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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
AMENDMENT NO.1
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number 1-8972
CWM MORTGAGE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3983415
(State or other jurisdiction of (I. R. S. Employer Identification No.)
incorporation or organization)
35 NORTH LAKE AVENUE, PASADENA, CALIFORNIA 91101-1857
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800) 669-2300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Common stock outstanding as of March 31, 1996: 43,980,354 shares
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
CWM Mortgage Holdings, Inc. was incorporated in the state of Maryland in July
1985 and reincorporated in the state of Delaware in March 1987. References to
"CWM" mean either the parent company alone or the parent company and the
entities consolidated for financial reporting purposes, while references to the
"Company" mean the parent company, its consolidated subsidiaries and Independent
National Mortgage Corporation and its subsidiary ("Indy Mac"), which is not
consolidated with CWM for financial reporting or tax purposes.
In its mortgage loan conduit business, the Company acts as an intermediary
between the originators of mortgage loans and permanent investors in mortgage-
backed securities ("MBS") secured by or representing an ownership interest in
such mortgage loans. The Company purchases "jumbo" and other "nonconforming"
mortgage loans from mortgage originators. The Company and its sellers negotiate
whether such sellers will retain, or the Company will purchase the rights to
service the mortgage loans delivered by such sellers to the Company. All loans
purchased by CWM, for which a Real Estate Mortgage Investment Conduit ("REMIC")
transaction or whole loan sale is contemplated, are committed for sale to Indy
Mac at the same price at which the loans were acquired by CWM. Pursuant to the
Master Forward Commitment and Servicer Agreement between CWM and Indy Mac, Indy
Mac does not purchase any loans from entities other than CWM.
The Company's conduit operations were expanded during 1995 through the
introduction of two divisions; Independent National Finance Corporation ("INFC")
and Independent National Housing Services (INHS). INFC was formed to purchase,
securitize and sell subprime mortgage loans (i.e., "B through D" paper
mortgages). INHS was formed to facilitate the purchase or origination,
securitization and sale of consumer loans secured by manufactured housing.
The Company's principal sources of income from its conduit operations are gains
recognized on the sale and securitization of loans, the net spread between
interest earned on loans and the interest costs associated with the borrowings
used to finance such loans pending their securitization, the net interest earned
on the Company's mortgage securities, and master servicing fee income.
In addition to its conduit operations, the Company earns fee income and net
interest income through its portfolio of mortgage loans held for investment and
its construction and warehouse lending programs. The construction lending
operation consists of two distinct divisions: (i) the Builder Division, which
provides tract construction loans, builder custom home loans, model home loans
and lot financing on a nationwide basis to small-to-medium-size builders, and
(ii) the Consumer Division, which provides construction-to-permanent financing,
home improvement loans and lot financing to individual borrowers who wish to
construct or remodel their principal or secondary residences. The Company's
warehouse lending operation provides financing to small-to-medium-size mortgage
originators for the origination and sale of mortgage loans, the retention,
acquisition or sale of servicing rights and the carrying of mortgage loans
pending foreclosure and/or repurchase from an investor.
In the first quarter of 1996, Indy Mac purchased Guaranty Asset Protection
Services (GAPS), a mortgage fraud detection company located in West Hills,
California. The acquisition of GAPS will allow the Company to help prevent
fraud on its existing purchase volume as well as offer fraud detection services
to the Company's base of customers.
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FINANCIAL CONDITION
CONDUIT OPERATIONS: During the first three months of 1996, CWM purchased $1.1
billion of non-conforming mortgage loans, including $98 million of subprime
mortgage loans through INFC, and $581,000 of manufactured housing loans through
INHS. These loans were financed on an interim basis using equity and short-term
financing in the form of repurchase agreements and other credit facilities. In
general, the Company, through Indy Mac, sells the loans in the form of REMIC
securities or whole loan sales or, alternatively, through CWM invests in the
loans on a long-term basis using financing provided by CMOs or repurchase
agreements and other credit facilities. During the first three months of 1996,
Indy Mac sold $1.0 billion of mortgage loans through the issuance of five series
of multiple-class MBS in the form of REMIC securities. In addition, INFC Sold
$9.9 million of whole loans during the quarter. At March 31, 1996, the Company
was committed to purchase $386.7 million of mortgage loans from various mortgage
originators. The Indy Mac master servicing portfolio at quarter-end had an
aggregate outstanding principal balance of $9.9 billion with a weighted average
coupon of 8.378%.
MORTGAGE LOANS HELD FOR INVESTMENT: The $1.2 billion portfolio of mortgage loans
held for investment at March 31, 1996 consisted of $827.2 million of varying
types of adjustable-rate products which contractually reprice in monthly, semi-
annual or annual periods; $190.6 million of mortgage loans which have a fixed
rate for a period of three to ten years, and subsequently convert to adjustable-
rate mortgage loans that reprice annually and $159.6 million of fixed-rate
mortgage loans. The weighted average coupon of the mortgage loans held for
investment at March 31, 1996 was 8.93%. The Company finances mortgage loans held
for investment with repurchase agreements and other credit facilities which have
maturities ranging from overnight to 14 months as of March 31, 1996. The company
also utilizes interest rate swap agreements to manage the interest rate exposure
on its portfolio of mortgage loans held for investment. The allowance for losses
related to mortgage loans held for investment totaled $4.9 million at quarter
end. Charge-offs related to mortgage loans held for investment totaled $23,000
for the three months ended March 31, 1996.
During the first quarter of 1996, the Company financed $154.6 million of
mortgage loans held for investment through the issuance of a CMO. The mortgage
loans consisted of loans that are fixed for a period of 10 years and
subsequently convert to adjustable-rate mortgage loans. The issuance of the CMO
substantially defeased the interest rate risk component of holding these loans
for investment.
CONSTRUCTION LENDING OPERATIONS: At March 31, 1996, the Builder Division had
loans outstanding totaling $114.4 million, net of reserves, with $198.5 million
of remaining commitments to fund tract and custom home loans. The Consumer
Division had loans outstanding at March 31, 1996 totaling $45.9 million with
remaining commitments to fund construction-to-permanent and home improvement
loans of $29.8 million. The allowance for losses related to construction loans
totaled $996,000 at march 31, 1996. There were no charge-offs of construction
loans during the three months ended March 31, 1996. The Company had outstanding
borrowings under a revolving credit facility totaling $65.1 million at March 31,
1996 associated with the financing of construction loans.
WAREHOUSE LENDING OPERATIONS: At March 31, 1996, CWM had extended committed
warehouse and related lines of credit in an aggregate amount of $412.9 million,
of which $205.7 million was outstanding, net of reserves. The allowance for loan
losses related to warehouse lines of credit totaled $797,000 at March 31, 1996.
there were no charge-offs of warehouse lines of credit during the threee months
ended March 31, 1996. Repurchase agreements associated with CWM's financing of
these lines of credit totaled $157.4 million at Aarch 31, 1996.
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CMO PORTFOLIO: As of March 31, 1996, the CMO portfolio was comprised of 12
series of CMOs. Collateral for CMOs increased from $184.1 million at December
31, 1995 to $326.9 million at March 31, 1996. This increase of $142.8 million
included an increase of $154.6 million of collateral related to the issuance of
a CMO, repayments (including prepayments and premium and discount amortization)
of $10.9 million, and an increase in guaranteed investment contracts ("GICS")
held by trustees and accrued interest receivable of $644,000 and $767,000,
respectively. The fair value of the collateral for CMOs totaled $322.5 million
and $185.2 million at March 31, 1996 and December 31, 1995, respectively. CWM's
CMOs outstanding increased to $299.4 million at March 31, 1996 from $164.8
million at December 31, 1995. This increase of $134.6 million resulted from
issuance proceeds of $146.9 million, principal payments and discount
amortization on CMOs of $10.0 million and an increase in accrued interest
payable on CMOs of $751,000.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
NET EARNINGS: CWM's net earnings were $15.4 million or $0.36 per share, based on
43,105,573 weighted average shares outstanding for the quarter ended March 31,
1996, compared to $10.2 million or $0.28 per share, based on 36,979,444 weighted
average shares outstanding for the quarter ended March 31, 1995.
The increase of $5.2 million in first quarter earnings resulted from an increase
in net interest income of $6.0 million, an increase of $4.2 million in equity in
earnings from Indy Mac, offset by and increases of $2.2 million in the provision
for loan losses, and increases of $1.6 million and $1.3 million in general and
administrative expenses and management fees, respectively.
INTEREST INCOME: Total interest income was $59.0 million for the quarter ended
March 31, 1996 and $41.5 million for the quarter ended March 31, 1995. This
increase in interest income of $17.5 million is primarily due to an increase in
interest on mortgage loans held for investment of $6.9 million with additional
increases in construction loans, mortgage loans held for sale, warehouse lines
of credit, and collateral for CMO's of $4.0 million, $3.3 million, $2.6 million
and $653,000, respectively, offset by a decrease of $448,000 in securitized
master servicing fees.
Interest income on mortgage loans held for investment, consisting primarily of
adjustable rate mortgages, totaled $27.1 million and $20.2 million, resulting in
an effective yield of 8.48% and 8.27%, for the quarters ended March 31, 1996 and
1995, respectively. The increase is primarily due to an increase in the average
outstanding balance of mortgage loans held for investment to $1.3 billion for
the quarter ended March 31, 1996 from $991.1 million for the quarter ended March
31, 1995.
Interest income earned on mortgage loans held for sale totaled $14.0 million and
$10.6 million, resulting in an effective yield of 8.68% and 9.47%, for the
quarters ended March 31, 1996 and 1995, respectively. Average outstanding
balances rose to $647.4 million for the quarter ended March 31, 1996 from $455.3
million for the quarter ended March 31, 1995.
Interest income earned on revolving warehouse lines of credit totaled $3.8
million and $1.2 million with interest earned at an effective yield of 8.71% and
9.97% for the quarters ended March 31, 1996 and 1995, respectively. Interest
income on construction loans totaled $4.5 million and $462,000, with interest
earned at an effective yield of 12.58% and 13.63%, for the quarters ended March
31, 1996 and 1995, respectively.
Interest income on collateral for CMOs was $5.3 million and $4.7 million for the
quarters ended March 31, 1996 and 1995, respectively. The increase was primarily
attributable to an increase in the average aggregate principal amount of
collateral for CMOs outstanding to $288.1 million for the quarter ended March
31, 1996 compared to $227.8 million for the quarter ended March 31, 1995,
offset by a decrease in the effective yield earned on the collateral for CMOs to
7.45% in the first quarter of 1996 from 8.33%
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in the first quarter of 1995. Interest income on collateral for CMOs includes
the impact of amortization of premiums paid in connection with acquiring the
loan portfolio and the impact of the delay in the receipt of prepayments and
temporary investment in lower yielding short-term holdings (GICs) until such
amounts are used to make payments on CMOs.
SECURITIZED MASTER SERVICING FEES, NET: Investments in securitized master
servicing fees have characteristics comparable to "excess servicing" insofar as
the value thereof tends to decline as market interest rates decline and
prepayment rates increase. Accordingly, the yield on this investment could
decline considerably as a result of rapid prepayments occasioned by declining
interest rates. It is also possible that under certain high prepayment scenarios
the Company would not recoup its initial investment in such assets. In such a
scenario, the Company would write down its securitized master servicing fees
asset so that the remaining asset does not exceed the present value of future
net master servicing income. Gross master servicing income for CWM was $6.4
million and $6.5 million for the three months ended March 31, 1996 and 1995,
respectively. This gross income was offset by amortization of the securitized
master servicing fees of $4.0 million, and $3.6 million, for the three months
ended March 31, 1996 and 1995, respectively. As of March 31, 1996, securitized
master servicing fees of $116.3 million were pledged to secure borrowings
totaling $66.3 million.
INTEREST EXPENSE: For the quarters ended March 31, 1996 and 1995, total interest
expense was $40.5 million and $29.0 million, respectively. This increase in
interest expense of $11.5 million was due to an increases in interest expense on
repurchase agreements and other credit facilities, senior unsecured notes and
CMO's of $9.4 million, $1.4 million and $732,000, respectively.
Interest expense on repurchase agreements and other credit facilities used to
finance mortgage loans held for sale and investment, revolving warehouse lines
of credit, construction loans and master servicing fees receivable totaled $33.5
million for the quarter ended March 31, 1996, compared to $24.1 million for the
quarter ended March 31, 1995. This increase was principally the result of an
increase in the aggregate average balance of indebtedness outstanding for the
period to $2.1 billion for the quarter ended March 31, 1996 compared to $1.5
billion for the quarter ended March 31, 1995, slightly offset by a decrease in
the weighted average effective rate applicable to such indebtedness to 6.37% for
the quarter ended March 31, 1996 from 6.70% for the quarter ended March 31,
1995.
Interest expense on senior unsecured notes totaled $1.4 million resulting in an
effective rate of 9.22% for the first quarter of 1996. There were no senior
unsecured notes outstanding during the first quarter of 1995.
Interest expense on CMOs was $5.6 million and $4.9 million for the quarters
ended March 31, 1996 and 1995, respectively. This increase was primarily
attributable to an increase in average aggregate CMOs outstanding to $263.6
million for the quarter ended March 31, 1996 from $198.5 million for the quarter
ended March 31, 1995, partially offset by a decrease in the effective rate on
the CMOs to 8.56% in the first quarter of 1996 from 9.96% in the first quarter
of 1995. The overall increase in the outstanding average balance and the
reduction in weighted average effective rate was primarily due to the issuance
of a $146.2 million CMO at an effective rate of 6.75%.
EQUITY IN EARNINGS OF INDY MAC: The 1996 first quarter earnings of $3.6 million
for Indy Mac, in which CWM has a 99% economic interest, resulted principally
from net interest income of $2.7 million, gain on sale of mortgage loans and
issuances of securities of $4.4 million and loss on sale of mortgage securities
offset by expenses of $5.0 million, management fee expense of $443,000, and
income taxes of $2.8 million.
Net income related to the securitized master servicing fees totaled $1.9 million
during the first three months of 1996, including gross income of $9.4 million
offset by amortization of the related asset balances of $7.5 million. Net income
related to the master servicing fees receivable totaled $746,000 during the
first three months of 1996, including gross income of $4.5 million offset by
amortization of the related asset balances of $3.8 million.
During the first quarter of 1995, Indy Mac realized a loss of $629,000 which
resulted principally from net interest income of $4.1 million, including master
servicing fees receivable gross income totaling $6.5 million and related
amortization of $5.3 million, loss on sale of mortgage loans and issuance of
securities of $2.7 million, gain on sale of mortgage securities available-for-
sale of $1.9 million, expenses of $4.4 million, management fee expense of $8,000
and income taxes of $456,000.
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SALARIES, GENERAL AND ADMINISTRATIVE EXPENSE: The increase of $1.6 million for
the three months ended March 31, 1996 compared to three months ended March 31,
1995 is primarily the result of growth in personnel related to the operations of
CWM, combined with the expansion of the Company's construction lending
operations.
MANAGEMENT FEES: For the three months ended March 31, 1996, management fees
were $2.1 million compared to $767,000 for the three months ended March 31,
1995. The increase in the management fee of $1.3 million was primarily due to
an increase in incentive compensation for the first quarter of 1996, directly
related to the increase in cwm's earnings in comparison to the first quarter of
1995. Regular management fees also increased due to increased average balances
of CMW's mortgage loans held for investment and warehouse lines of credit.
LIQUIDITY AND CAPITAL RESOURCES
The Company uses proceeds from the issuance of CMOs, repurchase agreements, bank
debt, other borrowings and common stock to meet its working capital needs. In
addition, in connection with its mortgage conduit operations, Indy Mac issues
REMIC securities to help meet such needs.
During the quarter the Company raised $23.5 million of new capital primarily
through the optional cash investment feature of the Dividend Reinvestment Plan.
In addition, the Company completed a $500 million repurchase facility with a
leading investment bank, committed through November 1996.
In May, 1995, the Company entered into a two-year committed credit facility with
a syndicate of nine commercial banks led by First Union National Bank of North
Carolina. During the first quarter of 1996, the Company amended this credit
facility to expand the available committed borrowings from $300 million to $400
million. This facility finances mortgage loans, builder construction loans, and
master servicing assets, as well as servicing-secured, servicing-receivable and
repurchase lines of credit extended by the Company to its customers. The
interest rates under this credit facility are based, at the Company's election,
on LIBOR or the federal funds rate, plus an applicable margin, which varies by
the type of asset financed.
The REIT provisions of the Internal Revenue Code restrict CWM's ability to
retain earnings and thereby replenish the capital committed to its mortgage
portfolio by requiring CWM to distribute to its shareholders substantially all
of its taxable income from operations.
Management believes that the Company's cash flow from operations and the
Company's current and potential financing arrangements are sufficient to meet
current liquidity requirements. The Company's ability to meet future liquidity
requirements is subject to the renewal of credit facilities and/or obtaining
other sources of financing, including raising additional debt or equity from
time to time.
EFFECT OF INTEREST RATE CHANGES
The Company's earnings may be affected by changes in interest rates in a variety
of ways. For example, higher interest rates may depress the market value to an
extent of the Company's investment portfolio if the yield on such holdings does
not keep pace with increases in interest rates. As a result of decreased market
values it could be necessary for the Company to borrow additional funds and
pledge additional assets to maintain financing for its holdings that have not
been financed to maturity through the issuance of CMOs or other debt securities.
Increases in short-term borrowing rates relative to rates earned on holdings
that have not been financed to maturity through the issuance of CMOs or other
debt securities may also adversely affect the Company's earnings. However, the
Company has implemented a hedging strategy which may to an extent mitigate this
adverse effect. In addition, high levels of interest rates tend to decrease the
rate at which mortgages prepay. A decrease in the rate of prepayments may
lengthen the estimated average lives of the underlying mortgages supporting
securitized master servicing fees and master servicing fees receivable and for
classes of the CMOs issued by the Company and may result in higher residual cash
flows from such assets than would otherwise have been obtained. However, higher
rates of interest may also discourage potential mortgagors from borrowing or
refinancing mortgage loans, thus decreasing the volume of loans available to be
purchased through the Company's mortgage conduit operations or financed through
the Company's construction and warehouse lending operations.
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Conversely, lower interest rates tend to increase the rate at which mortgages
prepay, which may have an adverse effect on the value of the Company's
securitized master servicing fees and master servicing fees receivable.
However, lower interest rates also tend to improve the Company's mortgage
origination and production volumes and increase the market value, to an extent,
of the Company's mortgage loan and mortgage securities available for sale
portfolio.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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<CAPTION>
Exhibits
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<C> <S>
10.1* Compensation Plan for Michael W. Perry effective
January 1, 1996.
10.2* Compensation Plan for Richard Wohl effective January 1, 1996.
10.3* Compensation Plan for Carmella Grahn effective January 1, 1996.
10.4* Second Amendment to Facility I Credit Agreement dated January
4, 1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.5* Second Amendment to Facility II Credit Agreement dated January
4, 1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.6 Third Amendment to Facility I Credit Agreement dated March 15,
1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.7 Third Amendment to Facility II Credit Agreement dated March 15,
1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.8* Master Forward Commitment and Services Agreement effective
January 1, 1996 between CWM Mortgage Holdings, Inc. and
Independent
National Mortgage Corporation.
10.9* Independent National Mortgage Corporation Capitalization
Agreement effective as of January 1, 1996, by and among CWM
Mortgage Holdings, Inc., Countrywide Funding Corporation and
Independent National Mortgage Corporation.
10.10* Revolving Working Capital Credit Facility and Credit Support
Agreement effective as of January 1, 1996, between CWM Mortgage
Holdings, Inc. and Independent National Mortgage Corporation.
27* Financial Data Schedule
</TABLE>
*Previously filed.
Reports on Form 8-K.
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None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Pasadena, State of California, on December 20, 1996.
CWM MORTGAGE HOLDINGS, INC.
By: /Michael W. Perry
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Michael W. Perry
Executive Vice President and Chief
Operating Officer
By: /James P. Gross
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James P. Gross
Senior Vice President and Chief
Financial Officer
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Exhibit 10.6
THIRD AMENDMENT TO
FACILITY I CREDIT AGREEMENT
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THIS THIRD AMENDMENT TO FACILITY I CREDIT AGREEMENT dated as of March 15,
1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), and INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union"), in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a
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("Credit Lyonnais"), DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH, a ("Dresdner"), THE FIRST NATIONAL BANK OF CHICAGO, a
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national banking association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking
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association ("Hibernia"), NATWEST BANK N.A., a national banking association
("NatWest"), and NATIONSBANK OF TEXAS, N.A., a national banking association
("NationsBank") (First Union in its individual capacity, BNY, Credit Lyonnais,
Dresdner, FNB Chicago, Guaranty Federal, Hibernia, NatWest and NationsBank, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
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WHEREAS, each of the parties hereto is a party to a Facility I Credit
Agreement dated as of May 30, 1995, as amended by a First Amendment to Facility
I Credit Agreement dated as of September 25, 1995 and by a Second Amendment to
Facility I Credit Agreement dated as of January 4, 1996 (as so amended, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the modification of various terms and covenants thereof; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties hereto, the parties hereto hereby agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
<PAGE>
2. Paragraph 1(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"1(a) Lending Limit. Subject to the conditions set forth
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herein, the Lenders severally agree that they shall, from time to time up
to and including the Business Day immediately preceding the Maturity Date,
advance and readvance their respective Percentage Shares of loans (the
"Tranche A Loans" or a "Tranche A Loan") to the Companies in amounts not to
exceed, in the aggregate at any one time outstanding (determined after
giving effect to the other transactions contemplated by the Loan Request
pursuant to which the applicable Tranche A Loan was requested), the lesser
of:
(1) The Aggregate Tranche A Credit Limit; and
(2) The Collateral Value of the Tranche A Borrowing Base minus
the aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans (and which are not being repaid
by any Tranche A Loan requested).
Provided, however, that notwithstanding anything contained herein to the
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contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding and all Swing Line Loans outstanding exceed the
Aggregate Facility Commitment at such time."
3. Paragraph 2(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"2(a) Lending Limit. Subject to the conditions set forth herein,
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the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche B
Loans" or a "Tranche B Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche B Loan was requested), the lesser of:
(1) The Aggregate Tranche B Credit Limit; and
(2) The Collateral Value of the Tranche B Borrowing Base minus
the aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche B Loans (and which are not being repaid
by any Tranche B Loan requested).
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Provided, however, that notwithstanding anything contained herein to the
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contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding and all Swing Line Loans outstanding exceed the
Aggregate Facility Commitment at such time."
4. The following provisions are hereby added as a new Paragraph 2A of the
Credit Agreement:
"2A. Swing Line Facility.
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2A(a) Swing Line Lending Limit. Subject to the conditions set forth
------------------------
herein, First Union agrees that it shall, from time to time up to and including
the Business Day immediately preceding the Maturity Date, advance and readvance
loans (the "Swing Line Loans" or a "Swing Line Loan") to the Companies in
amounts not to exceed, in the aggregate at any one time outstanding, the lesser
of:
(1) The Maximum Swing Line Commitment; and
(2) (i) The sum of (A) the Collateral Value of the Tranche A
Borrowing Base and (B) the Collateral Value of the Tranche B Borrowing
Base, minus (ii) the aggregate dollar amount of Regular Loans outstanding;
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Provided, however, that:
- -------- -------
i. In calculating the availability of Swing Line Loans under
this Paragraph 2A(a) at any date, the aggregate amount of Swing Line Loans
outstanding shall not include any Swing Line Loans which will be repaid
with Regular Loans to be advanced on such date in accordance with the terms
of this Agreement;
ii. Notwithstanding anything contained herein to the contrary,
at no time may the sum of all Tranche A Loans outstanding, all Tranche B
Loans outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time; and
iii. Notwithstanding anything contained herein to the contrary,
at no time may (A) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans, plus all Tranche A Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche A
Borrowing Base or the Aggregate Tranche A Credit Limit; or (B) the sum of
all Swing Line Loans outstanding which have been identified by the
Companies in the applicable Loan Request as being scheduled for repayment
by Tranche B Loans, plus all Tranche B Loans outstanding, exceed the lesser
of the
<PAGE>
Collateral Value of the Tranche B Borrowing Base or the Aggregate Tranche B
Credit Limit.
2A(b) Interest Rate. Each Swing Line Loan shall bear interest at the
-------------
Applicable Corporate Rate which corresponds to the type of Regular Loan
identified by the Companies in the applicable Loan Request as being scheduled to
repay such Swing Line Loan.
2A(c) Payment of Interest. The Companies shall pay to the
Administrative Agent for distribution to First Union interest on Swing Line
Loans outstanding hereunder from the date disbursed to but not including the day
of payment or refunding pursuant to Paragraph 2A(d) below. Interest on Swing
Line Loans shall be payable monthly, in arrears, as provided in Paragraph 3(l)
below.
2A(d) Refunding of Swing Line Loans. Upon demand by First Union,
-----------------------------
Swing Line Loans shall be refunded or participations therein acquired, as
applicable, in accordance with the following provisions. Such refunding or
acquisition will occur no later than 4:00 p.m. (Charlotte, North Carolina time)
on the day of such demand if made before 2:00 p.m. (Charlotte, North Carolina
time) and no later than 12:00 noon (Charlotte, North Carolina time) on the next
succeeding Business Day if demand therefor is made after 2:00 p.m. (Charlotte,
North Carolina time).
(1) Prior to the occurrence of an Event of Default or Potential
Default, Swing Line Loans shall be refunded by the Lenders. Such refundings
shall be made by the Lenders in accordance with their respective Percentage
Shares and shall, thereafter, be reflected as actual Regular Loans of the
Lenders on the books and records of the Administrative Agent. The type of
Regular Loan made by the Lenders in connection with the refunding of any
Swing Line Loan shall be the type of Loan identified by the Companies in
the Loan Request for such Swing Line Loan as being scheduled to repay such
Swing Line Loan.
(2) After the occurrence of any Event of Default or Potential
Default, each Lender (other than First Union) shall irrevocably and
unconditionally purchase from First Union, without recourse or warranty
(except that such outstanding Swing Line Loans in fact were made in
accordance with the provisions of this Agreement, and are not subject to
any Liens arising out of any act of First Union), an undivided interest and
participation in any Swing Line Loans then outstanding, by paying to First
Union, in dollars immediately available to First Union, an amount equal to
such Lender's Percentage Share of such Swing Line Loans, and thereafter,
except as otherwise provided in the second succeeding sentence, the
Lenders' respective interests in such Swing Line Loans, and the remaining
interest of First Union in such Swing Line Loans, shall in all respects be
treated as Regular Loans under this Agreement of the type identified by the
Companies in the Loan Request for such Swing Line Loan as being scheduled
to repay such Swing Line Loan, but such Swing Line
<PAGE>
Loans shall continue to be evidenced by the Note which evidences the Swing
Line Loans. If any Lender does not pay any amount which it is required to
pay to First Union, First Union shall be entitled to recover such amount on
demand from such Lender, together with interest thereon, at the Applicable
Corporate Rate, for each day from the date of such demand, if made prior to
2:00 p.m. (Charlotte, North Carolina time) on any Business Day, or, if made
after 2:00 p.m. from the next Business Day following the date of such
demand, until the date such amount is paid to First Union by such Lender.
If such Lender does not pay such amount forthwith upon First Union's demand
therefor, and until such time as such Lender makes the required payment,
First Union shall be deemed to continue to have outstanding a Swing Line
Loan in the amount of such unpaid participation obligation for all purposes
of this Agreement other than those provisions requiring such other Lender
to purchase a participation therein. First Union shall upon the request of
such Lender, furnish to such Lender a participation certificate evidencing
the participation purchased by such Lender.
(3) [Intentionally Omitted].
(4) Notwithstanding anything contained in this Agreement to the
contrary, no Lender shall be obligated to refund or acquire a participation
interest in any Swing Line Loans made by First Union unless (i) First Union
believed in good faith that all conditions specified in Paragraph 2A(a)
above and Paragraph 5 below to the making of such Swing Line Loans were
satisfied at the time such Swing Line Loans were made, or (ii) such Lender
had actual knowledge that any such condition had not been satisfied and
failed to notify First Union in writing prior to the time First Union made
such Swing Line Loan that First Union was not authorized to make a Swing
Line Loan until such condition had been satisfied, or (iii) the
satisfaction of any such condition that was not satisfied had been waived
by the requisite Lenders in accordance with the provisions of this
Agreement, or the making of such Swing Line Loan in the face of such non-
satisfied condition or conditions had been consented to by the requisite
Lenders in accordance with the provisions of this Agreement."
5. Paragraph 3(j)(1) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
(1) (a) If the Companies desire to borrow a Swing Line Loan
hereunder, the Companies shall make a Loan Request to the
Administrative Agent no later than 4:45 p.m. (Charlotte, North
Carolina time) on the proposed funding date, which Loan Request shall
identify the type of Regular Loan which is scheduled to repay such
Swing Line Loan. First Union shall make available the amount of the
proposed Swing Line Loan by crediting the amount
<PAGE>
thereof in immediately available same day funds to the Funding Account
on such date.
(b) If the Companies desire to borrow a Corporate Rate Loan
(other than a Swing Line Loan) hereunder, the Companies shall make a
Loan Request to the Administrative Agent no later than 2:00 p.m.
(Charlotte, North Carolina time) on the proposed funding date, which
Loan Request shall be forwarded promptly by the Administrative Agent
to the Lenders by facsimile transmission no later than 2:45 p.m.
(Charlotte, North Carolina time) on such date. The applicable Lenders
shall make available the amount of their respective Percentage Shares
of the proposed Corporate Rate Loan by crediting the amount thereof in
immediately available same day funds to the Funding Account no later
than 3:30 p.m. (Charlotte, North Carolina time) on such date."
6. Paragraph 3(j)(3) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"(3) Each Corporate Rate Loan (other than a Swing Line Loan) and
each Eurodollar Loan shall be allocated among and funded by the Lenders in
accordance with their applicable Percentage Shares. The failure of any
Lender to make its Percentage Share of any Regular Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation
hereunder to advance its applicable portion of the principal amount thereof
but no Lender shall be responsible for the failure of any other Lender to
make the advance required of it."
7. Paragraph 3(k) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(k) Notes. The joint and several obligations of the Companies to
-----
repay the Loans shall be evidenced by (i) notes payable to the order of
each Lender, as applicable, in the form set forth as Exhibit A-1 in the
-----------
Addendum, and (ii) a Facility I Swing Line Promissory Note payable to the
order of First Union, in form and content acceptable to First Union
(collectively, the "Notes")."
8. Paragraph 3(n) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(n) Borrowing Base Conformity; Mandatory Prepayments.
------------------------------------------------
<PAGE>
(1) The Companies shall cause to be maintained with the
Collateral Agent a Tranche A Borrowing Base such that the Collateral Value
of the Tranche A Borrowing Base is not less than, at any date, the sum of
the aggregate dollar amount of outstanding Tranche A Loans plus the
aggregate dollar amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans.
(2) The Companies shall cause to be maintained with the
Collateral Agent a Tranche B Borrowing Base such that the Collateral Value
of the Tranche B Borrowing Base is not less than, at any date, the sum of
the aggregate dollar amount of outstanding Tranche B Loans plus the
aggregate dollar amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche B Loans.
(3) The Companies shall prepay Loans to the Administrative Agent
on behalf of the Lenders, upon telephonic or facsimile demand by the
Administrative Agent, on any day (A) in the amount by which the aggregate
principal amount of outstanding Tranche A Loans, plus the aggregate
principal amount of outstanding Swing Line Loans which have been identified
by the Companies in the applicable Loan Request as being scheduled for
repayment by Tranche A Loans, exceeds the Collateral Value of the Tranche A
Borrowing Base, (B) in the amount by which the aggregate principal amount
of outstanding Tranche B Loans, plus the aggregate principal amount of
outstanding Swing Line Loans which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche B
Loans, exceeds the Collateral Value of the Tranche B Borrowing Base, or
(C) in the amount by which the sum of the aggregate principal amount of
outstanding Tranche A Loans, Tranche B Loans and Swing Line Loans exceeds
the Aggregate Facility Commitment; said prepayment to be made on the date
on which demand is made by the Administrative Agent if made prior to 12:00
p.m. (Charlotte, North Carolina time) or, if made later than 12:00 p.m.
(Charlotte, North Carolina time), before 12:00 p.m. (Charlotte, North
Carolina time) on the next Business Day.
(4) The Companies shall prepay Corporate Rate Loans to the
Administrative Agent on behalf of Lenders, upon telephonic or facsimile
demand by the Administrative Agent, on any day in the amount equal to the
lesser of (y) the aggregate principal amount of outstanding Loans or (z)
the amount by which 1. the maximum amount which may be outstanding at any
-
time as Tranche A Loans and Tranche B Loans under the Facility
<PAGE>
II Agreement exceeds 2. the aggregate principal amount of outstanding
-
Tranche A Loans and Tranche B Loans under the Facility II Agreement;
provided, however, that in no event shall this Paragraph 3(n)(4) be
-------- -------
construed to require the Companies to prepay Eurodollar Loans prior to the
expiration of the applicable Interest Period therefor.
(5) If at such time as the Companies shall be required to prepay
Loans under this Paragraph 3(n) there shall not have occurred and be
continuing an Event of Default, in lieu of prepaying the Loans as required,
the Companies may deliver to the Collateral Agent or the Administrative
Agent, as applicable, additional Collateral such that after giving effect
to the inclusion of such Collateral in the respective borrowing bases, the
Companies shall be in compliance with the requirements of subparagraphs
(1) and (2) above."
9. Paragraph 3(o) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(o) Nature and Place of Payments. All payments made on account of
----------------------------
the Obligations shall be made to the Administrative Agent for distribution
to the Lenders, and the Administrative Agent is hereby irrevocably
authorized to debit the Settlement Account and distribute amounts held
therein as provided in Paragraph 3(s) below on account thereof. All
payments made on account of the Obligations shall be made without setoff or
counterclaim in lawful money of the United States of America in immediately
available same day funds, free and clear of and without deduction for any
taxes, fees or other charges of any nature whatsoever imposed by any taxing
authority. If such payments (other than principal payments made via wire
transfers under the Federal Reserve System on Swing Line Loans held solely
by First Union, i.e., the other Lenders have not purchased participations
therein pursuant to Paragraph 3A(d)(2) above) are received by the
Administrative Agent by 3:30 p.m. on any Business Day (Charlotte, North
Carolina time) such payment will be credited on such Business Day. If a
payment (other than principal payments made via wire transfers under the
Federal Reserve System on Swing Line Loans held solely by First Union) is
received after 3:30 p.m. (Charlotte, North Carolina time) by the
Administrative Agent, such payment will be credited on the next succeeding
Business Day and interest thereon shall be payable at the then applicable
rate until credited, provided, that the Administrative Agent shall use its
--------
best efforts to credit such payment on the Business Day received. Principal
payments via wire transfers under the Federal Reserve System on Swing Line
Loans held solely by First Union will be credited
<PAGE>
as of the Business Day on which First Union receives credit for such funds
in its account with the Federal Reserve Bank. All amounts received by the
Administrative Agent on account of the Obligations shall be disbursed by
the Administrative Agent to the applicable Lenders by wire transfer on the
date of receipt if received by the Administrative Agent by the applicable
deadline for payment thereof as specified above, or if received later, on
the next succeeding Business Day. If any payment required to be made by the
Companies hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding Business
Day and interest thereon shall be payable at the then applicable rate
during such extension."
10. Paragraph 3(s) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(s) Allocation of Payments Received.
-------------------------------
(1) Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, principal amounts
received by the Administrative Agent with respect to Loans shall be
allocated (i) first, to First Union in payment of any Swing Line Loans
-----
which have not been refunded with Regular Loans, then (ii) next, among the
----
Lenders on account of the Obligations pro rata in accordance with their
respective Percentage Shares.
(2) Following the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, all amounts received
by the Administrative Agent on account of the Obligations shall be
disbursed by the Administrative Agent as follows:
(i) First, to the payment of reasonable costs and
expenses incurred by the Administrative Agent and Collateral Agent in the
performance of their duties and enforcement of their rights under the
Credit Documents, including, without limitation, all reasonable costs and
expenses of collection, reasonable attorneys' fees, court costs and
foreclosure expenses;
(ii) Second, to First Union in payment of any
Swing Line Loans outstanding (A) in which the Lenders are obligated to
purchase participations pursuant to the terms and provisions of Paragraph
2(A)(d)(2) above, (B) which have not been refunded with Regular Loans, and
(C) in which participations have not
<PAGE>
been purchased by the Lenders pursuant to the terms and provisions of
Paragraph 2A(d)(2) above;
(iii) Third, to the Lenders, pro rata in
accordance with their respective Repayment Shares, until the outstanding
Loans and other Obligations shall have been paid in full, provided that all
--------
such amounts described herein shall be applied first to interest and then
to principal, as applicable, provided further that for the sole purpose of
-------- -------
this Paragraph 3(s)(2)(iii), the Lenders' respective Repayment Shares shall
be adjusted to take into account interest which may be owing to any Lender
at a rate determined pursuant to the provisions of Paragraph 3(u) below,
and provided further that for the sole purpose of this Paragraph
-------- -------
3(s)(2)(iii), First Union's Repayment Share shall be adjusted to exclude
Swing Line Loans outstanding which, by application of Paragraph 2A(d)(4)
above, the Lenders are not obligated to refund;
(iv) Fourth, to First Union in payment of any
Swing Line Loans outstanding which, by application of Paragraph 2A(d)(4)
above, the Lenders are not obligated to refund; and
(v) Fifth, to such Persons as may be legally
entitled thereto."
11. Paragraph 8(g) of the Credit Agreement is hereby amended by deleting
the ratio "12.0:1.0" contained therein and substituting the ratio "10.0:1.0" in
lieu thereof.
12. Paragraph 9 of the Credit Agreement is hereby amended by adding the
following sentence to the end of the last paragraph thereof:
"Provided, however, that no Lender will be required to purchase a
-------- -------
participation in a Swing Line Loan which, by application of Paragraph
2A(d)(4) above, it would not have been obligated to refund."
13. The definition of the term "Aggregate Facility Commitment" contained
in Paragraph 12 of the Credit Agreement is hereby deleted in its entirety and
the following definition is hereby substituted in lieu thereof:
"'Aggregate Facility Commitment' shall mean, at any time, the sum of the
-----------------------------
Lenders' Maximum Commitments at such time; provided that such sum shall not
-------- ----
exceed $250,000,000 at any time."
14. The definitions of the terms "Corporate Rate Loan" and "Corporate Rate
Loans" contained in Paragraph 12 of the Credit agreement are hereby deleted in
their entireties and the following definitions are hereby substituted in lieu
thereof:
<PAGE>
"'Corporate Rate Loan' shall mean a Tranche A Corporate Rate Loan, a
-------------------
Tranche B Corporate Rate Loan or a Swing Line Loan, as applicable."
"'Corporate Rate Loans' shall mean, collectively, Tranche A Corporate Rate
--------------------
Loans, Tranche B Corporate Rate Loans and Swing Line Loans."
15. The definition of the term "Eurodollar Rate" contained in Paragraph 12
of the Credit Agreement is hereby deleted in its entirety and the following
definition is hereby substituted in lieu thereof:
"'Eurodollar Rate' shall mean, with respect to any Eurodollar Loan for the
---------------
Interest Period applicable to such Eurodollar Loan, the arithmetic average
of the rates at which deposits in immediately available U.S. dollars in an
amount equal to the aggregate amount of Eurodollar Loans proposed to be
subject to such rates having a maturity approximately equal to such
Interest Period are offered to or by reference banks in the London
interbank market, as determined by the Administrative Agent by reference to
page 3750 or 4833, as applicable, of the Telerate Systems Incorporated
screen service as of 11:00 a.m. (London time) two Eurodollar Business Days
prior to the first day of such Interest Period."
16. The definitions of the terms "Loan" and "Loans" contained in Paragraph
12 of the Credit Agreement are hereby deleted in their entireties and the
following definitions are hereby substituted in lieu thereof:
"'Loan' shall mean a Tranche A Loan, a Tranche B Loan or a Swing Line Loan,
----
as applicable."
"'Loans' shall mean, collectively, Tranche A Loans, Tranche B Loans and
-----
Swing Line Loans."
17. The following definitions of the terms "Maximum Swing Line
Commitment", "Regular Loan", "Regular Loans", "Swing Line Loan" and "Swing Line
Loans" are hereby added to Paragraph 12 in correct alphabetical order as
follows:
"'Maximum Swing Line Commitment' shall mean with respect to First Union the
-----------------------------
lesser of (i) the excess of its Maximum Commitment over its Percentage
Share of all Regular Loans outstanding, or (ii) the excess of $20,000,000
over the aggregate principal amount of outstanding Swing Line Loans under
the Facility II Agreement."
"'Regular Loan' shall mean a Tranche A Loan or a Tranche B Loan, as
------------
applicable."
<PAGE>
"'Regular Loans' shall mean, collectively, Tranche A Loans and Tranche B
-------------
Loans."
"'Swing Line Loan' and 'Swing Line Loans' shall have the meanings given
--------------- ----------------
such terms in Paragraph 2A(a) above."
18. The Commitment Schedule (Facility I Credit Agreement) contained as
Schedule I-1 to the Addendum is hereby deleted and the Commitment Schedule
(Facility I Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
19. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of
the Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility I Swing Line Promissory Note of even date herewith, as duly
executed by the Companies, such note to be payable by the Companies to the
order of First Union and to be in the form of ANNEX I hereto; and
(C) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that
(i) the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing,
(iii) all representations and warranties of such party previously made to
the Lenders remain true, complete and accurate, and (iv) no Event of
Default or Potential Default has occurred and is continuing.
20. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
21. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
22. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
<PAGE>
23. From and after the date hereof, all references in the Credit
Agreement, and any other document or instrument entered into in connection
therewith, to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby.
24. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Exec. Vice President & Chief
Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
<PAGE>
CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES AGENCY AND
GRAND CAYMAN BRANCH
By: /s/ Sidney S. Jordan
Name: Sidney S. Jordan
Title: Vice President
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Asst. Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ann H. Chudacoff
Name: Ann H. Chudacoff
Title: Vice President
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Edward K. Santos
Name: Edward K. Santos
Title: Vice President
<PAGE>
NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: Assistant Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
<PAGE>
EXHIBIT 10.7
THIRD AMENDMENT TO AMENDMENT TO
FACILITY II CREDIT AGREEMENT
----------------------------
THIS THIRD AMENDMENT TO FACILITY II CREDIT AGREEMENT dated as of March 15,
1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), and INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union"), in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a
-----------------
("Credit Lyonnais"), DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH, a ("Dresdner"), THE FIRST NATIONAL BANK OF CHICAGO, a
-----------------
national banking association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking
- -------------
association ("Hibernia"), NATWEST BANK N.A., a national banking association
("NatWest"), and NATIONSBANK OF TEXAS, N.A., a national banking association
("NationsBank") (First Union in its individual capacity, BNY, Credit Lyonnais,
Dresdner, FNB Chicago, Guaranty Federal, Hibernia, NatWest and NationsBank, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
--------------------
WHEREAS, each of the parties hereto is a party to a Facility II Credit
Agreement dated as of May 30, 1995, as amended by a First Amendment to Facility
II Credit Agreement dated as of September 25, 1995 and by a Second Amendment to
Facility II Credit Agreement dated as of January 4, 1996 (as so amended, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the modification of various terms and covenants thereof; and
WHEREAS, SUBJECT TO AND UPON THE TERMS AND CONDITIONS HEREIN SET FORTH, THE
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties hereto, the parties hereto hereby agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
1
<PAGE>
2. Paragraph 1(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"1(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche A
Loans" or a "Tranche A Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche A Loan was requested), the lesser of:
(1) The Aggregate Tranche A Credit Limit; and
(2) The Collateral Value of the Tranche A Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans (and which are not being repaid
by any Tranche A Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
3. Paragraph 2(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"2(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche B
Loans" or a "Tranche B Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche B Loan was requested), the lesser of:
(1) The Aggregate Tranche B Credit Limit; and
(2) The Collateral Value of the Tranche B Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified
2
<PAGE>
by the Companies in the applicable Loan Request as being scheduled for
repayment by Tranche B Loans (and which are not being repaid by any Tranche
B Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
4. Paragraph 3(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(a) Lending Limit. Subject to the conditions set forth herein,
the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche C
Loans" or a "Tranche C Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche C Loan was requested), the lesser of:
(1) The Aggregate Tranche C Credit Limit; and
(2) The Collateral Value of the Tranche C Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche C Loans (and which are not being repaid
by any Tranche C Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
5. Paragraph 4(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"4(a) Lending Limit. Subject to the conditions set forth herein, the
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date,
3
<PAGE>
advance and readvance their respective Percentage Shares of loans (the
"Tranche D Loans" or a "Tranche D Loan") to the Companies in amounts not to
exceed, in the aggregate at any one time outstanding (determined after
giving effect to the other transactions contemplated by the Loan Request
pursuant to which the applicable Tranche D Loan was requested), the lesser
of:
(1) The Aggregate Tranche D Credit Limit; and
(2) The Collateral Value of the Tranche D Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche D Loans (and which are not being repaid
by any Tranche D Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
6. Paragraph 5(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"5(a) Lending Limit. Subject to the conditions set forth herein,
the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche E
Loans" or a "Tranche E Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche E Loan was requested), the lesser of:
(1) The Aggregate Tranche E Credit Limit; and
(2) The Collateral Value of the Tranche E Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche E Loans (and which are not being repaid
by any Tranche E Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all
4
<PAGE>
Tranche D Loans outstanding, all Tranche E Loans outstanding, all Tranche F
Loans outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
7. Paragraph 6(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"6(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche F
Loans" or a "Tranche F Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche F Loan was requested), the lesser of:
(1) The Aggregate Tranche F Credit Limit; and
(2) The Collateral Value of the Tranche F Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche F Loans (and which are not being repaid
by any Tranche F Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
8. The following provisions are hereby added as a new Paragraph 6A of the
Credit Agreement:
"6A. Swing Line Facility.
--------------------
6A(a) Swing Line Lending Limit. Subject to the conditions set forth
herein, First Union agrees that it shall, from time to time up to and including
the Business Day immediately preceding the Maturity Date, advance and readvance
loans (the "Swing Line Loans" or a "Swing Line Loan") to the Companies in
amounts not to exceed, in the aggregate at any one time outstanding, the lesser
of:
(1) The Maximum Swing Line Commitment; and
5
<PAGE>
(2) (i) The sum of (A) the Collateral Value of the Tranche A
Borrowing Base, (B) the Collateral Value of the Tranche B Borrowing Base,
(C) the Collateral Value of the Tranche C Borrowing Base, (D) the
Collateral Value of the Tranche D Borrowing Base, (E) the Collateral Value
of the Tranche E Borrowing Base, and (F) the Collateral Value of the
Tranche F Borrowing Base, minus (ii) the aggregate dollar amount of Regular
-----
Loans outstanding;
Provided, however, that:
- -------- -------
i. In calculating the availability of Swing Line Loans under this
Paragraph 6A(a) at any date, the aggregate amount of Swing Line Loans
outstanding shall not include any Swing Line Loans which will be repaid
with Regular Loans to be advanced on such date in accordance with the terms
of this Agreement;
ii. Notwithstanding anything contained herein to the contrary, at
no time may the sum of all Tranche A Loans outstanding, all Tranche B Loans
outstanding, all Tranche C Loans outstanding, all Tranche D Loans
outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time; and
iii. Notwithstanding anything contained herein to the contrary, at no
time may (A) the sum of all Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans, plus all Tranche A Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche A
Borrowing Base or the Aggregate Tranche A Credit Limit; (B) the sum of all
Swing Line Loans outstanding which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche B
Loans, plus all Tranche B Loans outstanding, exceed the lesser of the
Collateral Value of the Tranche B Borrowing Base or the Aggregate Tranche B
Credit Limit; (C) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche C Loans, plus all Tranche C Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche C
Borrowing Base or the Aggregate Tranche C Credit Limit; (D) the sum of all
Swing Line Loans outstanding which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche D
Loans, plus all Tranche D Loans outstanding, exceed the lesser of the
Collateral Value of the Tranche D Borrowing Base or the Aggregate Tranche D
Credit Limit; (E) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
6
<PAGE>
scheduled for repayment by Tranche E Loans, plus all Tranche E Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche E
Borrowing Base or the Aggregate Tranche E Credit Limit; or (F) the sum of
all Swing Line Loans outstanding which have been identified by the
Companies in the applicable Loan Request as being scheduled for repayment
by Tranche F Loans, plus all Tranche F Loans outstanding, exceed the lesser
of the Collateral Value of the Tranche F Borrowing Base or the Aggregate
Tranche F Credit Limit.
6A(b) Interest Rate. Each Swing Line Loan shall bear interest at the
-------------
Applicable Corporate Rate which corresponds to the type of Regular Loan
identified by the Companies in the applicable Loan Request as being scheduled to
repay such Swing Line Loan.
6A(c) Payment of Interest. The Companies shall pay to the
-------------------
Administrative Agent for distribution to First Union interest on Swing Line
Loans outstanding hereunder from the date disbursed to but not including the day
of payment or refunding pursuant to Paragraph 6A(d) below. Interest on Swing
Line Loans shall be payable monthly, in arrears, as provided in Paragraph 7(l)
below.
6A(d) Refunding of Swing Line Loans. Upon demand by First Union,
-----------------------------
Swing Line Loans shall be refunded or participations therein acquired, as
applicable, in accordance with the following provisions. Such refunding or
acquisition will occur no later than 4:00 p.m. (Charlotte, North Carolina time)
on the day of such demand if made before 2:00 p.m. (Charlotte, North Carolina
time) and no later than 12:00 noon (Charlotte, North Carolina time) on the next
succeeding Business Day if demand therefor is made after 2:00 p.m. (Charlotte,
North Carolina time).
(1) Prior to the occurrence of an Event of Default or Potential
Default, Swing Line Loans shall be refunded by the Lenders. Such refundings
shall be made by the Lenders in accordance with their respective Percentage
Shares and shall, thereafter, be reflected as actual Regular Loans of the
Lenders on the books and records of the Administrative Agent. The type of
Regular Loan made by the Lenders in connection with the refunding of any
Swing Line Loan shall be the type of Loan identified by the Companies in
the Loan Request for such Swing Line Loan as being scheduled to repay such
Swing Line Loan.
(2) After the occurrence of any Event of Default or Potential
Default, each Lender (other than First Union) shall irrevocably and
unconditionally purchase from First Union, without recourse or warranty
(except that such outstanding Swing Line Loans in fact were made in
accordance with the provisions of this Agreement, and are not subject to
any Liens arising out of any act of First Union), an undivided interest and
participation in any Swing Line Loans then outstanding, by paying to First
Union, in dollars immediately available to First Union, an amount equal to
such Lender's
7
<PAGE>
Percentage Share of such Swing Line Loans, and thereafter, except as
otherwise provided in the second succeeding sentence, the Lenders'
respective interests in such Swing Line Loans, and the remaining interest
of First Union in such Swing Line Loans, shall in all respects be treated
as Regular Loans under this Agreement of the type identified by the
Companies in the Loan Request for such Swing Line Loan as being scheduled
to repay such Swing Line Loan, but such Swing Line Loans shall continue to
be evidenced by the Note which evidences the Swing Line Loans. If any
Lender does not pay any amount which it is required to pay to First Union,
First Union shall be entitled to recover such amount on demand from such
Lender, together with interest thereon, at the Applicable Corporate Rate,
for each day from the date of such demand, if made prior to 2:00 p.m.
(Charlotte, North Carolina time) on any Business Day, or, if made after
2:00 p.m. from the next Business Day following the date of such demand,
until the date such amount is paid to First Union by such Lender. If such
Lender does not pay such amount forthwith upon First Union's demand
therefor, and until such time as such Lender makes the required payment,
First Union shall be deemed to continue to have outstanding a Swing Line
Loan in the amount of such unpaid participation obligation for all purposes
of this Agreement other than those provisions requiring such other Lender
to purchase a participation therein. First Union shall upon the request of
such Lender, furnish to such Lender a participation certificate evidencing
the participation purchased by such Lender.
(3) [Intentionally Omitted].
(4) Notwithstanding anything contained in this Agreement to the
contrary, no Lender shall be obligated to refund or acquire a participation
interest in any Swing Line Loans made by First Union unless (i) First Union
believed in good faith that all conditions specified in Paragraph 6A(a)
above and Paragraph 9 below to the making of such Swing Line Loans were
satisfied at the time such Swing Line Loans were made, or (ii) such Lender
had actual knowledge that any such condition had not been satisfied and
failed to notify First Union in writing prior to the time First Union made
such Swing Line Loan that First Union was not authorized to make a Swing
Line Loan until such condition had been satisfied, or (iii) the
satisfaction of any such condition that was not satisfied had been waived
by the requisite Lenders in accordance with the provisions of this
Agreement, or the making of such Swing Line Loan in the face of such non-
satisfied condition or conditions had been consented to by the requisite
Lenders in accordance with the provisions of this Agreement."
9. Paragraph 7(j)(1) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
8
<PAGE>
"(1)(a) If the Companies desire to borrow a Swing Line Loan
hereunder, the Companies shall make a Loan Request to the
Administrative Agent no later than 4:45 p.m. (Charlotte, North
Carolina time) on the proposed funding date, which Loan Request
shall identify the type of Regular Loan which is scheduled to
repay such Swing Line Loan. First Union shall make available the
amount of the proposed Swing Line Loan by crediting the amount
thereof in immediately available same day funds to the Funding
Account on such date.
(b) If the Companies desire to borrow a Corporate Rate
Loan (other than a Swing Line Loan) hereunder, the Companies
shall make a Loan Request to the Administrative Agent no later
than 2:00 p.m. (Charlotte, North Carolina time) on the proposed
funding date, which Loan Request shall be forwarded promptly by
the Administrative Agent to the Lenders by facsimile transmission
no later than 2:45 p.m. (Charlotte, North Carolina time) on such
date. The applicable Lenders shall make available the amount of
their respective Percentage Shares of the proposed Corporate Rate
Loan by crediting the amount thereof in immediately available
same day funds to the Funding Account no later than 3:30 p.m.
(Charlotte, North Carolina time) on such date."
10. Paragraph 7(j)(3) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"(3) Each Corporate Rate Loan (other than a Swing Line Loan) and each
Eurodollar Loan shall be allocated among and funded by the Lenders in
accordance with their applicable Percentage Shares. The failure of any
Lender to make its Percentage Share of any Regular Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation
hereunder to advance its applicable portion of the principal amount thereof
but no Lender shall be responsible for the failure of any other Lender to
make the advance required of it."
11. Paragraph 7(k) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(k) Notes. The joint and several obligations of the Companies to
-----
repay the Loans shall be evidenced by (i) notes payable to the order of
each Lender, as applicable, in the form set forth as Exhibit A-2 in the
-----------
Addendum, and (ii) a Facility II Swing Line Promissory Note payable to the
order of First Union, in form
9
<PAGE>
and content acceptable to First Union (collectively the "Notes")."
12. Paragraph 7(n) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(n) Borrowing Base Conformity; Mandatory Prepayments.
-------------------------------------------------
(1) The Companies shall cause to be maintained with the
Collateral Agent a Tranche A Borrowing Base such that the Collateral
Value of the Tranche A Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche A Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche A Loans.
(2) The Companies shall cause to be maintained with the
Collateral Agent a Tranche B Borrowing Base such that the Collateral
Value of the Tranche B Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche B Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche B Loans.
(3) The Companies shall cause to be maintained with the
Administrative Agent a Tranche C Borrowing Base such that the
Collateral Value of the Tranche C Borrowing Base is not less than, at
any date, the sum of the aggregate dollar amount of outstanding
Tranche C Loans plus the aggregate dollar amount of outstanding Swing
Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche C
Loans.
(4) The Companies shall cause to be maintained with the
Collateral Agent a Tranche D Borrowing Base such that the Collateral
Value of the Tranche D Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche D Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche D Loans.
(5) The Companies shall cause to be maintained with the
Collateral Agent a Tranche E Borrowing Base such that the Collateral
Value of the Tranche E Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding
10
<PAGE>
Tranche E Loans plus the aggregate dollar amount of outstanding
Swing Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche E
Loans.
(6) The Companies shall cause to be maintained with the
Collateral Agent a Tranche F Borrowing Base such that the Collateral
Value of the Tranche F Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche F Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche F Loans.
(7) The Companies shall prepay Loans to the Administrative
Agent on behalf of the Lenders, upon telephonic or facsimile demand by
the Administrative Agent, on any day (A) in the amount by which the
aggregate principal amount of outstanding Tranche A Loans, plus the
aggregate principal amount of outstanding Swing Line Loans which have
been identified by the Companies in the applicable Loan Request as
being scheduled for repayment by Tranche A Loans, exceeds the
Collateral Value of the Tranche A Borrowing Base, (B) in the amount by
which the aggregate principal amount of outstanding Tranche B Loans,
plus the aggregate principal amount of outstanding Swing Line Loans
which have been identified by the Companies in the applicable Loan
Request as being scheduled for repayment by Tranche B Loans, exceeds
the Collateral Value of the Tranche B Borrowing Base, (C) in the
amount by which the aggregate principal amount of outstanding Tranche
C Loans, plus the aggregate principal amount of outstanding Swing Line
Loans which have been identified by the Companies in the applicable
Loan Request as being scheduled for repayment by Tranche C Loans,
exceeds the Collateral Value of the Tranche C Borrowing Base, (D) in
the amount by which the aggregate principal amount of outstanding
Tranche D Loans, plus the aggregate principal amount of outstanding
Swing Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche D
Loans, exceeds the Collateral Value of the Tranche D Borrowing Base,
(E) in the amount by which the aggregate principal amount of
outstanding Tranche E Loans, plus the aggregate principal amount of
outstanding Swing Line Loans which have been identified by the
Companies in the applicable Loan Request as being scheduled for
repayment by Tranche E Loans, exceeds the Collateral Value of the
Tranche E Borrowing Base, (F) in the amount by which the aggregate
principal amount of outstanding Tranche F Loans, plus the aggregate
principal amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment
11
<PAGE>
by Tranche F Loans, exceeds the Collateral Value of the Tranche F
Borrowing Base, or (G) in the amount by which the sum of the aggregate
principal amount of outstanding Tranche A Loans, Tranche B Loans,
Tranche C Loans, Tranche D Loans, Tranche E Loans, Tranche F Loans and
Swing Line Loans exceeds the Aggregate Facility Commitment; said
prepayment to be made on the date on which demand is made by the
Administrative Agent if made prior to 12:00 p.m. (Charlotte, North
Carolina time) or, if made later than 12:00 p.m. (Charlotte, North
Carolina time), before 12:00 p.m. (Charlotte, North Carolina time) on
the next Business Day.
(8) If at such time as the Companies shall be required to
prepay Loans under this Paragraph 7(n) there shall not have occurred
and be continuing an Event of Default, in lieu of prepaying the Loans
as required, the Companies may deliver to the Collateral Agent or the
Administrative Agent, as applicable, additional Collateral such that
after giving effect to the inclusion of such Collateral in the
respective borrowing bases, the Companies shall be in compliance with
the requirements of subparagraphs (1) through (6) above."
13. Paragraph 7(o) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(o) Nature and Place of Payments. All payments made on account of
----------------------------
the Obligations shall be made to the Administrative Agent for distribution
to the Lenders, and the Administrative Agent is hereby irrevocably
authorized to debit the Settlement Account and distribute amounts held
therein as provided in Paragraph 7(s) below on account thereof. All
payments made on account of the Obligations shall be made without setoff or
counterclaim in lawful money of the United States of America in immediately
available same day funds, free and clear of and without deduction for any
taxes, fees or other charges of any nature whatsoever imposed by any taxing
authority. If such payments (other than principal payments made via wire
transfers under the Federal Reserve System on Swing Line Loans held solely
by First Union, i.e., the other Lenders have not purchased participations
therein pursuant to Paragraph 6A(d)(2) above) are received by the
Administrative Agent by 3:30 p.m. on any Business Day (Charlotte, North
Carolina time) such payment will be credited on such Business Day. If a
payment (other than principal payments made via wire transfers under the
Federal Reserve System on Swing Line Loans held solely by First Union) is
received after 3:30 p.m. (Charlotte, North Carolina time) by the
Administrative Agent, such payment will be credited on the next succeeding
Business Day and interest thereon shall be payable at the then applicable
12
<PAGE>
rate until credited, provided, that the Administrative Agent shall use its
--------
best efforts to credit such payment on the Business Day received. Principal
payments via wire transfers under the Federal Reserve System on Swing Line
Loans held solely by First Union will be credited as of the Business Day on
which First Union receives credit for such funds in its account with the
Federal Reserve Bank. All amounts received by the Administrative Agent on
account of the Obligations shall be disbursed by the Administrative Agent
to the applicable Lenders by wire transfer on the date of receipt if
received by the Administrative Agent by the applicable deadline for payment
thereof as specified above, or if received later, on the next succeeding
Business Day. If any payment required to be made by the Companies hereunder
becomes due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such
extension."
14. Paragraph 7(s) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(s) Allocation of Payments Received.
-------------------------------
(1) Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, principal amounts
received by the Administrative Agent with respect to Loans shall be
allocated (i) first, to First Union in payment of any Swing Line Loans
-----
which have not been refunded with Regular Loans, then (ii) next, among the
----
Lenders on account of the Obligations pro rata in accordance with their
respective Percentage Shares.
(2) Following the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, all amounts received
by the Administrative Agent on account of the Obligations shall be
disbursed by the Administrative Agent as follows:
(i) First, to the payment of reasonable costs and expenses
incurred by the Administrative Agent and Collateral Agent in the
performance of their duties and enforcement of their rights under the
Credit Documents, including, without limitation, all reasonable costs
and expenses of collection, reasonable attorneys' fees, court costs and
foreclosure expenses;
(ii) Second, to First Union in payment of any Swing Line
Loans outstanding (A) in which
13
<PAGE>
the Lenders are obligated to purchase participations pursuant to the
terms and provisions of Paragraph 6(A)(d)(2) above, (B) which have not
been refunded with Regular Loans, and (C) in which participations have
not been purchased by the Lenders pursuant to the terms and provisions
of Paragraph 6A(d)(2) above;
(iii) Third, to the Lenders, pro rata in accordance with
their respective Repayment Shares, until the outstanding Loans and
other Obligations shall have been paid in full, provided that all such
--------
amounts described herein shall be applied first to interest and then
to principal, as applicable, provided further that for the sole
-------- -------
purpose of this Paragraph 7(s)(2)(iii), the Lenders' respective
Repayment Shares shall be adjusted to take into account interest which
may be owing to any Lender at a rate determined pursuant to the
provisions of Paragraph 7(u) below, and provided further that for the
-------- -------
sole purpose of this Paragraph 7(s)(2)(iii), First Union's Repayment
Share shall be adjusted to exclude Swing Line Loans outstanding which,
by application of Paragraph 6A(d)(4) above, the Lenders are not
obligated to refund;
(iv) Fourth, to First Union in payment of any Swing Line
Loans outstanding which, by application of Paragraph 6A(d)(4) above,
the Lenders are not obligated to refund; and
(v) Fifth, to such Persons as may be legally entitled
thereto."
15. Paragraph 12(g) of the Credit Agreement is hereby amended by deleting
the ratio "12.0:1.0" contained therein and substituting the ratio "10.0:1.0" in
lieu thereof.
16. Paragraph 13 of the Credit Agreement is hereby amended by adding the
following sentence to the end of the last paragraph thereof:
"Provided, however, that no Lender will be required to purchase a
-------- -------
participation in a Swing Line Loan which, by application of Paragraph
6A(d)(4) above, it would not have been obligated to refund."
17. The definition of the term "Aggregate Facility Commitment" contained
in Paragraph 16 of the Credit Agreement is hereby deleted in its entirety and
the following definition is hereby substituted in lieu thereof:
"'Aggregate Facility Commitment' shall mean, at any time, the sum of the
-----------------------------
Lenders' Maximum Commitments at such time; provided that such sum shall not
-------- ----
exceed $250,000,000 at any time."
14
<PAGE>
18. The definition of the term "Aggregate Tranche D Credit Limit"
contained in Paragraph 16 of the Credit Agreement is hereby amended by deleting
the phrase "fifty-five percent (55%)" contained therein and substituting the
phrase "seventy-five percent (75%)" in lieu thereof.
19. The definitions of the terms "Corporate Rate Loan" and "Corporate Rate
Loans" contained in Paragraph 16 of the Credit agreement are hereby deleted in
their entireties and the following definitions are hereby substituted in lieu
thereof:
"'Corporate Rate Loan' shall mean a Tranche A Corporate Rate Loan, a
-------------------
Tranche B Corporate Rate Loan, a Tranche C Corporate Rate Loan, a Tranche D
Corporate Rate Loan, a Tranche E Corporate Rate Loan, a Tranche F Corporate
Rate Loan or a Swing Line Loan, as applicable."
"'Corporate Rate Loans' shall mean, collectively, Tranche A Corporate Rate
--------------------
Loans, Tranche B Corporate Rate Loans, Tranche C Corporate Rate Loans,
Tranche D Corporate Rate Loans, Tranche E Corporate Rate Loans, Tranche F
Corporate Rate Loans and Swing Line Loans."
20. The definition of the term "Eurodollar Rate" contained in Paragraph 16
of the Credit Agreement is hereby deleted in its entirety and the following
definition is hereby substituted in lieu thereof:
"'Eurodollar Rate' shall mean, with respect to any Eurodollar Loan for the
---------------
Interest Period applicable to such Eurodollar Loan, the arithmetic average
of the rates at which deposits in immediately available U.S. dollars in an
amount equal to the aggregate amount of Eurodollar Loans proposed to be
subject to such rates having a maturity approximately equal to such
Interest Period are offered to or by reference banks in the London
interbank market, as determined by the Administrative Agent by reference to
page 3750 or 4833, as applicable, of the Telerate Systems Incorporated
screen service as of 11:00 a.m. (London time) two Eurodollar Business Days
prior to the first day of such Interest Period."
21. The definitions of the terms "Loan" and "Loans" contained in Paragraph
16 of the Credit Agreement are hereby deleted in their entireties and the
following definitions are hereby substituted in lieu thereof:
"'Loan' shall mean a Tranche A Loan, a Tranche B Loan, a Tranche C Loan, a
----
Tranche D Loan, a Tranche E Loan, a Tranche F Loan, or a Swing Line Loan,
as applicable."
"'Loans' shall mean, collectively, Tranche A Loans, Tranche B Loans,
-----
Tranche C Loans, Tranche D Loans, Tranche E Loans, Tranche F Loans and
Swing Line Loans."
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22. The following definitions of the terms "Maximum Swing Line
Commitment", "Regular Loan", "Regular Loans", "Swing Line Loan" and "Swing Line
Loans" are hereby added to Paragraph 16 in correct alphabetical order as
follows:
"'Maximum Swing Line Commitment' shall mean with respect to First Union the
-----------------------------
lesser of (i) the excess of its Maximum Commitment over its Percentage
Share of all Regular Loans outstanding, or (ii) $20,000,000."
"'Regular Loan' shall mean a Tranche A Loan, a Tranche B Loan, a Tranche C
------------
Loan, a Tranche D Loan, a Tranche E Loan or a Tranche F Loan, as
applicable."
"'Regular Loans' shall mean, collectively, Tranche A Loans, Tranche B
-------------
Loans, Tranche C Loans, Tranche D Loans, Tranche E Loans and Tranche F
Loans."
"'Swing Line Loan' and 'Swing Line Loans' shall have the meanings given
--------------- ----------------
such terms in Paragraph 6A(a) above."
23. The Commitment Schedule (Facility II Credit Agreement) contained as
Schedule I-2 to the Addendum is hereby deleted and the Commitment Schedule
(Facility II Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
24. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of the
Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility II Swing Line Promissory Note of even date herewith, as duly
executed by the Companies, such note to be payable by the Companies to the
order of First Union and to be in the form of ANNEX I HERETO; AND
(C) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that (i)
the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing, (iii)
all representations and warranties of such party previously made to the
Lenders remain true, complete and accurate, and (iv) no Event of Default or
Potential Default has occurred and is continuing.
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25. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
26. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
27. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
28. From and after the date hereof, all references in the Credit
Agreement, and any other document or instrument entered into in connection
therewith, to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby.
29. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Executive Vice President &
Chief Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
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CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH
By: /s/ Sidney S. Jordan
Name: Sidney S. Jordan
Title: Vice President
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Asst. Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ann H. Chudacoff
Name: Ann H. Chudacoff
Title: Vice President
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Edward K. Santos
Name: Edward K. Santos
Title: Vice President
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NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: Assistant Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
20
