Exhibit 10.18

 

FALCON FINANCIAL INVESTMENT TRUST

 

SIXTH AMENDMENT TO
REVOLVING WAREHOUSE FINANCING AGREEMENT

 

This SIXTH AMENDMENT TO REVOLVING WAREHOUSE FINANCING AGREEMENT (this “Sixth
Amendment”) is dated as of March 22, 2004 and entered into by and among Falcon
Financial Investment Trust (as successor to Falcon Financial, LLC) (“FFIT”),
SunAmerica Life Insurance Company, Bank of New York (as successor to LaSalle
National Bank) and ABN AMRO Bank N.V., and is made with reference to the
Revolving Warehouse Financing Agreement dated as of January 7, 1998 by and among
the parties hereto (as amended, the “Warehouse Agreement”).  Capitalized terms
used herein without definition shall have the respective meanings set forth in
the Warehouse Agreement.

 

WHEREAS, the parties hereto have entered into the First Amendment to Revolving
Warehouse Financing Agreement as of March 25, 1998 (the “First Amendment”),
which amended the Warehouse Agreement, among other things to add new definitions
to, and amend and restate existing definitions in, Article I of the Warehouse
Agreement for the purpose of clarifying certain terms relating to the franchise
loans eligible to be financed under the Warehouse Agreement;

 

WHEREAS, the parties hereto have entered into the Second Amendment to Revolving
Warehouse Financing Agreement as of October 2, 1998 (the “Second Amendment”),
which amended the Warehouse Agreement, among other things to amend the recitals,
add new definitions to, and amend and restate existing definitions in, Article I
of the Warehouse Agreement and amend certain other sections of the Warehouse
Agreement to provide for the financing of mortgage loans under the Warehouse
Agreement;

 

WHEREAS, the parties hereto have entered into the Third Amendment to Revolving
Warehouse Financing Agreement as of April 19, 1999 (the “Third Amendment”),
which amended the Warehouse Agreement, among other things to reflect the
increase in the working capital facility under the Senior Subordinated Loan
Agreement and the existence of the Junior Subordinated Loan Agreement;

 

WHEREAS, the parties hereto have entered into the Fourth Amendment to Revolving
Warehouse Financing Agreement as of October 29, 2001 (the “Fourth Amendment”),
which amended the Warehouse Agreement, among other things to temporarily
increase the Facility Limit and to set the Applicable Margin at 3%;

 

WHEREAS, Customer, SunAmerica and Goldman Sachs Mortgage Company (“Goldman
Sachs”) have entered into that certain Agreement Relating to Receivables dated
as of October 27, 2003 (the “Receivables Agreement”) pursuant to which Customer
granted SunAmerica and Goldman Sachs certain rights with respect to approving
Customer’s origination of Receivables under the Warehouse Agreement and
requiring Customer to make Partial Prepayments of Invested Principal under the
circumstances described therein;

 

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WHEREAS, the parties hereto have entered into the Fifth Amendment to Revolving
Warehouse Financing Agreement dated as of November 21, 2003 (the “Fifth
Amendment”), which amended the Warehouse Agreement, among other things to reduce
the Applicable Margin to 2%, reduce the Advance Rate to 80% and provide for the
ability of Customer to borrow for general corporate purposes to the extent any
voluntary Partial Prepayments of Invested Principal reduce the Aggregate Amount
Outstanding below 80% of the Net Receivables Balance;

 

WHEREAS, the Merger and the IPO (each as described and defined in the Fifth
Amendment) were effective as of December 22, 2003, resulting in FFIT succeeding
to Falcon Financial, LLC as the “Customer” under the Warehouse Agreement and the
Receivables Agreement;

 

WHEREAS, the parties desire to amend the Warehouse Agreement to provide for the
financing of variable rate Receivables under the Warehouse Agreement and make
certain other amendments relating to reporting requirements and financial
covenants;

 

WHEREAS, except as expressly set forth herein, the parties hereto disclaim any
intent to effect a novation or an extinguishment or discharge of any liability
or obligation under the Warehouse Agreement arising prior to the date of this
Sixth Amendment;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:

 

Section 1.              AMENDMENTS TO WAREHOUSE AGREEMENT

 

1.1          Amendment of Existing Definitions.

 

A.            Section 1.1 of the Warehouse Agreement is amended by amending and
restating paragraph (m) of the definition of “Eligible Direct Loan Receivable”
in its entirety as follows:

 

“(m)  The Receivable arises under a Contract the terms of which call for monthly
and no more than 240 installment payments.  Where the Receivable is a fixed rate
obligation pursuant to the Franchise Loan Origination Guidelines, the terms of
the Contract call for level pay installment payments, except for the first
installment and the final installment, each of which may be less but not more
than the other monthly payments.  The Receivable has a first installment due
date no later than the next succeeding Cut-Off Date unless the first installment
is prepaid, in which case the next installment has a due date no later than the
second Cut-Off Date following the date on which the Receivable is made.  Each
payment is due on the same day of the month.”

 

B.            Section 1.1 of the Warehouse Agreement is amended by amending and
restating paragraph (l) of the definition of “Eligible Mortgage Loan Receivable”
in its entirety as follows:

 

“(l)  The Receivable arises under a Contract the terms of which call for monthly
and no more than 240 installment payments.  Where the Receivable is a fixed rate
obligation pursuant to the Mortgage Loan Origination Guidelines, the terms of
the Contract call for level pay installment payments, except for the first
installment and the final installment, each of which may be less but not more
than the other monthly payments.  The

 

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Receivable has a first installment due date no later than the next succeeding
Cut-Off Date unless the first installment is prepaid, in which case the next
installment has a due date no later than the second Cut-Off Date following the
date on which the Receivable is made.  Each payment is due on the same day of
the month.”

 

1.2          Amendments to Section 2.11.  Effective as of November 21, 2003, the
first clause of the first sentence of Section 2.11(f)  of the Warehouse
Agreement is amended and restated as follows:

 

“As soon as available, and in any event within 45 days after the end of each of
the first three Fiscal Quarters and within 90 days after the end of the fourth
Fiscal Quarter,”

 

1.3          Amendment to Section 5.1.  Effective as of November 21, 2003,
subparagraph (ii) of Section 5.1(n) of the Warehouse Agreement is amended and
restated in its entirety as follows:

 

“ (ii)        Minimum Consolidated Net Income.  Customer shall not permit
Consolidated Net Income:  (A) as of the end of any Fiscal Quarter commencing
with the second Fiscal Quarter of Fiscal Year 2004, to be less than negative
$500,000; and (B) as of the end of the first Fiscal Quarter of Fiscal Year 2004,
to be less than negative $2,000,000.”

 

1.4          Amendment to Schedule 1.1(a).  Schedule 1.1(a) (Loan Origination
Guidelines) is amended and restated in its entirety as attached hereto as
Exhibit A.

 

Section 2.              MISCELLANEOUS.

 

2.1          Reference to and effect on the Warehouse Agreement and other
documents relating to the Warehouse Agreement.

 

A.            On and after the date hereof, each reference in the Warehouse
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like
import referring to the Warehouse Agreement, and each reference in any other
document relating to the Warehouse Agreement to the “Warehouse Agreement”,
“thereunder”, “thereof”, or words of like import referring to the Warehouse
Agreement shall mean and be a reference to the Warehouse Agreement as amended by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment and this Sixth Amendment.

 

B.            Except as specifically amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and
this Sixth Amendment, the Warehouse Agreement and any other documents relating
to the Warehouse Agreement shall remain in full force and effect and are hereby
ratified and confirmed.

 

C.            The execution, delivery and performance of the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment and this Sixth Amendment shall not, except as expressly provided
therein and herein, constitute a waiver of any provision of, or operate as a
waiver of any right, power or remedy of the parties under, the Warehouse
Agreement or any other document relating to the Warehouse Agreement.

 

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2.2          Execution in Counterparts.  This Sixth Amendment may be executed in
any number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument.

 

2.3          Headings.  Section and subsection headings in this Sixth Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Sixth Amendment for any other purpose or be given any substantive
effect.

 

2.4          Further Assurances.  The parties to this Sixth Amendment agree to
execute and deliver any additional information, documents or agreements
contemplated hereby and/or necessary or appropriate to effect and perform the
actions contemplated hereby and to amend each of the Transaction Documents,
including the Paying Agent Agreement, as is necessary to conform such documents
to the amendments to the Warehouse Agreement set forth herein.

 

2.5          Applicable Law.  THIS SIXTH AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED
TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

 

2.6          Authorization of Custodian.  Customer, SunAmerica and Facility
Agent hereby authorize and instruct the Custodian to enter into this Sixth
Amendment and hereby agree that the Custodian shall have no liability in
connection with this Sixth Amendment, or its consequences.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be
executed by their respective duly authorized officers as of the date first above
written.

 

 

FALCON FINANCIAL INVESTMENT TRUST

 

 

 

 

 

 

 

By:

/s/ David A. Karp

 

 

 

Name: David A. Karp

 

 

Title: President

 

 

 

 

 

 

 

SUNAMERICA LIFE INSURANCE COMPANY

 

 

 

 

By:

AIG Global Investment Corp.

 

Its:

Investment Advisor

 

 

 

 

 

 

 

By:

  /s/ Thomas N. Denkler

 

 

 

Name: Thomas N. Denkler

 

 

Title: Managing Director

 

 

 

 

 

 

 

THE BANK OF NEW YORK, as Paying Agent and Custodian

 

 

 

 

 

 

 

By:

/s/ Diane Pickett

 

 

 

Name: Diane Pickett

 

 

Title: Vice President

 

 

 

 

 

 

 

ABN AMRO BANK N.V.

 

 

 

 

 

 

 

By:

/s/ Thomas J. Educate

 

 

 

Name: Thomas J. Educate

 

 

Title: Senior Vice President

 

 

 

 

 

 

 

By:

/s/ Patricia Luken

 

 

 

Name: Patricia Luken

 

 

Title: Group Vice President

 

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ACKNOWLEDGED AND AGREED as of the date first above written pursuant to Section 2
of the Participation Agreement dated as of January 7, 1998 between SunAmerica
Life Insurance Company and the undersigned.

 

 

GOLDMAN SACHS MORTGAGE COMPANY

 

 

 

By:

GOLDMAN SACHS REAL ESTATE FUNDING

 

CORP., its general partner

 

 

 

 

 

 

 

By:

/s/ Dan Sparks

 

 

 

Name: Dan Sparks

 

 

Title:   Vice President

 

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