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9/03 AMENDMENT TO SENIOR SECURED
CREDIT AGREEMENT
dated as of September 22, 2003
by and among
AMERICAN BUSINESS CREDIT, INC.
and certain affiliates
and
JPMORGAN CHASE BANK,
as Agent and as a Lender,
and
the other Lender(s) parties hereto
amending (for the fourth time)
the 3/02 Senior Secured Credit Agreement
dated as of March 15, 2002, as supplemented by
the 10/02 Letter of Credit Supplement to
Senior Secured Credit Agreement, and as previously
amended by the 12/02 Amendment and the 3/03 Amendment
and the 3/31/03 Amendment,
all among such parties
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INDEX OF DEFINED TERMS
10/02 Supplement.............................................................1
3/02 Credit Agreement........................................................1
9/03 Amendment...............................................................1
9/03 Amendment Effective Date................................................2
ABC..........................................................................1
ABFRS2002....................................................................1
ABMS.........................................................................1
Agent........................................................................1
Aggregate Committed Sum......................................................3
Agreement....................................................................1
Amended Credit Agreement.....................................................2
Cash Collateral Account......................................................3
Chase........................................................................1
Committed Sum................................................................3
Companies....................................................................1
Company......................................................................1
Current Credit Agreement.....................................................1
HAC..........................................................................1
Parent.......................................................................1
TRC..........................................................................1
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TABLE OF CONTENTS
1. DEFINITIONS...............................................................2
3. THE LENDERS' COMMITMENTS..................................................3
7. COLLATERAL................................................................3
8. CONDITIONS PRECEDENT......................................................4
9. REPRESENTATIONS...........................................................4
10. AFFIRMATIVE COVENANTS....................................................4
11. NEGATIVE COVENANTS.......................................................4
16. MISCELLANEOUS............................................................5
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9/03 AMENDMENT TO
SENIOR SECURED CREDIT AGREEMENT
Preamble
This 9/03 Amendment to the Senior Secured Credit Agreement dated
September 22, 2003 (the "9/03 Amendment") amending the 3/02 Amended and Restated
Senior Secured Credit Agreement dated March 15, 2002 (the "3/02 Credit
Agreement"), as supplemented by the 10/02 Letter of Credit Supplement to the
Senior Secured Credit Agreement (the "10/02 Supplement"), as amended by the
12/02 Amendment, the 3/03 Amendment and the 3/31/03 Amendment, as amended hereby
and as it may be further supplemented, further amended or restated from time to
time, (the "Current Credit Agreement" or, within itself, this "Agreement"),
among:
AMERICAN BUSINESS CREDIT, INC. ("ABC"), a Pennsylvania corporation,
HOMEAMERICAN CREDIT, INC. ("HAC"), a Pennsylvania corporation doing
business under the assumed or fictitious name Upland Mortgage, and
AMERICAN BUSINESS MORTGAGE SERVICES, INC. ("ABMS"), a New Jersey
corporation formerly named New Jersey Mortgage & Investment Corp.,
Inc., TIGER RELOCATION COMPANY ("TRC"), a Pennsylvania corporation
formerly named ABC Holdings Corporation, and ABFS Residual 2002, Inc.
("ABFSR2002"), each with its principal office at The Xxxxxxxxx
Building, 100 Penn Square East, 8th Floor, Philadelphia, Pennsylvania
19107 (ABC, HAC, ABMS, TRC, and ABFSR2002 are herein collectively the
"Companies" and are sometimes individually referred to as a "Company");
AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Parent"), a Delaware
corporation and owner of all of the capital stock of ABFSR2002, and all
of the capital stock of ABC which owns all of the capital stock of each
of the other Companies;
JPMORGAN CHASE BANK ("Chase"), a New York banking corporation, acting
herein as a Lender and as agent and representative of the Lenders and
Eligible Assignees (in that capacity, Chase is called the "Agent"); and
such other Lender(s) as may from time to time be party to the Current
Credit Agreement;
recites and provides as follows:
Recitals
One or more of the Companies (other than ABFSR2002) intend to sell
Mortgage Loans, including all of the Pledged Loans, to a third party for cash,
as a result of which the Companies will have no further need to borrow under the
Current Credit Agreement, but the Letter of Credit previously issued by Chase
pursuant to the Current Credit Agreement will remain outstanding. Chase, as the
only Lender, is willing for the Agent's Lien against the Pledged Mortgage Loans
to be released, but only if the obligations of the Companies with respect to
Letters of Credit continue to be adequately secured and the Current Credit
Agreement is amended to reflect such events and changed circumstances.
Therefore, the parties wish to amend the 3/02 Credit Agreement, as
supplemented by the 10/02 Supplement and amended by the 12/02 Amendment and the
3/03 Amendment and the 3/31/03 Amendment (as so supplemented and amended, the
"Amended Credit Agreement") to change the facility from a $50 million revolving
credit facility and letter of credit facility to an $8 million letter of credit
facility, to limit the types of property that will be Eligible Collateral and to
modify its financial covenants as hereinafter provided.
All capitalized terms defined in the Amended Credit Agreement and used
but not defined differently in this Amendment have the same meanings here as
there.
The Sections of this 9/03 Amendment are numbered to correspond with the
numbers of the Sections of the 3/02 Credit Agreement and are consequently
nonsequential.
If there is any conflict or inconsistency between the foregoing
recitals and the following agreements, the latter shall govern and control.
Agreements
In consideration of the premises, the mutual agreements stated below
and other good and valuable consideration paid by each party to each other party
to this Agreement, the receipt and sufficiency of which each party hereby
acknowledges, the parties hereby agree as follows.
1. DEFINITIONS
1.2 Definitions of General Application. This Section is hereby amended
as follows:
A. The following definitions are hereby added to Section 1.2, in
alphabetical order:
"9/03 Amendment" means the 9/03 Amendment to Senior Secured
Credit Agreement dated as of September 22, 2003.
"9/03 Amendment Effective Date" is defined in the 9/03
Amendment (to mean September 22, 2003.)
B. The definitions of "Collateral," "Collateral Value" and "Eligible
Collateral" as amended by the 10/02 Supplement are each hereby reamended to
exclude any and all Mortgage Loans previously included as Collateral and
Eligible Collateral. The Lenders hereby direct the Agent to release its Liens on
all Pledged Mortgage Loans now held by the Agent as Collateral.
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C. The definitions of "Aggregate Committed Sum" and "Committed Sum" set
forth in Section 1.2 are hereby amended each in its entirety to henceforth read
as follows:
"Aggregate Committed Sum" means, on any day, the lesser of (a)
Eight Million Dollars ($8,000,000) and (b) the aggregate of the
Lenders' individual Committed Sums for that day as stated in the
definition of "Committed Sum".
"Cash Collateral Account" means the Companies' non-interest
bearing demand checking account no. 00113325386 to be maintained with
and pledged to Chase. Only Chase shall be able to make or order
withdrawals from the Cash Collateral Account.
"Committed Sum" means, for any day, the maximum amount a
Lender is committed to lend to the Companies (or for their account)
pursuant to this Agreement, on its terms and subject to its conditions.
From the 9/03 Amendment Effective Date of this Agreement until the
Termination Date or such other date (if any) when all or any of them is
changed by operation of the provisions of any agreement or Legal
Requirement, the Committed Sums for the Lenders are as set forth on
Schedule LC, as it may be amended and restated from time to time.
3. THE LENDERS' COMMITMENTS
3.1 The Lenders' Commitments to Lend. The provisions of Section 3.1 of
the 3/02 Credit Agreement are amended hereby to terminate the Lenders'
commitments to make revolving credit Advances to the Companies under the
Sublines as of the 9/03 Amendment Effective Date, so that henceforth the
Companies shall have no right to borrow money from the Lenders under the Current
Credit Agreement. However, such termination shall not affect or impair the
Companies' ability to request the issuance of Letters of Credit in such manner
and pursuant to such terms as are provided in the Amended Credit Agreement.
7. COLLATERAL
7.1 Grant of Security Interest. The provisions of Section 7 of the 3/02
Credit Agreement are not amended hereby. Cumulative of such existing provisions,
as security for the payment of the Loan and for the payment and performance of
all of the Obligations, each Companies hereby GRANTS to the Agent, as agent and
representative of the Lenders, a first priority security interest in all of such
Company's present and future estate, right, title and interest in and to the
Collateral, in addition to and cumulative of the security interest in the
Collateral granted in the 3/02 Credit Agreement, the 12/02 Amendment, the 3/03
Amendment and the 3/31/03 Amendment and the security interest in the Collateral
granted in the Security Agreement - Class R Certificate, as amended, and the
parties hereby declare and confirm that all such security interests were and are
granted to and held by the Agent as agent and representative of the Lenders,
including Chase. Notwithstanding the foregoing, any Collateral not required to
secure any remaining Advances shall be released pursuant to Section 7.12 of the
Current Credit Agreement. The Lenders shall execute any releases or other
documents necessary to effectuate such release.
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8. CONDITIONS PRECEDENT
Section 8 of the 3/02 Credit Agreement is hereby amended by adding the
following new Section 8.7:
8.7 Each Letter of Credit on or after the 9/03 Amendment
Effective Date. The obligations of Chase to issue Letters of Credit
requested on or after the 9/03 Amendment Effective Date are also
subject to the condition precedent that the Agent shall have received
the following, all of which must be satisfactory in form and content to
the Agent in its sole discretion:
(a) The 9/03 Amendment duly executed by all parties;
and
(b) such other documents, if any, as shall be
specified by the Agent.
9. REPRESENTATIONS
The Companies and the Parent hereby republish all of their
representations and warranties made in the 3/02 Credit Agreement.
10. AFFIRMATIVE COVENANTS
New Section 10.20 reading as follows is hereby added to the end of
Section 10:
10.20. Reduce Subordinated Debt. Beginning with the fiscal
quarter ending on December 31, 2003, the Company will apply or cause to
be applied on a quarterly basis a minimum of sixty percent (60%) of the
Company's operating cash flow per quarter to retire and reduce
Subordinated Debt.
11. NEGATIVE COVENANTS
The following numbered Sections of Section 11 of the 3/02 Credit
Agreement, as heretofore amended, are hereby amended in their entirety to
henceforth read as follows:
11.5. The Parent's Minimum Liquidity. The Parent will at all
times maintain at least Twenty-five Million Dollars ($25,000,000) in
unrestricted cash and Cash Equivalents that is owned and held free and
clear of Liens other than bankers' liens or setoff rights against cash
on deposit with the Agent or another depositary institution and the
Agent's or another warehouse lender's Lien.
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11.10. The Parent's Minimum GAAP Net Worth. As of the end of
the current fiscal quarter, permit the GAAP Net Worth of the Parent (on
a consolidated basis with its Subsidiaries) to be less than
Twenty-eight Million Dollars ($28,000,000) with an increase in such
GAAP Net Worth of Two Million Dollars ($2,000,000) in the each of the
following fiscal quarters beginning with the fiscal quarter ending
December 31, 2003.
11.13. Total Delinquency Rate Limitation. The Companies will
not permit the Total Delinquency Rate as of the end of any calendar
quarter to exceed twelve percent (12%.)
The text contained in Section 11.8 is deleted in its entirety and
hereby shall read as follows:
11.8. [Intentionally Deleted]
New Section 11.15 reading as follows is hereby added to the end of
Section 11:
11.15. The Parent's Maximum Subordinated Debt. The Parent will
not on any day permit Subordinated Debt to exceed Seven Hundred Five
Million Dollars ($705,000,000).
16. MISCELLANEOUS
The parties hereby ratify and confirm the Current Credit Agreement
(being the 3/02 Credit Agreement, as supplemented by the 10/02 Supplement, as
amended by the 12/02 Amendment and the 3/03 Amendment and the 3/31/03 Amendment
and as amended hereby). The Parent hereby ratifies the Guaranty and confirms
that (i) the Guaranty is and remains in full force and effect and (ii) the
Parent, as primary obligor and not as a surety, unconditionally guarantees to
the Lenders and the Agent the full, prompt and punctual payment of the Loan when
due (whether at its stated maturity, by acceleration or otherwise) in accordance
with the terms and provisions of the Current Credit Agreement, the Notes and the
other Credit Papers, and that such guaranty obligation is not and shall not be
impaired, diminished or otherwise affected in any way adverse to the Agent or
the Lenders by this Amendment or any act or transaction contemplated hereby, and
the Parent hereby irrevocably consents to this Amendment.
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16.10 Notice Pursuant to Tex. Bus. & Comm. Code ss.26.02. This
Section is hereby amended to read as follows:
THE 3/02 CREDIT AGREEMENT, AS SUPPLEMENTED BY THE 10/02 SUPPLEMENT, AS
AMENDED BY THE 12/02 AMENDMENT, THE 3/03 AMENDMENT, AND THE 3/31/03
AMENDMENT AND AS AMENDED HEREBY, AND THE OTHER FACILITIES PAPERS
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS 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.
(The remainder of this page is blank; unnumbered counterpart
signature pages follow.)
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EXECUTED as of September 22, 2003.
By the Companies: AMERICAN BUSINESS CREDIT, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
HOMEAMERICAN CREDIT, INC. doing business as
UPLAND MORTGAGE
By:_________________________________________
Name:_______________________________________
Title:______________________________________
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
TIGER RELOCATION COMPANY
By:_________________________________________
Name:_______________________________________
Title:______________________________________
ABFS RESIDUAL 2002, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
By the Parent/Guarantor: AMERICAN BUSINESS FINANCIAL SERVICES, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Unnumbered counterpart signature page to 9/03 Amendment to Senior Secured Credit
Agreement among American Business Credit, Inc. and certain affiliates and
JPMorgan Chase Bank, as Agent and as a Lender
By the Agent and a Lender: JPMORGAN CHASE BANK,
as the Agent and as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Schedules:
Schedule LC - the Lenders' Committed Sums and Subline Funding Limits and the
Aggregate Committed Sum
Unnumbered counterpart signature page to 9/03 Amendment to Senior Secured Credit
Agreement among American Business Credit, Inc. and certain affiliates and
JPMorgan Chase Bank, as Agent and as a Lender
SCHEDULE LC
TO 3/02 CREDIT AGREEMENT
The Lenders' Committed Sums and Subline Funding Limits
and the Aggregate Committed Sum
------------------ -------------- --------------- --------------- ------------- --------------- --------------
Lender Committed Sum Single-family Receivables REO Subline Repurchased Working
Warehouse Subline Funding Mortgages Capital
Subline Funding Share Share Subline Subline
Funding Share Funding Share Funding Share
------------------ -------------- --------------- --------------- ------------- --------------- --------------
JPMorgan $8,000,000 0 0 0 0 0
Chase Bank*
------------------ -------------- --------------- --------------- ------------- --------------- --------------
Aggregate $8,000,000
Committed
Sum
------------------ -------------- --------------- --------------- ------------- --------------- --------------
Sublimit 0 0 0 0 0
------------------ -------------- --------------- --------------- ------------- --------------- --------------
*JPMorgan Chase Bank is the only Lender on the 9/03 Amendment Effective Date
