EXHIBIT 10.4
3/02 AMENDMENT
(THE NINTH AMENDMENT)
DATED AS OF MARCH 29, 2002
TO
REPURCHASE FINANCING AGREEMENT
DATED AS OF OCTOBER 9, 1996
AMONG
ASSOCIATES FUNDING, INC.
("BORROWER")
RYLAND MORTGAGE COMPANY
("GUARANTOR")
JPMORGAN CHASE BANK
("CHASE"), AS AGENT ("AGENT")
AND
CERTAIN LENDERS
$35,000,000 (ORIGINALLY $100,000,000) REVOLVING CREDIT FACILITY
INDEX
"3/02 AMENDMENT"......................................................1
"AGENT"...............................................................1
"BORROWER"............................................................1
"CHASE"...............................................................1
"COMPANIES"...........................................................1
"GUARANTOR"...........................................................1
"LENDERS".............................................................1
"LOAN AGREEMENT"......................................................1
"STATED TERMINATION DATE".............................................1
TABLE OF CONTENTS
Preamble ..........................................................................1
Recitals ..........................................................................1
Amendments ........................................................................1
1. Amendment of Section 1.1........................................................1
2. Conditions Precedent............................................................2
3. Representations and Warranties..................................................2
4. Ratification....................................................................2
5. Miscellaneous...................................................................2
3/02 AMENDMENT TO
REPURCHASE FINANCING AGREEMENT
PREAMBLE
THIS 3/02 AMENDMENT TO REPURCHASE FINANCING AGREEMENT (the "3/02
AMENDMENT") entered into as of March 29, 2002, among ASSOCIATES FUNDING, INC., a
Delaware corporation ("BORROWER"), ▇▇▇▇▇▇ MORTGAGE COMPANY, an Ohio corporation
("GUARANTOR"), JPMORGAN CHASE BANK ("CHASE"), a New York banking corporation,
formerly known as The Chase Manhattan Bank and successor by merger to Chase Bank
of Texas, National Association, a national banking association formerly named
Texas Commerce Bank National Association, as a lender and as agent for the
lenders from time to time party thereto (in that capacity, the "AGENT"), and
Chase, as currently the only lender party to the Loan Agreement (defined below)
to amend (for the ninth time) the Loan Agreement, recites and provides as
follows:
RECITALS
Borrower and Guarantor (the "COMPANIES") and Chase, as Agent and the
only lender (the lenders thereunder being called the "LENDERS"), are party to
the Repurchase Financing Agreement dated as of October 9, 1996 (as amended
through the date of this amendment, the "LOAN AGREEMENT") providing for
revolving credit loans of (originally) up to $100 million of principal lent and
outstanding on any day during the term of the Loan Agreement, and previously
amended to, among other things, reduce such limit to $35 million and
subsequently (by the 9/00 Amendment to Repurchase Financing Agreement dated as
of September 1, 2000) to increase it back up to $45 million. Terms defined in
the Loan Agreement have the same meanings when used, unless otherwise defined,
in this amendment. THIS AMENDMENT IS FOR THE PURPOSES OF (i) DECREASING SUCH
LIMIT TO $35 MILLION AND (ii) EXTENDING THE STATED TERMINATION DATE TO MARCH 31,
2003. Accordingly, for valuable and acknowledged consideration, the parties to
this amendment agree as follows:
AMENDMENTS
1. AMENDMENT OF SECTION 1.1.
SECTION 1.1 is amended by adding the following new definition, in
alphabetical order:
"3/02 AMENDMENT" means the 3/02 Amendment to Repurchase
Financing Agreement dated as of March 29, 2002, executed by the parties
hereto and amending this Agreement (for the ninth time).
SECTION 1.1 is further amended by amending the following definitions to
henceforth read as follows:
"STATED TERMINATION DATE" means March 31, 2003.
And SCHEDULE 1.1(a) (first referred to in the Loan Agreement in the
definition of "Commitment" in SECTION 1.1 and last updated by the 9/00 Amendment
to Repurchase Financing Agreement dated September 1, 2000) is amended in its
entirety to henceforth read as does SCHEDULE 3/02-1.1(a) attached to this
amendment and hereby made a part hereof.
2. CONDITIONS PRECEDENT.
The Companies agree to forthwith deliver to the Agent: (a) counterparts
of this amendment executed by all of the parties named below, (b) for any
officer of either Company signing below on behalf of that Company but not
included in certificates of incumbency for that Company delivered to the Agent
before this amendment, a certificate of the secretary or assistant secretary of
that Company about the due incumbency of that officer, and (c) if the Agent
reasonably requires, resolutions of the directors of any Company authorizing
this amendment certified as accurate and complete by the secretary or assistant
secretary of the appropriate Company. This amendment shall become effective as
of the effective date of this amendment upon execution of this amendment by the
Borrower and the Agent.
3. REPRESENTATIONS AND WARRANTIES.
The Companies jointly and severally represent and warrant to Agent and
Lenders that, as of the date of this amendment and on the date of its execution
(a) the representations and warranties in the Loan Papers are true and correct
in all material respects except to the extent that (i) a representation or
warranty speaks to a specific date or (ii) the facts on which a representation
or warranty is based have changed by transactions or conditions contemplated or
permitted by the Loan Papers, and (b) no Default or Potential Default exists.
4. RATIFICATION.
The Companies ratify and confirm (a) all provisions of the Loan Papers
as amended by this amendment and (b) that all guaranties, assurances and Liens
granted, conveyed, or assigned to Agent or Lenders under the Loan Papers --
including, but not limited to, the unconditional and irrevocable guaranty by the
Guarantor of (i) the prompt payment of the Obligation at maturity, by
acceleration or otherwise, and at all times after maturity in accordance with
the Loan Papers, and (ii) the prompt performance of and compliance with every
term, covenant, and condition of the Loan Papers when due, all as stated in
Section 4.1 of the Loan Agreement -- as they may have been revised, extended,
and amended, continue to guarantee, assure and secure the full payment and
performance of the Obligation (including, without limitation, all amounts
evidenced now or in the future by any note delivered under this amendment).
In addition and without limiting the generality of the foregoing
(and without establishing or implying any requirement for any future
republication or reconfirmation thereof, the parties agreeing that there is and
shall be no such requirement), Guarantor hereby specifically republishes and
reconfirms its letter agreement with the Lender dated September 13, 2001, an
unsigned copy of which is attached as EXHIBIT 3/02-1 hereto and hereby made a
part hereof.
5. MISCELLANEOUS.
All references in the Loan Papers to the "Loan Agreement" are to the
Loan Agreement as heretofore amended and as amended by this amendment. This
amendment is a "Loan Paper" referred to in the Loan Agreement, and the
provisions relating to Loan Papers in the Loan Agreement are incorporated in
this amendment by reference. Except as specifically amended and modified in this
amendment, the Loan Agreement is unchanged and continues in full force and
effect. This amendment may be executed in any number of counterparts with the
same effect as if all signatories had signed the same document. All counterparts
must be construed together to constitute one and the same instrument. This
amendment binds and benefits the Companies, Agent, Lenders and their respective
successors and permitted assigns. THIS AMENDMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
2
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
The remainder of this page is intentionally blank; counterpart signature
pages follow.
3
EXECUTED as of the day and year first stated above.
ASSOCIATES FUNDING, INC. ▇▇▇▇▇▇ MORTGAGE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- -------------------------------
(Name) ▇▇▇▇▇ ▇. ▇▇▇▇ (Name) ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- ----------------------------
(Title) SR. VP & CFO (Title) SR. VP & CFO
---------------------------- ---------------------------
JPMORGAN CHASE BANK, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
(Name) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
(Title) VICE PRESIDENT
----------------------------
Counterpart signature page to 3/02 Amendment to Repurchase Financing
Agreement among Associates Funding, Inc., ▇▇▇▇▇▇ Mortgage Company
and JPMorgan Chase Bank
SCHEDULE 3/02-1.1(a)
LENDERS AND COMMITMENTS
================================================================================
NAME OF LENDER COMMITMENT
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JPMorgan Chase Bank $35,000,000
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Fed Tax ID No. ▇▇-▇▇▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
================================================================================
[JPMORGAN LOGO]
THE CHASE MANHATTAN BANK
717 ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
September 27, 2001
▇▇▇▇▇▇ Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇, Chief Financial Officer
Re: Repurchase Financing Agreement dated as of October 9, 1996 (as
heretofore amended eight times, the "LOAN AGREEMENT") among Associates
Funding, Inc., ▇▇▇▇▇▇ Mortgage Company ("▇▇▇▇▇▇") and The Chase
Manhattan Bank (successor by merger to Texas Commerce Bank National
Association which was renamed Chase Bank of Texas, National Association
before such merger)
Ladies and Gentlemen:
1. Negative Covenant. Section 8.3 of the Loan Agreement prohibits ▇▇▇▇▇▇
from making any loan, advance, extension of credit or capital contribution to,
making any investment in, or purchasing or committing to purchase any stock or
other securities or evidences of Debt of, or interests in, any other Person
other than Permitted Loans/Investments, which are defined in the Loan Agreement
as those loans and investments that are listed on Schedule 8.3 to the Loan
Agreement, item 2 of which list of Permitted Loans/Investments is "Permitted
Loans and Investments of Guarantor under the Existing Loan Agreement," which are
those loans and investments that are listed on Schedule 8.3 to the Restated
Credit Agreement dated June 16, 1995 between ▇▇▇▇▇▇, as borrower, Bank One,
Texas, N.A., as Agent, and certain lenders, as amended (the "EXISTING LOAN
AGREEMENT"). This Bank and ▇▇▇▇▇▇ intend that Schedule 8.3 to the Loan Agreement
and Schedule 8.3 to the Existing Loan Agreement be read together to determine
what loans, advances, extensions of credit or capital advances are permitted by
the Loan Agreement (copies of both Schedule 8.3 to the Loan Agreement and
Schedule 8.3 to the Existing Loan Agreement are attached hereto, as EXHIBITS 1
and 2, respectively, to facilitate that). ▇▇▇▇▇▇ has requested that, for
purposes of the Loan Agreement, this Bank agree that henceforth, in determining
whether ▇▇▇▇▇▇ is in compliance with item 10 of the Existing Loan Agreement's
list of Permitted Loans and Investments, which reads substantially as follows
(modified as indicated by brackets to clarify its intended meaning in the
present context):
10. Loans or advances by [▇▇▇▇▇▇] to ▇▇▇▇▇▇ Group in the management of
its cash so long as (a)(i) they are not made at a time when (and do not
cause) a Default, or any default by ▇▇▇▇▇▇ Group exists, in respect of
any of [▇▇▇▇▇▇'▇] material debt, and (ii) the total of those loans and
advances never (without the prior approval of [The Chase Manhattan
Bank]) exceeds the lesser of either 50% of [▇▇▇▇▇▇'▇] Net Worth or
$7,500,000 or (b) [they are] otherwise approved by [The Chase Manhattan
Bank] in writing;
the short term payment obligations of ▇▇▇▇▇▇ Group to ▇▇▇▇▇▇ that result from
▇▇. ▇▇▇▇▇ ▇▇▇▇
September 27, 2001
Page 3
Countrywide's making single payments on the last two business days of a quarter
to ▇▇▇▇▇▇ Group under Countrywide's Early Purchase Program of amounts that are
owed by Countrywide part to ▇▇▇▇▇▇ and part to ▇▇▇▇▇▇ Group, be disregarded in
determining the sum of loans or advances by ▇▇▇▇▇▇ to ▇▇▇▇▇▇ Group outstanding
from time to time (specifically, to test for compliance with clause (a)(ii) of
the above-quoted item 10.)
Please sign and return a copy of this letter to this Bank to confirm our
agreements as stated in clauses (a) and (b) of the second sentence of this Part
0 of this letter.
2. Financial Covenants. Section 9.3 of the Loan Agreement states that
the Guarantor (▇▇▇▇▇▇) must comply in all respects with the financial covenants
applicable to it as set forth in Section 9 of the Existing Loan Agreement, to
the same effect as if they were set forth in the Loan Agreement.
Please sign and return a copy of this letter to this Bank also to
confirm that such provision remains applicable, even though the Existing Loan
Agreement has been terminated, and that the referenced financial covenants with
which ▇▇▇▇▇▇ continues to be obligated to comply pursuant to Section 9.3 of the
Loan Agreement are the following:
- ▇▇▇▇▇▇'▇ Net Worth may not be less than $15 million at the end of any
quarter in ▇▇▇▇▇▇'▇ fiscal year.
- The ratio of ▇▇▇▇▇▇'▇ Total Liabilities to ▇▇▇▇▇▇'▇ Tangible Net Worth
may not exceed 13.5 to 1.0 at the end of any quarter in ▇▇▇▇▇▇'▇ fiscal year.
- The sum of ▇▇▇▇▇▇'▇ net income (excluding any recognized non-cash
income) or loss plus (to the extent deducted in calculating that net income or
loss) amortization, depreciation and other noncash charges (on a consolidated
basis) may never be less than $1.00 at the end of any of ▇▇▇▇▇▇'▇ fiscal
quarters for the four fiscal quarter periods then ended.
As used above:
- "Net Worth" means, on a consolidated basis and at anytime, ▇▇▇▇▇▇'▇
stockholders' equity reflected on its balance sheet.
- "Total Liabilities" means, for ▇▇▇▇▇▇, on a consolidated basis, and at
any time, all amounts that should be reflected as a liability on
▇▇▇▇▇▇'▇ balance sheet. The consolidated repurchase and consolidated
reverse repurchase obligations of ▇▇▇▇▇▇ and its affiliates under
Repurchase Agreements in connection with the sale of, and secured by,
Mortgage Securities, may be excluded from Total Liabilities.
- "Mortgage Securities" means (a) participation certificates representing
undivided interests in first lien residential mortgage loans purchased
by the Federal Home Loan Mortgage Corporation under the Emergency Home
Finance Act of 1970, (b) modified pass through mortgage backed
certificates guaranteed by the Federal National Mortgage Association
under the National Housing Act, (c) modified pass through mortgage
backed certificates guaranteed by the Government National Mortgage
Association under Section 306(g) of the National Housing Act, or (d) any
other security issued by an investor that was an "Approved Investor"
under the Existing Loan Agreement or that is approved by The Chase
Manhattan Bank, that is based on or backed by a pool of mortgage loans
providing for pass through payments of principal and interest.
- "Tangible Net Worth" means, on a consolidated basis, at any time, and
without duplication, the sum of (a) ▇▇▇▇▇▇'▇ Net Worth plus (b) ▇▇▇▇▇▇'▇
long term debt if its maturity is no earlier than 30 days after the
Stated Termination Date, as defined in the Loan Agreement and its
payment is subordinated to payment of ▇▇▇▇▇▇'▇ Obligation
▇▇. ▇▇▇▇▇ ▇▇▇▇
September 27, 2001
Page 4
(as defined in the Loan Agreement) in form and substance acceptable to
The Chase Manhattan Bank; minus (c) ▇▇▇▇▇▇'▇ goodwill, including,
without limitation, any amounts representing the excess of the purchase
price for acquired assets, stock or interests over the book value
assigned to them minus (d) ▇▇▇▇▇▇'▇ patents, trademarks, service marks,
trade names and copyrights minus (e) ▇▇▇▇▇▇'▇ other intangible assets.
Please call if you have any questions or comments.
Very truly yours,
[Original signed by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇]
Vice President
Agreed:
▇▇▇▇▇▇ MORTGAGE COMPANY
By: [Original signed by ▇▇▇▇▇ ▇. ▇▇▇▇]
------------------------------------------------------
Name: [▇▇▇▇▇ ▇. ▇▇▇▇]
----------------------------------------------------
Title: [Senior Vice President and Chief Financial Officer]
---------------------------------------------------
Date: [September 27] , 2001
---------------------------------------------------
EXHIBIT 1
SCHEDULE 8.3
PERMITTED LOANS/INVESTMENTS
1. Mortgage-backed securities and related residual interests, acquired by
Borrower in the ordinary course of it business.
2. Permitted Loans and Investments of Guarantor under the Existing Loan
Agreement.
3. Mortgage Securities or other mortgage-backed securities issued by any
Subsidiary of ▇▇▇▇▇▇ Group that are acquired by Guarantor under its
exercise of call Rights with respect to them.
4. (a) Investments having a maturity of one year or less in commercial
paper given the highest rating by a nationally recognized credit rating
agency, (b) the United States governmental obligations having maturities
of one year or less, and (c) certificates of deposit, bankers
acceptances, and repurchase agreements issued by a Lender or any other
commercial bank that has combined capital and surplus of at least Two
Hundred Fifty Million Dollars ($250,000,000) and a rating of C or better
by ▇▇▇▇▇▇▇▇ Bank Watch, Inc.
5. Eurodollar investments with (a) any Lender or (b) any other financial
institution that has (i) combined capital, surplus, and undivided
profits of at least One Hundred Million Dollars ($100,000,000) and (ii)
a ▇▇▇▇▇'▇ Investors Service, Inc., or Standard & Poor's Corporation
commercial paper rating of at least P-1 or A-1, respectively, or (iii)
if it does not have a commercial paper rating, a bond rating of at least
A-1 or A-, respectively.
6. Extensions of trade credit and other payables in the ordinary course of
business.
7. Acquisition of securities or evidences of Debt of others when acquired
by either Company in settlement of accounts receivable or other debts
arising in the ordinary course of business so long as the total of all
of those securities or evidences of debt is not material to the
Companies' financial condition taken as a whole.
8. Loans or advances to officers or employees (a) of Guarantor or its
Subsidiaries for travel, entertainment, and relocation expense in the
ordinary course of business or (b) of either borrower or Guarantor that
are not in the ordinary course and are never more than a total of Five
Hundred Thousand Dollars ($500,000) outstanding for both Borrower and
Guarantor together.
9. Loans or advances to Guarantor.
EXHIBIT 2
SCHEDULE 8.3 TO EXISTING LOAN AGREEMENT
PERMITTED LOANS/INVESTMENTS
1. Mortgage loans and mortgage-backed securities and related residual
interests, originated or acquired by Borrower in the ordinary course of
it business.
2. Acquisition by Borrower of the stock or assets of any Person conducting
a mortgage-servicing business.
3. Mortgage Securities or other mortgage-backed securities issued by any
Subsidiary of Borrower that are acquired by Borrower under its exercise
of call Rights with respect to them.
4. Investments that (a) are made by Borrower in joint ventures with
homebuilders and realtors for the purpose of originating mortgage loans
and (b) never exceed a total of $5,000,000.
5. (a) Investments having a maturity of one year or less in commercial
paper given the highest rating by a nationally recognized credit rating
agency, (b) United States governmental obligations having maturities of
one year or less, and (c) certificates of deposit, bankers acceptances,
and repurchase agreements issued by a Lender or any other commercial
bank that has combined capital and surplus of at least $250,000,000 and
a rating of C or better by ▇▇▇▇▇▇▇▇ Bank Watch, Inc.
6. Eurodollar investments with (a) any Lender or (b) any other financial
institution that has (i) combined capital, surplus, and undivided
profits of at least $100,000,000 and (ii) a ▇▇▇▇▇'▇ Investors Service,
Inc., or Standard & Poor's Corporation commercial-paper rating of at
least P-1 or A-1, respectively, or (iii) if it does not have a
commercial-paper rating, a bond rating of at least A-1 or A-,
respectively.
7. Extensions of trade credit and other payables in the ordinary course of
business.
8. Acquisition of securities or evidences of Debt of others when acquired
by Borrower in settlement of accounts receivable or other debts arising
in the ordinary course of business so long as the total of all of those
securities or evidences of debt is not material to the Borrower's
financial condition taken as a whole.
9. Loans or advances to officers or employees (a) of Borrower or its
Subsidiaries for travel, entertainment, and relocation expense in the
ordinary course of business or (b) of Borrower that are not in the
ordinary course and are never more than a total of $500,000 outstanding
for Borrower.
10. Loans or advances by Borrower to ▇▇▇▇▇▇ Group in the management its cash
so long as (a) (i) they are not made at a time when (and do not cause) a
Default or any default by ▇▇▇▇▇▇ Group exists in respect of any of its
material debt, and (ii) the total of those loans and advances never
(without the prior written approval by Administrative Agent) exceeds the
lesser of either 50% of Borrower's Net Worth or $7,500,000 or (b) is
otherwise approved by Administrative Agent in writing.
