exv10w42



 






Exhibit 10.42




EXECUTION



	 	 	 
	

	 	Master Repurchase
Agreement






September 1996 Version






	 	 	 
	Dated as of

	 	November 17, 2005
	 
	 	 
	Between:

	 	Citigroup Global Markets Inc. (as “Buyer”)
	 
	 	 
	and

	 	CSE Mortgage LLC (as “Seller”)







	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;





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	 	(o)	 	“Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree
otherwise, such price increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by
Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations
under clause (ii) of Paragraph 5 hereof;
	 
	 	(p)	 	“Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction
hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof.
The term “Purchased Securities” with respect to any Transaction at any time also shall
include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and
shall exclude Securities returned pursuant to Paragraph 4(b) hereof;
	 
	 	(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





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	 	 	 	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.





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	 	(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.





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	8.	 	Segregation of Purchased Securities
	 
	 	 	To the extent required by applicable law, all Purchased Securities in the possession of
Seller shall be segregated from other securities in its possession and shall be identified as
subject to this Agreement. Segregation may be accomplished by appropriate identification on the
books and records of the holder, including a financial or securities intermediary or a clearing
corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the
Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall
preclude Buyer from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no
such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof.
	 






Required Disclosure for Transactions in Which the Seller

Retains Custody of the Purchased Securities




Seller is not permitted to substitute other securities for those subject
to this
Agreement and therefore must keep Buyer’s securities segregated at all times, unless
in this Agreement Buyer grants Seller the right to substitute other securities. If
Buyer grants the right to substitute, this means that Buyer’s securities will likely be
commingled with Seller’s own securities during the trading day. Buyer is advised
that, during any trading day that Buyer’s securities are commingled with Seller’s
securities, they [will]* [may]** be subject to liens granted by Seller to [its clearing
bank]* [third parties]** and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller’s ability to resegregate
substitute securities for Buyer will be subject to Seller’s ability to satisfy
[the clearing] *[any]** lien or to obtain substitute securities.




* Language to be used under 17 C.F.R. ß403.4(e) if Seller is a
government securities broker
or dealer other than a financial institution.





** Language to be used under 17 C.F.R. ß403.5(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.





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	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 deter-mined 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.





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	 	(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





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	 	 	 	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 sub-paragraph (a) of this Paragraph.
	 
	 	(g)	 	The defaulting party shall be liable to the nondefaulting party for (i) the amount
of all
reasonable legal or other expenses incurred by the nondefaulting party in connection
with or as a result of an Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a result of
an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a Transaction.
	 
	 	(h)	 	To the extent permitted by applicable law, the defaulting party shall be liable to
the non-defaulting party for interest on any amounts owing by the defaulting party
hereunder, from the date the defaulting party becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full
by the exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable
by the defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at
a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime
Rate.
	 
	 	(i)	 	The nondefaulting party shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable law.






	12.	 	Single Agreement
	 
	 	 	Buyer and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in the performance
of any such obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply property held
by them in respect of any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other transfers made by either
of them in respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions hereunder, and
the obligations to make any such payments, deliveries and other transfers may be applied
against each other and netted.
	 
	13.	 	Notices and Other Communications
	 
	 	 	Any and all notices, statements, demands or other communications hereunder may be given by
a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address
specified in Annex II hereto, or so sent to such party at any other place specified in a notice
of change of address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by other communication as
specified in the preceding sentence.





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	14.	 	Entire Agreement; Severability
	 
	 	 	This Agreement shall supersede any existing agreements between the parties containing
general terms and conditions for repurchase transactions. Each provision and agreement herein
shall be treated as separate and independent from any other provision or agreement herein and
shall be enforceable notwithstanding the unenforceability of any such other provision or
agreement.






	15.	 	Non-assignability; Termination






	 	(a)	 	The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written consent of the
other party, and any such assignment without the prior written consent of the other
party shall be null and void. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. This Agreement may be terminated by either party upon
giving written notice to the other, except that this Agreement shall, notwithstanding such
notice, remain applicable to any Transactions then outstanding.
	 
	 	(b)	 	Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning,
charging or otherwise dealing with all or any part of its interest in any sum payable to
it under Paragraph 11 hereof.






	16.	 	Governing Law
	 
	 	 	This Agreement shall be governed by the laws of the State of New York without giving
effect to the conflict of law principles thereof.






	17.	 	No Waivers, Etc.
	 
	 	 	No express or implied waiver of any Event of Default by either party shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall
constitute a waiver of its right to exercise any other remedy hereunder. No modification or
waiver of any provision of this Agreement and no consent by any party to a departure here-from
shall be effective unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at
a later date.






	18.	 	Use of Employee Plan Assets






	 	(a)	 	If assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party
hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party
prior to the Transaction. The Plan Party shall represent in writing to the other party
that the Transaction does not constitute a prohibited transaction under ERISA or is
otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall
not be required so to proceed.





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September 1996 • Master Repurchase Agreement





 









 









	 	(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
out-standing 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
connec-tion 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
insti-tution,” 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





11 •
September 1996 • Master Repurchase Agreement




 









 









	 	 	 	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.





Citigroup Global Markets Inc.




By: /s/ Barrie Ringelheim

Name: Barrie Ringelheim

Title: Managing Director




CSE Mortgage LLC




By: CapitalSource Inc., as Manager




By: /s/ Thomas A. Fink




Name: Thomas A. Fink




Title: Senior Vice President and Chief Financial Officer





 










 






EXECUTION




ANNEX I




Supplemental Terms and Conditions



This Annex I supplements and forms a part of the Master Repurchase Agreement dated as of November
17, 2005 (the “Agreement”) between Citigroup Global Markets Inc. and CSE Mortgage LLC. 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 IV – Party Acting as Investment Manager


Schedule A – Letter Repo Acceptable Collateral



2. Definitions. For purposes of the Agreement and this Annex I, the following terms shall
have the following meanings:



“Margin Notice Deadline” means 10:00 A.M. New York time.



“Business Day” or “business day”, with respect to any Transaction hereunder, a day on which regular
trading may occur in the principal market for the Purchased Securities subject to such Transaction,
which includes shortened trading days, days on which trades are permitted to occur but do not in
fact occur and days on which the Purchased Securities are subject to percentage of movement or
volume limitations, provided, however, that for purposes of calculating Market Value, such
term shall mean a day on which regular trading occurs in the principal market for the assets the
value of which is being determined. Notwithstanding the foregoing, (i) for purposes of Paragraph 4
of the Agreement, “business day” shall mean any day on which regular trading occurs in the
principal market for any Purchased Securities or for any assets constituting Additional Purchased
Securities under any outstanding Transaction hereunder and “next business day” shall mean the next
day on which a transfer of Additional Purchased Securities may be effected in accordance with
Paragraph 7 of the Agreement, and (ii) in no event shall a Saturday or Sunday be considered a
business day.



3. Initiation; Confirmation: Termination. Paragraph 3 (a) is hereby amended and restated
in its entirety to read as follows:




     “(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. Buyer hereby agrees that its agent for such purposes shall be Citigroup
Global Markets Inc.


4. Threshold Amount. Paragraph 4(e) is hereby amended and restated in its entirety to read
as follows:




     “(e) Seller and Buyer hereby agree, with respect to all Transactions hereunder, that the
respective rights of Buyer or Seller 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 the lesser of
(a) $500,000 USD, or (ii) 1% of the aggregate Purchase Price for all Transactions outstanding
hereunder on such day.”


5. Purchase Price Maintenance.



(a) The parties agree that in any Transaction hereunder whose term extends over an Income payment
date for the Securities subject to such transaction, Buyer shall on the date such income is paid
transfer to or credit to the account of Seller an amount equal to such Income payment or payments
pursuant to Paragraph 5(i) and shall not apply the Income payment or payments to reduce the amount
to be


 









 






transferred to Buyer or Seller upon termination of the Transaction pursuant to Paragraph 5(ii) of
the Agreement.



(b) Notwithstanding the definition of Purchase Price in Paragraph 2 of the Agreement and the
provisions of Paragraph 4 of the Agreement, the parties agree (i) that the Purchase Price will not
be increased or decreased by the amount of any cash transferred by one party to the other pursuant
to Paragraph 4 of the Agreement and (ii) that transfer of such cash shall be treated as if it
constituted a transfer of Securities (with a Market Value equal to the U.S. dollar amount of such
cash) pursuant to Paragraph 4(a) or (b), as the case may be (including for purposes of the
definition of “Additional Purchased Securities”).



(c ) The parties agree that any cash transferred by Seller to Buyer pursuant to Paragraph 4 of the
Agreement shall earn interest at a rate equal to the Fed Funds effective rate.



6. Submission to Jurisdiction and Waiver of Immunity.



Each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any United
States Federal or New York State court sitting in Manhattan, and any appellate court from any such
court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction under the Agreement
and (ii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court and any right of
jurisdiction on account of its place of residence or domicile.



To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise)
from any legal action, suit or proceeding, from jurisdiction of any court or from set off or any
legal process (whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to itself or any of its
property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in
respect of any action brought to enforce its obligations under the Agreement or relating in any way
to the Agreement or any Transaction under the Agreement.



Each party hereto hereby irrevocably waives all right to trial by jury in any action or proceeding
arising out of or relating to this Agreement or any Transaction hereunder.



7. Cross Default.



Each party to this agreement (such party, “Party X”) agrees that, upon (a) the insolvency of Party
X or any of its affiliates, or (b) the default of Party X or any of its affiliates under any
transaction with the other party hereto or any of such other party’s affiliates (such other party
or any of its affiliates, a “Non-Defaulting Party”) and the exercise by such Non-Defaulting Party
of its rights and remedies under such transaction as a result of such default, then each
Non-Defaulting Party may, without prior notice to Party X: (i) liquidate any transaction between
Party X and any Non-Defaulting Party (which liquidation may include the conversion of amounts
denominated in multiple currencies into a single currency if deemed necessary or desirable by the
Non-Defaulting Party), (ii) reduce any amounts due and owing to Party X under any transaction
between Party X and any Non-Defaulting Party by setting off against such amounts any amounts due
and owing to a Non-Defaulting Party by Party X, and (iii) treat all security for, and all amounts
due and owing to Party X under, any transaction between Party X and any Non-Defaulting Party as
security for all transactions between Party X and any Non-Defaulting Party; provided,
however, that the exercise of the remedies described in clauses (i), (ii) and (iii) above
(or in any other similar provision in any agreement between the parties) shall be deemed to occur
immediately subsequent to, but independent of, the exercise of any netting, liquidation, set-off or
other similar provision contained in any master agreement between the parties; provided
further that each provision and agreement hereof shall be treated as independent from any
other provision or agreement herein and shall be enforceable notwithstanding the unenforceability
of any such other provision or agreement. For purposes of the foregoing, the term “affiliate”
shall not include any entity that controls or is under common control with Citigroup Global Markets
Holdings Inc., but in any event such term shall include


 









 






Citigroup Global Markets Holdings Inc. and any entity controlled by it; for purposes of this
Agreement, CSE Mortgage LLC shall be deemed to have no affiliates.



8. “Open” Transactions.



Whenever the parties enter into a Transaction on an “open basis”, it is understood that the
Transaction will terminate on the next succeeding Business Day, and that on any day that a
Transaction is terminating, the parties may enter into a new Transaction (which may be accomplished
by resetting the rate) which will, itself, terminate on the next succeeding Business Day. In all
cases, unless the parties have agreed otherwise, “open” Transactions will settle following
termination in accordance with the normal timeframe determined in accordance with market practice.



9. Resale of Purchased Securities.





The parties hereto acknowledge that from time to time the Purchased Securities may consist of
Securities that have not been registered under the United States Securities Act of 1933 (the
“Securities Act”). Accordingly, Buyer agrees that if any Purchased Securities consist of
Securities that have not been registered under the Securities Act, Buyer will not resell or
otherwise transfer such Purchased Securities except in accordance with Regulation S or Rule
144A or other available exemption under the Securities Act and in accordance with all
applicable laws and regulations in each jurisdiction in which it offers, sells or delivers
Purchased Securities. In addition, if any Purchased Securities consist of bearer debt
securities issued by a non-U.S. entity and if Buyer resells or otherwise transfers any such
obligations, Buyer agrees that it will do so only under procedures adequate to satisfy the
restrictions of applicable U.S. Treasury regulations relating to an original issuance of bearer
bonds.


10. Representations. The following additional representation and warranty shall be added to
Paragraph 10 of the Agreement:





(vi) from and after December 31, 2005, as of the last day of each calendar month, CSE
Mortgage LLC shall have a minimum shareholder’s equity of $300 million and maximum leverage
(calculated as the ratio of liabilities to shareholder’s equity) of 20 to 1, in each case
as determined by reference to the unaudited balance sheet of CSE Mortgage LLC as of the
last day of such calendar month.


11. Limited Recourse. Paragraph 11(i) of the Agreement is hereby amended and restated in
its entirety to read as follows:




     “(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; provided,
however, that notwithstanding any other provision of this Agreement, Buyer shall have no
recourse to Seller in excess of the Recourse Amount (as defined below), and Seller shall have no
obligation to Buyer in excess of the Recourse Amount, with respect to (i) any claims against Seller
(either in law or equity) arising under or in connection with this Agreement or otherwise in
connection with the transactions contemplated hereby, or (ii) the payment or performance of any
other debt, liability, obligation, covenant or duty owing under this Agreement or otherwise in
connection with the transactions contemplated hereby. For purposes of this Agreement, “Recourse
Amount” means, as of any date upon which an Event of Default occurs hereunder, an aggregate amount
equal to 10% of the aggregate Purchase Price of all Transactions outstanding hereunder on such day.
For the avoidance of doubt, in the case of an Event of Default in which the defaulting party is
Seller hereunder, nothing in this Paragraph 11(i) shall in any way limit or impair the rights of
Buyer to exercise its rights pursuant to Paragraph 11(d) of the Agreement and to have full recourse
against all Purchased Securities subject to Transactions on the date of such Event of Default.”


12. Delivery by Buyer of Purchased Securities on Repurchase Date. For the avoidance of
doubt, Buyer and Seller hereby acknowledge and agree that on each Repurchase Date, Buyer shall
transfer back to Seller all right, title and interest to the exact same Purchased Securities that
were transferred to Buyer by Seller on the Purchase Date.




 









 







13. Intent. Paragraph 19 is hereby amended by adding the following:




     “(e) For the avoidance of doubt, the parties clarify that they intend to treat each
Transaction as a secured financing transaction for purposes of U.S. federal income tax, and agree
not to act in a manner inconsistent with such treatment of each Transaction.”


In the event of any inconsistency between the provisions of this Annex and the provisions of the
Master Repurchase Agreement attached hereto, the terms contained in this Annex shall prevail.




	 	 	 	 	 	 	 	 	 
	Citigroup Global Markets Inc.	 	 	 	CSE Mortgage LLC
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By: CapitalSource Inc., as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Barrie Ringelheim
	 	 	 	/s/ Thomas A. Fink	 	 
	Name:

	 	 

Barrie Ringelheim
	 	 
	 	 

Name: Thomas A. Fink
	 	 
	 

	 	Managing Director
	 	 	 	Title: Senior Vice President and Chief	 	 
	 

	 	 	 	 	 	Financial Officer	 	 






 









 





ANNEX II




Names and Addresses for Communications Between Parties




CITIGROUP GLOBAL MARKETS INC.




	 	 	 
	Contract Issues:
	 	 
	 

	 	Citigroup Global Markets Inc.
	 

	 	Attention: Gail Shanley
	 

	 	111 Wall Street, 4th Floor
	 

	 	New York, NY 10005
	 

	 	Telephone: 212-657-1650
	 

	 	Telefax: 646-291-1551
	 
	 	 
	Operations Issues:
	 	 
	 

	 	Citigroup Global Markets Inc.
	 

	 	Patrick Kirby
	 

	 	333 West 34th Street –4th Floor
	 

	 	New York, NY 10001
	 

	 	Telephone: 212-615-8804
	 
	 	 
	 

	 	CSE MORTGAGE LLC
	 
	 	 
	Contract Issues:
	 	 
	 

	 	CSE Mortgage LLC
	 

	 	4445 Willard Ave. 12th Floor
	 

	 	Chevy Chase, MD 21815
	 

	 	Attn: General Counsel
	 

	 	Facsimile No.: 301-841-2380
	 
	 	 
	Other Issues:
	 	 
	 

	 	CSE Mortgage LLC
	 

	 	4445 Willard Ave. 12th Floor
	 

	 	Chevy Chase, MD 21815
	 

	 	Attn: Treasury
	 

	 	Facsimile No.: 301-841-2307






 









 





EXECUTION




Annex IV

Party Acting as Investment Manager



This Annex IV forms a part of the Master Repurchase Agreement dated as of November 17, 2005
(the “Agreement”) between CSE Mortgage LLC (“CSE”) and Citigroup Global Markets Inc. (“CGMI”).
This Annex IV sets forth the terms and conditions governing all transactions in which BlackRock
Financial Management, Inc. (“Investment Manager”) is authorized to enter into on behalf of CSE in
accordance with the terms of the Investment Manager Agreement dated as of November 14, 2005.
Capitalized terms used but not defined in this Annex IV shall have the meanings ascribed to them in
the Agreement.





	 	1.	 	Additional Representations. The Investment Manager hereby makes, for the benefit of
CSE and CGMI, the representations set forth in Paragraph 10 of the Agreement. In
addition, the Investment Manager hereby makes the following representations, which shall
continue during the term of any Transaction: CSE has duly authorized the Investment
Manager to execute and deliver the Agreement on its behalf, has the power to so authorize
Investment Manager and to enter into the Transactions contemplated by the Agreement and to
perform the obligations of Seller or Buyer, as the case may be, under such Transactions,
and has taken all necessary action to authorize such execution and delivery by Investment
Manager and such performance by it.
	 
	 	2.	 	Limitation of Investment Manager’s Liability. The parties expressly acknowledge that
if the representations of the Investment Manager under the Agreement, including this Annex
IV, are true and correct in all material respects during the term of any Transaction and
the Investment Manager otherwise complies with the provisions of this Annex IV, then (a)
the Investment Manager’s obligations under the Agreement shall not include a guarantee of
performance by CSE and (b) the other party’s remedies shall not include a right of setoff
in respect of rights or obligations, if any, of the Investment Manager arising in other
transactions in which the Investment Manager is acting as principal.
	 
	 	3.	 	Interpretation of Terms. All references to “Seller” or “Buyer”, as the case may be,
in the Agreement shall, subject to the provisions of this Annex IV (including, among other
provisions, the limitations on the Investment Manager’s liability in Paragraph 2 of this
Annex IV), be construed to reflect that (i) CSE shall have, in connection with any
Transaction or Transactions entered into by the Investment Manager on its behalf, the
rights, responsibilities, privileges and obligations of a “Seller” or “Buyer”, as the case
may be, directly entering into such Transaction or Transactions with the other party under
the Agreement, and (ii) CSE has designated the Investment Manager as its sole Investment
Manager for performance of Seller’s obligations to Buyer or Buyer’s obligations to Seller,
as the case may be, and for receipt of performance by Buyer of its obligations to Seller
or Seller of its obligations to Buyer, as the case may be, in connection with any
Transaction or Transactions under the Agreement (including, among other things, as
Investment Manager for CSE in connection with transfers of Securities, cash or other
property and as the Investment Manager for giving and receiving all notices under the
Agreement). Both the Investment Manager and CSE shall be deemed “parties” to the Agreement
and all references to a “party” or “either party” in the Agreement shall be deemed revised
accordingly (excluding any Act of Insolvency with respect to Investment Manager). An
Event of Default by Investment Manager under Paragraph 11




 









 






	 	 	 	of the Agreement (excluding any Act of Insolvency with respect to Investment Manager) shall
be deemed an Event of Default by Seller or Buyer, as the case may be.





	 	 	 	 	 	 	 	 	 
	Citigroup Global Markets Inc.	 	 	 	CSE Mortgage LLC
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By: CapitalSource Inc., as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Barrie Ringelheim
	 	 	 	/s/ Thomas A. Fink	 	 
	Name:

	 	 

Barrie Ringelheim
	 	 
	 	 

Name: Thomas A. Fink
	 	 
	 

	 	Managing Director
	 	 	 	Title: Chief Financial Officer and	 	 
	 

	 	 	 	 	 	Senior Vice President	 	 






Acknowledged and Agreed to by:




BlackRock Financial Management, Inc. as

Investment Manager for CSE Mortgage LLC




	 	 	 	 	 
	By:

	 	/s/ Robert S. Kapito	 	 
	Name:

	 	 

Robert S. Kapito
	 	 
	Title:

	 	Vice Chairman