The URL can be used to link to this page

Home My WebLink AboutRepublic National Bank of New York; 1997-07-29;PSEI THE BOND MARKET TRADE.ASSOCIATION MASTER REPURCHASE AGREEMENT SEPTEMBER 1996 VERSION Between: CITY OF CARLSBAD, AS BUYER Dated as of Ju1Y 29 -f 1997 and t REPUBLIC NATIONAL BANK OF NEW YORK, AS SELLER 1. Applicability 2. From time to time the parties hereto may enter into transactions in which one party (“Seller”) agrees to kansfer to the other (“Buyer”) securities or other assets (“Securities”) against the uansfer of fmds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand, against the transfer of funds by Seller. Each such kansaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, in&d- ing any supplemental terms or conditions contained in Armex I hereto and in any other annexes identi- fied herein or therein as applicable hereunder. Definitions (a) “Act of Insolvm~y”, with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratori- um, dissolution, delinquency or similar law, or such party see+king the appoinurtent or eIetion of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appoinknent or election, (ii) the commencement of any such case or proceeding against such party, or another seeking such an appoinunent or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by such party of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such p+s inability to pay such party’s debts as they become due; (b) “Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to Paragraph 4(a) hereof; (c) “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained bY application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of such date; -4 \ ’ - . i * (d) “Buyer’s Margin Percentage”, with respect t0 any TGMSaCtiOn as of my date, a percentage (whi& may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any Such agreement, the percentage obtained by dividing the Market Value of the Purchased securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction; (e) “Confirmation”, the meaning specified in Paragraph 3(b) hereof; (f) “Income”, with respect to any Security at any time, any principal thereof and all interest, d.ivi- deds or other distributions thereon; (g) “Margin Deficit”, the meaning Specified in Paragraph 4(a) hereof; Q %fargin Excess”, the meaning spedfied in Paragraph 4(b) hereof; (i) “Margin Notice Deadline”, the time agreed to by the parties in the relevant Con&nation, A,NI~X I hereto or otherwise as the deadline for giving notice requiz%g same-day satisfaction of ma@ maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such agree- ment, the deadline for such purposes established in accordance with market practice); (j) “Market Value”, with respect to any Securities as of arty date, the price for such Securities on such date obtained from a generally recogrtized source agreed to by the parties or the most recent dos- ing bid quotation from such a source, plus acmed Income to the extent not included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless confxuy to market practice for such Securities); (k) “Price Differential”, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360-day-per-year basis for the actual number of days during the period commenc- ing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction); (1) “Pricing Rate”, the per annum percentage rate for determination of the Price Differential; (m) “Prime Rate”, the prime rate of U.S. commercial banks as published iZ%e Wall Sheet JuumaZ(or, if more than one such rate is published, the average of such rates); (n) “Purchase Date”, the date on which Purchased Securities are to be transferred by Seller to Buyer; (0) “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are msferred by Seller to Buyer, and (ii) thereafier, except where Buyer and Seller agree otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 40) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of Paragraph 5 hereof; (p) “Purchased Securities”, the Se&ties transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Securities” with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; (s> “Repurchase Date”, the date on which SeUer is to repurchase the Purchased Securities from Buyer! induding any date determined by application of the provisions of Paragraph 3(c) or II hereof; - (r) “Repurchase Price”, the price at whi& Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination; Scptrmbcr 19% - Slascr RcpwdLur Ayeemant , . I (5) "SeuefS Margin Amount”, with respect to any TrMSactiOn aS Of my date, the amount obtamed by application of the Seller’s Margin Percentage to the Repurchase Price for such Transaction as of such date; (t) “Seller’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (w&,-h may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction. 3. Initiation; Confirmation; Termination (a) An agreement to enter into a Transaction may be made oralzy or in writing at the initiation’of either Buyer or S&r. On the Purchase Date for the Transaction, the Purchased Securities shaI.I be transferred to Buyer or its agent against the &msfer of the Purchase Price to an account of Seller. (b) Upon agreeing to enter into a ‘Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP num- ber, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unIess the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaciion not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unIess with respect to the Confirmation spedfic objection is made promptly after receipt thereof. In the event of any codid between the terms of such Confirmation and this Agreement, this Agreement shall prevail. (c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any hcome in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer. 4. Margin Maintenance (a) Lf at any tie the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or additional Securities rea- sonably acceptable to Buyer (“Additional Purchased Securities”), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will theXUpOn equal or exceed such aggregate Buyer’s Margin Amount (d-eased by the amount Of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller). @) If at any time the aggregate Ma&et Value of all Purchased Securities subject to aLI Transactions in which a particular party hereto is actin, 0 as Seller exceeds the aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or Purchased Securities to SeUer, SO that the aggregate Market Value of the Purchased Securities, after deduction of any such 3 Sprcmbcr 1% . !.hrrr Xepurdrue Agrrrm-“r . . ’ . 5. cash or any Purchased Securities so transferred, will thereupon not exceed such ag,pegate ~~~~~~ Margin Amount (increased by the amount of any Mar,@ Excess as of such date arising horn any Transactions in which such Seller is acting as Buyer). (c) Lf any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall bans- fer cash or Additional Purchased Securities as provided in such subparagraph no later than the close of business in the relevant market on such day. If any such notice is given after the margin Notice Deadline, the party receiving such notice shall !ransfer such cash or Securities no later t&an the close of business in the relevant market on the next business day following such notice. (d) Any cash &nsferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. (e) Sek and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and @) of this Paragraph may be exer- cised only where a Margin Deficit or a Margin Excess, as the case may be, exceeds a specified do&u amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions). (f) Seller and Buyer may agree, with respect to any or ail Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimi- nation of a Margin Deficit or a Mar,@ Excess, as the case may be, may be exercised whenever such a Margin Deficit or a Margin Excess exists with respect to any single Transaction hereunder (caicu- lated without regard to any other Transaction outstanding under this Agreement). Income Payments Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the paties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall reasonably determine in its dis- cretion), on the date such Income is paid or distributed either (i) &ansfer to or aedit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (i;> with respect to Income paid in cash, apply the hcome payment or payments to reduce the amount, if any, to be bansferred to Buyer by SeBer upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Mar,ti Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed. 6. Security Interest Although the parties intend that all Transactions hereunder be sales and purchases and not loan~, in the event any such Transactions are deemed to be loans, Se&r shall be deemed to have pledged to BuYa as security for the performance by SeI.Ier of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with - respect to all Transactions hereunder and all Income thereon and other proceeds thereof. 7. Payment and Transfer unkss otherwise mutually agreed, aB tzansfers of funds hereunder shall be in immediately avaiIable funds. AU. Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of msfer or assignment in blank and September IS96 - Master Xcpuctwsc Agrrrment 4 . . . ’ . I ’ . ‘r .#. such other documentation as the party receiving possession may reasonably request, (ii) shall be trans- ferred on the book-entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. 8. Segregation of Purchased Securities ’ To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a detig Corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or otherwise selling, transferring, pledging or hypothecating the Pur- chased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Se&r pursuant to Paragraph 3,4 or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. 7 Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer’s securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute other securities. Lf Buyer grants the right to substitute, this means that Buyer’s securities will likely be commingled wit Seller’s own securities during the tcading day. Buyer is advised that, during any tradin day that Buyefs securities are commin gled with SeLIefs securities, they [will]* [may]** be subject to liens granted by Seller to [its clearing bank]’ [third parties]” and may be used by Seller for deliveries on other securities transactions. Whenever the securities a~ commingIed, Seller’s ability to resegregate substitute securities for Buyer will be subjec to Seller’s ability to satisfy [the clearing]’ (any]** lien or to obtain substitute securities. ‘Language to be used under 17 C.F.R. 5403.4(e) if Seller is a government securities broker or dealer other than a financial institution. ‘*Language to be used under 17 C.F.R. 5403.5(d) if Seller is a finandal institution. 9. Substitution (a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by martsfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities. @) In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; pmuided, hummer, that such other Securities shall have a Market Value at least equal to the hfarket Value of the Purchased Securities for which they are substituted. 10. Representations Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and Per- 5 Stptrmber 1% - &WCC Rcpuxchae Agremenl . . < % , . ‘4 *. formance, (ii) it will engage m such Transactions as principal (or, if agreed in writing, h the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a dis- closed principal), (iii) the person signing this Agreement on its behalf is duly authoked to do so on its behalf (or on behaif of any such &dosed principal), (iv) it has obtained aLI authokations of any gov- emmental body required in connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery and performance of t&s Agreement and the Transactions hereunder wiII not vioIate any law, ordinance, charter, by-law or nJe applicable to it or any agreement by which it is bound or by which any of its assets are affected. C-n the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it 11. Events of Default In the event that (i) seller fails to bzmsfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to SelIer or Buyer, (vi) any representation made by Seller or Buyer shaU have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shaI.I admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an “Event of Default”): (a) The nondefauking party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefauIting party shall (except upon the occurrence of an Act of hsol~en~y) give notice to the defaulting party of the exercise of such option as promptly as practicable. (b) In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting party exer- cises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party’s obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subpara- graph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) ail Income paid after such exercise or deemed exercise shaI.l be retained by the nondefaulting party and appIied to the aggregate unpaid Repurchase Prices and any other amounts owing by the default- ing party hereunder, and (;ii> the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party’s posses- sion or control. (c) In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefault- ing party of payment of the aggregate Repurchase Prices for all such Transactions, aJ.l right* title and interest in and entitlement to all Purchased Securities subject to such Transactions sha be deemed transferred to the nondefaulhg party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party. Epnmbcr 1996 - Muter R~purcfure .Apeement 6 . . < ’ . . ; * . (d) Lf the nondefaulbng party exercises or is deemed to have exercised the option referred to ii-, sub- paragraph (a) of this Paragraph, the nondefaulting party, without prior notice to the defaulhg parly, may: (i) as to Transactions in which the defaulting party is acting as SeIIer, (A) i.mmediateIy sell, in a recognized market (or otherwise in a commerdally reasonable manner) at such price or p,+es as the nondefaulting party may reasonably deem satisfactory, any or all Purchased S-ties subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repu- chase Prices and any other amounts owing by the defaulting party hereunder or (B) in its soIe disaetion elect, in lieu of Selling a.lI or a portion of Such Purchased securities, to @Je the defaulting party credit for such Purchased Securities in art amount equal to the price themfor on such date, obtained fkom a genemlly recognized source or the most recent dosing bid quo- tation horn such a source, against the aggregate unpaid Repurchase Prices and arty other amounts owing by the defaulting party hereunder; and (ii) as to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, securities (“Replacement Securities”) of the same cIass and amount as any Purchased Securities that are not delivered by the defauhing party to the nondefaulting party as required hereunder or (8) in its sole discre- tion elect, in lieu of purchasing Replacement Securities, to be deemed to have purchased RepIacement Securities at the price therefor on such date, obtained from a generally recog- nized source or the most recent closing offer quotation from such a source. Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments haded in a recognized market, (2) in the absence of a generally recognized source for prices or bid or offer quotations for any Security, the nondefaulting party may establish the source therefor in its sole discretion and (3) all prices, bids and offers shall be determin ed together with accrued Income (except to the extent contrary to mar- ket practice with respect to the relevant Securities). (e) As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shaIl be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nonde- faulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. (f) For purposes of this Paragraph II, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in subparagraph (a) of this Paragraph. (g) The defaulting party shall be habIe to the nondefauIting party for (i) the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (in&ding all fees, expenses ad commissions) of entering into replacement transactions and entering into or terminating .hedge bansactions in connection with or as a result of an Event of Default, and (5) any other lossf dam- age, cost or expense di.rectIy arising or resulting from the occurrence of an Event of Default m respect of a Transaction. (h) To the extent permitted by applicable law, the defaulting party shall be liable to the nondefaulting party for interest on any amounts owing by the defaulting party hereunder, from the date *e defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in fd 7 Scptrmber LPM - MYM Scpwhu .+retmCnc 12. Single Agreement by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable by the defaulting pati/ to the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. (i) The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise ava& able to it under any other agreement or applicable law. Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, a.U Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of ail Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other trans- fers made by either of them in respect of any Transaction shall be deemed to have been made in con- sideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other &ansfers may be applied against each other and netted. 13. Notices and Other Communications Any and all notices, statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex II hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. AI1 notices, demands and requests hereunder may be made orally, to be con- firmed promptly in writing, or by other communication as specified in the preceding sentence. 14. Entire Agreement; Severability This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 7 5. Non-assignability; Termination (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminat- ed by either party upon giving written notice to the other, except that this Agreement shaL notwithstanding such notice, remain applicable to any Transactions then outstanding. (b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charging or other- wise dealing with au or any part of its interest in any sum payabIe to it under Paragraph 11 hereof. 16. Governing Law This Agreement shall be governed by the laws of the State of New York without giving effect to the COnfliCt Of law principles thereof. September 15% * Ma5trr Rcpuduac Agfrrmcnr 8 . 17. No Waivers, Etc. No express or implied waiver of any Event of DefauIt 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 her&out shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. 18. Use of Employee Plan Assets (a) If assets of an employee benefit pIan subject to any provision of the Employee Retirement Income Security Act of 1974 (Y!RI%“) 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 PIan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed. (b) Subject to the Iast sentence of subparagraph (a) of this Paragraph, any such Transaction shall pro- ceed only if Seller furnishes or has furnished to Buyer ik most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condi- tion. 19. (c) By entering into a Transaction pursuant to this Paragraph, SelIer shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial con&tion as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. intent (a) The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities con&act” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). @) It is understood that either party’s right to liquidate Securities deLivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a con- &actual right to liquidate such Transaction as described in Sections 5.55 and 559 of Title 11 of the United States Code, as amended. (c) The parties agree and atiowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDLA”), then each Transaction hereunder is a “qualified financial contract, * as that term is defined in FDIA and aY ties, orders or policy statements thereunder (except insofar as the type of aSSek subject to such Transaction would render such definition inapplicable). (d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject-to Title N of the Federal Deposit I,nsura.nce Corporation Jmprovement Act of 1991 (“FDICTA? and each payment entitlement and payment obligation under any Transaction hereunder sha.U consb- tute a “covered contractual payment entitlement” or “covered con&actual payment obligation”, 9 respectively, as defied in and subject to FDICLA (except insofar as one or both of the parties k not a “financial institution” as that term is defined in FDICIA). 20. Disclosure Relating to Certain Federal Protections The parties acknowledge that they have been advised that: (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; (b) in the case of Transactions in which one of the parties is a government securities broker or a gov- ernment securities dealer registered with the SEC under Section 1SC of the 1934 Act, SIPA wiII not provide protection to the other party with respect to any Transaction hereunder; and (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. REPUBLIC NATIONAL BANK OF NEW YORK, AS SELLER By: Title: Date: ~$$54iL~ Robert McKtnney Senior Vice President September 1996 . MASI..I Repuchue Agrrmmt By: Title: Date : 10 > ^ r . d ,( 1, 1 . Annex I T&Party to PSA Master Repo 1996 VERSION ANNEX I Supplemental Terms and Conditions This Annex I forms part of the Master Repurchase Agreement dated as of July 29,1997 (the “Agreement”) between City of Carlsbad and Republic National Bank of New York. Capitalized terms used but not defined in this Annex I shall have the meaning ascribed to them in the Agreement. Definitions: (i) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York or Carlsbad, California are required or authorized to be closed. (ii) “Custodian” means The Chase Manhattan Bank pursuant to the Custodial Undertaking dated as of the date hereof between Buyer, Seller and Custodian (the “Custody Agreement”) (iii) “Indenture” means that certain Indenture dated July 1, 1997 entered into by the City of Carlsbad regarding Assessment District No. 95-l (Carlsbad Ranch) Limited Obligation Improvement Bonds, (the “Bonds”). Initial Purchase Date: Amount of Initial Purchase: Final Repurchase Date: Repurchases: July 29,1997 $799,000 September 2,2022 Prior to the Final Repurchase Date, Seller shall repurchase all or part of the Purchased Securities in such amounts as the Buyer shall request by notice to Seller at least two Business Days prior to the date of repurchase; provided, however, that in respect of the Reserve Fund, the Buyer shall not request Seller to enter into a Repurchase Transaction other than in each case as required or permitted by the Indenture. The Buyer shall neither request Seller to enter into a Repurchase Transaction earlier than two Business Days prior to the date on which the proceeds of such Repurchase Transaction are to be applied by the Buyer pursuant to the provisions of the Indenture stated above, nor in amounts greater than the amounts to be so applied by the Buyer. SOURCE s:woRMs\MuNI INvwPcl ANNBXCUSTODIALWESERVE AND NON-RESERVE FUNDDOC DWLMENT S:U. DEPT FOL.DERSBAUERKARLSZ.DOC Pricing Rate: Price Differential Payment Dates: Price Differential Day Count Calculation: Additional Purchases: Securities: In no event shall the Buyer require any repurchase, in respect of the Debt Service Reserve Fund, for purposes of reinvestment. Seller will repurchase all Purchased Securities on the Final Repurchase Date. A rate per annum of 5.83%, commencing March 2, 1998. Prior to March 2,1998, the Pricing Rate shall be that rate sufficient to provide $27,800 of additional Purchased Securities, which Securities shall be transferred to Buyer on March 2,1998. The second day of each March and September during the period from the date hereof to and including the Final Repurchase Date, commencing September 2, 1997. 30/360 day basis. Additional Purchases may be made at the Pricing Rate only to the extent the Seller has repurchased the Securities prior to the Final Repurchase Date pursuant to the terms hereof. Any such Transactions shall be governed by the terms of this Agreement. Securities, which shall be delivered to Buyer free and clear of any third party interest, shall mean only the following: (a) Any bond or other obligations which as to principal and interest constitute direct general obligations of, or are unconditionally guaranteed by, the United States of America; (b) bonds, debentures, notes, mortgage participation certificates, mortgage pass-through certificates in physical or book entry form, or other evidences of indebtedness issued by or the payment of which is guaranteed by Federal Home Loan Mortgage Corporation (including participation certificates); Federal National Mortgage Association; Resolution Funding Corporation; Government National Mortgage Association; or (c) any other securities permitted in the Indenture and agreed to by the Buyer and Seller. Seller’s Margin Percentage: 103% of the Repurchase Price; provided, however the Buyer’s Margin Percentage for cash is 100%. Substitution Rights of Seller: Full substitution rights. 2 SOurlCE: s:woRMsMuNI INvmEPo ANNEXICUSTODIALWSERVE AND NON-RESERVE FUNTXDOC DOCUMENT: S:U. DEPT FOLDERS\BAUER\CARLS2DOC Margin Notice Deadline: Cure Period for Margin Excess or Deficit: Delivery Method: Securities Valuation Responsibilities: Security Interest: Setoff: As specified in the Custody Agreement or, otherwise, 10 A.M. Eastern Standard Time. Notification shall be by telephone or by facsimile with return confirmation. As soon as practicable, but in no event later than one Business Day from date of notification of a Margin Excess or a Margin Deficit. Notification shall be by telephone or by facsimile with return confirmation. Each transfer of Purchased Securities by Seller pursuant to the terms of this Master Repurchase Agreement shall be made to the Custodian pursuant to the Custody Agreement. The Market Value of the Purchased Securities shall be determined by Custodian in accordance with the terms of the Custody Agreement. Paragraph 6 of the Master Repurchase Agreement is hereby deleted and restated in its entirety as follows: 69 “Buyer and Seller agree that, if for any reason any Transaction hereunder shall be deemed to be other than a sale or purchase, Seller hereby grants a security interest in and pledges, assigns and transfers to Buyer any and all right, title, and interest of Seller in and to the Purchased Securities and all Income thereon and other proceeds thereof or cash delivered or to be delivered to Buyer pursuant to the terms of the Transactions, to secure the prompt performance of all obligations of Seller under this Master Repurchase Agreement, including, without limitation, the payment to Buyer of the liabilities, indebtedness and obligations of Seller, and all claims of Buyer against Seller arising out of or by reason of any or all Transactions hereunder. cb) It is the intention of Seller and Buyer that, if for any reason any Transaction shall be deemed other than a sale and purchase, Buyer’s rights in and to the Purchased Securities and cash shall be those of a secured party holding collateral under the provisions of the Uniform Commercial Code as in effect in the State of New York.” All payments under the Master Repurchase Agreement will be made without setoff or counterclaim. 3 SomcE: s:wonMsm DMREF9 ANNEX\CUSTODIALWESERVE AND NON-RESERVE FUND.DOC DOCUhENT: S:U. DEF’T FOLDERS\BAUER\CARLS2.DOC - Rehypothecation: Covenants of Buyer: Covenants of Seller: The third sentence of Paragraph 8 of the Master Repurchase Agreement is hereby amended to read in its entirety as follows: “All of Sellers interest in the Purchased Securities shall pass to Buyer; provided, however, that Buyer shall not engage in repurchase transactions with the Purchased Securities or otherwise pledge or hypothecate the Purchased Securities.” Buyer agrees that (i) it will deliver to Seller written notice of all proposed amendments and waivers to the Indenture that would affect the Transactions, and such notice shall be accompanied by the proposed amendments and waivers; (ii) no proposed amendment to or waiver of any provision of the Indenture relating to the Transactions shall be adopted which has the effect of reducing Seller’s expected benefits or increasing Seller’s exposure or obligations pursuant to this Master Repurchase Agreement without the prior written consent of Seller; (iii) no proposed amendment to or waiver of any provision of the Indenture relating to the Transactions shall be adopted which has the effect of making the Transactions contemplated hereunder no longer permissible under the Indenture; (iv) all funds used by Buyer to pay for the Purchased Securities are derived from funds and accounts established pursuant to the Indenture; and (v) it has received all required consents and direction to enter into the Transactions contemplated herein in accordance with the applicable provisions of the Indenture. (a) Seller agrees that so long as it has or may have any obligation under this Master Repurchase Agreement, it will notify Buyer of any Event of Default under the Master Repurchase Agreement or any suspension, withdrawal or downgrading of its rating. (b) Seller agrees that in the event Seller’s rating is suspended, withdrawn or is graded below A- or below A3, by either Standard & Poor’s Corporation (“S&P”) or Moody’s Investors Service (“Moody’s”), respectively, the Master Repurchase Agreement and any outstanding Transactions may be terminated by Buyer on one Business Day’s prior notice. Within two Business Days of the termination date specified in Buyer’s notice, all Securities shall be repurchased by Seller and any Price Differential Payments owing as of the date of such Repurchase Transaction shall be paid by Seller. Seller is currently rated AA and 4 SOURCE: s:woludslMuNi IlWREFO ANNEXWUSTODIALiRESERVE AND NON-RESERVE FUNDDOC DOCUMENT: S:U. DEPT FOLDERSlBAUERiCXRLS2.DOC Aal by S&P and Moody’s, respectively. Events of Default: Conflict of Terms: (c) Seller will provide monthly reports to Buyer setting forth the amount and value of Purchased Securities held by Buyer, any repurchases made by Seller during such period and Price Differential Payments made by Seller during such period. (a) Paragraph 1 l(h) of the master Repurchase Agreement is here by amended by deleting the words “Prime Rate” at the end thereof and substituting “Federal Funds Effective Rate” therefor. For the purposes of Paragraph 1 l(h) “Federal Funds Effective Rate” shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day). (b) Paragraph 1 l(i) of the Master Repurchase Agreement is hereby deleted and restated in its entirety as follows: “The non-defaulting party shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law; provided that for Transactions where the defaulting party is acting as Seller, the non-defaulting party must first exhaust its remedies against the Purchased Securities, as set forth above.” (b) It is agreed by Buyer and Seller that, in addition to the Events of Default specified in Paragraph 11 of the Master Repurchase Agreement, the failure of either party to observe any material obligation under the terms of this Master Repurchase Agreement, including, without limitation, the failure to make any Price Differential Payment when due, shall also constitute an “Event of Default” under Paragraph 11 of the Master Repurchase Agreement and, upon the occurrence of an Event of Default, the non-defaulting party shall have the right to exercise all remedies available under such Paragraph unless otherwise specified herein. To the extent that the terms and conditions of the Annex I conflict with the terms and conditions of the printed form of Master Repurchase Agreement, the terms and conditions of the Annex I shah prevail. 5 souFcE.: s:woRMs\MuM[ INWBFO ANNEXICUSTODL4L.IRESWVE AND NON-RESERVE FUND DOC DOCUMENT: S:U. DEFT FOLDERSBAUER’C4RLS2.DOC Amendments and Assignability: Role of Seller: Miscellaneous: Section 15 of the Master Repurchase Agreement is hereby amended by adding (i) “The Master Repurchase Agreement and Custody Agreement shall only be amended by a writing signed by the parties.” as a sentence at the end thereof. In performing its obligations, neither Seller nor any of its directors, offkers, partners, employees, or agents (including directors, officers, employee or agents thereof) shall be liable or responsible for: (a) the payment of any amounts owing on or with respect to the Bonds issued pursuant to the Indenture; (b) the use or application by Buyer of any monies payable to Buyer hereunder; and (c) any acts or omissions of Buyer under or with respect to the Bonds or the Indenture. Without limiting the foregoing, regardless of whether Seller has reviewed the Indenture or is generally familiar with the terms of indentures of a similar type, Seller shall have no duty to comply with the terms of the Indenture or to ascertain whether Buyer is in compliance therewith. (a) Buyer agrees that if any trustee succeeds to the duties of Buyer as trustee pursuant to the applicable provisions of the Indenture, it will promptly noti@ Seller in writing of such succession, which notice shall identify the successor trustee, set out its address, telephone and facsimile numbers and identify the offker or officers author&d to transact business with Seller under this Agreement and the Custody Agreement. Such successor trustee shah, upon delivery to Seller of such additional information as may reasonably be requested by Seller, and upon execution of an assumption of Buyer’s obligations under this Agreement, if required by Seller, automatically succeed to the rights and duties of Buyer pursuant to Paragraph 15 of the Master Repurchase Agreement. (b) This Master Repurchase Agreement may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument. 6 SOURCE: s:woluvls\MuNI tt+vwFo ANNEX\CUSTODIALWESERVE AND NON-RESERVE FUNDDOC DOCUhENT S:U DEPT FOLDEIWBAUER\CAIUSZ.DOC Custody Agreement: (c) The headings of the articles and sections hereof are for convenience of reference only and shall not affect the meaning or construction of any provisions hereof. If a party elects to terminate the Custody Agreement pursuant to provisions thereof, Seller shall select a substitute financial institution qualifying as a “financial intermediary” (as such term is defined in Section 8-3 13 of the Uniform Commercial Code as codified in the State of New York and as a “securities intermediary” (as such term is defined in Section 8- 102 of Revised Article 8, 1994 Official Text, as adopted by the American Law Institute and the National Conference of Commissioners on Uniform Laws) to assume the obligations of the Custodian under the Custody Agreement or other custodial agreements having terms and conditions similar to the Custody Agreement. Seller shall pay all service fees of any such substitute financial institution pursuant to the Custody Agreement or any such other custodial agreements. Any substitute custodian or substitute custody agreement shall be subject to the prior written consent of Buyer, which consent shall not be reasonably withheld. If a replacement custodian cannot be obtained prior to the effective termination date of the Custodian’s obligations under the Custody Agreement, Seller shall thereafter, until a replacement custodian is appointed, deliver all Purchased Securities to an agent designated by Buyer, which agent shall be a financial intermediary and a securities intermediary located in New York, New York maintaining accou.nts with the Federal Reserve Bank of New York (“FRBNY”). Purchased Securities comprised of Physical Securities shall be delivered by Seller into the possession of Buyer’s agent. Book Entry Securities shall be transferred by Seller to the account maintained by Buyer’s agent at FRBNY. Seller shall pay all reasonable service fees of Buyer’s agent for the period in which such financial intermediary holds Collateral hereunder Until a replacement custodian is appointed, Seller shall determine the Market Value of the Purchased Securities on each Tuesday of each week (or if such day is not a Business Day, the next following Business Day) and shah give prompt notice to Buyer of each determination of Market Value made. 7 SOuRcFi: S:WORhls~ INvwEm ANNE~CLlSTODL4LMtESE AND NON-RESERVE FUNDDOC DOWhiWC SL. DEPT FOLDERS~AUERU!AFtLS2.DOC Other Applicable Annexes: In addition to this Annex I and Annex II, the following Annexes and any Schedules hereto shall form part of the Agreement and shall be applicable thereunder: NONE 8 SOURCE: s:woRMs\MuNI INVWEFO ANNEXKWSTODlALULESERVE AND NON-RESERVE FUNDDOC DOC- S:U. DEPT FOLDERS!3AUER\CARLSZ.DOC Agreed to and annexed to the Master dated as of July 29,1997 between Buyer and Seller. REPUBLiC NATIONAL BANK OF NEW YORK, AS SELLER By: Title: Date: R0h-t McKirtney StXk Vic0 Pre&jent By: Title: Date: 9 SOURCE: s:\FoRMs\MuNI EWXEF’O ANNEXICUSTODIALWESE AND NON-RESERVE FUNDDOC DOCUMENT: S:U. DEPT FOLDFXS\BAlJERlCARLSZ.DOC .: ‘. c ,: - 1. Buyer US Dollar Payments (Funds): Fed Book Entry (Securities): 2. Seller ANNEX II Wire and Delivery Instructions ABA: 121000248 Acct# 4159281716 Attn: Lisa Hildabrand Tel: 760-434-2867 Fax: 760-434-8 164 ABA: 121000248 AC&# 4159281716 Attn: Lisa Hildabrand Tel: 760-434-2867 Fax: 760-434-8 164 Chase Custody Account: ABA: 021000021 Acct # 544755022 CHASE NYC/DEPT 4004Kity of Carlsbad FOR TRI-PARTY WITH: Republic National Bank - RI City of Carlsbad Attn: Alan Mann Tel: (212) 623-0915 Fax: (212) 623-5959 10 3: SOURCE: s:woRhs~ INVWEF’O ANNEXWJSTODlALU(ESE AND NON-RESERVE FUNIWOC DOCUh5NT: S:U. DEPT FOLDERS~AUER!CARLSZ.DOC . , . - For Buyer: For Seller: Notices City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: Lisa Hildabrand Telephone No.: (760) 434-2867 Facsimile No.: (760) 434-8 164 Republic National Bank of New York 452 Fifth Avenue - Tower 10 New York, New York 10018 Attention: Jorge Martin, First Vice President Telephone No.: (212) 525-8000 Facsimile No.: (212) 556-9224 11 SOURCE: s:woF3mMuNl lNVWS0 ANNEXWUSTODIALWSERVE AND NON-RESERVE FUNDDOC DOCUhENT: S:U. DEF’T FOLDRRSIBAUER\CARLSZ.DOC Nancy E Bauer T&q-ta& REPUBLIC NATIONAL BANK OF NEW YORK FIFIH AVENUE AT 40th STREET l NEW ‘fOfM. N.Y. 10018 l (212) 5256671 FM (212) 525-6148 Ms. Lisa Hildabrand City of Carlsbad Finance Department 1200 Carlsbad Village Drive Carlsbad, CA 92008-l 989 August 7,1997 Re: Custodial Agreement between Republic National Bank of New York ,City of Carlsbad, and Chase Manhattan Bank Dear Lisa: Enclosed please find one fully executed copy of the above-referenced. : Thank you for your help in the completion of this matter. Very truly yours, 7Qy% Nancy Bauer S:U. DEPT FOLDERS\BAUERWANCYC~SBAD.WC CUSTODIAL UNDERTAKING IN CONNECTION WITH MASTER REPURCHASE AGREEMENT This Custodial Undertaking In Connection With Master Repurchase Agreement (the “Agreement”) is made and entered into as of the date set forth below by and among Republic National Bank of New York (“Seller”), City of Carlsbad (“Buyer”), and The Chase Manhattan Bank (“Bank”). WHEREAS, Buyer and Seller have entered into a Master Repurchase Agreement (the “Repurchase Agreement”) dated July 29, 1997; and WHEREAS, Buyer and Seller have requested that Bank undertake certain agency and custodial functions in connection with the Repurchase Agreement pursuant to the terms hereof; and WHEREAS, Bank has agreed to act as agent and custodian for Seller and Buyer in connection with the Repurchase Agreement pursuant to the terms hereof; NOW, THEREFORE, in consideration of the mutual promises set forth herein and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definitions. 6-4 Additional Purchased Securities. Securities provided by Seller and held by Bank for the benefit of Buyer to attain the Margin Value. 0) Business Day. Any day, from Monday through Friday, on which Bank, Buyer and Seller are open to transact business. (cl Buver’s Account. The meaning set forth in Section 2(b) of thii Agreement. Cd> Clearing Corporation. The meaning set forth in Section 7(h) of this Agreement. 04 Agreement. Event of Default. An Event of Default on the part of Seller or Buyer under the Repurchase (0 With respect to any Security at any time, any principal thereof then paid and all interest, Income. dividends or other distributions thereon. (g> Margin Percentage. 103% or such other percentage as is specified on Schedule 1 hereto. Unless otherwise specified on Schedule 1 hereto, the Margin Percentage for cash shall be 100%. 01) Margin Value. With respect to any Repurchase Transaction, the amount obtained by dividing the Market Value of each Security by the applicable Margin Percentage and aggregating such amounts. The Margin Value of Securities shall equal or exceed the Purchase Price at the times calculated by Bank pursuant to this Agreement. (0 Market Value. The most recently available closing bid price (usually from the previous Business Day) for the particular Security as made available to Bank by a recognized pricing service which Bank uses for pricing such Security, plus, with respect to debt Securities, any accrued interest on such Securities (to the extent not reflected in such price). If no price is available, Bank shall be author&d to price any Security by contacting any dealer designated as a “primary dealer” by the Federal Reserve Bank of New York and relying upon any price SOURCE: S:\l. FORhlSMLJNItNWlUPAR~ TRIPARTY.Doc DOCUMENT: S:U. DEW FOLDERSBALJER~ARTYZ.doc quoted by such “primary dealer” as if it were quoted by a recognized pricing service or Bank may price such Security in accordance with the methodology utilized by Bank for such purpose in the ordinary course of its business. Notwithstanding the foregoing, banker’s acceptances, commercial paper, certificates of deposit and cash shall be valued at face value. (i> Purchase Date. With respect to any Repurchase Transaction, the Business Day on which Purchased Securities are sold to Buyer by Seller. 0 Purchase Price. With respect to any Repurchase Transaction, the price at which Purchased Securities are sold to Buyer by Seller. (1) Purchased Securities. The Securities sold by Seller to Buyer (including Securities substituted therefor) under a Repurchase Transaction. Purchased Securities shall also include Additional Purchased Securities. Cm> Repurchase Date. With respect to any Repurchase Transaction, the Business Day on which Seller is to repurchase the Purchased Securities from Buyer, which date may be the Business Day after the Purchase Date. 00 Renurchase Price. With respect to any Repurchase Transaction, the price at which Purchased Securities are to be repurchased upon termination thereof. (0) Renurchase Transaction. A transaction whereby Seller sells certain Securities to Buyer, subject to Buyer’s agreement to resell such Securities to Seller at a future date at a stated price plus interest, all pursuant to and in accordance with the Repurchase Agreement. 0) Securities. Debt obligations issued or guaranteed directly or indirectly by the United States government or any agency, instrumentality or establishment thereof (including, without limitation, government- sponsored enterprises and entities the obligations of which are registered in the form of an entry on the records of the Federal Reserve Bank of New York) or such other securities or property identified on Schedule 1 hereto. Securities shall always include cash. G4 Seller’s Account. The meaning set forth in Section 2(b) of this Agreement. W Term Renurchase Transaction. The meaning set forth in Section 3(g) of this Agreement. Any references to time shall mean the time in effect in New York, New York. All provisions in this Agreement for the transfer, payment or receipt of funds or cash shall mean transfer of, payment in, or receipt of United States dollars in immediately available funds. 2. Maintenance of Accounts. (a> Each of Seller and Buyer hereby appoints Bank as custodian of all Securities at any time delivered to, and accepted by, Bank on its behalf in connection with this Agreement and as its agent to effect Repurchase Transactions as specified in this Agreement. Bank hereby accepts appointment as custodian and agent and agrees to establish and maintain Buyers Account (as defined below) as provided hereunder. (b) Bank maintains a custody account consisting of a cash account and an account for securities and other property for the benefit of Seller (collectively, “Seller’s Account”). Buyer instructs Bank to establish and maintain a custody account consisting of a cash account and an account for securities and other property for the benefit of Buyer (collectively, “Buyer’s Account”). Bank hereby acknowledges that Bank holds Buyer’s Account 2 SOURCE: S:\l. PO- lNv-imPAR- TRlFARTY.Doc DOCUMZN: s:U. DEIT FOLDElWBALiER~ARTYZ.dac and all securities, cash or other property from time to time deposited in Buyer’s Account, as bailee, financial intermediary and securities intermediary on Buyer’s behalf, subject to this Agreement. Bank shall segregate all securities, cash and other property in Buyer’s Account from the assets of Bank or other persons in its possession by appropriate identification on the books and records of Bank. Bank hereby waives any security interest, lien or right of setoff against Buyer’s Account and the property therein. (4 Bank and Buyer intend that the receipt and maintenance by Bank of property in Buyer’s Account and property received by Bank from Buyer in connection with this Agreement until credited to Buyer’s Account shall constitute a bailment under the laws of the State of New York subject to this Agreement and not a debtor-creditor relationship. Bank and Buyer intend to create a special deposit account in favor of Buyer. Bank shall not pay any interest on any property held at any time in Buyer’s Account. The parties intend that: (i) Buyer’s Account shall be a “securities account”, (ii) Bank shall be a “securities intermediary” and (iii) all property in Buyer’s Account shall be a “financial asset” and “investment property” (as such terms are defined in revised Articles 8 and 9 of the Uniform Commercial Code of the State of New York as the same may be (or deemed to be) in effect pursuant to applicable law or regulation). ‘The parties acknowledge that Bank is a commercial bank acting as custodian for Buyer as a customer in connection with the securities contracts contemplated by this Agreement, and therefore, Buyer is a “financial institution” within the meaning of Section 10 1 of the Federal Bankruptcy Code. (4 All property from time to time in Seller’s Account shall be owned and controlled solely by Seller, and Bank shall follow only Seller’s instructions with respect to Seller’s Account. All property Porn time to time in Buyer’s Account shall be owned and controlled solely by Buyer, and Bank shall follow only Buyer’s instructions (including the instruction contained in the next sentence) with respect to Buyer’s Account. The provisions of this Agreement set forth circumstances in which Seller may give Bank instructions with respect to the transfer of Securities in Buyer’s Account, and Buyer hereby instructs Bank to follow such instructions of Seller in accordance with the provisions of this Agreement. 3. Snecific Reuurchase Transactions. 00 Upon receipt of instructions from Seller on the Purchase Date specifying the Purchased Securities, Purchase Price and Purchase Date with respect to a Repurchase Transaction, Bank shall on the Purchase Date, debit Buyer’s Account in an amount equal to the Purchase Price and credit the Purchase Price to Seller’s Account against the transfer of the Purchased Securities required to attain the Margin Value from Seller’s Account to Buyer’s Account. On the Repurchase Date, with further instructions from Seller, Bank shall transfer the Purchased Securities from Buyer’s Account to Seller’s Account against the credit to Buyer’s Account of immediately available funds in an amount specified by Seller which shall not be less than the Purchase Price and the debit of such amount from Seller’s Account. @> Bank shall be responsible for verifying that all Purchased Securities are Securities. (4 If Bank is unable to comply with the terms of Section 3(a) above on any Purchase Date because Seller or Buyer has failed to credit sufficient cash or Securities to Seller’s Account or Buyer’s Account, as applicable, Bank shall promptly notify Seller and Buyer and await modification of Seller’s instructions or the receipt of tinther cash or Securities as Seller shall direct. If Bank has not received modified instructions from Seller or cash prior to the close of the Federal Reserve Bank of New York’s funds transfer wire or additional Securities, Buyer and Seller hereby irrevocably agree and instruct Bank as follows: (i) if the cash balance in Buyer’s Account on a Purchase Date shall be less than the Purchase Price, the cash balance may be deemed to be the Purchase Price; and (ii) if the Margin Value of Securities in Seller’s Account is less than the Purchase Price, Bank shall disburse to Seller cash ti-om Buyer’s Account in an amount equal to the Margin Value of Securities available for transfer to Buyer’s Account, and the remaining cash shall be held in Buyer’s Account by Bank and shall be designated cash held in 3 SOuRrn s:\l. FORMs~INv\TRIpARMcHAs ETRlPARTY.DOC DOCUWNT: S:U. DEPT FOLDFBSBAUER!fhrlhd~ARTYZ.~ substitution for Purchased Securities. In the event of the effectuation of any such partial Repurchase Transaction, Seller and Buyer shall remain obligated to each other pursuant to the terms of the Repurchase Agreement. Cd) Notwithstandmg anything to the contrary in this Agreement, it is expressly agreed and acknowledged by Buyer and Seller that Bank is not guaranteeing performance of or assuming any liability for the obligations of Buyer or Seller hereunder nor is it assuming any credit risk associated with Repurchase Transactions, which liabilities and risks are the responsibility of Buyer and Seller; further, it is expressly agreed that Bank is not undertaking to make credit available to Seller or Buyer to enable it to complete Repurchase Transactions. However, in the event that the Margin Value of the Purchased Securities in Seller’s Account does not equal or exceed the Purchase Price, or there is insufficient cash in Seller’s Account to fulfil1 Seller’s obligations to Buyer on the Repurchase Date or on any Business Day during a Term Repurchase Transaction as such obligations are specified to Bank, Bank may, at Bank’s option and without notice to Seller, advance the amount of such deficiency on Seller’s behalf and Seller shall be obligated to repay such amount on demand to Bank, plus interest at a rate to be determined from time to time. Notwithstanding the fact that Bank may from time to time make advances or loans pursuant to this paragraph or otherwise extend credit to Seller, whether or not as a regular pattern Bank may at any time decline to extend such credit for any reason, including, but not limited to, if Bank believes Seller to be insecure or Bank believes Seller’s ability to perform its obligations hereunder may be impaired, or if Bank is precluded from extending such credit as a result of any law, regulation or applicable ruling. Notwithstanding anythmg in this Agreement to the contrary, Bank shall not be obligated to transfer from Seller’s Account to Buyer’s Account any cash or securities which it has a right not to transfer pursuant to any agreement between Seller and Bank. (e> If instructions are not timely received by Bank from Seller with respect to specific Purchased Securities which are to be transferred from Seller’s Account to Buyer’s Account in connection with a Repurchase Transaction, Bank may transfer in Bank’s sole discretion any Securities with a Margin Value equal to or greater than the purchase Price. (0 Seller may substitute other Securities for any Purchased Securities without notice to Buyer provided that the Purchased Securities in Buyer’s Account after the substitution have a Margin Value equal to or greater than the purchase Price. (g) In connection with any Repurchase Transaction the Repurchase Date of which is not the Business Day immediately following the Purchase Date (each, a “Term Repurchase Transaction”), Bank shall (i) transfer at the beginning of each Business Day after the Purchase Date (but not including the Repurchase Date) all Purchased Securities subject to such Repurchase Transaction from Buyer’s Account to Seller’s Account against the transfer from Seller’s Account to Buyer’s Account of cash in an amount equal to the Purchase Price for such Repurchase Transaction (such cash to constitute cash margin unless otherwise specified by Seller) and (ii) transfer at the end of each Business Day after the Purchase Date (but not including the Repurchase Date) from Buyer’s Account to Seller’s Account such cash margin against the transfer from Seller’s Account to Buyer’s Account of Securities having a Margin Value equal to or greater than the amount of such cash margin. 0 Seller and Buyer agree that in effecting Repurchase Transactions, Bank’s transfers between Seller’s Account and Buyer’s Account, including without limitation, substitutions, are intended to be, and shall be deemed to be, simultaneous. (0 Buyer and Seller agree and acknowledge that the amounts and values of cash and Securities to be transferred by Bank in accordance with the provisions of this Agreement may differ from those required in accordance with the provisions of the Repurchase Transaction, and Bank shall have no liability in respect of any such differences. Seller and Buyer shall in all events remain obligated to each other pursuant to the terms of the Repurchase Agreement. 4 SOLRCl3 s:\l. FORMShlUNII TRPARTYDoc DOCUhWW S:U. DEFTFOLDERS\BAUER\CulabadTRIPARTY2.doc 4. Bank shall credit to Seller’s Account all Income paid by or on behalf of issuers in respect of Income. Purchased Securities in the event that any such amounts are received by Bank. Notwithstanding the foregoing, in the event Bank receives a written notice from Buyer of an Event of Default by Seller, Bank shall credit such amounts thereafter received by Bank to Buyer’s Account. Bank shall be entitled to withhold taxes or other levies, if any, on Income received by Bank prior to crediting it to Seller’s Account or Buyer’s Account, as applicable. 5. Bank’s Obligation to Hold Securities. Seller, Buyer and Bank agree that the Securities in Buyer’s Account tiom time to time will be held for Buyer by Bank as bailee, financial intermediary and securities intermediary on Buyer’s behalf. In this connection, Seller, Buyer and Bank agree that, upon receipt by the Bank of a written notice from Buyer of an Event of Default by Seller, Bank will follow Buyer’s instructions directing transfer with respect to any Securities in Buyer’s Account notwithstanding any dispute with respect thereto. Bank will promptly notify Seller of receipt of any such notice from Buyer; provided, that in no event shall Bank have any duty of further inquiry, nor shall any consent of the Seller be required for the taking of any action by Bank in response to such notice and instructions from Buyer. Buyer hereby covenants, for the benefit of Seller, that Buyer will not instruct Bank to deliver any Purchased Securities or Additional Purchased Securities to any person other than Seller until the date, if any, when an Event of Default shall have occurred as to which Seller is the defaulting party. The foregoing covenant is for the benefit of Seller only and shall in no way be deemed to constitute a limitation on Buyer’s right at any time to instruct Bank with respect to the transfer of Securities or on Bank’s obligation to act upon such instructions. 6. Dailv Statement to Seller and Buyer. Bank shall send to Seller and Buyer a statement describing the Purchased Securities held in Buyer’s Account as of the close of each Business Day. The statement shall be sent by the close of the Business Day following the date to which such statement applies. The statement shall include the Market Value of such Purchased Securities as of the date to which the statement applies. No statement will be sent with respect to a Business Day on which there are no Purchased Securities in Buyer’s Account as of the close of the Business Day. Buyer and Seller shall promptly review all such statements and shall promptly advise Bank of any error, omission, or inaccuracy in the Purchased Securities positions reported. Bank shall undertake to correct any errors, failures, or omissions that are reported to Bank by Buyer or Seller to the extent possible. Any such corrections shall be reflected on subsequent statements. 7. Care of Property; Reliance on Instructions; and Pricing of Securities. (4 Bank shall exercise the same care with respect to property in Seller’s Account and Buyer’s Account as Bank exercises with respect to Bank’s own property. Notwithstanding anything to the contrary in this Agreement, Bank shall not be liable for any costs, expenses, damages, liabilities or claims (collectively, “Damages”) resulting from its action or omission to act in connection with this Agreement, except to the extent that such Damages result from the negligence or willll misconduct of Bank. In the case of loss of property in Seller’s Account or Buyer’s Account caused by Bank’s negligence or willful misconduct, Bank’s liability for lost property shall be limited to the Market Value thereof at the date of the discovery of such loss. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, lN NO EVENT SHALL BANK BE LIABLE FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY RIND WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS) EVEN IF BANK HAS BEEN ADVISED AS TO THE POSSIBILITY THEREOF AND REGARDLESS OF THE FORM OF ACTION. Bank, at its option, may insure itself against loss from any cause but shall be under no obligation to obtain insurance directly for the benefit of either Seller or Buyer. In matters concerning or relating to this Agreement, Bank shall not be responsible for compliance with any statute or regulation regarding the establishment or maintenance of margin credit, including but not limited to Regulation T or X of the Board of Governors of the Federal Reserve System or with any rules or regulations of the Office of the Controller of the Currency. Bank shall not be liable for any acts or omissions of the other parties to this Agreement. Bank shall not have any duty to require that any cash, securities or other property be delivered to it or to determine that the amount and form of property deposited in the accounts comply with any applicable requirements other than as specified in this Agreement. 5 SOURCE: S:\l. FORMSMUNI NVWFtlPARTYtCHASE TIUF’ARTYDOC DOWMENT: S:U. DEPTFOLDERSiBAUER~TRlF’AR~,doc @I Bank, at any time, without any resulting liability to it, may act hereunder in reliance upon any instructions or notices Bank believes to be genuine; provided however, that all instructions and notices to Bank shall be by a signed writing (via telecopy or otherwise), by electronic communication or by oral communication, including the code which may be assigned by Bank to Buyer from time to time. Instructions to Bank from Seller may also be given in the manner specified in the Clearance Agreement between Bank and Seller. Bank reserves the right to confirm payment orders and/or institute any other reasonable security procedures to verify payment orders or other instructions. (cl Until written notice to the contrary is given to another party to this Agreement by Buyer and such other party has had a reasonable tune to amend its records, such other party shall be entitled to act on the belief that the persons listed on Schedule 2 hereto (whether or not any such person is an officer or employee of Buyer) are author&d to act on behalf of Buyer, and that any one of them has authority to transfer Securities, give notices and otherwise act under this Agreement on behalf of Buyer. In addition, a party shah be entitled to assume that any person whom it in good faith believes is an authorized party listed on Schedule 2 hereto is author&d to act on behalf of Buyer and has authority to transfer Securities, give notices and otherwise act under this Agreement on behalf of Buyer. (4 All transfers of cash from Buyer to Bank shall be made to the appropriate account listed on Schedule 2 hereto, unless otherwise specified in a notice to Buyer by Bank. All transfers of cash from Bank to Buyer shall be made to the appropriate account listed on Schedule 2 hereto, until otherwise specified in a written notice to Bank by Buyer with Bank having had a reasonable time to amend its records. 69 Bank may rely upon a recognized pricing service (or its equivalent as provided in the definition of Market Value) or a recognized credit rating service in determining the Market Value or credit rating of the Securities, as applicable, and shah in no circumstances be liable for any errors made by such service. (0 All credits, debits or transfers shah be deemed to have been completed at such time as recorded on Bank’s books. (g) Bank shall have no duties or obligations whatsoever except such duties and obligations as are specifically set forth in this Agreement, and no covenant or obligation shall be implied in this Agreement against Bank. Bank shall have no discretion whatsoever with respect to the management, disposition or investment of Buyer’s Account or Seller’s Account and is not a fiduciary to Buyer or Seller. 01) Transfer of Securities to Bank hereunder may be accomplished by crediting a proprietary or pledgee account of Bank with the Federal Reserve Bank of New York, The Participants Trust Company, The Depository Trust Company or any other central securities depository or clearing agency which it is or may become standard market practice to use for the comparison and settlement of securities trades (each, a “Clearing Corporation”) or by delivery of physical certificates to Bank in negotiable form. Seller and Buyer agree that Bank’s use of a Clearing Corporation in connection with the Repurchase Transactions contemplated under this Agreement is authorized and shall filly comply with all terms and conditions of this Agreement regarding Bank’s transfer and custody of such Securities. Buyer and Seller acknowledge and understand that all transfers of Securities by a Clearing Corporation will be subject to the then applicable rules and procedures of such Clearing Corporation. Bank shall not be responsible for the risk of holding Securities through Cleating Corporations; no Clearing Corporation shall be, or shall be deemed to be, an agent of Bank, Bank shall have no liability for the acts or omissions of any Clearing Corporation and Bank assumes no credit risk, including insolvency or bankruptcy risk, with respect to any such entity. Notwithstanding anything to the contrary contained in this Agreement, Bank shall be authorized, in its discretion, to accept a trust receipt from any financial intermediary as a Security. 6 SOURCE s:\l. FORhSWUM EevruPArlTncHAs ETiuPARTY.Doc - Xi. DEPTFDLDBSBAIJER-WARTY2.h (9 Bank is not a party to the Repurchase Agreement. Bank has not examined the Repurchase Agreement, haa no responsibility for the content thereof and is not, and shall not be deemed to be, on notice as to any provision thereof. Bank’s obligations hereunder shall not be affected by, nor does Bank assume any liability under, the Repurchase Agreement. (iI Bank shall not be deemed to have independent knowledge or notice of the existence of an Event of Default. Bank shall be entitled to rely on Buyer’s or Seller’s written notice (including, without limitation, telecopy notice) thereof and shall have no duty to inquire into the nature or validity of an Event of Default. 0 Bank may, with respect to questions of law, apply for and obtain the advice and opinion of counsel and shall not be deemed to be negligent or have engaged in willfir misconduct in any action taken or omitted by Bank in good faith in conformity with such advice or opinion. (1) Without limiting the generality of the foregoing, Bank shall be under no obligation to inquire into, and shall not be liable for: (i) subject to Section 3(b) hereof, the title, validity or genuineness of any securities, other property or document; (ii) the legality of the purchase, sale, delivery or transfer of any securities or other property, the propriety of the price for which the same is acquired, sold, delivered or transferred or the enforceability of any trust receipt received by Bank pursuant to this Agreement; (iii) the due authority to act on behalf of Buyer of any person Bank in good faith believes is author&d to act on behalf of Buyer; (iv) the due authority to act on behalf of Seller of any person Bank in good faith believes is author&d to act on behalf of Seller; or (v) the due authority of Seller, Buyer or any entities for which Buyer acts to deliver, transfer, obtain or hold any particular property pursuant to this Agreement. (m) Buyer and Seller agree that Bank shall have no obligation to monitor whether any Securities transferred or to be transferred hereunder derive all or a portion of their value from changes in the value of underlying securities, mortgages or other obligations or one or more currencies, commodities, indices or other factors (“Derivative Securities”). Accordingly, the parties agree that notwithstanding anything to the contrary in this Agreement, it shall be Buyer’s and Seller’s responsibility to ensure that Securities do not include Derivative Securities unless they have otherwise agreed. Bank shall have no liability whatsoever for any loss, damage or expense arising out of any ineligibility of Derivative Securities which are the subject of Repurchase Transactions. (n) Bank does not in any way undertake to, and shall not have any responsibility to, monitor or ascertain the compliance of any transactions in the Securities with any exemptions from registration under the Securities Act of 1933, as amended, or of any other state or federal securities laws. (0) Notwithstanding anything to the contrary in this Agreement, Bank shah not be required to buy or sell or arrange for the purchase or sale of any Securities in connection with this Agreement or to follow any instructions other than those directing the transfer of Securities. 7 SOURCE: s:\l. FO- INv\l?UPARMcHAsETRIpARTy.DOC DOCUMEW W. DEFTFOL.DERSBAlJl3-WARTYZ.doc (p) In the event the funds or Securities available in Buyer’s Account or Seller’s Account are inadequate to effectuate Repurchase Transactions in full in accordance with Section 3 hereof, Bank shall have no obligations except as specified in Section 3 hereof 8. Comnensation. Seller hereby agrees to pay Bank compensation for the services to be rendered hereunder, based upon rates which shall be determined from time to time in a manner agreed upon by Bank and Seller. 9. Indemnification. Seller and Buyer hereby agree, jointly and severally, to indemnify Bank for, and hold it harmless against, any loss, liability or expense in connection with, arising out of or in any way related to this Agreement or the Repurchase Agreement, or any action or omission by Bank in connection with this Agreement, includiig the reasonable costs, expenses and fees of attorneys chosen by Bank incurred in defending any claim of such liability, except that Seller and Buyer shall not be liable for any loss, liability or expense to the extent that it is determined to be the direct result of acts or omissions on the part of Bank constituting negligence or willful misconduct. Without limiting the generality of the foregoing, Bank shall be absolutely indemnified by each other party for, and held harmless against, any loss, liability or expense (including the reasonable costs, expenses and fees of attorneys chosen by Bank incurred in defending any claim of such liability) incurred as a result of complying with the instructions of such party after such party has delivered notice of an Event of Default to Bank pursuant to Section 10 below, including without limitation any such compliance which constitutes or is alleged to constitute a violation of the rights of the alleged defaulting party or a violation of an injunction, stay, order or law. These indemnification obligations shall survive the termination of any Repurchase Transaction, the Repurchase Agreement, this Agreement or all of them. For purposes of this Section, “Bank” shall mean Bank, any existing or future parent company of Bank, any existing or future direct or indirect subsidiary of such parent company and any director, officer, employee or agent of any of the foregoing. 10. Event of Default; Continuing Disputes; Effect of Notice of Lew. Etc (a) If either Buyer or Seller shall declare an Event of Default, it shall promptly deliver a written notice of an Event of Default to Bank and to the other party. Such notice shall identify the name of the defaulting party, the Event of Default and the Repurchase Transactions which are the subject of such Event of Default. Bank shall promptly notify the defaulting party of Bank’s receipt of a written notice of an Event of Default. In addition, the non- defaulting party shall furnish Bank with such documentation as Bank shall reasonably request, including copies of the Repurchase Agreement, with all amendments thereto, and copies of any relevant trade tickets and confirmations. The non-defaulting party shall at Bank’s request certify to Bank that such documentation is accurate and complete. Co) Subject only to the provisions of Section 5 hereof, from and after Bank’s receipt of a written notice of an Event of Default from Buyer or Seller, Bank is hereby instructed not to follow the instructions of the defaulting party with respect to the non-defaulting party’s Account and to follow the instructions of the non-defaulting party with respect to the non-defaulting party’s Account and, if the non-defaulting party is Seller, Bank is hereby Iinther instructed to follow the instructions of Seller to accept into Buyer’s Account cash in substitution of any Securities therein provided that the Securities in Buyer’s Account after the substitution have a Margin Value equal to or greater than the Purchase Price. Bank shall have no obligation to verify any amount(s) owed by Seller to Buyer pursuant to the Repurchase Agreement. Without any liability resulting to Bank, Bank shall be entitled to rely solely on Seller’s instructions specifying the amount of cash to credit to Buyer’s Account in connection with a substitution effected in accordance with this Section. In no event shall Bank have any duty to sell or otherwise foreclose or enforce any lien upon or security interest in or realize the value of any Securities pursuant to a notice of an Event of Default or Seller’s or Buyer’s instructions. w Except as provided in Section 5 hereof, in the event of any dispute between, conflicting claims by or conflicting instructions from any of Seller, Buyer and any other person(s) with respect to the Securities, cash or any other matter covered by this Agreement, or if Bank, in the opinion of its counsel, is precluded by law Ii-om acting, Bank may decline to comply with any and all claims, demands or instructions with respect to such Securities, 8 SOURCE: s:\l. FoRMswLNlNkwluFAR~ TRlPARTY.Doc WCUMENT: W. DEFT FOLDERS’BAUER~~ARW2.doc cash or any other matter covered by this Agreement so long as such dispute or conflict or legal inability to perhorm shall continue, and Bank shall not be liable for failure to act or to comply with such claims, demands or instructions. Bank shall be entitled to refuse to act or comply until (i) such dispute or conflict shall have been finally determined in a court of competent jurisdiction or settled by agreement between the conflicting parties and Bank shall have received evidence satisfactory to it of the same, (ii) Bank, in the opinion of its counsel, is permitted by law to perform or (iii) Bank shall have received security or an indemnity satisfactory to it sufficient to hold it harmless from and against any and all losses or damages, including counsel’s fees and expenses, that it may incur by reason of taking any action. (4 Bank shall not be required to deliver or transfer cash, securities or other property in contravention of any order, stay, judgment, levy, restraining notice, seizure or other similar notice or restraint imposed by law or issued or directed by a governmental agency or court, or officer thereof, asserting jurisdiction over Bank, any existing or future parent company of Bank, any existing or Mure direct or indirect subsidiary of such parent company or any director, officer, employee or agent of any of the foregoing, which on its face affects such cash, securities or other property. Bank shall give Buyer and Seller prompt notice of any such notice or order of which it is aware. 11. Funds Transfer Name/Identifviig Number Inconsistencies. In executing or paying a payment order, Bank may rely upon the identifying number (e.g. Fedwire routing number or account number) of any party as instructed in the payment order. Seller assumes full responsibility for any inconsistency between the name and identifying number of any party in payment orders issued to Bank in Seller’s name. Buyer assumes 111 responsibility for any inconsistency between the name and identifying number of any party in payment orders issued to Bank in Buyer’s name. 12. Renresentations and Warranties. (a) Buyer represents and warrants that (i) it is a municipal corporation duly organized and existing pursuant to the Constitution and the laws of the State of California with all necessary power and authority to execute and deliver this Agreement and to perform all of the duties and obligations to be performed by it hereunder and under the Repurchase Agreement, (ii) this Agreement and performance of all transactions contemplated hereunder and under the Repurchase Agreement have been duly authorized, executed and delivered in accordance with all requisite action, (iii) the person executing this Agreement on its behalf has been duly and properly authorized to do so, (iv) this Agreement constitutes a valid, legal and binding obligation enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, or similar laws relating to or limiting creditors’ rights generally, or by equitable principles, (v) the execution, delivery and performance of this Agreement and the transactions contemplated hereunder and under the Repurchase Agreement will not violate any agreement by which it is bound or by which any of its assets are affected, or its charter or by-laws, or any statute, regulation, rule, order or judgment applicable to it, (vi) it has the unqualified right to buy the Securities from Seller and resell the Securities to Seller upon the terms and subject to the conditions set forth in the Repurchase Agreement and this Agreement, (vii) the Purchased Securities held in Buyer’s Account shall at no time be or become subject to any lien, claim, security interest or encumbrance of any person or entity other than Buyer except as permitted by this Agreement, and all of such Purchased Securities, upon delivery to Seller, will be free and clear of any lien, claim, security interest or encumbrance (except any lien, claim, security interest or encumbrance to which such Purchased Securities were subject at the time of delivery by Seller to Buyer), (viii) the establishment of Buyer’s Account and its operation by the parties designated herein have been duly author&d and no other action is required prior to commencing operation of such account, (ix) its principal executive office is located at 1200 Carlsbad Village Drive, Carlsbad, California (x) it is subject to regulation by the laws of the state of California, (xi) it is a not a “financial institution” for purposes of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), (xii) it is not an “insured depository institution” for purposes of the Federal Deposit Insurance Act (the “FDIA”), and, if it is, it shall during the term of this Agreement comply with the written agreement and related requirements of Section 1823(e) of 9 SOURCE: SN. PORM-INv\TRIFAR- lTuPARTY.m DOCUMEW S:U. DEFT FOLDERSBAUER-ARTY2.k the FDIA and (xiii) it will deliver to Bank a complete copy of the Repurchase Agreement and all amendments thereto or modifications thereof promptly upon Bank’s request. (b) Buyer further represents and warrants that if it is acting as agent for one or more third parties, Buyer is either authorized by virtue of standing instructions or is a fiduciary or an agent with the authority to enter into, execute and bind such third parties to this Agreement and the Repurchase Transactions effected for such third parties. Buyer is author&d to make, and makes each of the representations and warranties above applicable to Buyer for each of such third parties. If Buyer acts beyond the authority granted to it by any such third party or any entity acting on behalf of such third party or exceeds any limitations on transactions imposed by Seller and agreed to by Buyer, Buyer will be liable for all such actions as if it were the principal with respect thereto provided that the same shall not lit in any manner the liability of such third party or any other party for such actions and related transactions. (4 Seller represents and warrants that (i) it is a duly organized and validly existing bank under the laws of the United States of America with all necessary power and authority to execute and deliver this Agreement and to perform all of the duties and obligations to be performed by it hereunder and under the Repurchase Agreement, (ii) this Agreement and performance of all transactions contemplated hereunder and under the Repurchase Agreement have been duly authorized, executed and delivered in accordance with all requisite corporate action, (iii) the person executing this Agreement on its behalf has been duly and properly authorlzed to do so, (iv) this Agreement constitutes a valid, legal and binding obligation enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, or similar laws relating to or limiting creditors’ rights generally, or by equitable principles, (v) the execution, delivery and performance of this Agreement and the transactions contemplated hereunder and under the Repurchase Agreement will not violate any agreement by which it is bound or by which any of its assets are affected, or its charter or by-laws, or any statute, regulation, rule, order or judgment applicable to it, (vi) it has the unqualified right to sell, buy, transfer, assign and/or pledge the Securities transferred on its behalf hereunder, and all of such Securities upon delivery to Buyer, will be Gee and clear of any lien, claim, security interest or encumbrance, (vii) it is acting as principal for its own account and (viii) it has delivered to Bank a complete and correct copy of the Repurchase Agreement and will, promptly upon the execution thereof, deliver to Bank any amendments thereto or modifications thereof. Cd) Bank represents and warrants that (i) it is duly organized and validly existing banking corporation under the laws of the State of New York with all necessary power and authority to execute and deliver this Agreement and to perform all of the duties and obligations to be performed by it hereunder, (ii) this Agreement and performance of all transactions contemplated hereunder have been duly authorized, executed and delivered in accordance with all requisite corporate action, (iii) the person executing the Agreement on its behalf has been duly and properly authorized to do so, (iv) this Agreement constitutes a valid, legal and binding obligation enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, or similar laws relating to or limiting creditors’ rights generally, or by equitable principles and (v) the execution, delivery and performance of this Agreement and the transactions contemplated hereunder will not violate any agreement by which it is bound or by which any of its assets are affected, or its charter or by-laws, or any statute, regulation, rule, order or judgment applicable to it. These representations and warranties shall be deemed to be repeated on each day on which a Repurchase Transaction is outstanclmg. 13. Entire Agreement: Modification: Amendment. This Agreement constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior oral or written agreements in regard thereto. No modification or amendment of this Agreement shall be binding unless in writing and executed by each of the parties. In the event of conflict between this Agreement and the Repurchase Agreement, this Agreement shall control. 10 SOURCE: WI. FO- ImmuFAuTncHAs ETRJPARTYDoc m S:U DET’l’FOLDEXSBAUER’Carlsbad~AllTY2..doc 14. Termination. This Agreement shall terminate forthwith upon termination of the Repurchase Agreement and written notice thereof to Bank by Seller or Buyer or may be terminated by any party hereto on ten Business Days’ prior written notice to the other parties; provided, however, that, any such termination shall not affect any Repurchase Transaction then outstanding. 15. Severability. If any provision of this Agreement is held to be unenforceable as a matter of law, the other terms and provisions hereof shall not be affected thereby and shall remain in full force and effect. 16. Rights and Remedies. The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver of any thereof shall not preclude or inhibit the exercise of any additional rights and remedies; provided, however, that nothing in this Section shall be construed as permitting any party, person or entity under any circumstances, to make any claim against Bank for special, indirect or consequential damages arising under or in connection with this Agreement. 17. Agreement. Headings. Section headings are for reference purposes only and shall not be construed as a part of this 18. The term “or” shall include the conjugate form so that each use of the term “or” should be And/Or. interpreted as “and/or”. 19. Assianment. This Agreement shall be binding upon the parties’ respective successors and permitted assigns. Neither Buyer nor Seller may assign its rights and/or obligations hereunder without the prior written consent of the other parties. Any attempted assignment without such consent shall be null and void. 20. Counternarts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one instrument. 21. No Implied Waivers. The right of any party under any provision of this Agreement shall not be affected by its prior failure to require the performance of any other party under such provision or any other provision of this Agreement, nor shall the waiver by any party of a breach of any provision hereof constitute a waiver of any succeeding breach of the same or any other provision or constitute a waiver of the provision itself 22. Notices. All notices shall be given to the party entitled to receive such notices at the following addresses, telephone numbers and telecopy numbers unless otherwise specified in a notice given pursuant to this Section: (4 To Seller. Unless and until Seller shall give written notice to Buyer and Bank to the contrary, all notices to Seller shall be sent to it at Republic National Bank of New York, 452 Fiflh Avenue - Tower 10, New York, New York 10018, attention of Derivative Products Group, all notices by telephone to Seller shall be made to Jorge Martin, First Vice President at (212) 525-8000 and all notices by telecopy to Seller shall be made to (212) 556-9224. (b) To Buyer. Unless and until Buyer shall give written notice to Seller and Bank to the contrary, all written notices to Buyer shall be sent to it at City of Carlsbad attention of Lisa Hildabrand, Finance Director, all notices by telephone to Buyer shall be made to Lisa Hildabrand, Finance Director, at (760) 434-2867 and all notices by telecopy at (760) 434-8 164 . Cc) To the Bank. Unless and until the Bank shall give written notice to Seller and Buyer to the contrary, all written notices to Bank shall be sent to it at 4 New York Plaza, New York, New York 10004-2477, attention of Brokers and Dealers Clearance Department, all notices by telephone to Bank shall be made to Allen B. Clark, Senior Vice President at (212)623-7219 and all notices by telecopy to Bank shall be made to (212)623-5959. 11 SOURCE s:\l. FORM%WNl INMmARTncHAs EllUPARTY.DOC - s:U. DEF’TFOLDERSBAUER’t(hlhd~ARTYZ.dac (4 Troubleshooting List. Until written notice to the contrary is given to the other parties by Seller or Buyer, as applicable, the persons listed on Schedule 3 hereto may be contacted after business hours as necessary in connection with this Agreement. (e) Q&r. All notices and instructions shall be deemed given when received. Notwithstanding anything to the contrary contained in this Agreement, the Bank shall be entitled in its sole discretion to act (or omit to act) in reliance upon an oral notice even if this Agreement provides for a written notice under the circumstances. -1. ,,:‘.-.,,j, .“.:.L’,~‘i:;., 23. Force M~i&re. ‘$&q&+&&l not be liable for any failure or delays arising out of conditions beyond its reasonable control, including, but not l&&d to, work stoppages, fire, civil disobedience, delays associated with hardware malfunction or availability, riots, rebellions, storms, electrical failures, acts of God and similar occurrences. 24. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF. THE PARTIES HERETO (I) IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY FEDERAL OR STATE COURT IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, (II) IRREVOCABLY WAIVE THE RIGHT TO OBJECT TO THE VENUE OF ANY SUCH COURT ON THE GROUND OF INCONVENIENT FORUM AND (III) IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY REPURCHASE TRANSACTION. TO THE EXTENT THAT, IN ANY JURISDICTION, ANY PARTY, BY ITSELF OR ON BEHALF OF ITS PRINCIPAL, MAY NOW OR HEREAFTER BE ENTITLED TO CLAIM, FOR ITSELF OR ITS ASSETS, OR FOR ITS PRINCIPAL OR SUCH PRINCIPAL’S ASSETS, IMMUNITY FROM SUIT, EXECUTION, ATTACHMENT (BEFORE OR AFTER JUDGMENT) OR OTHER LEGAL PROCESS, SUCH PARTY IRREVOCABLY AGREES NOT TO CLAIM, AND IT HEREBY WAIVES, SUCH IMMUNITY. 12 SomcE: S:\l. Fol&mmJNIINv\TRIpARMcHAsE TmR4RTY.Dcc DOCUMENT: S:U. DWT FOLDERSBAUER\CarlabdIXIPARnZ.doc . . . IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Agreement as of the 29th day of July, 1997. ;;cL*+J3g&lfm Name: Title: I’ vb)cIyrrr By: . Name: 13 NORC!2 s:\l. FOFSASMUNl INVVRIPAR Ty\cHAsETiuPAR~.wc DWUMENT: s:U. DEPT’FOLDEPSBAUER~C~~~~~~T~‘~.~‘X SCHEDULE 1 Securities Debt obligations issued or guaranteed by the United States government or any agency, instrumentality or establishment thereof (including without limitation, government-sponsored enterprises and entities the obligations of which are registered in the form of an entry on the records of the Federal Reserve Bank of New York) Cash Margin Percentaee 103% 100% 14 SOURS S:\l. FO- lNwrlwARMcHAsE TRlPARTY.Doc DOCUMENT: S:U. DEFT FOLDERS’BAUER~ARTY2.doc C h SCHEDULE 2 A. Buyer’s Account at Bank ABA: 021000021 ABA:121000248 CHASE NYUDEPT 40041 City of Carlsbad (Buyer’s Name) FOR TRI-PARTY WITH REPUBLIC NATIONAL BANK Re: City of Carlsbad (Issuer’s Name) B. Buyef s Delivery Instructions for Cash: Bank Name: Wells Fargo Bank Account Name: City of Carlsbad Account Number:4159281716 Branch: Carlsbad City: Carlsbad, CA Attention: Tax ID #:95-6004793 C. Buyer’s Delivery Instructions for Securities: ABA:121000248 Bank Name: Wells Fargo Bank Account Name: City of Carlsbad Branch: Carlsbad City: Carlsbad, CA Attention: Tax ID #:95-6004793 15 SOUFCE +%\I. FO- rmwRlPAri- TRlFARTY.Doc DOWMENT S:U. DEPTFOLDERSBAUERiC ulabadTRIpARTyz.doc D. Authorized Persons f?T Buyer: Finance Director Title Firm&l Management Director - SCHEDULE 3 AFTER HOURS CONTACT PERSONS For Seller: Name Address Republic National Bank 452 Fifth Avenue of New York DPG - Tower 10 Attn: George Martin New York, NY 10018 Office Number (212) 525-8000 After Hours Telephone Number For Buyer: Name City of Carlsbad Atln: Lisa Hildabrand Address 1200 Carlsbad Village Drive Carlsbad, CA 92008 After Hours m Telephone Number (760) 434-2867 (760) 434-2872 17 SouRm S:\l. FOnhls~mmm~ TluFARTY.Doc DOCUMEW SW. DEPTFOLDERSBAUER-AR’IY2.h