EXHBIT 10.14
ANNEX I
ADDITIONAL SUPPLEMENTAL TERMS TO MASTER REPURCHASE AGREEMENT,
DATED AS OF JULY 29, 1996, BETWEEN
CS FIRST BOSTON MORTGAGE CAPITAL CORP. ("CSFB" OR "Buyer") AND
WILSHIRE CREDIT CORPORATION ("WCC" OR "Seller")
1. APPLICABILITY. These Additional supplemental Terms (the "Additional
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Supplemental Terms") to Master Repurchase Agreement (the "Repurchase
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Agreement") modify the terms and conditions of the Repurchase
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Agreement and the terms under which the parties hereto may, from time
to time, enter into Transactions (the Repurchase Agreement, together
with the Annexes thereto, the "Agreement"). The provisions of these
Additional Supplemental Terms shall supersede the terms in the
Repurchase Agreement to the extent they are in conflict. The
Agreement shall be read, taken and construed as one and the same
instrument. Capitalized terms used in these Additional Supplemental
Terms and not otherwise defined herein shall have the meanings set
forth in the Repurchase Agreement.
2. ADDITIONAL DEFINITIONS.
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(a) Notwithstanding the definition set forth in Paragraph 2(h) of the
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Repurchase Agreement, with respect to Contracts, the "Market
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Value" of Contracts shall be the price of Contracts as reasonably
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determined from time to time (but in no event less frequently
than monthly) by CSFB in its good faith assessment of the value
of the Contracts.
(b) Notwithstanding the definition set forth in Paragraph 2(o) of the
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Repurchase Agreement, the "Repurchase Date" with respect to each
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Transaction shall be the earliest of (i) the twenty-fifth (25th
day of the calendar month following the month in which the
Purchase Date for such Transaction occurs, or if such day is not
a Business Day, the immediately following Business Day, (ii) the
Termination Date, and (iii) the date determined by application of
Paragraph 11 of the Repurchase Agreement or Section 10 hereof.
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(c) Notwithstanding the definition set forth in Paragraph 2(c) of the
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Repurchase Agreement, the "Buyer's Margin Amount" with respect to
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each Transaction as of any date shall be the amount
obtained by application to the Repurchase Price of each such
Transaction of a percentage determined on the Purchase Date by
CSFB, agreed to by WCC and set forth in the relevant
Confirmation.
(d) "Appraised Value": shall mean with respect to any related
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Mortgaged Property, generally, the lesser of (a) the appraised
value of such Mortgaged Property based on an appraisal made at
the time of the origination or modification of the related
Contract and (b) the sale price of the related Mortgage Property
at such time of origination; except in the case of a Mortgaged
Property securing a refinanced or modified Contract as to which
it is either the appraised value determined above or the
appraised value determined in an appraisal at the time of
refinancing or modification, as the case may be.
(e) "Balloon Contract" shall mean any Contract whose final Monthly
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Payment is substantially greater than the preceding Monthly
Payments.
(f) "Breakage Costs" shall have the meaning assigned thereto in
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Section 31 hereof.
(g) "Breakage Period" shall have the meaning assigned thereto in
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Section 31 hereof.
(h) "Breakage Rate" shall have the meaning assigned thereto in
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Section 31 hereof.
(i) "Business Day" shall mean any day other than (i) a Saturday or a
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Sunday or (ii) another day on which banking institutions in the
cities of Irvine, California, Portland, Oregon, or New York, New
York are authorized or obligated by law, executive order, or
governmental decree to be closed.
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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(k) "Collection Account" shall have the meaning assigned in the
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Custodial Agreement.
(l) "Collection Period" in respect of a Repurchase Date shall be the
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month preceding the month in which such Repurchase Date occurs.
(m) "Computer Tape" shall mean a computer tape or other electronic
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medium generated by the Seller and delivered to Buyer pursuant to
Section 4(b) hereof which provides information relating to the
Contracts in a format that was previously requested by the Buyer
or as provided in Section 4(b) hereof.
(n) "Confirmation" shall have the meaning assigned thereto in Section
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4(c) hereof.
(o) "Contracts" shall mean Mortgage Loan Contracts and Manufactured
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Home Loan Contracts which are to be sold and assigned by the
Seller to the Buyer and which are the subject of this Agreement.
The Contracts include, without limitation, all Records relating
to such Contract and all related security interests, the Related
Assets, and any and all rights to receive payments thereunder and
all other proceeds thereof (including, without limitation, any
recourse rights against third persons) from and after the related
Purchase Date.
(p) "Contract Account" shall have the meaning set forth in Section
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4.2 of the Custodial Agreement.
(q) "Contract Rate" shall have the meaning set forth in the Custodial
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Agreement.
(r) "Contract Schedule" shall have the meaning assigned in the
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Custodial Agreement.
(s) "Custodial Agreement" shall refer to the Tri-Party Custodial and
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Servicing Agreement, by and among the Buyer, the Seller and the
Servicer and the Custodian, providing for the
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custody of the Contracts and related documents listed in Schedule
I thereto, and the servicing of the Contracts.
(t) "Custodial Receipt and Confirmation" shall refer to the
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confirmation statement issued by the Custodian that evidences
receipt and confirms ownership of the Contracts and other
documents indicated thereon, as provided in the Custodial
Agreement.
(u) "Custodian" shall refer to Bankers Trust Company of California,
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N.A., in its capacity as custodian under the Custodial Agreement.
(v) "Custodian's Contract File" shall have the meaning set forth in
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the Custodial Agreement.
(w) "Dealer" shall mean the dealer who sold a Financed Manufactured
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Home to an Obligor and who originated and assigned the related
Manufactured Home Loan Contract to Seller under a Dealer
Agreement, and any successor to such Dealer.
(x) "Dealer Agreement" shall mean any agreement between Seller and a
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Dealer with respect to the origination of Manufactured Home Loan
Contracts relating to Financed Manufactured Homes, substantially
in the form previously delivered to and approved by the Buyer.
(y) "Dealer Recourse" shall mean, with respect to a Manufactured Home
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Loan Contract, all of Seller's rights arising under the related
Dealer Agreement or otherwise against the Dealer which originated
such Manufactured Home Loan Contract.
(z) "Defaulted Contracts" shall mean the following: (1) with respect
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to Originated Contracts, (A) Manufactured Home Loan Contracts and
Second Mortgage Loan Contracts that are over sixty (60) days past
due in payment of a Monthly Payment, and (B) First Mortgage Loan
Contracts that are over ninety (90) days past due in payment of a
Monthly Payment; and (2) with respect to Non-Originated
Contracts, Contracts that are deemed past due in accordance with
the guidelines established by Buyer and Seller with respect to
such Contract, as such guidelines may be modified or amended in
writing by Buyer and Seller.
(aa) "Default Rate" shall mean, with respect to any Collection Period
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and any designated category of Contracts, the percentage
equivalent of a fraction the numerator of which is the product of
(i) 12 and (ii) the aggregate principal balance of all such
Contracts with respect to which (x) the related Mortgage Property
was foreclosed upon or repossessed, as applicable, during such
Collection Period, or (y) the related Obligor became the subject
debtor of a case under the federal bankruptcy laws during such
Collection Period or failed generally to pay its debts as such
debts became due, and the denominator of which is the aggregate
principal balance of such designated category of Contracts as of
the end of such Collection Period.
(ab) "Delinquency Percentage" shall mean, with respect to any
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calculation period and any designated category of Contracts, the
percentage equivalent of a fraction, the numerator of which is
the sum of the Delinquent Contract Balances for
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each of the Collection Periods during such calculation period and
the denominator of which is the sum of the aggregate principal
balances of such designated category of Contracts, in each case
determined as of the end of each of the Collection Periods during
such calculation period.
(ac) "Delinquent Contract Balance" shall mean, with respect to any
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Collection Period and any designated category of Contracts, the
aggregate principal balance of such designated category of
Contracts that were 60 days or more past due as of the end of
such Collection Period or, without duplication, as of the date
such Contracts were repurchased pursuant to Section 9 hereof.
(ad) "Eligible Contract" shall mean, as of any date of determination,
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a Contract that complies in all material respects with the
representations and warranties set forth in Exhibit B hereto and
that has not been repurchased, and is not required to be
repurchased, pursuant to Section 9 hereof.
(ae) "Engagement Letter" means the letter agreement dated July 29,
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1996 between CSFB and WCC relating to, inter alia, the
transactions contemplated herein.
(af) "ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended.
(ag) "Financed Manufactured Home" shall mean any new or used
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Manufactured Home financed by loans arising under Manufactured
Home Loan Contracts.
(ah) "First Mortgage Loan Contract" shall mean a loan or other debt
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instrument secured by a first Mortgage on a residential dwelling,
including, without limitation, all Records relating to such First
Mortgage Loan Contract and all related security interests, the
Related Assets and all rights to receive payments thereunder and
all other proceeds thereof (including, without limitation, any
recourse rights against third persons) from and after the related
Purchase. Date.
(ai) "Fixed Rate Contract" shall mean a Contract bearing an interest
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rate that is fixed for the life of such Contract.
(aj) "GAAP" shall mean General Accepted Accounting Principles.
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(ak) "Insurance Policies" shall mean the policy of fire and extended
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coverage insurance (and federal flood insurance, if applicable)
required to be maintained for the related Mortgaged Property (as
provided in the Underwriting Standards) and which may be a
blanket insurance policy maintained by the Servicer in accordance
with the terms and conditions set forth in the Custodial
Agreement.
(al) "Land-and-Home Contract" shall mean a Manufactured Home Loan
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Contract that is secured in part, or intended to be secured in
part, by the lien of a Mortgage.
(am) "LIBOR" shall have the meaning assigned thereto in Section 16(a)
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hereof.
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(an) "List of Contracts" shall have the meaning assigned in Section 4
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hereof.
(ao) "Loan-to-Value Ratio" shall mean as of any date, the fraction,
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expressed as a percentage, the numerator of which is the
Outstanding Principal Amount of the related Contract at the date
of determination and the denominator of which is the Appraised
Value of the related Mortgaged Property.
(ap) "Management Team" shall mean the group of managers of the Seller,
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which shall include Xxxxxxxx X. Xxxxxxxxxx and Xxxxxx X.
Xxxxxxxxxx.
(aq) "Manufactured Home" shall mean a unit of manufactured housing
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which meets the requirements of Section 25(e)(10) of the Code,
including all accessions thereto, securing the indebtedness of
the Obligor under the related Contract.
(ar) "Manufactured Home Loan Contract" shall mean each manufactured
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housing fixed rate retail installment sale contract, installment
loan agreement and Land-and-Home Contract, including, without
limitation, all Records relating to such Manufactured Home Loan
Contract, and all related security interests, the Related Assets
and all rights to receive payments thereunder and all other
proceeds thereof (including, without limitation, any recourse
rights against third persons) from and after the related Purchase
Date.
(as) "MHLC Lockbox Account" shall have the meaning assigned in the
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Custodial Agreement.
(at) "MLC Lockbox Account" shall have the meaning assigned in the
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Custodial Agreement.
(au) "Monthly Payments" shall mean the scheduled monthly payments of
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principal and interest on a Mortgage Loan Contract which is
payable by an Obligor under a Mortgage Note.
(av) "Monthly Servicing Fee" shall have the meaning assigned in the
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Custodial Agreement.
(aw) "Mortgage" shall mean the mortgage or deed of trust creating a
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lien on an estate in fee simple interest in the real property
securing the related Contract.
(ax) "Mortgage Loan Contracts" shall mean First Mortgage Loan
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Contracts and Second Mortgage Loan Contracts.
(ay) "Mortgage Note" shall mean the note or other evidence of the
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indebtedness of an Obligor secured by a Mortgage.
(az) "Mortgaged Property" shall mean the real property, including any
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improvements thereon, or Manufactured Home securing the related
Contract, or both as the case may be.
(ba) "Multiemployer Plan" shall mean a multiemployer plan (within the
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meaning of Section 4001(a)(3) of ERISA) in respect of which
Seller makes contributions or has liability.
(bb) "Net Loss Rate" shall mean, with respect to any Collection Period
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and any designated category of Contracts, the percentage
equivalent of a fraction, the numerator of which
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is the product of (i) 12 and (ii) the net losses in respect of
such Contracts for such Collection Period, determined in
accordance with the credit and collection policies of the
Servicer, and the denominator of which is the aggregate principal
balance of such designated category of Contracts as of the end of
such Collection Period.
(bc) "Non-Originated Contracts" shall mean Contracts that are not
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Originated Contracts.
(bd) "Notice Date" shall have the meaning assigned thereto in Section
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4(a) hereof.
(be) "Obligor" shall mean each Person who is indebted under a
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Contract.
(bf) "Originated Contracts" shall mean Contracts that were originated
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by WCC or by a Person on behalf of WCC with whom WCC has or had a
correspondent relationship, and conform to the Underwriting
Standards.
(bg) "Outstanding Principal Amount" shall have the meaning assigned in
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the Custodial Agreement.
(bh) "PBGC" shall mean the Pension Benefit Guaranty Corporation, and
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any successor thereto.
(bi) "Person" shall mean any legal person, including any individual,
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corporation, partnership, association, joint-stock company,
trust, limited liability company, unincorporated organization,
governmental entity or other entity of similar nature.
(bj) "Plan" shall mean any pension plan (other than a Multiemployer
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Plan) covered by Title IV of ERISA, which is maintained by Seller
or in respect of which Seller has liability.
(bk) "Prime Rate" shall mean, with respect to any date of
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determination, the daily prime loan rate as reported in The Wall
Street Journal as most recently available as of the date of
determination or, if such rate is not published for any reason, a
daily prime loan rate from a comparable financial publication.
(bl) "Records" shall mean, with respect to any Contract, all
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documents, books, records and other information (including,
without limitation, computer programs, tapes, discs, punch cards
and related property and rights) relating to such Contract.
(bm) "Related Assets" shall mean (i) Seller's security interest in the
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Mortgaged Property and rights, remedies, powers and privileges
under the related Mortgage or other security instrument, (ii)
Seller's rights, remedies, powers and privileges under the
Contracts, including any personal guaranty thereof, (iii)
Seller's rights, remedies, powers and privileges under the
Agreement and the Custodial Agreement, (iv) Seller's rights,
remedies, powers and privileges under the Dealer Agreements,
including but not limited to Dealer Recourse and any holdback
amounts, (v) Seller's rights, remedies, powers and privileges
under the Insurance Policies, and (vi) all proceeds of the
foregoing.
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(bn) "Reportable Event" shall mean any of the events set forth in
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Section 4043(c) of ERISA or the regulations thereunder.
(bo) "Second Mortgage Loan Contract" shall mean a loan or other debt
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instrument secured by a second Mortgage on a residential dwelling
with respect to which WCC is the holder and originator of the
first Mortgage on such residential dwelling, including, without
limitation, all Records relating to such Second Mortgage Loan
Contract and all related security interests, the Related Assets
and all rights to receive payments thereunder and all other
proceeds thereof (including, without limitation, any recourse
rights against third persons) from and after the related Purchase
Date.
(bp) Notwithstanding the definition set forth in Paragraph 1 of the
Repurchase Agreement, "Securities" shall mean Contracts purchased
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pursuant to this Agreement.
(bq) "Termination Date" shall have the meaning assigned thereto in
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Section 13 hereof.
(br) "Transaction" shall, in addition to the definition set forth in
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the Repurchase Agreement, refer to substitutions pursuant to
Paragraph 9 of the Repurchase Agreement.
(bs) "Transaction Documents" means this Agreement, the Custodial
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Agreement, the Engagement Letter and any related agreements.
(bt) "Transaction Notice" shall have the meaning assigned thereto in
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Section 4(b) hereof.
(bu) "Underwriting Standards" shall mean the standards attached hereto
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as Exhibit D with respect to Originated Contracts.
3. COMMITMENT. On the terms and subject to the conditions set forth in
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this Agreement, the Custodial Agreement, and the relevant Confirmation
Buyer agrees to purchase from the Seller Eligible Contracts and Seller
agrees to repurchase such Eligible Contracts from Buyer.
4. CONFIRMATIONS.
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(a) An agreement to enter into a Transaction may not be entered into
orally. Unless otherwise agreed, Seller shall give Buyer at least
two (2) Business Days prior notice of any proposed Purchase Date
(the date on which such notice is set, the "Notice Date").
(b) On the Notice Date, Seller shall deliver to Buyer and Custodian
(i) a request to enter into the related Transaction, in the form
of Schedule 1 hereto (each, a "Transaction Notice") and (ii) on
Computer Tape and in such computer readable form as requested by
the Buyer, the List of Contracts relating to the Contracts
subject to such Transaction. With respect to a Notice Date
pursuant to Section 4(a) above, Seller shall also deliver to the
Custodian on or before 1:00 p.m. New York City time on such
Notice Date the items listed in Section 3.1 of the Custodial
Agreement. Furthermore, Seller shall, upon reasonable notice,
make available or, at Buyer's request, deliver to-the Buyer or
the Custodian any other documents in its
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possession relating to the Contracts for inspection by Buyer.
The List of Contracts ("List of Contracts") shall include fields
of information requested by Buyer, including, without limitation,
information set forth in Exhibit D to the Custodial Agreement.
(c) When Buyer determines that (i) any Non-Originated Contracts are
acceptable to Buyer or (ii) any Originated Contracts are Eligible
Contracts, or both, and will be purchased pursuant to a
Transaction, Buyer will confirm the terms of each Transaction by
delivering a written confirmation to Seller, with a copy
delivered to the Custodian, on or before the related Purchase
Date, in the form of Schedule 2 attached hereto (a
"Confirmation"); provided that Buyer shall not confirm the terms
of a Transaction or deliver a written confirmation to Seller
until Buyer has received from the Custodian a certification that
the Custodian has received, for each Contract to be subject to
such Transaction, the items listed in Section 3.1 of the
Custodial Agreement. Seller shall review the Confirmation and,
if in agreement therewith, shall return (i) a copy of such fully
signed Confirmation by facsimile transmission to the Buyer prior
to the payment of the Purchase Price by Buyer on the Purchase
Date, and (ii) the original executed copy of such Confirmation to
the Buyer within 48 hours of the settlement of such Transaction.
(d) Any Confirmation by Buyer shall be deemed to have been received
by Seller: (i) on the date sent if given by telecopy, telex or
other telecommunication device capable of transmitting or
creating a written record directly to the office of Seller, and
(ii) on the Business Day following the day sent if sent by a
nationally recognized overnight courier service.
5. BUYER MARGIN MAINTENANCE. Paragraph 4(a) of the Repurchase Agreement
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is hereby modified to provide that if the notice to be given by Buyer
to Seller under such Paragraph 4(a) is given at or prior to 1:00 p.m.
New York City time, Seller shall transfer cash or the Additional
Purchased Securities to Buyer prior to the close of business in New
York City on the date of such notice, and if such notice is given
after 1:00 p.m. New York City time, Seller shall transfer cash or the
Additional Purchased Securities prior to the close of business in New
York City on the Business Day following the date of such notice. The
Custodial Agreement shall set forth further terms and provisions
relating to Buyer's and Seller's rights and obligations under
Paragraph 4 of the Repurchase Agreement.
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6. SELLER MARGIN MAINTENANCE. Paragraph 4(b) of the Repurchase Agreement
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is hereby deleted in its entirety.
7. SECURITY INTEREST.
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(a) In the event, for any reason, any Transaction is construed by any
court as a secured loan rather than a purchase and sale, the
parties intend that Seller shall have granted to Buyer a security
interest in all of the Purchased Securities that is not subject
to any prior security interests created under the Uniform
Commercial Code in the appropriate jurisdiction.
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(b) Seller shall pay all fees and expense associated with perfecting
and maintaining such security interest including, without
limitation, the cost of filing financing statements and
continuation statements under the Uniform Commercial Code and the
recording of any assignment of Mortgage in the appropriate
jurisdiction as and when required thereunder or specified by
Buyer.
(c) In the event that Buyer elects to engage in repurchase
transactions with the Purchased Securities or otherwise elects to
pledge or hypothecate the Purchased Securities, Seller shall, at
the request of Buyer and at the expense of Seller, do and perform
such acts and things necessary to enable the Custodian to do and
perform such further acts and things and to execute and deliver
to Buyer and its counterparty such additional documents,
acknowledgements, powers and instruments as are required by Buyer
in connection with such transaction and such counterparty, it
being understood and agreed that Seller will retain all servicing
rights in respect of any Purchased Securities so transferred.
8. REPRESENTATIONS; COVENANTS.
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(a) Each party represents and warrants, and shall on and as of the
Purchase Date for any Transaction and on and as of each date
thereafter through the related Repurchase Date be deemed to
represent and warrant, as follows:
i) The execution, delivery and performance of the Agreement and
the performance of each Transaction do not and will not
result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant
hereto) upon or with respect to any of its properties; and
ii) The Agreement is, and each Transaction when entered into
under the Agreement will be, a legal, valid and binding
obligation of it enforceable against it in accordance with
the terms of the Agreement.
(b) Seller hereby makes, and on and as of the Purchase Date of any
Transaction and on and as of each date thereafter through the
related Repurchase Date shall be deemed to have made, the
representations and warranties to Buyer set forth in Exhibit A
and Exhibit B hereto. The representations and warranties set
forth herein shall survive transfer of the Purchased Securities
to the Buyer and shall continue for so long as the Purchased
Securities are subject to this Agreement. In the event Buyer
engages in a repurchase transaction with any of the Purchased
Securities or otherwise pledges or hypothecates any of the
Purchased Securities, Buyer shall have the right to assign to
Buyer's counterparty any representations or warranties in Exhibit
B hereof as they relate to the Purchased Securities that are
subject to such repurchase transaction; provided, however, that
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Buyer hereby represents and warrants that so long as this
Agreement is in effect, any repurchase transaction entered into
between Buyer and a counterparty with respect to Contracts which
are the subject of a Transaction hereunder shall not permit such
counterparty to assert a breach of an assigned representation or
warranty made by Seller with respect to such Contracts (as set
forth in
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Exhibit B hereunder) against Seller unless Buyer is in default of
its obligations under such repurchase transaction.
(c) Buyer represents and warrants that it is a separate and
independent corporate entity from the custodian named in the
Custodial Agreement. Buyer does not own a controlling interest
in such custodian either directly or through affiliates and no
director or officer of Buyer is also a director or officer of
such custodian.
9. REPURCHASE OF CONTRACTS.
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(a) Upon discovery by the Seller of a breach of any of the
representations and warranties set forth in Exhibit B, the Seller
shall give prompt written notice thereof to the other party. If
the Seller does not correct or cure such breach on or before the
15th day following the earlier of discovery of such breach by
Seller or receipt of notice of such breach, then the Seller shall
repurchase such Contract on the Repurchase Date next succeeding
such 15th day following receipt of such notice (or, if such 15th
day following receipt of such notice occurs on a Repurchase Date,
on such Repurchase Date).
(b) Seller shall repurchase from Buyer on each Repurchase Date
(without regard to whether the full amount of the Repurchase
Price for any Transaction is payable on such Repurchase Date)
each Contract that is a Defaulted Contract as of such Repurchase
Date. Any such repurchase made in respect of a Transaction
effected prior to the scheduled Repurchase Date shall reduce the
Repurchase Price payable on such Repurchase Date by the amount
paid in respect of such repurchase.
(c) In addition to the foregoing, Seller hereby indemnifies and holds
harmless Buyer for any loss, liability, expense (including
attorney fees) or damage suffered or incurred by Buyer arising
from or in any way related directly to a breach by Seller of any
representation or warranty of Seller in this Agreement.
10. EVENTS OF DEFAULT.
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(a) The term "Event of Default" shall, in addition to the definition
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set forth in the Repurchase Agreement, include the following
events:
i) Buyer shall have reasonably determined that Seller is or
will be unable to meet its commitments under any of the
Transaction Documents and shall have notified Seller of such
determination and Seller shall not have responded with
appropriate information to the contrary to the satisfaction
of the notifying party within two (2) Business Days.
ii) The Agreement shall for any reason cease to create a valid,
first priority security interest in any of the Purchased
Securities purported to be covered thereby.
iii) A final judgement by any competent court in the United
States of America for the payment of money in an amount of
at least $100,000 is rendered against Seller and the same
remains undischarged for a period of 30
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days during which execution of such judgement is not
effectively stayed.
iv) WCC shall fail to observe or perform any of the covenants or
agreements under any Transaction Document, which failure, in
the reasonable judgment of CSFB, materially and adversely
affects the ability of WCC to perform under any such
Transaction Document.
v) Any material event of default or any event which with
notice, the passage of time or both shall constitute a
material event of default shall occur and be continuing
under any repurchase or other financing agreement for
borrowed funds or indenture for borrowed funds by which WCC
is bound or affected.
vi) In the good faith judgment of CSFB a material adverse change
shall have occurred in the business, operations or financial
condition of WCC.
vii) CSFB shall not have received (a) a certificate,
substantially in the form set forth in Paragraph II. (c)(2)
of Exhibit A hereto, on the 5th Business Day of each month
with respect to the prior month's activity, and (b) a
certificate, substantially in the form set forth in
Paragraph II.(c)(1) of Exhibit A hereto, within ten (10)
Business Days following the date the related annual or
quarterly financial statement is required to be delivered.
viii) WCC shall be in default with respect to any provision under
any material debt contract or agreement, any servicing
agreement or any lease to which it is a party, which
default, in the judgment of CSFB, could materially and
adversely affect the financial condition of WCC (which
defaults include, but are not limited to, an Act of
Insolvency of WCC or the failure of WCC to make required
payments under such contract or agreement as they become
due).
ix) Any representation or warranty made by WCC in Exhibit A
hereto, or in Paragraph I.(bb), (bc) or (bd) of Exhibit B
hereto or in Paragraph II.(bb), (bc) or (bd) of Exhibit B
hereto or in Section 5.8 of the Custodial Agreement shall
have been materially incorrect or untrue when made or
repeated or when deemed to have been made or repeated.
X) WCC shall fail to promptly notify CSFB of (i) the
acceleration of any material debt obligation or the
termination of any credit facility of WCC, respectively;
(ii) the amount of any material funding facility entered
into after the date hereof; (iii) any adverse developments
with respect to pending or future litigation involving WCC,
respectively; and (iv) any other developments which would,
in the good faith judgment of Buyer, materially and
adversely affect the financial condition of WCC.
xi) WCC's audited annual financial statements or the notes
thereto or other opinions or conclusions stated therein
shall be qualified or limited by reference to
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WCC's status as a "going concern" or a reference of similar
import.
xii) With respect to any Originated Contracts, any material
amendment to the Underwriting Standards or practices which
was not previously approved in writing by the Buyer.
xiii) Either (i) a change in control of WCC shall have occurred
other than in connection with and as a result of the
issuance and sale by WCC of common stock or (ii) any two
members of the Management Team of the Seller shall cease to
be an officer of the Seller and tb function in substantially
the same capacity as such member functions as of the date
hereof.
(b) In addition to the rights of the Buyer pursuant to Paragraph 11
------------
of the Repurchase Agreement, upon the occurrence of an Event of
Default by Seller:
i) Buyer's commitment to purchase Eligible Contracts under
Section 3 hereof shall immediately terminate;
ii) All rights of Seller to receive payments, other than the
Monthly Servicing Fee which it would otherwise be authorized
to receive pursuant to the Custodial Agreement shall cease,
and all such rights shall thereupon become vested in Buyer,
which shall thereupon have the sole right to receive such
payments and apply them to the aggregate unpaid Repurchase
Prices owed by Seller;
iii) All payments which are received by Seller contrary to the
provisions of the preceding clause (ii) shall be received in
trust for the benefit of Buyer and shall as soon as
practicable, but no more than three (3) Business Days after
receipt, be segregated from other funds of Seller; and
iv) The Pricing Rate for each day from and after the date of
such Event of Default shall be a per annum rate equal to the
sum of (i) LIBOR and (ii) 3.50%.
(c) Each event specified in Section 10(a) of these Supplemental Terms
may, at the option of CSFB, cause an acceleration of the
Repurchase Date for a Transaction and shall be in addition to any
other rights of CSFB to cause such an acceleration under the
Agreement.
11. EVENTS OF TERMINATION. At the option of CSFB, exercised by written
---------------------
notice to WCC, Buyer's commitment to purchase Eligible Contracts that are not
the subject of a Transaction as of the occurrence of any of the following events
shall immediately terminate; provided, however, that in the event of an
-------- -------
occurrence of an event specified in subsections (c), (d) or (e) of this Section
11, then Buyer's commitment to purchase shall terminate only with respect to the
affected type of Contract specified in clauses (i) and (ii) thereof:
(a) In the judgment of CSFB a material adverse change shall have
occurred in the business, operations, properties, prospects
or condition (financial or otherwise) of WCC.
12
(b) CSFB shall request written assurances as to the financial
well-being of WCC and such assurances shall not have been
provided within two (2) Business Days of such request.
(c) (A) With respect to the four Collection Periods immediately
preceding the date of determination, the Delinquency
Percentage for either (i) Manufactured Home Loan Contracts
or (ii) Mortgage Loan Contracts that are Originated
Contracts shall exceed 10%; or (B) With respect to the
twelve Collection Periods immediately preceding the date of
determination, the Delinquency Percentage for either
designated category of Contracts described in the preceding
clauses (i) and (ii) shall exceed 3.5%.
(d) With respect to the three Collection Periods immediately
preceding the date of determination, the weighted average
Default Rate for such Collection Periods with respect to
either (i) all Manufactured Home Loan Contracts or (ii) all
Mortgage Loan Contracts that are Originated Contracts, in
each case weighted on the basis of the aggregate principal
balance of all Contracts described in the preceding clause
(i) or clause (ii) as of the end of the applicable
Collection Period, shall exceed 2.75%.
(e) With respect to the three Collection Periods immediately
preceding the date of determination, the weighted average
Net Loss Rate for such Collection Periods with respect to
either (i) all Manufactured Home Loan Contracts or (ii) all
Mortgage Loan Contracts that are Originated Contracts, in
each case weighted on the basis of the aggregate principal
balance of all Contracts described in the preceding clause
(i) or clause (ii), as of the end of the applicable
Collection Period, shall exceed 1.75%.
12. INTENTIONALLY OMITTED.
---------------------
13. TERM OF AGREEMENT. The last sentence of Paragraph 15 of the
----------------- ------------
Repurchase Agreement is hereby deleted. Subject to earlier
termination as set forth below, the Agreement shall terminate on the
Repurchase Date occurring in the 24th calendar month following the
date of the Agreement (such termination date, as it may be extended
pursuant to the following proviso, the "Termination Date") and all
Transactions outstanding hereunder shall terminate automatically
without any requirement for notice on such date; provided, however,
that the Agreement and any Transaction outstanding hereunder may be
extended by mutual agreement of CSFB and WCC; and provided further,
however, that neither party shall be obligated to agree to such an
extension. It is further understood and agreed that if,
notwithstanding the foregoing, any Transaction shall remain
outstanding subsequent to the termination of the Agreement, the
relevant provisions of the Agreement shall be deemed to govern the
termination of such outstanding Transaction as if such provisions have
survived.
14. FINANCIAL STATEMENTS. As of the date hereof, the parties hereto have
--------------------
each provided the other with such party's audited year-end financial
statements and such party's most recent publicly available interim
financial statement, if any.
13
15. MINIMUM AND MAXIMUM TRANSACTION AMOUNTS. With respect to
---------------------------------------
Transactions:
(a) The minimum amount of any Transaction under this Agreement shall
have an aggregate Repurchase Price of $1,000,000 unless CSFB
shall have consented to a lesser amount with respect to any
individual Transaction.
(b) The aggregate outstanding Repurchase Price for the Purchased
Securities subject to the Agreement at any one time shall not
exceed (i) $150,000,000 in the aggregate, (ii) $75,000,000 with
respect to Manufactured Home Loan Contracts, and (iii) in the
case of Second Mortgage Loan Contracts, 25% of the then
outstanding aggregate Repurchase Price for First Mortgage Loan
Contracts.
16. PRICING RATE; PURCHASE PRICE.
----------------------------
(a) The Pricing Rate with respect to each Transaction hereunder shall
be a per annum rate equal to (i) with respect to First Mortgage
Loan Contracts, LIBOR plus 1.50%, (ii) with respect to Second
Mortgage Loan Contracts, LIBOR plus 1.90%, (iii) with respect to
Manufactured Home Loan Contracts that are "A" and "B" Contracts,
as defined in the Underwriting Standards, LIBOR plus 1.90%, and
(iv) with respect to Manufactured Home Loan Contracts that are
"C" and "D" Contracts, as defined in the Underwriting Standards,
LIBOR plus 2.90%. LIBOR shall be the offered rate for United
States dollars with a maturity of one month which appears on
Telerate as of 9:00 A.M., New York City time, on the Purchase
Date for such Transaction, provided, however, that if such rate
-------- -------
does not appear on the Dow Xxxxx Telerate Service page 3750 (or
such other page as may replace that page on that service) or if
such service is no longer offered, the rate for United States
dollars with a maturity of one month quoted by such other service
as may be selected by the Buyer.
(b) Notwithstanding the definition set forth in Paragraph 2(m) of the
Repurchase Agreement, the "Purchase Price" with respect to each
Transaction shall be the lesser of (i) the product of (a)(x) in
respect of Originated Contracts that are (1) First Mortgage Loan
Contracts or Manufactured Home Loan Contracts, .95, or (2) Second
Mortgage Loan Contracts, .85, or (y) in respect of Non-Originated
Contracts, a percentage to be determined and mutually agreed upon
by Buyer and Seller on a case by case basis, and (b) the Market
Value of each Contract to be purchased by Buyer pursuant to such
Transaction and (ii) the aggregate Outstanding Principal Amount
of the Contracts.
17. REPURCHASE DATE AND REPURCHASE PRICE. On each Repurchase Date, unless
------------------------------------
(i) Buyer shall have notified Seller of an Event of Default pursuant
to Paragraph 11 of the Repurchase Agreement or Section 10 hereof or
the parties otherwise mutually agree, or (ii) such Repurchase Date
shall be the Termination Date, Seller and Buyer shall rollover all
Transactions maturing on such date into a single Transaction with
respect to all Purchased Securities (other than Purchased Securities
rejected by Buyer pursuant hereto or subject to repurchase by Seller
on such Repurchase Date pursuant hereto) which were the subject of the
matured Transactions. Seller shall pay to Buyer on each Repurchase
Date the excess, if any, of (A) the Repurchase Price for all
Transactions terminating
14
on such Repurchase Date over (B) the Purchase Price of the Purchased
Securities purchased by Buyer on such Repurchase Date pursuant to the
preceding sentence and any other Purchased Securities purchased in
different Transactions on such date. If the difference between (A) and
(B) above is a negative number, Buyer shall pay to Seller the absolute
value thereof. Payment of amounts shall be made by wire transfer in
immediately available funds in accordance with the intended
recipient's written instructions.
18. ADDITIONAL INFORMATION.
----------------------
(a) At any reasonable time, Seller shall permit Buyer, its agents or
attorneys, to inspect and copy any and all documents and data in
their possession pertaining to each Contract that is the subject
of such Transaction. Such inspection shall occur upon the
request of Buyer at a mutually agreeable location during regular
business hours and on a date not more than two (2) Business Days
after the date of such request.
(b) Seller agrees to provide Buyer from time to time with such
information concerning Seller and WCC of a financial or
operational nature as Buyer may reasonably request.
(c) Seller shall provide Buyer with copies of all filings made by or
on behalf of Seller or any entity that controls Seller, with the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, promptly upon making such
filings.
(d) Prior to the occurrence of an Event of Default, Buyer agrees to
keep confidential (and to use its best efforts to cause its
respective agents and representatives to keep confidential) the
Information (as defined below) and all copies thereof, extracts
therefrom and analyses or other materials based thereon, except
that the Buyer shall be permitted to disclose the Information (a)
to such of its respective officers, directors, employees, agents,
affiliates, representatives and auditors, on a need to know
basis, (b) to the extent requested by any regulatory authority,
(c) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process, upon prior notice
thereof (unless prohibited by the terms of such subpoena or
process) to the Seller, (d) to the extent such Information (i)
becomes publicly available other than as a result of a breach of
this Section 18(d) or (ii) becomes lawfully available to the
Buyer on a nonconfidential basis from a source other than the
Seller or (iii) is material to a counterparty of Buyer in the
normal course and Buyer gives notice to such counterparty that
such Information is subject to confidentiality and such
counterparty (which shall be disclosed to Seller) agrees to the
maintenance of confidentiality substantially on the terms in this
Section 18(d), or (e) to the extent disclosure of such
Information is necessary as determined by Buyer in order for
Buyer to enforce or defend its rights under the Agreement. For
the purposes of this Section 18(d), "Information" shall mean all
-----------
financial statements, certificates, reports, or material non-
public information that are received from the Seller and clearly
identified and marked as Confidential at the time of delivery.
The provisions of this Section 18(d), shall remain operative and
15
in full force and effect regardless of the expiration and term of
this Agreement. To the extent Buyer reasonably incurs any costs
and expenses, including reasonable attorneys' fees, to enforce,
defend or comply with the terms or provisions of this Section
18(d), Seller agrees to promptly reimburse Buyer such costs and
expenses, including reasonable attorneys' fees; provided,
--------
however, that Seller shall have no obligation to make such
-------
reimbursement in the event such costs and expenses were incurred
as a result of Buyer's negligence or misconduct in complying with
the terms of Section 18(d) hereof.
19. REJECTION OF SECURITIES. Buyer may reject any Originated Contract
-----------------------
from inclusion in a Transaction hereunder if Buyer determines, in its
sole discretion, that such Originated Contract was not originated in
conformity with the Underwriting Standards.
20. RIGHT OF SET-OFF. In addition to its rights hereunder, Buyer shall
----------------
have the right to proceed against any assets of Seller which may be in
the possession of Buyer, including the right to liquidate such assets
and to set-off the proceeds against monies owed by Seller to Buyer
pursuant to this Agreement. Buyer may set-off cash, the proceeds of
the liquidation of the Purchased Securities and Additional Purchased
Securities, any collateral or its proceeds, and all other sums or
obligations owed by Buyer to Seller hereunder against all of Seller's
obligations to Buyer, whether under this Agreement or under a
Transaction, whether or not such obligations are then due, without
prejudice to Buyer's right to recover any deficiency. Any cash
proceeds, or property in excess of any amounts due, or which Buyer
reasonably believes may become due, to it from Seller shall be
returned to Seller after satisfaction of all obligations of Seller to
Buyer.
21. OPINIONS OF COUNSEL. Seller shall, on or prior to the date of the
-------------------
first Transaction hereunder, cause to be delivered to Buyer, a
favorable opinion or opinions of counsel with respect to the matters
set forth in Exhibit C hereto, in form and substance acceptable to
---------
CSFB. Buyer shall have the right to request, on an annual basis, from
Seller, and Seller shall promptly provide to Buyer after receipt of
such request, an opinion of counsel to the effect that Buyer has as of
the date of such opinion a perfected security interest in the
Purchased Securities that are subject to the Agreement, which opinion
shall be subject to customary and standard exceptions and
qualifications.
22. ADDITIONAL CONDITIONS. Prior to entering into the initial Transaction
---------------------
under this Agreement, Seller shall cause each of the following
conditions to occur:
(a) A Custodial Agreement to cover the Contracts, in a form
satisfactory to CSFB, shall have been executed and delivered by
the parties thereto;
(b) WCC shall have disclosed information satisfactory to CSFB with
respect to the scheduled maturities and termination provisions of
all outstanding credit facilities and debt of WCC; and
(c) WCC shall have executed and delivered to CSFB the Engagement
Letter.
23. REPURCHASE TRANSACTIONS. CSFB may in its sole election engage in
-----------------------
repurchase transactions with the Purchased Securities or otherwise
16
pledge, hypothecate, assign, transfer or otherwise convey the
Purchased Securities with a counterparty of CSFB's choice, subject to
compliance with Section 18(d) hereof; provided, however, that no such
-------- -------
transaction by CSFB shall relieve CSFB of its obligations to WCC in
connection with the repurchase by WCC of any Purchased Securities in
accordance with the terms of this Agreement and the relevant
Confirmation.
24. NEW YORK JURISDICTION; WAIVER OF JURY TRIAL. WCC agrees to submit to
-------------------------------------------
personal jurisdiction in the State of New York in any action or
proceeding arising out of the Agreement. CSFB and WCC each hereby
waive the right of trial by jury in any litigation arising hereunder.
26. FURTHER ASSURANCES. Seller agrees to do such further acts and things
------------------
and to execute and deliver to Buyer such additional assignments,
acknowledgements, agreements, powers and instruments as are reasonably
required by Buyer to carry into effect the purposes of the Agreement,
to perfect the interests of the Custodian in the Contracts and the
Related Assets or to better assure and confirm unto Buyer its rights,
powers and remedies hereunder.
27. BINDING TERMS. All of the representations, warranties, covenants,
-------------
stipulations, promises and agreements in the Agreement shall bind and
inure to the benefit of the successors of the parties hereto, whether
expressed or not.
28. NOTICES AND OTHER COMMUNICATIONS. Any provision of Paragraph 13 of
--------------------------------
the Repurchase Agreement to the contrary notwithstanding, any notice
required or permitted by the Agreement shall be in writing (including
telegraphic, facsimile or telex communications) and shall be effective
and deemed delivered only when received by the party to which it is
sent; provided, however, that a facsimile transmission shall be deemed
to be received when transmitted so long as the transmitting machine
has provided an electronic confirmation of such transmission. Any
such notice shall be sent to a party at the address or facsimile
transmission number set forth in Annex II attached hereto.
29. FEES AND DISBURSEMENTS. Seller shall promptly pay all reasonable fees
----------------------
and expenses (including without limitation those of counsel and
accountants) incurred by Buyer and Custodian in entering into the
Transaction Documents to which it is a party and the Transactions. In
the event that either party commences a lawsuit or proceeding against
the other in connection with the Agreement, any and all reasonable
attorneys' fees and costs incurred by the prevailing party in
connection with such lawsuit or proceeding shall be paid by the non-
prevailing party.
30. DEFAULT BY BUYER. In the event Buyer breaches its obligations to
----------------
purchase or resell Contracts under the Agreement, then such breach
shall constitute an event of default by Buyer under the Engagement
Letter, and WCC shall have no obligations to Buyer with respect to any
Offerings (as defined in the Engagement Letter) that closes after the
date of such breach.
31. PREPAYMENT.
----------
(a) Seller shall have the right to accelerate any Repurchase Date for
any Transaction at any time and prepay any Transaction prior to
the Repurchase Date and thereby terminate the Transaction,
without penalty or premium,
17
subject, however, to payment of Breakage Costs by Seller to Buyer
as provided in subsection (b) below.
(b) Breakage Costs shall be paid by Seller to Buyer at the time of
prepayment and shall be calculated as follows ("Breakage Costs"):
the product of (x) the aggregate Repurchase Price (excluding
Price Differential) and (y) the product of (i) the Breakage Rate
and (ii) a fraction, the numerator of which is the Breakage
Period and the denomination of which is 360. "Breakage Rate"
shall mean the applicable Pricing Rate minus the prevailing one
(1) month LIBOR. "Breakage Period" shall mean the number of days
from the date of prepayment to and including the scheduled
Repurchase Date.
18
IN WITNESS WHEREOF, Buyer and Seller have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all as of
the day and year first above written.
CS FIRST BOSTON MORTGAGE CAPITAL CORP.,
as Buyer
By /s/
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
WILSHIRE CREDIT CORPORATION,
as Seller
By /s/
----------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Executive Vice President
19
