EXHIBIT 10.2
FOURTH AMENDMENT TO
--------------------
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") dated as of May 1, 1998 by and among NEW CENTURY MORTGAGE
CORPORATION, a California corporation (the "Company"), U.S. BANK NATIONAL
ASSOCIATION, a national banking association, formerly known as FIRST BANK
NATIONAL ASSOCIATION ("U.S. Bank"), GUARANTY FEDERAL BANK, FSB, a federal
savings bank ("GFB"), FIRST UNION NATIONAL BANK, formerly known as FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First Union"),
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("RFC"), BANK ONE,
TEXAS, N.A., a national banking association ("Bank One"), THE BANK OF NEW YORK,
a New York banking corporation ("BNY"), THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association ("First Chicago") (U.S. Bank, GFB, First Union,
RFC, Bank One, BNY, and First Chicago being hereinafter referred to collectively
as the "Lenders" and individually as a "Lender"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, in its capacity as agent for the
Lenders (in such capacity, together with any successor agents appointed
hereunder, the "Agent").
WITNESSETH THAT:
WHEREAS, the Company, the Lenders and the Agent are parties to a Second
Amended and Restated Credit Agreement dated as of July 31, 1997, as amended by a
First Amendment dated as of November 26, 1997, a Second Amendment dated as of
December 22, 1997, and a Third Amendment dated as of December 31, 1997 (as so
amended, the "Credit Agreement"), pursuant to which the Lenders provide the
Company with revolving mortgage warehousing and working capital credit
facilities; and
WHEREAS, the Company and the Lenders have agreed to amend the Credit
Agreement upon the terms and conditions herein set forth;
NOW, THEREFORE, for value received, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Lenders agree as follows:
1. Certain Defined Terms. Each capitalized term used herein without
---------------------
being defined herein that is defined in the Credit Agreement shall have the
meaning given to it therein.
2. Consent. On the date this Amendment becomes effective, the Lenders
-------
hereby consent to the Investments to be made by the Company, provided that the
amount of such Investments does not exceed $1,250,000 in the aggregate, and the
guaranty to be made by NCFC, pursuant to a Strategic Alliance Agreement by and
among the Company, Qualified Financial Services, Inc., a Colorado corporation,
Qualified Financial Services, Inc., a California corporation, Xxxxx Xxxxx, an
individual, and Xxxxx V.V. Thais, an individual. The consent set forth herein
is limited to the express terms thereof, and nothing herein shall be deemed a
waiver by the Lenders for any other purpose of any term, condition,
representation or covenant applicable to the Company under the Credit Agreement
or any of the other Loan Documents.
3. Amendments to Credit Agreement. The Credit Agreement is hereby amended
------------------------------
as follows:
(a) Section 1.01 is hereby amended by adding the following new
definitions in correct alphabetical order:
"Fair Market Value": as defined in Exhibit E.
-----------------
"Working Capital Borrowing Base": on the date of determination,
------------------------------
an amount equal to Four Million Dollars ($4,000,000) plus for each
----
Mortgage Loan included in the calculation of the Warehousing Borrowing
Base, the lesser of: (i) three percent (3%) of the purchase price
under the Take-Out Commitment to which such Mortgage Loan has been
assigned or, if such Mortgage Loan has not been so assigned, the
weighted average purchase price for Mortgage Loans under Take-Out
Commitments under which such Mortgage Loan has been pre-approved for
delivery, and (ii) three percent (3%) of the unpaid principal amount
of such Mortgage Loan.
(b) The definition of "Working Capital Increase Date" in Section 1.01
is hereby amended in its entirety to read as follows:
"Working Capital Increase Date": May 1, 1998.
-----------------------------
(c) The definitions of "GEFP," "Junior Securitization Interest,"
"Junior Securitization Interest Income Value," "SBRC," "Working Capital
Collateral," "Working Capital Collateral Value," and "Working Capital
Security Agreement" are hereby deleted from Section 1.01.
(d) The Agreement is hereby amended by deleting all references
therein to "Working Capital Collateral" and "Working Capital Security
Agreement."
(e) Section 2.02(a) is hereby amended in its entirety to read as
follows:
-2-
(a) Working Capital Credit Commitment. Upon the terms and
---------------------------------
subject to the conditions of this Agreement, during the period
beginning on the Effective Date and ending on the Working Capital
Termination Date, each Lender agrees to lend (and after repayment, to
refund) to the Company, at such times and in such amounts as the
Company shall request, up to an aggregate principal amount at any time
outstanding equal to such Lender's Working Capital Commitment Amount,
subject to the following limitations:
(i) the aggregate principal amount of Working Capital
Loans at any time outstanding plus the Letter of Credit
----
Obligations shall not exceed the sum of the Working Capital
Commitment Amounts of all the Lenders;
(ii) the aggregate principal amount of Working Capital
Loans at any time outstanding plus the Letter of Credit
----
Obligations shall not exceed the Working Capital Borrowing Base,
as determined by the Agent from its records; and
(iii) the aggregate amount of all Loans at any time
outstanding plus the Letter of Credit Obligations shall not
----
exceed ninety-seven percent (97%) of the Fair Market Value of all
of the Mortgage Loans included in the calculation of the
Warehousing Borrowing Base.
No Lender shall be obligated to make Working Capital Loans if, after
giving effect thereto, any of the foregoing limitations would be
exceeded. The failure of any one or more of the Lenders to make a
Working Capital Loan in accordance with its Working Capital Commitment
shall not relieve the other Lenders of their several obligations
hereunder, but no Lender shall be liable with respect to the
obligation of any other Lender hereunder or be obligated in any event
to make Working Capital Loans in excess of its Working Capital
Commitment Amount.
(f) Section 2.02(d)(ii) is hereby amended in its entirety to read as
follows:
(ii) Mandatory Prepayments. If, at any time from and after the
---------------------
Working Capital Increase Date, the aggregate principal amount of all
Working Capital Loans outstanding plus the Letter of Credit
----
Obligations exceeds the Working Capital Borrowing Base, or the
aggregate amount of all Loans outstanding plus the Letter of Credit
----
Obligations exceeds ninety-seven percent (97%) of the Fair Market
-3-
Value of all of the Mortgage Loans included in the calculation of the
Warehousing Borrowing Base, the Company shall immediately make
principal prepayments on the Working Capital Notes (and, after the
same have been repaid in full, the Warehousing Notes) in an aggregate
amount equal to the amount of such excess, which aggregate amount
shall be paid to the Agent and distributed to each Lender ratably on
the basis of its Pro Rata Share thereof.
(g) Section 2.09(a) is hereby amended in its entirety to read as
follows:
(a) Letters of Credit. Upon the terms and subject to the
-----------------
conditions of this Agreement, U.S. Bank agrees to issue Letters of
Credit for the account of the Company; provided that U.S. Bank shall
--------
be under no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the Company's Letter of Credit
Obligations would exceed $1,250,000, (ii) the sum of the aggregate
principal amount of Working Capital Loans outstanding plus the Letter
----
of Credit Obligations would exceed the lesser of (A) the sum of the
Working Capital Commitment Amounts or (B) the Working Capital
Borrowing Base, or (iii) the sum of the aggregate principal amount of
all Loans plus the Letter of Credit Obligations would exceed ninety-
----
seven percent (97%) of the Fair Market Value of all of the Mortgage
Loans included in the calculation of the Warehousing Borrowing Base.
(h) Section 3.04 is hereby amended by deleting the last sentence
thereof.
(i) Section 4.01(e) is hereby amended by deleting clause (v) thereof,
adding the word "and" at the end of such clause (iii) thereof, and deleting
the word "and" at the end of clause (iv) thereof.
(j) Section 4.08(d) is hereby amended in its entirety to read as
follows:
(d) Indebtedness incurred to finance interest-only or
residual interests in Mortgage-backed Securities issued by the
Company and which Indebtedness is secured only by such residual
interests, provided, such Indebtedness does not exceed 75% of the
--------
value of such interest-only or residual interests determined in
accordance with GAAP;
(k) Section 7.10 is hereby amended by deleting the last sentence
thereof and inserting the following therefor:
-4-
Notwithstanding any of the foregoing or any other provision of this
Agreement, upon and after the occurrence of an Event of Default or
Unmatured Event of Default, (a) all proceeds received by the Agent
from the sale or other disposition of the Warehousing Collateral shall
be applied in accordance with Section 17 of the Pledge and Security
Agreement, and (b) all payments made by the Guarantor to the Agent
under the Guaranty shall be applied in the same order of priority as
is set forth in Section 17 of the Pledge and Security Agreement with
respect to application of the proceeds of Warehousing Collateral.
(l) Section 5.03 is deleted in its entirety.
(m) Schedule 1.01(b) is hereby amended in its entirety to read as set
forth on Schedule 1.01(b) hereto.
4. Conditions to Effectiveness of this Amendment. This Amendment shall
---------------------------------------------
become effective when the Agent shall have received at least eight (8)
counterparts of this Amendment, duly executed by the Company and each Lender and
acknowledged by NCFC, provided the following conditions are satisfied:
(a) Before and after giving effect to this Amendment, the
representations and warranties of the Company in Section 3 of the Credit
Agreement and Section 5 of the Pledge and Security Agreement, and of NCFC
in Section 15 of the Guaranty, shall be true and correct as though made on
the date hereof, except for changes that are permitted by the terms of the
Credit Agreement.
(b) Before and after giving effect to this Amendment, no Event of
Default and no Unmatured Event of Default shall have occurred and be
continuing under the Credit Agreement.
(c) No material adverse change in the business, assets, financial
condition or prospects of the Company or NCFC shall have occurred since the
Effective Date.
(d) The following shall have been delivered to the Agent, each duly
executed or certified, as the case may be, and dated as of the date of
delivery thereof:
(i) a new Working Capital Note payable to each Lender holding a
Working Capital Commitment, in the amount of such Lender's respective
Working Capital Commitment Amount after giving effect
-5-
to any increase thereof (the "New Note"), duly executed by the
Company;
(ii) certified copies of resolutions of the Board of Directors
of the Company authorizing or ratifying the execution, delivery and
performance of this Amendment and the New Note;
(iii) a certified copy of any amendment or restatement of the
Articles of Incorporation or the By-laws of the Company made or
entered following the date of the most recent certified copies thereof
furnished to the Lenders;
(iv) certified copies of all documents evidencing any necessary
corporate action, consent or governmental or regulatory approval (if
any) with respect to this Amendment and the New Note;
(v) a favorable opinion of Xxxxxxxx Xxxxxxxxxxx, General Counsel
to NCFC and senior legal counsel to the Company, addressed to the
Banks, as to the matters and to the effect set forth on Exhibit B
hereto; and
(vi) such other documents, instruments, opinions and approvals
as the Agent may reasonably request.
5. Acknowledgments. The Company and each Lender acknowledge that, as
---------------
amended hereby, the Credit Agreement remains in full force and effect with
respect to the Company and the Lenders, that each reference to the Credit
Agreement in the Loan Documents shall refer to the Credit Agreement as amended
hereby. The Company confirms and acknowledges that it will continue to comply
with the covenants set out in the Credit Agreement and the other Loan Documents,
as amended hereby, and that its representations and warranties set out in the
Credit Agreement and the other Loan Documents, as amended hereby, are true and
correct as of the date of this Amendment. The Company further represents and
warrants that (i) the execution, delivery and performance of this Amendment is
within its corporate powers and has been duly authorized by all necessary
corporate action; (ii) this Amendment has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its respective terms
(subject to limitations as to enforceability which might result from bankruptcy,
insolvency, or other similar laws affecting creditors' rights generally and
general principles of equity) and (iii) no Events of Default or Unmatured Events
of Default exist.
6. General.
-------
-6-
(a) The Company agrees to reimburse the Agent upon demand for all
reasonable expenses (including reasonable attorneys fees and legal
expenses) incurred by the Agent in the preparation, negotiation and
execution of this Amendment and any other document required to be furnished
herewith, and to pay and save the Lenders harmless from all liability for
any stamp or other taxes which may be payable with respect to the execution
or delivery of this Amendment, which obligations of the Company shall
survive any termination of the Credit Agreement.
(b) This Amendment may be executed in as many counterparts as may be
deemed necessary or convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
instrument.
(c) Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
(d) This Amendment shall be governed by, and construed in accordance
with, the internal law, and not the law of conflicts, of the State of
Minnesota, but giving effect to federal laws applicable to national banks.
(e) This Amendment shall be binding upon the Company, the Lenders,
the Agent and their respective successors and assigns, and shall inure to
the benefit of the Company, the Lenders, the Agent and the successors and
assigns of the Lenders and the Agent.
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
NEW CENTURY MORTGAGE
CORPORATION
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its Chief Executive Officer
------------------------
U.S. BANK NATIONAL ASSOCIATION,
formerly known as
FIRST BANK NATIONAL ASSOCIATION
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its Vice President
------------------------
GUARANTY FEDERAL BANK, FSB
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its Senior Vice President
------------------------
FIRST UNION NATIONAL BANK,
formerly known as
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its VP
------------------------
[Signature Page for Fourth Amendment to
Second Amended and Restated Credit Agreement]
RESIDENTIAL FUNDING CORPORATION
By/s/ [SIGNATURE ILLEGIBLE]^^
------------------------------
Its Director
-------------------------
BANK ONE, TEXAS, N.A.
By/s/ Xxxx X. Xxxxxxx
------------------------------
Its Vice President
-------------------------
COMERICA BANK CALIFORNIA, INC.
By/s/ Xxxxx X Xxxxxxxxx
------------------------------
Its Corporate Banking Officer
-------------------------
THE BANK OF NEW YORK
By/s/ Xxxxxx X. Xxxxxxx
------------------------------
Its Vice President
-------------------------
THE FIRST NATIONAL BANK
OF CHICAGO
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its Vice President
------------------------
-9-
NATIONSBANK OF TEXAS, N.A.
By /s/ Xxx X. Xxxxxx
-----------------------------
Its Senior Vice President
------------------------
[Signature Page for Fourth Amendment to
Second Amended and Restated Credit Agreement]
THE UNDERSIGNED, NEW CENTURY FINANCIAL CORPORATION, HEREBY (1) AGREES
THAT EACH REFERENCE TO THE CREDIT AGREEMENT, OR WORDS OF SIMILAR IMPORT,
CONTAINED IN THE SECOND AMENDED AND RESTATED GUARANTY DATED AS OF JULY31, 1997
(THE "GUARANTY") BY THE UNDERSIGNED TO THE LENDERS AND THE AGENT, SHALL BE A
REFERENCE TO THE CREDIT AGREEMENT AS AMENDED BY THE FOREGOING AMENDMENT, (2)
CONFIRMS THAT THE GUARANTY SHALL REMAIN IN FULL FORCE AND EFFECT AFTER GIVING
EFFECT TO THE FOREGOING AMENDMENT, AND (3) CONFIRMS AND ACKNOWLEDGES THAT ITS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 15 OF THE GUARANTY ARE TRUE
AND CORRECT AS OF THE DATE OF THE FOREGOING AMENDMENT.
NEW CENTURY FINANCIAL CORPORATION
By/s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------
Its President
----------------------------
SCHEDULE 1.01(b)
BANK COMMITMENTS
----------------
Working
Warehousing Capital
Banks Commitment Commitment
----- ----------- -----------
U.S. Bank National Association $60,000,000 $11,500,000
Guaranty Federal Bank, F.S.B. $50,000,000 0
Comerica Bank California, Inc. $15,000,000 0
First Union National Bank $25,000,000 0
Residential Funding Corporation $25,000,000 0
Bank One, Texas, N.A. $30,000,000 0
Xxx Xxxx xx Xxx Xxxx $25,000,000 0
The First National Bank of Chicago $30,000,000 0
NationsBank of Texas, N.A. $30,000,000 0
