FIRST MODIFICATION OF
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST MODIFICATION OF AMENDED AND RESTATED CREDIT
AGREEMENT (this "Modification Agreement") is entered into as of
February 25, 2000, by and among AMRESCO, INC., a Delaware
corporation ("AMRESCO"), the Subsidiaries of AMRESCO listed as
Borrowers on the signature pages hereof (together with AMRESCO,
collectively referred to herein as the "Borrowers", and each such
entity referred to herein as a "Borrower"), and BANK OF AMERICA,
N.A., formerly NationsBank, N.A., as Administrative Agent
("Administrative Agent"), for and on behalf of the Lenders
(defined below).
W I T N E S S E T H:
WHEREAS, reference is made to the credit facilities made
pursuant to and governed by that certain Amended and Restated
Credit Agreement (as amended, the "Credit Agreement") dated as of
January 18, 2000, executed by and among the Borrowers,
Administrative Agent, and the financial institutions, funds and
other entities from time to time designated as "Lenders" therein
(the "Lenders");
WHEREAS, the Credit Agreement was executed in amendment and
restatement of that certain Credit Agreement dated as of
August 12, 1998, among AMRESCO, as borrower, certain of the other
Borrowers, as guarantors, Administrative Agent, and the Lenders,
as amended and supplemented;
WHEREAS, the Borrowers have requested certain modifications
to the Credit Agreement; and
WHEREAS, the Lenders, acting through Administrative Agent
pursuant to the Credit Agreement, have agreed to the requested
modifications, subject to and upon the terms and conditions
contained herein.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that, for
and in consideration of the terms, conditions and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged,
Administrative Agent, for and on behalf of the Lenders, and
Borrowers hereby agree as follows:
1. Definitions. (a) The following definition shall be
inserted in alphabetical order in Section 1.1 of the Credit
Agreement:
(i) "Lend Lease Consent Holdbacks" means amounts
held back from the gross cash purchase price to be paid
to the sellers under the Lend Lease Agreement for the
following items up to the maximum indicated amounts:
(a) Holdback of $5,000,000 pending receipt of consent
from the Japanese Ministry of Justice for the transfer
of AMRESCO's ownership in AMRESCO Japan, Inc. to the
purchasers under the Lend Lease Agreement; and
(b) Holdback of up to $6,400,000 pending receipt of
consent to the assignment of various agreements between
AMRESCO Capital,. L.P. ("ACLP") and Teachers Insurance
and Annuity Association related to certain commercial
mortgage loans originated by ACLP to the purchasers
under the Lend Lease Agreement.
(b) The definition of "Transition Date" in Section 1.1
of the Credit Agreement is amended in its entirety to read as
follows:
"Transition Date" means the earlier of (i) the
Lend Lease Closing Date and (ii) the date on which the
Borrowers are obligated to make a principal payment on
the Term Loans pursuant to Section 2.2.1(a)."
2. Extended Date for Lend Lease Required Payment. The
outside date for the payment of the Lend Lease Required Payment
is extended to April 6, 2000. Accordingly, the date of
"February 29, 2000" set forth in the first sentence of
Section 2.2.1(a) of the Credit Agreement is amended to be
"April 6, 2000."
3. Lend Lease Consent Holdbacks. If and to the extent
that the cash proceeds received by the sellers under the Lend
Lease Agreement upon closing thereof is reduced by virtue of any
Lend Lease Consent Holdbacks, then 95% of any such amounts
subsequently paid to the sellers shall be paid to Administrative
Agent for application to the Term Loans in accordance with
Section 2.2.1 of the Credit Agreement, and, as provided in
Section 2.7(b) of the Credit Agreement, if Term Loan B is paid in
full, then any such amounts shall be applied to amounts
outstanding under the Revolving Credit Facility, and the
Revolving Commitment shall be reduced by the amount so applied.
Accordingly, Section 2.2.1(d) of the Credit Agreement is amended
to read as follows:
"(d) On any day that a principal payment is made
on the Lend Lease Holdback Note or any portion of the
Lend Lease Consent Holdbacks is paid to AMRESCO or any
other seller under the Lend Lease Agreement, an amount
equal to 95% of such payment (or 85% of such payment if
neither the SREP Sale Date nor Structured Real Estate
Asset Sales for all or substantially all [as defined in
Section 2.2.1(b)] of the SREP Assets have occurred,
with such 10% difference being included in the Lend
Lease Deferral)."
4. Transition Date Borrowing Base Certificate. To be able
to determine compliance with the Borrowing Base requirements of
Section 7.24.4 of the Credit Agreement and the amount of any
payment(s) on the Credit Facilities due to a Borrowing Base
deficiency after the Transition Date pursuant to Section 2.2.4 of
the Credit Agreement, AMRESCO, for itself and the other
Borrowers, shall furnish to Administrative Agent within five (5)
Business Days after the Transition Date a pro forma Borrowing
Base Certificate calculating the Borrowing Base for the Revolving
Credit Facility and the Term Loan Facilities, in form acceptable
to Administrative Agent. Accordingly, Section 7.1(ix) of the
Credit Agreement is amended to add the following sentence at the
end of that Section:
"In addition, AMRESCO shall prepare and deliver to
Administrative Agent within five (5) Business Days
after the Transition Date, a pro forma Borrowing Base
Certificate, in form and methodology acceptable to
Administrative Agent, calculating the Borrowing Base
for the Revolving Credit Facility (calculated pursuant
to Schedule 11) and the Borrowing Base for the Term
Loan Facilities (calculated pursuant to Schedule 12) as
of the first (1st) Business Day after the Transition
Date, and such Borrowing Base Certificate shall be a
Borrowing Base Certificate for all purposes hereunder,
including without limitation for purposes of
Section 2.2.4 and for calculating compliance with
Section 7.24.4 from and after the date following the
Transition Date."
5. Covenant Amendments. The following amendments are made
to the referenced covenants contained in the Credit Agreement:
(a) Minimum Consolidated Tangible Net Worth: The
outside date for the Change Date (as defined in Section 7.24 of
the Credit Agreement) is extended until April 6, 2000.
Accordingly, the date of "March 1, 2000" set forth in clause (a)
of Section 7.24.1 of the Credit Agreement is amended to be
"April 6, 2000."
(b) Leverage Ratio: The term "Change Date" in
Section 7.24.2 of the Credit Agreement is expressly understood to
refer to the amended definition of Change Date set forth in the
preceding Section 4(a) hereof.
(c) Interest/Dividend Coverage Ratio: Section 7.24.3
of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Section 7.24.3. Interest/Dividend Coverage Ratio.
Borrowers shall not permit the Interest/Dividend
Coverage Ratio to be less than (a) on December 31,
1999, .80 to 1.00, (b) from January 1, 2000 though
March 31, 2000, .85 to 1.00, and (c) from and after
April 1, 2000, 1.35 to 1.00."
(d) Borrowing Base Requirement. Section 7.24.4 of the
Credit Agreement is hereby amended to read in its entirety as
follows:
"Section 7.24.4. Borrowing Base Requirement.
Borrowers shall not permit the Borrowing Base Coverage
Ratio (as indicated on Schedules 10, 11 and 12, as
applicable) to be less than (a) 1.05 to 1.00 prior to
and on the Transition Date for all the Credit
Facilities as calculated pursuant to Schedule 10,
(b) 1.25 to 1.00 after the Transition Date for the
Revolving Credit Facility as calculated pursuant to
Schedule 11, (c) if the Transition Date has occurred by
March 30, 2000, 2.00 to 1.00 after the Transition Date
through March 30, 2000, for the Term Loan Facilities as
calculated pursuant to Schedule 12, or (d) 4.00 to 1.00
from and after the later to occur of the Transition
Date or March 31, 2000, for the Term Loan Facilities as
calculated pursuant to Schedule 12. Compliance with
this Section 7.24.4 from and after the Transition Date
until the date for delivery of the next month-end
Borrowing Base Certificate shall be determined from the
pro forma Borrowing Base Certificate to be delivered
pursuant to the last sentence of Section 7.1(ix)."
6. SREP Sale Date. Borrowers and Administrative Agent,
for and on behalf of the Lenders, acknowledge and agree that with
the closing of the SREP-Ocwen Sale on January 18, 2000, the SREP
Sale Date has occurred for all purposes under the Credit
Agreement.
7. Definition of Loan Documents. The definition of "Loan
Documents", as defined in the Credit Agreement and as used in the
Credit Agreement, the other Loan Documents and herein, shall be,
and is hereby, modified to include this Modification Agreement
and any and all documents executed in connection herewith.
8. Conditions Precedent to this Modification Agreement.
As conditions precedent to this Modification Agreement and the
modifications to the Credit Agreement pursuant hereto and the
consents granted hereunder, all of the following shall have been
satisfied:
(a) The Borrowers and Guarantors shall have executed
and delivered to Administrative Agent this Modification
Agreement;
(b) The Borrowers shall have delivered to
Administrative Agent all corporate resolutions, consents, powers
of attorney, certificates or documents as Administrative Agent
may request relating to (i) the existence of Borrowers, and
(ii) the corporate and partnership authority for the execution
and validity of this Modification Agreement, together with all
other documents, instruments and agreements and any other matters
relevant hereto or thereto, all in form and content satisfactory
to Administrative Agent;
(c) The Borrowers shall have paid all applicable
amendment, administration and other fees as agreed in connection
with this Modification Agreement; and
(d) If applicable, Borrowers shall have caused to be
executed and delivered to Administrative Agent a Supplement to
the Loan Documents to add any additional Subsidiaries of AMRESCO
required pursuant to Section 5.13 of the Credit Agreement as
Borrowers or Guarantors, as the case may be, and as assigning or
pledging parties under the Collateral Assignment, the Security
Agreement and the Pledge Agreement, and Administrative Agent
shall have received all such corporate existence and authority
documentation, resolutions and other agreements, stock
certificates and other equity ownership certificates, stock
powers, financing statements, instruments and certificates as
Administrative Agent shall reasonably require with respect to
such additional Borrowers and/or Guarantors. Borrowers shall
also have caused to be executed and/or delivered to
Administrative Agent such modifications to the Stock Pledge
Agreement and such stock certificates of, or other evidences of
equity interests in, the Excluded Subsidiaries (with stock powers
as applicable) to effectively evidence and perfect the Lenders'
security interests therein.
9. Reaffirmation of Debt and Liens. Each Borrower
acknowledges and agrees that it is well and truly indebted to the
Lenders pursuant to the terms of the Notes, the Credit Agreement
and the other Loan Documents, as modified hereby, and that all
liens and security interests securing the Obligations are and
remain in full force and effect.
10. No Implied Waivers. None of the amendments or
modifications provided for herein shall be deemed a consent to or
waiver of any breach of the same or any other covenant, condition
or duty. The Borrowers and the Guarantors acknowledge and
understand that Administrative Agent and the Lenders have no
obligation to further amend or modify the Credit Agreement, any
of the other Loan Documents or any of the terms, provisions or
covenants thereof, and that Administrative Agent and the Lenders
have made no representations regarding any such amendments or
modifications. No failure or delay on the part of Administrative
Agent or any Lender in exercising, and no course of dealing with
respect to, any right, power or privilege under this Modification
Agreement, the Credit Agreement or any other Loan Document shall
operate as a waiver thereof or of the exercise of any other
right, power or privilege.
11. Representations and Warranties. Each of the Borrowers
and Guarantors hereby represent and warrant to Administrative
Agent and the Lenders that (a) the execution, delivery, and
performance by the Borrowers and the Guarantors of this
Modification Agreement and compliance with the terms and
provisions hereof (i) have been duly authorized by all requisite
action on the part of each such Person and (ii) do not, and will
not, violate or conflict with, or result in a breach of, or
require any consent under (A) the articles of incorporation,
certificate of incorporation, bylaws, partnership agreement or
other organizational documents of any such Person, (B) any
applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or
arbitrator, or (C) any material agreement or instrument to which
any such Person is a party or by which any of them or any of
their property is bound or subject, (b) the representations and
warranties contained in the Agreement, as amended hereby, and any
other Loan Document are true and correct in all material respects
on and as of the date hereof as though made on and as of the date
hereof, and (c) no Default has occurred and is continuing.
12. Release of Claims. Each of the Borrowers and the
Guarantors hereby acknowledge and agree that none of them has
any, and there are no, claims or offsets against or defenses or
counterclaims to the terms and provisions of or the obligations
of any Borrower, any Guarantor or any Subsidiary created or
evidenced by the Credit Agreement or any of the other Loan
Documents, and to the extent any such claims, offsets, defenses
or counterclaims exist, each Borrower and each Guarantor hereby
waives (to the fullest extent permitted by applicable law), and
hereby releases each of Administrative Agent and each of the
Lenders from, any and all claims, offsets, defenses and
counterclaims, whether known or unknown, such waiver and release
being with full knowledge and understanding of the circumstances
and effects of such waiver and release and after having consulted
legal counsel with respect thereto.
13. Ratification. Except as otherwise expressly modified
by this Modification Agreement, all terms and provisions of the
Credit Agreement, the Notes, and the other Loan Documents shall
remain unchanged and hereby are ratified and confirmed and shall
be and shall remain in full force and effect, enforceable in
accordance with their terms.
14. Payment of Expenses. Borrowers shall pay to
Administrative Agent, for and on behalf of the Lenders, upon
demand, the reasonable attorneys' fees and expenses of
Administrative Agent's counsel and all filing and recording fees
and other reasonable expenses incurred by Administrative Agent in
connection with this Modification Agreement.
15. Current Borrowers, Guarantors and Excluded
Subsidiaries. Borrowers represent that the Subsidiaries of
AMRESCO that are required to be a "Borrower" or a "Guarantor",
respectively, under the Credit Agreement and related Loan
Documents as of the date hereof, are and remain only the initial
Borrowers and Guarantors that executed the Credit Agreement, and
there are no additional Borrowers or Guarantors to be added by a
Supplement to the Loan Documents, and that BEI Sanjac, Inc. has
merged into AMRESCO Consolidated Corp. and is, therefore, no
longer a Borrower.
16. Further Assurances. AMRESCO and the other Borrowers
shall execute and deliver to Administrative Agent such other
documents as may be necessary or as may be required, in the
opinion of Administrative Agent and/or counsel to Administrative
Agent, to effect the transactions contemplated hereby and to
create, evidence, perfect and protect the Lenders' Liens and
security interests, and the rights and remedies of Administrative
Agent and/or the Lenders under the Loan Documents.
17. Binding Agreement. This Modification Agreement shall
be binding upon, and shall inure to the benefit of, the parties
hereto, and the Lenders, and their respective legal
representatives, successors and assigns.
18. Enforceability. In the event the enforceability or
validity of any portion of this Modification Agreement, the
Credit Agreement, the Notes, or any of the other Loan Documents
is challenged or questioned, such provision shall be construed in
accordance with, and shall be governed by, whichever applicable
federal or Texas law would uphold or would enforce such
challenged or questioned provision.
19. Choice of Law. THIS MODIFICATION AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT FEDERAL LAWS PREEMPT THE LAWS OF THE STATE OF TEXAS.
20. Counterparts. This Modification Agreement may be
executed in multiple counterparts, all of which are identical,
each of which shall be deemed an original, and all of which
counterparts together shall constitute one and the same
instrument.
21. Entire Agreement. This Modification Agreement, the
Credit Agreement and the Notes, together with the other Loan
Documents, contain the entire agreements between the parties
relating to the subject matter hereof and thereof and all prior
agreements relative thereto which are not contained herein or
therein are terminated.
THIS MODIFICATION AGREEMENT AND THE OTHER WRITTEN
INSTRUMENTS, AGREEMENTS AND DOCUMENTS EXECUTED IN CONNECTION WITH
THIS MODIFICATION AGREEMENT, AND THE CREDIT AGREEMENT, THE NOTES,
AND THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, this Modification Agreement is executed
effective as of the date first written above.
BORROWERS:
AMRESCO, INC., a Delaware corporation
By:
Name:
__________________________________________
Title:
__________________________________________
AFC EQUITIES INVESTORS, INC.
AFC EQUITIES, L.P.
AFC EQUITIES MANAGEMENT, INC.
AMREIT HOLDINGS, INC.
AMREIT MANAGERS G.P., INC.
AMREIT MANAGERS, L.P.
AMRESCO 1994-N2, INC.
AMRESCO ATLANTA INDUSTRIAL, INC.
AMRESCO BUILDERS GROUP, INC.
AMRESCO CAPITAL CONDUIT CORPORATION
AMRESCO CAPITAL LIMITED, INC.
AMRESCO CAPITAL, L.P.
AMRESCO CMF, INC.
AMRESCO COMMERCIAL FINANCE, INC.
AMRESCO CONSOLIDATION CORP.
AMRESCO CONSUMER ACQUISITIONS CORP.
AMRESCO CONSUMER INVESTMENTS, L.P.
AMRESCO CONSUMER RECEIVABLES CORPORATION
AMRESCO EQUITY INVESTMENTS, INC.
AMRESCO EQUITY INVESTMENTS II, INC.
AMRESCO FINANCE AMERICA CORPORATION
AMRESCO FINANCIAL I, INC.
AMRESCO FINANCIAL I, L.P.
AMRESCO FUNDING CORPORATION
AMRESCO-INSTITUTIONAL, INC.
AMRESCO INSURANCE SERVICES, INC.
AMRESCO INVESTMENTS, INC.
AMRESCO MANAGEMENT, INC.
AMRESCO-MBS I, INC.
AMRESCO MBS-II, INC.
AMRESCO MORTGAGE CAPITAL, INC.
AMRESCO MORTGAGE CAPITAL LIMITED-I, INC.
AMRESCO MORTGAGE SERVICES LIMITED, INC.
AMRESCO NEW ENGLAND, INC.
AMRESCO NEW ENGLAND II, INC.
AMRESCO NEW ENGLAND, L.P.
AMRESCO NEW ENGLAND II, L.P.
AMRESCO NEW HAMPSHIRE, INC.
AMRESCO NEW HAMPSHIRE, L.P.
AMRESCO OVERSEAS, INC.
AMRESCO PORTFOLIO INVESTMENTS, INC.
AMRESCO PRINCIPAL MANAGERS I, INC.
AMRESCO PRINCIPAL MANAGERS II, INC.
AMRESCO RECEIVABLES MANAGEMENT CORP.
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
AMRESCO RESIDENTIAL CREDIT CORPORATION
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
AMRESCO RESIDENTIAL PROPERTIES, INC.
AMRESCO SERVICES, L.P.
AMRESCO VENTURES, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BEI 1992 - N1, INC.
BEI 1993 - N3, INC.
BEI 1994 - N1, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
COMMONWEALTH TRUST DEED SERVICES, INC.
ENT MIDWEST, INC.
ENT NEW JERSEY, INC.
ENT SOUTHERN CALIFORNIA, INC.
EXPRESS FUNDING, INC.
FINANCE AMERICA CORPORATION
GRANITE EQUITIES, INC.
HF ACQUISITION SUB, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
LIFETIME HOMES, INC.
MORTGAGE INVESTORS CORPORATION
MSPI, INC.
OAK CLIFF FINANCIAL, INC.
PRESTON HOLLOW ASSET HOLDINGS, INC.
QUALITY FUNDING, INC.
By: AMRESCO, INC., a Delaware corporation,
as agent and attorney-in-fact
By:
Name:
Title:
ACKNOWLEDGED AND AGREED TO as of the
25th day of February, 2000, by:
GUARANTORS:
AMRESCO INDEPENDENCE FUNDING, INC.
By: AMRESCO, INC., a Delaware corporation,
as agent and attorney-in-fact
By:
Name:
Title:
AMRESCO UK HOLDINGS LIMITED
By:
Name:
Title:
By:
Name:
Title:
AMRESCO JERSEY VENTURES LIMITED
By:
Name:
Title:
AMRESCO CANADA INC.
By:
Name:
Title:
AMRESCO EQUITIES CANADA INC.
By:
Name:
Title:
AMRESCO FUNDING CANADA INC.
By:
Name:
Title:
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., a national banking
association, as Administrative Agent for and on
behalf of the Lenders
By:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director