Exhibit 10.4

 

FIRST AMENDMENT TO

MASTER REPURCHASE AGREEMENT

 

Dated as of August 24, 2020

 

Between:

 

WALKER & DUNLOP, LLC

a Delaware limited liability company, as SELLER,

 

WALKER & DUNLOP, INC.,

a Maryland corporation, as PARENT

 

and

 

JPMORGAN CHASE BANK, N.A., as BUYER

 

1.This Amendment

 

The Parties hereby amend (for the first time) the Master Repurchase Agreement
dated August 26, 2019 among them (the “Original MRA”, as amended by the
Correction of Master Repurchase Agreement dated July 23, 2020, the “Corrected
MRA”, and as amended hereby and supplemented, further amended or restated from
time to time, the “MRA”) to amend the Termination Date.

 

All capitalized terms used in the Corrected MRA and used, but not defined
differently, in this amendment (the “First Amendment” or within itself, this
“Amendment”) have the same meanings here as there.

 

The Sections of this Amendment are numbered to correspond with the numbers of
the Sections in the Original MRA amended hereby and are consequently
nonsequential.

 

2.Definitions; Interpretation

 

A.       The following defined term in Section 2(a) of the Original MRA is
amended to read as follows:

 

“Termination Date‎”‎ means the earliest of (i)  the Business Day, if any, that
Seller or Buyer designates as the Termination Date by written notice given to
the other Party, (ii) the date of declaration of the Termination Date pursuant
to Section 11(b)(i) and (iii) August 23, 2021.

 

B.       The following definitions are added to Section 2(a) of the Original MRA
in alphabetical order:

 

“Debt Service Coverage Ratio” means, as of any time of determination, the ratio
of:

 

(a) Four-Quarter EBITDA to

 

 

 

 

(b) the sum of:

 

(i) interest expense of Parent on account of all Debt other than Agency
Warehouse Facilities,

 

(ii) an amount equal to the aggregate amount of all scheduled or other mandatory
payments of principal under any Debt (whether or not so paid), excluding such
payments under Agency Warehouse Facilities and balloon payments due at maturity,
measured over the same time period as the relevant Four-Quarter EBITDA as
provided in the preceding clause (a).

 

For the purposes of this definition only, (A) Four-Quarter EBITDA shall exclude
any EBITDA attributable to any Subsidiary which is not a Specified Subsidiary
during the applicable period, and (B) interest expense shall exclude any
interest expense on account of any Indebtedness of any Subsidiary which is not a
Specified Subsidiary during the applicable period.

 

“EBITDA” means at any date of determination thereof, with respect to Parent and
its subsidiaries on a consolidated basis, an amount equal to the following, all
as determined in accordance with GAAP (net of intercompany transactions and
without duplication):

 

(a)           Net Income for the most recently completed Measurement Period;
plus

 

(b)           to the extent deducted in calculating Net Income, the sum of:

 

(i)       Interest expect of Parent on account of all Indebtedness other than
Agency Warehouse Facilities;

 

(ii)      depreciation expenses,

 

(iii)     amortization and write-off of Servicing Contracts,

 

(iv)     decreases in the fair value of any derivative instruments entered into
in the ordinary course,

 

(v)      net cash settlements paid by Parent in connection with any derivative
instruments entered into in the ordinary course,

 

(vi)     provisions for risk-sharing obligations relating solely to Fannie Mae
DUS Mortgage Loans pursuant to the Fannie Mae DUS Program, and

 

(vii)   stock compensation (i.e., a non-cash charge reducing net income); minus

 

(c)          to the extent included in calculating Net Income,

 

(i)       capitalized amounts attributable to origination of Servicing Contract
rights,

 

(ii)      the fair value of expected guaranty obligations,

 

 

 

 

(iii)       increases in the fair value of any derivative instruments entered
into in the ordinary course,

 

(iv)       net cash settlements received by Parent in connection with any
derivative instruments entered into in the ordinary course, and

 

(v)       any cash loan loss expenses not deducted or excluded from the
determination of Net Income.

 

“Four-Quarter EBITDA” means, as of any date of determination, EBITDA for the
period of four (4) consecutive Fiscal Quarters ending on or immediately prior to
such date of determination.

 

“Measurement Period” means, at any date of determination, the most recently
completed four fiscal quarters of the applicable Person. For purposes of
calculating any financial ratio for a Measurement Period (a) other than with
respect to the last fiscal quarter of any fiscal year, the financial statements
delivered to the Buyer pursuant to Section 10(h) of the Agreement shall be used
with respect to each respective fiscal quarter covered thereby, provided that,
when a Measurement Period includes a fiscal quarter which is covered by the then
most recently delivered audited financial statement required to be deliver to
the Buyer pursuant to Section 10(h) of the Agreement, then the financial
statements relating to such prior covered fiscal quarter shall be adjusted
pursuant to any adjustments made in such audited financial statements, and (b)
for the fourth fiscal quarter, the audited financial statements for the fiscal
year then ended shall be used.

 

“Net Income” means, for any Person, the net income (or loss) of such Person for
any period after deduction of all expenses, taxes and other proper charges, all
as determined in accordance with GAAP.

 

“Servicing Contract” means, with respect to any Person, the arrangement, whether
or not in writing, under which that Person has the right to service Mortgage
Loans.

 

“Specified Subsidiary” means Walker &Dunlop Multifamily, Inc., Seller, WD
Capital and any other Person who is or becomes a Seller or Guarantor as defined
or otherwise described in the Agreement).

 

10.       Seller Covenants.

 

A.       Financial Covenants. The following is added as a new subsection (vi) to
Section 10(u) of the Original MRA:

 

(vi)     Permit the Debt Service Coverage Ratio to be less than 2.75 to 1.00,
tested on the last day of each calendar quarter.

 

 

 

 

 

EXHIBIT A

 

Exhibit A attached to the Original MRA is deleted in its entirety and hereby
replaced with Exhibit A attached hereto.

 

(The remainder of this page is intentionally blank; counterpart signature pages
follow.)

 

 

 

 

As amended hereby, the Original MRA remains in full force and effect, and the
Parties hereby ratify and confirm it.

 

JPMORGAN CHASE BANK, N.A., as Buyer

 

By: /s/ Grace Chi   Name: Grace Chi   Title: Authorized Officer    

 

WALKER & DUNLOP, LLC, as Seller

 

By: /s/ Stephen P. Theobald   Name: Stephen P. Theobald   Title: Executive Vice
President and Chief Financial Officer  

  

WALKER & DUNLOP, INC., as Parent

 

By: /s/ Stephen P. Theobald   Name: Stephen P. Theobald   Title: Executive Vice
President and Chief Financial Officer    

 

Counterpart signature page to First Amendment to Master Repurchase Agreement

 

 

 

 

EXHIBIT A

 

TO MASTER REPURCHASE AGREEMENT

 

Form of Officer’s Certificate with computations

to show compliance or non-compliance with

certain financial covenants

 

OFFICER’S CERTIFICATE

 

AGENT:JPMORGAN CHASE BANK, N.A.

 

COMPANY:WALKER & DUNLOP, LLC

 

SUBJECT PERIOD:                       ended                  , 20    

 

DATE                        , 20    

 

This certificate is delivered to the Buyer under the Master Repurchase Agreement
dated as of August 26, 2019 (as supplemented, amended or restated from time to
time, the “Repurchase Agreement”), between Walker & Dunlop, LLC (“Seller”) and
Walker & Dunlop, Inc. (“Parent”) and JPMorgan Chase Bank, N.A. (the “Buyer”).
Unless they are otherwise defined in this request, terms defined in the
Repurchase Agreement have the same meanings here as there.

 

The undersigned officer of Parent and Seller certifies to Buyer that on the date
of this certificate that:

 

1.       The undersigned is an incumbent officer of Parent and Seller, holding
the titles stated below the undersigned’s signature below.

 

2.       Seller’s financial statements that are attached to this certificate
were prepared in accordance with GAAP (except that interim — i.e., other than
annual — financial statements exclude notes to financial statements and
statements of changes to stockholders’ equity and cash flow and are subject to
year-end adjustments) and (subject to the aforesaid proviso as to interim
financial statements) present fairly the financial position and results of
operations of Seller and its Subsidiaries, on a consolidated basis, as of
                       and for the (check, as applicable) ¨ one, ¨ two or ¨
three quarter(s) of Seller’s fiscal year, as the case may be, ending on the last
day of that period (the “Subject Period”).

 

3.       The undersigned officer of Seller supervised a review of the activities
of Seller and its Subsidiaries during the Subject Period in respect of the
following matters and has determined the following: (a) to undersigned officer’s
best knowledge, except to the extent that a representation or warranty speaks to
a specific date, the representations and warranties of Seller in Section 10 of
the Repurchase Agreement are true and correct in all material respects, other
than for the changes, if any, described on the attached Annex A; (b) Seller has
complied with all of its obligations under the Transaction Documents, other than
for the deviations, if any, described on the attached Annex A; (c) no Event of
Default has occurred that has not been declared by the Buyer in writing to have
been cured or waived, and no Default has occurred that has not been cured before
it became an Event of Default, other than those Events of Default and/or
Defaults, if any, described on the attached Annex A (d) compliance by Seller
with certain financial covenants in Section 11(v) of the Repurchase Agreement is
accurately calculated on the attached Annex A.

 

Walker & Dunlop, LLC       By:              Name:     Title:    

 

 

 

 

ANNEX A TO OFFICER’S CERTIFICATE

 

1.       Describe deviations from compliance with obligations, if any — clause
3(b) of attached Officer’s Certificate — if none, so state:

 

2.       Describe Defaults or Events of Default, if any — clause 3(c) of
attached Officer’s Certificate — if none, so state:

 

3.       Calculate compliance with covenants in Section 10(u) — clause 3(d) of
attached Officer’s Certificate:

 

As of the last day of the calendar quarter ending                         ,
20__:

 

(a)               The ratio of (x) the Total Indebtedness of Parent and its
consolidated Subsidiaries to (y) its Tangible Net Worth was ____. (The maximum
is 2.25 to 1.00.)

 

(b)               The Tangible Net Worth of Parent and its consolidated
Subsidiaries was $__________________. (The minimum is $200,000,000.)

 

(c)               The Liquidity of Parent and its consolidated Subsidiaries was
$___________________. (The minimum is $15,000,000.)

 

(d)               The sum of the unpaid principal balances of all Delinquent
Serviced Mortgage Loans in the Fannie Mae Servicing Portfolio was ___% of the
aggregate unpaid principal balances of all Fannie Mae Mortgage Loans then
serviced by Seller and its consolidated Subsidiaries. (The maximum is 3.5%.)

 

(e)               The aggregate principal balance of Seller’s portfolio of
Serviced Mortgage Loans (excluding Delinquent Serviced Mortgage Loans) was
$____________ as of the last day of the most recent calendar quarter. (The
minimum is $20,000,000,000.)

 

(f)                The aggregate principal balance of Seller’s portfolio of
Serviced Fannie Mae Mortgage Loans (excluding Delinquent Serviced Mortgage
Loans) was $____________ as of the last day of the most recent calendar quarter.
(The minimum is $10,000,000,000.)

 

(g)               The Debt Service Coverage Ratio was ____ to 1.00, tested on
the last day of the most recent calendar quarter. (The minimum is 2.75 to 1.00.)