Exhibit 10.17
Dated as of December 15, 1999
Between:
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED ("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
(EUROPE LIMITED/WFC)
Pursuant to the terms of the Master Repurchase Agreement (the
printed text only, the "Master Repurchase Agreement," and together with this
Annex and the other Annexes and Exhibits thereto, the "Agreement") dated as of
December 15, 1999 (the "Effective Date"), Buyer and Seller agree to be governed
by the Supplemental Terms and Conditions stated herein. Prior to the Effective
Date, Seller had entered into reverse repurchase transactions with Credit Suisse
First Boston (Hong Kong) Limited ("CSFB Hong Kong") pursuant to a Global Master
Repurchase Agreement dated as of November 13, 1996 (together with the Annexes
and Exhibits thereto, the "HK Agreement") between CSFB Hong Kong and Seller. The
transactions under the HK Agreement (the "HK Transactions") that are outstanding
on the Effective Date shall be settled on the Effective Date, and Buyer and
Seller shall contemporaneously enter into 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. 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 Effective Date
covering the Purchased Securities that were then subject to HK 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 Effective Date without any breakage costs
or similar charges) applicable to the HK 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 Effective 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).
(b) The Pricing Rate for all Transactions, subject to
adjustment as set forth in Section 9 below and unless otherwise agreed in
connection with a specific Transaction, shall be a per annum rate equal to LIBOR
(as defined below) plus the following respective per annum rate for Transactions
covering the following types of Purchased Securities:
TYPE OF PURCHASED SECURITIES PER ANNUM RATE
Mortgage-backed Securities Rated "BB" 1.50%
Mortgage-backed Securities Rated "B" 2.00%
Mortgage-backed Securities which are not Rated 2.50%
"Rated" means, with respect to any Purchased Securities,
the lowest rating given to such Purchased Securities by
any one of more of ▇▇▇▇▇'▇ Investors Service, Inc.,
Standard & Poor's Corporation, Duff & ▇▇▇▇▇▇ Credit Rating
Co., Fitch IBCA, Inc. or any successor to any of such
rating agencies.
"LIBOR" means 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 ▇▇▇▇▇ 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.
2. PAYMENTS AND FEES. (a) On November 29, 1999, Seller wired
immediately available funds to Buyer in the amount of $2,000,000, which payment
was applied to the outstanding Repurchase Prices under the HK Agreement.
(b) On the Effective 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.
(c) Buyer has agreed to accept deferred payment of the
$1,645,225.33 Margin Deficit (the "Deferred Amount") outstanding on the
Effective Date, and the Deferred Amount shall be included in the Purchase Price
for the New Transactions as of the Effective Date. Seller shall use all proceeds
(net of any related Repurchase Prices) received after the Effective Date by
Seller or Guarantor from sales of loans and securities subject to the Agreement
and the Whole Loan Agreement (as defined below) and from Guarantor's European
operations to pay the Deferred Amount and, in any event, shall pay at least
$175,000 of the Deferred Amount no later than December 31, 1999, at least
$800,000 (inclusive of all prior payments) of the Deferred Amount no later than
January 31, 2000, at least $1,070,000 (inclusive of all prior payments) of the
Deferred Amount no later than February 29, 2000, at least $1,270,000 (inclusive
of all prior payments) of the Deferred Amount no later than March 31, 2000, and
the entire Deferred Amount no later than April 28, 2000. All payments shall be
effected by wiring immediately available funds to Buyer (unless Buyer has
received the proceeds of the related sale directly). Except as set forth in this
Section 2(c) or Paragraph 11 of the Master Repurchase Agreement, but
notwithstanding the provisions of Paragraph 4(a) of the Master Repurchase
Agreement, Buyer shall not require transfers by Seller to eliminate any Margin
Deficit to the extent that such Margin Deficit is attributable to the Deferred
Amount. Buyer shall release, and shall cause Credit Suisse First Boston Mortgage
Capital LLC to release, any proceeds (net of any related Repurchase Prices) of
loans and securities subject to the Agreement or the Whole Loan Agreement, as
-2-
the case may be, for payment of the Deferred Amount in accordance with this
Section 2(c); PROVIDED, HOWEVER that no such proceeds shall be released if and
to the extent such release would result in, or such proceeds are required to
eliminate, a Margin Deficit (unrelated to the Deferred Amount) under the
Agreement or the Whole Loan Agreement, as the case may be.
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 HK 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 (except that this Section 4(c) shall not affect the obligations of
Seller set forth in Section 2(c) hereof), 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 amended and restated Master Repurchase
Agreement dated as of November 26, 1999 between Seller and Credit Suisse First
Boston Mortgage Capital LLC (as amended, modified, restated or supplemented from
time to time, the "Whole Loan Agreement")) existing at such time under the Whole
Loan Agreement.
5. INCOME PAYMENTS. The text of Paragraph 5 of the Master
Repurchase Agreement is replaced in its entirety with the following:
"(a) 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).
-3-
(b) Each party agrees to be liable to the relevant taxing
authority for the full amount of any Taxes required by
governing law to be deducted or withheld from payments or
distributions of income that the party receives from the
issuer of the Securities ("Income Payments"). All payments
made by one party to the other party in respect of any
Transaction pursuant to this Agreement, including any
Income Payments payable by Buyer to Seller, shall be made
free and clear of, and without any, withholding or
deduction for or on account of any Taxes, unless such
withholding or deduction is required by any applicable
law, as modified by the practice of any relevant
governmental revenue authority. If such withholding or
deduction is so required, then the payor shall (i)
promptly notify the payee of such requirement, (ii) pay to
the relevant authorities the full amount required to be
deducted or withheld promptly upon learning that such
deduction or withholding is required, (iii) promptly
forward to the payee an official receipt (or certified
copy), or other such documentation, evidencing such
payment to such authorities, and (iv) pay to the payee
such additional amounts as are necessary to yield and
remit to the payee an amount which, after deduction of all
Taxes (including any Taxes imposed on the additional
amounts) so withheld or deducted, equals the full amount
that the payee would have received had no such withholding
or deduction been required; provided, however, that in no
event will Seller be entitled to receive any amount in
respect of any Income Payment greater than Seller would
have received had it not entered into the relevant
Transaction. If (i) the payor fails to timely remit the
appropriate amount to the relevant governmental revenue
authority in respect of any amount that the payor is
required to withhold or deduct from any payment to the
payee, and (ii) a liability for such amount is assessed
directly against the payee, then payor shall, in addition
to its liability to pay additional amounts to the payee
pursuant to the preceding sentence, be liable to the payee
for any interest or penalties that are thereby imposed
upon the payee by reason of such failure by the payor.
(c) Each party agrees to complete (accurately and in a
manner reasonably satisfactory to the other party),
execute, arrange for any required certification of, and
deliver to the other party or such government or taxing
authority as the other party directs, any form or document
that may be required or reasonably requested in order to
assist or enable the other party to secure the benefit of
any available exemption or relief from any deduction or
withholding on account of any Tax or, if there is no
available exemption or relief as aforesaid, to secure the
benefit of any reduced rate of deduction or withholding,
in respect of any payment under this Agreement, promptly
upon the earlier of: (i) reasonable demand by the other
party, and (ii) learning that the form or document is so
required. Failure to comply with or perform any tax
covenant provided for hereunder will terminate payor's
obligation to pay any additional amount to the extent such
additional amount would not be required to be paid but for
such failure.
(d)(1) In the event a Tax Event occurs with respect to a
party to this Agreement, at the option of such party
(exercised by written notice to the other
-4-
party, such notice being treated as a demand pursuant to
paragraph 3(c) of this Agreement), the Repurchase Date for
the Transaction with respect to which the Tax Event
occurred shall be immediately deemed to occur and such
Repurchase Date shall be treated as the date of
determination for purposes of calculating the Repurchase
Price.
(d)(2) The occurrence with respect to either party of any
of the following events will constitute a Tax Event for
purposes of this subparagraph:
(A) the party shall be required on the next
succeeding payment date to pay to the other party an
additional amount under subparagraph 5(b) as a result
of a Change in Tax Law;
(B) there is a substantial likelihood that the party
will be required on the next succeeding payment date
to pay to the other party an additional amount under
subparagraph 5(b) and such substantial likelihood
results from an action taken by a taxing authority or
court of competent jurisdiction, on or after the date
on which such Transaction was entered into
(regardless of whether such action was taken or
brought with respect to a party to this Agreement);
or
(C) the party will be required on the next succeeding
payment date to pay to the other party an additional
amount under subparagraph 5(b) as a result of a
consolidation, amalgamation, merger or transfer of
substantially all of the assets of such other party
by such other party.
(e) Each party agrees that it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution
or performance of this Agreement by a jurisdiction in
which it is incorporated, organized, managed and
controlled, or is considered to have its seat, or in which
a branch or office through which it is acting for the
purpose of this Agreement is located (a "Stamp Tax
Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in
respect of the other party's execution or performance of
this Agreement by any such Stamp Tax Jurisdiction which is
not also a Stamp Tax Jurisdiction with respect to the
party. Notwithstanding the foregoing, if a party becomes a
Defaulting Party under this Agreement, then such party
agrees to indemnify the other party for any Stamp Taxes
imposed upon such other party by reason of such other
party's enforcement and protection, as a result of such
other default, of its rights under this Agreement or any
related credit support document.
(f) For purposes of this Paragraph 5:
(1) "Change in Tax Law" means the enactment,
promulgation, execution or ratification of, or any
change in or amendment to, any law (or in the
application or official interpretation of any law)
that occurs on or after the date on which the
relevant Transaction is entered into.
-5-
(2) "Law" includes any treaty, law, rule or
regulation (as modified, in the case of tax matters,
by the practice of any relevant governmental revenue
authority either generally or with respect to a party
to this Agreement) and "Change in Tax Law" shall be
construed accordingly.
(3) "Stamp Tax" means any stamp, registration,
documentation or similar tax.
(4) "Tax" means any present or future tax, levy,
impost, duty, charge, assessment or fee of any nature
that is imposed by any government or other taxing
authority in respect of any payment under this
Agreement."
6. REHYPOTHECATION. 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.
7. 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 Wilshire Real Estate
Investment Inc. or any of its subsidiaries
(collectively, "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 Wilshire Financial Services
Group Inc. ("Guarantor").
(iv) Any report by independent accountants of
Seller's or Guarantor's financial condition issued
after the Effective 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 Effective 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
-6-
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 any indenture, agreement or
guaranty in respect of indebtedness to which Seller
or Guarantor is a party or guarantor.
(b) The parties agree that a nondefaulting party that
exercises or is deemed to exercise its rights to declare an Event of Default
under Paragraph 11(a) of the Master Repurchase Agreement may elect, in lieu
of application of subparagraphs (b) through (e) of Paragraph 11, to exercise
its remedies through application of the following provisions (regardless of
any such election, the provisions of subparagraphs (a) and (f) through (i) of
Paragraph 11 shall remain applicable):
"(b) Upon the nondefaulting party's exercise or deemed
exercise of the option referred to in subparagraph (a) of this
Paragraph (and the deemed occurrence of the Repurchase Date as
provided therein), the performance of the respective
obligations of the parties with respect to Transactions shall
be effected only in accordance with the provisions of
subparagraphs (c) through (i) of this Paragraph.
(c) The value of the Purchased Securities to be transferred
and the aggregate Repurchase Prices to be paid by each party,
and any other amounts owed or owing in connection with
Transactions under this Agreement, shall be established by the
nondefaulting party for all outstanding Transactions as at the
Repurchase Date determined in accordance with subparagraph (a)
of this Paragraph (and for this purpose, the value of
Purchased Securities transferable by the nondefaulting party
shall be the price therefor obtained from a generally
recognized source or the most recent closing bid from such
source, and the value of Purchased Securities transferable by
the defaulting party shall be the price therefor, obtained
from a generally recognized source or the most recent closing
offer quotation from such source, in each case as determined
by the nondefaulting party).
(d) On the basis of the values and other amounts established
in accordance with subparagraph (c) of this Paragraph, an
account shall be taken (as at the Repurchase Date determined
in accordance with subparagraph (a) of this Paragraph) of the
amounts owing by each party to the other under this Agreement
(which amounts shall be equal, in the case of each party's
claims against the other in respect of transfers of
Securities, to the value of such Securities established in
accordance with subparagraph (c) of this Paragraph) and the
amounts owing by one party shall be set off and applied
against the amounts owing by the other, and only the balance
of the account shall become immediately due and payable (by
the party owing the greater amount pursuant to the foregoing).
(e) Unless otherwise provided in Annex I, the parties
acknowledge and agree that (1) the Securities subject to any
Transaction hereunder are instruments
-7-
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 in
good faith establish the source therefor in its sole
discretion and (3) all parties, bids and offers shall be
determined together with accrued Income (except to the extent
contrary to market practice with respect to the relevant
Securities)."
8. 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, Wilshire Credit
Corporation or any successor or affiliate of either 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) stratification reports for the Wilshire-Serviced
Securities, reflecting the loan level information described in immediately
preceding clause (d) in an aggregate format, stratified by delinquency,
charge-off status and other matters covered by the customary reports of such
information, 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
-8-
Seller or Buyer, as registered holder of the relevant Securities, do not include
all such information);
(f) 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;
(g) 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;
(h) 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;
(i) 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 10 below); and
(j) 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.
9. SELLER'S COVENANTS. (a) 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 Effective
Date to, or repurchase price under a repurchase agreement outstanding on the
Effective 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 Effective 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 ▇▇▇▇ 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
Effective 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
-9-
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.
(b) Seller shall use its best efforts to arrange for the
resecuritization, third-party financing, alternative repurchase agreement
placement or other disposition or financing of all Purchased Securities which
are not Wilshire-Serviced Securities as soon as possible. In the event that any
Transactions for such non-Wilshire-Serviced Securities remain outstanding on the
Effective Date, the Pricing Rate applicable to such Transactions shall be
automatically increased by 1.50% per annum commencing on the Effective Date.
(c) Seller shall use its best efforts to arrange for the
resecuritization, third-party financing, alternative repurchase agreement
placement or other disposition or financing of all Purchased Securities which
are Wilshire-Serviced Securities by no later than April 30, 2000 (or as soon
thereafter as possible). In the event that any Transactions for such Securities
remain outstanding (i) after April 30, 2000, the Pricing Rate applicable to such
Transactions shall be automatically increased by 0.50% per annum commencing on
May 1, 2000 and (ii) after June 30, 2000, the Pricing Rate applicable to such
Transactions shall be automatically increased by an additional 0.50% per annum
(an aggregate of 1.00% per annum over the original Pricing Rate specified in
Section 1(b) above) commencing on July 1, 2000.
10. MANDATORY PREPAYMENT OF REPURCHASE PRICE. In the event that,
at any time from the Effective 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 9(a) 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 10 is the same as,
and not in addition to, its identical obligation under Section 16 of Annex I to
the Whole Loan Agreement.
11. MUTUAL RELEASES. (a) As of the Effective Date, each of Seller
and Guarantor hereby releases Buyer, CSFB Hong Kong 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 HK Agreement,
any Transaction, any HK Transaction, any Security subject to any Transaction or
HK Transaction, any other repurchase agreement to
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which Seller is a party with Buyer or any other Buyer Releasee, and all related
documents and transactions.
(b) As of the Effective 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 HK Agreement, any Transaction, any HK Transaction, any
Security subject to any Transaction or HK 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 11(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.
12. 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 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:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Stoel Rives LLP
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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."
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. RETURN OF REPURCHASED SECURITIES. Notwithstanding anything to
the contrary contained in the Collateralization Agreement (as defined below) 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
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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 Whole Loan Agreement) then exists under the Whole Loan 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. The "Collateralization Agreement"
is the letter agreement dated as of the Restatement Date between Seller and
Credit Suisse First Boston Corporation regarding collateral and remedies.
19. STOCKBROKER. The parties acknowledge and agree that Buyer is
a "stockbroker" as defined in Section 101 of the Bankruptcy Code of 1978, as
amended.
20. CREDIT SUISSE FIRST BOSTON CORPORATION, AS AGENT. In the
event that Seller is a U.S. person or entity not registered as a broker-dealer
in the U.S.:
(a) Each Transaction made under the Agreement shall be
confirmed by CREDIT SUISSE FIRST BOSTON CORPORATION as Agent
for Buyer and Seller on Purchase Date by confirmation, in
accordance with Paragraph 3(b) of the Agreement
(b) Notwithstanding anything to the contrary contained in the
Agreement, any Confirmation or any other agreements or
instruments delivered in connection with any Transaction
hereunder:
(i) CREDIT SUISSE FIRST BOSTON CORPORATION, as a
broker-dealer registered with the U.S. Securities and
Exchange Commission ("SEC"), will arrange as Agent for each
of Buyer and Seller, each Transaction to be entered into
pursuant to this Agreement in accordance with Rule 15a-6
promulgated under the Securities Exchange Act of ▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇▇ ▇▇▇"). As Agent, CREDIT SUISSE FIRST BOSTON
CORPORATION will be responsible for (i) effecting and
settling all such Transactions in compliance with said Rule
15a-6, (ii) issuing all required confirmations and
statements to Buyer and Seller in compliance with Rule
15c3-1 under the Exchange Act, (iii) maintaining books and
records relating to such Transactions as required by Rule
17a-3 and 17a-4 under the Exchange Act, and (iv) if
requested by Buyer or Seller, receiving, delivering and
safeguarding such party's funds and securities in connection
with such Transactions in compliance with Rule 15c3-3 under
the Exchange Act.
(ii) CREDIT SUISSE FIRST BOSTON CORPORATION is participating
in each Transaction solely as Agent for Buyer and Seller.
CREDIT SUISSE FIRST BOSTON CORPORATION shall have no
responsibility or personal liability to Buyer and Seller
arising from any failure of Buyer or Seller to pay or
perform any obligation hereunder, including, without
limitation, any obligation to maintain margin. Each of Buyer
and Seller agrees to proceed solely against the other to
collect or recover any securities or monies owing to it in
connection with or as a result of any Transac-
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tion or otherwise hereunder. CREDIT SUISSE FIRST BOSTON
CORPORATION shall otherwise have no liability in respect of
this Agreement or any Transaction, except that CREDIT SUISSE
FIRST BOSTON CORPORATION shall be liable for its gross
negligence or willful misconduct, or its failure to comply
with applicable U.S. securities laws and regulations, in
performing its duties as Agent hereunder.
21. 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 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.
22. CONSENT TO ASSIGNMENT. In accordance with Paragraph 15(a) of
the Master Repurchase Agreement, Seller hereby consents to the assignment by
Buyer to any affiliate of Buyer of Buyer's rights and obligations under the
Agreement and under any or all Transactions; PROVIDED, HOWEVER, that Seller
shall not be deemed to have hereby consented to any assignment to an affiliate
that would result in Seller incurring payment obligations under Paragraphs 5(b)
through (e) of the Master Repurchase Agreement greater in amount than those to
which it was subject immediately prior to the assignment, all determined in
accordance with the Law (as defined in Paragraph 5(f) of the Master Purchase
Agreement) in effect as of the proposed effective
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date of such assignment. Upon consummation of any such assignment, Buyer shall
be relieved of all of its obligations under the Agreement and such Transactions.
23. SUBSTITUTION. Paragraph 9 of the Master Repurchase Agreement
is amended by adding the following new subparagraphs (c) and (d):
"(c) In the case of any Transaction for which the
Repurchase Date is other than the business day immediately
following the Purchase Date and with respect to which
Seller does not have any existing right to substitute
substantially the same Securities for the Purchased
Securities, Seller shall have the right, subject to the
proviso to this sentence, upon notice to Buyer, which
notice shall be given at or prior to 10 AM New York City
time on such business day, to substitute substantially the
same Securities for any Purchased Securities; PROVIDED,
HOWEVER, that Buyer may elect, by the close of business on
the business day notice is received, or by the close of
the next business day if notice is given after 10 AM New
York City time on such day, not to accept such
substitution. In the event such substitution is accepted
by Buyer, such substitution shall be made by Seller's
transfer to Buyer of such other Securities and Buyer's
transfer to Seller of such Purchased Securities, and after
substitution, the substituted Securities shall be deemed
to be Purchased Securities. In the event Buyer elects not
to accept such substitution, Buyer shall offer Seller the
right to terminate the Transaction.
(d) In the event Seller exercises its right to substitute
or terminate under subparagraph (c), Seller shall be
obligated to pay to Buyer, by the close of the business
day of such substitution or termination, as the case may
be, an amount equal to (A) Buyer's actual cost (including
all fees, expenses and commissions) of (i) entering into
replacement transactions; (ii) entering into or
terminating hedge transactions; and/or (iii) terminating
transactions or substituting Securities in like
transactions with third parties in connection with or as a
result of such substitution or termination, AND (B) to the
extent Buyer determines not to --- enter into replacement
transactions, the loss incurred by Buyer directly arising
or resulting from such substitution or termination. The
foregoing amounts shall be solely determined and
calculated by Buyer in good faith."
24. EFFECTIVENESS. This Agreement shall become effective, as of
the Effective Date, upon the satisfaction of all of the following conditions:
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(a) execution and delivery of the Agreement by all of the
parties thereto; and
(b) execution and delivery of a guaranty of the payment
and performance of Seller's obligations under the
Agreement, in form and substance satisfactory to Buyer, by
Guarantor.
CREDIT SUISSE FIRST BOSTON WILSHIRE FUNDING CORPORATION
(EUROPE) LIMITED
By:____________________________ By:_______________________________
Name: Name:
Title: Title:
ACCEPTED AND AGREED TO SOLELY AGREED AS TO SECTION 11(a) ONLY:
IN ITS CAPACITY AS AGENT:
CREDIT SUISSE FIRST BOSTON WILSHIRE FINANCIAL SERVICES
CORPORATION GROUP INC.
By:_____________________________ By:_______________________________
Name: Name:
Title: Title:
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