Document:

exv10w22

 

Exhibit 10.22

	 	 	 
	Public Securities Association

	 	Rigistrasse 60,
	40 Broad Street, New York, NY 1004-2373

	 	P.O. Box 169,
	

	 	CH-8033 Zurich

GLOBAL MASTER REPURCHASE AGREEMENT

Dated as of February 19, 2004

GROSS PAYING SECURITIES

GLOBAL MASTER REPURCHASE AGREEMENT

This agreement is to be used for repos or reverse repos and buy/sell backs of securities

other than equities, U.S. Treasury instruments and Net Paying Securities

	 	 	 
	BETWEEN:

	 	<“PARTY A”>
	 
	 	 
	

	 	   CITIGROUP GLOBAL MARKETS INC. AS AGENT FOR
	

	 	   CITIGROUP GLOBAL MARKETS LIMITED
	 
	 	 
	AND

	 	<“PARTY B”>
	 
	 	 
	

	 	   CAPITALSOURCE FINANCE LLC

	1.	 	APPLICABILITY

	(a)	 	From time to time the parties hereto may enter into transactions in which
one party, acting through a Designated Office, (“Seller”) agrees to sell
to the other, acting through a Designated Office, (“Buyer”) securities and
financial instruments (“Securities”) (other than equities, U.S. Treasury
instruments and Net Paying Securities) against the payment of the purchase
price by Buyer to Seller, with a simultaneous agreement by Buyer to sell
to Seller Securities equivalent to such Securities at a date certain or on
demand against the payment of the purchase price by Seller to Buyer.

	(b)	 	Each such transaction (which may be a repurchase transaction (“Repurchase
Transaction”) or a buy and sell back transaction (“Buy/Sell Back
Transaction”)) shall be referred to herein as a “Transaction” and shall be
governed by this Agreement, including any supplemental terms or conditions
contained in Annex I hereto, unless otherwise agreed in writing. If this
Agreement may be applied to Buy/Sell Back Transactions, this shall be
specified in Annex I, and the provisions of Annex III shall apply to such
Buy/Sell Back Transactions. If Transactions are to be effected under this
Agreement by either party as an agent, this shall be specified in Annex I,
and the provisions of Annex IV shall apply to such Agency Transactions.

 

 

	2.	 	DEFINITIONS

	(a)	 	“Act of Insolvency” shall occur with respect to any party hereto upon:

	 	(i)	 	its making a general assignment for the benefit of, or entering
into a re-organisation, arrangement, or composition with creditors;
or
	 
	 	(ii)	 	its admitting in writing that it is unable to pay its debts as they
become due; or
	 
	 	(iii)	 	its seeking, consenting to or acquiescing in the appointment
of any trustee, administrator, receiver or liquidator or analogous
officer of it or any material part of its property; or
	 
	 	(iv)	 	the presentation or filing of a petition in respect of it
(other than by the counterparty to this Agreement in respect of any
obligation under this Agreement) in any court or before any agency
alleging or for the bankruptcy, winding-up or insolvency of such
party (or any analogous proceeding) or seeking any reorganisation,
arrangement, composition, re-adjustment, administration, liquidation,
dissolution or similar relief under any present or future statute,
law or regulation, such petition (except in the case of a petition
for winding-up or any analogous proceeding, in respect of which no
such 30 day period shall apply) not having been stayed or dismissed
within 30 days of its filing; or
	 
	 	(v)	 	the appointment of a receiver, administrator, liquidator or
trustee or analogous officer of such party or over all or any
material part of such party’s property; or
	 
	 	(vi)	 	the convening of any meeting of its creditors for the purposes
of considering a voluntary arrangement as referred to in section 3 of
the Insolvency Act 1986 (or any analogous proceeding);

(b) “Agency Transaction”, the meaning specified in paragraph 1 of Annex IV
hereto;

(c) “Base Currency”, the currency indicated in Annex I hereto;

(d) “Business Day”:

	 	(i)	 	in relation to the settlement of any Transaction which is to be
settled through Cedel or Euroclear, a day on which Cedel or, as the
case may be, Euroclear is open to settle business in the currency in
which the Purchase Price and the Repurchase Price are denominated;
	 
	 	(ii)	 	in relation to the settlement of any Transaction which is to be
settled through a settlement system other than Cedel or Euroclear, a
day on which that settlement system is open to settle such
Transaction;
	 
	 	(iii)	 	in relation to any delivery of Securities not falling within
(i) or (ii) above, a day on which banks are open for business in the
place where delivery of the relevant Securities is to be effected;
and
	 
	 	(iv)	 	in relation to any obligation to make a payment not falling
within (i) or (ii) above, a day other than a Saturday or a Sunday on
which banks are open for business in the principal financial centre
of the country of which the currency in which the payment is
denominated is the official currency and, if different, in the place
where any account designated by the parties for the making or receipt
of the payment is situated (or, in the case of ECU, a day on which
ECU clearing operates);

	(e)	 	“Cash Margin”, a cash sum paid to Buyer or Seller in accordance with
paragraph 4;

	(f)	 	“Cedel”, Cedel Bank, societe anonyme;

	(g)	 	“Confirmation”, the meaning specified in paragraph 3(b);

	(h)	 	“Contractual Currency”, the meaning specified in paragraph 7(a);

	(i)	 	“Defaulting Party”, the meaning specified in paragraph 10;

	(j)	 	“Default Market Value” with respect to any Securities on any date:

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	 	(i)	 	in the case of Securities to be delivered to the Defaulting Party,

	 	(aa)	 	if the non-Defaulting Party has between the
occurrence of the relevant Event of Default and the Default
Valuation Time (as defined below) sold Securities forming part
of the same issue and being of an identical type and description
to those Securities and in substantially the same amount as
those Securities, the net proceeds of sale (after deducting all
reasonable costs, fees and expenses incurred in connection
therewith) and
	 
	 	(bb)	 	failing such sale before the Default Valuation Time,
the Market Value of such Securities at the Default Valuation
Time;

	 	(ii)	 	in the case of Securities to be delivered by the Defaulting Party,

	 	(aa)	 	if the non-Defaulting Party has between the
occurrence of the relevant Event of Default and the Default
Valuation Time purchased Securities forming part of the same
issue and being of an identical type and description to those
Securities and in substantially the same amount as those
Securities, the cost of such purchase (including all reasonable
costs, fees and expenses incurred in connection therewith) and
	 
	 	(bb)	 	failing such purchase before the Default Valuation
Time, the amount it would cost to buy such Securities at the
Default Valuation Time at the best available offer price
therefor (and where different offer prices are available for
different delivery dates, such offer price in respect of the
earliest available such delivery date) on the most appropriate
market, together with all reasonable costs, fees and expenses
that would be incurred in connection therewith (calculated on
the assumption that the aggregate thereof is the least that
could reasonably be expected to be paid in order to carry out
the Transaction),

	 	 	in each case as determined by the non-Defaulting Party; and for this
purpose the “Default Valuation Time” means, with respect to any Securities

	 	(A)	 	if the relevant Event of Default occurs during normal business
hours on a day which is a dealing day in the most appropriate market
for Securities of the relevant description (as determined by the
non-Defaulting Party), the close of business in that market on the
following dealing day;
	 
	 	(B)	 	in any other case, the close of business on the second dealing
day in that market after the day on which the relevant Event of
Default occurs;

	 	 	Where the amount of any Securities sold or purchased as mentioned in
(i)(aa) or (ii)(aa) above is not identical to that of the Securities to be
valued for the purposes of this definition, the Default Market Value of
those Securities shall be ascertained by dividing the net proceeds of sale
or cost of purchase by the amount of the Securities sold or purchased so
as to obtain a net unit price and multiplying that net unit price by the
amount of the Securities to be valued;

	(k)	 	“Default Notice”, a written notice served by the non-Defaulting Party on
the Defaulting Party under paragraph 10 stating that an event shall be
treated as an Event of Default for the purposes of this Agreement;

	(l)	 	“Designated Office”, with respect to a party, a branch or office of that
party which is specified as such in Annex I hereto or such other branch or
office as may be agreed to by the Parties;

	(m)	 	“Distributions”, the meaning specified in sub-paragraph (s) below;

	(n)	 	“Equivalent Margin Securities”, Securities equivalent to Securities
previously transferred as Margin Securities;

	(o)	 	“Equivalent Securities”, with respect to a Transaction, Securities
equivalent to Purchased Securities under that Transaction. If and to the
extent that such Purchased Securities have been redeemed the expression
shall mean a sum of money equivalent to the proceeds of the redemption;

	(p)	 	Securities are “equivalent to” other Securities for the purposes of this
Agreement if they are: (i) of the same issuer; (ii) part of the same
issue; and (iii) of an identical type, nominal value, description and
(except where otherwise stated) amount as those other Securities;

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	(q)	 	“Euroclear”, Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear System;
	 
	(r)	 	“Event of Default”, the meaning specified in paragraph 10 hereof;
	 
	(s)	 	“Income”, with respect to any Security at any time, all interest,
dividends or other distributions thereon (“Distributions”);
	 
	(t)	 	“Income Payment Date”, with respect to any Securities, the date on which
Income is paid in respect of such Securities, or, in the case of
registered Securities, the date by reference to which particular
registered holders are identified as being entitled to payment of Income;
	 
	(u)	 	“LIBOR”, in relation to any sum in any currency, the one-month London
Inter Bank Offered Rate in respect of that currency as quoted on Page 3750
on the Telerate Service (or such other page as may replace Page 3750 on
that service) as of 11:00 a.m., London time, on the date on which it is to
be determined;
	 
	(v)	 	“Margin Ratio”, with respect to a Transaction, the Market Value of the
Purchased Securities at the time when the Transaction was entered into
divided by the Purchase Price (and so that, where a Transaction relates to
Securities of different descriptions and the Purchase Price is apportioned
by the parties among Purchased Securities of each such description, a
separate Margin Ratio shall apply in respect of Securities of each such
description), or such other proportion as the parties may agree with
respect to that Transaction;
	 
	(w)	 	“Margin Securities”, in relation to a Margin Transfer, Securities
reasonably acceptable to the party calling for such Margin Transfer;
	 
	(x)	 	“Margin Transfer”, any, or any combination, of the payment or repayment
of Cash Margin and the transfer of Margin Securities or Equivalent Margin
Securities;
	 
	(y)	 	“Market Value”, with respect to any Securities as of any time on any
date, the price for such Securities at such time on such date obtained
from a generally recognised source agreed to by the parties (and where
different prices are obtained for different delivery dates, the price so
obtainable for the earliest available such delivery date) (provided that
the price of Securities that are suspended shall (for the purposes of
paragraph 4) be nil unless the parties otherwise agree and (for all other
purposes) shall be the price of those Securities as of close of business
on the dealing day in the relevant market last preceding the date of
suspension) plus the aggregate amount of Income which, as of such date,
has accrued but not yet been paid in respect of the Securities to the
extent not included in such price as of such date, and for these purposes
any sum in a currency other than the Contractual Currency for the
Transaction in question shall be converted into such Contractual Currency
at the Spot Rate prevailing at the relevant time;
	 
	(z)	 	“Net Exposure”, the meaning specified in paragraph 4(c);
	 
	(aa)	 	the “Net Margin” provided to a party at any time, the excess (if any) at
that time of (i) the sum of the amount of Cash Margin paid to that party
(including accrued interest on such Cash Margin which has not been paid to
the other party) and the Market Value of Margin Securities transferred to
that party under paragraph 4(a) (excluding any Cash Margin which has been
repaid to the other party and any Margin Securities in respect of which
Equivalent Margin Securities have been transferred to the other party)
over (ii) the sum of the amount of Cash Margin paid to the other party
(including accrued interest on such Cash Margin which has not been paid by
the other party) and the Market Value of Margin Securities transferred to
the other party under paragraph 4(a) (excluding any Cash Margin which has
been repaid by the other party and any Margin Securities in respect of
which Equivalent Margin Securities have been transferred by the other
party) and for this purpose any amounts not denominated in the Base
Currency shall be converted into the Base Currency at the Spot Rate
prevailing at the relevant time;
	 
	(bb)	 	“Net Paying Securities”, Securities which are of a kind such that, were
they to be the subject of a Transaction to which paragraph 5 applies, any
payment made by Buyer under paragraph 5 would be one in respect of which
either Buyer would or might be required to make a withholding or deduction
for or on account of taxes or duties or Seller would or might be required
to make or account for a payment for or on account of taxes or duties (in
each case other than tax on overall net income) by reference to such
payment;
	 
	(cc)	 	“New Purchased Securities”, the meaning specified in paragraph 8(a) of
this Agreement;

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	(dd)	 	“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
basis or 365 day basis in accordance with the applicable ISMA convention,
unless otherwise agreed between the parties for the Transaction), 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 calculation or, if earlier, the Repurchase Date;
	 
	(ee)	 	“Pricing Rate”, with respect to any Transaction, the per annum percentage
rate for calculation of the Price Differential agreed to by Buyer and
Seller in relation to that Transaction;
	 
	(ff)	 	“Purchase Date”, with respect to any Transaction, the date on which
Purchased Securities are to be sold by Seller to Buyer in relation to that
Transaction;
	 
	(gg)	 	“Purchase Price”, on the Purchase Date, the price at which Purchased
Securities are sold or are to be sold by Seller to Buyer;
	 
	(hh)	 	“Purchased Securities”, with respect to any Transaction, the Securities
sold or to be sold by Seller to Buyer under that Transaction, and any New
Purchased Securities transferred by Seller to Buyer under paragraph 8 of
this Agreement in respect of that Transaction;
	 
	(ii)	 	“Repurchase Date”, with respect to any Transaction, the date on which
Buyer is to sell Equivalent Securities to Seller in relation to that
Transaction;
	 
	(jj)	 	“Repurchase Price”, with respect to any Transaction and as of any date,
the sum of the Purchase Price and the Price Differential as of such date;
	 
	(kk)	 	“Spot Rate”, where an amount in one currency is to be converted into a
second currency on any date, unless the parties otherwise agree, the spot
rate of exchange quoted by Barclays Bank PLC in the London inter bank
market for the sale by it of such second currency against a purchase by it
of such first currency;
	 
	(ll)	 	“Term”, with respect to any Transaction, the interval of time commencing
with the Purchase Date and ending with the Repurchase Date;
	 
	(mm)	 	“Termination”, with respect to any Transaction, refers to the requirement
with respect to such Transaction for Buyer to sell Equivalent Securities
against payment by Seller of the Repurchase Price in accordance with
paragraph 3(f), and references to a Transaction having a “fixed term” or
being “terminable upon demand” shall be construed accordingly;
	 
	(nn)	 	“Transaction Exposure”, with respect to any Transaction at any time
during the period from the Purchase Date to the Repurchase Date (or, if
later, the date on which Equivalent Securities are delivered to Seller or
the Transaction is terminated under paragraph 10(e) or 10(f)), the
difference between (i) the Repurchase Price at such time multiplied by the
applicable Margin Ratio (or, where the Transaction relates to Securities
of more than one description to which different Margin Ratios apply, the
amount produced by multiplying the Repurchase Price attributable to
Equivalent Securities of each such description by the applicable Margin
Ratio and aggregating the resulting amounts, the Repurchase Price being
for this purpose attributed to Equivalent Securities of each such
description in the same proportions as those in which the Purchase Price
was apportioned among the Purchased Securities) and (ii) the Market Value
of Equivalent Securities at such time. If (i) is greater than (ii), Buyer
has a Transaction Exposure for that Transaction equal to that excess. If
(ii) is greater than (i), Seller has a Transaction Exposure for that
Transaction equal to that excess; and
	 
	(oo)	 	except in paragraphs 14(b)(i) and 18, references in this Agreement to
“written” communications and communications “in writing” include
communications made through any electronic system agreed between the
parties which is capable of reproducing such communications in hard copy
form.
	 
	3.	 	INITIATION; CONFIRMATION; TERMINATION
	 
	(a)	 	A Transaction may be entered into orally or in writing at the initiation
of either Buyer or Seller.

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	(b)	 	Upon agreeing to enter into a Transaction hereunder Buyer or Seller (or
both), as shall have been agreed, shall promptly deliver to the other
party written confirmation of such Transaction (a “Confirmation”).
	 
	 	 	The Confirmation shall describe the Purchased Securities (including CUSIP
or CINS or other identifying number or numbers, 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 (in which case the Confirmation will state that
it is terminable on demand);
	 
	 	(iv)	 	the Pricing Rate applicable to the Transaction;
	 
	 	(v)	 	in respect of each party the details of the bank account[s] to
which payments to be made hereunder are to be credited;
	 
	 	(vi)	 	where Annex III applies, whether the Transaction is a
Repurchase Transaction or a Buy/Sell Back Transaction;
	 
	 	(vii)	 	where Annex IV applies, whether the Transaction is an Agency
Transaction and, if so, the identity of the party which is acting as
agent and the name, code or identifier of the Principal; and
	 
	 	(viii)	 	any additional terms or conditions of the Transaction;

	 	 	and may be in the form of Annex II hereto or may be in any other form
which the parties agree.

	 	 	The Confirmation relating to a Transaction shall, together with this
Agreement, constitute prima facie evidence of the terms agreed between
Buyer and Seller for that Transaction, unless objection is made with
respect to the Confirmation promptly after receipt thereof. In the event
of any conflict between the terms of such Confirmation and this Agreement,
the Confirmation shall prevail in respect of that Transaction and those
terms only.

	(c)	 	On the Purchase Date for a Transaction, Seller shall transfer the
Purchased Securities to Buyer or its agent against the payment of the
Purchase Price by Buyer.

	(d)	 	Termination of a Transaction will be effected, in the case of on demand
Transactions, on the date specified for Termination in such demand, and,
in the case of fixed term Transactions, on the date fixed for Termination.

	(e)	 	In the case of on demand Transactions, demand for Termination shall be
made by Buyer or Seller, by telephone or otherwise, and shall provide for
Termination to occur after not less than the minimum period as is
customarily required for the settlement or delivery of money or Equivalent
Securities of the relevant kind.

	(f)	 	On the Repurchase Date, Buyer shall transfer to Seller or its agent
Equivalent Securities against the payment of the Repurchase Price by
Seller (less any amount then payable and unpaid by Buyer to Seller
pursuant to paragraph 5).

	4.	 	MARGIN MAINTENANCE

	(a)	 	If at any time either party has a Net Exposure in respect of the other
party it may by notice to the other party require the other party to make
a Margin Transfer to it of an aggregate amount or value at least equal to
that Net Exposure.

	(b)	 	A notice under sub-paragraph (a) above may be given orally or in writing.
	 
	(c)	 	For the purposes of this Agreement a party has a Net Exposure in respect
of the other party if the aggregate of all the first party’s Transaction
Exposures plus any amount payable to the first party under paragraph 5 but
unpaid less the amount of any Net Margin provided to the first party
exceeds the aggregate of all the other

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	 	 	party’s Transaction Exposures plus
any amount payable to the other party under paragraph 5 but unpaid less
the amount of any Net Margin provided to the other party; and the amount
of the Net Exposure is the amount of the excess. For this purpose any
amounts not denominated in the Base Currency shall be converted into the
Base Currency at the Spot Rate prevailing at the relevant time.
	 
	(d)	 	To the extent that a party calling for a Margin Transfer has previously
paid Cash Margin which has not been repaid or delivered Margin Securities
in respect of which Equivalent Margin Securities have not been delivered
to it, that party shall be entitled to require that such Margin Transfer
be satisfied first by the repayment of such
Cash Margin or the delivery of Equivalent Margin Securities but, subject
to this, the composition of a Margin Transfer shall be at the option of
the party making such Margin Transfer.
	 
	(e)	 	Any Cash Margin transferred shall be in the Base Currency or such other
currency as the parties may agree.
	 
	(f)	 	A payment of Cash Margin shall give rise to a debt owing from the party
receiving such payment to the party making such payment. Such debt shall
bear interest at such rate, payable at such times, as may be specified in
Annex I in respect of the relevant currency or otherwise agreed between
the parties, and shall be repayable subject to the terms of this
Agreement.
	 
	(g)	 	Where Seller or Buyer becomes obliged under sub-paragraph (a) above to
make a Margin Transfer, it shall transfer Cash Margin or Margin Securities
or Equivalent Margin Securities within the minimum period specified in
Annex I or, if no period is there specified, such minimum period as is
customarily required for the settlement or delivery of money, Margin
Securities or Equivalent Margin Securities of the relevant kind.
	 
	(h)	 	The parties may agree that, with respect to any Transaction, the
provisions of sub-paragraphs (a) to (g) above shall not apply but instead
that margin may be provided separately in respect of that Transaction in
which case -

	 	(i)	 	that Transaction shall not be taken into account when
calculating whether either party has a Net Exposure;
	 
	 	(ii)	 	margin shall be provided in respect of that Transaction in such
manner as the parties may agree; and
	 
	 	(iii)	 	margin provided in respect of that Transaction shall not be
taken into account for the purposes of sub-paragraphs (a) to (g)
above.

	(i)	 	The parties may agree that any Net Exposure which may arise shall be
eliminated not by Margin Transfers under the preceding provisions of this
paragraph but by the repricing of Transactions under sub-paragraph (j)
below, the adjustment of Transactions under sub-paragraph (k) below or a
combination of both these methods.

	(j)	 	Where the parties agree that a Transaction is to be repriced under this
sub-paragraph, such repricing shall be effected as follows -

	 	(i)	 	the Repurchase Date under the relevant Transaction (the
“Original Transaction”) shall be deemed to occur on the date on which
the repricing is to be effected (the “Repricing Date”);
	 
	 	(ii)	 	the parties shall be deemed to have entered into a new
Transaction (the “Repriced Transaction”) on the terms set out in
(iii) to (vi) below;
	 
	 	(iii)	 	the Purchased Securities under the Repriced Transaction shall
be Securities equivalent to the Purchased Securities under the
Original Transaction;
	 
	 	(iv)	 	the Purchase Date under the Repriced Transaction shall be the
Repricing Date;
	 
	 	(v)	 	the Purchase Price under the Repriced Transaction shall be such
amount as shall, when multiplied by the Margin Ratio applicable to
the Original Transaction, be equal to the Market Value of such
Securities on the Repricing Date;
	 
	 	(vi)	 	the Repurchase Date, the Pricing Rate, the Margin Ratio and,
subject as aforesaid, the other terms of the Repriced Transaction
shall be identical to those of the Original Transaction;
	 
	 	(vii)	 	the obligations of the parties with respect to the delivery of
the Purchased Securities and the payment of the Purchase Price under
the Repriced Transaction shall be set off against their obligations
with respect

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	 	 	 	to the delivery of Equivalent Securities and payment of
the Repurchase Price under the Original Transaction and accordingly
only a net cash sum shall be paid by one party to the other. Such net
cash sum shall be paid within the period specified in sub-paragraph
(g) above.

	(k)	 	The adjustment of a Transaction (the “Original Transaction”) under this
sub-paragraph shall be effected by the parties agreeing that on the date
on which the adjustment is to be made (the “Adjustment Date”) the Original
Transaction shall be terminated and they shall enter into a new
Transaction (the “Replacement Transaction”) in accordance with the
following provisions-

	 	(i)	 	the Original Transaction shall be terminated on the Adjustment
Date on such terms as the parties shall agree on or before the
Adjustment Date;
	 
	 	(ii)	 	the Purchased Securities under the Replacement Transaction
shall be such Securities as the parties shall agree on or before the
Adjustment Date (being Securities the aggregate Market Value of which
at the Adjustment Date is substantially equal to the Repurchase Price
under the Original Transaction at the Adjustment Date multiplied by
the Margin Ratio applicable to the Original Transaction);
	 
	 	(iii)	 	the Purchase Date under the Replacement Transaction shall be the
Adjustment Date;
	 
	 	(iv)	 	the other terms of the Replacement Transaction shall be such as
the parties shall agree on or before the Adjustment Date; and
	 
	 	(v)	 	the obligations of the parties with respect to payment and
delivery of Securities on the Adjustment Date under the Original
Transaction and the Replacement Transaction shall be settled in
accordance with paragraph 6 within the minimum period specified in
sub-paragraph (g) above.

	5.	 	INCOME PAYMENTS

Unless otherwise agreed -

	 	(i)	 	where the Term of a particular Transaction extends over an
Income Payment Date in respect of any Securities subject to that
Transaction, Buyer shall on the date such Income is paid by the
issuer transfer to or credit to the account of Seller an amount equal
to (and in the same currency as) the amount paid by the issuer;
	 
	 	(ii)	 	where Margin Securities are transferred from one party (“the
first party”) to the other party (“the second party”) and an Income
Payment Date in respect of such Securities occurs before Equivalent
Margin Securities are transferred by the second party to the first
party, the second party shall on the date such Income is paid by the
issuer transfer to or credit to the account of the first party an
amount equal to (and in the same currency as) the amount paid by the
issuer;

and for the avoidance of doubt references in this paragraph to the amount of
any income paid by the issuer of any Securities shall be to an amount paid
without any withholding or deduction for or on account of taxes or duties
notwithstanding that a payment of such Income made in certain circumstances may
be subject to such a withholding or deduction.

	6.	 	PAYMENT AND TRANSFER

	(a)	 	Unless otherwise agreed, all money paid hereunder shall be in immediately
available, freely convertible funds of the relevant currency. All
Securities to be transferred hereunder (i) shall be in suitable form for
transfer and shall be accompanied by duly executed instruments of transfer
or assignment in blank (where required for transfer) and such other
documentation as the transferee may reasonably request, or (ii) shall be
transferred through the book entry system of Euroclear or Cedel, or (iii)
shall be transferred through any other agreed securities clearance system,
or (iv) shall be transferred by any other method mutually acceptable to
Seller and Buyer.
	 
	(b)	 	Unless otherwise agreed, all money payable by one party to the other in
respect of any Transaction shall be paid free and clear of, and without
withholding or deduction for, any taxes or duties of whatsoever nature
imposed, levied, collected, withheld or assessed by any authority having
power to tax, unless the withholding or

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	 	 	deduction of such taxes or duties
is required by law. In that event, unless otherwise agreed, the paying
party shall pay such additional amounts as will result in the net amounts
receivable by the other party (after taking account of such withholding or deduction)  being equal to such amounts as would have been received by it
had no such taxes or duties been required to be withheld or deducted.
	 
	(c)	 	Unless otherwise agreed in writing between the parties, under each
Transaction transfer of Purchased Securities by Seller and payment of
Purchase Price by Buyer against the transfer of such Purchased Securities
shall be
made simultaneously and transfer of Equivalent Securities by Buyer and
payment of Repurchase Price payable by Seller against the transfer of such
Equivalent Securities shall be made simultaneously.
	 
	(d)	 	Subject to and without prejudice to the provisions of sub-paragraph 6(c),
either party may from time to time in accordance with market practice and
in recognition of the practical difficulties in arranging simultaneous
delivery of Securities and money waive in relation to any Transaction its
rights under this Agreement to receive simultaneous transfer and/or
payment provided that transfer and/or payment shall, notwithstanding such
waiver, be made on the same day and provided also that no such waiver in
respect of one Transaction shall affect or bind it in respect of any other
Transaction.
	 
	(e)	 	The parties shall execute and deliver all necessary documents and take
all necessary steps to procure that all right, title and interest in any
Purchased Securities, any Equivalent Securities, any Margin Securities and
any Equivalent Margin Securities shall pass to the party to which transfer
is being made upon transfer of the same in accordance with this Agreement,
free from all liens, claims, charges and encumbrances.
	 
	(f)	 	Notwithstanding the use of expressions such as “Repurchase Date”,
“Repurchase Price”, “margin”, “Net Margin”, “Margin Ratio” and
“substitution” which are used to reflect terminology used in the market
for transactions of the kind provided for in this Agreement, all right,
title and interest in and to Securities and money transferred or paid
under this Agreement shall pass to the transferee upon transfer or
payment, the obligation of the party receiving Purchased Securities or
Margin Securities being an obligation to transfer Equivalent Securities or
Equivalent Margin Securities.
	 
	(g)	 	Time shall be of the essence in this Agreement.
	 
	(h)	 	Subject to paragraph 10, all amounts in the same currency payable by each
party to the other under any Transaction or otherwise under this Agreement
on the same date shall be combined in a single calculation of a net sum
payable by one party to the other and the obligation to pay that sum shall
be the only obligation of either party in respect of those amounts.
	 
	(i)	 	Subject to paragraph 10, all Securities of the same issue, denomination,
currency and series, transferable by each party to the other under any
Transaction or hereunder on the same date shall be combined in a single
calculation of a net quantity of Securities transferable by one party to
the other and the obligation to transfer the net quantity of Securities
shall be the only obligation of either party in respect of the Securities
so transferable and receivable.
	 
	7.	 	CONTRACTUAL CURRENCY
	 
	(a)	 	All the payments made in respect of the Purchase Price or the Repurchase
Price of any Transaction shall be made in the currency of the Purchase
Price (the “Contractual Currency”) save as provided in paragraph
l0(c)(ii). Notwithstanding the foregoing, the payee of any money may, at
its option, accept tender thereof in any other currency, provided,
however, that, to the extent permitted by applicable law, the obligation
of the payer to pay such money will be discharged only to the extent of
the amount of the Contractual Currency that such payee may, consistent
with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) for delivery within the
customary delivery period for spot transactions in respect of the relevant
currency.
	 
	(b)	 	If for any reason the amount in the Contractual Currency received by a
party, including amounts received after conversion of any recovery under
any judgment or order expressed in a currency other than the Contractual
Currency, falls short of the amount in the Contractual Currency due and
payable, the party required to make the payment will, as a separate and
independent obligation, to the extent permitted by applicable law,
immediately transfer such additional amount in the Contractual Currency as
may be necessary to compensate for the shortfall.

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	(c)	 	If for any reason the amount in the Contractual Currency received by a
party exceeds the amount of the Contractual Currency due and payable, the
party receiving the transfer will refund promptly the amount of such
excess.
	 
	8.	 	SUBSTITUTION
	 
	(a)	 	A Transaction may at any time between the Purchase Date and the
Repurchase Date, if Seller so requests and Buyer so agrees, be varied by
the transfer by Buyer to Seller of Securities equivalent to the Purchased
Securities, or to such of the Purchased Securities as shall be agreed, in
exchange for the transfer by Seller to Buyer of other Securities of such
amount and description as shall be agreed (“New Purchased Securities”)
(being Securities having a Market Value at the date of the variation at
least equal to the Market Value of the Equivalent Securities transferred
to Seller).
	 
	(b)	 	Any variation under sub-paragraph (a) above shall be effected, subject to
paragraph 6(d), by the simultaneous transfer of the Equivalent Securities
and New Purchased Securities concerned.
	 
	(c)	 	A Transaction which is varied under sub-paragraph (a) above shall
thereafter continue in effect as though the Purchased Securities under
that Transaction consisted of or included the New Purchased Securities
instead of the Securities in respect of which Equivalent Securities have
been transferred to Seller.
	 
	(d)	 	Where either party has transferred Margin Securities to the other party
it may at any time before Equivalent Margin Securities are transferred to
it under paragraph 4 request the other party to transfer Equivalent Margin
Securities to it in exchange for the transfer to the other party of new
Margin Securities having a Market Value at the time of transfer at least
equal to that of such Equivalent Margin Securities. If the other party
agrees to the request, the exchange shall be effected, subject to
paragraph 6(d), by the simultaneous transfer of the Equivalent Margin
Securities and new Margin Securities concerned. Where either or both of
such transfers is or are effected through a settlement system in
circumstances which under the rules and procedures of that settlement
system give rise to a payment by or for the account of one party to or for
the account of the other party, the parties shall cause such payment or
payments to be made outside that settlement system, for value the same day
as the payments made through that settlement system, as shall ensure that
the exchange of Equivalent Margin Securities and new Margin Securities
effected under this sub-paragraph does not give rise to any net payment of
cash by either party to the other.
	 
	9.	 	REPRESENTATIONS

Each party represents and warrants to the other that -

	(a)	 	it is duly authorised to execute and deliver this Agreement, to enter
into the Transactions contemplated hereunder and to perform its
obligations hereunder and thereunder and has taken all necessary action to
authorise such execution, delivery and performance;
	 
	(b)	 	it will engage in this Agreement and the Transactions contemplated
hereunder (other than Agency Transactions) as principal;
	 
	(c)	 	the person signing this Agreement on its behalf is, and any person
representing it in entering into a Transaction will be, duly authorised to
do so on its behalf;
	 
	(d)	 	it has obtained all authorisations of any governmental or regulatory body
required in connection with this Agreement and the Transactions
contemplated hereunder and such authorisations are in full force and
effect;
	 
	(e)	 	the execution, delivery and performance of this Agreement and the
Transactions contemplated hereunder will not violate any law, ordinance,
charter, bye-law or rule applicable to it or any agreement by which it is
bound or by which any of its assets are affected;
	 
	(f)	 	it has satisfied itself and will continue to satisfy itself as to the tax
implications of the Transactions contemplated hereunder;
	 
	(g)	 	in connection with this Agreement and each Transaction:

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	 	(i)	 	unless there is a written agreement with the other party to the
contrary, it is not relying on any advice (whether written or oral)
of the other party, other than the representations expressly set out
in this Agreement;
	 
	 	(ii)	 	it has made and will make its own decisions regarding the
entering into of any Transaction based upon its own judgement and
upon advice from such professional advisers as it has deemed it
necessary to consult;
	 
	 	(iii)	 	it understands the terms, conditions and risks of each
Transaction and is willing to assume (financially and otherwise)
those risks;

	(h)	 	at the time of transfer to the other party of any Securities it will have
the full and unqualified right to make such transfer and that upon such
transfer of Securities the other party will receive all right, title and
interest in and to those Securities free of any lien, claim, charge or
encumbrance; and

	(i)	 	the paying and collecting arrangements applied in relation to any
Securities prior to their transfer from that party to the other under this
Agreement will not have resulted in the payment of any Income in respect
of such Securities to the party transferring such Securities under
deduction or withholding for or on account of UK tax.

On the date on which any Transaction is entered into pursuant hereto, and on
each day on which Securities, Equivalent Securities, Margin Securities or
Equivalent Margin Securities are to be transferred under any Transaction, Buyer
and Seller shall each be deemed to repeat all the foregoing representations.
For the avoidance of doubt and notwithstanding any arrangements which Seller or
Buyer may have with any third party, each party will be liable as a principal
for its obligations under this Agreement and each Transaction.

	10.	 	EVENTS OF DEFAULT

	(a)	 	If any of the following events (each an “Event of Default”) occurs in
relation to either party (the “Defaulting Party”, the other party being
the “non-Defaulting Party”) whether acting as Seller or Buyer-

	 	(i)	 	Buyer fails to pay the Purchase Price upon the applicable
Purchase Date or Seller fails to pay the Repurchase Price upon the
applicable Repurchase Date, and the non-Defaulting Party serves a
Default Notice on the Defaulting Party; or
	 
	 	(ii)	 	Seller or Buyer fails to comply with paragraph 4 and the
non-Defaulting Party serves a Default Notice on the Defaulting Party;
or
	 
	 	(iii)	 	Seller or Buyer fails to comply with paragraph 5 and the
non-Defaulting Party serves a Default Notice on the Defaulting Party;
or
	 
	 	(iv)	 	an Act of Insolvency occurs with respect to Seller or Buyer and
(except in the case of an Act of Insolvency which is the presentation
of a petition for winding-up or any analogous proceeding or the
appointment of a liquidator or analogous officer of the Defaulting
Party in which case no such notice shall be required) the
non-Defaulting Party serves a Default Notice on the Defaulting Party;
or
	 
	 	(v)	 	any representations made by Seller or Buyer are incorrect or
untrue in any material respect when made or repeated or deemed to
have been made or repeated, and the non-Defaulting Party serves a
Default Notice on the Defaulting Party; or
	 
	 	(vi)	 	Seller or Buyer admits to the other that it is unable to, or
intends not to, perform any of its obligations hereunder and/or in
respect of any Transaction and the non-Defaulting Party serves a
Default Notice on the Defaulting Party; or
	 
	 	(vii)	 	Seller or Buyer is suspended or expelled from membership of or
participation in any securities exchange or association or other self
regulating organisation, or suspended from dealing in securities by
any government agency, or any of the assets of either Seller or Buyer
or the assets of investors held by, or to the order of, Seller or
Buyer are transferred or ordered to be transferred to a trustee by a
regulatory authority pursuant to any securities regulating
legislation and the non-Defaulting Party serves a Default Notice on
the Defaulting Party; or

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	 	(viii)	 	Seller or Buyer fails to perform any other of its obligations
hereunder and does not remedy such failure within 30 days after
notice is given by the non-Defaulting Party requiring it to do so,
and the non-Defaulting Party serves a Default Notice on the
Defaulting Party;

	 	 	then sub-paragraphs (b) to (d) below shall apply.
	 
	(b)	 	The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur and, subject to the following provisions, all Cash
Margin (including interest accrued) shall be immediately repayable and
Equivalent Margin Securities shall be immediately deliverable (and so
that, where this sub-paragraph applies, performance of the respective
obligations of the parties with respect to the delivery of Securities, the
payment of the Repurchase Prices for any Equivalent Securities and the
repayment of any Cash Margin shall be effected only in accordance with the
provisions of sub-paragraph (c) below).
	 
	(c)	 	 

	 	(i)	 	The Default Market Values of the Equivalent Securities and any
Equivalent Margin Securities to be transferred, the amount of any
Cash Margin (including the amount of interest accrued) to be
transferred and the Repurchase Prices to be paid by each party shall
be established by the non-Defaulting Party for all Transactions as at
the Repurchase Date; and
	 
	 	(ii)	 	on the basis of the sums so established, an account shall be
taken (as at the Repurchase Date) of what is due from each party to
the other under this Agreement (on the basis that each party’s claim
against the other in respect of the transfer to it of Equivalent
Securities or Equivalent Margin Securities under this Agreement
equals the Default Market Value therefor) and the sums due from one
party shall be set off against the sums due from the other and only
the balance of the account shall be payable (by the party having the
claim valued at the lower amount pursuant to the foregoing) and such
balance shall be due and payable on the next following Business Day.
For the purposes of this calculation, all sums not denominated in the
Base Currency shall be converted into the Base Currency on the
relevant date at the Spot Rate prevailing at the relevant time.

	(d)	 	The Defaulting Party shall be liable to the non-Defaulting Party for the
amount of all reasonable legal and other professional expenses incurred by
the non-Defaulting Party in connection with or as a consequence of an
Event of Default, together with interest thereon at LIBOR or, in the case
of an expense attributable to a particular Transaction, the Pricing Rate
for the relevant Transaction if that Pricing Rate is greater than LIBOR.

	(e)	 	If Seller fails to deliver Purchased Securities to Buyer on the
applicable Purchase Date Buyer may-

	 	(i)	 	if it has paid the Purchase Price to Seller, require Seller
immediately to repay the sum so paid;
	 
	 	(ii)	 	if Buyer has a Transaction Exposure to Seller in respect of the
relevant Transaction, require Seller from time to time to pay Cash
Margin at least equal to such Transaction Exposure;
	 
	 	(iii)	 	at any time while such failure continues, terminate the
Transaction by giving written notice to Seller. On such termination
the obligations of Seller and Buyer with respect to delivery of
Purchased Securities and Equivalent Securities shall terminate and
Seller shall pay to Buyer an amount equal to the excess of the
Repurchase Price at the date of Termination over the Purchase Price.

	(f)	 	If Buyer fails to deliver Equivalent Securities to Seller on the
applicable Repurchase Date Seller may-

	 	(i)	 	if it has paid the Repurchase Price to Buyer, require Buyer
immediately to repay the sum so paid;
	 
	 	(ii)	 	if Seller has a Transaction Exposure to Buyer in respect of the
relevant Transaction, require Buyer from time to time to pay Cash
Margin at least equal to such Transaction Exposure;
	 
	 	(iii)	 	at any time while such failure continues, by written notice to
Buyer declare that that Transaction (but only that Transaction) shall
be terminated immediately in accordance with sub-paragraph (c) above
(disregarding for this purpose references in that sub-paragraph to
transfer of Cash Margin and delivery of Equivalent Margin
Securities).

	(g)	 	The provisions of this Agreement constitute a complete statement of the
remedies available to each party in respect of any Event of Default.

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	(h)	 	Neither party may claim any sum by way of consequential loss or damage in
the event of a failure by the other party to perform any of its
obligations under this Agreement.
	 
	(i)	 	Each party shall immediately notify the other if an Event of Default, or
an event which, upon the serving of a Default Notice, would be an Event of
Default, occurs in relation to it.
	 
	11.	 	TAX EVENT
	 
	(a)	 	This paragraph shall apply if either party notifies the other that-

	 	(i)	 	any action taken by a taxing authority or brought in a court of
competent jurisdiction (regardless of whether such action is taken or
brought with respect to a party to this Agreement); or
	 
	 	(ii)	 	a change in the fiscal or regulatory regime (including, but not
limited to, a change in law or in the general interpretation of law
but excluding any change in any rate of tax)

	 	 	has or will, in the notifying party’s reasonable opinion, have a material
adverse effect on that party in the context of a Transaction.
	 
	(b)	 	If so requested by the other party, the notifying party will furnish the
other with an opinion of a suitably qualified adviser that an event
referred to in sub-paragraph (a)(i) or (ii) above has occurred and affects
the notifying party.
	 
	(c)	 	Where this paragraph applies, the party giving the notice referred to in
sub-paragraph (a) may, subject to sub-paragraph (d) below, terminate the
Transaction with effect from a date specified in the notice, not being
earlier (unless so agreed by the other party) than 30 days after the date
of the notice, by nominating that date as the Repurchase Date.
	 
	(d)	 	If the party receiving the notice referred to in sub-paragraph (a) so
elects, it may override that notice by giving a counter-notice to the
other party. If a counter-notice is given, the party which gives the
counter-notice will be deemed to have agreed to indemnify the other party
against the adverse effect referred to in sub-paragraph (a) so far as
relates to the relevant Transaction and the original Repurchase Date will
continue to apply.
	 
	(e)	 	Where a Transaction is terminated as described in this paragraph, the
party which has given the notice to terminate shall indemnify the other
party against any reasonable legal and other professional expenses
incurred by the other party by reason of the termination, but the other
party may not claim any sum by way of consequential loss or damage in
respect of a termination in accordance with this paragraph.
	 
	(f)	 	This paragraph is without prejudice to paragraph 6(b) (obligation to pay
additional amounts if withholding or deduction required); but an
obligation to pay such additional amounts may, where appropriate, be a
circumstance which causes this paragraph to apply.
	 
	12.	 	INTEREST

To the extent permitted by applicable law, if any sum of money payable
hereunder or under any Transaction is not paid when due, interest shall accrue
on such unpaid sum as a separate debt at the greater of the Pricing Rate for
the Transaction to which such sum relates (where such sum is referable to a
Transaction) and LIBOR on a 360 day basis or 365 day basis in accordance with
the applicable ISMA convention, for the actual number of days during the period
from and including the date on which payment was due to, but excluding, the
date of payment.

	13.	 	SINGLE AGREEMENT

Each party acknowledges that, and has entered into this Agreement 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 are made in consideration of each other.
Accordingly, each party 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, and (ii) 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.

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	14.	 	NOTICES AND OTHER COMMUNICATIONS

	(a)	 	Any notice or other communication to be given under this Agreement-

	 	(i)	 	shall be in the English language and, except where expressly
otherwise provided in this Agreement, shall be in writing;
	 
	 	(ii)	 	may be given in any manner described in sub-paragraph (b)
below;
	 
	 	(iii)	 	shall be sent to the party to whom it is to be given at the
address or number, or in accordance with the electronic messaging
details, set out in Annex V.

	(b)	 	Any such notice or other communication shall be effective-

	 	(i)	 	if in writing and delivered in person or by courier, at the
time when it is delivered;
	 
	 	(ii)	 	if sent by telex, at the time when the recipient’s answerback
is received;
	 
	 	(iii)	 	if sent by facsimile transmission, at the time when the
transmission is received by a responsible employee of the recipient
in legible form (it being agreed that the burden of proving receipt
will be on the sender and will not be met by a transmission report
generated by the sender’s facsimile machine);
	 
	 	(iv)	 	if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), at the time when that
mail is delivered or its delivery is attempted;
	 
	 	(v)	 	if sent by electronic messaging system, at the time that
electronic message is received;

	 	 	except that any notice or communication which is received, or delivery of
which is attempted, after close of business on the date of receipt or
attempted delivery or on a day which is not a day on which commercial
banks are open for business in the place where that notice or other
communication is to be given shall be treated as given at the opening of
business on the next following day which is such a day.

	(c)	 	Either party may by notice to the other change the address, telex or
facsimile number or electronic messaging system details at which notices
or other communications are to be given to it.

	15.	 	ENTIRE AGREEMENT; SEVERABILITY

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

16. NON-ASSIGNABILITY; TERMINATION

	(a)	 	Subject to sub-paragraph (b) below, the rights and obligations of the
parties under this Agreement and under any Transaction shall not be
assigned, charged or otherwise dealt with by either party without the
prior written consent of the other party. 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.

	(b)	 	Sub-paragraph (a) above 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 10(c) or (d) above.

	(c)	 	Either party may terminate this Agreement by giving written notice to the
other, except that this Agreement shall, notwithstanding such notice,
remain applicable to any Transactions then outstanding.

	(d)	 	All remedies hereunder shall survive Termination in respect of the
relevant Transaction and termination of this Agreement.

14

 

	17.	 	GOVERNING LAW

This Agreement shall be governed by the laws of England. Buyer and Seller
hereby irrevocably submit for all purposes of or in connection with this
Agreement and each Transaction to the jurisdiction of the Courts of England.

Party A hereby appoints the person identified in Annex VI hereto as its agent
to receive on its behalf service of process in such courts. If such agent
ceases to be its agent, Party A shall promptly appoint, and notify Party B of
the identity of, a new agent in England.

Party B hereby appoints the person identified in Annex VII hereto as its agent
to receive on its behalf service of process in such courts. If such agent
ceases to be its agent, Party B shall promptly appoint, and notify Party A of
the identity of, a new agent in England.

Nothing in this paragraph shall limit the right of any party to take
proceedings in the courts of any other country of competent jurisdiction.

	18.	 	NO WAIVERS, ETC.

No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be
effective unless and until such modification, waiver or consent 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 sub-paragraph
4(a) hereof will not constitute a waiver of any right to do so at a later date.

	19.	 	WAIVER OF IMMUNITY

Each party hereto hereby waives, to the fullest extent permitted by applicable
law, all immunity (whether on the basis of sovereignty or otherwise) from
jurisdiction, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in any action or proceeding in the Courts
of England or of any other country or jurisdiction, relating in any way to this
Agreement or any Transaction, and agrees that it will not raise, claim or cause
to be pleaded any such immunity at or in respect of any such action or
proceeding.

	20.	 	RECORDING

The parties agree that each may electronically record all telephone
conversations between them.

CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	 	 
	By: /s/ LINDA K. COOK

	 	By: /s/ STEVEN A. MUSELES
	
 

	 	
 
	Name: Linda Cook

	 	Name: Steven A. Museles
	Title: Director

	 	Title: Senior Vice President

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YOUR COUNTERPARTY IN ANY TRANSACTION ENTERED PURSUANT TO THIS MASTER AGREEMENT IS CITIGROUP
GLOBAL MARKETS LIMITED. CITIGROUP GLOBAL MARKETS
LIMITED IS NOT REGISTERED AS A BROKER-DEALER UNDER THE SECURITIES EXCHANGE ACT OF
1934.

ANNEX 1, Part 1

Supplemental Terms and Conditions

for

Transactions with CITIGROUP GLOBAL MARKETS INC. AS AGENT FOR

CITIGROUP GLOBAL MARKETS LIMITED

	1.	 	The following elections shall apply:

	 	(a)	 	Annex I, Part 2, Transactions in gilt-edged securities may be effected under this Agreement.
	 
	 	(b)	 	Annex IV Agency Transactions will apply under this Agreement.
	 
	 	(c)	 	Annex 1, Part 4, Additional Terms and Conditions relating to European Economic and Monetary Union will apply under this Agreement.
	 
	 	(d)	 	Annex III, the provisions relating to Buy/Sell Back Transactions will apply under this Agreement.
	 
	 	(e)	 	Annex VIII the provisions relating to Italian Bonds will apply under this Agreement.
	 
	 	(f)	 	Annex IX the provisions thereof relating to Net Paying Securities will apply under this Agreement.
	 
	 	(g)	 	Paragraph 2 (c). The Base Currency shall be: US Dollars.
	 
	 	(h)	 	Paragraph 2 (l). Citigroup Global Markets Limited’s Designated Offices shall be: Citigroup Centre, Canada Square, London E14 5LB.
	 
	 	 	 	Party B’s Designated Offices shall be:
	 
	 	(i)	 	paragraph 2 (y). Market Value shall be calculated in accordance with market practice in the principal market for the relevant Securities or as otherwise
agreed by the Parties.
	 
	 	(j)	 	paragraph 4(f). Interest rate on Cash Margin to be agreed between the parties in writing prior to payment of the relevant Cash Margin.
	 
	 	(k)	 	All other elections shall be made by the Parties prior to a particular Transaction or pursuant to a separate agreement.

	2.	 	The following Supplemental Terms and Conditions shall apply:

	 	(a)	 	Citigroup Global Markets Inc. (“CGM”) has executed this Agreement as agent for Citigroup Global Markets Limited (“CGML”). The parties agree that Annex IV shall not apply to
any Transaction solely by reason of CGM acting as agent for CGML in accordance with this Agreement. If the parties agree that Agency Transactions may be effected under the
Agreement, Party B only may act as Agent and paragraph 3 of Annex IV shall be deleted.

16

 

	 	(b)	 	With effect from the date of execution of the Agreement, paragraphs 4 (Margin Maintenance), and 8 (Substitution) and 10 (Events of Default) of the Agreement shall apply to
all repurchase transactions and buy/sell back transactions into which the Parties have entered before that date and which are outstanding at that date in substitution for any
corresponding provisions in any previous master agreement between the Parties governing such transactions.
	 
	 	(c)	 	Each of the Parties agrees that they do not intend any Transaction or transfer of Cash Margin to be for a Term of more than 364 days.
	 
	 	(d)	 	Each party to this agreement (such party, “Party X”) agrees that, upon the insolvency of Party X or any of its affiliates or 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”), each Non
Defaulting Party may, without prior notice to Party X: (a) 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), (b) 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 (c) 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 (a), (b), and (c) 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, and for purposes of clause (a) above only, shall include Citibank
N.A.
	 
	 	 	 	Clauses (a), (b) and (c) of this paragraph 2(d) shall be deemed not to include any references to the affiliates of the Non-Defaulting Party and Party X to the extent that
their inclusion would prejudice the enforceability of this paragraph 2(d).
	 
	 	(e)	 	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 to so proceed.
	 
	 	(f)	 	Limitation of Liability. No party shall be required to pay or be liable to the other party for any consequential, indirect or punitive damages, opportunity costs or lost
profits.

17

 

	 	(g)	 	Paragraph 8 of the Agreement shall be amended by adding at the end of the paragraph the following paragraphs (e), (f) and (g):

	 	(e)	 	In the case of any Transaction for which the Repurchase Date is not the Business Day immediately following the Purchase Date and with respect to which Seller does not
have any existing right to vary the Transaction, Seller shall have the right (subject to the proviso to this sub-paragraph) by notice to Buyer (such notice to be given at or
prior to 12 pm (London time) on that Business Day) to vary that Transaction in accordance with sub-paragraphs (a) and (b) above, provided however that Buyer may elect by
close of business on the Business Day notice is received (or by close of business on the next Business Day if notice is received after 12 pm (London time) on that day) not to
vary that Transaction. If Buyer elects not to vary the Transaction, Seller shall have the right, by notice to Buyer, to terminate the Transaction on the Business Day
specified in that notice, such Business Day (unless the parties otherwise agree) not to be later than two Business Days after the date of the notice.
	 
	 	(f)	 	If Seller exercises its right to vary the Transaction or to terminate the Transaction under sub-paragraph (e) above, notwithstanding paragraph 10(h), Seller shall be
required to pay to Buyer by close of business on the Business Day of such variation or termination an amount equal to:

	 	(i)	 	Buyer’s actual cost (including all fees, expenses and commissions) of (aa) entering into replacement transactions; (bb) entering into or terminating hedge transactions;
and (cc) terminating or varying transactions with third parties in connection with or as a result of such variation or termination; and
	 
	 	(ii)	 	to the extent that Buyer party does not enter into replacement transactions, the loss incurred by Buyer directly arising or resulting from such variation or termination,

	 	 	 	in each case as determined and calculated in good faith by Buyer.

	 	(g)	 	Where one party (the “Requesting Party”) has requested the other party to transfer Equivalent Margin Securities to it in exchange for the transfer to the other party of
new Margin Securities in accordance with paragraph 8(d) but the other party does not agree to the request, if the Requesting Party so elects by written notice specifying the
Equivalent Margin Securities to be transferred and the Business Day on which those Equivalent Margin Securities are to be transferred (such Business Day (unless the parties
otherwise agree) not to be later than two Business Days after the date of the notice) the other party shall, unless otherwise agreed, transfer those Equivalent Margin
Securities to the Requesting Party in exchange for the transfer to the other party of Cash Margin of an amount equal to the Market Value of the Equivalent Margin Securities
so transferred.

	 	(h)	 	Counterparties in certain jurisdictions

	 	(a)	 	Where party B is:

	 	(i)	 	a company incorporated or registered as external company under the Companies Act, Chapter
308 of the laws of Barbados, paragraph A.1 of Annex X will apply.

	 	(b)	 	Where Party B is a company incorporated or organized under the laws of Bahrain or a
branch established or located in Bahrain of a company incorporated or organized outside
Bahrain, paragraph B of Annex X will apply.

18

 

	 	(c)	 	Where Party B is a company incorporated or organized under the laws of Belgium or a
branch established or located in Belgium of a company incorporated or organized
outside Belgium, paragraph C of Annex X will apply.
	 
	 	(d)	 	Where Party B is a company incorporated or organized under the laws of Canada or a
branch established or located in Ontario or Quebec of companies incorporated or
organized outside Canada, paragraph D of Annex X will apply.
	 
	 	(e)	 	Where Party B is a company incorporated or organized under the laws of Denmark or a
branch established or located in Denmark of a company incorporated or organized
outside Denmark, paragraph E of Annex X will apply.
	 
	 	(f)	 	Where Party B is a company or a commercial partnership (Handelsgesellschaft) or a
cooperative society (Genossenschaft) incorporated or organized under the laws of the
Federal Republic of Germany or a branch established or located in the Federal Republic
of Germany of a company incorporated or organized outside the Federal Republic of
Germany, paragraph F of Annex X will apply.
	 
	 	(g)	 	Where Party B (other than banks) is a company incorporated or organized under the
laws of Finland or a branch established or located in Finland of a company incorporated
or organized outside Finland, paragraph G of Annex X will apply.
	 
	 	(h)	 	Where Party B is a company established under the laws of Luxembourg or a branch
established or located in Luxembourg of a company established outside Luxembourg,
paragraph H of Annex X will apply.
	 
	 	(i)	 	Where Party B is a company incorporated or registered under the laws of New Zealand
or a body corporate registered as an “overseas company” under the laws of New
Zealand or a corporation incorporated or formed under the laws of another jurisdiction
with a branch or branches located in New Zealand but not registered as an “overseas
company” under the laws of New Zealand, paragraph I of Annex X will apply.
	 
	 	(j)	 	Where Party B is a company incorporated or organized under the laws of South Africa or
a branch established or located in South Africa of a company incorporated or organized
outside South Africa, paragraph J of Annex X will apply.
	 
	 	(k)	 	Where Party B is a limited liability company incorporated under the laws of Sweden,
paragraph K of Annex X will apply.
	 
	 	(l)	 	Where Party B is a company incorporated and organized under the laws of Switzerland
or a branch established or located in Switzerland of a company incorporated or
organized outside Switzerland, paragraph L of Annex X will apply.

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

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

19

 

ANNEX I, PART 2

SUPPLEMENTAL TERMS AND CONDITIONS WHERE

REPURCHASE TRANSACTIONS ARE TO BE EFFECTED IN UK

GILT-EDGED SECURITIES

	1.	 	Interpretation

	1.1	 	In this Part of this Annex -

	 	(a)	 	the “Agreement” means the Agreement substantially in the form
of the PSA//ISMA Global Master Repurchase Agreement for Gross Paying
Securities of which this Annex forms part;
	 
	 	(b)	 	“Central Gilts Office Service” or “CGO Service” means the
computer-based system for the transfer of gilt-edged securities by
exempt transfer (as defined in the Stock Transfer Act 1982) operated
by the Central Gilts Office of the Bank of England;
	 
	 	(c)	 	“CHAPS system” means the same day payment system operated by
the CHAPS Clearing Company Limited;
	 
	 	(d)	 	“gilt-edged securities” means securities which are gilt-edged
securities for the purposes of section 51A(7) of the Income and
Corporation Taxes Act 1988 or, following that provision ceasing to
have effect in accordance with section 37 of the Finance (No 2) Act
1997, section 50(7) of the Income and Corporation Taxes Act 1988.

	1.2	 	Terms to which a defined meaning is given in the Agreement have the same
meanings in this Annex.
	 
	2.	 	Scope
	 
	2.1	 	The parties have agreed that the Transactions to which the Agreement
applies may include Transactions in respect of gilt-edged securities.
	 
	2.2	 	The terms and conditions set out in this Annex apply to Transactions in
respect of gilt-edged securities and, to the extent and in the
circumstances provided in paragraph 3.4(c) below, Transactions wholly or
partly in respect of such other securities as are referred to in that
paragraph.
	 
	3.	 	CGO Service
	 
	3.1	 	The CGO Service shall be an agreed securities clearance system for the
purposes of paragraph 6(a)(iii) of the Agreement.
	 
	3.2	 	Where under the rules and procedures of the CGO Service the delivery of
any Securities from a securities account in the name of one party or its
nominee or agent (“the transferor”) to a securities account in the name of
the other party or its nominee or agent (“the transferee”) gives rise to
an assured payment obligation by which the settlement bank acting for the
transferee is obliged to make a payment to the settlement bank acting for
the transferor, the creation of that assured payment obligation shall for
the purposes of the Agreement and any Transaction be treated as a payment
from the transferee to the transferor of an amount equal to the amount of
the assured payment obligation.
	 
	3.3	 	Where any transfer of Securities under or for the purposes of the
Agreement or any Transaction results, under the rules and procedures of
the CGO Service, in a payment (whether under paragraph 3.2 above or
otherwise) which is not required to be made by the Agreement or the terms
of the relevant Transaction -

	 	(a)	 	where the amount of the relevant payment is less than £100, the
payment shall be treated as made by way of margin adjustment under
paragraph 4 of the Agreement;

20

 

	 	(b)	 	in any other case the party receiving such payment shall,
unless the parties shall have agreed otherwise, cause an irrevocable
payment in the same amount to be made to the other party for value
the same day through the CHAPS system or another guaranteed payment
system agreed between the parties.

	3.4	(a)	 	Subject to and in accordance with the following provisions of this
sub-paragraph, the parties may agree to enter into an overnight sale and
repurchase transaction (a “DBV Transaction”) to be effected under the
“delivery-by-value” facility of the CGO Service.

	 	(b)	 	The Confirmation relating to a DBV Transaction -

	 	(i)	 	shall specify the Transaction as a DBV Transaction;
	 
	 	(ii)	 	shall not describe the Purchased Securities;
	 
	 	(iii)	 	shall specify as the Purchase Price the
consideration to be input in respect of the delivery of the
Purchased Securities through the CGO Service;
	 
	 	(iv)	 	shall specify the pricing rate for the DBV
Transaction.

	 	(c)	 	The Purchased Securities under a DBV Transaction shall be such
Securities (which may include Securities which are not gilt-edged
securities) as shall be selected and delivered by the CGO Service on
the apportionment of securities to the relevant delivery in
accordance with the rules and procedures of the CGO Service.
	 
	 	(d)	 	The amount by which the Repurchase Price under a DBV
Transaction exceeds the Purchase Price shall be paid by the Seller to

the Buyer on the Repurchase Date on or as soon as practicable after
the delivery of Equivalent Securities through the CGO Service from a
securities account of the Buyer to a securities account of the
Seller. Such payment shall be made through the CGO Service or
outside the CGO Service in same day funds.
	 
	 	(e)	 	If on the Repurchase Date of a DBV Transaction Equivalent
Securities are not delivered to the Seller by reason of the fact that -

	 	(i)	 	either party’s membership of the CGO Service has been terminated or
suspended; or
	 
	 	(ii)	 	overnight collateral chits issued by the CGO Service
at the request of the Buyer have not been returned to the CGO
Service on the Repurchase Date by the latest time fixed for such
return by the rules and procedures of the CGO Service;

	 	 	 	then, unless before the latest time for delivery of such Equivalent
Securities under the rules and procedures of the CGO Service an Event
of Default has occurred under paragraph 10 of the Agreement in
respect of either Party, such non-delivery shall be deemed to
constitute -

	 	(A)	 	where the Buyer’s membership of the CGO Service has
been terminated or suspended or sub-paragraph (ii) above
applies, a failure by the Buyer to deliver Equivalent Securities
on the Repurchase Date;
	 
	 	(B)	 	where the Seller’s membership of the CGO Service has
been terminated or suspended, a failure by the Seller to pay the
Repurchase Price on the Repurchase Date.

	 	(f)	 	If after an Event of Default has occurred under paragraph 10 of
the Agreement Equivalent Securities to the Purchased Securities are
delivered to a securities account of the Seller against the creation
of an assured payment obligation in accordance with the rules and
procedures of the CGO Service notwithstanding the termination of the
relevant DBV Transaction, such delivery shall give rise to the
following obligations, each of which shall be conditional on the
simultaneous performance of the other.

	 	(i)	 	an obligation on the Seller to deliver to the Buyer
on demand securities equivalent to the securities so delivered;
and
	 
	 	(ii)	 	an obligation on the Buyer to pay to the Seller on
demand a sum equal to the amount of the assured payment
obligation so created.

21

 

	3.5	(a)	 	The parties may agree to enter into a series of DBV Transactions to
be confirmed by a single Confirmation, each such DBV Transaction being for
the same Purchase Price and each such DBV Transaction other than the first
commencing on the Repurchase Date of the previous Transaction. Such a
series of DBV Transactions is in this paragraph referred to as -

	 	(i)	 	an “Open DBV Repo” if the Repurchase Date of the last
Transaction in the series is not specified in the Confirmation
but it is instead provided that, if either Party gives to the
other notice of not less than a stated period, the DBV
Transaction which will be due for Termination on the date
specified in the notice will be the last Transaction in the
series and the series will be limited accordingly;
	 
	 	(ii)	 	a “Term DBV Repo” if the date on which the last
Transaction in the series is due for Termination is specified in
the Confirmation.

	 	(b)	 	Subject to the following provisions of this sub-paragraph,
paragraph 3.4 above shall apply in respect of each DBV Transaction
forming part of an Open DBV Repo or a Term DBV Repo.
	 
	 	(c)	 	It shall not be necessary for any Transaction forming part of
an Open DBV Repo or a Term DBV Repo to be evidenced by a separate
Confirmation and, subject to sub-paragraph 3.5(d) below, each such
Transaction shall be deemed to be entered into on the Repurchase Date
of the preceding such Transaction.
	 
	 	(d)	 	Notwithstanding the preceding provisions of this sub-paragraph,
a transaction which would otherwise be deemed to be entered into on
any day and would form part of an Open DBV Repo or a Term DBV Repo
shall be deemed not to be entered into if before the parties have
taken the steps necessary to effect delivery of the Purchased
Securities under that Transaction on that day in accordance with the
rules and procedures of the CGO Service -

	 	(i)	 	an Event of Default has occurred in relation to
either party; or
	 
	 	(ii)	 	an earlier Transaction forming part of that Open DBV
Repo or Term DBV Repo has been terminated under paragraph 10(e)
or 10(f) of the Agreement.

	 	(e)	 	In any case where sub-paragraph 3.5(d) above applies, no
further Transaction forming part of the relevant Open DBV Repo or
Term DBV Repo shall arise.
	 
	 	(f)	 	Subject to sub-paragraph 3.5(h) below, and save in so far as
the Confirmation relating to an Open DBV Repo or Term DBV Repo may
otherwise provide, that part (if any) of the Repurchase Price in
respect of each Transaction in the relevant series (other than the
last such Transaction) which exceeds the Purchase Price shall not be
payable on the Repurchase Date, but shall instead be deferred until,
and shall be payable on, the Repurchase Date of the last Transaction
in the series. Such payment shall be made through the CGO Service or
outside the CGO Service in same-day funds.
	 
	 	(g)	 	Any amount payable in respect of a Transaction forming part of
an Open DBV Repo or Term DBV Repo payment of which has been deferred
under sub-paragraph (f) above shall, until it is paid or the relevant
Transaction is terminated under any provision of paragraph 10 of the
Agreement, be treated for the purposes of paragraph 4(c) of the
Agreement as if it were an amount payable under paragraph 5 of the
Agreement.
	 
	 	(h)	 	If any Transaction forming part of an Open DBV Repo or Term DBV
Repo is terminated under any provision of paragraph 10 of the
Agreement, any amounts payable in respect of any earlier Transactions
forming part of that Open DBV Repo or Term DBV Repo payment of which
has been deferred under sub-paragraph 3.5(f) above shall become due
and payable immediately.

	4.	 	Transactions in partly-paid securities

	4.1	 	This paragraph applies where -

	 	(a)	 	the Purchased Securities under a Transaction are Securities on
which a call or instalment remains to be paid; and

22

 

	 	(b)	 	the due date for the payment of any such call or instalment
occurs before the Termination of the Transaction.

	4.2	 	The Seller shall pay to the Buyer, for value on or before the due date of
the call or instalment, an amount equal to the call or instalment payable
on that date in respect of Securities equivalent to the Purchased
Securities.
	 
	4.3	 	No adjustment to the Repurchase Price shall be made in consequence of the
call or instalment or of the payment made by the Seller under paragraph
4.2 above.
	 
	4.4	 	On and from the due date for the payment of the call or instalment the
expression “Equivalent Securities” shall with respect to that Transaction
be taken to mean Securities of the same issuer, forming part of the same
issue and being of an identical type, nominal value, description and
amount as the Purchased Securities but after payment of the call or
instalment in question.
	 
	5.	 	Exercise of rights of conversion
	 
	5.1	 	This paragraph applies where the Purchased Securities under a Transaction
are Securities in respect of which a right of conversion (whether arising
under the terms of issue of the Securities or under a conversion offer
made after such issue) becomes exercisable before the Termination of the
Transaction.
	 
	5.2	 	The Seller may, not later than a reasonable period before the latest time
for the exercise of the right of conversion, give to the Buyer written
notice to the effect that, on Termination of the Transaction, it wishes to
receive Securities in such form as will arise if the right of conversion
is exercised or, in the case of a right of conversion which may be
exercised in more than one manner, is exercised in such manner as is
specified in the notice.
	 
	5.3	 	With effect from the latest time for the exercise of the right of
conversion the expression “Equivalent Securities” shall be taken to mean -

	 	(a)	 	if a notice has been given under paragraph 5.2 above not later
than the time specified in that sub-paragraph, such amount of such
Securities of such description as fall to be held by a holder of
Securities of the same issuer, forming part of the same issue and
being of an identical type, nominal value, description and amount as
the Purchased Securities if he has exercised the right of conversion
in the manner specified in the notice;
	 
	 	(b)	 	in any other case, such amount of Securities of such
description as fall to be held by a holder of Securities of the same
issuer, forming part of the same issue and being of an identical
type, nominal value, description and amount as the Purchased
Securities if he has not exercised the right of conversion.

	6.	 	Termination of on demand Transactions

	6.1	 	Paragraph 3(e) of the Agreement shall not apply, but shall be replaced by
the following -

	 	(e)	 	“In the case of on demand Transactions, demand for Termination
shall be made by Buyer or Seller, by telephone or otherwise, and
shall provide for Termination to occur as soon as reasonably
practicable after such demand or on such date (being at least one
Business Day after that on which the demand is made) as may be
specified in the demand; provided that, unless otherwise agreed
between the Parties, a demand which is made before 10 a.m. on a
Business Day may provide for Termination to occur not later than the
close of business on that day.”

	7.	 	Dividend entitlements: effect on margin provisions

	7.1	 	This paragraph applies where -

	 	(a)	 	the ex-dividend date for the payment of any dividend on any
Purchased Securities occurs before the Termination of the relevant
Transaction; or

23

 

	 	(b)	 	the ex-dividend date for the payment of any dividend on any
gilt-edged securities which have been delivered to a party as Margin
Securities occurs before Equivalent Margin Securities have been
delivered to the other party.

	7.2	 	For the purposes of paragraph 4 of the Agreement -

	 	(a)	 	where the paragraph 7.1(a) above applies, from the period from
the ex-dividend date until the Termination of the Transaction, the
Purchaser shall be deemed to have received a payment of Cash Margin
equal to the amount of the dividend payable on the Purchased
Securities by reference to that ex-dividend date;
	 
	 	(b)	 	where paragraph 7.1(b) above applies, the party which has
received those Margin Securities shall, from the period from the
ex-dividend date until Equivalent Margin Securities are delivered to
the other party, be deemed to have received a payment of Cash Margin
equal to the amount of the dividend payable on those Margin
Securities by reference to that ex-dividend date.

	 	 	 
	CITIGROUP GLOBAL MARKETS INC. 

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

24

 

ANNEX 1, Part 4

Additional Terms and Conditions relating to

European Economic and Monetary Union

	1.	 	Interpretation

In this Annex -

“euro” means the currency of the member states of the European Union that adopt
a single currency in accordance with the Treaty establishing the European
Communities, as amended by the Treaty on European Union;

“euro unit”, “national currency unit” and “transitional period” have the
meaning given to those terms in the European Council Regulation on the legal
framework for the introduction of the euro which is expected to come into force
1 January 1999;

“TARGET” means the Trans-European Automated Real-time Gross Settlement Express
Transfer System.

	2.	 	Continuity of contract

The parties confirm that the introduction of the euro or the occurence or
non-occurence of any other event associated with economic and monetary union in
the European Community shall not have the effect of altering any term of the
Agreement or discharging; or excusing performance under the Agreement or any
Transaction thereunder, nor give a party the right unilaterally to alter or
terminate the Agreement or any Transaction thereunder.

	3.	 	Business Days

The parties agree that -

	(a)	 	references in paragraph 2(d)(iv) of the Agreement to a day on which
“banks are open for business in the principle financial centre” in
relation to a national currency unit will be to a day on which banks are
open for settling payments in the national currency unit in the principle
financial centre of that national currency unit immediately prior to the
start of the transitional period;

	(b)	 	there shall be inserted at the end of paragraph 2(d)(iv) of the Agreement -

	 	 	“ (or, in the case of a payment denominated in euro, a day on which
TARGET operates)”; and

	(c)	 	the following words at the end of paragraph 2(d)(iv) of the Agreement
shall be deleted with effect from 1 January 1999 -

	 	 	“(or, in the case of ECU, a day on which ECU clearing operates)”.

25

 

	4.	 	Equivalent Securities

The parties agree that for the purposes of paragraph 2(p) of the Agreement,
Securities will be equivalent to other Securities notwithstanding that those
Securities have been redenominated into euro or the nominal value of the
Securities has changed in connection with such redenomination.

	5.	 	Payment and Transfer

The parties agree that there shall be inserted at the end of paragraph 6(h) of
the Agreement -

	 	 	“For the purposes of this paragraph, amounts in euros (whether
denominated in the euro unit or a national currency unit) shall be
treated as being in the same currency only if those amounts are expressed
in the euro unit or the same national currency unit.”.

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

26

 

ANNEX II

FORM OF CONFIRMATION

To:

From:

Date:

Subject: [Repurchase] [Buy/Sell]* Transaction

(Reference Number:)

Dear Sirs,

The purpose of this [letter]/[facsimile]/[telex] is to set forth the terms and
conditions of the above repurchase transaction entered into between us on the
Contract Date referred to below.

This confirmation supplements and forms part of, and is subject to, the Global
Master Repurchase Agreement as entered into between us as of [ ] as the same
may be amended from time to time (the Agreement). All provisions contained in
the Agreement govern this confirmation except as expressly modified below.
Words and phrases defined in the Agreement and used in this confirmation shall
have the same meaning herein as in the Agreement.

1.Contract Date:

2.Purchased Securities [state type[s] and nominal value[s]]:

3.CUSIP, CINS or other identifying number[s]:

4.Buyer:

5.Seller:

6.Purchase Date:

7.Purchase Price:

8.Contractual Currency:

[9.Repurchase Date]:*

[10.Terminable on demand]*

11.Pricing Rate:

[12.Sell Back Price:]

13.Buyer’s Bank Account[s] Details:

14.Seller’s Bank Account[s] Details:

[15.The Transaction is an Agency Transaction. [Name of Agent] is acting as
agent for [name or identifier of Principal]]*

[16.Additional Terms]:

Yours faithfully,

*Delete as appropriate.

27

 

ANNEX III

Buy/Sell Back Transactions

	1.	 	In the event of any conflict between the terms of this Annex III and any
other term of the Agreement, the terms in this Annex shall prevail.

	2.	 	Each Transaction shall be identified at the time it is entered into and
in the Confirmation relating to it as either a Repurchase Transaction or a
Buy/Sell Back Transaction.

	3.	 	In the case of a Buy/Sell Back Transaction the Confirmation delivered in
accordance with paragraph 3 of the Agreement may consist of a single
document in respect of both of the transactions which together form the
Buy/Sell Back Transaction or separate Confirmations may be delivered in
respect of each such transaction. Such Confirmations may be in the form of
Annex II to the Agreement except that, subject to paragraph 5 below, such
Confirmations shall not include the item specified in paragraph 10 of
Annex II.

	4.	 	The following definitions shall apply to Buy/Sell Back Transactions:

	 	(i)	 	“Accrued Interest”, with respect to any Purchased Securities
subject to a Buy/Sell Back Transaction, unpaid Income that has
accrued during the period from (and including) the issue date or the
last Income Payment Date (whichever is the later) in respect of such
Purchased Securities to (but excluding) the date of calculation. For
these purposes unpaid Income shall be deemed to accrue on a daily
basis from (and including) the issue date or the last Income Payment
Date (as the case may be) to (but excluding) the next Income Payment
Date or the maturity date (whichever is the earlier);
	 
	 	(ii)	 	“Sell Back Differential”, with respect to any Buy/Sell Back
Transaction as of any date, the aggregate amount obtained by daily
application of the Pricing Rate for such Buy/Sell Back Transaction
(on a 360 day basis or 365 day basis in accordance with the
applicable ISMA convention, unless otherwise agreed between the
parties for the Transaction) to the sum of (a) the Purchase Price and
(b) Accrued Interest paid on the Purchase Date for such Transaction
for the actual number of days during the period commencing on (and
including) the Purchase Date for such Buy/Sell Back Transaction and
ending on (but excluding) the date of calculation;
	 
	 	(iii)	 	“Sell Back Price”, with respect to any Buy/Sell Back
Transaction, means:

	 	(x)	 	in relation to the date originally specified by the
parties as the Repurchase Date pursuant to paragraph 3(b)(iii)
of the Agreement, the price agreed by the Parties in relation to
that Buy/Sell Back Transaction, and
	 
	 	(y)	 	in any other case (including for the purposes of the
application of paragraph 4 (margin maintenance) or paragraph 10
(Events of Default)) of the Agreement, the product of the
formula (P + AI + D) - (IR + C), where -

	 	 	 	 	 	 	 
	

	 	P
	 	=
	 	the Purchase Price
	 
	 	 	 	 	 	 
	

	 	AI
	 	=
	 	the amount, equal to Accrued Interest at the Purchase Date,
paid under paragraph 8 of this Annex
	 
	 	 	 	 	 	 
	

	 	D
	 	=
	 	the Sell Back Differential
	 
	 	 	 	 	 	 
	

	 	IR
	 	=
	 	the amount of any Income in respect of the Purchased
Securities payable by the issuer on or, in the case of
registered Securities, by reference to, any date falling
between the Purchase Date and the Repurchase Date
	 
	 	 	 	 	 	 
	

	 	C
	 	=
	 	the aggregate amount obtained by daily application of the
Pricing Rate for such Buy/Sell Back Transaction to any such
Income from (and including) the date of payment by the issuer
to (but excluding) the date of calculation

	5.	 	When entering into a Buy/Sell Back Transaction the parties shall also
agree the Sell Back Price and the Pricing Rate to apply in relation to
that Transaction on the scheduled Repurchase Date. The parties shall
record the Pricing Rate in at least one Confirmation applicable to that
Buy/Sell Back Transaction.

	6.	 	Buy/Sell Back Transactions shall not be terminable on demand.

28

 

	7.	 	In the case of a Buy/Sell Back Transaction, the Purchase Price shall be
quoted exclusive of Accrued Interest to the Purchase Date on the Purchased
Securities and the Sell Back Price shall be quoted exclusive of Accrued
Interest.

	8.	 	For the purposes of paragraph 3(c) of the Agreement, in the case of a
Buy/Sell Back Transaction, the Purchased Securities shall be transferred
to Buyer or its agent against the payment of the Purchase Price plus an
amount equal to Accrued Interest to the Purchase Date on such Purchased
Securities.

	9.	 	In the case of a Buy/Sell Back Transaction, paragraph 3(f) of the
Agreement shall not apply. Termination of such a Transaction will be
effected on the Repurchase Date by transfer to Seller or its agent of
Equivalent Securities against the payment by Seller of (i) in a case where
the Repurchase Date is the date originally scheduled by the parties
pursuant to paragraph 3(b)(iii) of the Agreement, the Sell Back Price
referred to in paragraph 4(iii)(x) of this Annex plus an amount equal to
Accrued Interest to the Repurchase Date; and (ii) in any other case, the
Sell Back Price referred to in paragraph 4(iii)(y) of this Annex.

	10.	 	If the parties agree that a Buy/Sell Back Transaction is to be repriced
in accordance with paragraph 4(i) of the Agreement, they shall at the time
of such repricing agree the Purchase Price, the Sell Back Price and the
Pricing Rate applicable to the Repriced Transaction.

	11.	 	Paragraph 5 of the Agreement (relating to Income payments) shall not
apply to Buy/Sell Back Transactions.

	12.	 	References to “Repurchase Price” throughout the Agreement shall be
construed as references to “Repurchase Price or the Sell Back Price, as
the case may be”.

	13.	 	In Paragraph 10(c)(i) of the Agreement (relating to Events of Default),
the reference to the “Repurchase Prices” shall be construed as a reference
to “Repurchase Prices and Sell Back Prices”.

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

29

 

ANNEX IV

Transactions entered into as agent

1. Subject to the following provisions of this Annex, either party may enter
into Transactions as
agent for a third person (a “Principal”), whether as custodian or investment
manager or otherwise
(a Transaction so entered into being an “Agency Transaction”). In this Annex
the party entering
into an Agency Transaction as agent is referred to as the “Agent” and the other
party is referred to
as the “other party”.

2.
A party may enter into an Agency Transaction if, but only if - (a) it
specifies that Transaction as an Agency Transaction at the time when it enters
into it and in the Confirmation; (b) it enters into that Transaction on behalf
of a single Principal whose identity is disclosed to the other party (whether
by name or by reference to a code or identifier which the parties have agreed
will be used to refer to a specified Principal) at the time when it enters into
the Transaction; and (c) has at the time when the Transaction is entered into
actual authority to enter into the Transaction on behalf of that Principal and
to perform on behalf of that Principal all of that Principal’s obligations
under the Agreement.

3. A transaction shall not be entered into under the Agreement and this Annex
if both parties
specify that they propose to enter into that transaction as an agent.

4. Each party undertakes that, if it enters as agent into an Agency
Transaction, forthwith upon
becoming aware – (a) of any event which constitutes an Act of insolvency with
respect to the relevant Principal; or (b) of any breach of any of the
warranties given in paragraph 8 below or of any event or
circumstance which has the result that any such warranty would be untrue if
repeated by reference
to the current facts; it will inform the other party of that fact and will, if
so required by the other party, furnish the other party with such additional
information as the other party may reasonably request.

5. (a) Each Agency Transaction shall be a transaction between the relevant
Principal and the
other party and no person other than the relevant Principal and the other party
shall be a party to
or have any rights or obligations under an Agency Transaction. Without limiting
the foregoing, the
Agent shall not be liable as principal for the performance of an Agency
Transaction, but this is
without prejudice to any liability of the Agent under any other provision of
this Annex.
(b) All the provisions of the Agreement shall apply separately as between the
other party and
each Principal for whom the Agent has entered into an Agency Transaction or
Agency Transactions
as if each such Principal were a party to a separate agreement with the other
party in all respects
identical with the Agreement as supplemented by the provisions of this Annex
other than this
paragraph, but with the following additions and modifications - (i) if there
occurs in relation to the Agent an Event of Default or an event which would
constitute an Event of Default if the other party served a Default Notice or
other written notice under any sub-paragraph of paragraph 10 of the Agreement,
the other party
shall be entitled by giving written notice to the Principal (which notice shall
be validly given if given to the Agent in accordance with paragraph 14 of the
Agreement) to declare that by reason of that event an Event of Default is to be
treated as occurring in relation to the Principal. If the other party gives
such a notice then an Event of Default shall be treated as occurring in
relation to the Principal at the time when the notice is
deemed to be given in accordance with paragraph 14 of the Agreement; (ii) if
the Principal is neither incorporated nor has established a place of business
in Great Britain, the Principal shall for the purposes of paragraph 17 of the
Agreement as so applicable be deemed to have appointed as its agent to receive
on its behalf service of process in the Courts of England the Agent, or if the
Agent is neither incorporated nor
has established a place of business in the United Kingdom, the person appointed
by the Agent under paragraph 17 of the Agreement, or such other person as the
Principal may from time to time specify in a written notice given to the other
party. (c) The Agent shall do all such things and provide the other party with
all such information as may be necessary to identify any Transaction Exposure
which may arise in respect of any Principal. (d) The foregoing provisions do
not affect the operation of the Agreement as

30

 

between the other party and the Agent in respect of any Transactions into which
the Agent may enter on its own account as a principal.

6. Paragraph 9(b) of the Agreement shall be deleted and replaced by the
following- “(b) it will engage in this Agreement and the Transactions
contemplated hereunder as principal or, subject to and in accordance with of
Annex IV, as agent and the conditions referred to in Annex IV will be fulfilled
in respect of each Transaction into which it enters as an agent;”.

7. At the beginning of the last sentence of paragraph 9 of the Agreement there
shall be added
the words “Subject to Annex IV,”.

8. Each party warrants to the other that it will, on every occasion on which it
enters or purports to
enter into a transaction as an Agency Transaction, be duly authorized to enter
into that transaction
on behalf of the person whom it specifies as the Principal in respect of that
transaction and to perform on behalf of that person all the obligations of that
person under the Agreement.

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name:
Barrie L. Ringelheim

Title: Managing Director

	 	Name: Steven A. Museles

Title: Senior Vice President

31

 

ANNEX V

NAMES AND ADDRESSES FOR COMMUNICATION BETWEEN PARTIES

	1.	 	PARTY A

CITIGROUP GLOBAL MARKETS INC. AS AGENT FOR

CITIGROUP GLOBAL MARKETS LIMITED

Citigroup Centre

33 Canada Square

Canary Wharf

London E14 5LB

Settlements

Attn: Customer Services

Tel: 0171 721 2000

Fax: 0171 721 3516

Tlx: 886441

Repo Trading Desk

Tel: 0171 721 3406

Fax: 0171 721 2859

Tlx: 886441

Notices/Contract Issues

Attn: Finance Desk

Tel: 0171 721 3421

Fax: 0171 721 2831

Tlx: 886441

	2.	 	PARTY B

Attention:

Telephone:

Telex:

Fax:

32

 

ANNEX VI

NAME AND ADDRESS OF PARTY A’S AGENT FOR SERVICE OF PROCESS

CITIGROUP GLOBAL MARKETS INC. AS AGENT FOR

CITIGROUP GLOBAL MARKETS LIMITED

Citigroup Centre

Canada Square

London E14 5LB

33

 

ANNEX VII

NAME AND ADDRESS OF PARTY B’S AGENT FOR SERVICE OF PROCESS

AS REQUIRED IN CLAUSE 17

34

 

ANNEX IX

Net Paying Securities

The term “gross paying securities” shall be deleted from the title page, and in
both the heading to the Agreement and paragraph 1(a) the phrase “other than
equities, U.S. Treasury instruments and Net Paying Securities” shall be
replaced by the phrase “other than equities and U.S. Treasury instruments”.

The definition of “Net Paying Securities” shall be deleted.

In Annex III (Buy/Sell Transactions) the following words shall be added at the
end of the definition of the expression “IR”;

“ and for the avoidance of the doubt the reference to the amount of Income
for these purposes shall be to an amount paid without withholding or
deduction for or on account of taxes or duties notwithstanding that a
payment of such Income made in certain circumstances may be subject to
such a withholding or deduction.”

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

35

 

ANNEX VIII

Supplemental Terms and conditions for transactions in

Italian Domestic Purchased Securities

	1.	 	In the event of Repurchase Transactions or Buy/Sell Back Transactions in
Domestic Purchased Securities (as defined below) or in Italian Bonds (as
defined below) whether or not such Italian Bonds fall within the
definition of Domestic Purchased Securities, the following provisions
shall apply and, where in conflict with any other term of the Agreement,
including Annex III of the Agreement, they shall prevail.

	2.	 	The following definition shall be added to paragraph 2 of the Agreement:

	 	 	“Domesticated Purchased Securities” means Purchased Securities which are
issued in Italy whether or not the issuer thereof is incorporated in
Italy or has a presence in Italy.

	3.	 	The following definitions shall replace the corresponding definitions
contained in paragraph 4 of Annex III of the Agreement:

	 	(i)	 	“Accrued Interest”, with respect to any Domestic Purchased
Securities unpaid Income that has accrued during the period from
(and excluding) the issue date or the last Income Payment Date
(whichever is the later) in respect of such Domestic Purchased
Securities to (and including) the date of calculation. For these
purposes unpaid Income shall be deemed to accrue on a daily basis
from (and excluding) the issue date or the last Income Payment Date
(as the case may be) to and including the next Income Payment Date
or the maturity date (whichever is the earlier).
	 
	 	(ii)	 	“Sell Back Differential”, with respect to any Transaction in
Domestic Purchased Securities as of any date, the aggregate amount
obtained by daily application of the Pricing Rate for such
Transaction (on a 360 day basis, unless otherwise agreed between the
parties for the Transaction) to the sum of (a) the Purchase Price
and (b) Accrued Interest paid on the Purchase Date for such
Transaction for the actual number of days during the period
commencing on (and excluding) the Purchase Date for such Transaction
and ending on (and including), the date of calculation.

	4.	 	The settlement method in relation to Transactions in Domestic Purchased
Securities shall be “in the clearing” (giornaliera titoli) unless the
parties in the relevant Confirmation agree that such settlement method
shall be “over the counter” (Conto Accentrato Titoli (CAT) copertura
giornaliera) (such terms having the meanings specified in the relevant
regulations issued by the Bank of Italy).

	5.(a)	 	 In connection with a Transaction in Domestic Purchased Securities, if
Seller fails to deliver Domestic Purchased Securities to Buyer on the
Purchase Date or Buyer fails to deliver Securities equivalent to Domestic
Purchased Securities on the Repurchase Date and Buyer or, as the case may
be, Seller (the affected party) elects to terminate the Transaction in
accordance with paragraph 10(e)(iii) or, as the case may be paragraph
10(f)(iii) of the Agreement, the parties agree that for the purposes of
paragraph 10(c):

	 	(i)	 	if the affected party has at any time in the period beginning
on the date on which the failure occurred and ending at the Default
Valuation Time, purchased, whether by way of a repurchase
transaction, buy and sell back transaction or otherwise, Securities
forming part of the same issue and being of an identical type and
description as those Purchased Securities or Equivalent Securities
and in substantially the same amount as those Securities, the
affected party shall, to the extent that it does not fall within
paragraph 2(j), treat the cost of such purchase (including all
reasonable costs, fees and expenses incurred in connection
therewith) as the Default Market Value of those Securities;
	 
	 	(ii)	 	in calculating the Default Market Value, reasonable costs and
expenses incurred in connection with a purchase of Securities under
paragraph 2(j)(ii)(aa) or (bb) shall include:

	 	(aa)	 	any costs imposed by the Bank of Italy as a
result of the failure; and

36

 

	 	(bb)	 	an amount equal to interest on the amount
of any deposit which the affected party is required to make
with the Bank of Italy at the greater of the Pricing Rate
for the relevant Transaction and EURIBOR (on a 360 day
basis, unless otherwise agreed by the parties to the
Transaction) which shall be payable by the other party to
the affected party.

	(b)	 	If Buyer fails to deliver Equivalent Securities to Seller on the
applicable Repurchase Date, Seller may by written notice to the other
party, elect to adjust the Transaction in accordance with sub-paragraph
(c) below.

	(c)	 	The adjustment of a Transaction (the Original Transaction) under this
sub-paragraph shall be effected as follows. The Original Transaction shall
be terminated on the Repurchase Date for the Original Transaction and the
parties shall be in deemed to enter into a new Transaction (the Replacement
Transaction) in accordance with the following provisions:

	 	(i)	 	the Purchase Date under the Replacement Transaction
shall be the Repurchase Date under the Original Transaction;
	 
	 	(ii)	 	the Purchased Securities under the Replacement
Transaction shall be Securities equivalent to the Purchased
Securities under the Original Transaction;
	 
	 	(iii)	 	the Purchase Price under the Replacement
Transaction shall, unless otherwise agreed, be the Market Value
of the Purchased Securities for that Transaction on the
Purchase Date for the Replacement Transaction as determined by
Seller;
	 
	 	(iv)	 	the Pricing Rate under the Replacement Transaction
shall, unless otherwise agreed, be minus five per cent;
	 
	 	(v)	 	the Repurchase Date under the Replacement
Transaction shall be the Business Day following the Purchase
Date under the Replacement Transaction;
	 
	 	(vi)	 	the Margin Ratio and, subject as aforesaid, the
other terms of the Replacement Transaction shall, unless
otherwise agreed, be identical to those of the Original
Transaction; and
	 
	 	(vii)	 	the obligations of the parties with respect to the
delivery of the Purchased Securities and the Payment of the
Purchase Price under the Replacement Transaction shall be set
off against their obligations with respect to the delivery of
Equivalent Securities and payment of the Repurchase Price under
the Original Transaction and accordingly only a net cash sum
shall be paid by one party to the other. If such net sum is
payable by Seller to Buyer, that sum shall be payable on the
Repurchase Date under the Replacement Transaction.

	(d)	 	If on the Repurchase Date for any Transaction Buyer delivers to Seller
part only of the Equivalent Securities which it should have delivered
(the Delivered Securities and the part of the Equivalent Securities which
Buyer has failed to deliver being the Undelivered Securities) Seller
shall not be obliged to accept delivery of the Delivered Securities but
instead may elect to terminate that Transaction in accordance with
paragraph 10(f)(iii) of the Agreement, in which case sub-paragraph (a)
above shall apply. If Seller does not accept delivery of the Delivered
Securities, the provisions of sub-paragraph (e) below shall apply.

	(e)	 	Where this paragraph applies, the Transaction (the Terminated
Transaction) shall be terminated. Upon such termination, Buyer shall
transfer to Seller or its agent the Delivered Securities against payment
by Seller of the proportion of the Repurchase Price which corresponds to
the Delivered Securities and the parties shall be deemed to enter into a
new Transaction on the following terms:

	 	(i)	 	the Purchase Date under the new Transaction
shall be the Repurchase Date under the Terminated
Transaction;
	 
	 	(ii)	 	the Purchased Securities under the new
Transaction shall be Securities equivalent to the Undelivered
Securities;
	 
	 	(iii)	 	the Purchase Price under the new Transaction
shall be in the Market Value of the Undelivered Securities at
the Purchase Date under the new Transaction as determined by
Seller;

37

 

	 	(iv)	 	the Repurchase Date under the new Transaction
shall be the Business Day following the Purchase Date under
the new Transaction;
	 
	 	(v)	 	the Pricing Rate under the new Transaction
shall, unless otherwise agreed, be minus five per cent;
	 
	 	(vi)	 	the Margin Ratio and, subject as aforesaid, the
other terms of the new Transaction shall, unless otherwise
agreed, be identical to those of the Terminated Transaction;
and
	 
	 	(vii)	 	the obligations of the parties with respect to
the delivery of the Undelivered Securities and the payment of
that part of the Repurchase Price which corresponds to the
Underlying Securities under the Terminated Transaction shall
be set off against their obligations with respect to the
delivery of the Purchased Securities and the payment of the
Purchase Price under the new Transaction and accordingly only
a net cash sum shall be paid by Seller to Buyer. If such net
sum is payable by Seller to Buyer, that sum shall be payable
on the Repurchase Date under the Replacement Transaction.

	6.	 	Transactions in Domestic Purchased Securities between an Italian resident
and a counterparty which is not resident in Italy for Italian tax purposes
(but excluding the foreign branches of entities incorporated in Italy)
where the non-Italian party is Buyer, are subject to the then applicable
withholding tax in accordance with the following formula applied to the
amount of capital gains (as resulting from the following formula) realised
unless otherwise provided in any applicable tax treaty.

	 	 	(Pssnt – Pssnp) x Awtr x (360/gg) x (100/Pssnp)

	 	 	 	 	 	 	 
	Pssnt 

	 	=
	 	Prezzo supersecco netto a

termine
	 	Sell Back Price net of accrued
interest and matured original
issue discount
	Pssnp

	 	=
	 	Prezzo supersecco netto a pronti
	 	Purchase price net of accrued
interest and matured original
issue discount
	 
	 	 	 	 	 	 
	Awtr

	 	=
	 	Tazzo della ritenuta d’imposta
applicabile
	 	Applicable withholding tax rate
	 
	 	 	 	 	 	 
	gg

	 	=
	 	Giorni di durata del Buy/Sell

Back
	 	number of days in the
transaction (excluding the
date of purchase and including
the date of sell back)

	 	 	To the extent that the withholding tax referred to above is applicable to
Buyer and Seller is required to pay the amount of such withholding tax to
the Italian tax authorities, Seller shall be entitled to deduct the amount
of such tax from the Repurchase Price or, within ten days of the demand of
Seller to make the relevant payment, Buyer shall reimburse Seller in
respect of the amount required to be paid by it. Seller shall, upon
demand by Buyer, provide Buyer with appropriate evidence of the amount of
tax deducted and paid to he Italian tax authorities as Buyer may
reasonably require to obtain any tax relief under any applicable tax
treaty or to obtain any tax credit in respect of its income in the country
in which it is resident or out of which it is acting.

	7.	 	Paragraphs 3, 4(iii) and 5 to 13 (inclusive) of Annex III of the
Agreement shall apply to Buy/Sell Back Transactions in Domestic Purchased
Securities as if:

	 	(a)	 	references to Buy/Sell Back Transactions shall be construed as
references to Buy/Sell Back Transactions in Domestic Purchased
Securities; and
	 
	 	(b)	 	references to Purchased Securities shall be construed as
references to Domestic Purchased Securities;

	8.	 	Unless otherwise agreed:

	 	(a)	 	paragraph 5 of the Agreement shall apply without modification
in respect of any payment of income in respect of Italian Bonds which
could be received without a withholding or deduction on account of
Italian tax being made at source by an owner of such Italian bonds
which is a body corporate resident in Italy or in one of the
jurisdictions listed in Decree of he Minister of finance of the
Republic of Italy dated 4th September, 1996 issued pursuant to
Legislative Decree no. 239 of 1st April, 1996 having an appropriate
double tax treaty with Italy (whether or not either of the parties is
such a body corporate);

38

 

	 	(b)	 	paragraph 5 of the Agreement shall be modified, in its
application to any payment of Income in respect of Italian Bonds
other than such a payment falling within sub-paragraph (a) above, by
deducting from the amount required to be transferred or credited
under that paragraph an amount equal to any amount which would, on
the assumption that Buyer owned the Italian Bonds at the relevant
Income Payment Date, be withheld or deducted at source on account of
Italian tax;
	 
	 	(c)	 	in relation to Buy/Sell Back Transactions in Italian Bonds, the
amount “IR” in the formula for computing the Sell Back Price pursuant
to paragraph 4(iii)(y) of Annex III of the Agreement shall be
calculated on the same basis as the amount required to be transferred
or credited pursuant to paragraph 5 is calculated in accordance with
sub-paragraphs (a) and (b) above;
	 
	 	(d)	 	without prejudice to the provisions set out in the final
sentence of paragraph 6 above in this Annex IX, neither party shall
be obliged to deliver or transfer to the other, or to account to the
other for, any tax credits or refunds to which it may become entitled
in respect of Income on Italian Bonds; and
	 
	 	(e)	 	paragraph 11 (Tax Event) shall not apply to any Transaction by
virtue of any Italian Bonds ceasing to be Securities in respect of
which a deduction or withholding on account of Italian tax is
required to be made in respect of a payment of Income to which an
owner as is referred to in sub-paragraph (a) above.
	 
	 	 	 	For the purposes of this paragraph “Italian Bonds” means any
Securities which are issued by the Italian government or local
authorities (or the Securities which for Italian tax purposes are
treated likewise) or by other entitles and to which the provisions of
Legislative Decree no. 239 of 1st April, 1996, as amended granting a
special tax treatment will apply.

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

39

 

ANNEX X

Supplemental Terms and Conditions for

Transactions with Citigroup Global Markets Limited

[Note: The additional wording below was recommended for inclusion in this
Agreement by Legal Opinions.]

Paragraph references are to paragraphs in the Agreement. Reference to Party X
applies to either Party A or Party B.

BARBADOS

	(A) 1.	 	 This paragraph shall apply where Party X is a company incorporated or
registered as external company under the Companies Act, Chapter 308 of the
laws of Barbados or is a branch established or located in Barbados of a
company incorporated or organized outside Barbados:

	 	 	“Without limiting any other provisions of paragraphs 2(a) or 10 of the
Agreement, in the case of Party X the following events shall constitute
an Act of Insolvency:

	 	(i)	 	the making by it of a fraudulent conveyance, gift, delivery
or transfer of property;
	 
	 	(ii)	 	the making by it of any conveyance or transfer of property or
the creation of any charge on any property which would under the
Bankruptcy Act Chapter 303 of the laws of Barbados or any other
enactment be void as a fraudulent preference if he were adjudged
bankrupt;
	 
	 	(iii)	 	the execution against it by seizure of its goods under
process in an action in any court and such goods have either been
sold or held by the Marshal for twenty-one days (such twenty-one
days being calculated in accordance with the provisions of the
Bankruptcy Act);
	 
	 	(iv)	 	the giving of notice that it has suspended or is about to
suspend payment of its debts; and
	 
	 	(v)	 	the declaration by any act that it is unable to meet its
engagements.”

BAHRAIN

	(B)	 	This paragraph shall apply where Party X is a company incorporated or
organized under Laws of Bahrain or a branch established or located in
Bahrain of a company incorporated or organized outside Bahrain:

	 	(i)	 	the words ‘and in respect of Party X, adjudication by a court
as to the date when Party X is deemed to suspend payment pursuant to
Article 8 of the Bankruptcy and Composition Law of Bahrain, Decree
Law no. 11/1987” shall be inserted immediately after the word
“filing” in the last line of paragraph 2(a)(iv) of this Agreement.
	 
	 	(ii)	 	Notwithstanding any other provisions in the Agreement, all
Transactions and all sums payable hereunder, from the time that they
are entered into or from the time at which the payment obligation is
incurred (as the case may be), shall constitute one single and
integral account, the amount standing to the credit of which shall
be a sum equal to the Net Exposure (if any) of one party to the
other and such account shall be deemed to be in the name and favour
of that party which has the Net Exposure to the other. To the extent
permitted by applicable law, for the purposes of this calculation,
all sums not denominated in the Base Currency shall be converted
into the Base Currency on the relevant date at the Spot Rate
prevailing at the relevant time.
	 
	 	(iii)	 	For the avoidance of doubt, the provisions of paragraph (ii)
above, shall be read and construed as applying to Transactions as
between the Principal and the other party notwithstanding that any
Transaction may be an Agency Transaction.”

40

 

BELGIUM

	(C)	 	This paragraph shall apply where Party X is a company incorporated or
organized under the laws of Belgium or a branch established or located in
Belgium of a company incorporated or organized outside Belgium.

	 	 	“Paragraph 2(a) is amended by inserting at the end of the paragraph the
following: “(viii) the occurrence of an attachment whether conservatory
or executory (saisie-arêt conservatoire or saisie arrêt
exécution/bewaurend beslag onder derden or witvoerend beslag onder
derden), of the sums owing to it from the other party;”

CANADA

	(D)	 	This paragraph shall apply where Party X is a company incorporated or
organized under the laws of Canada or a branch established or located in
Ontario or Quebec of companies incorporated or organized outside Canada:

	 	 	“Without limiting the provisions of paragraphs 2(a) or 10 of the
Agreement, in respect of Party X:

	 	(i)	 	the reference 2(a)(vi) to analogous proceedings shall include
a reference to proceedings under the Bankruptcy and Insolvency Act
(Canada) and the Companies’ Creditors Arrangement Act (Canada) and
to any corporate law proceedings with potential application to such
party in the event of its insolvency: and
	 
	 	(ii)	 	the occurrence of such proceedings shall, upon the service of
a Default Notice, constitute an Event of Default for the purpose of
paragraph 10 of the Agreement.”

DENMARK

	(E)	 	This paragraph shall apply where Party X is incorporated or organized
under the laws of Denmark or a branch established or located in Denmark of
a company incorporated or organized outside Denmark:

	 	 	“In respect of Party X the occurrence of any Act of Insolvency shall
constitute an immediate Event of Default and the service of written
notice shall not be necessary.”

	 	 	FEDERAL REPUBLIC OF GERMANY

	(F)	 	This paragraph shall apply where Party X is a company or a commercial
partnership (Handelsgessellscaft) or a cooperative society
(Genossenschaft) incorporated or organized under the laws of the Federal
Republic of Germany or a branch established or located in the Federal
Republic of Germany of a company incorporated or organized outside the
Federal Republic of Germany:

	 	(i)	 	In this paragraph
	 
	 	 	 	“Konkursverfahren” means bankruptcy proceedings under the Bankruptcy
Act (Konkursordnung) dated 18 February 1877, as amended and
“Konkursverwalter” means a Konkursverwalter appointed under that Act;
	 
	 	 	 	“Vergleichsverfahren” means composition proceedings under the
Composition Act (Vergleichsordnung) dated 26 February 1935, as amended
and “Vergleichsverwalter” means a Vergleichsverwalter appointed under
that Act;
	 
	 	 	 	“Gesamtvollstreckungsordnung” means the insolvency Act promulgated on
23 May 1991 in respect of the new federal states (Länder) of Germany,
“Gesamtvollstreckungsverfahren” means insolvency proceedings
instituted under that Act and “Verwalter” means a
“Vergleichsverwalter” appointed under that Act;
	 
	 	 	 	“Insolvenzordung” means the Insolvency Act which is due to come into
force in Germany in 1 January 1999, “Insolvenzverfahren” means
insolvency proceedings instituted under the Act and
“Insolvenzverwalter” means an “Insolvenzverwalter” appointed under
that Act.

41

 

	 	(ii)	 	Without limiting any other provision of Paragraph 2(a) or
Paragraph 10 of the Agreement, in respect of Party X:

	 	(a)	 	the references to an analogous officer in Paragraph
2(a)(iii) and (v) shall include a Konkursverwalter, a
Vergleichsverwalter, a Verwalter under
Gesamtvollstreckungsordnung and an Insolvenzverwalter;
	 
	 	(b)	 	the reference to any analogous proceeding in Paragraph
2(a)(iv) and (v) shall include a Konkursverfahren, a
Vergleichsverfahren, a Gesamtvollstreckungsverfahren and an
Insolvenzverfahren;
	 
	 	(c)	 	an Event of Default shall for the purposes of Paragraph
10 of the Agreement occur immediately, and without the need for
the service of a Default Notice, if an application is made for
the institution of Konkursverfahren, a Vergleichsverfahren, a
Gesamtvollstreckungsverfahren or an Insolvenzverfahren or
measures are taken pursuant to § 46a para. 1 of the German
Banking Act (Kreditwesengesetz) or pursuant to § 89 para. 1 of
the German Insurance Supervision Act
(Versicherungsaufsichtsgesetz).

FINLAND

	(G)	 	This paragraph shall apply where Party X is incorporated or organized
under the laws of Finland or a branch established or located in Finland of
a company incorporated or organized outside Finland:

	 	 	“In respect of Party X -

	 	(a)(i)	 	 the passing of a resolution for the filing of an application for
the institution of reorganization proceedings under the Act on
Company Reorganization; and
	 
	 	(a)(ii)	 	 the filing of an application for the institution of
reorganization proceedings under the Act on Company Reorganization
	 
	 	 	 	shall constitute an Act of Insolvency;
	 
	 	(b)	 	without limiting paragraph 10 of the Agreement, the
occurrence of any Act of Insolvency referred to in paragraph G (a)
above shall constitute an immediate Event of Default and the service
of a Default Notice shall not be necessary.”

LUXEMBOURG

	(H)	 	This paragraph shall apply where Party X is a company established under
the laws of Luxembourg or a branch established or located in Luxembourg of
a company established outside Luxembourg:

	 	 	“Without limiting the provisions of paragraph 2 of the Agreement, the
case of Party X, the reference in paragraphs 2(a)(iii) and (v) to any
trustee, administrator or liquidator or analogous officer shall include:

	 	(i)	 	any commissaire de surveillance appointed in the course of
the admittance of such party to the regime of a sursis de paiement
et gestion contrôlée under article 60 of the law of 5th April, 1993
on the financial sector or article 56 of the law of 6th December,
1991 on the insurance sector; and
	 
	 	(ii)	 	any commissaire appointed in the course of the admittance of
such party to the regime of a gestion contrôlée et sursis de
paiement under the Grand-Ducal decree of 24th May, 1935.”

NEW ZEALAND

	(I)	 	This paragraph shall apply where Party X is a company incorporated or
registered in New Zealand under the Companies Act 1993 ( The “Companies
Act”) or a body corporate registered as an “overseas company” under the
Companies Act or a corporation incorporated or formed under the laws of
another jurisdiction with a branch or branches located in New Zealand but
not registered as an “overseas company” under the Companies Act:

42

 

	 	(a)	 	In the definition of “Act of Insolvency” in paragraph 2(a),
“or” is inserted after paragraph 2(a)(vi) and a new paragraph
2(a)(vii) is inserted as follows:

	 	“(vii)	 	 it becoming subject to a recommendation made by the Securities
Commission or the Reserve Bank of New Zealand to the relevant
Minister supporting the appointment of a statutory manager;”

	 	(b)	 	In paragraph 10(a)(iv), after “proceeding” in the second
line, the following is inserted:
	 
	 	 	 	“, a recommendation supporting the appointment of a statutory
manager”.”

SOUTH AFRICA

	(J)	 	This paragraph shall apply where Party X is a company incorporated or
organized under the laws of South Africa or a branch established or
located in South Africa of a company incorporated or organized outside
South Africa:

	 	(i)	 	Without limiting any other provision of a paragraph 2(a) or
paragraph 10 of the Agreement, in the case of Party X:

	 	(a)	 	for the purposes of paragraph 2(a)(i), the
reference to a reorganization, arrangement or composition
with creditors shall include any reorganization, arrangement,
compromise or composition with creditors or any class of
creditors;
	 
	 	(b)	 	the reference in paragraph 2(a)(iv) to the
presentation or filing of any petition shall include any
issuing of or application for a petition and the reference to
analogous proceeding shall include the provisional or final
bankruptcy, winding-up or insolvency, curatorship under Banks
Act, 1990 and any compromise or judicial management (whether
provisional or final);
	 
	 	(c)	 	the reference to any analogous officer in
paragraph 2(a)(v) shall include a judicial manager or
curator; and
	 
	 	(d)	 	for the purposes of paragraph 10(a)(iv), if an
Act of Insolvency occurs which is the presentation of a
petition for winding-up or any analogous proceeding
(including curatorship under Banks Act, 1990) or the
appointment of a liquidator or analogous officer of the
Defaulting Party, the non-Defaulting Party shall be required
to serve a Default Notice on the Defaulting Party.

	 	(ii)	 	Without limiting any other provision of paragraph 6 of the
Agreement, in the case of Party X;

	 	(a)	 	any reference in paragraph 6(f) to all right,
title and interest in and to Securities shall include
ownership of Securities; and
	 
	 	(b)	 	it is the intention of the parties that this
Agreement will provide for the delivery of Securities on a
future date. Accordingly, if in respect of any Transaction,
the date referred to in the Confirmation as the Purchase Date
is the same date as the date of the Confirmation, then,
notwithstanding anything to the contrary in the Agreement or
the Confirmation, the Purchase Date in respect of that
Transaction shall be the first Business Day after the date of
the Confirmation.”

SWEDEN

	(K)	 	This paragraph shall apply where Party X is a limited liability company
incorporated under the laws of Sweden:

	 	 	For the avoidance of doubt, and without limiting any other provision of
paragraph 2(a) or paragraph 10 of this Agreement, in respect of Party X:

	 	(i)	 	the reference to “a liquidator or analogous
officer” in paragraph 2(a)(iii) and (v) shall include a
konkursförvaltare appointed under Swedish law; and

43

 

	 	(ii)	 	an Event of Default shall accordingly, for the
purposes of paragraph 10 of the Agreement be deemed to occur
immediately, and without the service of a Default Notice,
upon the appointment of a konkursförvaltare.”

SWITZERLAND

	(L)	 	This paragraph shall apply where Party X is incorporated and organized
under the Laws of Switzerland or a branch established or located in
Switzerland of a company incorporated or organized outside Switzerland:

	 	 	“In respect of Party X:

	 	(i)	 	the adjudication of bankruptcy (“Konkurseröffnung”) shall
constitute an Act of Insolvency;
	 
	 	(ii)	 	without limiting paragraph 10(a)(iv) of the Agreement, the
occurrence of any Act of Insolvency referred to in sub-paragraph (i)
above shall constitute and immediate Event of Default and the
service of written notice shall not be necessary.”

	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

AS AGENT FOR CITIGROUP GLOBAL

MARKETS LIMITED

	 	CAPITALSOURCE FINANCE LLC
	 
	 	 
	By: /s/ BARRIE L. RINGELHEIM

	 	By: /s/ STEVEN A MUSELES
	
 

	 	
 
	Name: Barrie L. Ringelheim

	 	Name: Steven A. Museles
	Title: Managing Director

	 	Title: Senior Vice President

44exv10w23

 

Exhibit 10.23

CapitalSource Inc.

Senior Convertible Debentures due 2034

REGISTRATION RIGHTS AGREEMENT

March 19, 2004

J.P. Morgan Securities Inc.

277 Park Avenue

9th Floor

New York, New York 10172

as Representative of the Initial Purchasers

Ladies and Gentlemen:

     CapitalSource Inc., a Delaware corporation (the “Company”), proposes to
issue and sell (such issuance and sale, the “Initial Placement”) to the Initial
Purchasers (as defined below), upon the terms set forth in a purchase
agreement, dated March 16, 2004 (the “Purchase Agreement”), $225,000,000
principal amount of its Senior Convertible Debentures due 2034 (together with
the related Guarantees (as defined below) of the Guarantors (as defined below),
the “Firm Securities”). In addition, the Company has granted to the Initial
Purchasers an option to purchase up to an additional $25,000,000 principal
amount of the Company’s Senior Convertible Debentures due 2034 (together with
the related Guarantees of the Guarantors, the “Additional Securities” and,
collectively with the Firm Securities, the “Securities”). The Securities will
be fully and unconditionally guaranteed as to due and punctual payment (the
“Guarantees”) by CapitalSource Holdings LLC and CapitalSource Finance LLC
(together, the “Guarantors”). The Securities will be convertible into shares
of Common Stock (as defined below), at the conversion price set forth in the
Offering Memorandum (as defined below), as the same may be adjusted from time
to time pursuant to the Indenture (as defined below). As an inducement to you
to enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company and the Guarantors agree with you, (i) for
your benefit and (ii) for the benefit of the Holders (as defined below) from
time to time of the Securities and the shares of Common Stock issuable upon
conversion of the Securities, as follows:

               1. Definitions. Capitalized terms used herein without definition shall
have the respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized terms shall have the following
meanings:

     “Additional Amounts” has the meaning set forth in Section 2(e) hereof.

     “Additional Amounts Payment Date” means each March 15 and September 15.

     “Affiliate” of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified

 

 

person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person whether through the
ownership of voting securities or by agreement or otherwise.

     “Business Day” has the meaning set forth in the Indenture.

     “Closing Date” means March 19, 2004.

     “Common Stock” means the common stock, par value $0.01 per share, of the
Company, as it exists on the date of this Agreement and any other shares of
capital stock or other securities of the Company into which such Common Stock
may be reclassified or changed, together with any and all other securities
which may from time to time be issuable upon conversion of Securities.

     “Company” has the meaning set forth in the preamble hereto.

     “DTC” has the meaning set forth in the Indenture.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.

     “Existing Registration Agreement” means the Amended and Restated
Registration Rights Agreement, dated as of August 30, 2002, by and among the
Company and the holders of its securities party thereto.

     “Holder” means a person who is a registered holder or beneficial owner of
any registrable Securities (including the Initial Purchasers).

     “Guarantee” has the meaning set forth in the preamble hereto.

     “Guarantors” means CapitalSource Holdings LLC and CapitalSource Finance
LLC.

     “Holder Information” with respect to any Holder means information with
respect to such Holder required to be included in any Shelf Registration
Statement or the related Prospectus pursuant to the Securities Act and which
information is included therein in reliance upon and in conformity with
information furnished to the Company and the Guarantors in writing by such
Holder for inclusion therein.

     “Indenture” means the Indenture relating to the Securities, dated March
19, 2004, among the Company, the Guarantors and U.S. Bank National Association,
as trustee, as the same may be amended from time to time in accordance with the
terms thereof.

     “Initial Placement” has the meaning set forth in the preamble hereto.

     “Initial Purchasers” mean J.P. Morgan Securities Inc. and the other
initial purchasers named in and a party to the Purchase Agreement.

2

 

     “Majority Holders” means the Holders of a majority of the then outstanding
aggregate principal amount of Securities being registered under a Shelf
Registration Statement; provided that Holders of shares of Common Stock issued
upon conversion of Securities shall be deemed to be Holders of the aggregate
principal amount of Securities converted into such Common Stock; and provided
further, that Securities or shares of Common Stock which have been sold or
otherwise transferred pursuant to the Shelf Registration Statement shall not be
included in the calculation of Majority Holders.

     “NASD” has the meaning set forth in Section 3(i) hereof.

     “NASD Rules” means the rules and regulation promulgated by the NASD.

     “Notice and Questionnaire” means a Selling Securityholder Notice and
Questionnaire substantially in the form of Annex A to the Offering Memorandum.

     “Notice Holder” shall mean, on any date, any Holder of Transfer Restricted
Securities that has delivered a completed and signed Notice and Questionnaire
to the Company on or prior to such date.

     “Offering Memorandum” means the Final Memorandum as defined in the
Purchase Agreement.

     “Person” has the meaning set forth in the Indenture.

     “Prospectus” means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities or shares of Common Stock
issuable upon conversion thereof covered by such Shelf Registration Statement,
including all documents incorporated or deemed to be incorporated by reference
in such prospectus.

     “Purchase Agreement” has the meaning set forth in the preamble hereto.

     “Record Holder” means each person who is registered on the books of the
registrar as the holder of Securities at the close of business on the March 1
or September 1 immediately preceding the relevant Additional Amounts Payment
Date.

     “Registration Default” has the meaning set forth in Section 2(e) hereof.

     “Representative” means J.P. Morgan Securities Inc., as representative of
the Initial Purchasers.

     “Rule 144” means Rule 144 under the Securities Act (or any similar
provision then in force).

     “Rule 144A” means Rule 144A under the Securities Act (or any successor
provision promulgated by the SEC).

3

 

     “Rule 144(k)” means Rule 144(k) under the Securities Act (or any successor
provision promulgated by the SEC).

     “Rule 415” means Rule 415 under the Securities Act (or any successor
provision promulgated by the SEC).

     “SEC” means the Securities and Exchange Commission.

     “Securities” has the meaning set forth in the preamble hereto.

     “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

     “Seller Post-Effective Amendment” has the meaning set forth in Section
2(b)(ii) hereof.

     “Shelf Registration” means a registration effected pursuant to Section 2
hereof.

     “Shelf Registration Period” has the meaning set forth in Section 2(c)
hereof.

     “Shelf Registration Statement” means any “shelf” registration statement of
the Company and the Guarantors filed pursuant to the provisions of Section 2
hereof which covers the Transfer Restricted Securities on Form S-3 or on
another appropriate form (as determined by the Company) for an offering to be
made on a delayed or continuous basis pursuant to Rule 415 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all documents incorporated or deemed to be incorporated by
reference therein.

     “Suspension Period” has the meaning set forth in Section 2(d) hereof.

     “Transfer Restricted Securities” means each Security and each share of
Common Stock issuable upon conversion thereof until the earliest of the date on
which such Security or share of Common Stock, as the case may be, (i) has been
transferred pursuant to a Shelf Registration Statement or another registration
statement covering such Security or share of Common Stock which has been filed
with the SEC pursuant to the Securities Act, in either case after such
registration statement has become effective and while such registration
statement is effective under the Securities Act, (ii) has been transferred
pursuant to Rule 144 under circumstances in which any legend borne by such
Securities or shares of Common Stock relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed,
(iii) may be sold or transferred pursuant to Rule 144(k) or (iv) the date on
which such Security or Common Stock ceases to be outstanding.

     “Trustee” means U.S. Bank National Association, the trustee with respect
to the Securities under the Indenture.

     All references in this Agreement to financial statements and schedules and
other information which is “contained,” “included,” or “stated” in the Shelf
Registration Statement, any preliminary Prospectus or Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information

4

 

incorporated or deemed to be incorporated by reference in such Shelf
Registration Statement, preliminary Prospectus or Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Shelf Registration Statement, any preliminary Prospectus or Prospectus shall be
deemed to mean and include any document filed with the SEC under the Exchange
Act, after the date of such Shelf Registration Statement, preliminary
Prospectus or Prospectus, as the case may be, which is incorporated or deemed
to be incorporated by reference therein (which shall not include, unless
incorporated therein, documents and information furnished and not filed under
applicable SEC rules).

               2. Shelf Registration Statement.

               (a) The Company and the Guarantors shall, at the Company’s expense,
prepare and file with the SEC within 195 days following the Closing Date a
Shelf Registration Statement with respect to resales of the Transfer Restricted
Securities by each Holder that is a Notice Holder from time to time on a
delayed or continuous basis pursuant to Rule 415 and in accordance with the
methods of distribution elected by such Notice Holders in a Notice and
Questionnaire and thereafter shall use its best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act within
285 days after the Closing Date; provided that if any Additional Securities are
issued and the date on which such Additional Securities are issued occurs after
the Closing Date, the Company will take such steps, prior to the effective date
of the Shelf Registration Statement, to ensure that such Additional Securities
and the shares of Common Stock issuable upon conversion thereof are included in
the Shelf Registration Statement on the same terms as the Securities issued on
the Closing Date. The Company shall supplement or amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for the Shelf Registration Statement,
or by the Securities Act, the Exchange Act or the SEC.

          (b) (i) The Company shall take action to name each Holder that is a
Notice Holder as of the date that is 10 Business Days prior to the
effectiveness of the Shelf Registration Statement as a selling
securityholder in the Shelf Registration Statement at the time of its
effectiveness so that such Holder is permitted to deliver the Prospectus
forming a part thereof as of such time to purchasers of such Holder’s
Transfer Restricted Securities in accordance with applicable law. The
Company shall be under no obligation to name any Holder that is not a
Notice Holder as a selling securityholder in the Shelf Registration
Statement.

                    (i) (A) After the Shelf Registration Statement has become effective,
the Company shall, upon the request of any Holder of Transfer Restricted
Securities, promptly send a Notice and Questionnaire to such Holder and
the Company shall, as promptly as is practicable after the date a
completed and signed Notice and Questionnaire is delivered to the
Company, and in any event (subject to clause (B) below) within 20
Business Days after such date, prepare and file with the SEC (y) a
supplement to the Prospectus or, if a post-effective amendment to the
Shelf Registration Statement is required by applicable law in order to
cause a Holder to be named as a selling securityholder in the Shelf
Registration Statement, a post-effective amendment to the Shelf
Registration Statement (a “Seller Post-Effective Amendment”) and (z) any
other document required by applicable law, so that the Holder delivering
such Notice and

5

 

Questionnaire is named as a selling securityholder in the Shelf
Registration Statement and is permitted to deliver the Prospectus to
purchasers of such Holder’s Transfer Restricted Securities in accordance
with applicable law. If the Company files a Seller Post-Effective
Amendment, it shall use its best efforts to cause such post-effective
amendment to become effective under the Securities Act as promptly as is
practicable and in any event within 75 days of such filing.
Notwithstanding anything contained herein to the contrary, if a Notice
and Questionnaire is delivered to the Company during a Suspension Period,
the Company shall not be obligated to take the actions set forth above
until the termination of such Suspension Period.

                    (B) Notwithstanding the requirements of clause (A) above, the
Company shall not be required to file more than one Seller Post-Effective
Amendment in any fiscal quarter, provided that this clause (B) shall not
relieve the Company of any obligations under clause (A) unless a Seller
Post-Effective Amendment is required by applicable law in order to cause
a Holder to be named as a selling securityholder in the Shelf
Registration Statement.

               (c) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended under the Securities
Act in order to permit the Prospectus forming a part thereof to be usable,
subject to Section 2(d), by all Notice Holders until all Transfer Restricted
Securities (A) have been transferred pursuant to a Shelf Registration Statement
or another registration statement covering such Security or share of Common
Stock which has been filed with the SEC pursuant to the Securities Act, in
either case after such registration statement has become effective and while
such registration statement is effective under the Securities Act, (B) have
been transferred pursuant to Rule 144 under circumstances in which any legend
borne by such Securities or shares of Common Stock relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed or
(C) have ceased to be outstanding (in any such case, such period being called
the “Shelf Registration Period”). The Company will, (x) subject to Section
2(d), prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep the
Shelf Registration Statement continuously effective for the Shelf Registration
Period, (y) subject to Section 2(d), cause the related Prospectus to be
supplemented by any required supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act and (z) comply in all material respects with the provisions of
the Securities Act with respect to the Shelf Registration Statement during the
Shelf Registration Period.

               (d) The Company may suspend the availability of any Shelf Registration
Statement and the use of any Prospectus (the period during which the
availability of any Shelf Registration Statement and any Prospectus may be
suspended herein referred to as the “Suspension Period”), without incurring any
obligation to pay Additional Amounts pursuant to Section 2(e), for a period not
to exceed 90 days in the aggregate during any 12-month period for valid
business reasons, to be determined by the Company in its sole judgment (which
shall not include the avoidance of the Company’s obligations hereunder),
including, without limitation, the acquisition or divestiture of assets,
pending corporate developments, public filings with the SEC and similar events;
provided that the Company promptly thereafter complies with the requirements of
Section 3(j) hereof, if applicable, and provided further that, if a Seller
Post-

6

 

Effective Amendment is required by applicable law in order to cause a
Holder to be named as a selling securityholder in the Shelf Registration
Statement, the period of time between the filing and effectiveness of any
Seller Post-Effective Amendment shall not be deemed to be a Suspension Period
hereunder.

               (e) The Company and the Initial Purchasers agree that the Holders of
Transferred Restricted Securities will suffer damages, and it would not be
feasible to ascertain the extent of such damages with precision, if the Company
fails to fulfill its obligations under Section 2 hereof. Accordingly, if (i)
the Shelf Registration Statement is not filed with the SEC within 195 days
after the Closing Date, (ii) the Shelf Registration Statement has not been
declared effective by the SEC within 285 days after the Closing Date, (iii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by a
replacement Shelf Registration Statement filed and declared effective) or
usable (including as a result of a Suspension Period) for the offer and sale of
Transfer Restricted Securities for a period of time (including any Suspension
Period and excluding, if a Seller Post-Effective Amendment is required by
applicable law in order to cause a Holder to be named as a selling
securityholder in the Shelf Registration Statement, the period of time between
the filing and effectiveness of any Seller Post-Effective Amendment) which
exceeds 90 days in the aggregate in any 12-month period or (iv) the Company
fails to perform its obligations set forth in Section 2(b)(ii) within the time
periods required therein (each such event referred to in clauses (i) through
(iv), a “Registration Default”), the Company shall pay to each Notice Holder
(who is also a Record Holder) (but only to each affected Notice Holder under
Section 2(b)(ii) in the case of clause (iv)) during any period in which a
Registration Default has occurred or is continuing an amount (the “Additional
Amounts”) equal to (i) one-quarter of one percent (25 basis points) per annum
of the outstanding principal amount of Securities constituting Transfer
Restricted Securities held by such Holder for the period up to and including
the 90th day during which such Registration Default has occurred and is
continuing and (ii) one-half of one percent (50 basis points) per annum of the
outstanding principal amount of Securities constituting Transfer Restricted
Securities held by such Holder for the period including and subsequent to the
91st day during which such Registration Default has occurred and is continuing,
it being understood that all calculations pursuant to this sentence shall be
carried out to five decimal places. Following the cure of all Registration
Defaults, Additional Amounts will cease to accrue with respect to such
Registration Defaults. All accrued Additional Amounts shall be paid by the
Company on each Additional Amounts Payment Date in cash and Additional Amounts
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. The parties hereto agree that the Additional Amounts provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Notice Holders by reason of a Registration Default and that such
Additional Amounts are the only monetary damages available to Notice Holders in
the event of a Registration Default.

               (f) All of the Company’s obligations (including, without limitation, the
obligation to pay Additional Amounts) set forth in the preceding paragraph
which are outstanding or exist with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full. Notwithstanding the foregoing, no
Additional Amounts shall accrue as to any Transfer Restricted Security from and
after the date

7

 

such security is no longer a Transfer Restricted Security. Additional
Amounts shall not accrue to more than one Notice Holder with respect to a
Transfer Restricted Security at any one time.

               (g) Immediately upon the occurrence or the cure of a Registration Default,
the Company shall give (i) the Trustee, so long as the Securities remain
outstanding, and (ii) the transfer and paying agent for the Common Stock, in
the event any Notice Holder holds Common Stock issued upon conversion of
Securities, notice of such commencement or termination of the obligation to pay
Additional Amounts with regard to the Securities or the Common Stock, as the
case may be, the amount or applicable percentage thereof and the nature of the
default giving rise to such commencement or the event giving rise to such
termination, as the case may be (such notice to be contained in an Officer’s
Certificate (as such term is defined in the Indenture)), and prior to receipt
of such Officer’s Certificate the Trustee and the transfer and paying agent
shall be entitled to assume that no such commencement or termination has
occurred, as the case may be.

               3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:

               (a) The Company shall (i) furnish to the Initial Purchasers, within a
reasonable period of time, but in any event within three Business Days, prior
to the filing thereof with the SEC to afford the Initial Purchasers and their
counsel a reasonable opportunity for review, a copy of each Shelf Registration
Statement, and each amendment thereof, and a copy of each Prospectus, and each
amendment or supplement thereto (excluding amendments caused by the filing of a
report under the Exchange Act), and shall reflect in each such document, when
so filed with the SEC, such comments as the Initial Purchasers may reasonably
propose, except to the extent the Company reasonably determines, on the advice
of counsel, it to be inadvisable or inappropriate to reflect such comments
therein, and (ii) include information regarding the Notice Holders and the
methods of distribution they have elected for their Transfer Restricted
Securities provided to the Company in Notice and Questionnaires as necessary to
permit such distribution by the methods specified therein. Each Notice Holder
who sells, transfers or disposes of Transfer Restricted Securities pursuant to
the Shelf Registration Statement shall, as a condition to the obligations of
the Company hereunder, do so only in accordance with the terms of this
Agreement, the methods of distribution elected by such Notice Holder, the
Securities Act and the Exchange Act.

               (b) Subject to Section 2(d), the Company shall ensure that (i) any Shelf
Registration Statement and any amendment thereto and any Prospectus forming a
part thereof and any amendment or supplement thereto comply in all material
respects with the Securities Act and the rules and regulations thereunder, (ii)
any Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Prospectus forming a part of
any Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation with respect to any Holder
Information.

8

 

               (c) The Company, as promptly as reasonably practicable (but in any event
within two Business Days), shall notify the Initial Purchasers and each Notice
Holder and, if requested by you or any such Holder, confirm such notice in
writing:

                    (i) when a Shelf Registration Statement or any amendment thereto or
any Prospectus or any amendment or supplement thereto has been filed with
the SEC and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective;

                    (ii) of any request, following effectiveness of the Shelf
Registration Statement under the Securities Act, by the SEC or any other
federal or state governmental authority for amendments or supplements to
the Shelf Registration Statement or the Prospectus or for additional
information (other than any such request relating to a review of the
Company’s Exchange Act filings);

                    (iii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of
the Shelf Registration Statement or of any order preventing or suspending
the use of any Prospectus or the initiation or threat of any proceedings
for that purpose;

                    (iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of
the Transfer Restricted Securities included in any Shelf Registration
Statement for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose;

                    (v) of the occurrence of any event or the existence of any condition
or any information becoming known that requires the making of any changes
in the Shelf Registration Statement or the Prospectus or any document
incorporated by reference therein so that, as of such date, the
statements therein are not misleading and the Shelf Registration
Statement or the Prospectus or any document incorporated by reference
therein, as the case may be, does not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading;

                    (vi) of the Company’s determination that a post-effective amendment
to the Shelf Registration Statement is necessary; and

                    (vii) of the commencement (including as a result of any of the
events or circumstances described in paragraphs (ii) through (vi) above)
and termination of any Suspension Period.

               (d) The Company shall use its best efforts to obtain (i) the withdrawal of
any order suspending the effectiveness of any Shelf Registration Statement and
the use of any related Prospectus and (ii) the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Transfer
Restricted Securities for offer or sale in any jurisdiction in which they have
been qualified for sale, in each case at the earliest possible time, and shall

9

 

provide notice to each Notice Holder and the Initial Purchasers of the
withdrawal of any such orders or suspensions.

               (e) The Company shall promptly furnish to each Notice Holder and the
Initial Purchasers, without charge, at least one copy of any Shelf Registration
Statement and any post-effective amendment thereto, excluding all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
thereto (unless requested by such Notice Holder).

               (f) The Company shall, during the Shelf Registration Period, promptly
deliver to the Initial Purchasers, each Notice Holder and any broker-dealers
acting on their behalf, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in any Shelf Registration
Statement, and any amendment or supplement thereto, as such person may
reasonably request, except as provided in Sections 2(d) and 3(s) hereof; and
the Company hereby consents to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Notice Holders in connection with the
offering and sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto in the manner set forth
therein.

               (g) Prior to any offering of Transfer Restricted Securities pursuant to
any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Notice Holders and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Transfer Restricted Securities for offer and sale, under
the securities or blue sky laws of such jurisdictions within the United States
as any such Notice Holders reasonably request and shall maintain such
qualification in effect so long as required during the Shelf Registration
Period and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Transfer Restricted Securities
covered by such Shelf Registration Statement; provided, however, that the
Company will not be required to (A) qualify generally to do business as a
foreign corporation or as a dealer in securities in any jurisdiction where it
is not then so qualified or to (B) take any action which would subject it to
service of process or taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.

               (h) The Company shall cooperate with the Notice Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities (to the extent certificates for the Securities or the
Common Stock issued upon conversion of Securities are issuable under the
Indenture) sold pursuant to any Shelf Registration Statement free of any
restrictive legends and, with respect of any Securities, in such denominations
permitted by the Indenture and registered in such names as Holders may request
at least two Business Days prior to settlement of sales of Transfer Restricted
Securities pursuant to such Shelf Registration Statement.

               (i) Subject to the exceptions contained in (A) and (B) of Section 3(g)
above, the Company shall use its best efforts to cause the Transfer Restricted
Securities covered by the applicable Shelf Registration Statement to be
registered with or approved by such other federal, state and local governmental
agencies or authorities, and self-regulatory organizations in the United States
as may be necessary to enable the Notice Holders to consummate the disposition
of such Transfer Restricted Securities as contemplated by the Shelf
Registration Statement; without

10

 

limitation to the foregoing, the Company shall provide all such
information as may be required by the National Association of Securities
Dealers, Inc. (the “NASD”) in connection with the offering under the Shelf
Registration Statement of the Transfer Restricted Securities (including,
without limitation, such as may be required by NASD Rule 2710 or 2720), and
shall cooperate with each Holder in connection with any filings required to be
made with the NASD by such Holder in that regard.

               (j) Upon the occurrence of any event described in Section 3(c)(v) or
3(c)(vi) hereof, the Company shall promptly prepare and file with the SEC a
post-effective amendment to any Shelf Registration Statement, or an amendment
or supplement to the related Prospectus, or any document incorporated therein
by reference, or file a document which is incorporated or deemed to be
incorporated by reference in such Shelf Registration Statement or Prospectus,
as the case may be, so that, as thereafter delivered to purchasers of the
Transfer Restricted Securities included therein, the Shelf Registration
Statement and the Prospectus, in each case as then amended or supplemented,
will not include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading and, in the case of a
post-effective amendment, use its best efforts to cause it to become effective
as promptly as practicable; provided that the Company’s obligations under this
paragraph (j) shall be suspended if the Company has suspended the use of the
Prospectus in accordance with Section 2(d) hereof and given notice of such
suspension to Notice Holders, it being understood that the Company’s
obligations under this Section 3(j) shall be automatically reinstated at the
end of such Suspension Period.

               (k) The Company shall provide, prior to the effective date of any Shelf
Registration Statement hereunder (i) a CUSIP number for the Transfer Restricted
Securities registered under such Shelf Registration Statement and (ii) global
certificates for such Transfer Restricted Securities to the Trustee, in a form
eligible for deposit with DTC.

               (l) The Company shall make generally available to its security holders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 promulgated by the SEC thereunder (or any similar rule
promulgated under the Securities Act) for a 12-month period commencing on the
first day of the first fiscal quarter of the Company commencing after the
effective date of any Shelf Registration Statement or each post-effective
amendment to any Shelf Registration Statement, which such statements shall be
made available no later than 45 days after the end of the 12-month period or 90
days after the end of the 12-month period, if the 12-month period coincides
with the fiscal year of the Company.

               (m) The Company shall use its best efforts to cause the Indenture to be
qualified under the TIA (as defined in the Indenture) not later than the
effective date of the first Shelf Registration Statement.

               (n) The Company shall cause all shares of Common Stock issuable upon
conversion of the Securities to be approved for listing upon official notice of
issuance on each securities exchange or quotation system on which the Common
Stock is then listed no later than the date the applicable Shelf Registration
Statement is declared effective and, in connection

11

 

therewith, to make such filings as may be required under the Exchange Act
and to have such filings declared effective as and when required thereunder.

               (o) The Company may require each Holder of Transfer Restricted Securities
to be sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities sought by the Notice and Questionnaire and such
additional information as may, from time to time, be required by the Securities
Act and/or the SEC or any other federal or state governmental authority, and
the obligations of the Company to any Holder under this Agreement shall be
expressly conditioned on the compliance of such Holder with such request.

               (p) The Company shall, if reasonably requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement (i) such information as the Majority Holders provide and (ii) such
information as a Notice Holder may provide from time to time to the Company in
writing for inclusion in a Prospectus or any Shelf Registration Statement
concerning such Notice Holder and the distribution of such Holder’s Transfer
Restricted Securities and, in either case, shall make all required filings of
such Prospectus supplement or post-effective amendment promptly after being
notified in writing of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided that the Company shall not be
required to take any action under this Section 3(p) that is not, in the
reasonable opinion of counsel for the Company, in compliance with applicable
law.

               (q) In the case of the underwritten offering provided by Section 7 below,
take all actions necessary, or reasonably requested by the holders of a
majority of the Transfer Restricted Securities being sold in such underwritten
offering, in order to expedite or facilitate disposition of such Transfer
Restricted Securities; provided that the Company shall not be required to take
any action in connection with the underwritten offering without its consent.

               (r) If reasonably requested in writing in connection with any disposition
of Transfer Restricted Securities pursuant to a Shelf Registration Statement,
make reasonably available for inspection during normal business hours by a
representative for the Notice Holders of such Transfer Restricted Securities
and any broker-dealers, attorneys and accountants retained by such Notice
Holders, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
appropriate executive officers, directors and designated employees of the
Company and its subsidiaries to make reasonably available for inspection during
normal business hours all relevant information reasonably requested by such
representative for the Notice Holders or any such broker-dealers, attorneys or
accountants in connection with such disposition, in each case as is customary
for similar “due diligence” examinations; provided, however, that any
information that is designated by the Company, in good faith, as confidential
at the time of delivery of such information shall be kept confidential by such
persons, unless disclosure thereof is made in connection with a court,
administrative or regulatory proceeding or required by law, or such information
has become available to the public generally through the Company or through a
third party without an accompanying obligation of confidentiality.

               (s) Each Notice Holder agrees that, upon receipt of notice of the
happening of an event described in Sections 3(c)(ii) through and including
3(c)(vii), each Holder shall

12

 

forthwith discontinue (and shall cause its agents and representatives to
discontinue) disposition of Transfer Restricted Securities and will not resume
disposition of Transfer Restricted Securities until such Holder has received
copies of an amended or supplemented Prospectus contemplated by Section 3(j)
hereof, or until such Holder is advised in writing by the Company that the use
of the Prospectus may be resumed or that the relevant Suspension Period has
been terminated, as the case may be, provided that the foregoing shall not
prevent the sale, transfer or other disposition of Transfer Restricted
Securities by a Notice Holder in a transaction which is exempt from, or not
subject to, the registration requirements of the Securities Act, so long as
such Notice Holder does not and is not required to deliver the applicable
Prospectus or Shelf Registration Statement in connection with such sale,
transfer or other disposition, as the case may be; and provided, further, that
the provisions of this Section 3(s) shall not prevent the occurrence of a
Registration Default or otherwise limit the obligation of the Company to pay
Additional Amounts.

               (t) Each Notice Holder shall promptly notify the Company of any
inaccuracies or changes in the information provided in such Notice Holder’s
Notice and Questionnaire that may occur subsequent to the date thereof at any
time while the Shelf Registration Statement remains effective.

               (u) The Company will register shares of Common Stock issuable upon
conversion of the Securities to the extent necessary to permit such shares of
Common Stock to be freely tradable under the Securities Act by persons who are
not affiliates of the Company.

               4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 2
and 3 hereof. Such fees and expenses shall include, without limitation: (i)
all registration and filing fees and expenses (including filings made with the
NASD); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities laws; (iii) all expenses of printing (including
printing of Prospectuses and certificates for the Common Stock to be issued
upon conversion of the Securities) and the Company’s expenses for messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel to
the Company; (v) all application and filing fees in connection with listing (or
authorizing for quotation) the Common Stock on a national securities exchange
or automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company. The Company shall bear its internal expenses (including, without
limitation, all salaries and expenses of their officers and employees
performing legal, accounting or other duties), the expenses of any annual audit
and the fees and expenses of any Person, including special experts, retained by
the Company. Notwithstanding the provisions of this Section 4, each Holder
shall bear its own legal fees and expenses and the expense of any broker’s
commission, agency fee and underwriter’s discount or commission (including,
without limitation, the expenses related to the engagement of a “qualified
independent underwriter”), if any, relating to the sale or disposition of such
Holder’s Transfer Restricted Securities pursuant to a Shelf Registration
Statement.

               5. Indemnity and Contribution.

               (a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless each Holder of Transfer Restricted Securities named
in any Shelf

13

 

Registration Statement (including, without limitation, each Initial
Purchaser), its directors, its officers and each person, if any, who controls
any such Holder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively referred to for purposes of
this Section 5 as a “Holder”), from and against any and all losses, claims,
damages and liabilities (including without limitation the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any
claim asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement, or in any
Prospectus, or any amendment thereof or supplement thereto, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Holder
furnished to the Company in writing by such Holder expressly for use therein;
provided that the foregoing indemnity with respect to any Shelf Registration
Statement, or any Prospectus, or any amendment or supplement thereto, shall not
inure to the benefit of any Holder (or the benefit of any person controlling
such Holder) from whom the person asserting any such losses, claims, damages or
liabilities purchased the securities concerned, to the extent that any such
loss, claim, damage or liability of the Holders occurs under the circumstance
where it shall have been established that (w) the Company had previously
furnished copies of the Prospectus, and any amendments and supplements thereto,
to the Holder, (x) delivery of the Prospectus, and any amendment or supplements
thereto, was required by the Securities Act to be made to such person, (y) the
untrue statement or omission of a material fact was corrected in the Prospectus
or amendments or supplements thereto, and (z) there was not sent or given to
such person, at or prior to the written confirmation of the sale of such
securities to such person, a copy of such Prospectus or amendments or
supplements thereto.

               (b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company and the Guarantors, its directors, its officers and each
person who controls the Company and the Guarantors within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company and the Guarantors to
the Holders, but only with reference to information relating to such Holder
furnished to the Company and the Guarantors in writing by such Holder expressly
for use in the Shelf Registration Statement, or in any Prospectus, or any
amendment or supplement thereto.

               (c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of
the two preceding paragraphs, such person (the “Indemnified Person”) shall
promptly notify the person against whom such indemnity may be sought (the
“Indemnifying Person”) in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding. The
Indemnifying Person shall be relieved from liability to the extent that the
Indemnified Person fails to promptly notify the Indemnifying Person of any
action commenced against it in respect of which indemnity may be sought
hereunder; provided that failure to so notify the Indemnifying Person (i) shall
not relieve the Indemnifying Person from any liability

14

 

hereunder to the extent it is not materially prejudiced as a result
thereof and (ii) in any event shall not relieve the Indemnifying Person from
any liability which it may have otherwise than on account of this indemnity
agreement. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate, in the reasonable judgment
of the Indemnified Person, due to actual or potential differing interests
between them. It is understood that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Holders and such control persons of the Holders shall be designated in
writing by the Representative and any such separate firm for the Company and
the Guarantors, their respective directors, officers and such control persons
of the Company and the Guarantors shall be designated in writing by the Company
and the Guarantors. The Indemnifying Person shall not be liable for any
settlement of any pending or threatened proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for fees and expenses of counsel as contemplated by the
fourth sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding on terms reasonably satisfactory
to such Indemnified Person.

               (d) If the indemnification provided for in paragraph (a) or (b) of this
Section 5 is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Holder on the other hand with respect to the sale by such Holder of Securities
or Common Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Guarantors on the one hand and of such
Holder on the other in connection with the statements or

15

 

omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. Benefits received by the
Company and the Guarantors shall be deemed to be equal to the total net
proceeds from the Initial Placement (before deducting expenses). Benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions as set forth in the Offering Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Securities registered under the Securities Act. Benefits received
by any underwriter shall be deemed to be equal to the total underwriting
discounts and commissions, as set forth on the cover page of the Prospectus
forming a part of the Shelf Registration Statement which resulted in such
losses, claims, damages or liabilities. The relative fault of the Company and
the Guarantors on the one hand and such Holder on the other shall be determined
by reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or either of the
Guarantors or by such Holder and the parties’ relevant intent, knowledge,
information and opportunity to correct or prevent such statement or omission.

               (e) The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined
by pro rata allocation (even if the Company and the Guarantors, on the one
hand, or the Holders, on the other hand, were treated as one entity for such
purpose) or any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 5. The
amount paid or payable by an Indemnified Person as a result of losses, claims,
damages and liabilities referred to in paragraph (d) of this Section 5 shall be
deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such Indemnified Person not otherwise
reimbursed in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 5, in no event shall any
Holder be required to contribute any amount in excess of the amount by which
the total amount received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Shelf Registration Statement exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

               (f) The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.

               (g) The indemnity and contribution agreements contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder or by or on behalf of the
Company and the Guarantors, their respective officers or directors or any other
person controlling the Company or either of the Guarantors and (iii) the sale
by a Holder of Transfer Restricted Securities covered by a Shelf Registration
Statement.

               6. Rules 144 and 144A. The Company covenants that it shall use its best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act

16

 

in a timely manner so long as the Transfer Restricted Securities remain
outstanding. If at any time the Company is not required to file such reports,
it will, upon request of any Holder or beneficial owner of Transfer Restricted
Securities, make available such information necessary to permit sales pursuant
to Rule 144A. The Company further covenants that, for as long as any Transfer
Restricted Securities remain outstanding, it will take such further action as
any Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 and Rule 144A. Upon the
written request of any Holder of Transfer Restricted Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.

               7. Underwritten Offering.

               (a) If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are proposed to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the underwritten offering will be selected, subject to the rights of
the Company’s common stockholders party to the Existing Registration Agreement
to the extent exercised by them, by the Majority Holders of such Transfer
Restricted Securities included in such underwritten offering, subject to the
consent of the Company (which shall not be unreasonably withheld or delayed),
and such Holders shall be responsible for all underwriting commissions and
discounts in connection therewith and all of the fees and expenses set forth in
Section 4 hereof, including, without limitation, the Company’s reasonable and
documented internal expenses as described therein; provided, however, that if
any common stockholders party to the Existing Registration Agreement exercise
their “piggyback” rights under the Existing Registration Agreement, such common
stockholders will be responsible for their portion of the underwriting
commissions and discounts and other fees and expenses as set forth in the
Existing Registration Agreement, and any Holder hereunder will be responsible
only for its pro rata share (taking into account the participation of any
common stockholders party to the Existing Registration Agreement) of the
Company’s reasonable and documented internal expenses; provided further, that
notwithstanding anything contained in this Agreement to the contrary, the
Company shall be under no obligation to participate in any underwritten
offering with respect to the Transfer Restricted Securities and no underwritten
offering shall be effected pursuant to this Agreement without the prior consent
of the Company; and provided further that, if and to the extent the Company may
consent to an underwritten offering of the Company’s common stock in accordance
with this Section 7(a), the rights of the Holders to have their Transfer
Restricted Securities included in such underwritten offering will be subject to
the cut-back and other provisions of the Existing Registration Agreement.

               (b) No Holder may participate in any underwritten offering hereunder
unless such person (i) agrees to sell such Holder’s Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.

17

 

               8. Miscellaneous.

               (a) No Inconsistent Agreements. Except with respect to the Existing
Registration Agreement, none of the Company or the Guarantors has, as of the
date hereof, entered into nor shall any of them, on or after the date hereof,
enter into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof. In addition, none of the Company or the Guarantors shall
grant to any of its securityholders the right to include any of its securities
in the Shelf Registration Statement provided for in this Agreement other than
the Transfer Restricted Securities and other than the “registrable
securities"(as defined in the Existing Registration Agreement”) held by parties
to the Existing Registration Agreement, it being expressly understood and
acknowledged that the rights of such parties to the Existing Registration
Agreement take precedence over those of the Holders hereunder.

               (b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Guarantors have obtained the
written consent of at least the majority of the Holders of the then outstanding
Transfer Restricted Securities; provided that with respect to any matter that
directly or indirectly affects the rights of the Initial Purchasers hereunder,
the Company and the Guarantors shall obtain the written consent of the Initial
Purchasers against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the
foregoing proviso), a waiver or consent to departure from the provisions hereof
with respect to a matter that relates exclusively to the rights of Holders
whose Transfer Restricted Securities are being sold pursuant to a Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Majority Holders.

               (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier, or air courier guaranteeing overnight delivery:

                    (i) if to the Initial Purchasers, initially at their address set
forth in the Purchase Agreement;

                    (ii) if to any other Holder, at the most current address of such
Holder maintained by the Registrar under the Indenture or the registrar
of the Common Stock (provided that while the Securities or the Common
Stock are in book-entry form, notice to the Trustee or transfer and
paying agent, as the case may be, shall serve as notice to the Holders),
or, in the case of the Notice Holder, the address set forth in its Notice
and Questionnaire; and

                    (iii) if to the Company and the Guarantors, to:

CapitalSource Inc.

4445 Willard Avenue

12th Floor

18

 

Chevy Chase, MD 20815

Facsimile: (301) 841-2380

Attn: Chief Legal Officer

With a copy to:

Hogan & Hartson L.L.P.

555 Thirteenth Street, NW

Washington, DC 20004-1109

Facsimile: (202) 637-5910

Attn: James E. Showen

     All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if
sent by first-class mail or telecopier.

     The Initial Purchasers or the Company and the Guarantors by notice to the
other may designate additional or different addresses for subsequent notices or
communications.

               (d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company or the Guarantors thereto, subsequent Holders. The Company and the
Guarantors hereby agree to extend the benefits of this Agreement to any Holder
and any such Holder may specifically enforce the provisions of this Agreement
as if an original party hereto. In the event that any other person shall
succeed to the Company or the Guarantors under the Indenture, then such
successor shall enter into an agreement, in form and substance reasonably
satisfactory to the Initial Purchasers, whereby such successor shall assume all
of the Company’s or such Guarantor’s obligations, as the case may be, under
this Agreement.

               (e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

               (f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

               (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.

               (h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected

19

 

thereby, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.

     (i) Securities Held by the Company, etc. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities or the
shares of Common Stock issuable upon conversion thereof is required hereunder,
Securities or the shares of Common Stock issued upon conversion thereof held by
the Company or its Affiliates (other than subsequent Holders of Securities or
the Common Stock issued upon conversion thereof if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.

     (j) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Shelf Registration Period, except
for (i) any liabilities or obligations under Section 2(e) and related
liabilities or obligations under Sections 4 and 5, to the extent arising prior
to the end of the Shelf Registration Period, and (ii) the obligations under
Section 3(u) and the related liabilities or obligations under Sections 4 and 5,
which shall survive until all interests in the Securities have been redeemed,
repurchased, converted, cancelled or exchanged for Common Stock.

20

 

     Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Guarantors and you.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	CAPITALSOURCE INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ STEVEN A. MUSELES

	

	 	 	 	Name: Steven A. Museles
	

	 	 	 	Title: Senior Vice President
	 
	 	 	 	 
	 	 	CAPITALSOURCE HOLDINGS LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ STEVEN A. MUSELES

	

	 	 	 	Name: Steven A. Museles
	

	 	 	 	Title: Senior Vice President
	 
	 	 	 	 
	 	 	CAPITALSOURCE FINANCE LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ STEVEN A. MUSELES

	

	 	 	 	Name: Steven A. Museles
	

	 	 	 	Title: Senior Vice President

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

J.P. MORGAN SECURITIES INC.

Acting on behalf of itself and as Representative

of the Initial Purchasers

	 	 	 
	By:

	 	/s/ SANTOSH SREENIVASAN

	Name: Santosh Sreenivasan
	Title: Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]