EXHIBIT 10.10
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AMENDED AND RESTATED
INTERIM WAREHOUSE AND
SECURITY AGREEMENT
BY AND BETWEEN
PRUDENTIAL SECURITIES CREDIT
CORPORATION,
AS LENDER
AND
WMFC 1997-2, INC.,
AS BORROWER
DATED AS OF DECEMBER 19, 1997
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TABLE OF CONTENTS
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Section 1 The Loan.......................................................................... 2
Section 2. Additional Conditions Precedent; Required Characteristics; and Correspondents..... 7
Section 3. Mortgage Files and Custodian...................................................... 8
Section 4. Representations, Warranties and Covenants......................................... 9
Section 5. Mandatory Payment of Loan......................................................... 12
Section 6. Release of Mortgage Files Following Payment....................................... 13
Section 7. Servicing......................................................................... 13
Section 8. Modifications; Successors and Assigns............................................. 13
Section 9. Reports........................................................................... 13
Section 10. Events of Default................................................................. 14
Section 11. Remedies Upon Default............................................................. 15
Section 12. Indemnification................................................................... 17
Section 13. Power of Attorney................................................................. 17
Section 14. Agreement Constitutes Security Agreement.......................................... 17
Section 15. Lender May Act Through Affiliates................................................. 17
Section 16. Notices........................................................................... 17
Section 17. Severability...................................................................... 19
Section 18. Counterparts...................................................................... 19
Section 19. Certain Definitions............................................................... 19
EXHIBITS
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Exhibit A-1 -- Form of First Lien Secured Note
Exhibit A-2 -- Form of Second Lien Secured Note
Exhibit B -- Form of Legal Opinion
Exhibit C -- Form of Credit Increase
Exhibit D -- Form of Notice to Lender
Exhibit E -- Form of Guarantee
Exhibit F -- Mortgage Loan Schedule Information
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AMENDED AND RESTATED
INTERIM WAREHOUSE AND SECURITY AGREEMENT
AMENDED AND RESTATED INTERIM WAREHOUSE AND SECURITY AGREEMENT, dated as of
December 19, 1997 (as amended or otherwise modified from time to time, this
"Agreement") among PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware
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corporation, having an office at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Lender"), and WMFC 1997-2, INC., a Delaware corporation, having its
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principal office at ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrower").
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WHEREAS, the Lender and the Borrower had previously entered into the
Interim Warehouse and Security Agreement, dated as of November 15, 1996, as
amended by (i) the Credit Increase Confirmation and Note Amendment, dated June
30, 1997, (ii) Amendment No. 2 to Interim Warehouse and Security Agreement,
dated September 5, 1997, (iii) Amendment No. 3 to Interim Warehouse and Security
Agreement, dated September 18, 1997 and (iv) the Credit Increase Confirmation
and Note Amendment, dated December 11, 1997 (together, the "Original Warehouse
Agreement"); and
WHEREAS, the Lender and the Borrower desire to amend and restate the
Original Warehouse Agreement; and
WHEREAS, Wilshire Funding Company ("Wilshire Funding"), a Delaware
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corporation and a subsidiary of Wilshire Financial Services Group Inc. ("WFSG"),
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proposes to continue in the mortgage loan origination and acquisition business;
and
WHEREAS, the Lender wishes to lend to the Borrower, a subsidiary of
Wilshire Funding;
WHEREAS, the Lender intends to lend and the Borrower intends to borrow up
to $150,000,000 (One Hundred Fifty Million dollars) to fund the purchase or
origination by Wilshire Funding of certain fixed and adjustable rate, first lien
and second lien, residential mortgage loans; and
WHEREAS, it is intended that the amount loaned to the Borrower to fund the
purchase or origination by Wilshire Funding of fixed and adjustable rate, second
lien, residential mortgage loans shall at no time exceed $30,000,000 (Thirty
Million dollars); and
WHEREAS, the Lender's affiliate, Prudential Securities Incorporated ("PSI")
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may act as the sole or lead manager or co-manager on a mortgage-backed
securities issuance (the "First Lien Securitization") collateralized by First
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Lien Mortgage Loans (as defined below) and on a mortgage-backed securities
issuance (the "Second
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Lien Securitization") collateralized by Second Lien Mortgage Loans (as defined
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below), in each case on the terms and subject to the conditions set forth in
Section 1(e)(ii) below;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto hereby agree as follows:
(An index to the location of the definitions of the defined terms used
herein is set forth in Section 19 hereof).
Section 1. The Loan.
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(a) Subject to the terms of this Agreement:
(i) On and following the date hereof (the "Effective Date"),
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the Lender agrees to lend to the Borrower up to the Available Amount in one
or more advances in respect of either (x) fixed or adjustable rate, first
lien, residential mortgage loans (such borrowing being the "First Lien
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Loan" and any advances made in respect thereof being the "First Lien
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Advances"), and/or (y) fixed or adjustable rate, second lien, residential
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mortgage loans (such borrowing being the "Second Lien Loan" and, together
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with the First Lien Loan, the "Loans", and any advances made in respect of
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the Second Lien Loan being the "Second Lien Advances" and, together with
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the First Lien Advances, the "Advances"); provided, however, that at no
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time shall the aggregate outstanding amount of the Second Lien Loan be
greater than the Second Lien Amount. The Borrower agrees that the First
Lien Loan shall be used to warehouse fixed or adjustable rate, first lien,
residential mortgage loans that are to be included in the First Lien
Securitization (the "First Lien Mortgage Loans"), as such First Lien
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Mortgage Loans are identified to the Lender in writing and in electronic
form from time to time. The Borrower agrees that the Second Lien Loan
shall be used to warehouse fixed or adjustable rate, second lien,
residential mortgage loans that are to be included in the Second Lien
Securitization (the "Second Lien Mortgage Loans" and, together with the
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First Lien Mortgage Loans, the "Mortgage Loans"), as such Second Lien
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Mortgage Loans are identified to the Lender in writing and in electronic
form from time to time. All Mortgage Loans financed hereunder shall be
closed loans; i.e., this facility shall not be used for "wet" or "table"
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fundings. The Lender may refuse to lend against any Mortgage Loans which
the Lender in its sole discretion believes will not be eligible for
inclusion in any securitized pool. "Available Amount" means, at any time,
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$150,000,000 (One Hundred Fifty Million dollars) and "Second Lien Amount"
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means, at any time, $30,000,000 (Thirty Million dollars).
(ii) Each Advance shall be made on or following the Effective
Date and on a date prior to the Maturity Date (each such date, a "Funding
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Date"); provided, that:
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(A) the conditions precedent to the making of Advances set forth
in Section 2 hereof shall have been satisfied, and the representations
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and warranties of the Borrower in Section 4 hereof shall be true and
correct on and as of such Funding Date as if made on and as of such
date;
(B) no Event of Default shall have occurred and be continuing or
would exist after the making of the Advance on such Funding Date;
(C) the Lender shall have received (x) in connection with each
Advance, a certificate from the Custodian to the effect that it has
reviewed the mortgage files relating to the Mortgage Loans being
pledged in connection with the Advance being made on such Funding Date
and has found no material deficiencies in such mortgage files (such
certificate, the "Custodian's Certification"), (y) confirmation that
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the Custodian has been notified that the Lendor is the Registered
Holder with respect to such Mortgage Loans, and (z) prior to the
initial Advance, a legal opinion from counsel (which may be in-house
counsel) to the Borrower in the form of Exhibit B attached hereto;
(D) prior to each Advance, the Lender shall have received the
electronic disk or tape referred to in Section 2(a) and determined
that the specified characteristics of the Mortgage Loans to be pledged
on the related Funding Date are reasonably acceptable to the Lender;
(E) the Borrower shall have delivered or caused to be delivered
to the Custodian all documents required to be delivered pursuant to
Section 2 of the Custodial Agreement with respect to the Mortgage
Loans being pledged on such Funding Date; and
(F) to the extent described in Section 5(c) hereof, no notice
described in said Section 5(c) shall have been received by PSI.
(iii) The Loans shall accrue interest daily (from and including the
Funding Date to and excluding the date of payment) on its outstanding
principal amount, with interest calculated for the actual number of days
elapsed, based on a 365-day year. The interest rate shall be (except as
otherwise provided in Section 1(e) and Section 11(d) hereof) LIBOR plus
1.00% per annum, and shall be reset on each business day. Interest which
accrues during each calendar month shall be payable on the 5th business day
of the following month, with any outstanding interest due and payable in
its entirety on the date of termination (including the Maturity Date) of
the warehouse facility created by this Agreement (this "Warehouse
Facility") .
"LIBOR" shall mean, the London interbank offered rate for one-month
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U.S. dollar deposits, as set forth in the most recently-published edition
of The Wall Street Journal.
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Any amounts pre-paid under this Agreement prior to the Maturity Date
may be re-borrowed, subject to the terms and conditions of this Agreement,
until the Maturity Date.
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(b) The amount of each Advance shall not exceed the lesser of:
(i) 100% of the aggregate outstanding principal balance of
the Mortgage Loans (calculated as of the related Cut-Off Date) proposed to
be pledged to the Lender in connection with such Advance, minus, in the
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event that a Collateral Deficiency Situation exists as of the date of such
Advance, the Restoration Amount as of the related Funding Date; and
(ii) the product of (x) the Market Value of the Mortgage
Loans proposed to be pledged to the Lender in connection with such Advance
and (y) 97%, in the case of First Lien Advances, and 85%, in the case of
Second Lien Advances, minus, in the event that a Collateral Deficiency
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Situation exists as of the related Funding Date, the Restoration Amount as
of such Funding Date.
For purposes of this Agreement:
A Collateral Deficiency Situation shall be deemed to be existing as of
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any day on which (x) the outstanding principal amount of the Loans made in
respect of Mortgage Loans as of such day exceeds (y) the product of (I) the
Market Value of the Pledged Mortgage Loans (disregarding the Market Value
of any Mortgage Loans proposed to be pledged to the Lender on such day) and
(II) the Collateral Percentage, in the case of First Lien Mortgage Loans,
and 86%, in the case of Second Lien Mortgage Loans.
Collateral Percentage means, with respect to First Lien Mortgage
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Loans, 97% for any of the First Lien Mortgage Loans that are less than 31
days delinquent and 91% for any of the First Lien Mortgage Loans that are
more than 30 days delinquent.
Cut-Off Date means, as of any date, the close of business on the date
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set forth in the related Mortgage Loan Schedule (as defined in the
Custodial Agreement). In no event shall the Cut-Off Date precede by more
than two weeks the date on which the related Mortgage Loan Schedule is
delivered.
Market Value means, as of any date and with respect to any Mortgage
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Loan, the whole-loan servicing-retained fair market value of such Mortgage
Loan as of such date as determined by the Lender (or an affiliate thereof)
in its sole discretion and in good faith, together with the aggregate
principal amount of principal payments and prepayments on deposit in the
Collection Account maintained by the Custodian in respect of the Mortgage
Loans.
Maturity Date, means, the earlier of (i) March 31, 1998 and (ii) the
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date on which both the First Lien Securitization and the Second Lien
Securitization have occurred. The Maturity Date may be extended by Lender,
in Lender's sole and unreviewable discretion, on any date by the execution
and delivery of a Credit Increase Confirmation and Note Amendment in the
form of Exhibit C hereto. The Lender will give the Borrower ten (10)
business days prior written notice if it determines not to extend the
Maturity Date or renew this Warehouse Facility.
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Pledged Mortgage Loans means, as of any date of determination, any
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Mortgage Loans then held by the Custodian on behalf of the Lender to secure
the Loans.
Restoration Amount means, as of any date of determination, the amount,
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if any, by which (x) the outstanding principal amount of the Loans as of
such date exceeds (y) the lesser of (i) the product of (I) the Market Value
of the Pledged Mortgage Loans (disregarding the Market Value of any
Mortgage Loans proposed to be pledged to the Lender on such date) and (II)
the Restoration Percentage, in the case of First Lien Mortgage Loans, and
85%, in the case of Second Lien Mortgage Loans, and (ii) the outstanding
principal balance of the Pledged Mortgage Loans (disregarding the
outstanding principal balance of any Mortgage Loans to be pledged to the
Lender on such date);
Restoration Percentage means, with respect to First Lien Mortgage
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Loans, 97% for any of the First Lien Mortgage Loans that are less than 31
days delinquent and 90 % for any of the First Lien Mortgage Loans that are
more than 30 days delinquent.
(c) The Loans evidenced hereby shall mature on the Maturity Date and
all amounts outstanding hereunder shall be due and payable on the Maturity Date.
(d) The Loans are pre-payable at any time without premium or
penalty, in whole or in part, and an equal aggregate principal amount of Pledged
Mortgage Loans may be removed from this Warehouse Facility in connection with
any such prepayment of either Loan in part; provided, that Pledged Mortgage
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Loans removed from this Warehouse Facility in connection with any prepayment of
the Loans in part will not result (based on rating agency criteria or standards)
in the remaining Pledged Mortgage Loans being, in the aggregate, materially
inferior as collateral as compared to the pool of Pledged Mortgage Loans
immediately prior to such removal. In addition, no Pledged Mortgage Loans may be
removed from this Warehouse Facility with the result that a Collateral
Deficiency Situation would then exist. Notwithstanding the foregoing, a Pledged
Mortgage Loan, may in any event be removed from this Warehouse Facility if such
Pledged Mortgage Loan has been paid in full by the mortgagor. If the Borrower
intends to prepay either Loan in whole or in substantial part from a source
other than the proceeds of the First Lien Securitization or the Second Lien
Securitization, the Borrower shall give two business days' written notice to the
Lender.
(e) (i) If the Loans are not extended by means of a Credit
Increase Confirmation and Note Amendment, the Loans shall immediately and
automatically become due and payable without any further action by the Lender on
the then scheduled Maturity Date, and in the event of non-payment in full on
such Maturity Date the Lender may exercise all rights and remedies available to
it as the holder of a first perfected security interest under the Uniform
Commercial Code of the State of New York (the "New York UCC").
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(ii) So long as the Loans are outstanding under this
Agreement, the parties hereby acknowledge and agree that PSI will be
invited to participate in any issuance by the Borrower (or any special
purpose entity created by the Borrower) of mortgage-backed securities which
are collateralized by Mortgage Loans financed under this Warehouse Facility
or by fixed or adjustable rate, first or second lien, residential mortgage
loans which were not financed under this Warehouse Facility in each case on
the following terms and conditions:
(1) in the event that any such mortgage-backed securities
issuance is not collateralized by any Mortgage Loans financed under
this Warehouse Facility, PSI will be invited to participate as a co-
manager in such mortgage-backed securities issuance and its allocation
will be determined by the lead manager (book runner);
(2) in the event that any such mortgage-backed securities
issuance is in part collateralized by Mortgage Loans financed under
this Warehouse Facility but such Mortgage Loans are less than a
majority of all mortgage loans collateralizing such mortgage-backed
securities (based on outstanding principal balances at the cut-off
date for such issuance), PSI will be invited to participate as a co-
manager in such mortgage-backed securities issuance and PSI will be
entitled to receive an allocation of securities being offered by
underwriters (i.e. excluding residual securities) (the "Offered
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Securities"), in a principal amount at least equal to the Specified
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Percentage of the aggregate principal amount of the Offered
Securities; provided, that the price quoted by PSI for such Offered
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Securities (i.e., interest rate and issue price) will be at least
equal to the pricing set by the lead manager; and
(3) in the event that any such mortgage-backed securities
issuance is in part collateralized by Mortgage Loans financed under
this Warehouse Facility and such Mortgage Loans constitute a majority
of all mortgage loans collateralizing such mortgage-backed securities
(based on outstanding principal balances at the cut-off date for such
issuance), PSI will be invited to act as lead manager (and book
runner) in such mortgage-backed securities issuance; provided, that
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PSI will be obligated to provide a minimum allocation of Offered
Securities to any Specified Underwriter in a principal amount at least
equal to the Specified Percentage of the aggregate principal amount of
the Offered Securities; provided, that the price quoted by such
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Specified Underwriter for such Offered Securities (i.e., interest rate
and issue price) will be at least equal to the pricing set by PSI.
For purposes of this agreement, "Specified Percentage" means the percentage
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determined by (i) in the case of PSI when not acting as lead manager,
dividing the aggregate amount of Mortgage Loans financed under this
Warehouse Facility and included in such mortgage-backed issuance by the
aggregate principal amount of all mortgage loans collateralizing such
mortgage-backed securities (based on
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outstanding principal balances at the cut-off date for such issuance) and
(ii) in the case of any Specified Underwriter, dividing the aggregate
principal amount of mortgage loans financed under such Specified
Underwriter's, or one of its affiliate's, warehouse lending facility and
included in such mortgage-backed issuance by the aggregate principal amount
of all mortgage loans collateralizing such mortgage-backed securities
(based on outstanding principal balances at the cut-off date for such
issuance). For purposes of this agreement, "Specified Underwriter" means
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any underwriter designated by the Borrower with respect to which the
Borrower or its parent has a similar warehousing and underwriting
arrangement as the one between the Lender and PSI described in this Section
2(e)(ii).
(iii) In the event that the Borrower does not invite PSI to
participate in any issuance by the Borrower, or any special purpose entity
created by the Borrower, of mortgage-backed securities in the circumstances
set forth in Section 1(e)(ii) above or any Whole Loan Trade, then the
interest rate on the Loans shall increase to LIBOR plus 3.50% per annum,
which higher rate shall respectively be applied as of the related Funding
Date for all prior Advances or Pledged Mortgage Loans so involved. "Whole
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Loan Trade" shall mean any whole loan trade involving the Pledged Mortgage
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Loans, other than a whole loan trade instituted by the Borrower due to the
termination of this Warehouse Facility by the Lender prior to maturity as a
result of an Event of Default (other than an Event of Default under Section
10(a) below).
(f) The First Lien Loan shall be evidenced by the secured promissory
note of the Borrower in the form attached hereto as Exhibit A-1 (the "First Lien
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Secured Note") and the Second Lien Loan shall be evidenced by the secured
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promissory note of the Borrower in the form attached hereto as Exhibit A-2 (the
"Second Lien Secured Note" and, together with the First Lien Secured Note, the
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"Secured Notes").
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(g) In the event that the Loans are extended beyond the then scheduled
Maturity Date by means of a Credit Increase Confirmation and Note Amendment, the
factors set forth in the definitions of "Collateral Deficiency Situation" and
"Restoration Amount" may be revised downward by the Lender in its sole
discretion.
(h) The Lender shall not make Advances in amounts less than $250,000
(Two Hundred Fifty Thousand dollars).
Section 2. Additional Conditions Precedent; Required Characteristics;
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and Correspondents. (a)__Not later than two business days prior to the proposed
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Funding Date for an Advance, the Borrower shall deliver to the Lender (i) a
written notice in the form of Exhibit D hereto and (ii) an electronic disk or
tape, in a mutually satisfactory form to be agreed upon detailing certain
specified characteristics of the Mortgage Loans proposed to be pledged in
connection with such Advance (each such schedule, a "Mortgage Loan Schedule").
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Mortgage Loan Schedules containing the information set forth in Exhibit F are
considered to be in satisfactory form.
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(b) It is the Lender's understanding that the Borrower's current business
strategy (the "Program") is to operate as a "conduit" for the securitization of
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first and second lien, conforming and non-performing credit mortgage loans which
the Borrower will purchase from others.
In connection with the Program, the Borrower agrees as follows:
(i) the Borrower shall supply to the Lender and/or its counsel
copies of all purchase agreements ("Purchase Agreements") (or, if such
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agreements have not been finalized, the latest drafts of such agreements),
together with copies of all underwriting guidelines applicable to any
Mortgage Loans proposed to be financed hereunder, not later than the second
business day prior to the proposed Funding Date (it being understood that
if the same agreements and guidelines apply to multiple Funding Dates they
only need to be furnished once);
(ii) the Lender may in its sole, reasonable discretion reject
for financing hereunder any Mortgage Loans based upon the identity of the
entity selling such Mortgage Loans to the Borrower (each such entity, a
"Correspondent"), or, if the originator of such Mortgage Loans is not the
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Correspondent, upon the identity of such originator; provided, that, in
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furtherance of the foregoing, the Borrower and the Lender agree to
communicate with reasonable frequency concerning the Borrower's pipeline
and upcoming trades;
(iii) the Borrower hereby assigns to the Lender, as collateral
security for the Loans, all of the Borrower's right, title and interest in
and to each Purchase Agreement and the Custodial Agreement (collectively,
the "Program Agreements"); and
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(iv) notwithstanding the collateral assignment granted in clause
(iii) above, the Borrower agrees and covenants with the Lender (x) to
enforce diligently the Borrower's rights and remedies set forth in the
Program Agreements and (y) to provide the Lender with prompt written notice
of any default or event which, with the passage of time, will become a
default, by any party to any Program Agreement and of which the Borrower is
aware.
(c) The Borrower shall reimburse the Lender for any of the Lender's
reasonable out-of-pocket costs, including due diligence review costs and
reasonable attorney's fees, incurred by the Lender in determining the
acceptability to the Lender of (x) any Mortgage Loans, (y) any Program Agreement
or (z) the identity of any Correspondent, originator or servicer.
Section 3. Mortgage Files and Custodian . The Borrower shall deliver to
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Bankers Trust Company of California, N.A., as custodian (the "Custodian") on
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behalf of the Lender, the documents and instruments listed in Section 2 of that
certain Custodial Agreement dated as of December 19, 1997 (the "Custodial
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Agreement") among the Borrower, the Lender and the Custodian. Such documents and
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instruments evidencing and relating to the Mortgage Loans, together with any
proceeds thereof, and together with
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the Borrower's right, title and interest in and to the Program Agreements with
respect to Pledged Mortgage Loans are hereinafter referred to as the
"Collateral". The Borrower hereby pledges all of its right, title and interest
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in and to the Collateral to the Lender to secure the repayment of principal of
and interest on the Loans and all other amounts owing by the Borrower to the
Lender hereunder (collectively, the "Secured Obligations").
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Section 4. Representations, Warranties and Covenants . (a) The
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Borrower represents and warrants to the Lender that:
(i) it has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) It or an affiliate, as applicable, is duly licensed as a
"Licensee" or is otherwise qualified in each state in which it or such
affiliate transacts business and is not in default of such state's
applicable laws, rules and regulations. It has the requisite power and
authority and legal right to own and ▇▇▇▇▇ ▇ ▇▇▇▇ on all of its right,
title and interest in and to the Collateral, and to execute and deliver,
engage in the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement, each Program Agreement, and the
Secured Notes.
(iii) At all times after the Custodian has received a Mortgage
Loan from the Borrower and until payment in full of each Loan, the Borrower
will not knowingly and intentionally commit any act in violation of
applicable laws or regulations promulgated with respect thereto.
(iv) Each of the Borrower and WFSG as guarantor (the
"Guarantor") under the guarantee in the form of Exhibit E hereto (the
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"Guarantee") is solvent and is not in default under any mortgage, borrowing
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agreement or other instrument or agreement pertaining to indebtedness for
borrowed money, and the execution, delivery and performance by the Borrower
of this Agreement, the Secured Notes and the Program Agreements do not
conflict with any term or provision of the certificate of formation or
operating agreement of the Borrower or any law, rule, regulation, order,
judgment, writ, injunction or decree applicable to the Borrower of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Borrower and will not result in any violation of any
such mortgage, instrument or agreement.
(v) All financial statements or certificates of the Borrower
or the Guarantor furnished to the Lender are true and complete and do not
omit to disclose any material liabilities or other facts relevant to the
Borrower's or such Guarantor's condition. All such financial statements
have been prepared in accordance with GAAP. No financial statement or
other financial information as of a date later than that supplied to the
Lender, has been furnished by the Borrower or the Guarantor to another
lender of the Borrower or the Guarantor that has not been furnished to the
Lender.
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(vi) Except for those held by its affiliates, no consent,
approval, authorization or order of, registration or filing with, or notice
to any governmental authority or court is required under applicable law in
connection with the execution, delivery and performance by the Borrower of
this Agreement, the Secured Notes and the Program Agreements.
(vii) There is no action, proceeding or investigation pending
with respect to which the Borrower has received service of process or, to
the best of the Borrower's knowledge threatened against it before any
court, administrative agency or other tribunal (A) asserting the invalidity
of this Agreement, the Secured Notes or any Program Agreement, (B) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement, the Secured Notes or any Program Agreement, or (C) which might
materially and adversely affect the validity of the Mortgage Loans or the
performance by it of its obligations under, or the validity or
enforceability of, this Agreement, the Secured Notes or any Program
Agreement.
(viii) There has been no material adverse change in the
business, operations, financial condition, properties or prospects of the
Borrower or the Guarantor since the date set forth in the financial
statements supplied to the Lender.
(ix) This Agreement, the Secured Notes and the Program
Agreements have been (or, in the case of Program Agreements not yet
executed, will be) duly authorized, executed and delivered by the Borrower,
all requisite corporate action having been taken, and each is valid,
binding and enforceable against the Borrower in accordance with its terms
except as such enforcement may be affected by bankruptcy, by other
insolvency laws, or by general principles of equity.
(b) With respect to every Mortgage Loan pledged to the Lender, the
Borrower represents and warrants to the Lender that:
(i) Such Mortgage Loan and all documents listed in Section 2
of the Custodial Agreement are complete and authentic and all signatures
thereon are genuine.
(ii) Such Mortgage Loan arose from a bona fide loan, complying
with all applicable State and Federal laws and regulations, to persons
having legal capacity to contract and is not subject to any defense, set
off or counterclaim.
(iii) Except for payment defaults permitted by clause (viii)
below, no default has occurred in any provisions of such Mortgage Loan.
(iv) To the best of the Borrower's knowledge, any property
subject to any security interest given in connection with such Mortgage
Loan is not subject to any other encumbrances other than in the case of
Second Lien
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Mortgages, the security interest of the party having the first mortgage
lien on such property.
(v) The Borrower pledging such Mortgage Loan hereunder holds
good and indefeasible title to, and is the sole owner of, such Mortgage
Loan subject to no liens, charges, mortgages, participations, encumbrances
or rights of others or other liens released simultaneously with such
pledge.
(vi) Each Mortgage Loan conforms to the description thereof
as set forth on the related Mortgage Loan Schedule delivered to the
Custodian and the Lender.
(vii) All disclosures required by the Real Estate Settlement
Procedures Act, by Regulation X promulgated thereunder and by Regulation Z
of the Board of Governors of the Federal Reserve System promulgated
pursuant to the statute commonly known as the Truth-in-Lending Act and the
Notice of the Right of Rescission required by said statute and regulation
have been properly made and given.
(viii) Such Mortgage Loan is not 31 or more days delinquent
as of the last payment due date for such Mortgage Loan; provided, that in
--------
the aggregate up to 5% of the First Lien Mortgage Loans hereunder may be 31
to 60 days delinquent as of the last payment due date for such First Lien
Mortgage Loans.
(ix) Such Mortgage Loan was originated in accordance with the
underwriting guidelines set forth in the Wilshire Funding Corporation
Seller Guide as of the date of origination and referred to in the Purchase
Agreements.
(x) Each representation and warranty made by the related
Correspondent in the related Purchase Agreement was true and correct as of
its date.
(c) The Borrower covenants with the Lender that during the term of
this facility (i) the Guarantor will continue to maintain, for it and its
affiliates, insurance coverage with respect to employee dishonesty, forgery or
alteration, theft, disappearance and destruction, robbery and safe burglary,
property (other than money and securities) and computer fraud in an amount which
is consistent with industry practice, (ii) the Borrower will establish and
maintain a lock-box account with Bank of America (Oregon) for the benefit of the
Custodian under the Custodial Agreement into which the obligors on the Pledged
Mortgage Loans will be instructed to remit their payments and the Borrower will
remit, or cause to be remitted, from such account no later than the first
business day after the business day on which payments on the Mortgage Loans are
received and identified by the Servicer, all principal payments and such portion
of the interest payments on such Mortgage Loans in an amount sufficient to make
the monthly payments of interest required by Section 1(a)(iii) hereunder, and
(iii) the Borrower and the Guarantor will, at the request of the Lender, employ
a third party contract underwriter
11
to reunderwrite up to 20% of the Mortgage Loans financed under this Warehouse
Agreement during any month; provided, that (x) such third party contract
--------
underwriter shall be acceptable to any credit rating agency or monoline
insurance company, (y) the cost of such third party contract underwriter's
services shall be for the account of the Borrower and shall not exceed $5,000 in
any month, and (z) any such reunderwriting shall be done during regular business
hours with reasonable frequency and in such a manner as to be the least
disruptive as possible to the Borrower and the Guarantor.
Section 5. Mandatory Payment of Loan. (a) Upon discovery by the
--------------------------
Borrower or the Lender of any breach of any of the representations and
warranties listed in Section 4(b) hereof, the party discovering such breach
shall promptly give notice of such discovery to the others.
The Lender has the right to require, in its unreviewable discretion,
the Borrower to repay the Loans in part with respect to any Mortgage Loan (i)
which breaches one or more of the representations and warranties listed in
Section 4(b) hereof or (ii) which is determined by a rating agency or a party
providing credit enhancement to be unacceptable for inclusion in the First Lien
Securitization or the Second Lien Securitization, as the case may be.
(b) If more than 5% of the First Lien Mortgage Loans hereunder are 31
to 60 days delinquent as of the last payment due date for such First Lien
Mortgage Loans, the Lender may require the Borrower to (x) prepay the First Lien
Loan with respect to any such First Lien Mortgage Loans in excess of 5%, or (y)
with the Lender's consent, deliver a qualifying substitute mortgage loan in its
place. The Lender may require the Borrower to (x) prepay the First Lien Loan in
part with respect to any First Lien Mortgage Loan which becomes 61 or more days
delinquent as indicated on any Supplemental Mortgage Loan Schedule delivered
pursuant to Section 9(a) hereof, or (y) with the Lender's consent, deliver a
qualifying substitute mortgage loan in its place. The Lender may require the
Borrower to (x) prepay the Second Lien Loan in part with respect to any Second
Lien Mortgage Loan which becomes 31 or more days delinquent as indicated on any
Supplemental Mortgage Loan Schedule delivered pursuant to Section 9(a) hereof,
or (y) with the Lender's consent, deliver a qualifying substitute mortgage loan
in its place.
(c) If the Borrower awards a securitization or any Whole Loan Trade
involving any Pledged Mortgage Loans to an investment banking house, agent or
underwriter other than as agreed or permitted in Section 1(e)(ii) then (x) the
Lender may demand that the Borrower prepay any portion of the Loans evidenced
hereby relating to the dollar amount of the Mortgage Loans to be included in
such securitization or Whole Loan Trade for payment within five business days of
the demand for prepayment, (y) the Lender may refuse to make further Advances
hereunder if such Advances would relate to Mortgage Loans to be included in such
securitization or Whole Loan Trade in which PSI has not been selected for
participation and (z) the interest rate on the Loan shall increase as set forth
in Section 1(e)(iii) hereof. The Borrower shall give immediate notice, by
facsimile transmission, to the attention of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at the Lender,
and to ▇▇▇▇ ▇▇▇▇▇▇▇ at PSI (fax ▇▇▇-▇▇▇-▇▇▇▇) of any decision to award the lead
manager role or to
12
name any group of managers for any securitization or whole-loan trade involving
any Pledged Mortgage Loans.
(d) If, on any date other than a Funding Date, the Lender determines
that a Collateral Deficiency Situation exists, the Lender shall so notify the
Borrower, and the Borrower, within two business days, shall either (i) pay to
the Lender the Restoration Amount or (ii) deliver to the Custodian on behalf of
the Lender additional Mortgage Loans having an aggregate Market Value at least
equal to the Restoration Amount. The provisions of Section 1(b) shall govern
with regard to a Collateral Deficiency Situation as of a Funding Date.
Section 6. Release of Mortgage Files Following Payment. The Lender
-------------------------------------------
agrees to release its lien hereunder and to cause to be released the documents
described in Section 2 of the Custodial Agreement upon payment in full of the
Loans, or, if a partial payment of the Loans occurs, the liens and documents
relating to the Pledged Mortgage Loans in respect of which such partial
prepayment was made.
Section 7. Servicing. Wilshire Servicing Corporation or another
---------
subsidiary of WFSG shall act as servicer of the Mortgage Loans and shall service
the Mortgage Loans in the same manner and subject to the same standards as set
forth in the Wilshire Funding Corporation Loan Servicing Procedures Manual or
comparable procedures manual of such subsidiary of WFSG.
Section 8. Modifications; Successors and Assigns. No provisions of
-------------------------------------
this Agreement shall be waived or modified except by a writing duly signed by
the authorized agents of the Lender and the Borrower. This Agreement shall be
binding upon the successors and assigns of the parties hereto and the parties
may assign their rights and obligations under this Agreement; provided, that the
--------
Borrower will not be required to deal with a lender other than the Lender.
Section 9. Reports. (a) The Borrower shall provide the Lender
-------
with an electronic disk or tape (each, a "Supplemental Mortgage Loan Schedule")
-----------------------------------
within two business days following any reasonable request made by the Lender or
any affiliate thereof for such a report, but in any event at least once a month
on the 8th business day of such month. Such Supplemental Mortgage Loan Schedule
will contain information concerning all Mortgage Loans then held in the
Warehouse Facility, and shall be in the format as may be agreed upon by the
Borrower and the Lender from time to time.
(b) The Borrower shall furnish to the Lender (x) promptly, copies of
any material and adverse notices (including, without limitation, notices of
defaults, breaches, potential defaults or potential breaches) given to or
received from its other lenders, (y) immediately, notice of the occurrence of
any "Event of Default" hereunder or of any situation which the Borrower, with
the passage of time or notice or both, would become an "Event of Default"
hereunder, and (z) the following:
(i) audited financial statements of WFSG, within 120 days of
its fiscal year end;
13
(ii) unaudited financial statements of WFSG for each of its
first three quarters of each fiscal year, within 45 days after quarter end;
and
(iii) unaudited financial statements of the Borrower for
each quarter, within 45 days after quarter end.
All required financial statements, information and reports shall be
prepared in accordance with U.S. GAAP.
Section 10. Events of Default. Each of the following shall
-----------------
constitute an "Event of Default" hereunder:
(a) Failure of the Borrower to (i) make any payment of interest or
principal or any other sum which has become due, whether by acceleration or
otherwise, under the terms of the Secured Notes and this Agreement, or (ii) pay
or deliver any Restoration Amount following the expiration of the grace period
set forth in Section 5(d).
(b) Any "event of default" by the Borrower or the Guarantor under any
agreement relating to any indebtedness of the Borrower or the Guarantor or any
warehouse and security agreement or any other document evidencing or securing
indebtedness of the Borrower to the Lender or to any affiliate of the Lender or
any other lender which results in the acceleration of such indebtedness in an
amount in excess of $100,000.
(c) Assignment or attempted assignment by the Borrower of this
Agreement or any rights hereunder, without first obtaining the written consent
of the Lender, or the granting by the Borrower of any security interest, lien or
other encumbrance on any Collateral hereunder to any other person other than the
Lender or the holder of a second lien position in respect of such Collateral.
(d) The filing by the Borrower or the Guarantor of a petition for
liquidation, reorganization, arrangement or adjudication as a bankrupt or
similar relief under the bankruptcy, insolvency or similar laws of the United
States or any state or territory thereof or of any foreign jurisdiction; the
failure of the Borrower or the Guarantor to secure dismissal of any such
petition filed against it within forty-five (45) days of receiving notice of
such filing; the making of any general assignment by the Borrower or the
Guarantor for the benefit of creditors; the appointment of a receiver or trustee
for the Borrower or the Guarantor, or for any part of the Borrower's or the
Guarantor's assets; the institution by the Borrower or the Guarantor of any
other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or
of any formal or informal proceeding, for the dissolution or liquidation of,
settlement of claims against, or winding up of the affairs of, the Borrower or
the Guarantor; the institution of any such proceeding against the Borrower or
the Guarantor if the Borrower or the Guarantor shall fail to secure a stay or
dismissal thereof within forty-five (45) days thereafter; the lifting of any
such stay if the Borrower or the Guarantor shall fail to secure a dismissal of
such proceeding within forty-five (45) days of the date such proceeding was
originally instituted; the consent by the Borrower or the Guarantor to any type
of insolvency
14
proceeding against the Borrower or the Guarantor (under the Bankruptcy Code or
otherwise).
(e) Any materially adverse change in the financial condition of the
Borrower or of the Guarantor or the occurrence of any other condition which in
the Lender's sole discretion impairs the Borrower's ability to perform its
obligations under this Agreement or the Borrower's obligations under the Secured
Notes or the Guarantor's obligations under the Guarantee and which condition is
not remedied within ten (10) days after written notice to the Borrower or the
Guarantor thereof or, if the conditions cannot be fully remedied within said ten
(10) days, substantial progress has not been made within said ten (10) days
toward remedy of the condition.
(f) Wilshire Servicing Corporation or another subsidiary of WFSG
ceases to be the servicer of the Mortgage Loans and no replacement servicer
reasonably acceptable to the Lender is found within 30 days of such termination.
(g) A breach by the Borrower of any representation, warranty or
covenant set forth in Section 4, Section 7 or Section 9 hereof or a use by the
Borrower of the proceeds of the Loans for a purpose other than as set forth in
Section 1(a) hereof.
Section 11. Remedies Upon Default. (a) Upon the happening of one
---------------------
or more Events of Default, the Lender may (x) refuse to make further Advances
hereunder and (y) immediately declare the principal of the Secured Notes then
outstanding to be immediately due and payable, together with all interest
thereon and fees and expenses accruing under this Agreement; provided, that upon
the occurrence of the Event of Default referred to in Section 10(d), such
amounts shall immediately and automatically become due and payable without any
further action by any person or entity. Upon such declaration or such automatic
acceleration, the balance then outstanding on the Secured Notes shall become
immediately due and payable without presentation, demand or further notice of
any kind to the Borrower.
(b) Upon the happening of one or more Events of Default, the Lender
shall have the right to obtain physical possession, and to commence an action to
obtain physical possession, of all files of the Borrower relating to the
Collateral and all documents relating to the Collateral which are then or may
thereafter come into the possession of the Borrower or any third party acting
for the Borrower. The Lender shall be entitled to specific performance of all
agreements of the Borrower contained in this Agreement. The Borrower and the
Lender hereby acknowledge that the Lender's right to obtain physical possession
of the Collateral is deemed for all purposes to be equivalent to the rights of
"seizure of property or maintenance or continuation of perfection of an interest
in property" as specified under Bankruptcy Code Sections 362(b) and 546(b)(2).
(c) Upon the happening of one or more Events of Default, the Lender
shall have the right to direct all servicers then servicing any Pledged Mortgage
Loans to remit all collections on the Pledged Mortgage Loans to the Lender, and
if any such payments are received by the Borrower, the Borrower shall not
commingle the amounts received with other funds of the Borrower and shall
promptly pay them over to the
15
Lender. In addition, the Lender shall have the right to dispose of the
Collateral as provided herein, or as provided in the other documents executed in
connection herewith, or in any commercially reasonable manner, or as provided by
law. Subject to the provisions of Section 11(e) hereof, such disposition may be
on either a servicing released or a servicing-retained basis. The Lender shall
be entitled to place the Mortgage Loans which it receives after any default in a
pool for issuance of mortgage-backed securities at the then-prevailing price for
such securities and to sell such securities for such prevailing price in the
open market as a commercially reasonable disposition of Collateral, subject to
the applicable requirements of the NY UCC. The Lender shall also be entitled to
sell any or all of such Mortgage Loans individually for the prevailing price as
a commercially reasonable disposition of Collateral, subject to the applicable
requirements of the NY UCC. The specification in this Section 11(c) of manners
of disposition of collateral as being commercially reasonable shall not preclude
the use of other commercially reasonable methods (as contemplated by the NY UCC)
at the option of the Lender.
(d) Following the occurrence and during the continuance of an Event
of Default (other than an Event of Default under Section 10(a) above), interest
shall accrue on the Loans at a default interest rate of LIBOR plus 2.00% per
annum. Following the occurrence of an Event of Default under Section 10(a)
above, interest shall accrue on the Loans at a default interest rate of LIBOR
plus 5.00% per annum; provided, that such interest rate shall decline to LIBOR
--------
plus 2.50% per annum on the occurrence of a Trade Date as provided in Section
11(e) hereof. Following the occurrence and during the continuance of an Event
of Default, the Borrower or its designee, Wilshire Servicing Corporation or
another subsidiary of WFSG, shall be entitled to receive a servicing fee (the
"Servicing Fee"), payable monthly in arrears on the 5th business day of each
-------------
month, in an amount equal to 0.50% per annum on the outstanding principal
balance of the Pledged Mortgage Loans as of the first day of the month preceding
the month in which such fee is payable, and such servicing fee shall continue to
be payable until the default is cured or the Collateral is disposed of as
provided in Section 11(e). In addition, following the occurrence and during the
continuance of an Event of Default, principal payments received in respect of
Mortgage Loans will be applied to reduce the principal amount of the Loans and
interest payments will be applied in the following order: first, to pay
interest on the Loans, second, to pay the Servicing Fee, and third, to reduce
the principal amount of the Loans.
(e) If the Lender determines to begin marketing the Collateral as
provided in Section 11(c) hereof, the Lender shall immediately give written
notice of such determination to Wilshire Servicing Corporation and WFSG and, at
any time prior to the Lender entering into an agreement to sell all or a portion
of the Collateral with any third party (the "Trade Date"), will allow WFSG (or
----------
any affiliate thereof) to purchase all the Mortgage Loans then subject to this
Agreement at a price equal to the then outstanding principal balance of the
Loans together with accrued interest. The Lender agrees to promptly provide the
Borrower with written evidence of any such agreement with a third party. In the
event that WFSG does not purchase the Mortgage Loans as provided in this Section
11(e), the Lender agrees to act in a commercially reasonable manner in disposing
of such Collateral. The Lender and the Borrower also agree that in the event
that the Mortgage Loans are sold to a third party as provided in this Section
16
11(e) at a price in excess of 105% of the principal balance of such Mortgage
Loans, any amounts payable in excess of 105% of the principal balance of such
Mortgage Loans shall be equally divided between the Borrower and the Lender. On
payment by WFSG (or an affiliate), the Lender shall promptly release any right,
title, interest or other claim in the Mortgage Loans or proceeds thereof.
Section 12. Indemnification. The Borrower agrees to hold the Lender
---------------
harmless from and indemnifies the Lender against all liabilities, losses,
damages, judgments, costs and expenses of any kind which may be imposed on,
incurred by, or asserted against the Lender relating to or arising out of this
Agreement, the Secured Notes, any Program Agreement or any transaction
contemplated hereby or thereby resulting from anything other than the Lender's
gross negligence or willful misconduct. The Borrower also agrees to reimburse
the Lender for all reasonable expenses in connection with the enforcement of
this Agreement, the Secured Notes and any Program Agreement, including without
limitation the reasonable fees and disbursements of counsel. The Borrower's
agreements in this Section 12 shall survive the payment in full of the Secured
Notes and the expiration or termination of this Agreement and the Warehouse
Facility. The Borrower hereby acknowledges that, notwithstanding the fact that
the Secured Notes are secured by the Collateral, the obligations of the Borrower
under the Secured Notes are recourse obligations of the Borrower.
Section 13. Power of Attorney. The Borrower hereby authorizes the
-----------------
Lender, at the Borrower's expense, to file such financing statement or
statements relating to the Collateral without the Borrower's signature thereon
as the Lender at its option may deem appropriate, and appoints the Lender as the
Borrower's attorney-in-fact to execute any such financing statement or
statements in the Borrower's name and to perform all other acts which the Lender
deems appropriate to perfect and continue the security interest granted hereby
and to protect, preserve and realize upon the Collateral, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of the Borrower as its attorney-in-
fact. This Power of Attorney is coupled with an interest and is irrevocable
without the Lender's consent. Notwithstanding the foregoing, the power of
attorney hereby granted may be exercised only during the occurrence and
continuance of any Event of Default hereunder.
Section 14. Agreement Constitutes Security Agreement. This Agreement
----------------------------------------
is intended by the parties hereto to be governed by the laws of the State of New
York, and to constitute a security agreement within the meaning of the NY UCC.
Section 15. Lender May Act Through Affiliates. The lender may, from
---------------------------------
time to time, designate one or more affiliates for the purpose of performing any
action hereunder.
Section 16. Notices. All demands, notices and communications
-------
relating to this Agreement shall be in writing and shall be deemed to have been
duly given when received by the other party or parties at the address shown
below, or such other address as may hereafter be furnished to the other party or
parties by like notice.
17
If to the Borrower:
WMFC 1997-2, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
If to the Guarantor:
Wilshire Financial Services Group Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Stoel ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & Grey
Standard Insurance Center
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇,. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Lender:
Prudential Securities Credit
Corporation
One Seaport Plaza, 27th Floor
Treasury Department
New York, New York 10292
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
18
With copies to:
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Section 17. Severability. Any provision of this Agreement which
------------
is prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 18. Counterparts. This Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
Section 19. Certain Definitions. The following capitalized terms
-------------------
are defined in the corresponding sections specified below:
"Advances" - Section 1(a)(i).
--------
"Agreement" - Introductory Clause.
---------
"Available Amount" - Section 1(a)(i)
----------------
"Borrower" - Introductory Clause.
--------
"Collateral" - Section 3.
----------
"Collateral Deficiency Situation" - Section 1(b)(ii).
-------------------------------
"Collateral Percentage" - Section 1(b)(ii).
---------------------
"Correspondent" - Section 2(b)(ii).
-------------
"Custodian" - Section 3.
---------
"Custodial Agreement" - Section 3.
-------------------
"Custodian's Certification" - Section 1(a)(ii)(C).
-------------------------
"Cut-Off Date" - Section 1(b)(ii).
------------
"Effective Date" - Section 1(a)(i).
--------------
"Event of Default" - Section 10.
----------------
19
"First Lien Advances" - Section 1(a)(i).
-------------------
"First Lien Loan" - Section 1(a)(i).
---------------
"First Lien Mortgage Loan" - Section 1(a)(i).
------------------------
"First Lien Secured Note" - Section 1(f).
-----------------------
"First Lien Securitization" - Recitals.
-------------------------
"Funding Date" - Section 1(a)(ii).
------------
"Guarantee" - Section 4(a)(iv).
---------
"Guarantor" - Section 4(a)(iv).
---------
"Lender" - Introductory Clause.
------
"LIBOR" - Section 1(a)(iii).
-----
"Loans" - Section 1(a)(i).
-----
"Market Value" - Section 1(b)(ii).
------------
"Maturity Date" - Section 1(b)(ii).
-------------
"Mortgage Loan Schedule" - Section 2(a).
----------------------
"Mortgage Loans" - Section 1(a)(i).
--------------
"NY UCC" - Section 1(e)(i).
------
"Offered Securities" - Section 1(e).
------------------
"Original Warehouse Agreement" - Recitals.
----------------------------
"Pledged Mortgage Loans" - Section (1)(b)(ii).
----------------------
"Program" - Section 2(b).
-------
"Program Agreements" - Section 2(b)(iii).
------------------
"PSI" - Recitals.
---
"Purchase Agreements" - Section 2(b)(i).
-------------------
"Restoration Amount" - Section 1(b)(ii).
------------------
"Restoration Percentage" - Section 1(b)(ii).
----------------------
20
"Second Lien Advances" - Section 1(a)(i).
--------------------
"Second Lien Amount" - Section 1(a)(i).
------------------
"Second Lien Loan" - Section 1(a)(i).
----------------
"Second Lien Mortgage Loan" - Section 1(a)(i)
-------------------------
"Second Lien Secured Note" - Section 1(f).
------------------------
"Second Lien Securitization" - Recitals.
--------------------------
"Secured Notes" - Section 1(f).
-------------
"Secured Obligations" - Section 3.
-------------------
"Servicing Fee" - Section 11(d).
-------------
"Specified Percentage" - Section 1(e).
--------------------
"Specified Underwriter" - Section 1(e).
---------------------
"Supplemental Mortgage Loan Schedule" - Section 9.
-----------------------------------
"Trade Date" - Section 11(e).
----------
"Warehouse Facility" - Section 1(a)(iii).
------------------
"WSFG" - Recitals.
----
"Whole Loan Trade" - Section 1(e)(iii).
----------------
"Wilshire Funding" - Recitals.
----------------
21
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
WMFC 1997-2, INC.
By:
------------------------------
Name:
Title:
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By:
------------------------------
Name:
Title:
[Signature Page for Amended and Restated Interim
Warehouse and Security Agreement]
EXHIBIT A-1
-----------
[FORM OF FIRST LIEN SECURED NOTE]
Dated December __, 1997
FOR VALUE RECEIVED, the undersigned, WMFC 1997-2, INC., a corporation
organized under the laws of the State of Delaware, whose address is ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the
order of PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation, whose
address is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Lender"), on or
before the Maturity Date the amount then outstanding in respect of First Lien
Advances (including accrued interest) under that certain Amended and Restated
Interim Warehouse and Security Agreement, dated as of December __, 1997 (the
"Agreement"), between the Lender and the Borrower. Initially, the maximum
principal amount which may be outstanding in respect of Advances is
$[150,000,000]. Capitalized terms used herein and not defined herein shall have
their respective meanings as set forth in the Agreement.
The holder of this Note is authorized to record the date and amount of
each Advance and the date and amount of each repayment of principal thereof on
the schedule to be maintained by the Lender (which schedule may be obtained upon
the Borrower's request), and any such recordation shall constitute prima facie
evidence of the accuracy of the amount so recorded; provided, that the failure
--------
of the holder hereof to make such recordation (or any error in such recordation)
shall not affect the obligations of the Borrower hereunder or under the
Agreement.
MAXIMUM RATE OF INTEREST: It is intended that the rate of interest
------------------------
herein shall never exceed the maximum rate, if any, which may be legally charged
on the Loan evidenced by this Note (the "Maximum Rate"), and if the provisions
for interest contained in this Note would result in a rate higher than the
Maximum Rate, interest shall nevertheless be limited to the Maximum Rate and any
amounts which may be paid toward interest in excess of the Maximum Rate shall be
applied to the reduction of principal, or, at the option of the Lender, returned
to the Borrower.
DUE DATE: If the Loan evidenced hereby is not paid before the
--------
Maturity Date, it shall be due and payable on the Maturity Date.
PLACE OF PAYMENT: All payments hereon shall be made, and all notices
----------------
to the Lender required or authorized hereby shall be given, at the office of the
Lender at the address designated in the heading of this Note, or at such other
place as the Lender may from time to time direct by written notice to the
Borrower.
PAYMENT AND EXPENSES OF COLLECTION: All amounts payable hereunder are
----------------------------------
payable by wire transfer in immediately available funds to the account number
specified by the Lender, in lawful money of the United States. Payments
A-1-1
remitted by the Borrower via wire transfer initiated after 1:00 p.m. New York
City time shall be deemed to be received on the next business day. The Borrower
agrees to pay all costs of collection when incurred, including, without limiting
the generality of the foregoing, reasonable attorneys' fees through appellate
proceedings, and to perform and comply with each of the covenants, conditions,
provisions and agreements contained in every instrument now evidencing or
securing said indebtedness.
SECURITY: This Note is issued pursuant to the Agreement and is
--------
secured by a pledge of the Collateral described therein. Notwithstanding the
pledge of the Collateral, the Borrower hereby acknowledges, admits and agrees
that the Borrower's obligations under this Note are full recourse obligations of
the Borrower to which the Borrower pledges its full faith and credit.
DEFAULTS: Upon the happening of an Event of Default, the Lender shall
--------
have all rights and remedies set forth in the Agreement.
The failure to exercise any of the rights and remedies set forth in
the Agreement shall not constitute a waiver of the right to exercise the same or
any other option at any subsequent time in respect of the same event or any
other event. The acceptance by the Lender of any payment hereunder which is
less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
foregoing rights and remedies at that time or at any subsequent time or nullify
any prior exercise of any such rights and remedies without the express consent
of the Lender, except as and to the extent otherwise provided by law.
WAIVERS: The Borrower waives diligence, presentment, protest and
-------
demand and also notice of protest, demand, dishonor and nonpayment of this Note,
and expressly agrees that this Note, or any payment hereunder, may be extended
from time to time, and consents to the acceptance of further Collateral, the
release of any Collateral for this Note, the release of any party primarily or
secondarily liable hereon, and that it will not be necessary for the Lender, in
order to enforce payment of this Note, to first institute or exhaust the
Lender's remedies against the Borrower or any other party liable hereon or
against any collateral for this Note. None of the foregoing shall affect the
liability of the Borrower. No extension of time for the payment of this Note or
an installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
-------- -------
agreement between them, may affect the liability of the Borrower.
TERMINOLOGY: If more than one party joins in the execution of this
-----------
Note, the covenants and agreements herein contained shall be the joint and
several obligations of each and all of them and of their respective heirs,
executors, administrators, successors and assigns, and relative words herein
shall be read as if written in the plural when appropriate. Any reference
herein to the Lender shall be deemed to include and apply to every subsequent
holder of this Note. Words of masculine or neuter import shall be read as if
written in the neuter or masculine or feminine when appropriate.
A-1-2
AGREEMENT: Reference is made to the Agreement for provisions as to
---------
Advances, rates of interest, mandatory principal repayments, collateral and
acceleration. If there is any conflict between the terms of this Note and the
terms of the Agreement, the terms of the Agreement shall control.
APPLICABLE LAW: This Note shall be governed by and construed in
--------------
accordance with the laws of the State of New York, which the Borrower hereby
expressly elects to apply to this Note. The Borrower agrees that any action or
proceeding brought to enforce or arising out of this Note may be commenced in
the Supreme Court of the State of New York, or in the United States District
Court for the Southern District of New York.
* * * * * * * * * * * * *
A-1-3
IN WITNESS WHEREOF, the Lender has caused the Note to be executed in its
name by its duly authorized representative.
WMFC 1997-2, INC.
By:
----------------------------
Name:
Title:
[First Lien Secured Note Signature Page]
A-1-4
EXHIBIT A-2
-----------
[FORM OF SECOND LIEN SECURED NOTE]
Dated December __, 1997
FOR VALUE RECEIVED, the undersigned, WMFC 1997-2, INC., a corporation
organized under the laws of the State of Delaware, whose address is ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the
order of PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation, whose
address is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Lender"), on or
before the Maturity Date the amount then outstanding in respect of Second Lien
Advances (including accrued interest) under that certain Amended and Restated
Interim Warehouse and Security Agreement, dated as of December __, 1997 (the
"Agreement"), between the Lender and the Borrower. Initially, the maximum
principal amount which may be outstanding in respect of Second Lien Advances is
[$30,000,000]. Capitalized terms used herein and not defined herein shall have
their respective meanings as set forth in the Agreement.
The holder of this Note is authorized to record the date and amount of
each Advance and the date and amount of each repayment of principal thereof on
the schedule to be maintained by the Lender (which schedule may be obtained upon
the Borrower's request), and any such recordation shall constitute prima facie
evidence of the accuracy of the amount so recorded; provided that the failure of
--------
the holder hereof to make such recordation (or any error in such recordation)
shall not affect the obligations of the Borrower hereunder or under the
Agreement.
MAXIMUM RATE OF INTEREST: It is intended that the rate of interest
------------------------
herein shall never exceed the maximum rate, if any, which may be legally charged
on the Loan evidenced by this Note (the "Maximum Rate"), and if the provisions
for interest contained in this Note would result in a rate higher than the
Maximum Rate, interest shall nevertheless be limited to the Maximum Rate and any
amounts which may be paid toward interest in excess of the Maximum Rate shall be
applied to the reduction of principal, or, at the option of the Lender, returned
to the Borrower.
DUE DATE: If the Loan evidenced hereby is not paid before the
--------
Maturity Date, it shall be due and payable on the Maturity Date.
PLACE OF PAYMENT: All payments hereon shall be made, and all notices
----------------
to the Lender required or authorized hereby shall be given, at the office of the
Lender at the address designated in the heading of this Note, or at such other
place as the Lender may from time to time direct by written notice to the
Borrower.
PAYMENT AND EXPENSES OF COLLECTION: All amounts payable hereunder are
----------------------------------
payable by wire transfer in immediately available funds to the account number
specified by the Lender, in lawful money of the United States. Payments
A-2-1
remitted by the Borrower via wire transfer initiated after 1:00 p.m. New York
City time shall be deemed to be received on the next business day. The Borrower
agrees to pay all costs of collection when incurred, including, without limiting
the generality of the foregoing, reasonable attorneys' fees through appellate
proceedings, and to perform and comply with each of the covenants, conditions,
provisions and agreements contained in every instrument now evidencing or
securing said indebtedness.
SECURITY: This Note is issued pursuant to the Agreement and is
--------
secured by a pledge of the Collateral described therein. Notwithstanding the
pledge of the Collateral, the Borrower hereby acknowledges, admits and agrees
that the Borrower's obligations under this Note are full recourse obligations of
the Borrower to which the Borrower pledges its full faith and credit.
DEFAULTS: Upon the happening of an Event of Default, the Lender shall
--------
have all rights and remedies set forth in the Agreement.
The failure to exercise any of the rights and remedies set forth in
the Agreement shall not constitute a waiver of the right to exercise the same or
any other option at any subsequent time in respect of the same event or any
other event. The acceptance by the Lender of any payment hereunder which is
less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
foregoing rights and remedies at that time or at any subsequent time or nullify
any prior exercise of any such rights and remedies without the express consent
of the Lender, except as and to the extent otherwise provided by law.
WAIVERS: The Borrower waives diligence, presentment, protest and
-------
demand and also notice of protest, demand, dishonor and nonpayment of this Note,
and expressly agrees that this Note, or any payment hereunder, may be extended
from time to time, and consents to the acceptance of further Collateral, the
release of any Collateral for this Note, the release of any party primarily or
secondarily liable hereon, and that it will not be necessary for the Lender, in
order to enforce payment of this Note, to first institute or exhaust the
Lender's remedies against the Borrower or any other party liable hereon or
against any collateral for this Note. None of the foregoing shall affect the
liability of the Borrower. No extension of time for the payment of this Note or
an installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
-------- -------
agreement between them, may affect the liability of the Borrower.
TERMINOLOGY: If more than one party joins in the execution of this
-----------
Note, the covenants and agreements herein contained shall be the joint and
several obligations of each and all of them and of their respective heirs,
executors, administrators, successors and assigns, and relative words herein
shall be read as if written in the plural when appropriate. Any reference
herein to the Lender shall be deemed to include and apply to every subsequent
holder of this Note. Words of masculine or neuter import shall be read as if
written in the neuter or masculine or feminine when appropriate.
A-2-2
AGREEMENT: Reference is made to the Agreement for provisions as to
---------
Advances, rates of interest, mandatory principal repayments, collateral and
acceleration. If there is any conflict between the terms of this Note and the
terms of the Agreement, the terms of the Agreement shall control.
APPLICABLE LAW: This Note shall be governed by and construed in
--------------
accordance with the laws of the State of New York, which the Borrower hereby
expressly elects to apply to this Note. The Borrower agrees that any action or
proceeding brought to enforce or arising out of this Note may be commenced in
the Supreme Court of the State of New York, or in the United States District
Court for the Southern District of New York.
* * * * * * * * * * * *
A-2-3
IN WITNESS WHEREOF, the Lender has caused the Note to be executed in
its name by its duly authorized representative.
WMFC 1997-2, INC.
By:
----------------------------
Name:
Title:
[Second Lien Secured Note Signature Page]
A-2-4
EXHIBIT B
---------
[FORM OF LEGAL OPINION]
December __, 1997
Bankers Trust Company of
California, N.A.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Prudential Securities Credit Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Interim Funding Arrangement
---------------------------
Gentlemen:
We have acted as special New York counsel to WMFC 1997-2, Inc., a
Delaware corporation (the "Borrower") and to Wilshire Financial Services Group
Inc., a Delaware corporation (the "Guarantor") in connection with the execution
and delivery of the following documents:
(i) the Amended and Restated Interim Warehouse and Security
Agreement, dated as of December __, 1997 (the "Interim Warehouse
Agreement"), between the Borrower and Prudential Securities Credit
Corporation (the "Lender");
(ii) each of the two Secured Notes executed December __, 1997 (the
"Notes") by the Borrower in favor of the Lender;
(iii) the Custodial Agreement, dated as of December __, 1997 (the
"Custodial Agreement"), among the Borrower, the Lender and Bankers Trust
Company of California, N.A.; and
(iv) the Guarantee, dated December __, 1997 (the "Guarantee"),
executed by the Guarantor in favor of the Lender.
B-1
Capitalized terms used herein, but not defined herein, shall have the
meanings assigned to them in the Interim Warehouse Agreement.
We have examined executed copies of the Interim Warehouse Agreement,
the Notes, the Guarantee and the Custodial Agreement. We have also examined
originals or photostatic or certified copies of all such corporate records of
the Borrower and the Guarantor and such certificates of public officials,
certificates of corporate officers, and other documents as we have deemed
appropriate and necessary as a basis for the opinions hereinafter expressed. In
making our examination and rendering the opinions herein expressed, we have made
the following assumptions: (i) each party to each of the Interim Warehouse
Agreement and the Custodial Agreement (other than the Borrower and the
Guarantor) has the power to enter into and perform all of its obligations
thereunder, (ii) the due authorization, execution and delivery of each of the
Interim Warehouse Agreement and the Custodial Agreement by all parties thereto
(other than the Borrower and the Guarantor), and (iii) the validity and binding
effect on all parties thereto (other than the Borrower and the Guarantor) of
each of the Interim Warehouse Agreement and the Custodial Agreement.
The opinions expressed below with respect to enforceability are
subject to the following additional qualifications:
(a) The effect of insolvency, reorganization, moratorium,
conservatorship, receivership, or other similar laws relating to or
affecting the rights of creditors.
(b) The application of general principles of equity, including, but
not limited to, the right of specific performance (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(c) The unenforceability of provisions to the effect that failure to
exercise or delay in exercising rights or remedies will not operate as a
waiver of any such rights or remedies, or to the effect that provisions
therein may only be waived in writing to the extent that an oral agreement
has been entered into modifying such provisions.
We are licensed to practice law in the State of New York and each
opinion hereinafter set forth is an opinion concerning only the law of the State
of New York and the general corporation law of the State of Delaware. All
opinions expressed herein are based on laws, regulations and policy guidelines
currently enforced and may be affected by future changes in law. Furthermore,
no opinion is expressed herein regarding the applicable state Blue Sky, legal
investment or real estate syndication laws.
Based upon the foregoing, and subject to the last paragraph hereof,
we are of the opinion that:
1. The Interim Warehouse Agreement, the Notes and the Custodial
Agreement each constitutes the valid, legal and binding agreement of the
Borrower, and each is enforceable against the Borrower in accordance with
its terms.
B-2
2. No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required
under federal laws or the laws of the State of New York for the execution,
delivery and performance of the Interim Warehouse Agreement, the Notes, or
the Custodial Agreement as applicable, by the Borrower, except such of
which as have been obtained.
3. The execution, delivery and performance by the Borrower of the
Interim Warehouse Agreement, the Notes and the Custodial Agreement does not
conflict with or result in a breach of, or constitute a default under any
law, rule or regulation of the federal government or of the State of New
York.
4. The execution, delivery and performance of the Interim Warehouse
Agreement, the Notes and the Custodial Agreement by the Borrower will not
result in a default under any mortgage, borrowing agreement, or other
instrument or agreement pertaining to indebtedness for borrowed money to
which the Borrower is a party.
5. The Guarantee constitutes the valid, legal and binding agreement of
the Guarantor, and is enforceable against the Guarantor in accordance with
its terms.
6. No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required
under federal laws or the laws of the State of New York for the execution,
delivery and performance of the Guarantee by the Guarantor, except such of
which as have been obtained.
7. The execution, delivery and performance by the Guarantor of the
Guarantee does not conflict with or result in a breach of, or constitute a
default under any law, rule or regulation of the federal government or of
the State of New York.
8. The execution, delivery and performance of the Guarantee by the
Guarantor will not result in a default under any mortgage, borrowing
agreement, or other instrument or agreement pertaining to indebtedness for
borrowed money to which the Guarantor is a party.
This opinion is furnished is solely for the benefit of the
addressees hereof.
Yours truly,
B-3
EXHIBIT C
---------
[FORM OF CREDIT INCREASE CONFIRMATION AND
NOTE AMENDMENT AND LEGALITY CERTIFICATE]
Dated _______________ __, 199_
Reference is made to (i) the Amended and Restated Interim Warehouse
and Security Agreement, dated as of December __, 1997 (the "Interim Warehouse
Agreement") between Prudential Securities Credit Corporation (the "Lender") and
WMFC 1997-2, Inc. (the "Borrower ") and (ii) each of the two Secured Notes dated
December __, 1997 (the "Notes") from the Borrower to the Lender.
Section 1.
----------
The "Maturity Date" referenced in the Interim Warehouse Agreement and
in the Notes shall be _________________________________.
[Any other changes.]
Section 2.
----------
As amended by Section 1 hereof all provisions of the Interim Warehouse
Agreement and of the Notes are reconfirmed as of the date hereof. The Borrower,
in addition, hereby reconfirms and remakes as of the date hereof each of its
representations, warranties and covenants set forth in the Interim Warehouse
Agreement.
WMFC 1997-2, INC.
By:
--------------------------------
Name:
Title:
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By:
--------------------------------
Name:
Title:
C-1
Approval as to Legality
-----------------------
_____________, special New York counsel to the Borrower, hereby
confirms that (i) we delivered the opinion letter dated December __, 1997
relating to the Interim Warehouse Agreement and the Notes, a copy of which is
attached hereto (the "Opinion Letter"), (ii) we have represented the Borrower in
connection with its execution and delivery of the Credit Increase Confirmation
and Note Amendment (the "Confirmation") to which this Approval as to Legality is
attached, and we hereby confirm as of the date hereof the opinions set forth in
the Opinion Letter to cover both the Confirmation itself as well as the
transactions described on the Confirmation and confirm, as of the date hereof,
and subject to any and all assumptions and qualifications set forth therein, the
opinions set forth in the Opinion Letter.
Yours truly,
--------------------------------
Dated:
------------------
C-2
EXHIBIT D
---------
[FORM OF NOTICE TO LENDER]
[Date]
Prudential Securities
Credit Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Reference is made to the Amended and Restated Interim Warehouse and
Security Agreement, dated as of December __, 1997, between you and us (the
"Agreement"). We hereby request that on ________________, 199_, you make an
Advance (as defined in the Agreement) in the amount of $___________________ in
respect of the mortgage loans identified in the [electronic disk] [tape]
delivered to you together with this notice.
Very truly yours,
WMFC 1997-2, INC.
By:
--------------------------------
Name:
Title:
D-1
EXHIBIT E
---------
[FORM OF GUARANTEE]
Dated December __, 1997
WILSHIRE FINANCIAL SERVICES GROUP INC., a corporation duly organized
and existing under the laws of the State of Delaware (the "Guarantor"), hereby
issues this full recourse Guarantee (this "Guarantee") to PRUDENTIAL SECURITIES
CREDIT CORPORATION (the "Lender"). Unless otherwise indicated, all capitalized
terms herein have the same meaning ascribed to such terms in the Amended and
Restated Interim Warehouse and Security Agreement dated as of December __, 1997
(the "Interim Warehouse Agreement"), by and among the Lender and WMFC 1997-2,
INC., as borrower (the "Borrower").
The Lender has required the execution, delivery and on-going
effectiveness of this Guarantee as a condition to its providing the Warehouse
Facility described in the Interim Warehouse Agreement. The Guarantor indirectly
owns more than 95% of the Borrower, and the Guarantor has determined that the
issuance of this Guarantee is in furtherance of the best interests of the
Borrower and of the Guarantor.
To the extent that funds available in accordance with the Interim
Warehouse Agreement are insufficient to make payments on any of the Secured
Obligations owed by the Borrower to the Lender in connection with the Interim
Warehouse Agreement or the Secured Notes when such payments become due, the
Guarantor hereby unconditionally and irrevocably agrees to pay such amounts to
the Lender upon demand.
The obligations of the Guarantor under this Guarantee shall be a
continuing obligation and a fresh cause of action under this Guarantee shall be
deemed to arise in respect of each payment default by the Borrower under the
Interim Warehouse Agreement. This Guarantee shall remain in full force and
effect until the later of (a) the Maturity Date (subject to extension, if any,
pursuant to the terms of the Interim Warehouse Agreement), (b) the termination
of the Interim Warehouse Agreement and (c) the date on which all Secured
Obligations due and owing by the Borrower to the Lender in connection with the
Interim Warehouse Agreement have been paid in full. The Guarantor's obligations
under this Guarantee shall be reinstated and be continued in full force and
effect if at any time any payment received by the Lender under the Interim
Warehouse Agreement is invalidated, declared to be fraudulent or preferentially
set aside and/or required to be repaid by the Lender. This is a guarantee of
payment and not of collection and is a primary obligation of the Guarantor. The
Lender may enforce this Guarantee against the Guarantor without prior
enforcement of the Secured Obligations against the Borrower.
The Guarantor hereby agrees that its obligations under this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Interim
E-1
Warehouse Agreement; the absence of any action to enforce the same; any waiver
or consent by the Lender concerning any provisions thereof, the rendering of any
judgment against the Borrower or any action to enforce the same; or any other
circumstance that might otherwise constitute a legal or equitable discharge of a
guarantor or a defense of a guarantor. The Guarantor covenants that this
Guarantee will not be discharged except by complete payment of the amounts
payable hereunder. This Guarantee shall continue to be effective if the Borrower
merges or consolidates with or into another entity, loses its separate legal
identity or ceases to exist.
The Guarantor shall be subrogated to all rights of the Lender against
the Borrower in respect of any amounts paid by the Guarantor pursuant to the
provisions of this Guarantee; provided, however, that the Guarantor shall not be
-------- -------
entitled to enforce, or to receive any payments arising out of or based upon
such right of subrogation until all Secured Obligations under the Interim
Warehouse Agreement shall have been paid in full for a period of one year.
The Guarantor hereby waives diligence, presentment, protest, notice of
protest, notice of acceleration, notice of dishonor, filing of claims with a
court in the event of insolvency or bankruptcy of the Borrower, all demands
whatsoever, and any right to require a proceeding first against the Borrower.
The Guarantor makes the following representations and warranties to
the Lender, all of which shall be continuing representations and warranties
until all of the Secured Obligations shall have been paid in full and this
Guarantee shall be terminated:
(a) The Guarantor has been duly organized and is validly existing in
good standing under the laws of the state of Delaware, and is duly
qualified to do business and is in good standing as a foreign corporation
in all jurisdictions where the nature of its properties or business
requires it to be so qualified and where the failure to so qualify could
have a material adverse effect upon the business, operations or conditions
(financial or otherwise) of the Guarantor.
(b) The Guarantor has the corporate power and authority to execute,
deliver and perform its obligations under this Guarantee. The execution,
delivery and performance of this Guarantee (a) have been duly authorized by
all requisite corporate action, (b) do not conflict with or result in a
violation or breach of the Certificate of Incorporation or the By-Laws of
the Guarantor or of any agreement, instrument, indenture, note, statute,
regulation, rule, order, writ, judgment or decree to which the Guarantor is
a party or to which it or its property is subject, and (c) will not give
cause for acceleration of any indebtedness of the Guarantor.
(c) This Guarantee has been duly executed and delivered by the
Guarantor and constitutes a legal and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as
such validity and enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and similar laws
E-2
affecting creditor's rights generally or by the effect of general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
(d) The audited, consolidated balance sheet of the Guarantor and
certain subsidiaries as of September 30, 1997 and the related statements of
income, cash flows and changes in stockholders equity for the period then
ended contained in such financial statements were prepared in accordance
with generally accepted accounting principles consistently applied, and
present fairly the financial condition and results of operations at the
dates and for the periods indicated therein.
(e) There has been no material adverse change in the financial
condition of the Guarantor since September 30, 1997.
(f) No authority from or approval by any court, governmental body,
commission or agency is required in connection with the Guarantor's
execution, delivery and performance of this Guarantee.
This Guarantee shall be governed by, and construed in accordance with,
the laws of the State of New York (without regard to choice of law provisions).
This Guarantee becomes effective concurrent with the effectiveness of
the Interim Warehouse Agreement, according to its terms.
If any one or more provisions contained in this Guarantee should be
invalid, illegal or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained herein shall in no way be
affected or impaired thereby.
* * * * * * * * * * * *
E-3
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
executed in its name by its duly authorized representative.
WILSHIRE FINANCIAL SERVICES GROUP INC.
By:
--------------------------------
Name:
Title:
[Guarantee Signature Page]
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EXHIBIT F
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MORTGAGE LOAN SCHEDULE
The Mortgage Loan Schedule shall include the following items to the
extent applicable:
1. the Servicer's Mortgage Loan identifying number;
2. the Obligors' first and last name(s);
3. the street address of the Mortgaged Property;
4. the state in which the Mortgaged Property is located;
5. the city in which the Mortgaged Property is located;
6. the five digit zip code in which the Mortgaged Property is located;
7. a code indicating whether the Mortgaged Property is occupied as the
owner's primary residence or as a second home or is an investment
property;
8. the original months to maturity;
9. the original principal amount of the Mortgage Loan;
10. the remaining unpaid principal amount of the Mortgage Loan;
11. the Loan-to-Value Ratio at origination of the Mortgage being sold to the
Owner;
12. the Mortgage Interest Rate at origination;
13. the date on which the first Monthly Payment was due on the Mortgage
Loan;
14. the stated maturity date;
15. the paid through date of the Mortgage Loan;
16. the amount of the Monthly Payment;
17. the original closing date of the Mortgage Note (origination date);
18. with respect to each Adjustable Rate Loan, the next Rate Adjustment
Date;
19. with respect to each Adjustable Rate Loan, the period between resets;
20. with respect to each Adjustable Rate Loan, the Gross Margin;
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21. with respect to each Adjustable Rate Loan, a code indicating the
relevant Index;
22. with respect to each Adjustable Rate Loan, the number of days prior to
the Adjustment Date on which the value of the Index is determined, i.e.,
the look-back;
23. with respect to each Adjustable Rate Loan, a code indicating the
rounding factor, if any, applied to the Mortgage Interest Rate, e.g. the
nearest 1/8%, or up to the nearest 1/8%;
24. with respect to each Adjustable Rate Loan, the Maximum Mortgage Interest
Rate under the terms of the Mortgage Note;
25. with respect to each Adjustable Rate Loan, the Minimum Mortgage Interest
Rate under the terms of the Mortgage Note;
26. with respect to each Adjustable Rate Loan, the Periodic Rate Cap (if the
initial periodic cap is different from the subsequent periodic caps,
this field should state the initial periodic cap);
27. a code indicating if the Mortgage Loan is a balloon mortgage;
28. the Appraised Value of the Mortgaged Property at origination;
29. a code indicating if the Mortgage Loan has a prepayment penalty;
30. with respect to each Mortgage Loan that is not a first lien, the
principal balance of the senior lien on the Mortgaged Property at the
time the Mortgage Loan being sold to the Owner is originated;
31. a code indicating the lien position of the Mortgage Loan;
32. a code indicating which, if any, primary mortgage insurance company has
insured the Mortgage Loan; and
33. if the Mortgage Loan is not secured by a first lien, the combined loan-
to-value ratio.
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