1
Exhibit 10.35
AMENDMENT NUMBER ONE
to the
Amended and Restated Master Loan and Security Agreement
dated as of November 23, 1998
by and among
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,
HANOVER CAPITAL PARTNERS, LTD.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT is made this 28th day of March, 1999, by and
among HANOVER CAPITAL MORTGAGE HOLDINGS, INC., HANOVER CAPITAL PARTNERS, LTD.,
each having an address at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(each, a "Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., having an address at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 (the "Lender"), to the Amended and Restated Master Loan and
Security Agreement, dated as of November 23, 1998, by and among the Borrowers
and the Lender (the "Agreement"). Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
1. Effective as of March 28, 1999, Section 1 of the Agreement is hereby
amended as follows:
(a) The definition of Applicable Collateral Percentage is
hereby deleted in its entirety and replaced with the following:
"Applicable Collateral Percentage" shall mean, either (i) for
the first 180 days following the date such Eligible Asset
first becomes subject to the terms of this Agreement, with
respect to all Eligible Mortgage Loans (other than Delinquent
Mortgage Loans), 95%, with respect to Eligible Bonds that are
Investment Grade Bonds which are rated AA- or better by S&P
and Aa3 or better by Xxxxx'x, 75%, with respect to Eligible
Bonds that are Investment Grade Bonds which are rated A- or
better by S&P and A3 or better by Xxxxx'x, 70%, with respect
to Eligible Bonds that are Investment Grade Bonds which are
rated BBB- or better by S&P and Baa3 or better by Xxxxx'x,
60%, with respect to Eligible Bonds that are Non-Investment
Grade Bonds, 60%, with respect to Thirty Day Delinquent
Mortgage Loans, 90%, with respect to Sixty Day Delinquent
Mortgage Loans 85%, with respect to Pledged Stock, the
percentage applicable to the Underlying Eligible Bonds owned
by the applicable Eligible Entity, and with respect to
Participation Certificates, 95% multiplied by the Ownership
Percentage or (ii) thereafter, 0%."
(b) The definition of Applicable Margin is hereby amended by
substituting "1.25%" for ".70%" after the term "Tranche A Advances",
"1.55%" for "1.00%" after the term "Tranche B Advances" and "1.80%" for
"1.25%" after the term "Tranche C Advances".
2
(c) The definition of Collateral Value is hereby amended as
follows:
(i) Subclause (iii) thereof is hereby amended by
substituting "$10,000,000" for "$2,000,000" in the
fifth line thereof and by substituting "5%" for "1%"
in the sixth line thereof.
(ii) Subclause (iv)(J) thereof is hereby amended to read
in its entirety as follows:
"(J) which has a Material Exception with respect
thereto which was not otherwise waived by
Lender:"
(iii) The following subclause (v) is hereby added to the
end thereof:
"(v) the aggregate Collateral Value of all
Non-Investment Grade Bonds shall not at any time
exceed $15,000,000."
(d) The definition of Interest Period is hereby deleted in its
entirety and replaced with the following:
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with
respect to such Advance and ending on the calendar day prior
to the Payment Date of the next succeeding month, and (ii)
thereafter, each period commencing on the Payment Date of a
month and ending on the calendar day prior to the Payment Date
of the next succeeding month. Notwithstanding the foregoing,
no Interest Period may end after the Termination Date."
(e) The definition of Investment Grade is hereby amended by
substituting "Baa3" for "Baa2" in the second line thereof.
(f) The definition of Market Value is hereby amended as
follows:
(i) by adding the following sentence before the last sentence
thereof:
"The Lender shall have the right to xxxx to market
the Eligible Assets on a daily basis.";
(ii) by adding the following to the end thereof:
"The Borrowers acknowledges that the Lender's
determination of Market Value is for the limited
purpose of determining Collateral Value for lending
purposes hereunder without the ability to perform
customary purchaser's due diligence and is not
necessarily equivalent to a determination of the fair
market value of the Eligible Assets achieved by
obtaining competing bids in an orderly market in
which the Borrowers are not in default and the
2
3
bidders have adequate opportunity to perform
customary loan and servicing due diligence."
(g) The definition of Termination Date is hereby amended by
substituting "March 27, 2000" for "March 28, 1999" in the first line
thereof.
2. Effective as of March 28, 1999, Section 2.04(b) of the Agreement is
hereby amended by deleting the penultimate sentence of such section and the
immediate preceding sentence and inserting in their place the following:
Accrued interest on each Advance as calculated in this Section
2.05(b) shall be payable monthly on each Payment Date and on
the Termination Date, except that interest payable at the
Post-Default Rate shall accrue daily and shall be payable
promptly upon receipt of invoice.
3. Effective as of March 28, 1999, Section 2.07 of the Agreement is
hereby deleted in its entirety and replaced with the following:
"2.07 Optional Prepayments.
(a) The Advances are prepayable without premium or penalty, in
whole or in part on each Payment Date or after providing not
less than two (2) Business Days prior notice. The Advances are
prepayable at any other time, in whole or in part, in
accordance herewith and subject to clause (b) below. Any
amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest
thereon) until paid in full. Amounts repaid may be reborrowed
in accordance with the terms of this Loan Agreement. If the
Borrowers intend to prepay an Advance in whole or in part from
any source, the Borrowers shall give two (2) Business Days'
prior written notice thereof to the Lender. If such notice is
given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued
interest to such date on the amount prepaid. Partial
prepayments shall be in an aggregate principal amount of at
least $100,000.
(b) If the Borrowers make a prepayment of the Advances other
than as provided in Section 2.07(a) above, the Borrowers shall
indemnify the Lender and hold the Lender harmless from any
actual loss or expense which the Lender may sustain or incur
arising from (a) the deployment of funds obtained by the
Lender to maintain the Advances hereunder or from (b) fees
payable to terminate the deposits from which such funds were
obtained, in either case, which actual loss or expense shall
be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds
for such Advances for the period from the date of such payment
through the earlier of (x) the second Business Day following
receipt of such payment or (y) the following Payment Date over
(ii) the amount of interest likely to be realized by such
Lender in redeploying the funds not utilized by reason of such
payment for such period. This Section 2.07 shall survive
termination of this Agreement and payment of the Note."
3
4
4. Effective as of March 28, 1999, Section 3 of the Agreement is hereby
amended by adding the following Subsections to the end thereof:
"3.05 Non-usage Fee. The Borrowers agree to pay to the Lender,
on each Commitment Fee Payment Date, in addition to any
Commitment Fee then payable, a non-usage fee equal to (a) 12.5
basis points (0.125%) multiplied by (b)(i) the number of days
from and including March 27, 1999 or the previous Commitment
Fee Payment Date up to but not including the related
Commitment Fee Payment Date or the Termination Date, as
applicable, during which the unused portion of the Maximum
Committed Amount exceeded $50,000,000, divided by (ii) 360,
multiplied by (c) the average daily amount of the entire
unused portion of the Maximum Committed Amount for the
applicable days on which the unused portion of the Maximum
Committed Amount exceeded $50,000,000, such payment to be made
in Dollars, in immediately available funds, without deduction,
set-off, or counterclaim. The Lender may, in its sole
discretion, net such non-usage fee from the proceeds of any
Advance made to a Borrower hereunder.
3.06 Facility Fee. On the Termination Date, the Borrowers
shall pay to the Lender a facility fee equal to the excess, if
any, of (i) $500,000 over (ii) the total amount of any
underwriting fees earned by the Lender during the period from
March 28, 1999 through March 27, 2000, in connection with the
securitization of any Eligible Assets (excluding for purposes
of this clause (ii) any underwriting fees earned pursuant to
the letter agreement among the Borrowers and the Lender dated
as of February 23, 1999 (the "Letter Agreement"). In addition,
the Lender shall be paid a fee equal to 12/32 times the
principal amount of the Eligible Assets which are securitized
as described in the Letter Agreement upon the earlier to occur
of (i) the closing date for such securitization or (ii) July
31, 1999 (if such securitization has not occurred on or before
such date with the Lender acting as co-lead manager)."
5. Effective as of March 28, 1999, Section 5.01 of the Agreement is
hereby amended by adding the following subclause (r) to the end thereof:
"(r) Year 2000 Compliance. The Lender shall have
satisfactorily completed its due diligence of the Year 2000
Program of each Borrower and shall have determined that the
Year 2000 Issues will not have a material adverse effect on
the Borrowers' or the Subservicer's operations or financial
condition."
6. Effective as of March 28, 1999, Section 6.01(a) of the Agreement is
hereby amended to read in its entirety as follows:
(a) The unaudited consolidated balance sheet of Hanover
Capital Holdings and its consolidated Subsidiaries as of
December 31, 1998, reported thereon by Deloitte & Touche, a
copy of which has heretofore been furnished to the Lender, is
complete and correct and presents fairly the consolidated
financial condition of Hanover
4
5
Capital Holdings and its consolidated Subsidiaries as at such
dates and the consolidated results of their operations and
their consolidated cash flows for the fiscal year then ended.
7. Effective as of March 28, 1999, Section 6.02 of the Agreement is
hereby amended to read in its entirety as follows:
"6.02 No Change. Since December 31, 1998, there has been no
development or event nor any prospective development or event
which has had or should reasonably be expected to have a
Material Adverse Effect."
8. Effective as of March 28, 1999, Section 7.09 of the Agreement is
hereby amended to read in its entirety as follows:
7.09 Financial Condition Covenants.
(a) Maintenance of Tangible Net Worth. Hanover Capital
Holdings shall at all times maintain Tangible Net Worth of not
less than $60,000,000.
(b) Maintenance of Ratio of Indebtedness to Tangible Net
Worth. With respect to Hanover Capital Holdings or its
Subsidiaries, the ratio of Indebtedness to Tangible Net Worth
shall not at any time be greater than 10:1.
(c) Maintenance of Liquidity. Hanover Capital Holdings shall
ensure that, as of the end of each calendar month, it has Cash
Equivalents in an amount of not less than $2,500,000.
9. Effective as of March 28, 1999, Subsection 7.16 of the Agreement is
hereby amended by inserting "and shall not liquidate the Collateral on a
servicing released basis" after the word "Assets" in the second line thereof.
10. Effective as of March 28, 1999, Subsection 7.27 of the Agreement is
hereby amended by inserting "(a)" before the word "The" in the first line
thereof and by adding the following clause (b) to the end thereof:
"(b) By September 1, 1999, each Borrower shall be required to
provide written assurance to the Lender that it is year 2000
compliant. If satisfactory assurance can not be made on such
date, the Lender shall have no obligation to make any
additional Advances under this Agreement. In addition, the
failure of any Borrower to provide satisfactory assurance of
year 2000 compliance by September 30, 1999 shall constitute an
Event of Default under this Agreement."
11. Effective as of March 28, 1999, Section 8(a) of the Agreement is
hereby amended to read in its entirety as follows:
5
6
(a) Borrower Default in the Payment of any Advance or Fee.
Either Borrower shall default in the payment of any principal
of or interest on any Advance when due (whether at stated
maturity, upon acceleration or at mandatory payment) or in the
payment of any fee due under Section 3.03, 3.05 or 3.06; or
12. Effective as of March 28, 1999, Section 8(d)(ii) of the Agreement
is hereby amended by deleting the word "or" before "7.08" and inserting "or
7.16" after "7.08" in the second line thereof.
13. Effective as of March 28, 1999, Section 11.03(b) of the Agreement
is hereby amended as follows:
(a) by deleting the words "which amounts shall be paid
promptly by the Borrowers or may be netted out of any
Advances made by Lender" in the ninth line thereof.
(b) by inserting "and (iii) initial and ongoing fees and
expenses incurred by the custodian and any trustee
with respect to the Collateral under this Agreement"
after the word "hereof" in the last line thereof.
(c) by inserting "All of the foregoing amounts shall be
paid promptly by the Borrowers or may be netted out
of any Advances made by Lender hereunder." at the end
thereof.
14. Effective as of March 28, 1999, the telecopier number for notices
to the Lender as listed on the signature page of the Agreement is hereby amended
to read "(000) 000-0000."
15. This amendment shall be construed in accordance with the laws of
the State of New York and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflict of laws doctrine applied in such state.
16. This amendment may be executed in any number of counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one instrument.
17. Except as amended above, the Agreement shall continue in full force
and effect in accordance with its terms.
6
7
IN WITNESS WHEREOF, the Borrowers and the Lender have caused
this amendment to be executed and delivered by their duly authorized officers as
of the day and year first above written.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
(Borrower)
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
HANOVER CAPITAL PARTNERS, LTD.
(Borrower)
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
(Lender)
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
