Exhibit 10.3

 

FIFTH AMENDMENT TO AMENDED AND RESTATED WAREHOUSING
CREDIT AND SECURITY AGREEMENT

 

THIS FIFTH AMENDMENT TO AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY
AGREEMENT (this “Amendment”) is made as of May 11, 2011, by and among WALKER &
DUNLOP, LLC (the “Borrower”), BANK OF AMERICA, N.A., as credit agent (the
“Credit Agent”), the lenders party hereto (the “Lenders”), and, for the limited
purposes set forth herein, Walker & Dunlop, Inc. (the “Parent”).  Capitalized
terms used herein without definition have the meanings specified therefor in
that certain Amended and Restated Warehousing Credit and Security Agreement
dated as of October 15, 2009, among the Borrower, the Credit Agent, and the
Lenders, as amended (the “Loan Agreement”).

 

R E C I T A L S

 

The Borrower, the Credit Agent, and the Lenders desire to further amend the Loan
Agreement on, and subject to, the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the agreements of the parties set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.                                       Amendments.  Effective as of the
Effective Date (as hereafter defined), the Loan Agreement is amended as follows:

 

(a)                                  Section 7.2 of the Loan Agreement is hereby
deleted in its entirety, and replaced with the following:

 

“7.2                         Financial Statements

 

Deliver to Credit Agent, in form and detail reasonably satisfactory to Credit
Agent:

 

7.2(a)                   As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of the Parent,
audited consolidated, and consolidating with respect to W&D, fiscal year-end
statements of income and cash flows of the Parent for that year, and the related
consolidated, and consolidating with respect to W&D, audited balance sheet as of
the end of that year (setting forth in comparative form the corresponding
figures for the preceding fiscal year), all in reasonable detail and accompanied
by (1) an opinion as to those financial statements in form and substance
reasonably satisfactory to Credit Agent and prepared by an independent certified
public accounting firm reasonably acceptable to Credit Agent,  and (2) if then
available or otherwise within fifteen (15) days of receipt by the Parent, any
management letters, management reports or other supplementary comments or
reports delivered by those accountants to the Parent;

 

7.2(b)                  As soon as available and in any event within sixty (60)
days after the end of each Fiscal Quarter of the Parent, including its last
Fiscal Quarter, consolidated, and consolidating with respect to W&D, interim
statements of income for that fiscal quarter and the period from the beginning
of the fiscal year to end of that fiscal quarter, and the related consolidated
and consolidating balance sheet (including contingent liabilities) as at the end
of that fiscal quarter, all in reasonable detail, subject, however, to year-end
audit adjustments;

 

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7.2(c)                   Together with each delivery of financial statements
required by this Section, a Compliance Certificate substantially in the form of
Exhibit I.”

 

(b)                                 Section 7.3(a) of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

 

“7.3(a)             As soon as available and in any event within sixty (60) days
after the end of each Calendar Quarter, a consolidated report (“Servicing
Portfolio Report”) as of the end of the Calendar Quarter, as to all Mortgage
Loans the servicing rights to which are owned by the Parent or its Affiliates,
and separately for W&D (in each case, specified by investor type, recourse and
non-recourse) regardless of whether the Mortgage Loans are Pledged Loans. The
Servicing Portfolio Report must be in similar summary form as previously
presented to Credit Agent (or as Credit Agent otherwise may agree), and must, at
a minimum, indicate which Mortgage Loans (1) are current and in good standing,
(2) are more than 30, 60 or 90 days past due, (3) are the subject of pending
bankruptcy or foreclosure proceedings, or (4) have been converted (through
foreclosure or other proceedings in lieu of foreclosure) into real estate owned
by a member of the Parent’s consolidated group, and include, by Mortgage Loan
type (x) weighted average coupon, (y) weighted average maturity, and
(z) weighted average servicing fee.”

 

(c)                                  Section 8 of the Loan Agreement is hereby
amended as follows:

 

(i)                                     A new Section 8.2(h) is hereby added
immediately following Section 8.2(g):

 

“8.2(h)            Cease to be (i) directly or indirectly wholly-owned by,
(ii) controlled (as defined within the definition of “Affiliate”) by, and
(iii) included within the consolidated financial statements of, the Parent.”

 

(ii)                                  Sections 8.7, 8.8, 8.9 and 8.10 of the
Loan Agreement are hereby deleted in their entirety, and replaced with
“INTENTIONALLY OMITTED.”

 

(d)                                 A new Article 8A is hereby added to the Loan
Agreement immediately following Article 8, to be treated as part of Article 8 of
the Loan Agreement for all purposes thereunder, including, without limitation,
Section 10.1(b):

 

“8A.                       NEGATIVE COVENANTS

 

As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, none of the conditions set forth below
shall exists or occur, with the second sentence of Section 8.6 hereof to apply
to the following, as financial covenants:

 

8A.1                      Minimum Tangible Net Worth

 

(a) The Parent’s Tangible Net Worth shall at any time be less than
$100,000,000.00, to be tested on the last day of each Fiscal Quarter, or (b) the
Parent or any applicable Subsidiary shall otherwise not be in compliance with
applicable net worth requirements of HUD or any Investor, including Fannie Mae
and Freddie Mac.

 

8A.2                      Leverage Ratio

 

The Parent’s Leverage Ratio, determined on a consolidated basis, shall at any
time exceed 2.25 to 1.

 

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8A.3                      Minimum Liquid Assets

 

The Parent’s Liquid Assets, determined on a consolidated basis, shall at any
time be less than $10,000,000.00, or the Parent’s or any applicable Subsidiary’s
Liquid Assets shall otherwise not to be in compliance with applicable
requirements of HUD or any Investor, including Fannie Mae and Freddie Mac.

 

8A.4                      Servicing Delinquencies

 

The aggregate unpaid principal amount of Fannie Mae DUS Mortgage Loans within
the Parent’s consolidated Servicing Portfolio which are sixty (60) or more days
past due or otherwise in default at any time exceeds two percent (2%) of the
aggregate unpaid principal balance of all Fannie Mae DUS Mortgage Loans within
the Parent’s consolidated Servicing Portfolio at such time.”

 

(e)                                  Section 10.1(b) is hereby amended by adding
the following text to the end thereof immediately before the period, to be part
of the same sentence:

 

“; or any of the conditions set forth in Article 8A hereof shall exist or
occur.”

 

(f)                                    Section 13.1 of the Loan Agreement is
hereby amended as follows:

 

(i)                                     The following definitions are hereby
deleted in their entirety, and replaced with the following:

 

“Applicable Margin” means (a) for LIBOR Loans, 2.00%, and (b) for Base Rate
Loans, 2.00%.

 

“Leverage Ratio” means the ratio of a Person’s Indebtedness to Tangible Net
Worth.  For the purposes of calculating the Parent’s Leverage Ratio, there shall
be excluded from “Indebtedness” (a) guaranty obligations to Fannie Mae pursuant
to the Fannie Mae DUS Program, prior to the time liability is or could asserted
thereunder, and (b) amounts from time to time outstanding under this Agreement,
or any other warehouse lending facility the sole purpose of which, and the
amounts advanced from time to time under which are used only to, finance the
origination of Mortgage Loans secured by Multifamily Properties which Mortgage
Loans are pre-sold to Fannie Mae, Freddie Mac, or another Investor.

 

“Tangible Net Worth” means, at any time of determination, the excess, at such
time, of the Parent’s and its Subsidiaries’, on a consolidated basis, total
assets, minus the sum of (i) total liabilities, and (ii) the book value of all
intangible assets, including, without limitation, good will, trademarks, trade
names, service marks, brand names, copyrights, patents and unamortized debt
discount and expense, organizational expenses and the excess of the equity in
any Subsidiary over the cost of the investment in such Subsidiary, all of the
foregoing determined in accordance with GAAP applied in a manner consistent with
the most recent audited financial statements delivered to Credit Agent under
this Agreement.  For the purposes of this definition, mortgage servicing rights
shall not be considered intangible assets.

 

(ii)                                  The following definition is added in the
proper alphabetical sequence:

 

“Parent” means Walker & Dunlop, Inc., a Maryland corporation.

 

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(g)                                 Exhibit I to the Loan Agreement (Form of
Compliance Certificate) is hereby deleted in its entirety and replaced with the
form of Exhibit I annexed to this Amendment.

 

2.                                       Additional Agreements.  In order to
implement certain amendments to the Loan Agreement set forth herein, the
following additional provisions shall apply from and after the Effective Date:

 

(a)                                  The representations and warranties set
forth in Section 6.5 of the Loan Agreement shall apply to the Parent and the
applicable financial statements of the Parent, and Section 6.5 and all
applicable defined terms used therein, as the context may apply, shall be deemed
amended accordingly.

 

(b)                                 The representations and warranties set forth
in the last two sentences of Section 6.16 shall apply to the Servicing Contracts
of Parent and all of its Affiliates, including, without limitation, W&D.

 

(c)                                  By its execution hereof, the Parent agrees
to reasonably cooperate with the Agent and provide the Agent with information
from time to reasonably requested by the Agent, in order for the Agent to
determine compliance with the representations and warranties applicable to the
Parent set forth in the Loan Agreement as amended by this Amendment and the
requirements of Article 8A of the Loan Agreement as added pursuant to this
Amendment.

 

3.                                       Acknowledgments by Borrower.  The
Borrower acknowledges, confirms and agrees that:

 

(a)                                  This Amendment is a Loan Document, and all
references in any Loan Document to the Borrower’s Obligations shall mean and
include the Obligations as amended by this Amendment.

 

(b)                                 Except as provided herein, the terms and
conditions of the Loan Agreement and the other Loan Documents remain in full
force and effect, and the Borrower hereby (x) ratifies, confirms and reaffirms
all and singular of the terms and conditions of the Loan Agreement and the other
Loan Documents, and (y) represents and warrants that:

 

(i)                                     no Default or Event of Default exists as
of the date the Borrower executes this Amendment, nor will a Default or Event of
Default exist as of the Effective Date.

 

(ii)                                  the representations and warranties made by
the Borrower in the Loan Agreement and the other Loan Documents are true and
correct as of the date hereof, and will be true and correct as of the Effective
Date, except as to (1) matters which speak to a specific date, and (2) changes
in the ordinary course to the extent permitted and contemplated by the Loan
Agreement.

 

(iii)                               the Borrower and the Parent each has the
power and authority and legal right to execute, deliver and perform this
Amendment, has taken all necessary action to authorize the execution, delivery,
and performance of this Amendment, and the person executing and delivering this
Amendment on behalf of the Borrower and the Parent each is duly authorized to do
so.

 

(iv)                              this Amendment constitutes the legal, valid
and binding obligation of the Borrower and, to the extent of its agreements
hereunder, the Parent, enforceable against the Borrower and the Parent in
accordance with its terms, subject to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally and the effect of
equitable principles whether applied in an action at law or a suit in equity.

 

(c)                                  The Borrower shall promptly pay upon
receipt of an invoice or statement therefor the reasonable attorneys’ fees and
expenses and disbursements incurred by the Credit Agent and the Lenders in
connection with this Amendment and any prior matters involving the Loan.

 

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(d)                                 The Borrower acknowledges that it has no
defenses, set offs or counterclaims with respect to any of its obligations to
the Credit Agent or the Lenders, and hereby releases, waives, and forever
relinquishes all claims, demands, obligations, liabilities, and causes of action
whatever kind or nature, whether known or unknown, which it has or may have as
of the date hereof and as of the Effective Date against the Credit Agent or any
Lender, or their respective affiliates, officers, directors, employees, agents,
attorneys, independent contractors, and predecessors, together with their
successors and assigns, directly or indirectly arising out of or based upon any
matter connected with the Loan Agreement or the administration thereof or the
obligations created thereby (including pursuant to this Amendment).

 

4.                                       Conditions Precedent.  This Amendment
shall be effective upon the satisfaction by the Borrower of, or written waiver
by the Credit Agent and the Lenders of, the following conditions and any other
conditions set forth in this Amendment, by no later than 4:00 p.m. (Boston time)
on the date of this Amendment, as such time and date may be extended in writing
by the Credit Agent and the Lenders, in their sole discretion (with the date, if
at all, by which such conditions have been satisfied or waived being referred to
herein as, the “Effective Date”), failing which this Amendment and all related
documents shall be null and void at the option of the Credit Agent and the
Lenders:

 

(a)                                  Delivery by the Borrower to the Credit
Agent and each Lender of the following:

 

(i)                                     This Amendment, duly executed by the
Borrower, the Parent, the Credit Agent and each Lender.

 

(ii)                                  Such certificates of resolutions or other
actions, incumbency certificates and/or other certificates of an authorized
officer the Borrower as the Credit Agent may require evidencing (A) the
authority of the Borrower to enter into this Amendment and any other documents
to be executed and delivered in connection herewith, and (B) the identity,
authority and capacity of each officer of the Borrower authorized to act on its
behalf in connection with this Amendment and the other Loan Documents.

 

(iii)                               Such other documents as the Credit Agent or
any Lender reasonably may require, duly executed and delivered.

 

(b)                                 No Default or Event of Default shall have
occurred and be continuing.

 

(c)                                  The representations and warranties of the
Borrower contained in this Agreement or in any document, instrument, or
agreement delivered or to be delivered in connection with this Agreement
(i) shall have been true and correct in all material respects on the date that
such representations and warranties were made, and (ii) shall be true and
correct in all material respects on the Effective Date as if made on and as of
such date.

 

(d)                                 In addition to all other expense payment and
reimbursement obligations of the Borrower under the Loan Agreement and other
Loan Documents, the Borrower will, promptly following their receipt of an
appropriate invoice therefor, pay or reimburse the Credit Agent and each Lender
for all of their respective reasonable out of pocket costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses and
disbursements) incurred in connection with the preparation of this Amendment and
any other documents in connection herewith and the matters addressed in and
contemplated by, this Amendment.

 

5.                                       Miscellaneous.

 

(a)                                  This Amendment shall be governed in
accordance with the internal laws of the Commonwealth of Massachusetts (without
regard to conflict of laws principles) as an instrument under seal.

 

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(b)                                 This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.  Signatures transmitted electronically (including by fax or e-mail)
shall have the same legal effect as originals, but each party nevertheless shall
deliver original signed counterparts of this Amendment to each other party, upon
request.

 

(c)                                  This Amendment constitutes the complete
agreement among the Borrower, the Parent, the Credit Agent, and the Lenders with
respect to the subject matter of this Amendment and supersedes all prior
agreements and understanding relating to the subject matter of this Amendment,
and may not be modified, altered, or amended except in accordance with the Loan
Agreement.

 

(d)                                 Time is of the essence with respect to all
aspects of this Amendment.

 

[Remainder of page intentionally left blank]

 

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Executed as a sealed instrument as of the date first above written.

 

 

 

 

WALKER & DUNLOP, LLC

 

 

 

 

 

By:

/s/ William M. Walker

 

 

Name:

William M. Walker

 

 

Title:

President and CEO

 

 

 

 

 

 

 

 

BANK OF AMERICA, N.A., as Credit Agent and a Lender

 

 

 

 

 

 

 

 

By:

/s/ Jane E. Huntington

 

 

Name:

Jane E. Huntington

 

 

Title:

Senior Vice President

 

 

 

 

 

 

 

 

TD BANK, N.A., as a Lender

 

 

 

 

 

 

 

 

By:

/s/ William J. Olsen

 

 

Name:

William J. Olsen

 

 

Title:

Senior Vice President

 

 

 

For the limited purposes set forth herein:

 

 

 

 

 

WALKER & DUNLOP, INC.

 

 

 

 

 

 

 

 

By:

/s/ William M. Walker

 

 

Name:

William M. Walker

 

 

Title:

President and CEO

 

 

 

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