shall be
deemed to refer only to Deutsche Bank AG, Cayman Islands Branch, and not the
Removed Buyer.

(c)         Section 2 of Annex I is hereby amended by adding the following
definitions:

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“Amendment No. 2” shall mean Amendment No. 2 To Master Repurchase Agreement and
Annex I To Master Repurchase Agreement Supplemental Terms And Conditions, dated
as of July 8, 2008, by and between Buyer and Seller.
 
“BOA 9/08 Facility” shall mean that debt facility (whether documented as a
repurchase agreement or loan agreement) in a maximum principal amount equal to
$100,000,000 which currently matures in September, 2008, between an Affiliate of
the Sponsor and Bank of America, N.A. or its Affiliate.
 
“BOA 9/09 Facility” shall mean that debt facility (whether documented as a
repurchase agreement or loan agreement) in a maximum principal amount equal to
$275,000,000 which currently matures in September, 2009, between an Affiliate of
the Sponsor and Bank of America, N.A. or its Affiliate.
 
“Environmental Law” shall mean, any federal, state, foreign or local statute,
law, rule, regulation, ordinance, code, guideline, written policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. §
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the
Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
§ 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the
Emergency Planning the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et
seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq.; and
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state
and local or foreign counterparts or equivalents, in each case as amended from
time to time.
 
“Ground Lease” shall mean a ground lease containing the following terms and
conditions: (a) a remaining term (exclusive of any unexercised extension
options) of thirty (30) years or more from the Purchase Date of the Purchased
Loan; (b) the right of the lessee to mortgage and encumber its interest in the
leased property without the consent of the lessor or with such consent given;
(c) the obligation of the lessor to give the holder of any mortgage lien on such
leased property written notice of any defaults on the part of the lessee and
agreement of such lessor that such lease will not be terminated until such
holder has had a reasonable opportunity to cure or complete foreclosures, and
fails to do so; (d) reasonable transferability of the lessee’s interest under
such lease, including ability to sublease; and (e) such other rights customarily
required by mortgagees making a loan secured by the interest of the holder of
the leasehold estate demised pursuant to a ground lease.
 
“MS 2/09 Facility” shall mean that debt facility (whether documented as a
repurchase agreement or loan agreement) in a maximum principal amount equal
 
 

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to $300,000,000 which currently matures in February, 2009, between an Affiliate
of the Sponsor and Morgan Stanley Incorporated or its Affiliate.
 
“Restructure Date” shall mean July 8, 2008.
 
(d)         Section 2 of Annex I is hereby amended by deleting the definition of
“Applicable Spread” and by inserting the following definition of “Applicable
Spread”:

“Applicable Spread” shall mean, with respect to a Transaction involving
Purchased Securities in any Rating Category and/or Purchased Loans in any
Collateral Type Grouping, the rates indicated on Schedule 1 of Amendment No. 2.
 
(e)         Section 2 of the Repurchase Agreement is hereby amended by deleting
the definition of “Buyer’s Margin Percentage” and by inserting the following
definition of “Buyer’s Margin Amount”:
 
“Buyer’s Margin Percentage” shall mean, with respect to any Transaction as of
any date, the reciprocal of the “Advance Rate” for such Transaction, as
specified on Schedule 2 of Amendment No. 2 (i.e., the percentage that when
multiplied by the applicable Advance Rate equals 1.00).  The Buyer’s Margin
Percentage for each of the applicable Advance Rate is as specified on Schedule 2
of Amendment No. 2.
 
(f)          All references in Annex I to “CF Sweep Event” and “CF Sweep
Purchase Percentage,” or any term or provision related to either of the
foregoing, are hereby deleted in their entirety.
 
(g)         Section 2 of Annex I is hereby amended by deleting the definition of
“Deficit Cure Amount” and by inserting the following definition of “Deficit Cure
Amount”:
 
“Deficit Cure Amount” shall mean, as of any date, with respect to any Purchased
Loan, the amount (expressed in United States Dollars) obtained by dividing (i)
the Repurchase Price of such Purchased Loan as of such date by (ii) the Affirmed
Original Purchase Percentage for such Purchased Loan, and with respect to any
Purchased Security, the amount (expressed in United States Dollars) obtained by
dividing (i) the Repurchase Price of such Purchased Security as of such date by
(ii) the then current Target Original Purchase Percentage for such Purchased
Security.
 
(h)         Section 2 of Annex I is hereby amended by deleting the definition of
“Extension Conditions” and “Extension Date Repurchase Price” in their entirety.
 
(i)          Section 2 of Annex I is hereby amended by deleting the existing
definition of “LIBOR” and by inserting the following definition of “LIBOR”:
 
“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate
(expressed as a percentage per annum and rounded upward, if necessary, to the
 

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next nearest 1/1000 of 1%) for deposits in U.S. dollars, for a one-month period,
that appears on Reuters Screen LIBOR01 (or the successor thereto) as of 11:00
a.m., London time, on the related Pricing Rate Determination Date.  If such rate
does not appear on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on such
Pricing Rate Determination Date, Buyer shall request the principal London office
of any four major reference banks in the London interbank market selected by
Buyer to provide such bank’s offered quotation (expressed as a percentage per
annum) to prime banks in the London interbank market for deposits in U.S.
dollars for a one-month period as of 11:00 a.m., London time, on such Pricing
Rate Determination Date for amounts of not less than the Repurchase Price of the
Transaction.  If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations.  If fewer than two such
quotations are so provided, Buyer shall request any three major banks in New
York City selected by Buyer to provide such bank’s rate (expressed as a
percentage per annum) for loans in U.S. dollars to leading European banks for a
one-month period as of approximately 11:00 a.m., New York City time on the
applicable Pricing Rate Determination Date for amounts of not less than the
Repurchase Price of the Transaction.  If at least two such rates are so
provided, LIBOR shall be the arithmetic mean of such rates.  LIBOR shall be
determined by Buyer or its agent, which determination shall be conclusive absent
manifest error.
 
(j)          Section 2 of Annex I is hereby amended by deleting the existing
definition of “Pricing Rate” and by inserting the following definition of
“Pricing Rate”:
 
“Pricing Rate” shall mean, for any Pricing Rate Period, with respect to a
Transaction involving Purchased Securities in any Rating Category and/or
Purchased Loans in any Collateral Type Grouping on Schedule I-A of this Annex I,
an annual rate calculated in accordance with Schedule 3 of Amendment No. 2.
 
(k)         Section 2 of Annex I is hereby amended by deleting the definition of
“Reference Banks.”
 
(l)          Section 2 of Annex I is hereby amended by deleting the existing
definition of “Repurchase Date” and by inserting the following definition of
“Repurchase Date”:
 
“Repurchase Date” shall mean July 8, 2010.
 
(m)        Sections 3(a), 3(b) and 3(l) of the Repurchase Agreement are hereby
deleted in their entirety.
 
(n)         Section 3(e) of Annex I is hereby replaced in its entirety as
follows:
 
(e)          On the Repurchase Date, termination of the applicable Transactions
will be effected by transfer to Seller or its agent of the Purchased Securities
and Purchased Loans and any Income in respect thereof received by Buyer (and not
previously credited or transferred to, or applied to the obligations
 

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of, Seller pursuant to Section 5 of this Annex I) against the simultaneous
transfer of the Repurchase Price to an account of Buyer.

(o)         The following shall be added as Section 3(d)(vi) of the Annex I:
 
(vi)         If any individual Purchased Security which Seller proposes to
repurchase pursuant to this Section 3(d) is rated “BB” (or the equivalent) or
higher, then at the time such individual Purchased Security is repurchased,
Seller shall also repurchase all other Purchased Securities from the same issue
which are rated lower than such individual Purchased Security.

(p)         Section 4(a) of the Repurchase Agreement is hereby replaced in its
entirety as follows:

(a)  If at any time, either (i) the Market Value of any of the Purchased
Securities or any of the Purchased Loans shall be less than the Buyer’s Margin
Amount for such Purchased Securities or Purchased Loans, respectively (a “Margin
Deficit”), or (ii) a Credit Loss shall occur with respect to the Purchased
Securities in any Rating Category subject to the last sentence of this Paragraph
4(a) or a Credit Loss shall occur with respect to the Purchased Loans in any
Collateral Type Grouping, then Buyer may by notice to Seller require Seller to
transfer to Buyer (A) cash or (B) additional collateral or a letter of credit
acceptable to Buyer in its sole and absolute discretion, so that the sum
obtained by adding the Market Value of such Purchased Securities or Purchased
Loans plus such cash and additional collateral or letter of credit shall equal
or exceed the Deficit Cure Amount for such Purchased Securities or Purchased
Loans, respectively, as of the same date.  Seller’s failure to cure any Margin
Deficit as required by the preceding sentence shall constitute an Event of
Default under the Transaction Documents and shall entitle Buyer to exercise its
remedies under Section 14 of Annex I (including, without limitation, the
liquidation remedy provided for in Section 14(c)(iv) of Annex I).  For purposes
of this Paragraph 4(a), a Credit Loss shall only be deemed to have occurred with
respect to the Purchased Securities in any Rating Category if and to the extent
such Credit Loss shall not have been offset by Credit Gains with respect to
Purchased Securities in the same Rating Category.

(q)         Notwithstanding anything contained in the Repurchase Agreement to
the contrary, in no event shall Buyer advance any Margin Excess to
Seller.  Consequently, Section 4(b) of the Repurchase Agreement is hereby
deleted in its entirety.

(r)          Section 5(e) of Annex I in hereby deleted in its entirety.

(s)         Section 10(a)(viii) of Annex I is hereby replaced in its entirety as
follows:

(viii)        Representations and Warranties Regarding Purchased
Securities.  Seller represents and warrants to the Buyer that each Purchased
Security sold
 

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hereunder, as of each Purchase Date for a Transaction conforms to the applicable
representations and warranties set forth in Exhibit VI attached hereto in all
material respects, except as disclosed to the Buyer in writing.

(t)          Section 10(a)(xv) of Annex I is hereby replaced in its entirety as
follows:

(xv)        Federal Regulations.  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.

(u)         Section 14(a) of Annex I shall be amended by adding the text
indicated on Schedule 4 of Amendment No. 2.

(v)         The following shall be added to Annex I as Section 14(b)(ix):

(ix)         Upon the designation of any Accelerated Repurchase Date, the Buyer
may, without prior notice to the Seller, set off any sum or obligation (whether
or not arising under this Agreement, whether matured or unmatured, whether or
not contingent and irrespective of the currency, place of payment or booking
office of the sum or obligation) owed by Seller to Buyer or any Affiliate of
Buyer against any sum or obligation (whether or not arising under this
Agreement, whether matured or unmatured, whether or not contingent and
irrespective of the currency, place of payment or booking office of the sum or
obligation) owed by Buyer or any Affiliate of Buyer to Seller.  Buyer will give
notice to the other party of any set off effected under this Section
14(b)(ix).  If a sum or obligation is unascertained, Buyer may in good faith
estimate that obligation and set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained.  Nothing in this Section 14(b)(ix) shall be effective to create a
charge or other security interest.  This Section 14(b)(ix) shall be without
prejudice and in addition to any right of set-off, combination of accounts, lien
or other rights to which any party is at any time otherwise entitled (whether by
operation of law, contract or otherwise).

(w)        The second sentence of the second paragraph of Section 16 of Annex I
shall hereby be replaced in its entirety with the following:

“A copy of all notices, consents, approvals and requests directed to Seller
(other than Confirmations) shall be delivered concurrently to the
following:  Latham & Watkins, 885 Third Avenue, New York, New York 10019,
Attention:  David M. Stewart, Esq.  A notice shall be deemed to have been given:
(a) in the case of hand delivery, at the time of delivery, (b) in the case of
registered or certified mail, when delivered or the first attempted delivery on
a Business Day, (c) in the case of expedited prepaid delivery upon the first
attempted delivery on a Business Day, or (d) in the case telecopier, upon
receipt of answerback confirmation, provided that such telecopied notice was
also delivered as required in this Section.”

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(x)         On the date hereof, and as a condition to the effectiveness of this
Amendment, Seller shall reduce the outstanding Repurchase Price (excluding
accrued Price Differential) of each Purchased Security and Purchased Loan to an
amount equal to the product of (x) its then current Market Value multiplied by
(y) the Original Purchase Percentage for such Purchased Security or Purchased
Loan set forth on Schedule 5 attached hereto (such percentage, the “Affirmed
Original Purchase Percentage,” and such reduced Repurchase Price, the
“Restructure Date Repurchase Price”).

  Notwithstanding anything contained in the Repurchase Agreement to the
contrary, Seller shall, on the second Remittance Date of each month, reduce the
Repurchase Price with respect to each Purchased Security by an amount equal to
the product of (x) its then current Market Value multiplied by (y) the Target
Original Purchase Percentage (as hereinafter defined).  The “Target Original
Purchase Percentage” for each Purchased Security will be a percentage equal to
(a) the Affirmed Original Purchase Percentage minus (b) the product of (i) a
percentage equal to the quotient of (x) one (1) divided by the “amortization
flag” (as specified on Schedule 5 attached hereto for each Purchased Security)
of the Restructure Date Repurchase Price of such Purchased Security, divided by
(y) the Market Value of such Purchased Security as of the date hereof multiplied
by (ii) the number of Remittance Dates that have occurred since the date
(including the Remittance Date on which the percentage is being calculated).

(y)         Notwithstanding anything contained in the Repurchase Agreement to
the contrary, Seller acknowledges and agrees that from and after the date
hereof, Seller may not propose any new Transactions, and in no event shall Buyer
be obligated to enter into any new Transactions.

(z)         Schedule I-A to Annex I is hereby deleted in its entirety.

(aa)       Exhibit VI to Annex I is hereby replaced in its entirety by the
Representations and Warranties attached hereto as Schedule 6.

SECTION 2.      Representation and Warranties. Seller hereby represents,
covenants and warrants to Buyer that he representations and warranties contained
in the Repurchase Agreement and the other Transaction Documents, as modified by
this Amendment, are true and correct as of the date hereof.
 
SECTION 3.      Conditions Precedent.  This Amendment and its provisions shall
become effective on the first date on which this Amendment is executed and
delivered by a duly authorized officer of each of the Seller and the Buyer (the
“Amendment Effective Date”).
 
SECTION 4.      Counterparts. This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Amendment in Portable Document Format (PDF) or by facsimile transmission shall
be effective as delivery of a manually executed original counterpart thereof.
 

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SECTION 5.      GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 

[NO FURTHER TEXT ON THIS PAGE]

 

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
 

 
SELLER
     
ANTHRACITE FUNDING, LLC, a
 
Delaware limited liability company
     
By:
Anthracite Capital, Inc., a Maryland
   
corporations, its sole member
       
By:
/s/ Richard Shea
 
     
Name:  Richard Shea
     
Title:     COO
           
BUYER
     
DEUTSCHE BANK AG, CAYMAN
 
ISLANDS BRANCH
         
By:
/s/ Christopher E. Tognola
 
   
Name:  Christopher E. Tognola
   
Title:     Managing Director
       
By:
/s/ Christine Belbusti
     
Name:  Christine Belbusti
       
Title:     Director
   

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 
 

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AGREED TO AND ACCEPTED BY:
 
AHR CAPITAL DB LIMITED,
an Irish private limited company
       
By:
/s/ Richard Shea
 
 
Name:  Richard Shea
 
Title:     Director
       
DEUTSCHE BANK AG,
LONDON BRANCH
       
By:
/s/ David Butler
 
 
Name:  David Butler
 
Title:     Director
   
By:
/s/ Emma Winning
 
 
Name:  Emma Winning
 
Title:     Vice President

 
 
 
 

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SCHEDULE 1
 
[APPLICABLE SPREAD]
 

 

 
 

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SCHEDULE 2
 
[BUYER’S MARGIN PERCENTAGE]
 

 
 

 
 

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SCHEDULE 3
 
[PRICING RATE]
 

 

 
 
 

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SCHEDULE 4
 
[TEXT TO BE ADDED TO ANNEX I SECTION 14(a)(xiii) AND SECTION 14(a)(xiv)]

 
 

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SCHEDULE 5
 
[LIST OF AFFIRMED ORIGINAL PURCHASE PERCENTAGES FOR THE
PURCHASED SECURITIES AND PURCHASED LOANS]
 

 

 

 
 

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SCHEDULE 6
 
[REVISED EXHIBIT VI TO ANNEX I]