Exhibit 10.16
Dated as of November 26, 1999
Between:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC ("Buyer")
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and
WILSHIRE FUNDING CORPORATION ("Seller")
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1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities
or other assets ("Securities") against the transfer of funds by Buyer, with
a simultaneous agreement by Buyer to transfer to Seller such Securities at
a date certain or on demand, against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by this Agreement, including
any supplemental terms or conditions contained in Annex I hereto and in any
other annexes identified herein or therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment
or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investors
Protection Act of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of an order for
relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days, (iii) the making by such party of
a general assignment for the benefit of creditors, or (iv) the
admission in writing by such party of such party's inability to pay
such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(d) "Buyer's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Seller's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase Price
on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the
relevant Confirmation, Annex I hereto or otherwise as the deadline for
giving notice requiring same-day satisfaction of margin maintenance
obligations as provided in Paragraph 4 hereof (or, in the absence of
any such agreement, the deadline for such purposes established in
accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally
recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued income to the extent
not included therein (other than any Income credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate
for such Transaction to the Purchase Price for such Transaction on a
360-day-per-year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction
and ending on (but excluding) the date of determination (reduced by
any amount of such Price Differential previously paid by Seller to
Buyer with respect to such Transaction);
(l) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in
THE WALL STREET JOURNAL (or, if more than one such rate is published,
the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii)
thereafter, except where Buyer and Seller agree otherwise, such price
increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any
cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof
or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities"
with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to Paragraph 4(a)
hereof and shall exclude Securities returned pursuant to Paragraph
4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination;
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(s) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of
any date, a percentage (which may be equal to the Buyer's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase Price
on the Purchase Date for such Transaction;
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase
Date for the Transaction, the Purchased Securities shall be
transferred to Buyer or its agent against the transfer of the Purchase
Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other
party a written confirmation of each Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including
CUSIP number, if any), identify Buyer or Seller and set forth (i) the
Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date,
unless the Transaction is to be terminable on demand, (iv) the Pricing
Rate or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent
with this Agreement. The Confirmation, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between Buyer
and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any conflict
between the terms of such Confirmation and this Agreement, this
Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior
to the business day on which such termination will be effective. On
the date specified in such demand, or on the date fixed for
termination in the case of Transactions having a fixed term,
termination of the Transaction will be effected by transfer to Seller
or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) against transfer of the Repurchase Price to an account of
Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice
to Seller require Seller in such Transactions, at Seller's option, to
transfer to Buyer cash or additional Securities reasonably acceptable
to Buyer ("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities, including any such
Additional Purchased Securities, will thereupon equal or exceed such
aggregate Buyer's Margin Amount (decreased by the amount of any Margin
Deficit as of such date arising from any Transactions in which such
Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all
such Transactions at such time (a "Margin Excess"), then Seller may by
notice to Buyer require Buyer in such Transactions, at Buyer's option,
to transfer cash or Purchased Securities to Seller, so that the
aggregate Market Value of the Purchased Securities, after deduction of
any such
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cash or any Purchased Securities so transferred, will thereupon not
exceed such aggregate Seller's Margin Amount (increased by the amount
of any Margin Excess as of such date arising from any Transactions in
which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or
(b) of this Paragraph at or before the Margin Notice Deadline on any
business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day.
If any such notice is given after the Margin Notice Deadline, the
party receiving such notice shall transfer such cash or Securities no
later than the close of business in the relevant market on the next
business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by the Buyer and Seller.
(e) Seller and buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both)
under subparagraphs (a) or (b) of this Paragraph may be exercised only
where a Margin Deficit or a Margin Excess, as the case may be, exceeds
a specified dollar amount or a specified percentage of the Repurchase
Prices for such Transactions (which amount or percentage shall be
agreed to by Buyer and Seller prior to entering into any such
Transactions).
(f) Seller and Buyer may agree with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) or (b) of this Paragraph to require the elimination
of a Margin Deficit or a Margin Excess, as the case may be, may be
exercised whenever such a Margin Deficit or a Margin Excess exists
with respect to any single Transaction hereunder (calculated without
regard to any other Transaction outstanding under this Agreement).
5. INCOME PAYMENTS
Seller shall be entitled to receive an amount equal to all income paid or
distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would so be entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its discretion), on the
date such Income is paid or distributed either (i) transfer to or credit to
the account of Seller such Income with respect to any Purchased Securities
subject to such Transaction or (ii) with respect to Income paid in cash,
apply the Income payment or payments to reduce the amount, if any, to be
transferred to Buyer by Seller upon termination of such Transaction. Buyer
shall not be obligated to take any action pursuant to the preceding
sentence (A) to the extent that such action would result in the creation of
a Margin Deficit, unless prior thereto or simultaneously therewith Seller
transfers to Buyer cash or Additional Purchased Securities sufficient to
eliminate such Margin Deficit, or (B) if an Event of Default with respect
to Seller has occurred and is then continuing at the time such Income is
paid or distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to
be loans, Seller shall be deemed to have pledged to Buyer as security for
the performance by Seller of its obligations under each such Transaction,
and shall be deemed to have granted to Buyer a security interest in, all of
the Purchased Securities with respect to all Transactions hereunder and all
income thereon and other proceeds thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party
hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment
in blank and
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such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of the 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 clearing corporation. All of Seller's interest in the Purchased
Securities shall pass to Buyer on the Purchase Date and, unless otherwise
agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer
from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased
Securities to Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer's
obligation to credit or pay Income to, or apply Income to the obligations
of, Seller pursuant to Paragraph 5 hereof.
REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS CUSTODY OF
THE PURCHASED SECURITIES
Seller is not permitted to substitute other securities for those
subject to this Agreement and therefore must keep Buyer's securities
segregated at all times, unless in this Agreement Buyer grants Seller
the right to substitute other securities. If the Buyer grants the
right to substitute, this means that Buyer's securities will likely be
commingled with Seller's own securities during the trading day. Buyer
is advised that, during any trading day that Buyer's securities are
commingled with Seller's securities, they [will]* [may]** be subject
to liens granted by Seller to [its clearing bank]* [third parties]**
and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller's ability
to resegregate substitute securities for Buyer will be subject to
Seller's ability to satisfy [the clearing]* [any]** lien or to obtain
substitute securities.
*Language to be used under 17 C.F.R. SECTION 403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
**Language to be used under 17 C.F.R. SECTION 403.5(d) if Seller is a
financial institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities.
(b) In transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed,
for purposes of subparagraph (a) of this Paragraph, to have agreed to
and accepted in this Agreement substitution by Seller of other
Securities for Purchased Securities; PROVIDED, HOWEVER, that such
other Securities shall have a Market Value at least equal to the
Market Value of the Purchased Securities for which they are
substituted.
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 obligation hereunder
and has taken all necessary action to authorize such execution, delivery
and performance,
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(ii) it will engage in such Transactions as principal (or, if agreed in
writing, in the form of an annex hereto or otherwise, in advance of any
Transaction by the other party hereto, as agent for the disclosed
principal), (iii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf (or on behalf of any such disclosed
principal), (iv) it has obtained all authorizations of any governmental
body required in connection with this Agreement and the Transactions
hereunder and such authorizations are in full force and effect and (v) the
execution, delivery and performance of this Agreement and the Transactions
hereunder will not violate any law, ordinance, charter, by-law or rule
applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the Purchase Date for any Transaction Buyer and
Seller shall each be deemed to repeat all the foregoing representations
made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails
to repurchase or Buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to
comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with
respect to Seller or Buyer, (vi) any representation made by Seller or Buyer
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated, or (vii) Seller or Buyer
shall admit to the other its inability to, or its intention not to, perform
any of its obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an
Act of Insolvency), declare an Event of Default to have occurred
hereunder and, upon the exercise or deemed exercise of such option,
the Repurchase Date for each Transaction hereunder shall, if it has
not already occurred, be deemed immediately to occur (except that, in
the event that the Purchase Date for any Transaction has not yet
occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting
party shall (except upon the occurrence of an Act of Involvency)
give notice to the defaulting party of the exercise of such option
as promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, (i) the
defaulting party's obligations in such Transactions to repurchase all
Purchased Securities, at the Repurchased Price therefor on the
Repurchase Date determined in accordance with subparagraph (a) of
this Paragraph, shall thereupon become immediately due and payable,
(ii) all Income paid after such exercise or deemed exercise shall be
retained by the nondefaulting party and applied to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder, and (iii) the defaulting party shall
immediately deliver to the nondefaulting party any Purchased
Securities subject to such Transactions then in the defaulting
party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and
interest in and entitlement to all Purchased Securities subject to
such Transactions shall be deemed transferred to the nondefaulting
party, and the defaulting party shall deliver all such Purchased
Securities to the nondefaulting party.
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(d) If the nondefaulting party exercises or is deemed to have exercised
the option referred to in sub-paragraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party,
may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion elect,
in lieu of selling all or a portion of such Purchased Securities,
to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefor on such date, obtained
from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting
party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have
purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most
recent closing offer quotation from such a source.
Unless otherwise provided in Annex I, the parties acknowledge and
agree that (1) the Securities subject to any Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a
generally recognized source for prices or bid or offer quotations for
any Security, the nondefaulting party may establish the source
therefor in its sole discretion and (3) all prices, bids and offers
shall be determined together with accrued Income (except to the extent
contrary to market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party for
any excess of the price paid (or deemed paid) by the nondefaulting
party for Replacement Securities over the Repurchase Price for the
Purchased Securities replaced thereby and for any amounts payable by
the defaulting party under Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is
acting as Buyer shall not 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 liable to the nondefaulting party for
(i) the amount of all reasonable legal or other expenses incurred by
the nondefaulting party in connection with or as a result of an Event
of Default, (ii) damages in an amount equal to the cost (including all
fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in
connection with or as a result of an Event of Default, and (iii) any
other loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default in respect of a Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall
be liable to the nondefaulting party for interest on any amounts owing
by the defaulting party hereunder, from the date the defaulting party
becomes liable for such amounts hereunder until such amounts are (i)
paid in full
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by the defaulting party or (ii) satisfied in full by the exercise of
the nondefaulting party's rights hereunder. Interest on any sum
payable by the defaulting party to the nondefaulting party under this
Paragraph 11(h) shall be at a rate equal to the greater of the Pricing
Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of
any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries and other transfers may
be applied against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by mail, facsimile, telegraph,
messenger or otherwise to the address specified in Annex II hereto, or so
sent to such party at any other place specified in a notice of change of
address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by
other communication as specified in the preceding sentence.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
15. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without
the prior written consent of the other party, and any such assignment
without the prior written consent of the other party shall be null and
void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be
terminated by either party upon giving written notice to the other,
except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
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17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and
duly executed by both of the parties hereto. Without limitation on any of
the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later
date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended
to be used by either party hereto (the "Plan Party") in a Transaction,
the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other
party that the Transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required
so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph,
any such Transaction shall proceed only if Seller furnishes or has
furnished to Buyer its most recent available audited statement of its
financial condition and its most recent subsequent unaudited statement
of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of
Seller's latest such financial statements, there has been no material
adverse change in Seller's financial condition which Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future
audited and unaudited statements of its financial condition as they
are issued, so long as it is a Seller in any outstanding Transaction
involving a Plan Party.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the
United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such Transaction
would render such definition inapplicable), and a "securities
contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets
subject to such Transaction would render such definition
inapplicable).
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 11 hereof is a
contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as
amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the
Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as that
term is defined in FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
entitlement and payment obligation under any Transaction hereunder
shall constitute a "covered contractual payment entitlement" or
"covered contractual payment obligation",
9
respectively, as defined in and subject to FDICIA (except insofar as
one or both of the parties is not a "financial institution" as that
term is defined in FDICIA).
20. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"),
the Securities Investor Protection Corporation has taken the position
that the provisions of the Securities Investor Protection Act of 1970
("SIPA") do not protect the other party with respect to any
Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any
Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured
by the Federal Deposit Insurance Corporation or the National Credit
Union Share Insurance Fund, as applicable.
CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC WILSHIRE FUNDING CORPORATION
[Name of Party] [Name of Party]
By: [illegible] By: [illegible]
-------------------------- ---------------------------
Title: Managing Director Title: CFO
----------------------- --------------------------
Date: 11/16/99 Date: November 12, 1999
------------------------- ---------------------------
ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
(MORTGAGE CAPITAL/WFC)
Pursuant to the terms of the Master Repurchase Agreement (the
printed text only, the "Master Repurchase Agreement" and together with this
Annex and any other Annexes and Exhibits thereto, the "Agreement") dated as
of November 26, 1999 (the "Restatement Date"). Buyer and Seller agree to be
governed by the Supplemental Terms and Condition stated herein. The Agreement
amends, restates and consolidates in their entirety (a) the Master Repurchase
Agreement (Commercial) dated as of June 16, 1997 between Wilshire Financial
Corporation ("WFC or Seller") and Credit Suisse First Boston Mortgage Capital
LLC ("Buyer") relating to commercial mortgage loans and commercial real
property (the "Original Commercial Agreement") and (b) the Master Repurchase
Agreement dated June 16, 1997, between WFC and Buyer relating to residential
mortgage loans, residential real property and manufactured home installment
contracts (the "Original Residential Agreement" and, together with the
Original Commercial Agreement, the "Original Agreements"). The Transactions
under the Original Agreements (the "Original Transactions") shall, as of the
Restatement Date, be replaced by the New Transactions referred to below. The
New Transactions and the Rollover Transactions referred to below shall be
governed by the Agreement. All capitalized terms used in these Supplemental
Terms and Conditions that are defined in the Master Repurchase Agreement are
used herein as defined therein, except to the extent such terms are amended
or supplemented herein. Reference is made to Section 6 hereof for the meaning
of additional defined terms used herein. To the extent that any provisions in
these Supplemental Terms and Conditions are in conflict with provisions
contained in the Master Repurchase Agreement, the provisions of these
Supplemental Terms and Conditions shall prevail.
1. SPECIFIC TRANSACTIONS ONLY. (a) Unless otherwise agreed by Buyer
and Seller, the only Transactions under the Agreement shall be (i) new
Transactions (the "New Transactions") entered into as of the Restatement Date
covering the Purchased Securities that were then subject to Original
Transactions and (ii) the Rollover Transactions described below. Each New
Transaction shall have a term of approximately one month, and shall have a
Purchase Price equal to the Repurchase Price (determined as of the
Restatement Date without any Breakage Costs) applicable to the Original
Transaction for the corresponding Purchased Security (subject to adjustment
to give effect to the payments and fee described in Section 2 below). Unless
(x) an Event of Default shall have occurred, (y) Seller directs Buyer not to
do so, or (z) Seller shall have paid the applicable Repurchase Price for the
relevant Transaction, Buyer shall with respect to each Transaction enter into
successive additional monthly Transactions (the "Rollover Transactions") for
the Purchased Securities covered by such Transaction; PROVIDED, HOWEVER, that
Buyer shall have no obligation to enter into any Transaction with a
Repurchase Date later than the first anniversary of the Restatement Date.
Neither Buyer nor Seller shall have any obligation to enter into any
Transaction under the Agreement other than the Transactions described above
in this Section 1(a).
The Pricing Rate for all Transactions, unless otherwise agreed in
connection with a specific Transaction, shall be a per annum rate equal to
LIBOR plus the following
respective per annum rate for Transactions covering the following types of
Purchased Securities (all of which are Contracts):
TYPE OF PURCHASED SECURITIES PER ANNUM RATE
Commercial Performing 2.25%
Commercial Non-Performing 3.00%
Residential First Loan Contract 1.50%
Residential Junior Loan Contract 1.90%
Residential Non-Performing 2.50%
Residential Manufactured 1.90%
2. PAYMENTS AND FEES. (a) On November 16, 1999, Seller wired
immediately available funds to Buyer in the amount of $1,693,043.53, which
payment was applied to the outstanding Margin Deficits (as such term is defined
in the Original Agreements) under the Original Agreements as of the Restatement
Date.
(b) On the Restatement Date, Buyer shall be entitled to a
facility fee in the amount of 0.5% of the New Transaction Purchase Prices
(determined after giving effect to the payments described in Section 2(a) above
and before giving effect to such fee), which shall be added to and be part of
the respective Purchase Prices under the New Transactions.
3. MARKET VALUE. (a) The text of Paragraph 2(j) of the Master
Repurchase Agreement is replaced in its entirety with the following:
"`Market Value', with respect to any Securities as of any
date, the price of such Securities as determined by Buyer in
its good faith judgment;"
(b) Buyer shall provide to Seller, at Seller's request and for
information purposes only, the assumptions used by Buyer to determine the Market
Value of the Purchased Securities for each new determination of Market Value.
4. MARGIN MAINTENANCE. (a) The Margin Notice Deadline shall be
10 AM, New York City time. The Buyer's Margin Percentage with respect to each
Transaction under the Agreement shall be equal to the Buyer's Margin Percentage
with respect to the final Original Transaction for the corresponding Purchased
Security as specified in the relevant Confirmation.
(b) Paragraph 4 of the Master Repurchase Agreement is amended
by deleting subparagraphs (d), (e) and (f) of such Paragraph. Neither party
shall be required to comply with the provisions of subparagraph (b) of Paragraph
4, which subparagraph is preserved solely for the purpose of providing a
definition of the term "Margin Excess."
(C) Notwithstanding anything to the contrary contained in the
Agreement, Seller shall not be required to eliminate any Margin Deficit pursuant
to Paragraph 4(a) except to the extent, if any, that the amount of such Margin
Deficit exceeds the amount of any Margin Excess (as such term is defined in the
MBS Agreement) existing at such time under the MBS Agreement.
2
(d) The Custodial Agreement shall set forth further terms and
provisions relating to Buyer's and Seller's rights and obligations under
Paragraph 4 of the Master Repurchase Agreement.
5. INCOME PAYMENTS. The text of Paragraph 5 of the Master
Repurchase Agreement is replaced in its entirety with the following:
"Buyer shall be entitled to receive and retain an amount equal
to all Income and other proceeds (including sale and
refinancing proceeds) paid, distributed, received or otherwise
realized from, on or in respect of the Securities (after
deduction for any required tax or other third-party payments),
and shall apply all such amounts in the following order: first
to pay any unpaid accrued Price Differentials; second, to pay
any amounts due from Seller as a result of principal paydowns,
or changes in the Market Value, of Purchased Securities; and
then, to pay any other amounts owing by Seller under the
Agreement or in respect of any Transaction (in such order as
Buyer shall determine in its sole discretion)."
6. ADDITIONAL DEFINITIONS.
"AFFILIATE" With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities (including, without limitation, partnership interests), by contract
or otherwise and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"BREAKAGE COSTS" shall have the meaning assigned thereto in
Section 29 hereof.
"BREAKAGE PERIOD" shall have the meaning assigned thereto in
Section 29 hereof.
"BREAKAGE RATE" shall have the meaning assigned thereto in
Section 29 hereof.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or
a Sunday or (ii) another day on which banking institutions in the cities of
Portland, Oregon or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
"COLLATERALIZATION AGREEMENT" shall mean the Collateralization
Agreement dated as of the Restatement Date between Seller and Credit Suisse
First Boston Corporation, an Affiliate of CSFB.
"COMMERCIAL CONTRACT" shall mean a Contract that was a
Purchased Security under the Original Commercial Agreement, and any Contract
that constitutes proceeds of such a Purchased Security.
3
"COMMERCIAL EXHIBIT A" shall mean Exhibit A to the Original
Commercial Agreement (with all defined terms used therein having the meanings
ascribed thereto in the Original Commercial Agreement).
"COMMERCIAL EXHIBIT B" shall mean Exhibit B to the Original
Commercial Agreement (with all defined used therein have the meanings ascribed
thereto in the Original Commercial Agreement).
"CONTRACTS" shall mean (i) mortgage loans secured by a first
or junior mortgage on real property and related personal property, (ii) certain
real property and related personal property and (iii) manufactured housing
retail installment contracts and installment loan agreements, all to the extent
such loans, property or contracts constituted Purchased Securities under an
Original Agreement. Each such Contract includes, without limitation, all Records
relating to such Contract and all related security interests, Related Assets,
and any and all rights to receive payments thereunder and all proceeds thereof
(including, without limitation, any recourse rights against third persons) from
and after the related Purchase Date.
"CSFB" shall mean Credit Suisse First Boston Mortgage Capital
LLC.
"CUSTODIAL AGREEMENT" shall refer to the Second Amended and
Restated Custodial and Servicing Agreement dated as of June 16, 1997, as amended
as of the Restatement Date, by and among Buyer, Seller and Custodian, providing
for the custody and the servicing of the Contracts.
"CUSTODIAN" shall refer to Bankers Trust Company of
California, N.A., in its capacity as custodian under the Custodial Agreement, or
any successor or any permitted assigns.
"GUARANTOR" shall mean WFSG, or any successor thereto.
"GUARANTY AGREEMENT" shall mean the Guaranty dated as of the
Restatement Date issued by WFSG for the benefit of the Buyer.
"LIBOR" shall mean the offered rate for United States dollars
with a maturity of one month which appears on Telerate as of 9 AM, New York City
time, as determined by Buyer (absent manifest error) on the Purchase Date for
the relevant Transaction; PROVIDED, HOWEVER, that if such rate does not appear
on the Dow βββββ Telerate Service page 3750 (or such other page as may replace
that page on that service) or if such service is no longer offered, the rate for
United States dollars with a maturity of one month quoted by such other
comparable service as may be selected by Buyer.
"MBS AGREEMENT" shall mean the Global Master Repurchase
Agreement dated as of November 13, 1996 between Seller and Credit Suisse First
Boston (Hong Kong) Limited, as amended, modified, restated or supplemented from
time to time, relating to mortgage-backed securities; PROVIDED, HOWEVER that if
such Global Master Repurchase Agreement is replaced by a Master Repurchase
Agreement between Seller and Credit Suisse First Boston (Europe) Limited, such
Master Repurchase Agreement, as amended, modified, restated or supplemented from
time to time shall be the MBS Agreement.
4
"NON-PERFORMING" (i) with respect to a Commercial Contract,
has the meaning ascribed to such term in the Original Commercial Agreement and
(ii) with respect to a Residential Contract, has the meaning ascribed to such
term in the Original Residential Agreement.
"OBLIGOR" shall mean each Person who is indebted under a
Contract.
"PERFORMING" shall mean any Contract that is not
Non-Performing as of the date of determination.
"PERSON" shall mean any legal person, including any
individual, corporation, partnership, association, joint-stock company, trust,
limited liability company, unincorporated organization, governmental entity or
other entity of similar nature
"RECORDS" shall mean, with respect to any Contract, all
documents, books, records and other information (including, without limitation,
computer programs, tapes, discs, punch cards and related property and rights)
relating to such Contract.
"RELATED ASSETS" shall mean, with respect to any Contract, (i)
Seller's security interest in the related real and personal property (including
all improvements, fixtures, equipment and articles of personal property located
on such real property and all rents, issues, profits and income derived from the
operation of such real property, and in the case of a Contract relating to a
manufactured home, such manufactured home) and rights, remedies, powers and
privileges under the related mortgage or other security instrument, (ii)
Seller's rights, remedies, powers and privileges under such Contract, including
any personal guaranty thereof, (iii) Seller's rights, remedies, powers and
privileges under the Agreement and the Custodial Agreement and any servicing
agreement, (iv) Seller's rights, remedies, powers and privileges under the
Insurance Policies (as defined in the Custodial Agreement), and (v) all proceeds
of the foregoing.
"REO SUBSIDIARY PLEDGE AGREEMENT" shall mean the REO
Subsidiary Pledge Agreement dated June 16, 1997, as amended as of the
Restatement Date, between Buyer and Seller.
"RESIDENTIAL CONTRACT" shall mean a Contract that was a
Purchased Security under the Original Residential Agreement, and any Contract
that constitutes proceeds of such a Purchased Security.
"RESIDENTIAL EXHIBIT A" shall mean Exhibit A to the Original
Residential Agreement (with all defined terms used therein having the meanings
ascribed thereto in the Original Residential Agreement).
"RESIDENTIAL EXHIBIT B" shall mean Exhibit B to the Original
Residential Agreement (with all defined used therein have the meanings ascribed
thereto in the Original Residential Agreement).
"SECURITIES" shall mean, notwithstanding the definition set
forth in Paragraph 1 of the Repurchase Agreement, Contracts purchased pursuant
to this Agreement.
"SERVICER" shall refer to WSC, WCC or WFC, or their respective
successors.
5
"SERVICING LETTER AGREEMENT" means the letter agreement dated
as of June 16, 1997, as amended as of the Restatement Date, among Buyer and each
Servicer, relating to the servicing of the Contracts and other real property.
"TRANSACTION DOCUMENTS" means this Agreement, the Custodial
Agreement, the Servicing Letter Agreement and any related agreements.
"WCC" shall mean Wilshire Credit Corporation.
"WFSG" shall mean Wilshire Financial Services Group Inc.
"WREI" shall mean, collectively, Wilshire Real Estate
Investment Inc. and its subsidiaries.
"WSC" shall mean Wilshire Servicing Corporation.
7. BACKUP SECURITY INTEREST.
(a) In the event that, for any reason, any
Transaction is construed by any court as a secured loan rather than a purchase
and sale, the parties intend that Seller shall have granted to Buyer a security
interest in all of the Purchased Securities, which security interest is not
subject to any prior security interests created under the Uniform Commercial
Code in the appropriate jurisdiction.
(b) Seller shall pay all fees and expense associated
with perfecting and maintaining such security interest including, without
limitation, the cost of filing financing statements and continuation statements
under the Uniform Commercial Code and the recording of any assignment of
Mortgage in the appropriate jurisdiction as and when required thereunder or
specified by Buyer.
(c) In the event that Buyer elects to engage in
repurchase transactions with the Purchased Securities or otherwise elects to
pledge or hypothecate the Purchased Securities, Seller shall, at the request of
Buyer and at the expense of Seller, do and perform such acts and things
necessary to enable the Custodian to do and perform such further acts and things
and to execute and deliver to Buyer and its counterparty such additional
documents, acknowledgments, powers and instruments as are reasonably required by
Buyer in connection with such transaction and such counterparty, it being
understood and agreed that Seller will retain all servicing rights in respect of
any Purchased Securities so transferred.
8. REPRESENTATIONS; COVENANTS.
(a) Each party represents and warrants, and shall on
and as of the Purchase Date for any Transaction and on and as of each date
thereafter through the related Repurchase Date be deemed to represent and
warrant, as follows:
(i) The execution, delivery and performance of the
Agreement and the performance of each Transaction
do not and will not result in or require the
creation of any lien, security interest or other
charge or en-
6
cumbrance (other than pursuant hereto) upon or
with respect to any of its properties in favor of
any Person other than Buyer; and
(ii) The Agreement is, and each Transaction when
entered into under the Agreement will be, a legal,
valid and binding obligation of it enforceable
against it in accordance with the terms of the
Agreement.
(b) Seller hereby makes, and on and as of the Purchase Date of any
Transaction and on and as of each date thereafter through the related
Repurchase Date shall be deemed to have made, the representations and
warranties to Buyer set forth in (i) as to Transactions for Purchased
Securities which are Commercial Contracts, Commercial Exhibit A and
Commercial Exhibit B and (ii) as to Transactions for Purchased Securities
which are Residential Contracts, Residential Exhibit A and Residential
Exhibit B. The representations and warranties set forth herein shall survive
transfer of the Purchased Securities to the Buyer and shall continue for so
long as the Purchased Securities are subject to this Agreement. In the event
Buyer engages in a repurchase transaction with any of the Purchased
Securities or otherwise pledges or hypothecates any of the Purchased
Securities, Buyer shall have the right to assign to Buyer's counterparty any
representations or warranties in Commercial Exhibit B or Residential Exhibit
B, as the case may be, as they relate to the Purchased Securities that are
subject to such repurchase transaction; PROVIDED, HOWEVER, that Buyer hereby
represents and warrants that so long as this Agreement is in effect, any
repurchase transaction entered into between Buyer and a counterparty with
respect to Contracts which are the subject of a Transaction hereunder shall
not permit such counterparty to assert a breach of an assigned representation
or warranty made by Seller with respect to such Contracts (as set forth in
Commercial Exhibit B or Residential Exhibit B, as the case may be) against
Seller unless Buyer is in default of its obligations under such repurchase
transaction.
(c) Buyer represents and warrants that (i) it is a separate and
independent corporate entity from the custodian named in the Custodial
Agreement; (ii) it does not own a controlling interest in such custodian either
directly or through Affiliates; (iii) and no director or officer of Buyer is
also a director or officer of such custodian.
(d) Seller represents and warrants that (i) it is a separate and
independent corporate entity from the custodian named in the Custodial
Agreement; (ii) it does not own a controlling interest in such custodian either
directly or through Affiliates; (iii) and no director or officer of Seller is
also a director or officer of such custodian.
9. REPURCHASE OF CONTRACTS. Upon discovery by Seller of a breach of any
of the representations and warranties set forth in Commercial Exhibit B or
Residential Exhibit B, as the case may be, Seller shall give prompt written
notice thereof to Buyer. If Seller does not correct or cure such breach on or
before the 15th day following the earlier of discovery of such breach by Seller
or receipt of notice of such breach, then Seller shall repurchase such Contract
on the Repurchase Date next succeeding such 15th day following receipt of such
notice (or, if such 15th day following receipt of such notice occurs on a
Repurchase Date, on such Repurchase Date). The provisions of this Section shall
not be deemed to limit, or affect the time periods provided for in, any other
provision of this Agreement respecting margin maintenance or otherwise.
7
10. REHYPOTHECATION. (a) Paragraph 8 of the Master Repurchase Agreement
is amended by deleting "or pay Income" in the ninth line thereof and deleting
the comma in the tenth line thereof.
(b) Buyer may at its sole election engage in repurchase transactions
with the Purchased Securities or otherwise pledge, hypothecate, assign, transfer
or otherwise convey the Purchased Securities with a counterparty of Buyer's
choice; PROVIDED, HOWEVER, that no such transaction by Buyer shall relieve Buyer
of its obligations to WFC in connection with the repurchase by WFC of any
Purchased Securities in accordance with the terms of this Agreement and the
relevant Confirmation.
11. EVENTS OF DEFAULT. (a) In addition to the Events of Default
described in the Master Repurchase Agreement, the occurrence of any of the
following shall constitute an Event of Default:
(i) Seller shall fail to perform or comply with, or shall admit its
inability to or intention not to perform or comply with, any covenant or
agreement contained in these Supplemental Terms and Conditions.
(ii) Seller shall (x) default or breach its obligations under any
repurchase agreement, reverse repurchase agreement or other agreement with Buyer
or any Affiliate of Buyer or (y) default or breach any of its obligations under
any material agreement with any other person (except WREI).
(iii) A material adverse change (a "Material Adverse Change") shall
have occurred with respect to the financial condition, business, litigation or
operations of Seller or Guarantor.
(iv) Any report by independent accountants of Seller's or Guarantor's
financial condition issued after the Restatement Date shall contain any "going
concern" qualification or limitation.
(v) A Change in Control shall have occurred. For this purpose, a Change
in Control shall have occurred if (x) any person or group (within the meaning of
Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the
Restatement Date) shall own directly or indirectly, beneficially or of record,
shares or other equity interests representing more than 35% of the aggregate
voting power represented by the issued and outstanding partnership or other
equity interests of Seller or Guarantor; (y) a majority of the seats (other than
vacant seats) on the board of directors (or equivalent body) of Seller or
Guarantor shall at any time be occupied by persons who were neither (A)
nominated by the board of directors (or such body) of Seller or Guarantor nor
(B) appointed by directors (or equivalent persons) so nominated; (z) any change
in control (or similar event, however denominated) with respect to Seller or
Guarantor shall occur under and as defined in
8
any indenture, agreement or guaranty in
respect of indebtedness to which Seller or
Guarantor is a party or guarantor.
(vi) The Agreement shall for any reason
cease to create in favor or Buyer a valid
ownership or first priority security
interest in any of the Purchased Securities
purported to be covered thereby, and such
failure is not cured, or the affected
Contracts repurchased, by Seller, within 2
Business Days of the earlier of Seller's
discovery of, or notice to Seller of, such
failure.
(vii) A final judgment by any competent
court in the United States of America for
the payment of money in an amount of at
least $1,000,000 is rendered against Seller
or Guarantor and the same remains
undischarged for a period of 30 days during
which execution of such judgment is not
effectively stayed.
(viii) WFC or Servicer shall fail to observe
or perform any of the covenants or
agreements under any Transaction Document,
which failure, in the reasonable judgment of
Buyer, materially and adversely affects
Buyer.
(ix) WFC shall fail to promptly notify Buyer
of (i) the acceleration of any material debt
obligation of WFC or Guarantor; (ii) the
amount of any revolving or funded credit
facility of WFC or Guarantor of $100 million
or more entered into after the date hereof
with any one new lender; (iii) any material
adverse developments with respect to pending
or future litigation involving WFC or
Guarantor (other than foreclosures conducted
by or on behalf of WFC or Guarantor and
other like ordinary-course-of-business
proceedings); and (iv) any other
developments which materially and adversely
affect the financial condition of WFC.
Notwithstanding any other provision of this Section
11(a) of the Supplemental Terms and Conditions, any
repurchase period or cure period provided herein in
respect of any action to be taken by Seller may be
shortened to two (2) Business Days by Buyer if, in
Buyer's sole good faith discretion, it is
unreasonable to permit such cure period or repurchase
period under the circumstances, taking into
consideration, among other things, the volatility of
the market for the Contracts involved, the extent and
nature of any Event of Default (or events which with
the given of such passage of time would constitute an
Event of Default) and the risks inherent in deferring
the exercise of remedies for the otherwise applicable
repurchase period or cure period.
(b) In addition to the rights of the Buyer pursuant
to Paragraph 11 of the Master Repurchase Agreement,
upon the occurrence of an Event of Default by Seller:
9
(i) All rights of Seller and Servicers to
receive payments on, or otherwise service or
possess Records with respect to, the
Contracts shall cease, and all such rights
shall thereupon become vested in Buyer,
which shall thereupon have the sole right to
receive such payments and apply them to the
aggregate unpaid Repurchase Prices owed by
Seller (subject to the rights of Obligors in
respect of Escrow Payments, as defined in
the Custodial Agreement) and to pay any
excess either (x) to the Seller if in the
Buyer's reasonable judgment the Seller is
legally entitled thereto, (y) to such other
party or Person as is in the Buyer's
reasonable judgment is legally entitled
thereto, or (z) if the Buyer cannot
determine in its reasonable judgment the
Person or party entitled thereto, as
directed by a court of competent
jurisdiction;
(ii) All payments which are received by
Seller and Servicers contrary to the
provisions of the preceding clause (i) shall
be received in trust for the benefit of
Buyer and shall as soon as practicable, but
no more than three (3) Business Days after
receipt, be segregated from other funds of
Seller; and
(iii) The Pricing Rate for each day from and
after the date of such Event of Default
shall be a per annum rate equal to the sum
of (x) the Pricing Rate otherwise applicable
and (y) 2.00%.
(c) Each event specified in Section 11(a) of these
Supplemental Terms and Conditions may, at the option of Buyer, cause an
acceleration of the Repurchase Date for a Transaction and shall be in addition
to any other rights of Buyer to cause such an acceleration under the Agreement.
12. REPURCHASE DATE AND REPURCHASE PRICE. Seller shall pay to Buyer
on each Repurchase Date, to the extent not theretofore paid pursuant to
Paragraph 5 of the Master Repurchase Agreement, (a) the accrued Price
Differential with respect to each Transaction terminating on such Repurchase
Date and (b) the portion of the amount by which the Repurchase Price of each
such Transaction exceeds the Purchase Price of the next corresponding Rollover
Transaction that is attributable to principal paydowns on, and reductions in the
Market Value of, the relevant Purchased Securities during the term of such
Transaction. Payment of amounts shall be made by wire transfer in immediately
available funds in accordance with the intended recipient's written
instructions. With respect to any Contract, notwithstanding the occurrence of a
repossession, foreclosure, deed-in-lieu of foreclosure or other realization on
the underlying property, such Contract shall be deemed outstanding for purposes
of the calculation of the Repurchase Price and the servicing fee, and the
repurchase obligation of Seller under the terms and conditions of the Agreement,
and the payment of the Repurchase Price for such Contract by Seller shall
entitle Seller to receive the non-cash property obtained through such
realization (subject to the other provisions of the Agreement). The obligation
of Seller to pay the Repurchase Price for any Transaction on a Repurchase Date
shall not be lessened or otherwise affected in any way by the fact that
Contracts subject to such Transaction may have ceased to exist by reason of such
realization, and the payment of such Repurchase Price shall with respect to such
Contracts, constitute
10
a repurchase by Seller of all related rights, proceeds and underlying property,
as applicable, in respect of such realization.
13. REPORTING REQUIREMENTS. Seller shall furnish to Buyer:
(a) within 90 days after the end of each fiscal year of
Guarantor, Guarantor's consolidated balance sheet as at the end of such fiscal
year and the related statements of income and cash flows for such fiscal year,
audited by independent certified public accountants of recognized national
standing, together with (i) management's discussion and analysis of yearly
results compared to the prior year and (ii) an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that such
financial statements fairly present the financial condition and results of
operations of Guarantor on a consolidated basis in accordance with generally
accepted accounting principles consistently applied;
(b) within 45 days after the close of each quarterly
accounting period in each fiscal year of Guarantor (other than the last fiscal
quarter of any fiscal year), the consolidated balance sheet of Guarantor as at
the end of such quarterly accounting period and the related consolidated
statements of income and cash flows for such quarterly accounting period,
together with management's discussion and analysis of quarterly results and
year-to-date results compared to the same periods in the prior year, all of
which shall be certified by the chief financial officer of Guarantor, subject to
normal year-end adjustments;
(c) within 45 days after the end of each month (other than
the last month of any quarterly accounting period), the consolidated balance
sheet of Guarantor as at the end of such month and the related consolidated
statement of income for such month, all of which shall be certified by the chief
financial officer of Guarantor, subject to normal year-end adjustments;
(d) within 30 days after the end of each month, loan level
performance data as of the end of such month for any Securities subject to
Transactions hereunder with respect to which Seller, Guarantor, any Servicer or
any successor or Affiliate of any of them is the servicer or master servicer
(collectively, "Wilshire-Serviced Securities"), including delinquency reports,
pool analytic reports and static pool reports (including delinquency,
foreclosure and net charge-off reports), all to the extent obtainable without
unreasonable cost by Seller from the relevant trustee or servicer (it being
recognized by the parties that the reports currently received by Seller or
Buyer, as registered holder of the relevant Securities, do not include all such
information);
(e) promptly following the occurrence thereof, written
notice of any Event of Default, or any event, condition or circumstance which
with the giving of notice and/or passage of time may constitute an Event of
Default, in each case specifying the nature and extent thereof and the
corrective action, if any, taken or proposed to be taken with respect thereto;
(f) promptly following the occurrence thereof, written
notice of the filing or commencement of, or any threat or notice of intention of
any person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any governmental authority, against Seller or
Guarantor that might result in a Material Adverse Change;
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(g) promptly following the occurrence thereof, written
notice of any event, condition or circumstance that has resulted in, or may
reasonably be expected to result in, a Material Adverse Change;
(h) promptly following the occurrence thereof, written
notice of the receipt of any New Capital by any Prepayment Party (as such terms
are defined in Section 16 below); and
(i) promptly, from time to time, such other information
and reports regarding the operations, business affairs and financial condition
of Seller or Guarantor, or compliance with the terms of the Agreement, as Buyer
may reasonably request.
14. ACCESS TO INFORMATION. At any reasonable time, Seller shall
permit Buyer, its agents or attorneys, to inspect and copy any and all documents
and data in their possession pertaining to each Contract that is the subject of
a Transaction. Such inspection shall occur upon the request of Buyer at a
mutually agreeable location during regular business hours and on a date not more
than two (2) Business Days after the date of such request.
15. SELLER'S COVENANT. During any Restricted Period (as defined
below) occurring prior to the date on which Seller shall have paid in full all
of its obligations hereunder, Seller shall not, without the prior written
consent of Buyer, (x) pay any indebtedness outstanding on the Restatement Date
to, or repurchase price under a repurchase agreement outstanding on the
Restatement Date with, a party (other than Buyer) earlier than the scheduled due
or repurchase date thereof or (y) provide security, margin, additional purchased
securities, collateral or other credit support for any such indebtedness or
repurchase price; PROVIDED, HOWEVER that this covenant shall not prohibit (i)
the refinancing or replacement of currently existing indebtedness or repurchase
agreement obligations, or of indebtedness or repurchase agreement obligations
incurred in accordance with immediately following clause (ii), in each case on
terms which are, taken as a whole, at least as favorable to Seller as those
applicable to the indebtedness or repurchase agreement being refinanced or
replaced, but this covenant will apply to the refinancing or replacement
repurchase agreement as if it were outstanding on the Restatement Date, (ii) the
incurrence by Seller of new indebtedness or of obligations under repurchase
agreements, in each case on customary terms, in connection with the acquisition
by Seller of the securities or instruments securing or subject to such
indebtedness or repurchase agreements, (iii) compliance by Seller with ββββ to
market provisions (including providing security, margin, additional purchased
securities, collateral or other credit support as a result of a change in the
value of securities or otherwise) in effect under agreements outstanding on the
Restatement Date or entered into thereafter in accordance with immediately
preceding clauses (i) and (ii), and (iv) repayment by Seller of indebtedness or
of obligations under repurchase agreements to the extent required in connection
with the sale of any securities or instruments securing or subject to such
indebtedness or repurchase agreements. A Restricted Period exists whenever (a)
an Event of Default exists as a result of the failure of Seller to pay a
Repurchase Price or eliminate a Margin Deficit when required under the Agreement
or any other repurchase agreement between Seller and Buyer or an Affiliate of
Buyer or (b) any other Event of Default exists of which Buyer has given notice
to Seller, in each case regardless of whether Buyer has exercised or intends to
exercise any remedies with respect thereto.
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16. MANDATORY PREPAYMENT OF REPURCHASE PRICE. In the event
that, at any time from the Restatement Date through the date on which Seller
shall have paid in full all of its obligations hereunder, any one or more of
Seller, Guarantor or any of their respective subsidiaries (a "Prepayment Party")
receive net proceeds ("New Capital") in an aggregate amount exceeding $50
million from the issuance or other disposition of indebtedness for money
borrowed (excluding indebtedness of the kind described in clauses (i) and (ii)
of the proviso in Section 15 hereof) or equity of any Prepayment Party, in one
or more transactions, Seller shall cause 25% of such excess to be applied
substantially simultaneously with the receipt thereof to pay outstanding
repurchase prices on reverse repurchase agreements (including, without
limitation, the Repurchase Prices under the Transactions) between Seller and
Buyer or Affiliates of Buyer, all in such proportions as may be specified by
Buyer and such Affiliates in their sole discretion. Seller's obligation under
this Section 16 is the same as, and not in addition to, its identical obligation
under any MBS Agreement of the kind referred to in the proviso to the definition
of "MBS Agreement" in Section 6 hereof.
17. MUTUAL RELEASES. (a) As of the Restatement Date, each of
Seller and Guarantor (on its own behalf and on behalf of WCC and WSC) hereby
releases Buyer and all of their former and current officers, directors,
employees, shareholders, agents, representatives, advisors, attorneys,
accountants, parents, subsidiaries, Affiliates and any predecessors and
successors of any of the foregoing (collectively, the "Buyer Releasees") from
any and all claims, actions, cause of action, demands and charges of whatever
nature, known or unknown, including actual, consequential, punitive and other
damages, that either of them has or may have against any of the Buyer Releasees
relating to or arising from the Agreement, the Original Agreements, any
Transaction, any Original Transaction, any Security subject to any Transaction
or Original Transaction, any other repurchase agreement to which Seller is a
party with Buyer or any other Buyer Releasee, and all related documents and
transactions.
(b) As of the Restatement Date, Buyer hereby releases Seller,
Guarantor and all of their former and current officers, directors, employees,
shareholders, agents, representatives, advisors, attorneys, accountants,
parents, subsidiaries, Affiliates and any predecessors and successors of any of
the foregoing (collectively, the "Seller Releasees") from any and all claims,
actions, cause of action, demands and charges of whatever nature, known or
unknown, including actual, consequential, punitive and other damages, that it
has or may have against any of the Seller Releasees relating to or arising from
the Agreement, the Original Agreement, any Transaction, any Original
Transaction, any Security subject to any Transaction or Original Transaction,
any other repurchase agreement to which Buyer is a party with Seller or any
other Seller Releasee, and all related documents and transactions (collectively,
the "Buyer Claims"); PROVIDED, HOWEVER, that this Section 17(b) shall not be
deemed to release WREI or any of its officers, directors, employees,
shareholders, agents, representatives, advisors, attorneys, accountants,
parents, subsidiaries, Affiliates and any predecessors and successors of any of
the foregoing, in each case in their respective capacities as such, from any
Buyer Claims.
18. NOTICES. The text of Paragraph 13 of the Master Repurchase
Agreement is replaced in ------- its entirety with the following:
"Any notice or communication in respect of this Agreement will
be sufficiently given to a party if in writing and delivered
in person, sent by certified
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or registered mail, return receipt requested, or by overnight
courier or given by facsimile transfer at the following
address or facsimile number:
If to Buyer:
ββ βββββββ ββββββ, βββ βββββ
βββ ββββ, βββ ββββ βββββ
Attention: ββββ β. ββββββββ
Facsimile No.: (βββ) βββ-ββββ
with a copy to:
ββ βββββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: ββββββββ ββββββββ, Esq.
Facsimile No.: (βββ) βββ-ββββ
If to Seller:
ββββ β.β. βββββββ ββββββ
ββββββββ, ββββββ βββββ
Attention: ββββ ββββββ
Facsimile No.: (βββ) βββ-ββββ
with a copy to:
Stoel Rives LLP
βββ β.β. βββββ ββββββ
ββββββββ, ββββββ βββββ-ββββ
Attention: ββββ ββββββ
Facsimile No.: (βββ) βββ-ββββ
A notice or communication will be effective:
(i) if delivered by hand or sent by overnight courier, on the
day and time it is delivered;
(ii) if sent by facsimile transfer on a machine providing for
confirmation of receipt, on the day and time it is sent; or
(iii) if sent by certified or registered mail, return receipt
requested, three days after dispatch.
Either party may by like notice to the other change the
address or facsimile number at which notices or communications
are to be given to it."
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19. BINDING ON SUCCESSORS. All of the covenants, stipulations,
promises and agreements in this Annex I shall bind the successors and assigns of
the parties hereto, whether expressed or not.
20 COUNTERPARTS. This Annex I may be executed in any number of
counterparts, each of which shall be an original but such counterparts shall
together constitute but one and the same instrument.
21. FURTHER ASSURANCES. Seller and Buyer shall promptly
provide such further assurances or agreements as Buyer or Seller, as the case
may be, may reasonably request in order to effect the purposes of the Agreement.
22. NON-RELIANCE. Buyer and Seller each represents to the
other that it is entering into this Agreement and will enter into each
Transaction in reliance upon such tax, accounting, regulatory, legal and
financial advice as it deems necessary and not upon any view expressed by the
other.
23. EXPENSES. Seller shall promptly pay, or reimburse Buyer
for the payment of, all reasonable legal, due diligence and other out-of-pocket
costs and expenses incurred by Buyer in connection with the negotiation,
preparation, establishment, enforcement and administration of the Agreement and
the Transactions.
24. RETURN OF PURCHASED SECURITIES. Notwithstanding anything
to the contrary contained in the Collateralization Agreement or Paragraph 12 of
the Master Repurchase Agreement, if (i) no Event of Default shall have occurred
under the Agreement, (ii) no "Event of Default" within the meaning of the
Collateralization Agreement shall have occurred, (iii) the Seller shall have
paid in full all of the Repurchase Prices of all of the Transactions, (iv) no
Margin Deficit (within the meaning of the MBS Agreement) then exists under the
MBS Agreement without regard to any Margin Excess existing under the Agreement,
and (v) no other amounts remain owing by Seller under the Agreement, Buyer shall
return to Seller any Purchased Securities then held by Buyer.
25. SINGLE AGREEMENT. The text of Paragraph 12 of the Master
Repurchase Agreement is replaced in its entirety with the following:
Buyer and Seller hereby acknowledge that they consider all
transactions and agreements between them to constitute a
single business and contractual relationship and to have been
made in consideration of each other and this Agreement.
Therefore, (a) each party hereby agrees to perform all of its
obligations to the other party with respect to all
transactions or agreements between them, that a default in the
performance of any such obligations ("Obligations") shall
constitute an Event of Default hereunder, and that any Event
of Default hereunder shall constitute a default in all such
other transactions and agreements between them, (b) each party
shall have a right of setoff against the other party for
amounts owing hereunder and any other amounts or obligations
owing in respect of any other agreement or transaction
whatsoever, and (c) payments, deliveries and other transfers
made by either party
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hereunder shall be considered to have been made in
consideration of payments, deliveries and other transfers made
by the other party with respect to all other agreements or
transactions between them, and the Obligations to make any
such payments, deliveries, and other transfers may be applied
against each other and netted. As security for the performance
by each party of all of its Obligations, each party hereby
grants to the other a security interest in all securities,
instruments, money, and other property (and all distributions
thereon, proceeds thereof and security entitlements with
respect thereto) transferred by such party to the other
pursuant to this Agreement or otherwise. With respect to
defaulted Obligations which did not arise under this
Agreement, such security interest may be enforced in
accordance with the provisions of applicable law or Paragraph
11(d)(i) hereof (applying such Paragraph as if such defaulted
Obligations were owed hereunder in respect of a Transaction in
which the defaulting party is acting as Seller). Buyer will
advise Seller promptly following the application of any
payments or the exercise of setoff rights under this Paragraph
12.
26. CONSENT TO ASSIGNMENT. In accordance with Paragraph 15(a)
of the Master Repurchase Agreement, Seller hereby consents to the assignment by
CSFB ("Assignor") to Credit Suisse First Boston, Cayman Branch ("Assignee") of
all of Buyer's rights and obligations under the Agreement and under all
Transactions; PROVIDED, HOWEVER, that the foregoing consent shall not be
effective if such assignment would impose new or additional tax liability on
Seller. Upon any such assignment, Assignor shall be relieved of all of its
obligations under the Agreement and such Transactions. Following any such
assignment, (a) any notice or report required to be delivered to Buyer under the
Agreement shall be delivered to Assignor, as agent for Assignee, at the same
address set forth herein, (b) Assignor shall act solely as agent for Assignee,
and Assignor shall have no responsibility or personal liability to Seller or
Assignee arising from any failure of Seller or Assignee to pay or perform any
obligation under the Agreement and (c) each of Seller and Assignee shall proceed
against the other to collect or recover any assets or monies owing to it in
connection with or as a result of any Transaction or otherwise under the
Agreement.
27. JURISDICTION; NO JURY TRIAL. WFC agrees to submit to
personal jurisdiction in the State of New York in any action or proceeding
arising out of the Agreement. Buyer and WFC each hereby waive the right of trial
by jury in any litigation arising hereunder.
28. INDEMNIFICATION; FEES AND DISBURSEMENTS. Seller hereby
agrees to indemnify and hold harmless Buyer from any and all losses, damages,
claims, judgments, costs (including attorney fees and costs) and other expenses
arising from or relating to third party claims or third party claims Buyer
reasonably believes may be asserted relating to (a) any Event of Default and (b)
any error, or inaccuracy or untruthfulness in any representation or warranty
contained in this Agreement (including each Exhibit) and without regard to any
qualification thereof by "best of knowledge", "Seller's knowledge", "material"
or other words of like import; provided, however, that with respect to
representations or warranties qualified by words of such import, the Seller
shall not be liable for breach of contract damages, nor for damages for any
cause of action in tort, nor for any punitive or consequential damages, unless
(in each case) either (i)
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such damages are actually incurred by Buyer, or (ii) such representation or
warranty, as modified by such words of limitation, has been breached. In the
event that either party commences a lawsuit or proceeding against the other in
connection with the Agreement, any and all reasonable attorneys' fees and costs
incurred in connection with the lawsuit or proceeding shall be paid by the
non-prevailing party after all appeals have been exhausted or not pursued.
29. PREPAYMENT. (a) Seller shall have the right to accelerate
any Repurchase Date for any Transaction at any time and prepay any Transaction
prior to the Repurchase Date and thereby terminate the Transaction, without
penalty or premium, subject, however, to payment of Breakage Costs by Seller to
Buyer as provided in subsection (b) below.
(b) Breakage Costs shall be paid by Seller to Buyer at the
time of prepayment and shall be calculated as follows ("Breakage Costs"): the
product of (x) the aggregate Repurchase Price (excluding Price Differential) and
(y) the product of (i) the Breakage Rate and (ii) a fraction, the numerator of
which is the Breakage Period and the denomination of which is 360. "Breakage
Rate" shall mean the applicable Pricing Rate minus the prevailing LIBOR.
"Breakage Period" shall mean the number of days from the date of prepayment to
and including the scheduled Repurchase Date. Notwithstanding anything herein to
the contrary, in the event that the Contracts that are the subject of a prepaid
Transaction are transferred or deposited to a depositor or sponsor of a
securitization underwritten or placed by Buyer, then Seller shall not be
obligated to pay Breakage Costs with respect to such Contracts.
30. EFFECTIVENESS. This Agreement shall become effective, as
of the Restatement Date, upon the satisfaction of all of the following
conditions:
(a) execution and delivery of the Agreement by all of the
parties thereto;
(b) payment by Seller of the amount described in Section
2(a) hereof;
(c) execution and delivery of (x) the Collateralization
Agreement, in form and substance satisfactory to Buyer, by
all of the parties thereto and (y) any UCC-1 financing
statements required by the Collateralization Agreement, in
form and substance satisfactory to Buyer, by Seller;
(d) execution and delivery of the Guaranty Agreement, in
form and substance satisfactory to Buyer, by Guarantor; and
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(e) execution and delivery of amendments to the Custodial
Agreement, the REO Subsidiary Pledge Agreement and the
Servicing Letter Agreement, all as of the Restatement Date
and in form and substance satisfactory to Buyer, by all of
the parties thereto.
WILSHIRE FUNDING CORPORATION CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC
By:____________________________ By:__________________________
Name: Name:
Title: Title:
AGREED AS TO SECTIONS 17(a) AND 24 ONLY:
WILSHIRE FINANCIAL SERVICES GROUP INC.
By:_____________________________
Name:
Title:
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