Buyout clause samples

OCIP Holding II LLC (“Holding II”), a Delaware limited liability company and a wholly owned subsidiary of OCI N.V., a Dutch public limited company (together with Holding II, “OCI,” except where the context requires that “OCI” refers only to OCI N.V.), is offering to purchase all of the outstanding common units representing limited partner interests (the “Units”) in OCI Partners LP, a Delaware limited partnership (“OCIP”), not currently held by OCI or its affiliates, at a price of $11.00 per Unit, net to the seller in cash, without interest, less any applicable withholding taxes (the “Offer Price”), upon the terms and subject to the conditions set forth in this Offer to Purchase, the related letter of transmittal and the related notice of guaranteed delivery enclosed with this Offer to Purchase, which, together with any amendments or supplements, collectively constitute the “Offer” described in this Offer to Purchase. On June1, 2018, the last trading day before OCI announced the offer, the closing price of the Units was $10.00 per Unit; therefore the offer price represents a premium of 10% over the closing price of the Units on the trading day prior to the announcement of the Offer and a premium of 16.4% over OCIP’s 90 trading day volume-weighted average Unit price. After the completion of the Offer and subject to the satisfaction or, to the extent permitted, waiver of certain conditions, OCI currently intends to purchase any and all outstanding Units not tendered pursuant to the Offer (other than any such Units held by OCI or its affiliates) (the “ Buyout ”) pursuant to Section15.1(a) of the First Amended and Restated Agreement of Limited Partnership of OCIP, as amended (the “Partnership Agreement”), at a price per unit equal to the Offer Price, such that upon completion of the Buyout , OCI and its affiliates will collectively beneficially own 100% of the outstanding Units. However, OCI may change its intent and there can be no assurance that OCI will consummate the Buyout . For example, OCI might complete the Offer, but decide not to pursue the Buyout if the Formula Price (as defined below) exceeds the Offer Price.

06/04/2018 (OCI Partners LP)

Yes, assuming that the Minimum Tender Condition is satisfied and the Offer is consummated, OCI currently intends to purchase all of the remaining Units not held by OCI or its affiliates (the “ Buyout ”) pursuant to Section15.1(a) of the First Amended and Restated Agreement of Limited Partnership of OCIP (the “Partnership Agreement”). However, OCI may change its intent and there can be no assurance that OCI will consummate the Buyout . After such purchase, OCIP will cease to be a public company, the registration of OCIP under the Securities Exchange Act of 1934, as amended, will be terminated, and Units will cease to be quoted on the New York Stock Exchange (the “NYSE”) and OCIP will not be required to file periodic reports with the SEC. In addition, if we waive the Minimum Tender Condition as described herein and consummate the Offer but do not consummate the Buyout , the Units could become ineligible to continue trading on the NYSE or another national securities exchange, and the more limited number of holders of Units could result in a lower liquidity and trading volume in the Units. If the Minimum Tender Condition is waived as described herein and OCI and its affiliates do not own sufficient Units for the consummation of the Buyout , then we may take additional actions in the future to seek to acquire additional Units.

Appraisal rights are not available in connection with the Offer or the Buyout . Unlike the stock of a corporation, the Delaware law governing limited partnerships does not provide for appraisal rights unless such rights are contained in the partnership agreement. The Partnership Agreement does not provide for any rights to appraisal. See “The Offer—Appraisal Rights; “Going-Private” Rules” beginning on page 36.

• the terms of the Offer, which is structured to be non-coercive to holders of Units and includes a condition that there be validly tendered sufficient Units such that, following the closing of the Offer, OCI and its affiliates own at least 78,297,832 Units, representing greater than 90% of the outstanding Units (referred to herein as the Minimum Tender Condition), and is being made directly to the holders of Units without being conditioned upon any requirement that the directors, or a conflicts committee, of OCIP recommend the Offer. The board of directors of OCI also noted that, assuming the Minimum Tender Condition is satisfied, that OCI and its affiliates will own more than 90% of the outstanding Units after the Offer is completed. On that basis, OCI will be entitled to and currently intends to consummate the Buyout , but OCI may change its intent and there can be no assurance that OCI will consummate the Buyout . The board of directors of OCI was aware of and considered the interests that certain executive officers and directors of OCI may have with respect to the Offer in addition to their interests as unitholders, as described in “—Interests of Certain Persons in the Offer and the Buyout ” beginning on page 25.

The foregoing discussion summarizes the material factors considered by the board of directors of OCI in its consideration of the Offer and, if applicable, the subsequent Buyout . In view of the wide variety of factors considered by the board of directors of OCI, the amount of information considered and the complexity of these matters, the board of directors of OCI did not find it practicable to, and did not attempt to, rank, quantify, make specific assignments of, or otherwise assign relative weights to the specific factors considered in reaching its determination. In addition, individual members of the board of directors of OCI may have given different weights to different factors. The board of directors of OCI considered these factors as a whole, and in their totality considered them to be favorable to, and support, its determination.

OCI’s consideration of the factors described above reflects its assessment of the fairness of the Offer Price payable in the Offer and, if applicable, the Buyout to unaffiliated holders of Units (including holders of Units who tender their Units in the Offer as well as holders of Units who decline to tender their Units and whose Units are instead acquired through the Buyout , assuming the Minimum Tender Condition is satisfied) in relation to the going concern value of OCIP on a stand-alone basis. OCI implicitly considered the value of OCIP in a sale as a going concern by taking into account OCIP’s current and anticipated business, financial condition, results of operations, prospects and other forward-looking matters. OCI did not, however, explicitly calculate a stand-alone going concern value of OCIP because OCI believes that going concern value is not an appropriate method of determining the value of the Units for purposes of the Offer and the Buyout . In light of the fact that OCI already has, and will continue to have, control of OCIP, and that OCI remains unwilling to sell its Units, OCI does not believe that it would be appropriate for the Units held by the unaffiliated holders to be valued on a basis that includes a control premium.

OCIP does not as a matter of course make public any financial projections as to future performance, earnings or other results, and is especially wary of making projections for earnings periods due to the unpredictability of the underlying assumptions and estimates. However, the board of directors of OCI was aware of certain non-public financial projections at the time they evaluated the Offer and the Buyout . We have included below a summary of these projections to give OCIP unitholders access to certain non-public information that was considered by the board of directors of OCI in their evaluation of the Offer and the Buyout .

consummation of the Buyout , the interest of OCI and its affiliates in OCIP’s net income will increase to 100%, and OCI will be entitled to all other benefits resulting from OCI’s 100% ownership of OCIP, including all income generated by OCIP’s operations and any future increase in OCIP’s value. If the Offer is completed but not the Buyout , OCI will be entitled to similar benefits proportionate to its increased ownership of OCIP. Similarly, OCI will bear all of the risk of losses generated by OCIP’s operations and any decrease in the value of OCIP after the Offer and the Buyout . Upon consummation of the Buyout , OCIP will become a privately-held limited partnership. Accordingly, former holders of Units will not have the opportunity to participate in the earnings and growth of OCIP after the Offer and the Buyout . Similarly, former holders of Units will not face the risk of losses generated by OCIP’s operations or decline in the value of OCIP after the Offer and the Buyout . If the Buyout provided in the Partnership Agreement cannot be exercised after the Offer is completed, then the Units not tendered and accepted for purchase will remain outstanding and the holders of these Units will continue to participate in the earnings and growth of OCIP and will be subject to potential losses generated by OCIP’s future operations or a decline in the trading price of the Units.

Because OCI is an affiliate of OCIP, the Offer and the Buyout constitute a “going private” transaction for purposes of Rule 13e-3 under the Exchange Act. Rule 13e-3 requires, among other things, that certain financial information concerning OCIP and certain information relating to the fairness of the Offer and the Buyout and the consideration offered to minority holders of Units be filed with the SEC and disclosed to minority holders of Units prior to the consummation of the Buyout . OCI has provided such information in this Offer to Purchase.

OCI does not believe that any state takeover laws purport to apply to the Offer or the Buyout . Accordingly, OCI has not taken any action to comply with any state takeover statute or regulation. OCI reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer or the Buyout , and nothing in this Offer to Purchase or any action taken in connection with the Offer or the Buyout is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the Offer or the Buyout and if an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Buyout , OCI might be required to file certain information with, or to receive approvals from, the relevant state authorities, and OCI might be unable to accept for payment or pay for Units tendered pursuant to the Offer, or be delayed in consummating the Offer or the Buyout . In such case, OCI may not be obliged to accept for payment or pay for any Units tendered pursuant to the Offer.

• voting and support agreements, pursuant to which Elliott has locked-up an undisclosed amount of the Company’s outstanding common stock in favor of the Proposed Buyout . These provisions and agreements substantially and improperly limit the Board’s ability to investigate and pursue superior proposals and alternatives and, absent judicial intervention, virtually guarantee the consummation of the Proposed Buyout .

12/12/2017 (Gigamon Inc.)

Gigamon for an unfair price; and (iv)permit Elliott to acquire Gigamon without Gigamon’s shareholders being fully informed of all material information relating to the Proposed Buyout . In furtherance of this plan and course of conduct, Defendants, and each of them, took the actions as set forth herein.

$ 165,000 $ 2,619,742 $ 12,000 $ 2,769,742 100.Finally, to help secure these benefits, the Board consented to and took part in the execution of voting and support agreements pursuant to which Elliott agreed to vote all shares of Company common stock that it owns in favor of the Proposed Buyout . Interestingly, and contrary to custom, Defendants do not appear to have identified precisely how much of Gigamon’s common stock is subject to these agreements.

(f) Early Buyout . After Seller has purchased an Early Buyout , Seller shall include a notation of such Early Buyout in the monthly report delivered to Buyer as set forth in Section13(d)(iv) hereof. All Mortgage Loans subject to an Agency Claim Process shall designate the Seller on the electronic submission to HUD as payee. Upon receipt of proceeds by Seller in Seller’s HUD designated account, Seller shall transfer funds into the Collection Account within [***], as more particularly set forth in Section5(b) hereof.

04/07/2021 (Finance of America Companies Inc.)

3. See our last comment above. Where appropriate throughout the Offer to Purchase, clarify how the Formula Price in the Buyout would be determined if the units no longer trade on the NYSE after the Offer and there were no affiliated purchases during the 90-day period prior to the Buyout . Response: We acknowledge the Staff’s comment and have provided updated disclosure on page 2 of Amendment No.3.

06/25/2018 (OCI N.V.)

12. Explain why OCI is opining on the fairness of the Buyout , while expressly stating it may not undertake it. Consider whether this confuses shareholders about whether those who do not tender will be cashed out in a second-step Buyout . Response: We acknowledge the Staff’s comment and refer them to our revised disclosure on pages 2, 3 and 8 of Amendment No.3 where OCI expressly states that it will consummate the Buyout , subject to the conditions thereof.

assumptions underlying these analyses. Without this information, as described below, Essendant’s stockholders are unable to fully understand these analyses and, thus, are unable to determine what weight, if any, to place on Citi’s fairness opinion in determining whether to vote their shares in favor of the Proposed Buyout . This omitted information, if disclosed, would significantly alter the total mix of information available to Essendant’s common stockholders.

11/01/2018 (ESSENDANT INC)

Proposed Buyout . Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the irreparable injury that the Company’s stockholders will continue to suffer absent judicial intervention.

The foregoing summary of material financial analyses performed by Baird does not purport to be a complete description of the analyses or data presented by Baird to the Offeror Special Committee. In connection with the review of the Offer and the Buyout by the Offeror Special Committee, Baird performed a variety of financial and comparative analyses, which are not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the analyses provided to the Offeror Special Committee. In addition, the probability of any assumption occurring in comparison to any other assumption is highly subjective and Baird formed no opinion as to such probabilities. The range of valuations resulting from any particular analysis described above should therefore not be taken to be Baird’s view of the value of the Partnership or the Offeror. No company or partnership used in the above analyses is directly comparable to the Partnership or the Offeror, and no precedent transaction used is directly comparable to the Offer and the Buyout . Further, Baird’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies or partnerships, or transactions used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of the Partnership or the Offeror.

06/21/2017 (World Point Terminals, LP)

At the Acceptance Time, the Offeror will have sufficient cash and marketable securities on hand to pay the Offer Price for all of the Units tendered pursuant to the Offer, and on the Closing Date, the Offeror will have sufficient cash and marketable securities on hand to pay the Buyout Price for all of the Units purchased pursuant to the Buyout . However, in order to avoid liquidating marketable securities on hand at potentially unfavorable prices, the Offeror may choose to fund a portion of the Buyout Price with proceeds from the $200 million senior secured revolving credit facility available under the Credit Agreement, dated as of August14, 2013, by and among Center Point Terminal Company, LLC (“Center Point”), a wholly owned subsidiary of the Partnership, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent, and the lenders party thereto (the “Credit Agreement”).

The Partnership Agreement specifically grants to the General Partner, if the General Partner and its affiliates hold more than 90% of the total limited partner interests of any class then outstanding, the right to purchase all such limited partner interests then outstanding held by persons other than the General Partner and its Affiliates, at the greater of (x)the current market price and (y)the highest price paid by the General Partner or any of its affiliates for limited partner interests of that class purchased during the 90-day period before exercise, all as described in the Partnership Agreement. The exercise of the right to purchase, which we refer to as the Buyout , is not subject to contractual or other fiduciary standards upon the General Partner (other than as is consistent with the implied contractual covenant of good faith and fair dealing) and can be exercised in the General Partner’s discretion. The Buyout (which is assignable to affiliates of the General Partner) is at the heart of the Offer. Because of OCI’s ownership of approximately 88.25% of the Units, OCI is seeking a minimum of approximately 1.75% of the outstanding Units in the Offer in order to reach the 90% threshold to be able to exercise the Buyout . A recommendation by the Conflicts Committee (as defined below) to holders of Units to tender, or not to tender, into the Offer or an election by the Conflicts Committee not to express a view on the Offer, is not a condition to the Offer or the Buyout . Moreover, although OCI has indicated an intent to exercise the call right upon consummation of the Tender Offer, OCI is not contractually committed to do so.

06/19/2018 (OCI Partners LP)

The Buyout Right. Once OCI owns 90% of the outstanding Units, OCI will be able to consummate the Buyout at a time of OCI’s choosing. OCI needs to acquire in the market only 1,523,692 Units (14.9% of the public float) to be able to consummate the Buyout . OCI could consummate the Buyout at a future date that could result in a price lower than the Offer Price.

assignable buyout

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What Is an Assignable Contract?

Understanding assignable contracts, assignment of a futures contract, factors in the futures market, unwinding futures contracts, real estate assignment, example of an assignable contract.

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Assignable Contract: Overview, Factors, Example

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

assignable buyout

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

assignable buyout

An assignable contract is a provision allowing the holder of a contract to transfer or give away the obligations and rights of the contract to another party or person before the contract's expiration date. The assignee would be entitled to take delivery of the underlying asset and receive all of the benefits of that contract before its expiry. However, the assignee must also fulfill any obligations or requirements of the contract.

Assignability may be found in some options and futures contracts. There are also assignable contracts in the real estate market that allow the transfer of property.

Key Takeaways

  • An assignable contract has a provision allowing the holder to give away the obligations and rights of the contract to another party or person before the contract's expiration date.
  • The assignee would be entitled to take delivery of the underlying asset and receive all of the benefits of that contract before its expiry.
  • An assignment agreement can allow a bank or a mortgage company to sell or assign an outstanding mortgage loan.

Assignable contracts provide a way for current contract holders to close out their position, locking in profits or cutting losses, before the expiration date of the contract. Holders may assign their contracts if the current market price for the underlying asset allows them to realize a profit.

As mentioned earlier, not all contracts have an assignment provision, which is contained in the contract's terms. Also, an assignment doesn't always take away the assignor's risk and liability , because the original contract could require a guarantee that—whether assigned or not—the performance of all terms of the contract must be completed as required.

Owners of assignable futures contracts may opt to assign their holdings instead of selling them in the open market via an exchange. A futures contract is an obligation stating a buyer must purchase an asset, or a seller must sell an asset at a preset price and a predetermined date in the future.

Futures are standardized contracts with fixed prices, amounts, and expiration dates. Investors can use futures to speculate on the price of an asset such as crude oil. At expiration, speculators will book an offsetting trade and realize a gain or loss from the difference in the two contract amounts.

If an investor holds a futures contract and the holder finds that the security has appreciated by 1% on or before the closing of the contract, then the contract holder may decide to assign the contract to a third party for the appreciated amount. The initial holder would be paid in cash, realizing the profit from the contract before its expiration date. However, a buyer of an assigned contract can take a loss by paying an above-market price and risk overpaying for the asset.

Most futures contracts do not have an assignment provision. If you are interested in buying or selling a contract, make sure to carefully check its terms and conditions to see if it is assignable or not. Some contracts may prohibit assignment while other contracts may require the other party in the contract to consent to the assignment.

It's important to note that an assignment may be void if the terms of the contract change substantially or violate any laws or public policy.

A futures contract might be assigned if there was an above-market offer from the third party in an illiquid market where bid and ask spreads were wide. The bid-ask spread is the difference between the buy and sell prices. The spreads can be wide meaning there's an additional cost being added to the prices because there's not enough product to satisfy the order at a reasonable price.

Liquidity exists when there are enough buyers and sellers in the market to transact business. If the market is illiquid, a holder might not be able to find a buyer for the contract, or there might be a delay in unwinding the position.

An investor looking to buy the futures contract might offer an amount higher than the current market price in an illiquid environment. As a result, the current contract holder can assign the contract and realize a profit, and both parties benefit. However, unwinding or selling the contract outright is the cleaner solution, and it also guarantees that all liabilities concerning the contract's obligations are discharged.

However, holders of futures contracts don't need to assign the contract to another investor when they can unwind or close the position through a futures exchange. The exchange, or its clearing agent, would handle the clearing and payment functions. In other words, the futures contract can be closed before its expiration. The holder would incur any gains or loss depending on the difference between the purchase and sale prices.

An investor who assigns a futures contract can realize a profit from the contract before its expiry.

An investor might receive an above-market price for assigning a contract in an illiquid market.

Most futures contracts are not assignable.

A buyer of an assigned contract can take a loss by paying an above-market price for the asset.

An assignment agreement can allow a bank or a mortgage company to sell or assign an outstanding mortgage loan. The bank may sell the mortgage loan to a third party. The borrower would receive notice from the new bank or mortgage company servicing the debt with information on payment submission.

The terms of the loan, such as interest rate and duration, will remain the same for the borrower. However, the new bank would receive all of the interest and principal payments. Aside from the name on the check, there should be little difference noticed by the borrower.

Banks will assign loans to remove them as a liability on their balance sheets and allow them to underwrite new or additional loans.

Let's say an investor entered into a futures contract that contains an assignable clause in June to speculate on the price of crude oil, hoping the price will rise by year-end. The investor buys a December crude oil futures contract at $40, and since oil is traded in increments of 1,000 barrels, the investor's position is worth $40,000.

By August, the price of crude oil has risen to $60, and the investor decides to assign the contract to another buyer because the buyer was willing to pay $65 or $5 above market. The contract is assigned to the second buyer for $65, and the original buyer earns a profit of $25,000 (($65-$40) x 1000).

The new holder assumes all responsibilities of the contract and can profit if crude oil is trading above $65 by year-end, but also can lose if the oil trades below $65 by year-end.

assignable buyout

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Acquiring Contracts in an M&A Transaction

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When acquiring a business, often a key component is the contracts to which the company is a party to. Ensuring the transfer of any such contracts can have significant impacts on the structure and timing of the acquisition of a business.

The General Rule and Exceptions

The general rule is that contracts are freely assignable and can be transferred from one party to another. There are, however, exceptions to this general rule. Contracts that are personal in nature, involving personal relations or personal skills, are not assignable. Also, an assignment of a contract cannot result in an increase of the burden on the remaining third party to the contract. Finally, contracts may expressly prohibit assignment of the contract or provide that an assignment can only occur under certain conditions. In the context of most M&A transactions, the relevant exception will be anti-assignment provisions in the contract itself.

Anti-Assignment Provisions

A standard assignment clause will prohibit the transfer of a contract without consent and may specify whether such consent can or cannot be unreasonably withheld. These provisions are typically included to ensure that each of the parties have control over who they engage in commercial arrangements and continue to do business with.  A simple prohibition against assignment however, will not be triggered in the sale of a company by way of a share sale. Therefore, anti-assignment provisions are often include language that addresses the transfer of ownership on the sale of the shares of a company by prohibiting a change of control of a party to a contract without consent.

Asset Purchases

In an asset purchase transaction, the vendor is the company that owns the assets being sold. The resulting transfer of assets will include those desired contracts to which the company is a party to. Such transfer of contracts will be done by way of an assignment, thereby triggering any assignment provision and the corresponding need to obtain consent of the other party(ies) to such contract(s).

Share Purchases

In a share purchase transaction, the vendor is the shareholder(s) of the target company. The vendor sells the shares to the purchaser and there is no transfer of assets as they remain the assets of the target company. In this context, an assignment of a contract is not needed as the parties to the contract remain the same. The need to obtain consent would then only arise if the assignment provision specifically prohibited a change of control.

Seeking Consent

When proceeding with either an asset or share purchase where the consent of third parties is required, the timing of obtaining such consents must be considered. The contracts themselves may dictate when consent must be obtained and may require all costs be covered with respect to such consent. Obtaining the consent of third parties also raises issues with respect to the confidentiality of a transaction, where one or both parties wish to keep the proposed transaction confidential. The impact of not obtaining required consents should be considered, especially if such contracts are material to the business. Because of these various issues it is important to review any contracts that will be transferred or remain with the target company early in the process and discuss how any required consents will be obtained.

Assigning Contracts

To effect an assignment in the context of an asset purchase, the parties should enter into an assignment agreement whereby the vendor assigns and the purchaser assumes the contract and all rights, obligations and benefits thereunder. Often a contract will specify that the vendor will not be released of its obligations on an assignment. In such instances, the vendor and purchaser should address each of their obligations going forward. Typically, the purchaser will be solely responsible and will indemnify the vendor for any non-performance or breach by the purchaser under the contract from and after the date of assignment.  If consent for the assignment is required from a third party, such party can either be made a party to the assignment agreement or its separate written consent can be obtained. If consent is not required, notice should be given to the third party that the assignment has or will occur.  To effect an assignment in the context of a share purchase, only the documents effecting the sale and transfer of shares is needed as between the vendor and purchaser. Depending on the presence and content of any change of control provisions in each contract the target company is a party to, notice to or consent of the third party to each of the contracts may be necessary.

Although generally contracts are assignable, when contemplating the purchase or sale of a business consideration should be given to any contracts that will be assigned or remain with the target company. Each contract should be carefully reviewed in the context of the specific type of transaction so as to determine whether any consents or notices will be required before or after completion of the proposed transaction. Specifically, in the context of an asset purchase, only anti-assignment provisions will necessitate obtaining consent, and in the context of a share purchase, only change of control provisions will necessitate obtaining consent. Each party should also have regard to the timing and confidentiality issues that may arise in obtaining any necessary consents and all assignments or changes in control should be properly documented.

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Consumer Financial Protection Bureau

§ 1026.33 Requirements for reverse mortgages.

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(a) Definition. For purposes of this subpart, reverse mortgage transaction means a nonrecourse consumer credit obligation in which:

1. Nonrecourse transaction. A nonrecourse reverse mortgage transaction limits the homeowner's liability to the proceeds of the sale of the home (or any lesser amount specified in the credit obligation). If a transaction structured as a closed-end reverse mortgage transaction allows recourse against the consumer, and the annual percentage rate or the points and fees exceed those specified under § 1026.32(a)(1), the transaction is subject to all the requirements of § 1026.32, including the limitations concerning balloon payments and negative amortization.

See interpretation of 33(a) Definition in Supplement I

(1) A mortgage, deed of trust, or equivalent consensual security interest securing one or more advances is created in the consumer's principal dwelling; and

(2) Any principal, interest, or shared appreciation or equity is due and payable (other than in the case of default) only after:

1. Default. Default is not defined by the statute or regulation, but rather by the legal obligation between the parties and state or other law.

2. Definite term or maturity date. To meet the definition of a reverse mortgage transaction, a creditor cannot require any principal, interest, or shared appreciation or equity to be due and payable (other than in the case of default) until after the consumer's death, transfer of the dwelling, or the consumer ceases to occupy the dwelling as a principal dwelling. Some state laws require legal obligations secured by a mortgage to specify a definite maturity date or term of repayment in the instrument. An obligation may state a definite maturity date or term of repayment and still meet the definition of a reverse-mortgage transaction if the maturity date or term of repayment used would not operate to cause maturity prior to the occurrence of any of the maturity events recognized in the regulation. For example, some reverse mortgage programs specify that the final maturity date is the borrower's 150th birthday; other programs include a shorter term but provide that the term is automatically extended for consecutive periods if none of the other maturity events has yet occurred. These programs would be permissible.

See interpretation of Paragraph 33(a)(2) in Supplement I

(i) The consumer dies;

(ii) The dwelling is transferred; or

(iii) The consumer ceases to occupy the dwelling as a principal dwelling.

(b) Content of disclosures. In addition to other disclosures required by this part, in a reverse mortgage transaction the creditor shall provide the following disclosures in a form substantially similar to the model form found in paragraph (d) of appendix K of this part:

(1) Notice. A statement that the consumer is not obligated to complete the reverse mortgage transaction merely because the consumer has received the disclosures required by this section or has signed an application for a reverse mortgage loan.

(2) Total annual loan cost rates. A good-faith projection of the total cost of the credit, determined in accordance with paragraph (c) of this section and expressed as a table of “total annual loan cost rates,” using that term, in accordance with appendix K of this part.

(3) Itemization of pertinent information. An itemization of loan terms, charges, the age of the youngest borrower and the appraised property value.

(4) Explanation of table. An explanation of the table of total annual loan cost rates as provided in the model form found in paragraph (d) of appendix K of this part.

(c) Projected total cost of credit. The projected total cost of credit shall reflect the following factors, as applicable:

See interpretation of 33(c) Projected Total Cost of Credit in Supplement I

(1) Costs to consumer. All costs and charges to the consumer, including the costs of any annuity the consumer purchases as part of the reverse mortgage transaction.

1. Costs and charges to consumer - relation to finance charge. All costs and charges to the consumer that are incurred in a reverse mortgage transaction are included in the projected total cost of credit, and thus in the total annual loan cost rates, whether or not the cost or charge is a finance charge under § 1026.4.

2. Annuity costs. As part of the credit transaction, some creditors require or permit a consumer to purchase an annuity that immediately - or at some future time - supplements or replaces the creditor's payments. The amount paid by the consumer for the annuity is a cost to the consumer under this section, regardless of whether the annuity is purchased through the creditor or a third party, or whether the purchase is mandatory or voluntary. For example, this includes the costs of an annuity that a creditor offers, arranges, assists the consumer in purchasing, or that the creditor is aware the consumer is purchasing as a part of the transaction.

3. Disposition costs excluded. Disposition costs incurred in connection with the sale or transfer of the property subject to the reverse mortgage are not included in the costs to the consumer under this paragraph. (However, see the definition of Valnin appendix K to the regulation to determine the effect certain disposition costs may have on the total annual loan cost rates.)

See interpretation of 33(c)(1) Costs to Consumer in Supplement I

(2) Payments to consumer. All advances to and for the benefit of the consumer, including annuity payments that the consumer will receive from an annuity that the consumer purchases as part of the reverse mortgage transaction.

1. Payments upon a specified event. The projected total cost of credit should not reflect contingent payments in which a credit to the outstanding loan balance or a payment to the consumer's estate is made upon the occurrence of an event (for example, a “death benefit” payable if the consumer's death occurs within a certain period of time). Thus, the table of total annual loan cost rates required under § 1026.33(b)(2) would not reflect such payments. At its option, however, a creditor may put an asterisk, footnote, or similar type of notation in the table next to the applicable total annual loan cost rate, and state in the body of the note, apart from the table, the assumption upon which the total annual loan cost is made and any different rate that would apply if the contingent benefit were paid.

See interpretation of Paragraph 33(c)(2) Payments to Consumer in Supplement I

(3) Additional creditor compensation. Any shared appreciation or equity in the dwelling that the creditor is entitled by contract to receive.

1. Shared appreciation or equity. Any shared appreciation or equity that the creditor is entitled to receive pursuant to the legal obligation must be included in the total cost of a reverse mortgage loan. For example, if a creditor agrees to a reduced interest rate on the transaction in exchange for a portion of the appreciation or equity that may be realized when the dwelling is sold, that portion is included in the projected total cost of credit.

See interpretation of 33(c)(3) Additional Creditor Compensation in Supplement I

(4) Limitations on consumer liability. Any limitation on the consumer's liability (such as nonrecourse limits and equity conservation agreements).

1. In general. Creditors must include any limitation on the consumer's liability (such as a nonrecourse limit or an equity conservation agreement) in the projected total cost of credit. These limits and agreements protect a portion of the equity in the dwelling for the consumer or the consumer's estate. For example, the following are limitations on the consumer's liability that must be included in the projected total cost of credit:

i. A limit on the consumer's liability to a certain percentage of the projected value of the home.

ii. A limit on the consumer's liability to the net proceeds from the sale of the property subject to the reverse mortgage.

2. Uniform assumption for “net proceeds” recourse limitations. If the legal obligation between the parties does not specify a percentage for the “net proceeds” liability of the consumer, for purposes of the disclosures required by § 1026.33, a creditor must assume that the costs associated with selling the property will equal 7 percent of the projected sale price (see the definition of the Valn symbol under appendix K(b)(6)).

See interpretation of 33(c)(4) Limitations on Consumer Liability in Supplement I

(5) Assumed annual appreciation rates. Each of the following assumed annual appreciation rates for the dwelling:

(i) 0 percent.

(ii) 4 percent.

(iii) 8 percent.

(6) Assumed loan period.

(i) Each of the following assumed loan periods, as provided in appendix L of this part:

(A) Two years.

(B) The actuarial life expectancy of the consumer to become obligated on the reverse mortgage transaction (as of that consumer's most recent birthday). In the case of multiple consumers, the period shall be the actuarial life expectancy of the youngest consumer (as of that consumer's most recent birthday).

(C) The actuarial life expectancy specified by paragraph (c)(6)(i)(B) of this section, multiplied by a factor of 1.4 and rounded to the nearest full year.

(ii) At the creditor's option, the actuarial life expectancy specified by paragraph (c)(6)(i)(B) of this section, multiplied by a factor of .5 and rounded to the nearest full year.

Assignment Of Purchase And Sale Agreement

Jump to section, what is an assignment of purchase and sale agreement.

An assignment of purchase and sale agreement is a real estate transaction contract that defines the parties and terms of a real estate purchase. This agreement allows the original purchaser of a property to transfer or assign their rights in the deal to a third party. This agreement is often used in flipping houses.

Assignment of purchase and sale agreements allows the purchaser to take their rights and obligations under a purchase agreement and reassign them to a third party who will take on those responsibilities. Some contracts may have clauses that prohibit assignment or allow it under specific circumstances usually laid out in the agreement.

Common Sections in Assignment Of Purchase And Sale Agreements

Below is a list of common sections included in Assignment Of Purchase And Sale Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Purchase And Sale Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.1.1 2 d245573dex1011.htm ASSIGNMENT OF PURCHASE AND SALE AGREEMENT , Viewed October 18, 2021, View Source on SEC .

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RMBS Bank of the Year - Nomura

What nomura has achieved in the us rmbs market since it decided to enter in 2013 is remarkable. in a little over six years, under the leadership of gordon sweely, head of securitized products, americas, it has risen to number two in the league tables for the volume of deals done in 2019. it was involved in a large number of the most innovative and ground breaking transactions of the year as well. perhaps most importantly, it has earned the respect and admiration of its clients and peers..

Nomura came top of our poll among market players of who was the best RMBS bank in 2019, with 32.8% of the vote. Among respondents who classified themselves as issuers or investors, that rose to 41.2%. For Jack Kattan, head of asset backed finance, Americas, at Nomura in New York this is particularly gratifying. “This is not an issuer business, it is an issuer and investor business,” he says. 

In 2019, Nomura’s continuous focus on both sides of the business, along with heavy investment in research, sales and trading, has paid off handsomely. According to Nomura, it was a lead arranger on 85 US RMBS deals, with a total value of $33.9 billion. On the issuer side, Nomura has been able to do numerous trades for repeat clients, while at the same time bringing new issuers to market for the first time. 

“We have been fortunate to have been able to grow with our clients,” says Kattan. This is particularly true in the non-QM asset class, which in 2019 provided a large part of the growth of the overall RMBS market and scaled to new highs. 

“We want to have an intimate relationship with our issuer clients so that we can institutionalize them and be true partners,” says Amit Rametra, head of securitized products and leveraged loan sales at Nomura in New York. Some of the bank’s deal highlights in 2019 include a $442 million Single Family Rental securitization for Amherst Residential, a $267 million securitization for Finance of America’s HECM Assignable Buyout Loans, a $756 million offering of STACR 2019-DNA3 Notes and securitization of more than $600 million Residential Transitional Loans across three transactions for Lending Home. 

What is clear when looking at the list of deals that Nomura priced in 2019, is the number of repeat issuers with which it has worked. These include some of the biggest players in the business including Lone Star, Angel Oak, Deephaven and Freddie Mac. But the list also includes bringing new asset classes to the market, including a $256 million securitization of  Reverse Mortgage Funding’s non-agency product.

On the investor side, 2019 saw the fruition of many years spent building and educating a dedicated RMBS investor base. The firm has created a non-QM symposium that brought together more than 100 unique investors at events in New York, Boston and Los Angeles throughout the course of 2019. “Our distribution capabilities of RMBS product are based on our investor education and on our investor relationships,” says Rametra. “We have spent a lot of time building this.”

Time is the best investment that Nomura’s RMBS team has made. Time with issuers, time with investors and time with each other. The leaders of the business — in banking, sales, syndicate, trading and research — have been together at the firm for nearly 10 years. This has allowed them to build the business holistically. They have also embedded their knowledge of their clients and of the clients’ assets. 

“It is a very competitive environment, but we have managed to establish a level of incumbency in our business,” says Patrick Quinn, managing director, US Syndicate, at Nomura in New York. “Origination volumes in the non-QM space grew rapidly in 2019, so we needed to have a strong pool of liquidity to support that. Investor education was key in that it allowed our investor clients to be comfortable with the asset class.”

2020 has not been a continuation of 2019 for the overall US securitization business. But Nomura has continued to lead the market. “We saw the importance of getting the primary market for RMBS securitizations back open after the arrival of the COVID-19 pandemic” says Sanil Patel, managing director, asset backed finance, at Nomura in New York. “And we were  at the centre of re-opening the RMBS market by leading two transactions for Cascade Funding Mortgage Trust in 2020, sponsored by Waterfall Asset Management; the first for $373 million priced in April, and the second for $455 million a month later. In addition, we led the first SFR transaction since the onset of COVID-19 for Corevest American Finance, pricing a $234 million securitization in May”.

Nomura’s strong performance in 2019 was built on its incumbent relationships with issuers and investors, strong sales, trading and research, and, above all, a deep commitment to the RMBS asset class.

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  4. Leveraged Buyout (LBO) Model

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  6. What is a Leveraged Buyout (LBO) How does it work?

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COMMENTS

  1. Examples of buyout clauses in contracts

    Yes, assuming that the Minimum Tender Condition is satisfied and the Offer is consummated, OCI currently intends to purchase all of the remaining Units not held by OCI or its affiliates (the " Buyout ") pursuant to Section15.1 (a) of the First Amended and Restated Agreement of Limited Partnership of OCIP (the "Partnership Agreement").

  2. EX-10.22.15

    shall mean, with respect to (w) each Eligible Mortgage Loan that is a Buyout or an Assignable Buyout, as of any date of determination, the product of (i) the related Purchase Price Percentage with respect to such Eligible Mortgage Loan and (ii) the lesser of (A) the Adjusted Principal Balance and (B) (X) with respect to Buyouts, the Market Valu...

  3. PDF RE: FHA Info 2023-41; Draft Mortgagee Letter, Modifications to ...

    assignable buyout. FHA should accept loans that become due and payable or default after reaching 98% MCA as an assignable buyout. When a borrower has vacated their home or passed away, servicers are forced to foreclose on the estate, sell the house, and then file a claim with the

  4. Non-Compete Agreements After An Acquisition: Are They ...

    If the acquisition is a stock purchase and the acquired company (we'll call it Company B) maintains a separate existence, the non-compete is unaffected. Company B will still be around to enforce the Agreement. The answer is less clear, however, when Company B is merged into Company A or where the acquisition takes the form of an asset purchase.

  5. Non-assignable Buyout Definition

    Assignable Loan means a Loan that is capable of being assigned or novated to, at a minimum, commercial banks or financial institutions (irrespective of their jurisdiction of organization) that are not then a lender or a member of the relevant lending syndicate, without the consent of the Reference Entity or the guarantor, if any, of such Loan (o...

  6. PDF April 13, 2023 The Honorable Julia Gordon Federal Housing Administration

    assignable buyout. In addition, FHA should accept loans that become due and payable or default after reaching 98% MCA as an assignable buyout. When a borrower has vacated their home or passed away, servicers are forced to foreclose on the estate, sell the house, and then file a claim with the FHA for the cost of buying the loan out of the pool.

  7. Assignable Contract: Overview, Factors, Example

    Assignable contracts provide a way for current contract holders to close out their position, locking in profits or cutting losses, before the expiration date of the contract. Holders may assign...

  8. Acquiring Contracts in an M&A Transaction

    To effect an assignment in the context of an asset purchase, the parties should enter into an assignment agreement whereby the vendor assigns and the purchaser assumes the contract and all rights, obligations and benefits thereunder. Often a contract will specify that the vendor will not be released of its obligations on an assignment.

  9. EX-10.22.3

    (vii) such Purchased Asset is a Non-assignable Buyout that has been an Early Buyout (calculated from the date of repurchase from a Ginnie Mae securitization) for a period in excess of one year; . 1.3 deleting subclause (x) of the definition of "Asset Value" in its entirety and replacing it with the following: (x) such Purchased Asset is an Assignable Buyout for which a claim has not been ...

  10. EX-10.22

    "Assignable Buyout Purchased Assets" shall mean any Purchased Assets which are Assignable Buyouts. "Assignable Buyout Tranche" shall mean the Purchase Price of this facility for which Assignable Buyout Purchased Assets are subject to Transactions hereunder. "Assignment and Acceptance" shall have the meaning set forth in Section 20 ...

  11. Assignable Buyout Definition

    Assignable Loan means a Loan that is capable of being assigned or novated to, at a minimum, commercial banks or financial institutions (irrespective of their jurisdiction of organization) that are not then a lender or a member of the relevant lending syndicate, without the consent of the Reference Entity or the guarantor, if any, of such Loan (o...

  12. RMBS Deal of the Year

    CFMT 2020-AB1 was Waterfall's inaugural securitization of assignable reverse mortgage loans - also known as Assignable Buyouts (ABOs) - and only the second securitization of ABOs ever. More...

  13. § 1026.33 Requirements for reverse mortgages.

    To meet the definition of a reverse mortgage transaction, a creditor cannot require any principal, interest, or shared appreciation or equity to be due and payable (other than in the case of default) until after the consumer's death, transfer of the dwelling, or the consumer ceases to occupy the dwelling as a principal dwelling.

  14. Assignable Buyout Purchased Assets Definition

    Assignable Loan means a Loan that is capable of being assigned or novated to, at a minimum, commercial banks or financial institutions (irrespective of their jurisdiction of organization) that are not then a lender or a member of the relevant lending syndicate, without the consent of the Reference Entity or the guarantor, if any, of such Loan (o...

  15. Assignment Of Purchase And Sale Agreement

    An assignment of purchase and sale agreement is a real estate transaction contract that defines the parties and terms of a real estate purchase. This agreement allows the original purchaser of a property to transfer or assign their rights in the deal to a third party. This agreement is often used in flipping houses.

  16. Non-assignable Buyout Definition

    Define Non-assignable Buyout. means (i) adenine HECM Loan subject at one HECM Buyout which is no assignable to HUD and (ii) an Assignable Buyout that becomes subject to a Transaction by a period of [***] (whether or not consecutive). For the sake of limpidity, once a HECM Loan satisfies the criteria set forth in clause (ii) of this explanation such HECM Loan shall thereafter be included a Non ...

  17. EX-10.22.6

    (h) such Purchased Asset is a Non-assignable Buyout and the Mortgagor thereunder is subject to an eviction proceeding; (i) such Purchased Asset has been foreclosed upon or converted to REO Property; (j) Reserved; (k) the Buyer has determined in its good faith discretion that the

  18. PDF News Release Nomura Holding America Inc. Nomura Claims Top US RMBS

    HECM Assignable Buyout Loans, a $756 million offering of STACR 2019DNA3 Notes, and - securitization of more than $600 million Residential Transitional Loans across three transactions for Lending Home. "It is a very competitive environment, but we have now managed to establish a level of incumbency

  19. Assignable Buyout Tranche Definition

    Assignable Buyout Tranche means the Purchase Price of this facility for which Assignable Buyout Purchased Assets are subject to Transactions hereunder. Sample 1 Sample 2 Based on 2 documents Related to Assignable Buyout Tranche

  20. RMBS Bank of the Year

    According to Nomura, it was a lead arranger on 85 US RMBS deals, with a total value of $33.9 billion. On the issuer side, Nomura has been able to do numerous trades for repeat clients, while at ...

  21. Repurchase Price Adjustment Definition

    If, as of any date of determination, a Repurchase Price Adjustment Date occurs with respect to any Purchased Asset that is a Home Safe Loan or Seasoned Non-assignable Buyout, Seller shall remit the related Repurchase Price Adjustment Amount to Buyer within [***] of such Repurchase Price Adjustment Date.

  22. Seasoned Non-Assignable Buyout Definition

    Define Seasoned Non-Assignable Buyout. means a Purchased Asset that is a Non-Assignable Buyout pursuant to clause (ii) of the definition of "Non-Assignable Buyout".