<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
MAY 12, 1998
Date of Report
(Date of earliest event reported)
AMRESCO CAPITAL TRUST
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
TEXAS 1-14029 75-2744858
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
</TABLE>
700 NORTH PEARL STREET
SUITE 2400, LB 342
DALLAS, TEXAS 75201
(Address of principal executive offices)
(214) 953-7700
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 12, 1998, AMRESCO Capital Trust (the "Company")
acquired from AMRESCO Funding Corporation ("AFC") an affiliate of AMREIT
Managers, L.P., the manager of the Company, a $6 million nonrecourse loan
secured by a second lien on a 956,114 (approximate) square foot mixed-use
development located in north-central Columbus, Ohio. The loan was originated
by AFC on February 20, 1998 and was purchased by the Company from AFC for a
purchase price of $1,014.19, equal to the outstanding principal balance of the
loan, plus accrued interest. In addition, AFC paid to the Company $294,000,
equal to the unamortized portion of the loan origination fee.
The loan bears interest at 15% per annum. Payments of
interest only are due monthly commencing April 1, 1998, until the loan is paid
in full. All principal, and all remaining accrued and unpaid interest on the
loan, are due on March 31, 2001. Certain of the borrower's excess cash flow is
required to be applied toward payments of principal and interest on the loan.
In addition to a second lien on the mortgaged real property, the loan is also
secured by a pledge of the partnership interests of each partner in the
borrower and limited guaranties of certain recourse carve-outs by the three
owners of the general partner of the borrower.
The purchase of this loan was contemplated by the Company at
the time of its initial public offering of Common Shares and the terms of the
loan are more fully described in the Company's Registration Statement on Form
S-11 (such loan being referred to therein as "Loan One").
On May 12, 1998, the Company also acquired from AFC a $14.7
million nonrecourse loan for the construction of an 11-story multi-tenant
office building containing 300,887 (approximate) net rentable square feet and
an adjoining five level parking structure to be located in a suburb of Dallas,
Texas. The loan was originated by AFC on March 30, 1998 and was purchased by
the Company from AFC on March 30, 1998 for a purchase price of $5,860,789.87,
equal to the outstanding principal balance of the loan, plus accrued interest.
In addition, AFC paid to the Company $134,671.70, equal to the unamortized
portion of the loan origination fee.
The loan bears interest at an accrual rate of 12% per annum.
Payments of interest only are due and payable monthly at a pay rate of 10% per
annum. A portion of excess cash flow will be applied to payment of accrued and
unpaid interest until the lender has received a 12% return. Any remaining
operating cash flow will be applied to the principal balance of the loan and
any excess may be retained by the borrower. In addition, the loan provides
that the Company will receive 100% of any appreciation in the value of the
mortgaged real property until the Company has achieved a 15% per annum return.
After the borrower has received a 15% return on its equity, then the Company is
entitled to a 30% interest in the appreciation in value of the project until it
achieves a 20% per annum return on its investment and, finally, the Company
will then be entitled to a 20% interest in any appreciation in the value of the
project, with a maximum return of 25% per annum. The to-be-built project
securing the loan is not subject to any option or contract to sell. All
principal and accrued and unpaid interest, including any shared appreciation
-2-
<PAGE> 3
contingent interest, will be due and payable on March 30, 2001. The borrower
has two extension options of one year each, subject to the satisfaction of
certain conditions, including reaching certain leasing parameters and the
payment of a 1% extension fee. The developer has provided a completion
guaranty and a limited guaranty of certain recourse carve-outs.
The purchase of this loan was contemplated by the Company at
the time of its initial public offering of its Common Shares and the terms of
such loan are more fully described in the Company's Registration Statement on
Form S- 11 (such loan being referred to therein as "Loan Four").
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits
The following exhibits are filed as part of this report on Form 8-K:
3.1 First Amendment to Amended and Restated Declaration of Trust
3.2 Second Amendment to Amended and Restated Declaration of Trust
10.1 Sale and Assignment Agreement by and between AMRESCO
Funding Corporation, AMRESCO Capital Trust and AMREIT I, Inc.
effective as of May 12, 1998
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
AMRESCO Capital Trust
Date: May 12, 1998 By: /s/ MARK D. GIBSON
----------------------------------------
Name: Mark D. Gibson
--------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
-4-
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1 First Amendment to Amended and Restated Declaration of Trust
3.2 Second Amendment to Amended and Restated Declaration of Trust
10.1 Sale and Assignment Agreement by and between AMRESCO
Funding Corporation, AMRESCO Capital Trust and AMREIT I, Inc.
effective as of May 12, 1998
</TABLE>
<PAGE> 1
EXHIBIT 3.1
FIRST AMENDMENT TO
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AMRESCO CAPITAL TRUST
The undersigned, acting as the Trust Managers of a real estate
investment trust under the Texas Real Estate Investment Trust Act, as amended
(the "Texas REIT Act"), hereby adopt the following First Amendment to Amended
and Restated Declaration of Trust as recorded in the Dallas County Clerk's
Office on February 3, 1998 as Document No. 30979, Vol. 98022, Page 00055.
ARTICLE 1. Article XIV of the Amended and Restated Declaration
of Trust is replaced in its entirety by the following:
ARTICLE XIV
(a) The Trust shall indemnify every Indemnitee against
all judgments, penalties (including excise and similar taxes), fines,
amounts paid in settlement and reasonable expenses actually incurred
by the Indemnitee in connection with any Proceeding in which he was,
is or is threatened to be named defendant or respondent, or in which
he was or is a witness without being named a defendant or respondent,
by reason, in whole or in part, of his serving or having served, or
having been nominated or designated to serve, in any of the capacities
that qualify the named defendant or respondent as an Indemnitee, to
the fullest extent that indemnification is permitted by Texas law. To
the extent that indemnification is not permitted under Texas law to
the extent a Person or Indemnitee is found liable on the basis that
personal benefit was improperly received by him or is found liable to
the Company, a Person or an Indemnitee shall be deemed to have been
found liable in respect of any claim, issue or matter only after the
Indemnitee shall have been so adjudged by a court of competent
jurisdiction after exhaustion of all appeals therefrom. Reasonable
expenses shall include, without limitation, all court costs and all
fees and disbursements of attorneys for the Indemnitee.
(b) Without limitation of this paragraph (b) of Article
XIV and in addition to the indemnification provided for in paragraph
(a) of Article XIV, the Trust shall indemnify every Indemnitee against
reasonable expenses incurred by such Indemnitee in connection with any
Proceeding in which he is a witness or a named defendant or respondent
because he served in any of the capacities referred to in paragraph
(a) of this Article XIV, if such
<PAGE> 2
Person has been wholly successful, on the merits or otherwise, in
defense of the Proceeding.
(c) Reasonable expenses (including court costs and
attorneys' fees) incurred by an Indemnitee who was or is a witness or
was, is or is threatened to be made a named defendant or respondent in
a Proceeding shall be paid or reimbursed by the Trust at reasonable
intervals in advance of the final disposition of such Proceeding after
receipt by the Trust of a written affirmation from the Indemnitee of
his good faith belief that he has met the standard of conduct
necessary for indemnification under Texas law and a written
undertaking by or on behalf of such Indemnitee to repay the amount
paid or reimbursed by the Trust if it shall ultimately be determined
that he is not entitled to be indemnified by the Trust as authorized
in this Article XIV. Such written undertaking shall be an unlimited
general obligation of the Indemnitee but need not be secured and it
may be accepted without reference to financial ability to make
repayment. Notwithstanding any other provision of this Article XIV,
the Trust may pay or reimburse expenses incurred by an Indemnitee in
connection with his appearance as a witness or other participation in
a Proceeding at a time when he is not named a defendant or respondent
in the Proceeding.
(d) The indemnification provided by this Article XIV
shall (i) not be deemed exclusive of, or to preclude, any other rights
to which those seeking indemnification may at any time be entitled
under the Bylaws, any law, agreement or vote of shareholders or
disinterested Trust Managers, or otherwise, or under any policy or
policies of insurance purchased and maintained by the Trust on behalf
of any Indemnitee, both as to action in his Official Capacity and as
to action in any other capacity, (ii) continue as to a Person who has
ceased to be in the capacity by reason of which he was an Indemnitee
with respect to matters arising during the period he was in such
capacity and (iii) inure to the benefit of the heirs, executors and
administrators of such a Person.
(e) The provisions of this Article XIV (i) are for the
benefit of, and may be enforced by, each Indemnitee of the Trust, the
same as if set forth in their entirety in a written instrument duly
executed and delivered by the Trust and such Indemnitee and (ii)
constitute a continuing offer to all present and future Indemnities.
The Trust, by its adoption of this Declaration of Trust, (i)
acknowledges and agrees that each Indemnitee has relied upon and will
continue to rely upon the provisions of this Article XIV in becoming,
and serving in any of the capacities that qualify the named defendant
or respondent as an Indemnitee, (ii) waives reliance upon, and all
notices of acceptance of, such provisions by such Indemnities and
(iii) acknowledges
2
<PAGE> 3
and agrees that no present or future Indemnitee shall be prejudiced in
his right to enforce the provisions of this Article XIV in accordance
with their terms by any act or failure to act on the part of the
Trust.
(f) No amendment, modification or repeal of this Article
XIV or any provision of this Article XIV shall in any manner
terminate, reduce or impair the right of any past, present or future
Indemnities to be indemnified by the Trust, nor the obligation of the
Trust to indemnify any such Indemnities, under and in accordance with
the provisions of this Article XIV as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims
may be asserted.
(g) If the indemnification provided in this Article XIV
is either (i) insufficient to cover all costs and expenses incurred by
any Indemnitee as a result of such Indemnitee being made or threatened
to be made a defendant or respondent in a Proceeding by reason of his
holding or having held a position that qualifies the named defendant
or respondent as an Indemnitee or (ii) not permitted by Texas law, the
Trust shall indemnify, to the fullest extent that indemnification is
permitted by Texas law, every Indemnitee with respect to all costs and
expenses incurred by such Indemnitee as a result of such Indemnitee
being made or threatened to be made a defendant or respondent in a
Proceeding by reason of his holding or having held a position that
qualifies the defendant as an Indemnitee.
(h) The indemnification provisions contained in this
Article XIV may be amended only by the affirmative vote of the holders
of at least two-thirds (2/3) of the outstanding Shares.
IN WITNESS WHEREOF, the undersigned Trust Managers do hereby execute
this First Amendment to Amended and Restated Declaration of Trust effective as
of the 27th day of April, 1998.
/s/ ROBERT L. ADAIR III
-----------------------------------
Robert L. Adair III
/s/ ROBERT H. LUTZ, JR.
-----------------------------------
Robert H. Lutz, Jr.
3
<PAGE> 4
/s/ MARK D. GIBSON
-----------------------------------
Mark D. Gibson
4
<PAGE> 5
ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
On April 27, 1998, before me, the undersigned Notary Public, duly
commissioned and qualified within and for the State and County aforesaid,
personally came and appeared Robert L. Adair III personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument, and acknowledged to me that he executed
the same in his authorized capacity as Trust Manager of AMRESCO Capital Trust.
Witness my hand and official seal.
/s/ PATTI WOMACK
[SEAL] -----------------------------------
-----------------------------------
NOTARY PUBLIC
5
<PAGE> 6
ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
On April 27, 1998, before me, the undersigned Notary Public, duly
commissioned and qualified within and for the State and County aforesaid,
personally came and appeared Robert H. Lutz, Jr. personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument, and acknowledged to me that he executed
the same in his authorized capacity as Trust Manager of AMRESCO Capital Trust.
Witness my hand and official seal.
/s/ PATTI WOMACK
-----------------------------------
[SEAL]
-----------------------------------
NOTARY PUBLIC
6
<PAGE> 7
ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
On April 27, 1998, before me, the undersigned Notary Public, duly
commissioned and qualified within and for the State and County aforesaid,
personally came and appeared Mark D. Gibson, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed
the same in his authorized capacity as Trust Manager of AMRESCO Capital Trust.
Witness my hand and official seal.
/s/ DENISE LOWENBERG
-----------------------------------
-----------------------------------
NOTARY PUBLIC
[SEAL]
7
<PAGE> 1
EXHIBIT 3.2
SECOND AMENDMENT TO
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AMRESCO CAPITAL TRUST
AMRESCO Capital Trust, a real estate investment trust under the Texas
Real Estate Investment Trust Act, as amended (the "Texas REIT Act"), hereby
adopts the following Second Amendment to Amended and Restated Declaration of
Trust of AMRESCO Capital Trust, recorded in the Dallas County Clerk's Office on
February 3, 1998 as Document No. 30979, Vol. 98022, Page 00055, as amended by
First Amendment to Amended and Restated Declaration of Trust as recorded in the
Dallas County Clerk's Office on May 5, 1998 as Document No. 130686, Vol. 98087,
Page 00145.
ARTICLE 1. The name of the real estate investment trust is
AMRESCO Capital Trust.
ARTICLE 2. Article IV of the Amended and Restated Declaration of
Trust is replaced in its entirety by the following:
ARTICLE IV
The names and business mailing addresses of the Trust Managers are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
<S> <C>
Robert L. Adair III AMRESCO, Inc.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
Robert H. Lutz, Jr. AMRESCO, Inc.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
Mark D. Gibson Holiday Fenoglio Fowler, L.P.
8750 North Central Expressway
Suite 950
Dallas, Texas 75231-6428
James C. Leslie The Staubach Company
6750 LBJ Freeway, Suite 1100
Dallas, Texas 75240
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Christopher Leinberger Robert Charles Lesser & Company
142 Lincoln Avenue, Suite 501
Santa Fe, New Mexico 87501
Bruce W. Duncan The Cadillac Fairview Corporation, Ltd.
20 Queen Street West
Toronto, Ontario M5H 3R4
John Deterding Deterding Associates
107 North Waterview
Richardson, Texas 75080
</TABLE>
ARTICLE 3. The Second Amendment to Amended and Restated
Declaration of Trust was approved by the Sole Shareholder effective as of May
9, 1998.
IN WITNESS WHEREOF, the undersigned hereby executes this Second
Amendment to Amended and Restated Declaration of Trust effective as of the 9th
day of May, 1998.
AMRESCO CAPITAL TRUST
By: /s/ MICHAEL L. McCOY
-----------------------------------
Michael L. McCoy
Senior Vice President,
General Counsel and Secretary
<PAGE> 3
ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
On May 18th, 1998, before me, the undersigned Notary Public, duly
commissioned and qualified within and for the State and County aforesaid,
personally came and appeared Michael L. McCoy, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument, and acknowledged to me that he executed
the same in his authorized capacity as Senior Vice President, General Counsel
and Secretary of AMRESCO Capital Trust.
Witness my hand and official seal.
/s/ PATTI WOMACK
-----------------------------------
[SEAL]
-----------------------------------
NOTARY PUBLIC
3
<PAGE> 1
EXHIBIT 10.1
SALE AND ASSIGNMENT AGREEMENT
This Sale and Assignment Agreement (this "Agreement") is executed by
and between AMRESCO Funding Corporation, a Delaware corporation ("Assignor"),
and AMRESCO Capital Trust, a Texas real estate investment trust, and AMREIT I,
Inc., a Delaware corporation, or their designee (collectively, "Assignee"), and
is effective as of May 12, 1998 (the "Effective Date").
RECITALS:
A. Assignor is the owner of certain loans ("Loans") and payee or
holder of the promissory note(s) (the "Notes") identified on
the attached Exhibit A and evidencing the Loans, and the
related mortgages and deeds of trust (collectively, the
"Mortgages") covering certain real property and the
improvements situated thereon (collectively, the "Mortgaged
Properties"), security agreements, guaranties, claims, and/or
judgments and all other related documents, instruments,
collateral, files, claims and other assets (collectively with
the Notes and Mortgages, the "Loan Documents"), evidencing,
securing, or otherwise related to the indebtedness of the
party therein listed (as maker, guarantor or otherwise,
hereinafter referred to as the "Borrower"). The term "Primary
Loan Documents," as used herein, refers to the Notes, the
Mortgages, and all loan agreements, guaranties and security
instruments included in the Loan Documents.
B. Assignor and Assignee have agreed that Assignor will
irrevocably sell, transfer and assign to Assignee all of
Assignor's interest in, to and under the Loans including,
without limitation, all of Assignor's interest in the Loans
Documents and all of Assignor's claims and its defenses under
law related thereto (to the extent such defenses are legally
assignable), and all "Benefits Accruing to Assignee" as
described in Section 15 below (collectively, the "Assigned
Rights"), all subject to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. SALE AND ASSIGNMENT; PURCHASE PRICE. Subject to the terms and
conditions of this Agreement:
(a) Assignor shall sell, transfer, assign, grant and convey unto
Assignee, its successors and assigns, at the Closing (as
defined below) the Assigned Rights, on an:
Page 1
<PAGE> 2
"AS IS", "WHERE IS" BASIS, "WITH ALL FAULTS" AND WITHOUT
REPRESENTATIONS, EXPRESS OR IMPLIED, OF ANY TYPE, KIND,
CHARACTER OR NATURE, AND WITHOUT RECOURSE OR WARRANTIES,
EXPRESS OR IMPLIED, SAVE AND EXCEPT THE EXPRESS
REPRESENTATIONS OR WARRANTIES SET FORTH IN THIS AGREEMENT AND
IN DOCUMENTS TO BE DELIVERED PURSUANT TO THIS AGREEMENT.
(b) In full payment for the Assigned Rights, Assignee shall pay to
Assignor via wire transfer in accordance with the instructions
on Exhibit C the "Purchase Price" (herein so called), equal to
the sum of: (i) the outstanding principal balance of the Loans
as of the Closing Date, and (ii) the amount of accrued and
unpaid interest on the Loans as of the Closing Date, minus the
difference between (x) the unamortized portion of any loan
origination fee paid to Assignor in connection with making any
of the Loans, and (y) Assignor's actual costs incurred in
connection with making such Loan. The Purchase Price for each
of the Loans shall be set forth on Exhibit A-1.
2. CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place on or before
May 12, 1998, at the offices of Assignor, 700 North Pearl,
Suite 2400, Dallas, Texas 75201, or at such other time, day or
place as the parties hereto may agree upon. The actual date of
the Closing shall be referred to as the "Closing Date".
3. ASSIGNOR'S CONDITIONS TO CLOSING. The obligation of Assignor
to sell and assign the Assigned Rights to Assignee at the
Closing is subject to the fulfillment to Assignor's
satisfaction of the following conditions prior to or at the
Closing:
(a) The representations and warranties of Assignee set forth in
Section 6 hereof shall be true and correct in all material
respects on and as of the Closing Date.
(b) Assignee shall have paid to Assignor the Purchase Price.
(c) Assignee shall provide to Assignor at or prior to Closing
documentation reasonably requested by Assignor to evidence
Assignee's authority to execute this Agreement and to
consummate the transactions contemplated hereby.
(d) To the extent applicable pre-Closing, Assignee shall have
complied with its covenants as set forth in Sections 8(a) and
(c) of this Agreement.
If Assignee fails to satisfy the conditions to Closing set forth in this Section
3, Assignor may at its option terminate this Agreement by written notice to
Assignee of its intention to terminate this Agreement, identifying therein the
condition(s) which have not been satisfied.
Page 2
<PAGE> 3
4. ASSIGNEE'S CONDITIONS TO CLOSING. The obligation of Assignee
to purchase from Assignor at the Closing the Assigned Rights
is subject to the fulfillment to Assignee's satisfaction of
the following conditions prior to or at the Closing:
(a) Assignee's Investment Committee has approved the purchase of
the Assigned Rights.
(b) The representations and warranties of Assignor set forth in
Section 5 hereof shall be true and correct in all material
respects on and as of the Closing Date.
(c) Assignor shall have prepared and delivered to Assignee at the
Closing:
(i) Duly executed and acknowledged assignments, as
appropriate, in the forms annexed hereto as Exhibit
B;
(ii) A notice to each Borrower at Borrower's last known
address of the transaction contemplated by this
Agreement, duly executed by Assignor in the form
annexed hereto as Exhibit E, to be delivered by
Assignee by certified mail at the related Borrower's
last known address not more than fifteen (15) days
after the Closing Date;
(iii) (A) The original executed Notes duly endorsed by
Assignor to Assignee as follows: "Pay to the order of
[AMRESCO Capital Trust] [AMREIT I, Inc.], without
recourse, representation or warranty except as
provided in that certain Sale and Assignment
Agreement dated May 12, 1998 executed by and between
AMRESCO Funding Corporation and [AMRESCO Capital
Trust] [AMREIT I, Inc.]";
(B) All other Loan Documents and other instruments or
documents contained in Assignor's files relating to
the Loan Documents, together with such other tangible
collateral as may be in Assignor's possession or
control securing the Notes;
(iv) All escrow accounts and collateral accounts
associated with the Notes, together with assignments
of such accounts, agreements governing such accounts
and copies of ledgers or bank statements for such
accounts;
(v) All documents reasonably deemed necessary by Assignee
to evidence a transfer of the security interests
included in the Assigned Rights, including, without
limitation, the appropriate assignments to be filed
in the respective real property records, as well as
the necessary forms of UCC-3 assignments, and
endorsements or assignments of title policies and all
other insurance policies, to the extent they are
assignable.
Page 3
<PAGE> 4
(d) Assignor shall provide to Assignee at or prior to Closing
corporate resolutions, certificates of incumbency, and other
documentation reasonably requested by Assignee to evidence
Assignor's authority to execute this Agreement and to
consummate the transactions contemplated hereby.
(e) To the extent applicable pre-Closing, Assignor shall have
complied with its covenants as set forth in Section 7 of this
Agreement.
(f) If Assignor fails to satisfy the conditions to Closing set
forth in this Section 4, then Assignee may at its option
terminate this Agreement by written notice to Assignor of its
intention to terminate this Agreement, identifying therein the
condition(s) which have not been satisfied.
5. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR.
(a) Assignor hereby represents and warrants to Assignee that:
(i) (A) Assignor is a duly organized and validly
existing corporation under the laws of the State of
Delaware, continues to hold a valid certificate to
do business as such and has full power and authority
to conduct its business as such, (B) Assignor is in
all material respects in compliance with all laws,
rules, regulations, directives and published
interpretations issued or administered by, all
conditions imposed in writing by and all agreements
entered into with, any bank regulatory agency,
authority or body having jurisdiction over Assignor
or any of its respective assets, operations or
businesses, and (C) Assignor is duly authorized as a
foreign corporation, to do business and is in good
standing in all jurisdictions in which such
authorization or qualification is required and in
which the failure to be so authorized or to qualify,
as the case may be, could, in the aggregate, have
any material adverse effect upon the business,
condition or properties of Assignor taken as a
whole.
(ii) Assignor has the full power and authority to hold the
Assigned Rights, to sell the Assigned Rights, and to
enter into and consummate all transactions
contemplated by this Agreement with respect to the
Assigned Rights. Assignor has duly authorized the
execution, delivery and performance of this
Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due
authorization, execution and delivery by Assignee,
constitutes a legal, valid and binding obligation of
Assignor, enforceable against it in accordance with
its terms.
(iii) The consummation of the transactions contemplated by
this Agreement is in the ordinary course of
Assignor's business and will not result in a breach
of any of the terms, conditions or provisions of
Assignor's charter or bylaws or any legal restriction
or any agreement or instrument to which Assignor is
now a party or by which it is bound, or constitute a
default or
Page 4
<PAGE> 5
result in an acceleration under any of the foregoing,
or result in the violation of any law,rule,
regulation, order, judgment or decree to which
Assignor or its property is subject.
(iv) Assignor is not in material default under any
agreement, contract, instrument or indenture to which
it is a party or by which it is bound, nor has any
event occurred that with notice or lapse of time or
both would constitute a material default under any
such agreement, contract, instrument or indenture
which could have a material adverse effect on this
Agreement or the transactions proposed hereunder.
(v) There is no action, suit, proceeding or investigation
pending or, to Assignor's knowledge, threatened,
against Assignor that either individually or in the
aggregate, if determined adversely to Assignor, would
result in any material liability to Assignor, impair
the ability of Assignor to perform its obligations
hereunder in accordance with the terms hereof, or
have a material adverse effect on the business,
operations or financial condition of Assignor.
(vi) No consent, approval, authorization or order of any
court or governmental authority, participant or other
third party is required for the execution and
delivery of this Agreement by Assignor or for the
performance by Assignor of its obligations hereunder,
other than such consent, approval, authorization or
order as has been or will be obtained prior to the
Closing.
(b) With respect to each Loan, Assignor hereby represents and warrants
to Assignee that:
(i) Assignor is the sole owner and holder of the Notes,
the Loan Documents and that there are no outstanding
participation interests in the Loans.
(ii) The Loans are not currently subject to any prior
assignment or pledge which will not be released prior
to closing.
(iii) Assignor has made available to Assignee for
Assignee's review originals or true copies of all
Loan Documents, Collateral Reports (as defined in
Section 10) and substantive correspondence in
Assignor's possession as of May 11, 1998 (the "Review
Date"), which directly concern the Assigned Rights
(including, without limitation, the Loan Documents).
If there have been changes to the terms of the Loans
since the Review Date, or if significant
correspondence has been received in connection with
the Loans since the Review Date, information
regarding the same has been provided to Assignee by
Assignor.
(iv) Each of the Primary Loan Documents is valid and
enforceable except as such enforcement may be limited
by bankruptcy, insolvency, reorganization
Page 5
<PAGE> 6
or other laws affecting the enforcement of creditors'
rights generally and by general equity principles
(regardless of whether such enforcement is considered
in a proceeding in equity or at law), and each
Mortgage, if any, grants to Assignor a security lien
interest in the Mortgaged Property described therein
with the priority identified on Exhibit A-2, subject
only to the security interest of the first lien
holder in the case of second lien mortgages and
standard printed exceptions to title policies,
mineral reservations where surface rights have been
waived, and utility easements or such other
non-monetary encumbrances described as exceptions in
each of the assigned title policies and such
exceptions, individually or collectively, will not
impair the use of the property for its intended
purpose (collectively, the "Permitted Exceptions").
Further, to the extent there is a Mortgage, each
Mortgage has created a valid lien on the respective
Mortgaged Property which, in the event of a material
default thereunder or under the related Note, may be
foreclosed upon in accordance with applicable state
law (subject to the rights of the first lienholder in
the case of second mortgages). Assignor has not taken
any action that creates any valid defense in
accordance with applicable state law by the obligor
thereunder to the holder's realization on the
collateral or the indebtedness.
(v) Assignor has not received notice of pending or
threatened litigation (including bankruptcies and tax
suits) which may materially affect the validity or
enforceability of the Loan Documents or the valuation
of the Mortgaged Properties.
(vi) The Notes are legal, valid and binding obligations
of the maker or obligor thereof, enforceable against
such maker or obligor in accordance with their terms
except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights
generally and by general equity principles
(regardless of whether such enforcement is
considered in a proceeding in equity or at law) and
Assignor has not taken any enforcement action under
any security agreements or the other related Loan
Documents that creates any valid defense in
accordance with applicable state law by the maker
thereunder to the holder's realization on such
security.
(vii) The legal principal balances for each Note as set
forth on Exhibit A-2 attached hereto are true and
correct as of May 11, 1998 (the "Cut-Off Date") and
the legal principal balances as set forth on the
Certificate of Principal Balances (as described in
Section 7(d) hereof) will be true and correct as of
the last business day before Closing.
(viii) Ad valorem and other property taxes for the Mortgaged
Properties are current, and there are no material
delinquencies. For purposes of this Section
5(b)(viii), the term "material" shall refer to
delinquencies in excess
Page 6
<PAGE> 7
of $50,000 or 5% of the principal balance of the
related Loan, whichever is less.
(ix) All Loan Documents have been made available for
review by Assignee, and will continue to be updated
and available for review between the Effective Date
of this Agreement and the Closing Date. To the best
of Assignor's knowledge and belief, there are no
material Loan Documents which are not in its
possession.
(x) Assignor has made available for review by Assignee
(and will continue to update such information as it
is received and shall provide to Assignee such
updated information that is received by Assignor
prior to the Closing Date of this Agreement)
(collectively, "Environmental Material") all written
materials in its possession regarding (i) compliance
by each Mortgaged Property and/or the applicable
Borrower with all Environmental Requirements (as
defined in Section 9 below), (ii) the presence of
any Hazardous Materials (as defined in Section 9
below) located on or affecting any of the Mortgaged
Properties, and (iii) the failure to remediate, or
failure to have taken such steps as may have been
required as of the Effective Date by any
governmental authority with jurisdiction over the
Borrower or Mortgaged Property. Assignor has no
actual knowledge of any breach of any Environmental
Requirements or the existence of any Hazardous
Materials on or affecting the Mortgaged Properties
not described in the Environmental Material. Any
breach of this Section 5(b)(x) shall be referred to
herein as an "Environmental Defect."
(xi) To the actual knowledge of Assignor, as of the date
of the Prospectus for 9,000,000 common shares of
beneficial interest in AMRESCO Capital Trust dated
May 6, 1998 (the "Prospectus"), the descriptions of
each Loan contained in the Prospectus do not contain
any material misstatements of fact or omit to state a
material fact known to Assignor concerning such
Loans.
(xii) Assignor has not foreclosed upon or otherwise
realized upon or received any property securing the
Notes and will not take any such actions prior to the
Closing without Assignee's prior written consent.
6. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE. Assignee hereby
represents and warrants to Assignor that:
(a) Assignee has all requisite power and authority to execute and
deliver, and to perform all of its obligations under, this
Agreement and all instruments and other documents executed and
delivered by Assignee in connection herewith.
Page 7
<PAGE> 8
(b) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of
Assignee and does not require any consent or approval of any
party that has not been obtained.
(c) Assignee is acquiring the Assigned Rights for its own account
and not with a view toward any public sale or distribution
thereof and Assignee does not intend to sell, offer for sale
or syndicate the Assigned Rights or fractional interests in
Assignee in connection with the purchase of the Assigned
Rights; provided, however, nothing herein shall be construed
or applied to prohibit or otherwise limit Assignee's right to
dispose of all or any portion of Assignee's interest in the
Assigned Rights in compliance with all applicable laws.
(d) Assignee has such knowledge and experience in financial and
business matters and is capable of evaluating the merits and
risks relating to its purchase of the Assigned Rights
(including, without limitation, any environmental laws
pertaining to the Mortgaged Properties) and making an informed
purchase and investment decision in connection therewith.
(e) Assignee acknowledges that the Assigned Rights will have
limited liquidity and Assignee has the financial wherewithal
to hold the Assigned Rights for an indefinite period of time
and to bear the economic risk of an outright purchase of the
Assigned Rights.
(f) Assignee has agreed to the Purchase Price on the basis of its
own independent investigation and credit evaluation of the
Assigned Rights. Assignee has not relied upon any
representations, warranties or statements of any kind made by
or on behalf of Assignor except for those representations,
warranties and statements set forth in this Agreement.
Assignee acknowledges that, except for the representations and
warranties of Assignor set forth in, or to be made in
instruments delivered pursuant to this Agreement, Assignor
negates and disclaims all representations, warranties and
statements of every kind or type (express or implied).
Assignee further acknowledges that the amount ultimately
received by Assignee in respect of the Assigned Rights may be
less than the Purchase Price, and Assignee shall have no
recourse to Assignor for any such deficiency.
Nothing in this Section 6 shall constitute a waiver or modification of
Assignor's representations and warranties as set forth in this
Agreement, nor shall Assignee's remedies for breach of such
representations and warranties as set forth in Section 13 of this
Agreement be hereby waived or modified.
7. COVENANTS OF ASSIGNOR.
(a) Assignor shall use its reasonable efforts to satisfy each of
the conditions to closing set forth in Section 3 hereof.
Page 8
<PAGE> 9
(b) Assignor shall notify Assignee promptly if any of the
representations set forth in Section 5 hereof shall become
inaccurate prior to the Closing Date or if any of such
representations is discovered to be inaccurate prior to the
Closing Date.
(c) Assignor and Assignor's counsel shall cooperate with Assignee
and Assignee's counsel in the defense of any claims or
counterclaims made against Assignee, or any of Assignee's
subsidiaries, affiliates, employees, officers, directors,
shareholders, agents, representatives, attorneys, accountants
or consultants, in any litigation, arbitration proceeding or
other forum involving or relating to the Assigned Rights.
Assignor's obligations under this Section 7(c) shall not be
construed to require Assignor to expend any significant funds
or incur any material costs for which it is not reimbursed in
connection with such cooperation, and Assignee shall reimburse
Assignor for the reasonable costs of Assignor's employees
involved in supplying Assignee or Assignee's counsel with
copies of documents and other information as may be reasonably
required by Assignee or Assignee's counsel in preparing for
depositions or trial. For purposes of this Section 7(c) and
Section 8(d) below, "significant funds or...material costs"
shall mean costs, fees or expenses in excess of $1,000 per
lawsuit, arbitrated matter or other legal proceeding. This
provision is in addition to, and not in lieu of, the
indemnification of Assignee by Assignor contained in Section
12 hereof.
(d) As soon as practical after the Effective Date of this
Agreement, but in no event later than five (5) Business Days
thereafter, Assignor shall provide to Assignee a description
of all Notes listed on Exhibit A hereto in the form attached
as Exhibit A-2, giving the name of the Borrower(s), the date
of the Note, the original principal balance of the Note, and
the outstanding principal balance of the Note as of the
Cut-off Date. At Closing, Assignor shall provide Assignee with
a Certificate of Principal Balances in the form of Exhibit D
attached hereto; Schedule I to that Certificate of Principal
Balances shall include the information set forth in the list
described in the first sentence of this Section 7(d), plus the
principal balances on the Notes as of the last business day
before Closing.
(e) If there are letters of credit held as collateral for the
Notes or other obligations under the Loan Documents which are
not assignable, Assignor will cooperate fully with Assignee to
make presentment of or demand on such letters of credit or
other collateral. Such cooperation shall include, without
limitation, execution of notices, affidavits, or other notices
required for presentation of the letter of credit, actual
presentation of the letter of credit for funding, immediate
transfer of funds or endorsement and delivery of a check to
Assignee, and filing and vigorous prosecution of litigation
(at Assignee's expense) to obtain the proceeds of the
collateral letter of credit.
(f) Between the Effective Date of this Agreement and the Closing
Date (the "Interim Period"), Assignor will service the Loans
in a prudent fashion, including, without limitation,
maintaining or causing to be maintained customary amounts and
types of casualty insurance with respect to the Mortgaged
Properties. During the Interim
Page 9
<PAGE> 10
Period, Assignor shall not modify or extend the terms of the
Loans, fund previously unfunded commitments, or release any
collateral securing or obligors upon such Notes, unless
legally obligated to do so. There have been no restructurings
of the Notes or the Loans they evidence since the Cut-Off
Date.
8. COVENANTS OF ASSIGNEE.
(a) Assignee shall use its reasonable efforts to satisfy each of
the conditions to closing set forth in Section 4 hereof.
(b) Within fifteen (15) days after Closing, Assignee shall deposit
in the U.S. Mail, return receipt requested, all notices to
Borrower delivered to Assignee pursuant to Section 4(c)(ii)
hereof.
(c) Assignee shall notify Assignor promptly if any of the
representations set forth in Section 6 hereof shall become
inaccurate prior to the Closing Date or if any such
representation is discovered to be inaccurate prior to the
Closing Date.
(d) Assignee and Assignee's counsel shall cooperate with Assignor
and Assignor's counsel in the defense of any claims or
counterclaims made against Assignor, or any of Assignor's
subsidiaries, affiliates, employees, officers, directors,
shareholders, agencies, representatives, attorneys,
accountants or consultants, in any litigation, arbitration
proceeding or other forum involving or relating to the
Assigned Rights. Assignee's obligations under this Section
8(d) shall not be construed to require Assignee to expend any
significant funds or incur any material costs (as defined in
Section 7(c) hereof) for which it is not reimbursed in
connection with such cooperation and Assignor shall reimburse
to Assignee the reasonable costs of Assignee's employees
involved in supplying Assignor or Assignor's counsel with
copies of documents and other information as may be reasonably
required by Assignor or Assignor's counsel in preparing for
depositions or trial. This provision is in addition to, and
not in lieu of, the indemnification of Assignor by Assignee
contained in Section 11 hereof.
(e) Assignee hereby agrees to be expressly bound by the terms of
each Loan and the Loan Documents executed in connection
therewith and hereby assumes and covenants to perform all
obligations by Assignor thereunder, including but not limited
to, any obligation to fund any future advances of principal
and/or interest required under the terms of the Loan
Documents. The agreement contained in this subsection (e)
shall be in full force and effect at the time that Closing has
occurred.
9. ENVIRONMENTAL ISSUES. For purposes of this Agreement, the term
"Hazardous Materials" shall mean any substance which is or
contains: (i) any "hazardous substance" as now or hereafter
defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Section 9601 et seq.) ("CERCLA") or any regulations
Page 10
<PAGE> 11
promulgated under CERCLA; (ii) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery
Act (42 U.S.C. Section 6901 et seq.) ("RCRA") or regulations
promulgated under RCRA; (iii) any substance regulated by the
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.);
(iv) gasoline, diesel fuel, or other petroleum hydrocarbons;
(v) asbestos and asbestos containing materials, in any form,
whether friable or non-friable; (vi) polychlorinated
biphenyls; (vii) radon gas; and (viii) any additional
substances or materials which are now or hereafter classified
or considered to be hazardous or toxic under Environmental
Requirements (as hereinafter defined) or the common law, or
any other applicable laws relating to the Mortgaged
Properties. Hazardous Materials shall include, without
limitation, any substance, the presence of which on the
Mortgaged Properties, (A) requires reporting, investigation or
remediation under Environmental Requirements; (B) causes or
threatens to cause a nuisance on the Mortgaged Properties or
adjacent property or poses or threatens to pose a hazard to
the health or safety of persons on the Mortgaged Properties or
adjacent property; or (C) which, if it emanated or migrated
from the Mortgaged Properties, could constitute a trespass.
For purposes of this Agreement, the term "Environmental Requirements" shall mean
all laws, ordinances, statutes, codes, rules, regulations, agreements,
judgments, orders, and decrees, now or hereafter enacted, promulgated, or
amended, of the United States, the states, the counties, the cities, or any
other political subdivisions in which the Mortgaged Properties are located, and
any other political subdivision, agency or instrumentality exercising
jurisdiction over the owner of the Mortgaged Properties, the Mortgaged
Properties, or the use of the Mortgaged Properties, relating to pollution, the
protection or regulation of human health, natural resources, or the environment,
or the emission, discharge, release or threatened release of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or waste
or Hazardous Materials into the environment (including, without limitation,
ambient air, surface water, groundwater, land or soil).
10. COLLATERAL REPORTS. To the extent they are available, Assignor
will provide Assignee with all title reports, file reviews,
environmental site assessments, inspection reports, surveys,
engineering reports, and/or appraisals in Assignor's
possession or control relating to the Mortgaged Properties
(collectively, the "Collateral Report(s)"). The Collateral
Reports may have been prepared by Assignor, its predecessors
in interest, or third party contractors. ASSIGNEE UNDERSTANDS
AND ACKNOWLEDGES THAT ANY COLLATERAL REPORT WHICH MAY BE
PROVIDED BY ASSIGNOR OR ITS EMPLOYEES, AGENTS, CONTRACTORS AND
REPRESENTATIVES IS BEING PROVIDED WITHOUT REPRESENTATION OR
WARRANTY AS TO THE COMPLETENESS OR ACCURACY OF THE FACTS,
PRESUMPTIONS AND CONCLUSIONS CONTAINED THEREIN, AND ASSIGNEE
SHALL NOT RELY ON SAME TO ASSIGNEE'S DETRIMENT IN CLOSING THE
TRANSACTION CONTEMPLATED HEREBY. ASSIGNEE HAS BEEN EXPRESSLY
ADVISED BY ASSIGNOR TO CONDUCT AN INDEPENDENT INVESTIGATION IN
RESPECT TO THE IDENTIFICATION OF THE MORTGAGED PROPERTY, ITS
VALUE OR
Page 11
<PAGE> 12
CONDITION, AND ITS LIEN PRIORITY OR PERFECTION. Nothing in
this Section 10 shall diminish or affect the representations
and warranties set forth in Section 5 hereof.
11. ASSIGNEE'S INDEMNITIES. Assignee agrees to indemnify and hold
harmless Assignor, its subsidiaries, affiliates, officers,
directors, shareholders, employees, agents, representatives
and attorneys, from and against any and all loss, liability,
claim, damage and expense whatsoever (including attorneys'
fees) directly or indirectly arising out of, based upon,
resulting from or otherwise relating to (a) any act or
omission of Assignee or any of its representatives after the
Closing Date, which constitutes negligence or wilful
misconduct, in connection with the Loan Documents, the
Assigned Rights or otherwise, (b) the failure to make any
advance of principal or interest on a Loan after the Closing
Date that was required to be made after the Closing Date (but
not as to any such advance that, pursuant to the terms of the
applicable Loan Documents, was required to be made on or
before the Closing Date), (c) the material inaccuracy of any
of Assignee's representations or warranties contained in
Section 6, (d) the material breach of any of Assignee's
covenants herein, (e) any commissions, finder's fees or
similar fees due or claimed by any broker, agent or
salesperson claimed directly against Assignor as a result of
an agreement entered into by Assignee, or (f) actions taken by
Assignor which are specifically requested by Assignee under
Section 7(e) hereof.
12. ASSIGNOR'S INDEMNITIES. Assignor agrees to indemnify and hold
harmless Assignee, its subsidiaries, affiliates, officers,
directors, shareholders, employees, agents, representatives
and attorneys, from and against any and all loss, liability,
claim, damage and expense whatsoever (including attorneys'
fees) directly or indirectly arising out of, based upon,
resulting from or otherwise relating to (a) any act or
omission of Assignor or any of its representatives, which
constitutes negligence or willful misconduct, in connection
with the Loan Documents, the Assigned Rights or otherwise,
including, but not limited to, any action taken by it in
connection with any Loan Document which gives rise to a valid
third party claim for damages (and not solely a defense to
payment of the note which was not caused by any action on the
part of Assignor), (b) the failure to make any advance of
principal on or before the Closing Date that was required to
be made on a Loan on or before the Closing Date (but not as to
any such advance that, pursuant to the terms of the applicable
Loan Documents, was required to be made after the Closing
Date), (c) the material inaccuracy of any of Assignor's
representations or warranties contained in Section 5, (d) the
material breach of any of Assignor's covenants herein, and (e)
any commissions, finder's fees or similar fees due or claimed
by any broker, agent or salesperson claimed directly against
Assignee as a result of an agreement entered into by Assignor.
Page 12
<PAGE> 13
13. CONDITIONAL PRICE ADJUSTMENT OR REPURCHASE BY THE ASSIGNOR
AFTER TRANSFER DATE.
(a) Assignee's Conditional Right to Require Assignor to
Repurchase. Upon discovery by Assignor or Assignee of a breach
of any of Assignor's representations and warranties, as set
forth in Section 5 hereof, the party discovering such breach
shall give prompt written notice to the other. Such notice
shall include documentary evidence establishing the existence
of a breach of a representation or warranty by Assignor. Upon
such discovery and sending of notice of such material breach
of a representation or warranty, Assignor shall have the right
to cure such breach in all material respects within thirty
(30) days of Assignor's receipt of the notice (or within one
hundred and eighty (180) days of such notification if a breach
of Section 5(b)(x) and Assignor commences such cure within
thirty (30) days of such notification and diligently pursues
such cure thereafter) and, if such breach cannot be cured
within thirty (30) days of Assignee's notification to Assignor
(or within the above described 180-day cure period, if
applicable), then Assignee may, at its option, by written
notice to Assignor, require Assignor to repurchase such Note
and the related Loan Documents from Assignee, on a whole
asset, servicing-released basis as provided herein. Such
notice from Assignee must be delivered not later than thirty
(30) days from the expiration of the 30-day cure period (or
180-day cure period, if applicable) or receipt of written
notice from Assignor to Assignee that Assignor is unable to
cure the breach of representation or warranty, whichever is
earlier. If the breach is an error in the Purchase Price of a
Loan of less than 2%, it may be cured by Assignor paying
Assignee the excess Purchase Price together with its interest
thereon at 12% per annum.
(b) Repurchase Price. The repurchase price of any Note(s) shall be
determined as follows: the Purchase Price allocated to the
particular Note(s) (as reflected on Exhibit A-1), plus (a) the
amount of principal and any interest accrued since the Closing
Date advanced by Assignee pursuant to the requirements set
forth in the Loan Documents and any interest accrued since the
Closing Date, (b) the amount of ad valorem taxes and property
insurance premiums which have become due and which are paid by
Assignee, (c) other protective advances, not to exceed $25,000
per asset, and (d) any other expenses incurred by Assignee in
administration or collection of such Loan (including, but not
limited to, expenses for title reports, environmental site
assessments, appraisals, attorneys fees'), less (x) the amount
of any payments or other consideration received by Assignee
from the Borrowers or other obligors on the repurchased Loans
or from proceeds of any collateral for the Loans, and (y) the
remaining unamortized portion of any loan origination fee paid
in connection with the origination of such repurchased Loans.
The repurchase price shall be paid to Assignee within three
(3) days after Assignor's receipt of the documents and
instruments required to be delivered pursuant to Section 13(d)
or, at Assignee's option, the repurchase may be closed through
an escrow.
(c) Duration of Assignor's Obligation to Repurchase. Assignor's
obligation to repurchase any Loan pursuant to Section 13(a)
shall terminate automatically, with respect to that particular
Loan, unless Assignee notifies Assignor in writing that a
condition allowing Assignee to require Assignor to repurchase
such Loan has
Page 13
<PAGE> 14
occurred, which notice must be delivered prior to the first of
the following to occur:
(1) The terms of the Loan are substantively
modified by a written or oral agreement
between Assignee and Borrower.
(2) Assignee obtains full payment on the Note
from Borrower or any guarantor or surety
therefor, or otherwise accepts a partial
payment thereof in full satisfaction of the
debt evidenced thereby.
(3) The Borrower or other significant obligor
liable for payment of the Note is released
by Assignee.
(4) In the case of a Loan being repurchased
because of an Environmental Defect, Assignee
has taken steps to control the Mortgaged
Property or the property owner so that the
"secured lender" exception for environmental
liability has been effectively waived.
(d) Transfer of Loan/Delivery of Loan Files. Assignee shall,
within ten (10) days after delivering written notice to
Assignor confirming that Assignee is exercising its option to
require repurchase of a Loan or Loans by Assignor hereunder,
deliver to Assignor all originals and copies of the Note(s)
and any other Loan Documents, Collateral Report(s) and related
files and any other transfer documents or other documents that
were delivered to Assignee pursuant to this Agreement
regarding such Loan(s), together with any addenda, exhibits
and schedules thereto. With respect to each such Loan,
Assignee shall endorse, transfer, convey or assign to Assignor
the Note and the Loan Documents in the same manner as such
Note and the associated Loan Documents were transferred and
assigned from Assignor to Assignee by documentation in the
same form as that delivered from Assignor to Assignee
(provided that Assignee shall not be required to make any
representation other than that the events set forth in
Sections 13(c)(1) - (4) have not occurred and representations
corresponding to those of Assignor in Section 5(b)(i), (ii)
and (iv)). Simultaneously with Assignee's delivery of such
documents to Assignor, Assignor shall pay to Assignee the
Repurchase Price in the form of a wire transfer, a cashier's
check or certified check drawn upon an institution acceptable
to Assignee in its sole and absolute discretion. After
repurchase hereunder, Assignee shall immediately endorse,
assign over and deliver to Assignor any and all payments
received from or on behalf of any obligor on the repurchased
Loan. All amounts paid over to Assignor hereunder shall be
without payment of interest thereon. Upon repurchase of any
Loan, Assignee agrees to immediately terminate, at its sole
cost, the applications of any servicing agreement with respect
to the Loan repurchased. If either party fails to comply with
the terms of this Section 13, the other party shall have the
right to enforce the provisions hereof by appropriate legal
means and, in connection therewith, the defaulting party shall
be responsible for payment of all of the prevailing party's
costs and expenses (including, without
Page 14
<PAGE> 15
limitation, attorneys' fees and costs) incurred by the
prevailing party in such enforcement.
(e) Sole Remedy. Except as set forth in Section 12 and Section
13(a) hereof, the right of Assignee to cause Assignor to
repurchase the Loan(s) shall be Assignee's sole remedy for
Assignor's breach of warranties and representations contained
in Section 5 hereof.
14. LIMITATION OR DAMAGES. Also, Assignor and Assignee each hereby
agree that any claim they may have hereunder for damages shall
be limited to actual damages and each hereby waives the right
to claim or receive consequential, punitive, special or
incidental damages in connection with any claim arising out of
or related to this Agreement.
15. FURTHER COVENANTS.
(a) (i) For purposes of this Agreement, the following terms
shall have the following meanings:
(A) "BENEFITS ACCRUING TO ASSIGNOR" shall mean
with respect to the Loans, all principal and
interest payments received before the close
of business on the day before the Closing
Date.
(B) "BENEFITS ACCRUING TO ASSIGNEE" shall mean
with respect to the Loans, all principal and
interest payments received on or after the
Closing Date.
(ii) If Assignor shall receive any rents or payments of
interest and/or principal on the Notes or other
consideration distributed or paid by Borrower or its
affiliates which represent "Benefits Accruing to
Assignee", and provided the Closing occurs in
accordance with the terms and conditions
contemplated herein, Assignor shall accept such
payments or other consideration as Assignee's agent
and hold the same on behalf of and for the benefit
of Assignee, and shall remit (within five (5)
Business Days) the same following the Closing to
Assignee with the endorsement (without recourse,
representation or warranty) of Assignor when
necessary or appropriate.
(b) The terms of the transactions contemplated in this Agreement,
including, without limitation, the Purchase Price and all
other financial terms, shall remain confidential and shall not
be disclosed by either party hereto without the written
consent of the other except as otherwise required by law or
regulation.
(c) Assignor shall pay all fees and expenses (including, without
limitation, legal, accounting or investment banking fees and
expenses) incurred by it in connection with this Agreement and
the transactions contemplated hereby. Assignee shall pay
Page 15
<PAGE> 16
all fees and expenses (including, without limitation, legal,
accounting or investment banking fees and expenses) incurred
by it in connection with this Agreement and the transactions
contemplated hereby. All recording fees and documentary taxes
necessitated by the assignment of the Assigned Rights to
Assignee shall be borne and paid by Assignee (unless specific
state law requires the seller or assignor to pay said fees or
taxes).
16. OCCURRENCE OF CERTAIN EVENTS PRIOR TO CLOSING. Until Closing,
all risk of loss for the Loans shall be borne by Assignor and
any insurance, condemnation or other proceeds paid or payable
for such losses shall be either delivered or assigned to
Assignor at Closing, as appropriate.
17. LITIGATION IN NAME OF ASSIGNOR. Assignee shall not, without
the express prior written consent of Assignor (which consent
may be withheld in Assignor's discretion), institute any legal
action in the name of Assignor or continue to prosecute in the
name of Assignor any pending legal action. Assignee shall not
mislead or conceal from any person the identity of the owner
of the Assigned Rights purchased hereunder.
18. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants of the parties
contained herein shall survive the consummation of the
transactions contemplated in this Agreement, subject to any
time period limitations specified herein.
19. FURTHER ASSURANCES. Assignor and Assignee shall each execute
and deliver to the other all further documents or instruments
reasonably requested by either of them in order to effect the
intent of this Agreement and to obtain the full benefit of
this Agreement. Any request by either party under this Section
19 shall be accompanied by the document proposed for signature
by the party requesting it, in form and substance satisfactory
to the party of whom the request is made and its attorneys.
The party making the request shall bear and discharge any fees
or expenses incident to the preparation, filing or recording
of documents requested pursuant to this Section 19.
20. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with federal law. To the extent not
controlled by federal law, this Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of Texas without reference to conflicts of law
principles.
21. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT 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 parties make no
representations or warranties to each other, except as
contained in this Agreement or in the accompanying exhibits or
the certificates or other
Page 16
<PAGE> 17
closing documents delivered according to this Agreement. All
prior agreements and understandings between the parties hereto
with respect to the transactions contemplated hereby, whether
verbal or in writing, are superseded by, and are deemed to
have been merged into, this Agreement unless otherwise
expressly provided herein. This Agreement shall be binding on,
and inure to the benefit of, the parties hereto and their
successors and assigns, but no other party shall have or claim
any third party beneficiary rights under this Agreement.
Neither party hereto has engaged any broker or finder or
incurred or become obligated to pay any broker's commission or
finder's fee in connection with the transactions contemplated
by this Agreement.
22. MODIFICATIONS. This Agreement may not be changed, waived,
discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
23. SEVERABILITY. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable, the
balance of this Agreement shall remain in full force and
effect and if any provision is inapplicable to any person of
circumstance, it shall nevertheless remain applicable to all
other persons and circumstances.
24. ASSIGNMENT. This Agreement may be assigned by Assignee to any
affiliate or subsidiary thereof. Assignee shall immediately
give Assignor written notice of such assignment. The term
"affiliate" as used herein shall include, without limitation,
any partnership (general or limited) in which Assignee or
Assignee's general partner has an interest.
25. NOTICES. All notices between the parties shall be in writing
and shall be served either personally, by certified mail,
facsimile (followed by overnight courier) or overnight courier
services. If served personally or by facsimile, notice shall
be deemed given or made at the time of such service. If served
by certified mail, notice shall be deemed given and made five
(5) business days after the deposit thereof in the United
States mail, postage prepaid, addressed to the party to whom
said notice is to be given or made. If served by an overnight
courier service promising delivery not later than 10:00 a.m.
on the first business day after receipt by such service,
notice shall be deemed given and made one business day after
the deposit thereof with such courier service, addressed to
the party to whom such notice is to be given or made, if such
deposit is timely and appropriate in accordance with the
requirements of such courier service.
Page 17
<PAGE> 18
All notices to Assignor shall be given to it at:
AMRESCO Funding Corporation
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201
Attention: Joey Howell, Esq.
Fax No.: (214) 953-7757
With copies to:
AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB #342
Dallas, TX 75201
Attention: General Counsel
Fax No.: (214) 953-7757
All notices to Assignee shall be given to it at:
AMRESCO Capital Trust
AMREIT I, Inc.
700 North Pearl Street
Suite 2400, LB #342
Dallas, TX 75201
Attention: Michael L. McCoy, Esq.
Fax No.: (214) 953-7757
26. REFERENCES IN THIS AGREEMENT. Whenever the context of this
Agreement requires, references to the singular number shall
include the plural, and the plural shall include the singular,
where appropriate; words denoting gender shall be construed to
include the masculine, feminine and neuter where appropriate;
and specific enumeration shall not exclude the general, but
shall be considered as cumulative. For purposes of this
Agreement, the term "Business Days" shall mean any day other
than a Saturday, Sunday or national holiday recognized by
federally chartered banks.
27. JURISDICTION AND VENUE; WAIVER OF JURY TRIAL; MEDIATION.
Assignee and Assignor hereby consent to the jurisdiction of
any state or federal court located within Dallas County,
Texas, waive personal service of any and all process upon
them, consent to service of process by registered mail
directed to the defendant party at the address stated in
Section 25 above, and acknowledges that service so made shall
be deemed to be completed upon actual receipt thereof. In
addition, Assignee and Assignor consent and agree that venue
of any action instituted under this Agreement shall be proper
in Dallas County, Texas, and hereby waive any objection to
venue. This Agreement is and shall be performed
Page 18
<PAGE> 19
in Dallas County, Texas. Both Assignor and Assignee waive any
rights they may have to a jury trial for disputes arising
hereunder, and both parties agree to submit any disputes
hereunder to non-binding mediation prior to the institution of
a lawsuit.
28. COUNTERPARTS. This Agreement and any amendment hereto may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
29. ACCESS TO FILES AND RECORDS. From and after the Closing Date,
Assignee shall permit Assignor or Assignor's designee access
to the Loan Documents during normal business hours (with
reasonable prior written notice) delivered with respect to
this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Page 19
<PAGE> 20
IN WITNESS WHEREOF, the undersigned have duly executed this Sale and
Assignment Agreement effective as of the date first above written.
AMRESCO FUNDING CORPORATION
Date: May 12, 1998 By: /s/ RHONDA LINDSEY
--------------------------------
Printed Name: Rhonda Lindsey
-----------------------
Title: Vice President
-----------------------------
AMRESCO CAPITAL TRUST
Date: May 12, 1998 By: /s/ MICHAEL L. MCCOY
--------------------------------
Printed Name: Michael L. McCoy
-----------------------
Title: Senior Vice President
-----------------------------
AMREIT I, INC.
Date: May 12, 1998 By: /s/ MICHAEL L. MCCOY
--------------------------------
Printed Name: Michael L. McCoy
-----------------------
Title: Senior Vice President
-----------------------------
Page 20
<PAGE> 21
EXHIBIT A-1
PURCHASE PRICE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Note # Borrower Principal Balance Accrued Unamortized Origination Origination Costs Purchase Price
Interest Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Collins Crossing Ltd. $0.00 $0.00 $49,000.00 $0.00 ($49,000.00)
- --------------------------------------------------------------------------------------------------------------------------------
2. Collins Crossing Ltd. $1,000.00 $14.19 $245,000.00 $0.00 ($243,985.81)
- --------------------------------------------------------------------------------------------------------------------------------
3. Benton Columbus Partners, $5,838,667.62 $22,122.25 $134,671.70 $0.00 $5,726,118.17
L.P.
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL PURCHASE PRICE $5,433,132.36
</TABLE>
EXHIBIT A
Solo Page
<PAGE> 22
EXHIBIT A-2
LOAN DESCRIPTIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Note # Borrower Origination Original Principal Principal Balance as of Cut-
Date Balance Off Date
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Collins Crossing, Ltd. 3/30/98 $2,450,000.00 $0.00
- -----------------------------------------------------------------------------------------------------
2. Collins Crossing, Ltd. 3/30/98 $12,250,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------
3. Benton Columbus 2/20/98 $7,000,000.00 $5,838,667.62
Partners, L.P.
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
Note # Borrower Collateral Description Lien Position
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Collins Crossing, Ltd. To be constructed 11-story Second
multi-tenant office building
containing 300,887 (approximate)
square feet located in a suburb
of Dallas, Texas
- ------------------------------------------------------------------------------------------
2. Collins Crossing, Ltd. To be constructed 11-story Second
multi-tenant office building
containing 300,887 (approximate)
square feet located in a suburb
of Dallas, Texas
- ------------------------------------------------------------------------------------------
3. Benton Columbus 956,144 (approximate) square Second
Partners, L.P. foot mixed-use development
located in Columbus, Ohio
- ------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT A
Solo Page
<PAGE> 23
EXHIBIT A
NOTES
1. Promissory Note dated March 30, 1998, in the original
principal amount of $2,450,000.00, executed by Collins
Crossing, Ltd., payable to the order of AMRESCO Funding
Corporation.
2. Promissory Note dated March 30, 1998, in the original
principal amount of $12,250,000.00, executed by Collins
Crossing, Ltd. payable to the order of AMRESCO Funding
Corporation.
3. Promissory Note dated February 20, 1998, in the original
principal amount of $7,000,000.00, executed by Benton Columbus
Partners LP, a Texas limited partnership and AMRESCO Funding
Corporation.
EXHIBIT A
Solo Page
<PAGE> 24
EXHIBIT B
ASSIGNMENT
This Assignment is entered into by and between AMRESCO Funding
Corporation ("Assignor") and [AMRESCO Capital Trust] [AMREIT I, Inc.]
("Assignee").
RECITALS
Assignor and Assignee entered into that certain Sale and
Assignment Agreement effective May 12, 1998 (the "Sale and Assignment
Agreement").
The Sale and Assignment Agreement provides for the sale and
transfer by Assignor to Assignee of certain Assigned Rights (such term and all
other capitalized terms used herein and not otherwise defined herein have the
definitions ascribed to them in the Sale and Assignment Agreement).
In exchange for the Purchase Price and covenants set forth in
the Sale and Assignment Agreement and such other good and valuable consideration
as provided in the Sale and Assignment Agreement, Assignor hereby agrees to sell
to Assignee the Assigned Rights as set forth in the Sale and Assignment
Agreement and pursuant to the terms, conditions and provisions hereof.
NOW THEREFORE, premises considered:
(1) Assignor hereby transfers, assigns and conveys
all of Assignor's right, title and interest, if any, in and to the
Assigned Rights set forth in the instruments listed on Exhibit A
attached hereto and made a part hereof for all purposes;
(2) Subject to such other additional limitations,
disclaimers, waivers and qualifications as may be further set forth in
the Sale and Assignment Agreement, this sale is made on an "AS IS",
"WHERE IS" BASIS, "WITH ALL FAULTS" AND WITHOUT REPRESENTATIONS,
EXPRESS OR IMPLIED, OF ANY TYPE, KIND, CHARACTER OR NATURE, AND WITHOUT
WARRANTIES, EXPRESS OR IMPLIED, AND WITHOUT RECOURSE, EXPRESS OR
IMPLIED;
(3) Without in any way limiting the generality of the
foregoing, with respect to the Assigned Rights, together with any and
all related collateral, if any, Assignor hereby disclaims and disavows:
(i) any express or implied warranty of
"Merchantability"; and
EXHIBIT B
Page 1 of 3 Pages
<PAGE> 25
(ii) any express or implied warranty of
"Fitness For A Particular Purpose".
(4) Assignee hereby assumes any and all of Assignor's
obligations under the Assigned Rights arising on or after the date
hereof, including, without limitation, all of Assignor's obligations,
if any, to make advances under the Loan Documents.
DATED this ________ day of May, 1998.
By: AMRESCO Funding Corporation
By:
------------------------
Printed Name:
--------------
Title:
--------------------
EXHIBIT B
Page 2 of 3 Pages
<PAGE> 26
EXHIBIT A TO ASSIGNMENT
EXHIBIT B
Page 3 of 3 Pages
<PAGE> 27
EXHIBIT C
WIRE INSTRUCTIONS
Wire Transfer to: NationsBank, N.A.
Atlanta, Georgia
ABA #061000052
Deposit Account 325-545-0340
Account Name: AMRESCO Funding Corporation
Attention: Cynthia Strahin (404) 654-2669;
Fax (404) 654-2468
EXHIBIT C
Solo Page
<PAGE> 28
EXHIBIT D
CERTIFICATE OF PRINCIPAL BALANCES
STATE OF DALLAS Section
Section
COUNTY OF TEXAS Section
The undersigned, ________________________________ of AMRESCO Funding
Corporation, certifies the following:
1. The promissory notes (the "Notes") described on Schedule I
attached hereto were assigned to [AMRESCO Capital Trust]
[AMREIT I, Inc.], by AMRESCO Funding Corporation ("Assignor")
on May 12, 1998, as evidenced by the endorsement of the Notes
and the execution of an Assignment.
2. The outstanding principal balance of the Note(s) as of the
close of business on May 11, 1998, is set forth on Schedule I
attached hereto.
AMRESCO Funding Corporation
--------------------------------------
Name:
---------------------------------
Title:
-------------------------------
SUBSCRIBED AND SWORN TO BEFORE me this day of May, 1998.
-------------------------------------
Notary Public in and for the State of
----------------------------------
EXHIBIT D
Solo Page
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Note # Borrower Origination Original Principal Principal Balance as of Cut-
Date Balance Off Date
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Collins Crossing, Ltd. 3/30/98 $2,450,000.00 $0.00
- -----------------------------------------------------------------------------------------------------
2. Collins Crossing, Ltd. 3/30/98 $12,250,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------
3. Benton Columbus 2/20/98 $7,000,000.00 $5,838,667.62
Partners, L.P.
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
Note # Borrower Collateral Description Lien Position
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Collins Crossing, Ltd. To be constructed 11-story Second
multi-tenant office building
containing 300,887 (approximate)
square feet located in a suburb
of Dallas, Texas
- ------------------------------------------------------------------------------------------
2. Collins Crossing, Ltd. To be constructed 11-story Second
multi-tenant office building
containing 300,887 (approximate)
square feet located in a suburb
of Dallas, Texas
- ------------------------------------------------------------------------------------------
3. Benton Columbus 956,144 (approximate) square Second
Partners, L.P. foot mixed-use development
located in Columbus, Ohio
- ------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE I
<PAGE> 30
EXHIBIT E
NOTICE TO BORROWER
AMRESCO Funding Corporation
[Date]
[Borrower's Name CERTIFIED MAIL NO. _______________
Borrower's Address RETURN RECEIPT REQUESTED
City, State Zip Code
Attention:___________________]
Re: Sale and assignment of certain indebtedness currently owed to AMRESCO
Funding Corporation ("AFC")
Dear [Borrower]:
We hereby refer to the following:
Promissory note executed by ____________________________________ (the
"Borrower") dated and payable to the order of AMRESCO Funding
Corporation in the stated principal amount of
$___________ (the "Note").
AFC is the current owner and holder of the Note (such Note, together with the
documents executed in connection with such Note, shall be referred to as the
"Loan Documents").
This letter shall constitute notice to the Borrower of the sale and assignment
of all of AFC's right, title and interest in, to and under the Loan Documents to
[AMRESCO Capital Trust] [AMREIT I, Inc.] ("Assignee"). This transaction closed
on May 12, 1998 (the "Closing Date").
From and after the Closing Date, Assignee shall succeed to all of the
rights and obligations of AFC under the Loan Documents and the Borrower shall
treat Assignee for all purposes as payee in place of AFC under the Loan
Documents. After receipt of this letter, the Borrower should make no further
payments on the Note to AFC, but should make such payments to the following:
[AMRESCO Capital Trust] [AMREIT I, Inc.]
----------------------
----------------------
----------------------
Attention:
----------
EXHIBIT E
Page 1 of 2 Pages
<PAGE> 31
If you have any questions regarding the foregoing, please feel free to call
___________________ of Assignee at (800) _____-________.
Very truly yours,
AMRESCO Funding Corporation
By:
--------------------------------
Printed Name:
-----------------------
Its:
-------------------------------
cc:
----------------------------------
EXHIBIT E
Page 1 of 2 Pages
