EXHIBIT 10.20
SECOND AMENDMENT TO
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
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AND AGREEMENT TO ADD BANKS
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THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND
AGREEMENT TO ADD BANKS (the "Amendment") dated as of December 22, 1997 by and
among NEW CENTURY MORTGAGE CORPORATION, a California corporation (the
"Company"), FIRST BANK NATIONAL ASSOCIATION, a national banking association
("First Bank"), GUARANTY FEDERAL BANK, FSB, a federal savings bank ("GFB"),
FIRST UNION NATIONAL BANK, a national banking association ("First Union"),
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("RFC"), BANK ONE,
TEXAS, N.A., a national banking association ("Bank One"), (First Bank, GFB,
First Union, RFC and Bank One being hereinafter referred to collectively as the
"Existing Banks" and individually as an "Existing Bank"), THE BANK OF NEW YORK,
a New York banking corporation ("BNY") and THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association ("First Chicago"; BNY and First Chicago being
herein referred to collectively as the "New Banks" and individually as a "New
Bank"), and FIRST 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 Existing Banks 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 (as so amended, the
"Credit Agreement"), pursuant to which the Existing Banks provide the Company
with revolving mortgage warehousing and working capital credit facilities; and
WHEREAS, the Company and the Existing Banks have agreed to amend the Credit
Agreement to add the New Banks as parties thereto, to reallocate the Warehousing
Commitments and to add certain covenants thereto, 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:
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1. Certain Defined Terms. Each capitalized term used herein without
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being defined herein that is defined in the Credit Agreement shall have the
meaning given to it therein.
2. Warehousing Commitment Amount Increase. Effective as of the date of
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this Amendment, the total Warehousing Commitment Amount is increased to
$260,000,000 pursuant to Section 8.06(b) of the Credit Agreement.
3. Additional Lenders. Effective as of the date of this Amendment, BNY
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and First Chicago shall be and are each a "Lender" under the Credit Agreement
and shall and do have all of the rights, privileges and benefits of a Lender
under the Credit Agreement and the Loan Documents, and all of the duties of a
Lender thereunder, in each case as if these New Banks had each been a Lender
initially a party to the Credit Agreement.
4. Reallocation of Commitments. As of the effective date of this
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Amendment, the Warehousing Commitment Amount of First Bank shall be reduced to
Sixty Million Dollars ($60,000,000), the Warehousing Commitment Amount of BNY
shall be Twenty-five Million Dollars ($25,000,000), and the Warehousing
Commitment Amount of First Chicago shall be Thirty Million Dollars
($30,000,000).
5. Amendment to Credit Agreement. The Credit Agreement is hereby amended
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as follows:
(a) The definitions of "Tangible Net Worth," "Total Indebtedness" and
"Total Liabilities" in Section 1.01 are hereby amended in their entirety to
read as follows:
"Tangible Net Worth": as of any date of determination, the
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consolidated Net Worth of the Company or NCFC, as applicable, and its
respective Subsidiaries, less the consolidated book value of all
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assets of the Company or NCFC, as applicable, and its respective
Subsidiaries (to the extent reflected as an asset in the balance sheet
of the Company or NCFC, as applicable, or any such Subsidiary at such
date) which are treated as intangibles under GAAP, including, without
limitation, such terms as deferred financing expenses, net leasehold
improvements, good will, trademarks, trade names, service marks,
copyrights, patents, licenses and unamortized debt discount and
expense; provided, that interest-only or residual interests in
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Mortgage-backed Securities issued by the Company shall not be treated
as intangibles for purposes of this definition.
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"Total Indebtedness": at any time of determination, the amount,
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on a consolidated basis, of the liabilities of the Company or NCFC, as
applicable, and its respective Subsidiaries, determined in accordance
with GAAP, minus obligations under gestation repurchase agreements or
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similar arrangements under which the Company or its Subsidiaries are
required to repurchase Mortgage-backed Securities or Mortgage Loans
from any Lender or other counterparty reasonably satisfactory to the
Agent, whether or not such obligations are reflected on the Company's
balance sheet; provided, that such gestation repurchase agreements are
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entered into in the ordinary course of business in contemplation of
the subsequent non-recourse sale of such Mortgage-backed Securities or
Mortgage Loans.
"Total Liabilities": at any time of determination, the amount,
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on a consolidated basis, of the liabilities of the Company or NCFC, as
applicable, and its respective Subsidiaries, determined in accordance
with GAAP.
(b) Section 1.01 is hereby further amended to add the following
definitions in the appropriate alphabetical order:
"Daily Leverage Ratio": as of any date of determination, the
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ratio of (a)Total Liabilities of NCFC and its Subsidiaries on such
date to (b)Tangible Net Worth of NCFC and its Subsidiaries as of the
last day of the most recently completed month.
"Quarterly Average Leverage Ratio": for each three-month period
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ending on ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, September30 or December31 of any year,
beginning December31, 1997, the ratio of (a) the average daily amount
of Total Liabilities of NCFC and its Subsidiaries outstanding during
such three-month period to (b)the average of the Tangible Net Worth of
NCFC and its Subsidiaries at the end of each month during such three-
month period.
(c) Section 4.08 is hereby amended to delete the proviso at the end
thereof and substitute the following therefor:
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provided, that in no event shall (i)the Leverage Ratio of the Company
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be greater than 8 to 1 as of the last day of each fiscal quarter of
the Company, (ii)the Quarterly Average Leverage Ratio for any period
of measurement be greater than 9 to 1, or (iii)the Daily Leverage
Ratio on any date be greater than 12 to 1.
(d) Section 4.12 is hereby amended to add the following at the end
thereof:
NCFC will at all times maintain Tangible Net Worth of not less than
the greater of (i)$50,000,000 or (ii)eighty-five percent (85%) of the
Tangible Net Worth at the end of its most recently completed fiscal
year (or, in the case of the Tangible Net Worth at the end of any
fiscal year, its prior fiscal year) plus ninety percent (90%) of
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capital contributions made during such fiscal year plus fifty percent
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(50%) of positive year-to-date net income.
Schedule 1.01(b) is hereby amended in its entirety to read as set
forth on Schedule 1.01(b) hereto.
6. Conditions to Effectiveness of this Amendment. This Amendment shall
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become effective when the Agent shall have received at least four (4)
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 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.
(c) No material adverse change in the business, assets, financial
condition or prospects of the Company shall have occurred since the
Effective Date.
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(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) executed copies of new Warehousing Promissory Notes in
favor of BNY and First Chicago (the new Warehousing Promissory Notes
herein referred to collectively as "New Bank Notes" and individually
as a "New Bank Note");
(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 Bank Notes;
(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 Bank Notes;
(v) a favorable opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, counsel to the
Company and NCFC, addressed to the Lenders, as to the matters and to
the effect set forth on Exhibit I hereto; and
(vi) such other documents, instruments, opinions and approvals
as the Agent may reasonably request.
7. Acknowledgments. The Company and each Lender acknowledges that, as
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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, and that each reference to the Warehousing Notes or the Notes in the
Loan Documents shall include the New Bank Notes. 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 and the New Bank Notes are within its
corporate powers and have been duly authorized by all necessary corporate
action; (ii) this Amendment and the New Bank Notes have been duly executed and
delivered by the Company and constitute the legal, valid and
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binding obligations of the Company enforceable against the Company in accordance
with their 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.
8. General.
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(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 or the New Bank Notes, 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.
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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
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Its
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FIRST BANK NATIONAL ASSOCIATION
By
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Its
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GUARANTY FEDERAL BANK, FSB
By
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Its
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FIRST UNION NATIONAL BANK
By
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Its
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[Signature Page for Second Amendment to
Second Amended and Restated Credit Agreement]
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RESIDENTIAL FUNDING CORPORATION
By
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Its
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BANK ONE, TEXAS, N.A.
By
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Its
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COMERICA BANK CALIFORNIA, INC.
By
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Its
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THE BANK OF NEW YORK
By
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Its
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THE FIRST NATIONAL BANK
OF CHICAGO
By
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Its
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[Signature Page for Second Amendment to
Second Amended and Restated Credit Agreement]
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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 FIRST AMENDMENT TO THE
CREDIT AGREEMENT AND THE FOREGOING AMENDMENT, (2) CONFIRMS THAT THE GUARANTY
SHALL REMAIN IN FULL FORCE AND EFFECT AFTER GIVING EFFECT TO THE FIRST AMENDMENT
TO THE CREDIT AGREEMENT AND 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
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Its
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SCHEDULE 1.01(b)
BANK COMMITMENTS
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Working
Warehousing Capital
Banks Commitment Commitment
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First Bank National Association $60,000,000 $4,000,000
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 ▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ $25,000,000 0
The First National Bank of Chicago $30,000,000 0
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