Try our mobile app
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation) | File Number) | Identification No.) |
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: (
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to section 12(g) of the Act:
|
| |||
(Title of Each Class) | (Trading Symbol) | (Name of each exchange on which registered) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement |
The disclosures provided in Item 2.03 of this Current Report on Form 8-K are hereby incorporated by reference into this Item 1.01.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
TCB Credit Agreement
On April 8, 2022, an indirect subsidiary and unconsolidated joint venture of eXp World Holdings, Inc. (the “Company”), SUCCESS Lending, LLC (“SUCCESS Lending”), entered into a Mortgage Warehouse Agreement and related ancillary agreements (together, the “TCB Credit Agreement”) with Texas Capital Bank which establishes a revolving warehouse credit line for SUCCESS Lending. It is customary for mortgage businesses like SUCCESS Lending to obtain warehouse credit lines in order to enable them to close and fund residential mortgage loans for subsequent sale to investors. SUCCESS Lending will use the borrowing capacity under the TCB Credit Agreement exclusively for such purposes and borrowings will generally be repaid with the proceeds received from the sale of mortgage loans.
The TCB Credit Agreement provides SUCCESS Lending with a revolving warehouse credit line of up to $25 million. Borrowings under the TCB Credit Agreement are secured by the mortgage loans funded under the TCB Credit Agreement and the depository pledged account established by SUCCESS Lending with Texas Capital Bank, in which a minimum deposit equal to 0.50% of the total available credit line must be maintained. Interest on the credit line is computed at a rate equal to the 1-month Term SOFR Reference Rate plus 2.05%, with a floor of 3.10% and is subject to adjustment.
The TCB Credit Agreement contains certain customary covenants, including, without limitation, minimum insurance coverage and hedging against interest rate risk associated with all mortgage loans. In addition, SUCCESS Lending is restricted from, among other items, making material dispositions or transfers of assets, merging, consolidating, or winding up, making any changes in SUCCESS Lending’s management or control, or materially modifying any mortgage loan and the interests associated therewith, without the prior consent of Texas Capital Bank. Additionally, SUCCESS Lending must maintain a minimum tangible net worth of $2.5 million, minimum liquid assets of $1 million, and limit pre-tax net losses to not greater than $1.5 million. The TCB Credit Agreement provides for customary events of default. Upon an event of default, Texas Capital Bank has the right to declare all outstanding obligations as immediately due and payable and may purchase any retained percentage in any or all mortgage loans under the credit line, among other customary remedies.
In connection with the TCB Credit Agreement, each of the Company and Kind Lending, LLC have entered into a Capital Maintenance Agreement whereby the Company and Kind Lending, LLC agree to provide certain funds necessary to ensure that SUCCESS Lending is at all times in compliance with its financial covenants under the TCB Credit Agreement. The Company’s capital commitment liability under the Capital Maintenance Agreement is limited to $1,250,000. In the event SUCCESS Lending fails to comply with its financial covenants, the Company may have to contribute additional capital up to the limit. The TCB Credit Agreement represents an off-balance sheet arrangement for the Company.
The foregoing summary is subject to, and qualified in its entirety by, the full text of the TCB Credit Agreement, a copy of which will be filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2022.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| eXp World Holdings, Inc. |
| (Registrant) |
|
|
Date: April 13, 2022 | /s/ James Bramble |
| James Bramble |
| General Counsel |
