exv10w12



 





Exhibit 10.12




AMENDMENT NUMBER FOUR

to the

Servicer Advance Financing Facility Agreement

Dated as of August 28, 2003

by and between

NEW CENTURY MORTGAGE CORPORATION

and

CITIGROUP GLOBAL MARKETS REALTY CORP.




     This AMENDMENT NUMBER FOUR is made this 24th day of August, 2006 (“Amendment Number
Four”), by and between NEW CENTURY MORTGAGE CORPORATION, a California corporation (the
“Borrower”) and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation (the
“Lender”), to the Servicer Advance Financing Facility Agreement, dated as of August 28,
2003 by and between the Borrower and the Lender, as amended (the “Agreement”).



RECITALS




     WHEREAS, the Borrower and the Lender have agreed to amend the Agreement as more fully set
forth herein; and



     WHEREAS, as of the date of this Amendment Number Four, the Borrower represents to the Lender
that it is in compliance in all material respects with all of the representations and warranties
and all of the affirmative and negative covenants set forth in the Agreement and is not in default
under the Agreement.



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in consideration of the mutual covenants herein contained, the parties
hereto hereby agree as follows:



     Effective as of August 24, 2006, the Agreement is hereby amended as follows:



     SECTION 1. Amendments to Section 1.



     (a) Section 1 of the Agreement is hereby amended by deleting the definitions of “Affiliate”,
“Cash Equivalents”, “Guarantee”, “Guaranty”, “Indebtedness”, “Lender”, “Mortgage Note”,
“Termination Date”, and “Total Indebtedness” and replacing the same with the following new
definitions:




     “Affiliate” means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person, which shall include any Subsidiary of such Person. For the purposes of
this definition, “control” when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise (excluding Persons that may be deemed Affiliates solely by the operation
of securities laws), and the terms “controlling” and “controlled” have meanings
correlative to the meaning of “control”. Notwithstanding any provision herein to
the contrary, (i) a Person shall not be considered an Affiliate of the Lender
solely by such Person’s ownership of the publicly-traded stock of Citigroup Inc.,
and (ii) a Person shall not be considered an Affiliate of the Guarantor or the
Lender, (x) solely by such Person’s ownership of the publicly-traded stock of the
Guarantor, or (y) solely due to the direct or indirect ownership



 









 







by the Guarantor or the Lender, or any of the Guarantor and the Lender acting
in concert, of less than 50% of the capital stock or other units representing
ownership interests of such Person that are issued, outstanding, and grant the
owner or holder thereof the right to vote for the election of directors, managers
or other like positions of governance.




     “Cash Equivalents” means any of the following: (a) marketable direct
obligations issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits
or overnight bank deposits having maturities of six months or less from the date
of acquisition issued by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not less
than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors
Service, Inc. (“Moody’s”), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A2 by Moody’s; (f)
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition; or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.




     “Guarantee” means, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person or in any
manner providing for the payment of any Indebtedness of any other Person,
excluding (a) obligations to make endorsements for collection or deposits in the
ordinary course of business and (b) obligations to make servicing advances or
other obligations in respect of a mortgage loan serviced by such Person.




     “Guaranty” shall mean that certain Amended and Restated Guaranty
dated as of October 1, 2004 by the Guarantor in favor of the Lender, as the same
may be amended, modified or supplemented from time to time.




     “Indebtedness” means, for any Person: (a) all obligations for
borrowed money; (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable and
paid within ninety (90) days after the date the respective goods are delivered or
the respective



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services are rendered; (c) indebtedness of others secured by a lien on the
Property of such Person, whether or not the respective indebtedness so secured has
been assumed by such Person; (d) obligations (contingent or otherwise) of such
Person in respect of letters of credit or similar instruments issued for account
of such Person; (e) capital lease obligations of such Person; (f) obligations of
such Person under repurchase agreements or like arrangements; (g) indebtedness of
others guaranteed on a recourse basis by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets by
such Person; (i) indebtedness of general partnerships of which such Person is a
general partner; and (j) any other contingent liabilities of such Person.




     “Lender” shall mean Citigroup Global Markets Realty Corp. and
permitted assigns or successors thereto.




     “Mortgage Note” shall mean a promissory note which has a term not
exceeding 50 years evidencing a loan or advance which is secured by a Mortgage.




     “Termination Date” shall mean August 24, 2007 or such earlier date on
which this Agreement shall terminate in accordance with the provisions hereof or
by operation of law, as same may be extended by Lender in its sole reasonable
discretion.




     “Total Indebtedness” means, with respect to any Person, for any
period, the aggregate Indebtedness of such Person and its Subsidiaries during such
period maintained in accordance with GAAP, less the aggregate amount of any such
total liabilities that are reflected on the balance sheet of such Person in
respect of obligations incurred pursuant to a transaction solely to the extent
such obligations are secured by the assets securitized thereby and are
non-recourse to such Person.




     “Trustee” shall mean any trustee, paying agent, securities
administrator, trust administrator or other Person responsible for the
administration and distribution of collections on Mortgage Loans under a Pooling
and Servicing Agreement.



     (b) Section 1 of the Agreement is hereby amended by deleting the references to the term “New
Century” wherever it appears in the definitions of “Servicing Contract” and “Servicing Rights” and
replacing such references with the term “the Borrower”.



     (c) Section 1 of the Agreement is hereby amended by deleting the terms “Cash”,
“Overcollateralization”, “Servicing System Update” and the related definitions thereto in their
respective entirety.



     SECTION 2. Amendments to Section 2.



     (a) Subsection 2.1 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     2.1 Agreement to Lend. Subject to the terms and conditions
of this Agreement, and provided that no Default or Event of Default shall have
occurred and be continuing hereunder, Citigroup shall make available to the
Borrower a



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secured credit facility in an aggregate principal amount not to exceed
$50,000,000 (the “Facility Amount”) at any one time outstanding, against
which the Borrower may borrow, prepay, in whole or in part, and re-borrow at any
time (and without limit on the number of times) before the Termination Date. The
amount of each Loan drawn down by the Borrower shall be at least $500,000.



     (b) Subsection 2.2(4) of the Agreement is hereby amended by deleting the clause “which occurs
prior to the Servicing System Update” from the first sentence thereof.



     (c) Subsection 2.2(5) of the Agreement is hereby deleted in its entirety.



     (d) Subsection 2.7(3) of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     (3) Notwithstanding anything to the contrary contained in this Agreement, the
Borrower shall, on a weekly basis, reconcile the amount of the outstanding Loans
and the amount of Servicer Advances securing such Loans. If the amount of the
Servicer Advances securing such Loans is less than the Collateral Value required
under this Agreement, the Borrower shall, within 1 Business Day of such
reconciliation, repay a portion of the outstanding Loans to the Lender in an
amount necessary to cause the amount of the Servicer Advances securing such Loans
to equal the Collateral Value required hereunder; provided, however, the Borrower
shall not be required to remit such amount to the Lender if the remittance would
be for an amount less than $100,000; provided further that any remittance not
required to be made pursuant to this Section 2.7(3) shall not constitute a Default
under this Agreement.



     (e) Subsection 2.10 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     2.10 Renewal Fee. In the event that the Lender and the
Borrower agree to extend the term of this Facility for a period of at least 364
days, the Borrower shall pay to the Lender a renewal fee which in the aggregate
shall be equal to $100,000 (the “Renewal Fee”), such payment to be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim. The Renewal Fee shall be paid by the Borrower to the Lender on the
date the Lender renews this Facility.



     SECTION 3. Amendments to Section 3.



     (a) Subsection 3.3(1) of the Agreement is hereby amended by deleting the clause “which occurs
prior to the Servicing System Update” from the first sentence thereof.



     (b) Subsection 3.3(2) of the Agreement is hereby deleted in its entirety.



SECTION 4. Amendments to Section 5.




     (a) Subsection 5.1(4) is hereby deleted in its entirety and replaced with the following new
Subsection:




     (4) within five Business Days after any officer of the Borrower or the
Guarantor has knowledge of their occurrence, written notice of each of the



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following events: (i) upon the entry of a judgment or decree against the
Borrower or the Guarantor in an amount in excess of $7,000,000; (ii) any event,
circumstance or condition that has resulted, or has a reasonable likelihood of
resulting in either a Material Adverse Change or a Material Adverse Effect with
respect to the Borrower or the Guarantor; (iii) any Default and what actions, if
any, the Borrower or the Guarantor, as applicable, is taking or contemplates
taking in regard thereto; (iv) any notice under any Pooling and Servicing
Agreement from any party thereunder that it intends to declare an event of default
thereunder, or that it intends to terminate the servicer thereunder; (v) notice of
any other Material Adverse Effect, including any material adverse development
which occurs in any litigation, arbitration or governmental investigation or
proceeding previously disclosed by the Borrower or the Guarantor to the Lender;



     (b) Subsection 5.1(5) is hereby amended by deleting the reference therein to “either
Guarantor”, and replacing such reference with “the Guarantor”.



     (c) Subsection 5.9 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     5.9 Net Worth. The Guarantor will at all times during each
fiscal year maintain, on a consolidated basis, Tangible Net Worth, on a
consolidated basis, during each fiscal year, of not less than the sum of (i)
$750,000,000 and (ii) fifty percent (50%) of all equity capital raised after
November 1, 2004 as of the last day of each of its fiscal quarters.



     (d) Subsection 5.10 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     5.10 Ratio of Total Indebtedness to Tangible Net Worth. The
Guarantor will at all times, maintain a ratio of Total Indebtedness to Tangible
Net Worth as of the last day of each fiscal quarter of not greater than 13:1.



     (e) Subsection 5.11 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     5.11 Liquidity. The Guarantor will, at all times, maintain,
on a consolidated basis, cash and Cash Equivalents in an amount not less than
$60,000,000.



     (f) Subsection 5.15 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     5.15 Nature of Business. Neither the Borrower nor the
Guarantor shall make any material change in the nature of its business as carried
on as of the date hereof.



     (g) Subsection 5.17 of the Agreement is hereby deleted in its entirety and replaced with the
following new Subsection:




     5.17 Servicing. The Borrower shall service the Mortgage
Loans in accordance with the terms of each Pooling and Servicing Agreement or
other



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agreement governing the servicing of such Mortgage Loans and accepted
servicing practices.



     SECTION 5. Amendments to Section 8.



     (a) Subsection 8.2(4) is hereby deleted in its entirety and replaced with the following new
Subsection:




     (4) The Lender shall have received an original executed copy of the
Acknowledgement Letter in the form attached hereto as Exhibit G-1 and any other
documents reasonably required by the Lender in connection with the Lender’s right
to receive reimbursement for Servicer Advances.



     SECTION 6. Amendments to Section 9.



     (a) Subsection 9.1(5) is hereby deleted in its entirety and replaced with the following new
Subsection:




     (5) The Borrower, the Guarantor or any of the Borrower’s or the Guarantor’s
Affiliates or Subsidiaries shall fail to pay any of its respective Indebtedness
(aggregating in excess of $10,000,000), or any interest or premium thereon when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), or shall fail to make any payment when due under the Borrower’s, the
Guarantor’s or the Borrower’s or the Guarantor’s Affiliates’ or Subsidiaries’
Guarantee of another person’s Indebtedness for borrowed money (aggregating in
excess of $10,000,000), and such failure shall entitle any related counterparty to
declare any such Indebtedness or Guarantee to be due and payable, or required to
be prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof.



     (b) Subsections 9.1(7), (8), (9) and (10) of the Agreement are each hereby amended by deleting
each reference to “any Guarantor” and any other reference implying multiple Guarantors, and
replacing such references with “the Guarantor”.



     (c) Subsection 9.1(12) is hereby deleted in its entirety and replaced with the following new
Subsection:




     (12) Notwithstanding Subsection 9.1(5), a “default,” “event of default” or
“event of termination,” however defined, shall occur under any material Other
Agreement, which has not been waived by the Lender or its Affiliate, as
applicable. For the avoidance of doubt, an Other Agreement shall be deemed
“material” if the consideration paid or obligations owed thereunder exceeds
$500,000 in the aggregate.



     (d) Subsection 9.1(15) is hereby deleted in its entirety and replaced with the following new
Subsection:




     (15) In the good faith judgment of the Lender, any Material Adverse Effect
shall have occurred with respect to the Borrower, the Guarantor or any of the
Borrower’s or the Guarantor’s Affiliates taken as a whole or any Material Adverse
Change shall have occurred with respect to the financial condition or operations
of the Guarantor;



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     (e) Subsection 9.1(16) is hereby deleted in its entirety and replaced with “Reserved”.



     (f) Subsection 9.3(2) is hereby amended by deleting the clause “its gross negligence or
willful misconduct” in the third to last sentence in its entirety and replacing such term with “the
Lender’s gross negligence or willful misconduct”.



     SECTION 7. Amendments to Section 14.



     (a) Subsection 14.3 is hereby deleted in its entirety and replaced with the following new
Subsection:




     14.3 Set-off. In addition to any rights and remedies of the
Lender provided by this Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all property and deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The Lender
may set-off cash, the proceeds of the liquidation of any Collateral and all other
sums or obligations owed by the Lender or its Affiliates to the Borrower or its
Affiliates against all of the obligations of the Borrower or its Affiliates to the
Lender or its Affiliates, whether under this Agreement or under any other
agreement between the parties or between the Borrower or any of its Affiliates and
the Lender or any of its Affiliates, or otherwise, whether or not such obligations
are then due, without prejudice to the Lender’s or its Affiliate’s right to
recover any deficiency. The Lender agrees promptly to notify the Borrower after
any such set-off and application made by the Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and
application.



     (b) The notice addresses set forth in Subsection 14.11 are hereby deleted in its entirety and
replaced with the following new notice addresses:



	 	 	 	 	 
	 

	 	To the Lender:
	 	Citigroup Global Markets Realty Corp.
	 

	 	 	 	390 Greenwich Street, 6th Floor
	 

	 	 	 	New York, New York 10013
	 

	 	 	 	Attention: Bobbie Theivakumaran
	 

	 	 	 	Telephone: (212) 723-6753
	 

	 	 	 	Facsimile: (212) 723-8604
	 
	 	 	 	 
	 

	 	To the Borrower:
	 	 New Century Mortgage Corporation
	 

	 	 	 	18400 Von Karman, Suite 1000
	 

	 	 	 	Irvine, California 92612
	 

	 	 	 	Attention: Kevin Dwyer
	 

	 	 	 	Telephone: (949) 225-7808
	 

	 	 	 	Facsimile: (949) 440-7033






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     SECTION 8. Amendments to Schedules and Exhibits.



     (a) Schedule 1 is hereby deleted in its entirety and replaced with the Schedule 1 attached
hereto as Annex 1.



     (b) Exhibit G-2 and all references thereto in the Agreement are hereby deleted in their
respective entirety.



     SECTION 9. Representations. In order to induce the Lender to execute and deliver this
Amendment Number Four, the Borrower hereby represents to the Lender that as of the date hereof,
after giving effect to this Amendment Number Four, the Borrower and the Guarantor are each in
compliance in all material respects with all of the terms and conditions of the Agreement and the
Guaranty, as applicable, and no Default or Event of Default has occurred or is continuing
thereunder.



     SECTION 10. Conditions Precedent. As a condition precedent to the effectiveness of
this Amendment Number Four and the Amendment Number One to the Guaranty dated as of even date
herewith (collectively, the “Amendments”), the Borrower (i) shall execute and deliver a new
Note for the Facility Amount to the Lender, and (ii) shall pay to the Lender all additional fees
and out of pocket expenses incurred by the Lender in connection with the Amendments (including all
reasonable fees and out of pocket costs and expenses of the Lender’s legal counsel incurred in
connection with the Amendments), in accordance with Section 14.2 of the Agreement.



     SECTION 11. Defined Terms. Any terms capitalized but not otherwise defined herein
should have the respective meanings set forth in the Agreement.



     SECTION 12. Limited Effect. Except as amended hereby, the Agreement shall continue in
full force and effect in accordance with its terms. Reference to this Amendment Number Four need
not be made in the Agreement or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to, or with respect to, the
Agreement, any reference in any of such items to the Agreement being sufficient to refer to the
Agreement as amended hereby.



     SECTION 13. Governing Law. This Amendment Number Four shall be construed in accordance
with the laws of the State of New York and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to conflict of laws
doctrine applied in such state (other than Section 5-1401 of the New York General Obligations Law).



     SECTION 14. Counterparts. This Amendment Number Four may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an original and all
of which taken together shall constitute one and the same instrument.



[Signature Page Follows]




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     IN WITNESS WHEREOF, the Lender and the Borrower have caused this Amendment Number Four to be
executed and delivered by their duly authorized officers as of the day and year first above
written.



	 	 	 	 	 	 	 
	 	 	CITIGROUP GLOBAL MARKETS REALTY CORP.

(Lender)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bobbie Theivakumaran
 

	 	 
	 

	 	Name:
	 	Bobbie Theivakumaran	 	 
	 

	 	Title:
	 	Authorized Agent	 	 
	 
	 	 	 	 	 	 
	 	 	NEW CENTURY MORTGAGE CORPORATION

(Borrower)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Cloyd	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kevin Cloyd	 	 
	 

	 	Title:
	 	Executive Vice President