Exhibit 4(r)
[ Letterhead of Prudential Home Mortgage ]
The Prudential Home Mortgage Company, Inc.
7485 New Horizon Way
Frederick, MD 21701
301 696-7900
November 1, 1994
Mr. Douglas E. Jones
Chief Executive Officer
CUB Funding Corporation
26565 West Agoura Road
Suite 305
Calabasas, California 91302
Re: Amendment No. 1 to Credit and Security Agreement
Dear Doug:
We refer you to the Credit and Security Agreement dated as
of August 11, 1994, (the "Agreement") between The Prudential Home
Mortgage Company, Inc. (the "Lender") and CUB Funding Corporation
(the "Borrower"). Unless otherwise defined in this letter
amendment (the "Amendment"), the terms defined in the Agreement
shall be used in this Amendment as defined in the Agreement.
The Lender and the Borrower desire to amend certain
provisions of the Agreement to reduce the amount of the
Commitment in accordance with Section 2.03 of the Agreement and
to change the interest rate and fees payable in connection with
the Loans, as more particularly described below. Accordingly, it
is hereby agreed by the Lender and the Borrower, effective as of
the Effective Date (as defined below), as follows:
A. REDUCTION OF COMMITMENT
1. Amendment of "Maximum Credit Limit." The definition of
"Maximum Credit Limits" contained in Section 1.01 of the Agreement
is deleted and the following substituted therefor:
"Maximum Credit Limit" means, Sixteen Million
Dollars ($16,000,000), as such amount may be reduced in
accordance with Section 2.03."
2. Note. The first sentence of Section 2.06 of the
Agreement is deleted and following sentence substituted therefor:
All Loans made by the Lender under this Agreement shall
be evidenced by, and repaid with interest in accordance
with, a single promissory note of the Borrower in
substantially the form of Exhibit A duly completed, in
the original principal amount equal to the Maximum
Credit Limit, payable to the Lender, and maturing as to
principal on the Termination Date (the "Note").
Mr. Douglas E. Jones
November 1, 1994
Page 2 of 5
B. AMENDMENT OF INTEREST AND FEES:
1. Deletion of "Certified Loans." The definition of
"Certified Loans" contained in Section 1.01 of the Agreement is
deleted and the following substituted therefor in the proper
alphabetical order:
"Shipped Loans" means Loans made in respect of
Mortgage Loans for which the Collateral Custodian has
certified in the applicable Borrowing Base Certificate
that such Mortgage Loans have been shipped to a
Qualified Investor under a Purchase Commitment or
Agency Commitment.
2. Amendment of Available Loans. The references to
"Certified Loans" in Section 2.01 of the Agreement are deleted
and the defined term "Shipped Loans" is substituted therefor.
3. Amendment of Interest. Section 2.05 of the Agreement
is deleted in its entirety and the following substituted
therefor:
Section 2.05. Interest. The Borrower shall
pay interest to the Lender on the Outstanding Credit,
at a rate per annum as follows: (1) for a Wet Loan at
a rate equal to the CP Rate plus two and three quarters
percent (2.750%); (2) for a Documented Loan outstanding
for no more than three (3) days, at a rate equal to the
CP Rate plus one and three quarters percent (1.750%);
(3) for a Documented Loan outstanding for longer than
three (3) days, at a rate equal to the CP Rate plus one
and one quarter percent (1.250%); and (4) for a Shipped
Loan at a rate equal to the CP Rate plus one percent
(1.000%). Any principal amount not paid when due (at
maturity, by acceleration or otherwise) shall bear
interest thereafter, payable on demand, at the Default
Rate.
The interest rate on each Loan shall change
when the CP Rate changes. Interest on each Loan
shall not exceed the maximum amount permitted under
applicable law and shall be calculated on the basis of
a year of three hundred sixty (360) days for the actual
number of days elapsed.
Loans that were initially made in respect of
Wet Mortgage Loans, will begin to accrue interest at
the interest rate applicable to Documented Loans on the
Business Day that the Collateral Custodian certifies to
Douglas E. Jones
November 1, 1994
Page 3 of 5
the Lender in a Borrowing Base Certificate received by the
Lender not later than 2:00 p.m. (eastern time) on such
Business Day what all of the required documents have been
received and accepted by the Collateral Custodian and that
such Mortgage Loans are no longer classified in the
Borrowing Base as Wet Mortgage Loans. Loans accruing
interest at the initial rate applicable to Documented Loans
will begin to accrue interest at the CP Rate plus one and
one quarter percent (1.250%) on the Business Day that the
Collateral Custodian certifies to the Lender in a Borrowing
Base certificate received by the Lender not later than 2:00
p.m. (eastern time) on such Business Day that such
Documented Loans have been outstanding for more than three
(3) days. Loans accruing interest at the rate applicable to
Documented Loans will begin to accrue interest at the rate
applicable to Shipped Loans on the Business Day that the
Collateral Custodian certifies to the Lender in a Borrowing
Base certificate received by the Lender not later than 2:00
p.m. (eastern time) on such Business Day that such
Documented Loans have been shipped to a Qualified Investor.
4. Amendment of Fees. Section 2.09 of the Agreement is
deleted in its entirety and the following substituted therefor:
Section 2.09. Fees. The Borrower shall pay
to the Lender a non-refundable facility fee (the
"Facility Fee") equal to one fifth of one percent
(0.20%) of the Maximum Credit Limit, which fee shall be
payable monthly in advance in monthly installments on
each Monthly Date.
C. MISCELLANEOUS
1. Reaffirmation of Loan Documents. Except as expressly
amended herein, the Loan Documents shall remain in full force and
effect as currently written. The Borrower hereby affirms and
agrees that: (a) the execution and delivery by the Borrower of
and the performance of its obligations under this Amendment shall
not in any way impair, invalidate, or otherwise affect any of the
obligations of the Borrower or the rights of the Lender under the
Agreement or any other Loan Documents; (b) the term "Obligations"
as used in the Agreement includes, without limitation, the
Obligations of the Borrower under the Loan Documents as amended
by this Amendment and (c) the pledge of a security interest in
the Collateral by the Borrower to the Lender in the Agreement
remains in full force and effect in that such pledge constitutes
a continuing first priority security interest in and lien upon
the Collateral securing all of the obligations.
Douglas E. Jones
November 1, 1994
Page 4 of 5
2. Effective Date. This Amendment shall be effective as
of November 1, 1994, (the "Effective Date") provided that there
shall have been delivered to the Lender each of the following,
duly executed by all required hereunder:
(a) This Amendment;
(b) A $16,000,000 replacement Note dated as of
November 1, 1994;
(c) A Certificate of the Secretary of the Borrower (in
substantially the form attached hereto as Exhibit
A) certifying that the Borrower has the necessary
corporate authorizations to execute, deliver, and
perform this Amendment; and
(d) Such other additional documentation as the Lender
may reasonably request in connection herewith.
3. Counterparts. This Amendment may be executed in any
number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together
shall constitute one and the same agreement.
4. Representations and Warranties. The Borrower hereby
represents and warrants to the Lender as follows:
(a) The Borrower has the power and authority and the
legal right to execute, deliver, and perform this Amendment,
and has taken all necessary corporate action to authorize
the execution, delivery, and performance of this Amendment.
This Amendment has been duly executed and delivered on
behalf of the Borrower and constitutes the legal, valid, and
binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms. The execution,
delivery, and performance of this Amendment will not violate
any Law or require any consent, approval, authorization of,
or registration, declaration, or filing with, any
Governmental Authority.
(b) At and as of the date of execution of this
Amendment and at and as of the Effective Date, and both
prior to and after giving effect to this Amendment: (1) the
representations and warranties of the Borrower contained in
the Loan Documents are accurate and complete in all
respects, and (2) there has not occurred a Default or Event
of Default under the Agreement or any other Loan Document.
Douglas E. Jones
November 1, 1994
Page 5 of 5
Very truly yours:
THE PRUDENTIAL HOME MORTGAGE COMPANY, INC.
By /s/ Russell R. Anderson
--------------------------
Name: Russell R. Anderson
Title: Vice President
AGREED TO AND ACCEPTED AS OF NOVEMBER 1, 1994, BY:
CUB FUNDING CORPORATION
By /s/ Douglas E. Jones
--------------------------
Name: Douglas E. Jones
Title: Chief Executive Officer
NOTE
$16,000,000 November 1, 1994
For value received, the undersigned CUB FUNDING CORPORATION,
a California corporation (the "Borrower"), promises to pay to the
order of The Prudential Home Mortgage Company, Inc. (the
"Lender"), at its office at 7485 New Horizon Way, Frederick,
Maryland 21701, in lawful money of the United States and in
immediately available funds, the principal amount of Sixteen
Million Dollars ($16,000,000) or the aggregate unpaid principal
amount of all Loans made to the Borrower by the Lender pursuant
to the Credit and Security Agreement (as defined below),
whichever is less, on the Termination Date, and to pay interest
from the date of this Note on the unpaid principal amount of this
Note, in like money, at said office, at the time and at the rate
per annum as provided in the Credit and Security Agreement. Any
amount of principal hereof that is not paid when due, whether at
stated maturity, by acceleration, or otherwise, shall bear
interest from the date when due until said principal amount is
paid in full, payable on demand, at the Default Rate.
The Borrower hereby authorizes the Lender to endorse in the
books and records of the Lender all Loans made to the Borrower by
the Lender, the amount of each Loan, the type of Loan and each
renewal and all payments of principal amounts in respect of such
Loans, which endorsements shall, in the absence of manifest
error, be conclusive as to the outstanding principal amount of
all Loans made to the Borrower by the Lender; provided, however,
that the failure to make such notation with respect to any Loan
or payment shall not limit or otherwise affect the obligations of
the Borrower to the Lender under the Credit and Security
Agreement or this Note.
This Note is a Note referred to in, and is entitled to the
benefits of, the Credit and Security Agreement dated as of August
11, 1994 (as amended from time to time, the "Credit and Security
Agreement") among the Borrower and the Lender. This Note
replaces the Note of the Borrower to the Lender dated August 11,
1994, in the amount of $30,000,000; and any outstanding
Obligations under such former Note are incorporated under this
replacement Note. All capitalized terms used herein and not
defined in this Note shall have the meanings given to them in the
Credit and Security Agreement.
The Credit and Security Agreement contains, among other
things, provisions for the prepayment of and acceleration of the
maturity of this Note upon the happening of certain stated events
as specified therein. This Note is secured as provided in the
Credit and Security Agreement and certain of the Loan Documents
referred to therein, reference to which is hereby made for a
description of the Collateral provided for under the above-
referenced documents and the rights of the Borrower and the
Lenders with respect to such Collateral.
This Note shall be governed by the laws of the State of New
York, provided that, as to the maximum rate of interest that may
be charged or collected, if the laws applicable to the Lender
permit it to charge or collect a higher rate than the laws of the
State of New York, then such law applicable to the Lender shall
apply to the Lender under this Note.
CUB FUNDING CORPORATION
By /s/ Douglas E. Jones
----------------------------
Name: Douglas E Jones
Title: Chief Executive Officer