EXHIBIT 10.19
DIP LOAN AGREEMENT
This DIP Loan Agreement ("Agreement") is entered into as of March 3,
1999, by and between WILSHIRE REAL ESTATE PARTNERSHIP L.P., a Delaware limited
partnership ("WREP") and WILSHIRE FINANCIAL SERVICES GROUP INC., a Delaware
corporation ("WFSG").
RECITALS
A. WREP and WAC entered into the WAC Interim Loan Agreement, whereby
WREP agreed to make the WAC Interim Loan pursuant to the terms thereof.
B. Contemporaneous with the making of the WAC Interim Loan, WAC and
WFSG entered into the WFSG Interim Loan Agreement, whereby WAC agreed to use the
proceeds of the WAC Interim Loan to make the WFSG Interim Loan pursuant to the
terms thereof.
C. WREP has agreed to make the DIP Loan to WFSG, for the purpose of
repaying the WFSG Interim Loan and for other purposes. The parties wish to set
forth the terms and conditions upon which the DIP Loan will be made and repaid.
D. On March 3, 1999 (the "Petition Date"), WFSG filed a petition under
Chapter 11 of the Bankruptcy Code and currently is operating its business as
Chapter 11 Debtor-in-Possession ("DIP").
E. WFSG currently is unable to obtain the funds it requires to operate
after the Petition Date other than by borrowing from WREP on the terms set forth
in this Agreement. WREP is unwilling to lend to WFSG, except on the terms of
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
of the parties contained herein, WREP and WFSG hereby agree as follows:
ARTICLE I. DEFINITIONS
A. DEFINED TERMS
"AFFILIATE" of any person shall mean any other person which, directly
or indirectly, controls or is controlled by or is under common control with such
person .
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"AGREEMENT" means this Loan Agreement as amended, modified or
supplemented from time to time.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time, including
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"BOARD REGULATION" shall mean any of Regulation D, T, U or X of the
Board, as the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
days on which commercial banks are authorized or required to be closed in
Portland, Oregon.
"CLOSE" OR "CLOSING" means the funding of the DIP Loan.
"CLOSING DATE" means the day which is one Business Day after the
satisfaction or waiver of all the conditions set forth in Section III.C hereof.
"CAPITAL RESEARCH LOAN" means the loan from Capital Research and
Management Company to WREP evidenced by an Amended and Restated Promissory Note
dated as of November 12, 1998. The principal balance of the Capital Research
Loan as of the date of this Agreement is approximately $18,129,000.
"COLLATERAL" means the WAC Stock and the First Bank Stock.
"DEFAULT" means an Event of Default or an event or condition, which
with the giving of notice or the passage of time, or both, would constitute an
Event of Default.
"DIP LOAN" means the loan of up to $10,000,000 by WREP to WFSG pursuant
to the terms of this Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Section VII.A hereof.
"FIRST BANK" means the First Bank of Xxxxxxx Hills, FSB.
"FIRST BANK STOCK" means all of the issued and outstanding capital
stock of First Bank.
"FISCAL YEAR" shall mean the fiscal year of the WFSG for accounting
purposes which ends on December 31 of each year.
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"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" means any domestic or foreign national, state
or local government, any political subdivision thereof, any department agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, the
Comptroller of the Currency, any central bank or any comparable authority.
"GOVERNMENT RULE" means any applicable law, rule, regulation,
ordinance, order, code interpretation, judgment, decree, directive, guidelines,
policy or similar form of decision of any Government Authority.
"INDEBTEDNESS" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such periods as is
commercially reasonable for such person's business, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person and all capitalized lease obligations, (e) all
payment obligations of such person with respect to interest rate or current
protection agreements, (f) all obligations of such person as an account party
under any letter of credit or in respect of bankers' acceptances, (g) all
obligations of any third party secured by property or assets of such person
(regardless of whether or not such person is liable for repayment of such
obligations), and (h) all guarantees of such person.
"IRWINDALE PROPERTY" shall mean that certain parcel of real property
described in EXHIBIT B attached hereto.
"LETTER AGREEMENT" means that certain amended and restated agreement
dated as of January 19, 1999, by and among WREP, WFSG, WAC and WREIT.
"LIEN" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to have such creditor's claim satisfied out of such assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"LOAN DOCUMENTS" means this Agreement, the Note, the Security
Agreement, and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered
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by the WFSG in connection with this Agreement, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect occurring
after the Closing Date on (a) the condition, business, performance, prospects,
operations or properties of WFSG or WAC, (b) WFSG's ability to pay or perform
the Obligations, (c) the rights and remedies of or benefits available to WREP
under the Loan Documents, or (d) WREP's Lien on the Collateral.
"NEW LENDER" shall have the meaning defined in Section VI.A.2 of this
Agreement.
"NEW LOAN" is defined in Section VI.A.2 of this Agreement.
"NEW LOAN DOCUMENTS" " means any agreements, documents and
instruments executed and/or delivered by WREP, WFSG and/or WAC (as the case
may be), in connection with the New Loan, as the same may be amended,
modified, supplemented, extended, renewed, restated or replaced.
"NOTE" means a promissory note executed by WFSG in favor of WREP
evidencing the DIP Loan, substantially in the form attached as EXHIBIT A hereto.
"NOTICE OF NEW LOAN" shall have the meaning defined in Section VI.A.2
of this Agreement.
"OBLIGATIONS" means all of obligations of the WFSG to WREP, under the
Loan Documents, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereby arising.
"PREPACKAGED PLAN" or "PLAN" means the prepackaged plan of
reorganization filed by WFSG on March 3, 1999,
"SECURITY AGREEMENT" means the Security Agreement of even date from
WFSG to WREP with respect to the WAC Stock, substantially in the form of
EXHIBIT E attached hereto, and/or, where the context requires, a similar
security agreement from WAC to WREP with respect to the First Bank Stock.
"SENIOR NOTES" means the corporate debenture issued by WFSG which pay
interest at the rate of 13% per annum with a maturity date of 2004, and the
Series B Notes issued by WFSG which pay interest at the rate of 13% per annum
with a maturity date of 2004.
"SENIOR NOTEHOLDERS" means the holders of the Senior Notes.
"VALENCIA PROPERTY" means that certain parcel of real property
described in EXHIBIT C attached hereto.
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"WAC" means Wilshire Acquisitions Corporation, a Nevada corporation.
"WAC INTERIM LOAN" means the loan in the amount of up to $5,000,000 by
WREP to WAC pursuant to the WAC Interim Loan Agreement.
"WAC INTERIM LOAN AGREEMENT" means that certain loan agreement dated as
of February 1, 1999, by and between WREP and WAC.
"WAC OUTSTANDING BALANCE" means the outstanding principal balance and
all accrued interest on the WAC Interim Loan as of the Closing Date.
"WAC STOCK" means all of the issued and outstanding capital stock of
WAC.
"WFSG INTERIM LOAN" means the loan in the amount of up to $5,000,000 by
WAC to WFSG pursuant to the WFSG Interim Loan Agreement.
"WFSG INTERIM LOAN AGREEMENT" means that certain loan agreement dated
as of February 1, 1999, by and between WAC and WFSG.
"WFSG OUTSTANDING BALANCE" means the outstanding principal balance and
all accrued interest on the WFSG Interim Loan as of the Closing Date.
"WREIT" means Wilshire Real Estate Investment Trust Inc., a Maryland
corporation.
"WREIT/WREP CLAIM" means the claims of WREIT and WREP against WFSG as
of January 14, 1999, which claim was compromised and settled pursuant to
Paragraph A of the Letter Agreement.
"WREIT/WREP CLAIM NOTE" means a promissory note in the amount of
$18,400,000 by WFSG to the order of WREP and/or WREIT substantially in the form
attached as EXHIBIT D hereto.
"WREIT/WREP CLASS" means the class of creditors in the WFSG
reorganization which consists of WREIT and WREP.
ARTICLE II. HEADINGS
Headings in the Loan Documents are for convenience of reference only
and are not part of the substance hereof or thereof.
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ARTICLE III. THE CREDIT
A. THE DIP LOAN
On the terms and subject to the conditions, and relying on the
representations and warranties, contained in this Agreement, WREP agrees to make
the DIP Loan to WFSG.
1. The DIP Loan shall be evidenced by the Note and secured by a
pledge from WAC and WFSG of the Collateral.
2. WREP is hereby granted a security interest in and lien on the
Collateral to secure all of the Obligations. Such postpetition
security interest shall be valid and enforceable as of the
Petition Date and shall have priority over all other security
interests and liens. Except as allowed under Article VI below,
WFSG shall not create or grant an interest or lien senior to
WREP's interest in any of the Collateral without WREP's
consent or Bankruptcy Court order.
3. Subject to the provisions of Section B.5 below, the DIP Loan
shall be disbursed to WFSG, by wire transfer of immediately
available funds, on the Closing Date.
B. REPAYMENT
The DIP Loan shall be repaid as follows:
1. From the Closing Date to February 29, 2000, WFSG shall make monthly
payments, on the last day of each month, of accrued interest only on the
outstanding balance of the DIP Loan, at the rate of twelve percent (12%) per
annum, in arrears. Interest shall be calculated based on the actual number of
days elapsed in a year of 360 days.
2. Commencing on February 29, 2000 and on the last day of each month
thereafter, WFSG shall make equal monthly payments of principal and accrued
interest in an amount that will fully amortize the outstanding principal balance
of the DIP Loan in 48 monthly payments.
3. All outstanding principal of the DIP Loan and accrued interest
thereon shall be paid in full on February 29, 2004.
4. Without limiting any of WREP's other remedies, on and after the
occurrence and during the continuance of any Default or Event of Default, WFSG
shall on demand from time to time pay interest, to the extent permitted by law,
on all Obligations outstanding up to the date of cure or waiver of such Default
or Event of Default at a rate per annum equal to fourteen percent (14%) per
annum in lieu of the 12% interest rate. WFSG shall make each payment hereunder
and under any instrument delivered hereunder not later than 5:00 p.m. (Oregon
time) on the day
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when due in lawful money of the United States (in freely transferable dollars)
to WREP, in immediately available funds, or as otherwise directed.
5. WFSG shall apply the proceeds of the DIP Loan to pay the WFSG
Outstanding Balance in full, and shall direct WAC to apply such proceeds to the
WAC Outstanding Balance. The parties agree that on the Closing Date, (a) WREP
may withhold from disbursement of the DIP Loan an amount equal to the WFSG
Outstanding Balance and such amount shall be deemed to be applied to the WFSG
Outstanding Balance, and (b) if the WFSG Outstanding Balance is less than the
WAC Outstanding Balance, WFSG may withhold the difference from disbursement of
the DIP Loan.
6. Payments under this Section B shall be applied first to accrued
interest through the date of payment, then to principal. If the date specified
for a payment is not a Business Day, then payment shall be due on the next
Business Day. WFSG may prepay the DIP Loan, in whole or in part, at any time
without penalty or prepayment premium.
C. CONDITIONS OF DIP LOAN
The obligation of WREP to disburse the DIP Loan is subject to the
satisfaction of all of the following conditions on or prior to the Closing Date.
WREP shall have the sole discretion to waive, in whole or in part, satisfaction
of any of the conditions:
1. CONDITIONS PRECEDENT.
(a) CAPITAL RESEARCH RESTRUCTURING. WREP has restructured
the Capital Research Loan to provide for terms no
less favorable to WREP than the following: (i)
interest at 16% per annum, payable monthly, (ii)
principal due two years from restructuring, (iii)
secured by a lien in WREP's equity in any of WREP's
real property other than the Irwindale Property and
the Valencia Property, and (iv) prepayable at any
time in whole or in part without any penalty, and
such other commercially reasonable terms for a loan
of its type.
(b) MOTION. WFSG has filed a motion for authorization to
incur postpetition debt pursuant to this Agreement,
with terms and in a form acceptable to WREP, (the
"Motion") and given proper notice of the Motion in
accordance with Federal Rule of Bankruptcy Procedure
40001(d).
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(i) PROPOSAL OF PREPACKAGED PLAN. WFSG has not
materially revised the Prepackaged Plan.
(c) COURT ORDER. After Final Hearing of the Motion , the
Bankruptcy Court having jurisdiction over WFSG's
Chapter 11 case has entered a final order:
(i) authorizing and approving the DIP Loan on
the terms of this Agreement and the other
Loan Documents;
(ii) granting super-priority and administrative
claim status to WREP's claims under the DIP
Loan pursuant to 11 USC Section 507(b) and
503(b);
(iii) authorizing and approving, pursuant to 11
USC Section 364(c)(2), WFSG's grant to WREP
of a first-priority security interest in the
Collateral in accordance with the Security
Agreement and Article III. A. (2) hereof,
which security interest shall be deemed
perfected without filing or any other act to
effect perfection; and
(ii) finding that in making the DIP loan, WREP is
acting in good faith within the meaning of
11 USC Section 364(e);
which Order has not been stayed pending appeal (the
"Final Order").
(d) ABSENCE OF MATERIAL CHANGES. From the date of the
execution of the loan documents relating to the WFSG
Interim Loan, there has been no change that has
caused a Material Adverse Effect in the business,
assets or results of operations of: (i) WFSG and its
subsidiaries taken as a whole, (ii) WAC, or (iii)
First Bank.
(e) FINANCING. WREP has arranged for financing, on terms
satisfactory to WREP, to obtain funds sufficient to
allow WREP to make the DIP Loan.
(f) WREIT/WREP CLAIM NOTE. The WREIT/WREP Claim Note has
been executed and delivered.
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2. DOCUMENTATION.
WREP has received each of the following duly executed:
a) This Agreement.
b) The Note.
c) The Security Agreement from WFSG and the Security
Agreement from WAC pledging the Collateral to secure
the Obligations.
d) A good standing certificate for WFSG.
e) Certificate of incumbency from WFSG.
f) A good standing certificate for WAC.
g) Certificate of incumbency from WAC.
h) The WREIT/WREP Claim Note.
3. COLLATERAL.
a) WFSG has delivered to WREP (as collateral under the
Security Agreement) original certificates for the WAC
Stock, together with stock powers executed in blank
by WFSG.
b) WAC has delivered to WREP (as collateral under the
Security Agreement) original certificates for the
First Bank Stock, together with stock powers executed
in blank by WAC.
4. REPRESENTATIONS AND WARRANTIES. All representations and warranties
by WFSG and WAC are true and correct in all material respects, and no Default or
Event of Default has occurred and is continuing.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF WFSG
WFSG hereby makes the following representations and warranties to WREP,
which representations and warranties shall survive the Closing and shall survive
the full and final payment and satisfaction and discharge of all Obligations.
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1. LEGAL STATUS
WFSG is a corporation, duly organized and existing and in good standing
under the laws of the State of Delaware, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a Material
Adverse Effect.
2. AUTHORIZATION AND VALIDITY
Upon authorization by the Bankruptcy Court, WFSG has full power and
legal capacity to execute, deliver, and perform the terms and provisions of this
Agreement and all of the documents and instruments that it is required to
execute, deliver, and perform by the terms of this Agreement. The Loan Documents
have been authorized by WFSG's signature thereto and the performance by it of
its obligations under the Loan Documents constitutes a proper corporate purpose
under all applicable law. Upon their execution and delivery in accordance with
the provisions hereof, the Loan Documents will constitute legal, valid and
binding agreements and obligations of WFSG enforceable against it in accordance
with their respective terms.
3. NO VIOLATION
The execution, delivery and performance by WFSG of each of the Loan
Documents do not violate or contravene any provision of its Articles of
Incorporation or By-Laws, do not violate any Government Rule or result in a
breach of or constitute a default under any contract, obligation, indenture or
other instrument to which it or any subsidiary of it is a party or by which it
may be bound, and do not result in the creation or imposition of any Lien upon
any property or assets of the WFSG.
4. ACCURACY OF REPRESENTATIONS IN SECURITY AGREEMENT
All representations and warranties of WFSG contained in the Security
Agreement are true and correct in all material respects.
5. FEDERAL RESERVE REGULATIONS
WFSG is not engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No part of the proceeds of the DIP Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock (except payment on margin calls for
currently held mortgage-backed securities) or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of, or
which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation T, U or X thereof.
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6. USE OF PROCEEDS
The first proceeds of the DIP Loan shall be used by WFSG to pay off in
full the WFSG Outstanding Balance. The balance of the proceeds of the DIP Loan
shall be used by WFSG in the ordinary course of business or for such purposes
outside the ordinary course of business as are consented to by WREP and approved
by the order of the Bankruptcy Court.
7. NO MATERIAL MISSTATEMENTS
No information, report, financial statement, exhibit or schedule
prepared or furnished by or on behalf of WFSG to WREP in connection with any
Loan Document or the transactions contemplated thereby or included therein, if
any, contained or contains any material misstatement of fact or omitted or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
8. SECURITY INTEREST
WFSG is the record and beneficial owner and holder of the WAC Stock,
free and clear of all encumbrances. The stock certificates of the WAC Stock are
free of any legends or other reference to any purported encumbrance or
restrictions, and they represent all of the outstanding shares issued by WAC.
The Security Agreement creates and grants to the WREP a valid and perfected
first priority security interest in the collateral identified therein. Such
collateral or property is not subject to any other Liens.
9. TAXES
WFSG has filed or caused to be filed all federal, state, local and
foreign tax returns which are required to be filed by it, on or prior to the
Closing Date, other than tax returns in respect of taxes that (x) are not
franchise, capital or income taxes, (y) in the aggregate are not material and
(z) would not, if unpaid, result in the imposition of any material Lien on any
property or assets of the WFSG. WFSG has paid or caused to be paid all taxes
shown to be due and payable on such filed returns or on any assessments received
by them, other than any taxes or assessments the validity of which WFSG is
contesting in good faith by appropriate proceedings, and with respect to which
WFSG shall, to the extent required by GAAP have set aside on its books adequate
reserves, and taxes other than income, capital or franchise taxes that in the
aggregate are not material and which would not, if unpaid, result in the
imposition of any material Lien on any property or assets of WFSG.
B. REPRESENTATIONS AND WARRANTIES OF WAC
WAC hereby makes the following representations and warranties to WREP,
which representations and warranties shall survive the Closing and shall survive
the full and final payment and satisfaction and discharge of all Obligations.
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1. LEGAL STATUS
WAC is a corporation, duly organized and existing and in good standing
under the laws of the State of Nevada, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a Material
Adverse Effect.
2. CAPITALIZATION
The authorized equity securities of WAC consist of (a) fifty million
shares of common stock, par value one cent per share, of which 23,595.4649
shares are issued and outstanding, and (b) two hundred million shares of
preferred stock, par value one cent per share (of which one hundred million
shares are designated Series A Preferred), none of which are issued or
outstanding. All such equity securities shall together constitute the WAC Stock.
3. AUTHORIZATION AND VALIDITY
The Loan Documents to which WAC is a party, upon their execution and
delivery in accordance with the provisions hereof, will constitute legal, valid
and binding agreements and obligations of WAC, enforceable against it in
accordance with their respective terms, subject to bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights and general
principles of equity.
4. NO VIOLATION
The execution, delivery and performance by WAC of each of the Loan
Documents to which it is a party do not violate or contravene any provision of
its Articles of Incorporation or By-Laws, do not violate any Government Rule or
result in a breach of or constitute a default under any contract, obligation,
indenture or other instrument to which it or any subsidiary of it is a party or
by which it may be bound, and do not result in the creation or imposition of any
Lien upon any property or assets of WAC.
5. USE OF PROCEEDS
On the Closing Date, WAC shall use the funds it receives from WFSG in
payment for the WFSG Outstanding Balance, and other funds if necessary, to pay
in full the WAC Outstanding Balance.
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6. SECURITY INTEREST
WAC is the record and beneficial owner and holder of the First Bank
Stock, free and clear of all encumbrances. The stock certificates of the First
Bank Stock are free of any legends or other reference to any purported
encumbrance or restrictions, and they represent all of the outstanding shares
issued by First Bank. The Security Agreement creates and grants to WREP a valid
and perfected first priority security interest in the First Bank Stock. The
First Bank Stock is not subject to any other Liens. All representations and
warranties of WAC contained in the Security Agreement are true and correct in
all material respects.
ARTICLE V. AFFIRMATIVE COVENANTS
WFSG covenants that for so long as any Obligations remain outstanding,
and until payment in full, in cash, of all Obligations, WFSG shall, unless WREP
otherwise consents in writing and subject to the order by the Bankruptcy Court:
A. PUNCTUAL PAYMENTS AND PERFORMANCE
Punctually pay and perform all Obligations including, without
limitation, all principal, interest and other liabilities due under any of the
Loan Documents at the times and place and in the manner specified therein, and
perform and comply with all covenants.
B. ACCOUNTING RECORDS
Keep accurate books and records of its financial affairs sufficient to
permit the preparation of consolidated financial statements therefrom in
accordance with GAAP.
C. FURTHER ASSURANCES
At the request of WREP at any time and from time to time, duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Loan Documents, at WFSG's expense.
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D. LEGAL EXISTENCE
Do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence.
E. BUSINESS AND PROPERTIES
At all times do or cause to be done all things necessary to preserve,
renew and keep in full force and effect the rights, licenses, permits,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its businesses; and comply in all material respects with all laws,
rules, regulations and governmental orders (whether federal, state or local)
applicable to the operation of its businesses.
F. TAXES
Pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, might give rise to Liens upon such properties or
any part thereof.
G. BANKRUPTCY COURT ORDER
Comply with all orders of the Bankruptcy Court.
H. INSPECTION
Allow WREP or its agents, representatives, or workers to enter WFSG's
places of business at any reasonable time after prior written notice to WFSG for
the purpose of inspecting and copying any of WFSG's books and records, and for
the purpose of performing any of the acts it is authorized to perform under the
terms of this Agreement or any of the other Loan Documents. Any such inspection
shall take place during ordinary business hours and shall not unduly interfere
with the operation of WFSG's business. WREP shall give WFSG reasonable notice
before conducting such an inspection, provided that 24 hours' notice shall
conclusively be deemed reasonable. WREP's inspection rights hereunder shall he
in addition to all of WREP's rights to inspect its collateral under its security
agreements with WFSG and otherwise.
I. REPORTS
Deliver to WREP copies of all reports filed by WFSG with any
governmental agency.
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J. INFORMATION
With reasonable promptness, provide such other information respecting
the business, operations, and financial condition of WFSG or its affiliates as
WREP may from time to time reasonably request.
K. LICENSES
Maintain all material licenses, permits, and all related or other
agreements, necessary for WFSG to operate its business, as the same may now
exist or be modified or expanded.
L. COMPLIANCE
At all times comply with any and all material regulations, rules, or
requirements of any federal agency or department and of any state, local, or
municipal government agency or department that may at any time have jurisdiction
or power to regulate, license, or grant permits in respect of the facilities or
activities of WFSG, whether such regulations, rules, or requirements presently
exist or are modified, promulgated, or implemented after the date hereof.
M. POST-PETITION CLAIMS
Duly pay and discharge all lawful claims arising after the Petition
Date whether for labor, materials, rentals, or anything else, that might or
could, if unpaid, become a lien or charge upon WFSG's property including, but
not limited to, a lien or charge under Bankruptcy Code Section 506(c), unless
and to the extent only that the validity thereof, after written notice thereof
having been given to WREP, is being contested in good faith and by appropriate
proceedings. In the event any charge is being contested by WFSG as allowed
above, WFSG shall establish adequate reserves against possible liability in
respect thereto.
N. NOTICE OF ACTION OR DISPUTE
Promptly give written notice to WREP of any of the following with
respect to WFSG:
(i) Any (a) refusal or failure by any governmental agency or
instrumentality to renew or extend any material license, certificate of
compliance, or permit (b) revocation, termination, or modification
thereof, or (c) denial or threatened denial or revocation or
modification by any governmental agency or instrumentality of any
material authorization required by law.
(ii) Any nonrenewal or modification of, any material lease for
real or personal property to which WFSG is a party.
(iii) Any postpetition actions, proceedings, or claims of
which it may have notice, that may be commenced or asserted against it
in which the amount involved
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is $1,000,000 or more, and that is not fully covered by insurance or
that, if not solely a claim for monetary damages, could, if adversely
determined, have a material adverse effect on it.
O. NOTICE OF DEFAULT
Promptly notify WREP in the event that WFSG becomes aware of a Default
or Event of Default hereunder.
P. NOTICE OF OFFERS
Notify WREP of any written offers to purchase WFSG's assets out of the
ordinary course of business.
Q. COPIES
Provide WREP with copies of all pleadings filed in this case, except
proofs of claim or notices of appearance, that do not evidence service on WREP
or its counsel.
R. STATUS MEETINGS
Meet with WREP on reasonable notice, at reasonable times, and at
reasonable intervals to inform WREP of the status of the bankruptcy case.
ARTICLE VI. NEGATIVE COVENANTS
WFSG and WAC covenant that so long as any Obligations remain
outstanding, and until payment in full, in cash of all Obligations, WFSG and WAC
will not, unless otherwise permitted by the Bankruptcy Court, without the prior
written consent of WREP:
A. LIENS
1. Except as otherwise provided in Article VI.A.2 below, incur, create,
assume or permit to exist any Lien on any of the Collateral, whether owned at
the Closing Date or thereafter acquired, or assign or convey any rights to or
security interests in any of the Collateral, except for liens which are
expressly subordinate to WREP's liens in the Collateral.
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2. If WFSG or WAC desires to borrow from a new lender ("New Lender")
secured by a lien on the WAC Stock or the Bank Stock (as the case may be) prior
to WREP's lien on the WAC Stock or the Bank Stock (as the case may be), then
prior to accepting a commitment for a loan ("New Loan") from the New Lender,
WFSG or WAC (as the case may be) shall give written notice to WREP ("Notice of
New Loan") and give WREP the opportunity to make a loan to WFSG and/or WAC (as
the case may be) under the same terms as the New Loan. If WREP declines to make
such loan, or WREP fails to respond within 5 days of receipt of the Notice of
New Loan, WFSG or WAC (as the case may be) shall have the right to complete the
New Loan and WREP shall agree to subordinate the priority of its lien in the WAC
Stock or the First Bank Stock and the right to repayment of the DIP Loan to the
New Loan pursuant to a reasonable subordination agreement, provided that (a)
immediately after the closing of the New Loan, the ratio of all debts of WFSG or
WAC (as the case may be) secured by the WAC Stock or First Bank Stock (as the
case may be) to the tangible equity of WAC or First Bank (as the case may be)
does not exceed 1:2; (b) the term of the New Loan is for not less than two
years; (c) if the interest rate of the New Loan is greater than the interest
rate of the DIP Loan, WREP shall have the right to increase the interest rate of
the DIP Loan (up to the principal amount of the New Loan) to the same interest
rate as the New Loan; and (d) the loan documents of the New Loan shall contain
(i) a provision that in the event of a default by WFSG or WAC (as the case may
be) under the New Loan, the New Lender would give WFSG or WAC (as the case may
be) and WREP written notice of such default and an opportunity to cure within 30
days of such notice; (ii) in the event an action for foreclosure is instituted
against WFSG or WAC (as the case may be) by the New Lender, WFSG or WAC (as the
case may be) or WREP shall have the right to redeem the WAC Stock or the First
Bank Stock (as the case may be) from the foreclosure up to the completion of the
foreclosure proceedings but in no event less than 90 days from the notice of
default; and (iii) such other commercially reasonable terms for a loan of its
type.
B. DIVIDENDS, DISTRIBUTIONS AND PAYMENTS
Declare or pay, directly and indirectly, any dividends, whether in cash
or otherwise, with respect to (whether by reduction of capital or otherwise) any
shares of its capital stock, provided however WAC may pay dividends on preferred
stock as required thereby.
C. INVESTMENTS
Make any investments, except in the ordinary course of business in
accordance with its historical practices.
D. MODIFICATION OF CHARTER DOCUMENTS
Modify, amend or alter, or permit the modification, amendment or
alteration, of its certificate or articles of incorporation in any manner
materially adverse to the interests of the WREP as the lender hereunder.
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E. SEPARATE COVENANTS WITH RESPECT TO WFSG.
WFSG shall not:
1. sell its assets outside of the ordinary course of business; except
in accordance with the Prepackaged Plan;
2. commingle its assets with those of any other entity.
ARTICLE VII. EVENTS OF DEFAULT
A. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:
1. Failure to have properly noticed and completed the Final Hearing on
the Motion within 45 days of the Petition Date unless WREP approves in writing
of additional time.
2. A notice of lien, levy, or assessment is filed of record with
respect to all or a part of the Collateral and the same is not released within
30 days.
3. Custody or control of any substantial part of WFSG's property is
assumed by any governmental agency or authority or any court of competent
jurisdiction at the insistence of any governmental agency or authority, or any
governmental regulatory agency or authority takes any final action that would
have a material adverse effect on the Collateral.
4. There shall occur any refusal or failure by any governmental
agency or instrumentality to issue, renew, or extend any lease, license,
contract, certificate of compliance, or permit with respect to the operation
of the business of WFSG, or any denial, forfeiture or revocation by any
governmental agency or instrumentality of any license, permit, or
authorization required by law, which refusal, failure, denial, forfeiture or
revocation could have a material adverse effect on WFSG and the Collateral.
5. Any event occurs that specifically affects WFSG and that has a
material adverse effect upon the business or financial condition of WFSG, and
that materially increases WREP's risk or materially impairs the Collateral.
6. WFSG's authority to borrow from WREP terminates or expires.
7. The Bankruptcy Court announces from the bench or enters any order or
judgment holding any material provision of this Agreement invalid or
unenforceable and such order or judgment materially and adversely affects WREP.
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8. The Bankruptcy Court announces from the bench or enters any order
dismissing WFSG's bankruptcy case, converting that case to a chapter 7 case, or
appointing a trustee, or WFSG files a motion to convert that case to a chapter 7
case or a motion to have a trustee appointed.
9. WFSG fails to pay when due any amount payable under any of the Loan
Documents, or WFSG otherwise defaults in the performance of or compliance with
any other obligation, agreement or other provision contained in any Loan
Document and such failure continues for at least 10 days;
10. Any representation or warranty made by WFSG under, or in connection
with, any of the Loan Documents, was false or misleading in any material respect
when furnished or made;
11. Any representation or warranty made by WAC under, or in connection
with, any of the Loan Documents, was false or misleading in any material respect
when furnished or made;
12. An "event of default" occurs under the Security Agreement; or
13. This Agreement, or any other Loan Documents, for any reason cease
to be, or are asserted by WFSG or WAC not to be, legal, valid and binding
obligations, enforceable in accordance with their terms, or the security
interest created by the Security Agreement for any reason ceases to be a valid,
first priority perfected security interest in the Collateral.
B. REMEDIES
Upon the occurrence or existence of (a) an Event of Default which
relates to WFSG's obligation to make payments hereunder, or (b) an Event of
Default which relates to WFSG's or WAC's non-monetary obligation hereunder which
remains uncured for a period of 20 days after written notice from WREP, and at
any time thereafter during the continuance of such Event of Default, by written
notice to WFSG or WAC, as the case may be, WREP may declare all or any part of
the Obligations to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by WFSG or WAC (as the case may be) and may, subject to the approval, if
any, of any Governmental Authority, including the Office of Thrift Supervision,
exercise its remedies under the Security Agreement and/or any of the other Loan
Documents.
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ARTICLE VIII. MISCELLANEOUS
A. CONTINUING OBLIGATIONS
Termination of this Agreement or the other Loan Documents shall not
relieve or discharge WFSG of its duties, obligations and covenants under the
Loan Documents until all Obligations have been fully and finally discharged and
paid in cash.
B. NOTICES
All notices, requests and demands that a party is required or may
desire to give to the other party under any provision of this Agreement must be
in writing delivered to the other party at the following address:
WFSG: WILSHIRE FINANCIAL SERVICES GROUP INC.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 9720
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
Stoel Rives LLP
Suite 2300
000 XX Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
WAC: WILSHIRE ACQUISITIONS CORPORATION
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with copies to:
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WILSHIRE ACQUISITIONS CORPORATION
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
and
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
WREP: WILSHIRE REAL ESTATE PARTNERSHIP L.P.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxxxx Xxxxxxxx LLP
0000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
or to such other address as a party may designate by written notice to the other
party. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three days after deposit in the U.S. mail,
first class and postage prepaid; and (c) if sent by telecopy, upon receipt and
the sender will endeavor to send a hard copy of such telecopied notice to the
recipient by mail.
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C. SUCCESSORS; ASSIGNMENT
This Agreement shall be binding upon and insure to the benefit of the
successors and assigns of the parties; provided, however, that WFSG may not
assign or transfer its interest hereunder.
D. ENTIRE AGREEMENT; AMENDMENT
The Loan Documents constitute the entire agreement between WFSG and
WREP with respect to the DIP Loan and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof, PROVIDED that the terms of the Letter Agreement with respect to the
subject matters contained herein shall be incorporated by this reference. This
Agreement may be amended or modified only by a written instrument executed by
each party hereto.
E. THIRD PARTY BENEFICIARIES
This Agreement is made and entered into the for sole protection and
benefit of the parties hereto and their respective permitted successors and
assigns, and no other Person shall be a third party beneficiary or, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any other of the Loan Documents to which it is not a party.
F. TIME
Time is of the essence of each and every provision of the Loan
Documents.
G. SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or any remaining provisions of this Agreement.
H. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and all of
which when taken together shall constitute one and the same Agreement.
I. EXPENSES; ATTORNEY FEES; INDEMNITY
1. In the event any suit, action or arbitration is instituted to
enforce or interpret any of the terms, or if any proceeding is commenced which
arises out of, or which relates to this Agreement, including any action or
participation in or in connection with a case proceeding under any Chapter of
the Bankruptcy Code or any successor statute, the prevailing party shall be
22
entitled to such sum as the court or arbitrator may adjudge reasonable as
attorney fees and costs in such suit, action or arbitration or upon any appeal
from any judgment, order, decree or award entered therein, and whether or not
such fees and costs are prescribed by statute. Whether or not any court action
or arbitration is involved, after the occurrence of an Event of Default, WFSG
agrees to pay all reasonable attorney fees and costs incurred by WREP to protect
its interests or enforce its rights hereunder.
2. WFSG agrees to indemnify WREP and Wilshire Real Estate Investment
Trust Inc. and their directors, officers, employees and agents against, and
agrees to hold WREP and Wilshire Real Estate Investment Trust Inc. and each such
person harmless from, any and all losses, claims, damages, liabilities, fines,
penalties and related expenses, including reasonable counsel fees and expenses,
incurred by or asserted against them, or any of them, arising out of, in any way
connected with, or as a result of:
a) breach of any representation or warranty,
b) a violation of, or failure to comply with, any environmental
law, rule or regulation, or
c) any claim, litigation, investigation or proceedings related to
any of the foregoing, whether or not WREP or any such person
is a party thereto; provided, however, that such indemnity
shall not apply to any such losses, claims, damages,
liabilities or related expenses to the extent that they result
from the negligence or misconduct of WREP.
J. WAIVER OF JURY TRIAL
1. Except as prohibited by law, each party hereto hereby waives any
right it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under on in connection with this Agreement, the Note,
any of the other Loan Documents or the transactions contemplated hereby.
2. Except as prohibited by law, each party hereto hereby waives any
right it may have to claim or recover in any litigation referred to in paragraph
(a) of this Section J any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages.
3. Each party hereto certifies that no representative, agent or
attorney of the other party has represented, expressly or otherwise, that other
party would not, in the event of litigation, seek to enforce the foregoing
waivers and acknowledges that it has been induced to enter into this Agreement,
the Note or the other Loan Documents, as applicable, by, among other things, the
mutual waivers and certifications herein.
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WAIVER AND ESTOPPEL. WREP may at any time and from time to time waive in writing
any one or more of the terms and/or conditions contained in this Agreement, but
any such waiver shall be deemed to be made pursuant to this Agreement and not in
modification thereof, and any such waiver in any instance shall not be construed
a waiver of such condition in any other circumstance or in any subsequent
Default or Event of Default. The failure of WREP to promptly exercise its rights
or remedies shall not be deemed to be a waiver or grounds for the claim of
estoppel.
K. GOVERNING LAW
This Agreement shall be government by and construed in accordance with
the laws of the State of Oregon.
L. OREGON STATUTORY NOTICE
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
WREP AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY WFSG'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY WREP TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
EXECUTED AS OF THE DAY AND YEAR FIRST WRITTEN ABOVE.
WILSHIRE REAL ESTATE PARTNERSHIP L.P.
A DELAWARE LIMITED PARTNERSHIP
By: WILSHIRE REAL ESTATE INVESTMENT TRUST INC.,
a Maryland corporation, its General Partner
By: ____________________________
Title: ____________________________
WILSHIRE FINANCIAL SERVICES GROUP INC.,
A DELAWARE CORPORATION
By: _______________________
Its: _______________________
With respect to Sections III.B.5 (Repayment), III.C.3 (Collateral), IV.B.
(Representations and Warranties) and VI.A.2 (New Loan) of this Agreement only.
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WILSHIRE ACQUISITIONS CORPORATION,
A NEVADA CORPORATION
By: _________________________
Title: _________________________
25
