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EXHIBIT 10.8
THIRD AMENDMENT TO
CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 12th day of May 1997, by
and between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware
corporation ("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation ("Xxxxxxx," Washington and Xxxxxxx
are hereinafter collectively referred to as the "Borrowers"), and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender").
WHEREAS, the Borrowers and the Lender have entered into a
revolving warehouse facility with a present Warehousing Commitment
Amount of One Hundred Fifty Million Dollars ($150,000,000), to
finance the origination and acquisition of Mortgage Loans as
evidenced by a Warehousing Promissory Note in the principal sum of
One Hundred Fifty Million Dollars ($150,000,000), dated as of June
14, 1996 (the "Warehousing Note"), and by a Credit and Security
Agreement dated as of June 14, 1996, as the same may have been
amended or supplemented (the "Agreement");
WHEREAS, the Borrowers and the Lender have entered into a
servicing facility with a present Servicing Facility Commitment
Amount of Ten Million Dollars ($10,000,000) as evidenced by a
Servicing Facility Promissory Note in the principal sum of Ten
Million Dollars ($10,000,000), dated as of June 14, 1996.
WHEREAS, the Borrowers have also entered into a term loan
facility with a present Term Loan Commitment Amount of Ten Million
Dollars ($10,000,000) as evidenced by a Term Loan Promissory Note
in the principal sum of Ten Million Dollars ($10,000,000), dated as
of June 14, 1996, a Term Loan Promissory Note in the principal sum
of Ten Million Dollars ($10,000,000), dated as of June 14, 1996,
and the Agreement;
WHEREAS, the Borrowers have requested the Lender to amend the
certain terms of the Agreement, and the Lender has agreed to such
amendment of the Agreement subject to the terms and conditions of
this Amendment;
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants, agreements and conditions hereinafter set
forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise
defined shall have their respective meanings set forth in the
Agreement.
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2. The effective date ("Effective Date") of this Amendment
shall be May 14, 1997, the date on which the Borrowers have complied with
all the terms and conditions of this Amendment.
3. Section 1.1 of the Agreement shall be amended to delete
the definition of "Servicing Facility Rate" in its entirety,
replacing it with the following definition:
"Servicing Facility Rate" means a floating rate of
interest per annum equal to three percent (3.00%) per annum
over LIBOR. The Servicing Facility Rate shall be adjusted on
and as of the effective date of each weekly change in LIBOR.
The Lender's determination of the Servicing Facility Rate as
of any date of determination shall be conclusive and binding,
absent manifest error.
4. Sections 7.7 and 7.8 of the Agreement shall be deleted in
their entirety and the following shall be substituted in lieu thereof:
7.7 Minimum Adjusted Tangible Net Worth. Permit
Adjusted Tangible Net Worth of Washington and its
Subsidiaries, on a consolidated basis, at any time to be
less than Fifteen Million Dollars ($15,000,000).
7.8 Liquidity. Permit the ratio of Liquid Assets to
Tangible Net Worth of Washington and its Subsidiaries, on a
consolidated basis, at any time to be less than twenty-five
percent (25%).
5. Washington is in Default under the terms of the Liquidity
covenant of Section 7.8 of the Agreement. The Lender hereby agrees
to waive its Default rights with respect to the breach of the
Liquidity covenant for the period from March 31, 1997 through the
Effective Date of this Amendment. This waiver applies only to the
specific instance described herein. It is not a waiver of any
subsequent Default of the same provision of the Agreement, nor is
it a waiver of any other Default of the Agreement.
6. Exhibit I-MF to the Agreement is deleted in its entirety
and replaced with the new Exhibit I-MF attached to this Amendment.
All references in this Amendment and the Agreement to Exhibit I-MF
shall be deemed to refer to the new Exhibit I-MF.
7. The Borrowers shall deliver to the Lender (a) an executed
original of this Amendment; an executed Certificate of Secretary
with corporate resolutions; and (b) a Two Hundred Fifty Dollar
($250) document production fee.
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8. The Borrowers represent, warrant and agree that (a) there
exists no Default or Event of Default under the Loan Documents, (b)
the Loan Documents continue to be the legal, valid and binding
agreements and obligations of the Borrowers enforceable in
accordance with their terms, as modified herein, (c) the Lender is
not in default under any of the Loan Documents and the Borrowers
have no offset or defense to its performance or obligations under
any of the Loan Documents, (d) the representations contained in the
Loan Documents remain true and accurate in all respects, and (e)
there has been no material adverse change in the financial
condition of the Borrowers from the date of the Agreement to the
date of this Amendment.
9. Except as hereby expressly modified, the Agreement shall
otherwise be unchanged and shall remain in full force and effect,
and the Borrowers ratify and reaffirm all of their obligations
thereunder.
10. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the
same instrument.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused
this Amendment to be duly executed on their behalf by their duly
authorized officers as of the day and year above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By: /s/ XXXXXX XXXXXXXXXX
-----------------------------------------
Its: President & CEO
----------------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By: /s/ XXXXXX XXXXXXXXXX
-----------------------------------------
Its: Chairman
----------------------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Its: Director
----------------------------------------
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STATE OF VIRGINIA )
) ss
COUNTY OF FAIRFAX )
On May 15, 1997, before me, a Notary Public, personally appeared
XXXXXX XXXXXXXXXX, the President & CEO of WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
STATE OF VIRGINIA )
) ss
COUNTY OF FAIRFAX )
On May 15, 1997, before me, a Notary Public, personally appeared
XXXXXX XXXXXXXXXX,the Chairman of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a
Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
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STATE OF MARYLAND )
) ss
COUNTY OF XXXXXXXXXX )
On May 15, 1997, before me, a Notary Public, personally appeared
Xxxx X. Xxxxxxx, the Director of RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 11/01/00
---------
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EXHIBIT I-MF
OFFICER'S CERTIFICATE
Reference is made to that certain Credit and Security Agreement
between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware
corporation ("Xxxxxxx," Washington and Xxxxxxx are hereinafter collectively
referred to as the "Borrowers"), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (the "Lender"), dated as of June 14, 1996 (as the same may
be amended, modified, supplemented, renewed or restated from time to time, the
"Agreement"). All capitalized terms used herein and all Section numbers given
herein refer to those terms and Sections set forth in the Agreement. This
Officer's Certificate is submitted to the Lender pursuant to Section 6.2(c) of
the Agreement.
The undersigned hereby certifies to the Lender that as of the close
of business on_______________________, 19__ ("Statement Date",) and with
respect to the Borrowers and their Subsidiaries on a consolidated basis:
1. As illustrated in the attached calculations supporting this Officer's
Certificate, the Borrowers met the covenants set forth in Sections
7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12 and 7.13, or if the Borrowers did
not meet any of such covenants, a detailed explanation is attached
setting forth the nature and period of the existence of the Default
and the action the Borrowers have taken, are taking, and propose to
take with respect thereto.
2. No Servicing Contracts have been sold or pledged by the Borrowers
except as permitted under the terms of the Agreement.
3. No payments in advance of the scheduled maturity date have been made
with respect to any Subordinated Debt. The Borrowers have incurred no
Debt required to be subordinated pursuant to Section 6.10.
4. The Borrowers were in compliance with the applicable HUD, GNMA, and
Investor net worth requirements, and in good standing with VA, HUD,
GNMA, and each Investor.
5. I have reviewed the terms of the Agreement and have made, or caused
to be made under my supervision, a review in reasonable detail of the
transactions and conditions of the Borrowers (and, if applicable,
their Subsidiaries) and such review has not disclosed the existence,
and I have no knowledge of the existence, of any Default or Event of
Default, or if any
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Default or Event of Default existed or exists, a detailed
explanation is attached specifying the nature and period of
the existence of the Default and the action the Borrowers have
taken, are taking and propose to take with respect thereto.
6. Pursuant to Section 6.2 of the Agreement, enclosed are the
financial statements of the Borrowers as of the Statement
Date. The financial statements for the period ending on the
Statement Date fairly present the financial condition and
results of operations of the Borrowers (and, if applicable,
its Subsidiaries) as at the Statement Date.
Dated:
-----------------------------
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
-------------------------------------
Its:
------------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
-------------------------------------
Its:
------------------------------------
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CALCULATIONS SUPPORTING OFFICER'S CERTIFICATE
Borrowers Names: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. and
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED and its
Subsidiaries
Statement Date:___________________________________
All financial calculations set forth herein are as of the Statement
Date.
I. TANGIBLE NET WORTH
Tangible Net Worth of Washington is:
Excess of total assets over total liabilities: $____________
Plus: Loan loss reserves: $____________
Plus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $____________
Minus: Advances to owners, officers or
Affiliates: $____________
Minus: Investments in Affiliates: $____________
Minus: Assets pledged to secure liabilities
not included in Debt: $____________
Minus: Intangible assets: $____________
Minus: Any other HUD nonacceptable assets: $____________
Minus: Other assets unacceptable to the
Lender: $____________
TANGIBLE NET WORTH $_____________________
II. ADJUSTED TANGIBLE NET WORTH
A. Adjusted Tangible Net Worth of Washington is:
Tangible Net Worth (from IA above) $____________
Minus: Capitalized excess servicing fees: $____________
Minus: Capitalized servicing rights: $____________
Plus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $____________
Plus: .005 times Adjusted Servicing Portfolio
(from IIIA below): $____________
ADJUSTED TANGIBLE NET WORTH $_____________________
B. Requirements of Section 7.7 of the Agreement:
MINIMUM ADJUSTED TANGIBLE NET WORTH OF $15,000,000.
C. Covenant Satisfied: ______ Covenant Not Satisfied: ______
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III. ADJUSTED SERVICING PORTFOLIO
A. Adjusted Servicing Portfolio of the Borrowers is:
Servicing Portfolio owned by the Borrowers is: $____________
Minus: The unpaid principal balance of Mortgage Loans:
Past due 60 days or more: $____________
That are Commercial, FNMA DUS,
or FHA co-insured: $____________
Sold with recourse: $____________
For which the Servicing Contracts
are pledged: $____________
Serviced by Borrowers for others under
subservicing arrangements: $____________
ADJUSTED SERVICING PORTFOLIO $_____________________
B. Requirements of Section 7.10 of the Agreement:
ADJUSTED SERVICING PORTFOLIO OF $3,000,000,000.
C. COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
IV. DEBT OF THE BORROWERS
Total liabilities $____________
Minus: Loan loss reserves: $____________
Minus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $____________
Minus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $____________
DEBT $_____________________
V. RATIO OF DEBT TO ADJUSTED TANGIBLE NET WORTH
A. The ratio of Debt to Adjusted Tangible Net Worth
(IV to II.A) is: ______ to 1
B. Requirements of Section 7.6 of the Agreement:
The ratio of Debt to Adjusted Tangible Net Worth shall
not exceed 15 to 1.
C. COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
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VI. LIQUID ASSETS OF THE BORROWERS
Unrestricted and Unencumbered Cash $____________
Plus: Funds on deposit in any United States bank $____________
Plus: Investment grade commercial paper $____________
Plus: Money market funds $____________
Plus: Marketable securities $____________
Plus: Mortgage Loans and Mortgage-backed Securities
held for sale $____________
Minus: Outstanding liabilities secured by Mortgage Loans
and Mortgage-backed Securities held for sale $____________
LIQUID ASSETS $______________________
VII. LIQUIDITY
A. The ratio of Liquid Assets to Tangible Net Worth
(VI to I) is: ______ to 1
B. Requirements of Section 7.8 of the Agreement:
The ratio of Liquid Assets to Tangible Net Worth shall
not be less than twenty-five percent (25%).
C. COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
VIII. MAXIMUM PASS-THROUGHS
A. The aggregate cumulative outstanding amount of advances
to or on behalf of defaulting mortgagors paid or required
to have been paid by the Borrowers on Mortgage Loans and
Mortgage-backed Securities ("Pass-throughs") is:
$____________
B. The ratio of Pass-throughs to Adjusted Tangible Net Worth
(VIII.A to I.A) is: ______ to 1
C. Requirements of Section 7.9 of the Agreement:
The ratio of Pass-throughs to Adjusted Tangible Net Worth
shall not exceed thirty-five percent (35%).
D. COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
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IX. DEBT SERVICE COVERAGE RATIO
A. Net income for the previous four quarters: $____________
Plus: Income tax expenses: $____________
Minus: Income taxes paid: $____________
Plus: Depreciation, amortization and other non-cash
deductions: $____________
Minus: Non-cash revenue: $____________
Minus: Dividends and distributions: $____________
Plus: Term Loan/Servicing Facility interest
expenses: $____________
FUNDS FROM OPERATIONS $_____________________
B. Scheduled Term Loan/Servicing Facility principal payment
(following four quarters): $____________
Plus: Term Loan/Servicing Facility interest expenses
(previous four quarters):
$____________
Annual debt payments $____________
C. The ratio of XA to XB is: _______to 1.00
D. Requirements of Section 7.11 of the Agreement:
Permit the Debt Service Coverage Ratio, measured as of
the first day of any fiscal quarter, to be less than 1.50
to 1.00.
E. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
X. DELINQUENCY RATIO
A. Unpaid Principal Balance of Mortgage Loans Serviced that
are:
30 or more days past due: $____________
Foreclosure: $____________
In Bankruptcy: $____________
TOTAL $_____________________
B. Unpaid Principal Balance of all Mortgage Loans Serviced
by Borrowers: $____________
C. The ratio of XIA to XIB (expressed as a percentage): _________%
D. Requirements of Section 7.12 of the Agreement:
The Delinquency Ratio shall not exceed 10%.
E. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
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XI. TRANSACTIONS WITH AFFILIATES
A. Loans, advances, and extensions of credit made by the
Borrowers to their Affiliates total: $_____________
B. Capital contributions made by the Borrowers to their
Affiliates total: $_____________
C. Management fees paid to Affiliates during the current
fiscal year total: $_____________
D. Transfers, sales, pledges, assignments or other
dispositions of assets made by the Borrowers to their
Affiliates total: $_____________
E. Requirements of Section 7.13 of the Agreement:
1. No loans, advances or extensions of credit shall be
made by the Borrowers to Affiliates.
COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
2. No capital contributions shall be made by the
Borrowers to any Affiliate.
COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
3. No transfers, sales, pledges assignments or other
dispositions of assets by the Borrowers to
Affiliates.
COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
4. No Management fees shall be paid by the Borrowers
to Affiliates.
COVENANT SATISFIED:____ COVENANT NOT SATISFIED:____
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