ex10_2.htm


    Exhibit
10.2

     

     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    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:

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “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 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      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 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      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.”

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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]

    


     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    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]

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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

              


      

    

     

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      SCHEDULE
1

       

      [APPLICABLE
SPREAD]

       

      


       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      SCHEDULE
2

       

      [BUYER’S
MARGIN PERCENTAGE]

       

      


       

       

      


      

        
          
             


          

          
             


            
              

            

          

          
             


          

        



      SCHEDULE
3

       

      [PRICING
RATE]

       

      


       


      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


      SCHEDULE
4

       

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


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      SCHEDULE
5

       

      [LIST
OF AFFIRMED ORIGINAL PURCHASE PERCENTAGES FOR THE

      PURCHASED
SECURITIES AND PURCHASED LOANS]

       

      


       

      


       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      SCHEDULE
6

       

      [REVISED
EXHIBIT VI TO ANNEX I]