<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-8630
------
AMRESCO, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 59-1781257
- ---------------------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1845 Woodall Rodgers Fwy, Dallas, Texas 75201
- ---------------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 953-7700
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
24,169,125 shares of common stock, $.05 par value per share, as of October
20, 1995.
Location of Exhibit Index: Page 4
Page 1
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NOTE:
The Form 10-Q submitted by AMRESCO, INC., for the period ended September 30,
1995 is hereby amended to include two exhibits that were listed in the Exhibit
Index, but were inadvertently omitted in the original EDGAR filing.
Page 2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits as required by Item 601 of Regulation S-K are set forth on
the Exhibit Index at page 4.
(b) None
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMRESCO, INC.
Registrant
Date: October 25, 1995 By: /s/ Ronald B. Kirkland
-----------------------------
Ronald B. Kirkland
Vice President and
Chief Accounting Officer
Page 3
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EXHIBIT INDEX
3(i).* Restated Certificate of Incorporation, as amended
10(a). Warehousing Credit and Security Agreement, dated as of August 15,
1995, between AMRESCO Capital Corporation and Residential Funding
Corporation
10(b). Revolving Loan Agreement, dated as of September 29, 1995, among
AMRESCO, INC. and Other Entities Designated Within as Borrowers and
NationsBank of Texas, N.A. as Agent and NationsBank of Texas, N.A.
and Other Entities Designated Within
11.* Computation of Per Share Earnings
27.* Financial Data Schedule
* Previously filed.
Page 4
WAREHOUSING CREDIT AND SECURITY AGREEMENT
(MULTI-FAMILY MORTGAGE LOANS)
BETWEEN
AMRESCO CAPITAL CORPORATION
a Texas corporation
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
Dated as of August 15, 1995
TABLE OF CONTENTS
PAGE
1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 8
2 THE CREDIT 8
2.1 Funding Limitations 8
2.2 Procedures for Obtaining Advances 9
2.3 Notes 11
2.4 Interest 11
2.5 Principal Payments 12
2.6 Method of Making Payments 14
2.7 Warehousing Fees 14
2.8 Miscellaneous Charges 14
2.9 Interest Limitation 15
3. COLLATERAL 15
3.1 Grant of Security Interest 15
3.2 Release of Security Interest in Collateral 17
3.3 Delivery of Additional Collateral or Mandatory Prepayment 18
3.4 Collection and Servicing Rights 19
3.5 Return of Collateral 19
4. CONDITIONS PRECEDENT 20
4.1 Initial Advance 20
4.2 Each Advance 22
5. REPRESENTATIONS AND WARRANTIES. 23
5.1 Organization; Good Standing; Subsidiaries. 23
5.2 Authorization and Enforceability 24
5.3 Approvals 24
5.4 Financial Condition 24
5.5 Litigation 25
5.6 Compliance with Laws 25
5.7 Regulations G and U 25
5.8 Investment Company Act 25
5.9 Payment of Taxes 25
5.10 Agreements 26
5.11 Title to Properties 26
5.12 ERISA 26
5.13 Eligibility 27
5.14 Place of Business 27
5.15 Special Representations Concerning Collateral 27
5.16 Servicing 28
6. AFFIRMATIVE COVENANTS 29
6.1 Payment of Notes 29
6.2 Financial Statements and Other Reports 29
6.3 Maintenance of Existence; Conduct of Business 31
6.4 Compliance with Applicable Laws 31
6.5 Inspection of Properties and Books 31
6.6 Payment of Debt, Taxes, etc 31
6.7 Insurance 32
6.8 Closing Instructions 32
6.9 Subordination of Certain Indebtedness 32
6.10 Other Loan Obligations 32
6.11 Use of Proceeds of Advances 33
6.12 Special Affirmative Covenants Concerning Collateral 33
7. NEGATIVE COVENANTS 34
7.1 Contingent Liabilities 34
7.2 Merger; Sale of Assets; Acquisitions 34
7.3 Deferral of Subordinated Debt 34
7.4 Loss of Eligibility 35
7.5 Debt to Tangible Net Worth Ratio 35
7.6 Minimum Tangible Net Worth 35
7.7 Minimum Servicing Portfolio 35
7.8 Special Negative Covenants Concerning Collateral 35
8. DEFAULTS; REMEDIES 35
8.1 Events of Default 35
8.2 Remedies 39
8.3 Application of Proceeds 42
8.4 Lender Appointed Attorney-in-Fact 43
8.5 Right of Set-Off 43
9. NOTICES 44
10. REIMBURSEMENT OF EXPENSES; INDEMNITY 44
11. FINANCIAL INFORMATION 45
12. MISCELLANEOUS 46
12.1 Terms Binding Upon Successors; Survival of Representations 46
12.2 Assignment 46
12.3 Amendments 46
12.4 Governing Law 46
12.5 Participations 46
12.6 Relationship of the Parties 47
12.7 Severability 47
12.8 Operational Reviews 47
12.9 Consent to Credit References 47
12.10 Consent to Jurisdiction 48
12.11 Counterparts 48
12.12 Entire Agreement 48
12.13 Waiver of Jury Trial 48
EXHIBITS
Exhibit A Promissory Note
Exhibit B (Intentionally Omitted)
Exhibit C-MF Request for Advance
Against
Mortgage Loans
Exhibit D-CONV/TRAN Procedures and
Documentation for Warehousing
Conventional Multi-family Mortgage
Loans
Exhibit E-MF/APPROVAL Approval Request for Advances
against Mortgage Loans
Exhibit F Subordination
of Debt Agreement
Exhibit G Subsidiaries
Exhibit H Legal Opinion
Exhibit I-MF Officer's
Certificate
Exhibit J Schedule of Existing Warehouse
Lines
Exhibit K Funding Bank Agreement (Wire)
THIS WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of
August 15, 1995 between AMRESCO CAPITAL CORPORATION, a Texas
corporation (the "Company"), having its principal office at 1845
Woodall Rodgers Freeway, Suite 1700, Dallas, Texas 75201 and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender"), having its principal office at 8400 Normandale Lake
Blvd., Suite 600, Minneapolis, Minnesota 55437.
WHEREAS, the Company and the Lender desire to set forth
herein the terms and conditions upon which the Lender shall
provide warehouse financing to the Company;
WHEREAS, the Lender may from time to time, at its
discretion, make one or more Advances to the Company, each of
which shall be secured by a Conventional Mortgage Loan (as such
terms are hereinafter defined).
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or
elsewhere in this Agreement (including the Exhibits hereto)
shall have the following meanings:
"Advance" means a disbursement by the Lender pursuant
to Article 2 of this Agreement, including, without
limitation, readvances of funds previously advanced to the
Company and repaid to the Lender.
"Advance Request" has the meaning set forth in Section
2.2(c) hereof.
"Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
"Agreement" means this Warehousing Credit and Security
Agreement (Multi-Family Mortgage Loans), either as
originally executed or as it may from time to time be
supplemented, modified or amended.
"Approval Request" has the meaning set forth in Section
2.2(a) hereof.
"Base Rate" means three percent (3%) per annum over
LIBOR.
"Business Day" means any day excluding Saturday or
Sunday and excluding any day on which national banking
associations are closed for business.
"Cash Collateral Account" means a demand deposit
account maintained at the Funding Bank in the name of the
Lender and designated for receipt of the proceeds of the
sale or other disposition of the Collateral.
"Collateral" has the meaning set forth in Section 3.1
hereof.
"Collateral Documents" has the meaning set forth in
Section 2.2(b) hereof.
"Collateral Value" means (a) with respect to any
Mortgage Loan as of the date of determination, the lesser of
(i) the amount of any Advance made against such Mortgage
Loan under Section 2.1(b) hereof; or (ii) the Fair Market
Value of such Mortgage Loan; or (b) in the event Pledged
Mortgages have been exchanged for Pledged Securities, the
aggregate Fair Market Value of the Mortgage Loans backing
such Pledged Securities.
"Committed Purchase Price" means for a Mortgage Loan
the product of the Mortgage Note Amount multiplied by (a)
the price (expressed as a percentage) as set forth in a
Purchase Commitment for such Mortgage Loan or (b) in the
event such Mortgage Loan is to be used to back a Mortgage-
backed Security, the price (expressed as a percentage) as
set forth in a Purchase Commitment for such Mortgage-backed
Security.
"Company" has the meaning set forth in the first
paragraph of this Agreement.
"Conventional Mortgage Loan" means a Multi-Family
Mortgage Loan which is prior approved by FNMA or FHLMC and
covered by a Purchase Commitment from FNMA or FHLMC.
"Debt" means, with respect to any Person, at any date
(a) all indebtedness or other obligations of such Person
which, in accordance with GAAP, would be included in
determining total liabilities as shown on the liabilities
side of a balance sheet of such Person at such date; and (b)
all indebtedness or other obligations of such Person for
borrowed money or for the deferred purchase price of
property or services; provided that for purposes of this
Agreement, there shall be excluded from Debt at any date
loan loss reserves, Subordinated Debt not due within one
year of such date, and deferred taxes arising from
capitalized excess servicing fees.
"Default" means the occurrence of any event or
existence of any condition which, but for the giving of
Notice, the lapse of time, or both, would constitute an
Event of Default.
"Depository Benefit" shall mean the compensation
received by the Lender, directly or indirectly, as a result
of the Company's maintenance of Eligible Balances with a
Designated Bank.
"Designated Bank" means any bank(s) designated from
time to time by the Lender to be a Designated Bank with whom
the Lender has an agreement under which the Lender can
receive a Depository Benefit.
"ERISA" means the Employee Retirement Income Security
Act of 1974 and all rules and regulations promulgated
thereunder, as amended from time to time and any successor
statute.
"Eligible Balances" means all funds of or maintained by
the Company and its Subsidiaries in accounts at a Designated
Bank, less balances to support fees, interest or other
amounts that would otherwise be payable to the Designated
Bank, float, reserve requirements, Federal Deposit Insurance
Corporation insurance premiums and such other reductions as
may be imposed by governmental authorities from time to
time.
"Event of Default" means any of the conditions or
events set forth in Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
"Fair Market Value" means at any date with respect to
any Mortgage Loan covered by a valid Purchase Commitment,
the Committed Purchase Price, or in the absence of a valid
Purchase Commitment for a Mortgage Loan or the related
Mortgage-backed Security (if such Mortgage Loan is to be
used to back a Mortgage-backed Security), the fair market
value as determined by the Lender, in its reasonable
business judgment, in conformity with standard industry
practices for valuing similar Mortgage Loans or Mortgage-
backed Securities.
"FHA" means the Federal Housing Administration and any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage
Corporation and any successor thereto.
"FICA" means the Federal Insurance Contributions Act.
"FIRREA" means the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from time
to time, and the regulations promulgated and rulings issued
thereunder.
"FNMA" means the Federal National Mortgage Association
and any successor thereto.
"Funding Bank" means The First National Bank of Chicago
or any other bank designated from time to time by the
Lender.
"Funding Bank Agreement" means the letter agreement
substantially in the form of Exhibit K hereto.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as may be
approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of
the date of determination.
"GNMA" means the Government National Mortgage
Association and any successor thereto.
"HUD" means the Department of Housing and Urban
Development and any successor thereto.
"Indemnified Liabilities" has the meaning set forth in
Article 10 hereof.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, or any subsequent federal income tax law or laws,
as any of the foregoing have been or may from time to time
be amended.
"Investor" means FNMA, FHLMC or a financially
responsible private institution which is deemed acceptable
by the Lender from time to time in its sole discretion.
"Lender" has the meaning set forth in the first
paragraph of this Agreement.
"LIBOR" means, for each calendar week, the rate of
interest per annum which is equal to the arithmetic mean of
the U.S. Dollar London Interbank Offered Rates for one (1)
month periods as of 11:00 a.m. London time on the first
Business Day of each week on which the London Interbank
market is open, as published by Knight-Ridder, Inc. on its
MoneyCenter system. LIBOR shall be rounded, if necessary,
to the next higher one sixteenth of one percent (1/16%). If
such U.S. dollar LIBOR rates are not so offered or published
for any period, then during such period LIBOR shall mean the
London Interbank Offered Rate for one (1) month periods
published on the first Business Day of each week on which
the London Interbank market is open, in the Wall Street
Journal in its regular column entitled "Money Rates."
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan Documents" means this Agreement, the Notes, any
agreement of the Company relating to Subordinated Debt, an
Approval Request, an Advance Request, and each other
document, instrument or agreement executed by the Company in
connection herewith or therewith, as any of the same may be
amended, restated, renewed or replaced from time to time.
"Margin Stock" has the meaning assigned to that term in
Regulations G and U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Miscellaneous Charges" has the meaning set forth in
Section 2.8 hereof.
"Mortgage" means a first mortgage or first deed of
trust on improved real property.
"Mortgage-backed Securities" means FNMA or FHLMC
securities that are backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage
Note.
"Mortgage Note" means a promissory note secured by a
Mortgage.
"Mortgage Note Amount" means, as of the date of
determination, the then outstanding unpaid principal amount
of a Mortgage Note.
"Mortgage Note Rate" means the coupon rate of interest
born by a Mortgage Note as set forth in such Mortgage Note.
"Mortgage Pool" means a pool of one or more Pledged
Mortgages on the basis of which there is to be issued a
Mortgage-backed Security.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is maintained
for employees of the Company or a Subsidiary of the Company.
"Multi-family Mortgage Loan" means a Mortgage Loan
secured by a Mortgage on improved Multi-family Property.
"Multi-family Property" means real property containing
or which will contain more than four (4) dwelling units.
"Notes" has the meaning set forth in Section 2.3
hereof.
"Notices" has the meaning set forth in Article 9
hereof.
"Obligations" means any and all indebtedness,
obligations and liabilities of the Company to the Lender
(whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owed with others, direct
or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased
or extinguished and later increased, created or incurred),
arising out of or related to the Loan Documents.
"Officer's Certificate" means a certificate executed on
behalf of the Company by its chief financial officer or its
treasurer or by such other officer as may be designated
herein and substantially in the form of Exhibit I-MF
attached hereto.
"Operating Account" means a demand deposit account
maintained at the Funding Bank in the name of the Company
and designated for funding the discount portion of each
Advance and for returning any excess payment from an
Investor for a Pledged Mortgage or Pledged Security.
"Parent" shall mean AMRESCO, INC., a Delaware
corporation.
"Participant" has the meaning set forth in Section 12.5
hereof.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal
entities, and governments and agencies and political
subdivisions thereof.
"Plans" has the meaning set forth in Section 5.12
hereof.
"Pledged Mortgages" has the meaning set forth in
Section 3.1(a) hereof.
"Pledged Securities" has the meaning set forth in
Section 3.1(b) hereof.
"Purchase Commitment" means a written commitment, in
form and substance satisfactory to the Lender, issued in
favor of the Company by an Investor pursuant to which that
Investor commits to purchase Mortgage Loans or
Mortgage-backed Securities.
"Release Amount" has the meaning set forth in Section
3.2(f) hereof.
"Servicing Contract" means, with respect to any Person,
the arrangement, whether or not in writing, pursuant to
which such Person has the right to service Mortgage Loans.
"Servicing Portfolio" means, as to any Person, the
unpaid principal balance of Mortgage Loans whose Servicing
Contracts are owned by such Person.
"Stated Maturity Date" means the stated maturity date
of an Advance hereunder, as such date is set forth in the
related Notes.
"Statement Date" means the date of the most recent
financial statements of the Company (and, if applicable, its
Subsidiaries, on a consolidated basis) delivered to the
Lender under the terms of this Agreement.
"Subordinated Debt" means all indebtedness of the
Company, for borrowed money, which is, by its terms (which
terms shall have been approved by the Lender), effectively
subordinated in right of payment to all other present and
future Obligations, and, solely for purposes of Section 7.3
all indebtedness of the Company which is required to be
subordinated by Section 4.1(b) and Section 4.1(b), 6.9
hereof.
"Subsidiary" means any corporation, association or
other business entity in which more than fifty percent (50%)
of the total voting power or shares of stock entitled to
vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means with respect to any Person
at any date, the excess of the total assets over total
liabilities of such Person on such date, each to be
determined in accordance with GAAP consistent with those
applied in the preparation of the financial statements
referred to in Section 4.1(a)(5) hereof, plus loan loss
reserves, and that portion of Subordinated Debt not due
within one year of such date, provided that, for purposes of
this Agreement, there shall be excluded from total assets
advances or loans to shareholders, officers or Affiliates,
investments in Affiliates, assets pledged to secure any
liabilities not included in the Debt of such Person,
intangible assets and those other assets which would be
deemed by HUD to be non-acceptable in calculating adjusted
net worth in accordance with its requirements in effect as
of such date, as such requirements appear in the "Audit
Guide for Audit of Approved Non-Supervised Mortgagees" and
other assets deemed unacceptable by the Lender in its sole
discretion.
"Trust Receipt" means a trust receipt in a form
approved by and pursuant to which the Lender may deliver any
document relating to the Collateral to the Company for
correction or completion.
"Warehousing Fee" has the meaning set forth in Section
2.7 hereof.
1.2 Other Definitional Provisions.
1.2(a) Accounting terms not otherwise
defined herein shall have the meanings given the terms
under GAAP.
1.2(b) Defined terms may be used in the
singular or the plural, as the context requires.
1.2(c) All references to time of day shall
mean the then applicable time in Chicago, Illinois,
unless expressly provided to the contrary.
2 THE CREDIT.
2.1 Funding Limitations.
2.1(a) Advances shall be used by the
Company solely for the purpose of funding the
origination of Mortgage Loans and shall be made at the
request of the Company, in the manner hereinafter
provided in Section 2.2 hereof, against the pledge of
such Mortgage Loans as Collateral therefor. The
following limitations on the use of the Advance shall
be applicable:
(1) No Advance shall be made
against Mortgage Loans other than Conventional
Mortgage Loans.
(2) No Advance shall be made
against Mortgage Loans which are not covered by a
Purchase Commitment.
(3) No Advance shall be made
against any Mortgage Loan which was closed more
than fifteen (15) days prior to the date of the
requested Advance.
2.1(b) No Advance shall exceed an amount
equal to the lesser of ninety-nine percent (99%) of:
(i) the Mortgage Note Amount; or (ii) the Committed
Purchase Price.
2.1(c) All Advances under this Agreement
shall constitute a single indebtedness, and all of the
Collateral shall be security for the Notes and for the
performance of all the Obligations.
2.2 Procedures for Obtaining Advances.
2.2(a) If the Company wishes to request an
Advance, it shall deliver to the Lender no later than
thirty (30) days prior to any Business Day that the
Company desires to borrow hereunder, a request for
approval ("Approval Request") in substantially the form
set forth in Exhibit E-MF/APPROVAL hereto. Such
Approval Request shall be accompanied by the following
documents:
(1) Copy of either the FNMA or
FHLMC Multifamily Loan Application or the FHA
Firm Commitment to Insure for the Mortgage Loan to
be funded by the Advance described in the Approval
Request.
(2) An Officer's Certificate
substantially in the form of Exhibit I-MF hereto
(A) setting forth in reasonable detail all
calculations necessary to show that the Company is
in compliance with the requirements of Sections
7.5, 7.6, and 7.7, hereof as of the date of the
Approval Request; (B) certifying that the Company
is, as of the date of the Approval Request, an
approved and qualified seller/servicer or issuer
in good standing for the Investor named in and the
type of Mortgage Loan covered by the Approval
Request, and meets all requirements applicable to
its status as such.
2.2(b) Within fifteen (15) days after
receipt of an Approval Request and the supporting
documents the Lender may, in its sole discretion,
approve an Advance, by returning the Approval Request
executed by the Lender. Any approved Advance shall be
subject to the satisfaction of the conditions set forth
in Sections 4.1 and 4.2 hereof, and compliance with the
procedures set forth in this Section 2.2 and in Exhibit
D-CONV/TRAN attached hereto and made a part hereof,
including the delivery of all documents listed in such
Exhibit ("Collateral Documents").
2.2(c) After an Advance has been approved,
a request for funding such Advance shall be initiated
by the Company by delivering to the Lender the
documents required to be delivered in Exhibit D-
CONV/TRAN within the time periods set forth in such
Exhibit, including the delivery to the Lender no later
than one (1) Business Day prior to any Business Day
that the Company desires to borrow hereunder, of a
completed and signed request for an Advance ("Advance
Request") on the then current form approved by the
Lender. The current form in use by the Lender is
Exhibit C-MF attached hereto and made a part hereof.
The Lender shall have the right, on not less than ten
(10) Business Days' prior Notice to the Company, to
modify any of said Exhibits to conform to current legal
requirements or Lender practices, and, as so modified,
said Exhibits as delivered to the Company shall be
deemed a part hereof.
2.2(d) Before funding, the Lender shall
have a reasonable time (one (1) Business Day under
ordinary circumstances) to examine such Advance Request
and the Collateral Documents to be delivered prior to
such requested Advance, as set forth in Exhibit D-
CONV/TRAN, and may reject such of them as do not meet
the requirements of this Agreement or of the related
Purchase Commitment.
2.2(e) The Company shall hold in trust for
the Lender, and the Company shall deliver to the Lender
promptly upon request, the following: (1) originals of
the Collateral Documents for which copies are required
to be delivered to the Lender pursuant to Exhibit D-
CONV/TRAN, (2) the original lender's ALTA Policy of
Title Insurance, or an equivalent thereto, and (3) any
other documents relating to a Pledged Mortgage which
the Lender may request including, without limitation,
certificates of casualty or hazard insurance, credit
information on the maker of each such Mortgage Note,
and other documents of all kinds which are customarily
desired for inspection or transfer incidental to the
purchase of any Mortgage Note by an Investor and any
additional documents which are customarily executed by
the seller of a Mortgage Note to an Investor.
2.2(f) To make an Advance, the Lender
shall cause the Funding Bank to credit an account of
the Company with the Funding Bank, which account shall
be under the exclusive control of the Lender, upon
compliance by the Company with the terms of this
Agreement. Upon the approval of the Lender,
disbursement of the Advance shall be made in accordance
with the instructions of the Company as set forth in
the Advance Request.
2.2(g) If, pursuant to the authorization
given by the Company in the Funding Bank Agreement, for
the purpose of financing a Mortgage Loan against which
the Lender has made an Advance in accordance with a
Request for Advance the Lender debits the Company's
Operating Account at the Funding Bank to the extent
necessary to cover a wire to be initiated by the
Lender, and such debit results in an overdraft, the
Lender may make an additional Advance to fund such
overdraft.
2.3 Notes. The Company's Obligations shall be
evidenced by promissory notes ("Notes") of the Company dated
as of the date of each Advance substantially in the form of
Exhibit A attached hereto. The term "Notes" shall include
all extensions, renewals and modifications of the Notes and
all substitutions therefor. A "Note" shall relate to and
evidence a specific Advance. All terms and provisions of
the Notes are hereby incorporated herein.
2.4 Interest.
2.4(a) The unpaid amount of each Advance
against Pledged Mortgages shall bear interest, from the
date of such Advance until paid in full at a rate of
interest which is equal to the Base Rate. The interest
rate will be adjusted as of the effective date of each
change in LIBOR.
2.4(b) The Company is entitled to receive
a benefit in the form of an "Earnings Credit" on the
portion of the Eligible Balances maintained in time
deposit accounts with a Designated Bank, and the
Company is entitled to receive a benefit in the form of
an "Earnings Allowance" on the portion of the Eligible
Balances maintained in demand deposit accounts with a
Designated Bank. Any Earnings Allowance shall be used
first and any Earnings Credit shall be used second as a
credit against accrued Miscellaneous Charges and fees,
including, but not limited to Warehousing Fees, and may
be used, at the Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the
month in which the benefit was received shall be
accumulated for use and must be used during the
calendar year in which the benefit was received. Any
Earnings Credit not used during the month in which the
benefit was received shall be used to provide a cash
benefit to the Company. The Lender's determination of
the Earnings Credit and the Earnings Allowance for any
month shall be determined by the Lender in its sole
discretion and shall be conclusive and binding absent
manifest error. In no event shall the benefit received
by the Company exceed the Depository Benefit.
Either party hereto may terminate the
benefits provided for in this Section effective
immediately upon Notice to the other party, if the
terminating party shall have determined (which
determination shall be conclusive and binding absent
manifest error) at any time that any applicable law,
rule, regulation, order or decree or any interpretation
or administration thereof by any governmental authority
charged with the interpretation or administration
thereof, or compliance by such party with any request
or directive (whether or not having the force of law)
of any such authority, shall make it unlawful or
impossible for such party to continue to offer or
receive the benefits provided for in this Section.
2.4(c) Interest shall be computed on the
basis of a 360-day year and applied to the actual
number of days elapsed in each interest calculation
period and shall be payable upon the receipt of the
proceeds of the sale or other disposition of a Pledged
Mortgage, to the extent thereof, or upon the expiration
of the Stated Maturity Date of the related Note or the
termination of the Agreement.
2.4(d) If, for any reason, no interest is
due on an Advance, the Company agrees to pay to the
Lender an administrative fee equal to one day of
interest on such Advances at a rate of one and one-half
percent (1-1/2%) per annum. Administrative and other
fees shall be due and payable in the same manner as
interest is due and payable hereunder.
2.4(e) Upon demand of the Lender and
Notice to the Company, any Obligations not paid when
due (whether at stated maturity, upon acceleration
following the occurrence of an Event of Default or
otherwise) shall bear interest, from the date due until
paid in full, at a per annum rate of interest equal to
the Base Rate plus four percent (4%) (the "Default
Rate"), said interest to be payable on demand of the
Lender.
2.5 Principal Payments.
2.5(a) The unpaid principal amount of each
Advance hereunder shall be payable in full on the
Stated Maturity Date set forth in the related Note or,
if earlier, on the date to which the maturity of such
Advance is accelerated pursuant to the provisions of
this Agreement.
2.5(b) The Company shall have the right to
prepay the outstanding Advances in whole or in part,
from time to time, without premium or penalty.
2.5(c) All payments of outstanding
Advances from the proceeds of the sale or other
disposition of Pledged Mortgages and Pledged Securities
shall be paid directly by the Investor to the Cash
Collateral Account to be applied against the
Obligations.
2.5(d) The Company shall be obligated to
pay to the Lender, without the necessity of prior
demand or notice from the Lender, and the Company
authorizes the Lender to cause the Funding Bank to
charge the Company's account for, the amount of any
outstanding Advance against a specific Pledged
Mortgage, upon the earliest occurrence of any of the
following events:
(1) Sixty (60) days elapse from
the date of the initial Advance made by the Lender
against such Pledged Mortgage, whether or not such
Pledged Mortgage is included in a Mortgage Pool.
(2) On the date an Advance was
made and the Pledged Mortgage which was to have
been funded by such Advance is not closed and
funded.
(3) Ten (10) Business Days elapse
from the date a Collateral Document was delivered
to the Company for correction or completion under
a Trust Receipt, without being returned to the
Lender.
(4) On the date the Pledged
Mortgage is defaulted and applicable grace and
cure periods have expired.
(5) On the mandatory delivery date
of the related Purchase Commitment if the specific
Pledged Mortgage was not delivered under the
Purchase Commitment prior to such mandatory
delivery date or the Purchase Commitment is
terminated.
(6) On the date the Pledged
Mortgage is rejected by an Investor.
(7) Upon sale or other disposition
of the Pledged Mortgage.
(8) If the Pledged Mortgage is
included in a Mortgage Pool, then upon sale of the
Mortgage-backed Security.
2.5(e) The outstanding amount of any
Advance made pursuant to Section 2.2(g) shall be
payable in full within one (1) Business Day after the
date of such Advance.
2.5(f) The Company shall give Notice to
the Lender of the Pledged Mortgages or Pledged
Securities for which proceeds have been received. Upon
receipt of such Notice the Advances against such
Pledged Mortgages or Pledged Securities shall be repaid
and such Pledged Mortgages or Pledged Securities shall
be considered to have been redeemed from pledge. The
Lender is entitled to rely upon the Company's
affirmation that deposits in the Cash Collateral
Account represent payment from Investors for the
purchase of Pledged Mortgages or Pledged Securities as
specified by the Company. In the event that the
payment from an Investor for the purchase of Pledged
Mortgages or Pledged Securities is less than the
outstanding Advances against such Pledged Mortgages or
the Mortgage Loans backing Pledged Securities, the
Lender is authorized to cause the Funding Bank to
charge the Company's account for an amount equal to
such deficiency. Provided no Default or Event of
Default exists, the Lender shall return any excess
payment from an Investor for Pledged Mortgages or
Pledged Securities to the Company.
2.6 Method of Making Payments.
2.6(a) Except as otherwise specifically
provided herein, all payments hereunder shall be made
to the Lender not later than the close of business on
the date when due unless such date is a non-Business
Day, in which case, such payment shall be due on the
first Business Day thereafter, and shall be made in
lawful money of the United States of America in
immediately available funds transferred via wire to
accounts designated by the Lender from time to time.
2.6(b) Upon an Event of Default, and
without the necessity of prior demand or notice from
the Lender, the Company authorizes the Lender to cause
the Funding Bank to charge the Company's account for
any Obligations due and owing the Lender.
2.7 Warehousing Fees. The Company agrees to pay to
the Lender a Warehousing Fee in the amount of (a) one-eighth
percent (1/8%) of the amount of an Advance, if such Advance
is less than Five Million Dollars ($5,000,000), or (b) one-
sixteenth percent (1/16%) of the amount of an Advance, if
such Advance is greater than or equal to Five Million
Dollars ($5,000,000). Warehousing Fees shall be payable
upon receipt the proceeds of the sale or other disposition
of the Pledged Mortgage, to the extent thereof, or upon the
expiration of the Stated Maturity Date of the related Note
or the termination of the Agreement.
2.8 Miscellaneous Charges. The Company agrees to
reimburse the Lender for miscellaneous charges and expenses
(collectively, "Miscellaneous Charges") incurred by or on
behalf of the Lender in connection with the handling and
administration of Advances, and to reimburse the Lender for
Miscellaneous Charges incurred by or on behalf of the Lender
in connection with the handling and administration of the
Collateral. For the purposes hereof, Miscellaneous Charges
shall include, but not be limited to, charges for wire
transfers, charges for security delivery fees, charges for
overnight delivery of Collateral to Investors, Funding
Bank's service charges and Designated Bank's service
charges. Miscellaneous Charges are due when incurred, but
shall not be delinquent if paid within fifteen (15) days
after receipt of an invoice or an account analysis statement
from the Lender.
2.9 Interest Limitation. All agreements between the
Company and the Lender are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of
acceleration of Stated Maturity Date of a Note, termination
of this Agreement or otherwise, shall the amount paid or
agreed to be paid to the Lender for the use, forbearance,
loaning or retention of the Advances secured by this
Agreement exceed the maximum permissible under applicable
law. If from any circumstances whatsoever, fulfillment of
any provisions hereof or of the Notes, or any other document
securing this Agreement at any time given shall involve
transcending the limit of validity prescribed by law, then,
the obligation to be fulfilled shall automatically be
reduced to the limit of such validity, and if from any
circumstances the Lender should ever receive as interest an
amount which would exceed the highest lawful rate of
interest, such amount which would be in excess of interest
shall be applied to the reduction of the principal balance
secured by the Notes and not to the payment of interest
thereunder. This provision shall control every other
provision of all agreements between the Company and Lender
and shall also be binding upon and available to any
subsequent holder of the Notes.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the
payment of the Notes and for the performance of all of the
Company's Obligations, the Company hereby assigns and
transfers to the Lender all right, title and interest in and
to and grants a security interest to the Lender in the
following described property (the "Collateral"):
3.1(a) All Mortgage Loans, including all
Mortgage Notes and Mortgages evidencing such Mortgage
Loans, which from time to time are delivered or caused
to be delivered to the Lender (including delivery to a
third party on behalf of the Lender), come into the
possession, custody or control of the Lender for the
purpose of assignment or pledge or in respect of which
an Advance has been made by the Lender hereunder (the
"Pledged Mortgages").
3.1(b) All Mortgage-backed Securities
which are from time to time created in whole or in part
on the basis of the Pledged Mortgages or are delivered
or caused to be delivered to, or are otherwise in the
possession of the Lender, or its agent, bailee or
custodian as assignee, or pledged to the Lender, or for
such purpose are registered by book-entry in the name
of, the Lender (including delivery to or registration
in the name of a third party on behalf of the Lender)
hereunder or in respect of which from time to time an
Advance has been made by the Lender hereunder (the
"Pledged Securities").
3.1(c) All commitments issued by the FHA
to insure any Mortgage Loans included in the Pledged
Mortgages; all guaranties related to Pledged
Securities; all Purchase Commitments held by the
Company covering the Pledged Mortgages or the Pledged
Securities and all proceeds resulting from the sale
thereof to Investors pursuant thereto; and all personal
property, contract rights, servicing and servicing fees
and income or other proceeds, amounts and payments
payable to the Company as compensation or
reimbursement, accounts and general intangibles of
whatsoever kind relating to the Pledged Mortgages, the
Pledged Securities, said FHA commitments, the Purchase
Commitments, and all other documents or instruments
relating to the Pledged Mortgages and the Pledged
Securities, including, without limitation, any interest
of the Company in any fire, casualty or hazard
insurance policies and any awards made by any public
body or decreed by any court of competent jurisdiction
for a taking or for degradation of value in any eminent
domain proceeding as the same relate to the Pledged
Mortgages.
3.1(d) All right, title and interest of
the Company in and to all escrow accounts, documents,
instruments, files, surveys, certificates,
correspondence, appraisals, accounting records
(including all information contained in computer
programs, records, tapes, data, discs and cards
necessary or helpful in the administration or servicing
of the Collateral) and other information and data of
the Company directly relating to the Collateral.
3.1(e) All now existing or hereafter
acquired cash delivered to or otherwise in the
possession of the Lender or its agent, bailee or
custodian or designated on the books and records of the
Company as assigned and pledged to the Lender.
3.1(f) All cash and non-cash proceeds of
the Collateral, including all dividends, distributions
and other rights in connection with, and all additions
to, modifications of and replacements for, the
Collateral, and all products and proceeds of the
Collateral, together with whatever is receivable or
received when the Collateral or proceeds thereof are
sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary,
including, without limitation, all rights to payment
with respect to any cause of action affecting or
relating to the Collateral or proceeds thereof.
3.2 Release of Security Interest in Collateral.
3.2(a) Pledged Mortgages shall be released
from the Lender's security interest only against
payment to the Lender of the Release Amount due the
Lender in connection with such Pledged Mortgages.
3.2(b) If Pledged Mortgages are to be
transferred to a pool custodian for inclusion in a
Mortgage Pool, the Lender's security interest in such
Pledged Mortgages shall be released only against
payment to the Lender of the Release Amount in
connection with such Pledged Mortgages. If the
Lender's security interest in the Pledged Mortgages
comprising the Mortgage Pool is not released prior to
the issuance of the Mortgage-backed Security, then the
Mortgage-backed Security, when issued, shall be a
Pledged Security. The Lender's security interest shall
continue in such Pledged Mortgages and the Pledged
Security. The Lender shall be entitled to possession
of such Pledged Security in the manner provided below.
3.2(c) The Lender shall have the exclusive
right to the possession of the Pledged Securities or,
if the Pledged Securities are not to be issued in
certificated form or are to be issued in certificated
form and registered exclusively in the name of, and
held by, a clearing agency or its nominees, shall have
the right to have the book entries for the Pledged
Securities issued in the Lender's name or the name or
names of its designees, and the Lender shall have the
right to cause delivery of the Pledged Securities to be
made to the Investor or the book entries registered in
the name of the Investor or the Investor's designee
only against payment therefor. The Company
acknowledges that the Lender may enter into one or more
standing arrangements with other financial institutions
for the issuance of Pledged Securities in book entry
form in the name of such other financial institutions,
as agent or financial intermediary for the Lender, and
the Company agrees upon request of the Lender, to
execute and deliver to such other financial
institutions the Company's written concurrence in any
such standing arrangements.
3.2(d) Prior to the occurrence of an Event
of Default, the Company may redeem a Pledged Mortgage
or Pledged Security from the Lender's security interest
by notifying the Lender of its intention to redeem such
Pledged Mortgage or Pledged Security from pledge and
either (a) paying, or causing an Investor to pay, to
the Lender, for application to prepayment of the
principal balance of the Note evidencing the Advance
made against such Pledged Mortgage or such Pledged
Security, the Release Amount in connection with such
Pledged Mortgage or Pledged Security, or (b) delivering
substitute Collateral which, in addition to being
acceptable to the Lender in its sole discretion will,
when included with the Collateral, result in a
Collateral Value of all Collateral held by the Lender
which is at least equal to the aggregate outstanding
Advances.
3.2(e) Following the occurrence of a
Default or Event of Default, the Lender may, with no
liability to the Company or any Person, continue to
release its security interest in any Pledged Mortgage
or Pledged Security against payment of the Release
Amount in connection with such Pledged Mortgage or
Pledged Security.
3.2(f) The Release Amount in connection
with any Pledged Mortgage shall be (i) prior to the
occurrence of an Event of Default, the principal amount
of the Advances made against such Pledged Mortgage, and
(ii) from and after the occurrence and during the
continuance of an Event of Default, the Committed
Purchase Price of such Pledged Mortgage or, if there is
no Purchase Commitment therefor, the amount paid to the
Lender in a commercially reasonable disposition
thereof.
3.3 Delivery of Additional Collateral or Mandatory
Prepayment. At any time that the aggregate Collateral Value
of the Pledged Mortgages and Pledged Securities then pledged
hereunder is less than the aggregate amount of the Advances
then outstanding hereunder, the Lender may request, and the
Company shall within two (2) Business Days after Notice by
the Lender (a) deliver to the Lender for pledge hereunder
additional Mortgage Loans and/or cash, with a Collateral
Value sufficient to cover the difference between the
Collateral Value of the Pledged Mortgages and Pledged
Securities pledged and the aggregate amount of Advances
outstanding hereunder, or (b) repay the Advances in an
amount sufficient to reduce the aggregate balance thereof
outstanding to or below the Collateral Value of the Pledged
Mortgages and Pledged Securities pledged hereunder.
3.4 Collection and Servicing Rights. So long as no
Event of Default shall have occurred and be continuing, the
Company shall be entitled to service and receive and collect
directly all sums payable to the Company in respect of the
Collateral other than proceeds of any Purchase Commitment or
proceeds of the sale of any Collateral. Following the
occurrence of any Event of Default, the Lender or its
designee shall thereafter be entitled to service and receive
and collect all sums payable to the Company in respect of
the Collateral, and in such case (a) the Lender or its
designee in its discretion may, in its own name, in the name
of the Company or otherwise, demand, sue for, collect or
receive any money or property at any time payable or
receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so, (b)
the Company shall, if the Lender so requests, hold in trust
for the benefit of the Lender and forthwith pay to the
Lender at its office designated by Notice hereunder, all
amounts thereafter received by the Company upon or in
respect of any of the Collateral, advising the Lender as to
the source of such funds, and (c) all amounts so received
and collected by the Lender shall be held by it as part of
the Collateral.
3.5 Return of Collateral. If no Advances, interest or
other Obligations evidenced by the Loan Documents or due
under this Agreement shall be outstanding and unpaid, the
Lender shall deliver or release its security interest and
shall deliver all Collateral in its possession to the
Company at the Company's expense. The receipt of the
Company for any Collateral released or delivered to the
Company pursuant to any provision of this Agreement shall be
a complete and full acquittance for the Collateral so
returned, and the Lender shall thereafter be discharged from
any liability or responsibility therefor.
3.6 Release of Collateral.
3.6(a) The Lender may deliver documents
relating to the Collateral to the Company for
correction or completion pursuant to a Trust Receipt.
3.6(b) Prior to the occurrence of a
Default or Event of Default, upon delivery by the
Company to the Lender of shipping instructions pursuant
to Exhibit D-CONV/TRAN, the Lender will transmit
Pledged Mortgages or Pledged Securities and all related
loan documents or pool documents to the applicable
Investor.
3.6(c) Upon receipt of Notice from the
Company under Section 2.5(f) hereof, and repayment of
the Release Amount with respect to a Pledged Mortgage
identified by the Company, any Collateral Documents
relating to the redeemed Pledged Mortgage or Mortgage
Loan backing a Pledged Security which have not been
delivered to an Investor shall be released by the
Lender to the Company.
4. CONDITIONS PRECEDENT.
4.1 Initial Advance. The obligation of the Lender to
make the initial Advance under this Agreement is subject to
the satisfaction, in the sole discretion of the Lender, on
or before the date thereof of the following conditions
precedent:
4.1(a) The Lender shall have received the
following, all of which must be satisfactory in form
and content to the Lender, in its sole discretion:
(1) This Agreement duly executed
by the Company.
(2) The Company's articles of
incorporation as certified by the Secretary of
State of the Company's incorporation, bylaws
certified by the corporate secretary of the
Company, and certificates of good standing dated
no less recently than ninety (90) days prior to
the date of this Agreement.
(3) A resolution of the board of
directors of the Company, certified as of the date
of this Agreement by its corporate secretary,
authorizing the execution, delivery and
performance of this Agreement and the other Loan
Documents, and all other instruments or documents
to be delivered by the Company pursuant to this
Agreement.
(4) A certificate of the Company's
corporate secretary as to the incumbency and
authenticity of the signatures of the officers of
the Company executing this Agreement and the other
Loan Documents and each Note delivered in
connection with an Advance Request, each Advance
Request and all other instruments or documents to
be delivered pursuant hereto (the Lender being
entitled to rely thereon until a new such
certificate has been furnished to the Lender).
(5) Financial statements of the
Parent (and, if applicable, its Subsidiaries, on a
consolidated basis) containing a balance sheet as
of December 31, 1994 and related statements of
income, changes in stockholders' equity and cash
flows for the period ended on such date, all
prepared in accordance with GAAP applied on a
basis consistent with prior periods and audited by
independent certified public accountants of
recognized standing acceptable to the Lender.
(6) Financial statements of the
Company (and, if applicable, its Subsidiaries, on
a consolidated basis) containing a balance sheet
as of April 30, 1994, related statements of income
and changes in stockholders' equity for the period
ended on such date prepared in accordance with
GAAP applied on a basis consistent with the
Company's most recent audited financial
statements.
(7) A tax, lien and judgment
search of the appropriate public records for the
Company, including a search of Uniform Commercial
Code financing statements, which search shall not
have disclosed the existence of any prior Lien on
the Collateral other than in favor of the Lender
or as permitted hereunder.
(8) A favorable written opinion of
the general counsel to the Company, dated as of
the date of this Agreement substantially in the
form of Exhibit H attached hereto, addressed to
the Lender.
(9) Copies of the certificates,
documents or other written instruments which
evidence the Company's eligibility described in
Section 5.13 hereof, all in form and substance
satisfactory to the Lender.
(10) Copies of the Company's errors
and omissions insurance policy or mortgage
impairment insurance policy, and blanket bond
coverage policy, or certificates in lieu of
policies, all in form and content satisfactory to
the Lender, showing compliance by the Company as
of the date of this Agreement with the related
provisions of Section 6.7 hereof.
(11) Executed financing statements
in recordable form covering the Collateral and
ready for filing in all jurisdictions required by
the Lender.
(12) Evidence that all accounts
necessary into which Advances will be funded have
been established at the Funding Bank and receipt
of a fully executed Funding Bank Agreement.
4.1(b) All directors, officers and
shareholders of the Company, all Affiliates of the
Company or of any Subsidiary of the Company, to whom or
to any of whom the Company shall be indebted as of the
date of this Agreement, shall have subordinated such
indebtedness to the Obligations, by executing a
Subordination of Debt Agreement, in the form of Exhibit
F hereto; and the Lender shall have received an
executed copy of any such Subordination of Debt
Agreement, certified by the corporate secretary of the
Company to be true and complete and in full force and
effect as of the date of the Advance.
4.2 Each Advance. The obligation of the Lender to
make the initial and each subsequent Advance under this
Agreement is subject to the satisfaction, in the sole
discretion of the Lender, as of the date of each such
Advance, of the following additional conditions precedent:
4.2(a) The Company shall have delivered to
the Lender a Note in the amount of the requested
Advance.
4.2(b) The Company shall have delivered to
the Lender the Approval Request and the documents
called for thereunder, the Advance Request, the
Collateral Documents called for under, and shall have
satisfied the procedures set forth in, Section 2.2
hereof and the applicable Exhibits hereto described in
that Section. All items delivered to the Lender shall
be satisfactory to the Lender in form and content, and
the Lender may reject such of them as do not meet the
requirements of this Agreement or of the related
Purchase Commitment.
4.2(c) The Lender shall have received
evidence satisfactory to it as to the making and/or
continuation of any book entry or the due filing and
recording in all appropriate offices of all financing
statements and other instruments as may be necessary to
perfect the security interest of the Lender in the
Collateral under the Uniform Commercial Code of
Minnesota or other applicable law.
4.2(d) The representations and warranties
of the Company contained in Article 5 hereof shall be
accurate and complete in all material respects as if
made on and as of the date of each Advance.
4.2(e) The Company shall have performed
all agreements to be performed by it hereunder, and
after giving effect to the requested Advance, there
shall exist no Default or Event of Default hereunder.
4.2(f) The Company shall not have incurred
any material liabilities, direct or contingent, other
than in the ordinary course of its business, since the
Statement Date.
4.2(g) The Lender shall have received from
counsel for the Company , if requested by the Lender in
its sole discretion, an updated opinion, in form and
substance satisfactory to the Lender, addressed to the
Lender and dated as of the date of such Advance,
covering such of the matters as the Lender may
reasonably request.
Delivery of an Advance Request by the Company shall be
deemed a representation by the Company that all conditions
set forth in this Section 4.2 shall have been satisfied as
of the date of such Advance.
5. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the
Lender, as of the date of this Agreement and as of the date
of each Advance Request and the making of each Advance,
that:
5.1 Organization; Good Standing; Subsidiaries. The
Company and each Subsidiary of the Company is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, has the
full legal power and authority to own its property and to
carry on its business as currently conducted and is duly
qualified as a foreign corporation to do business and is in
good standing in each jurisdiction in which the transaction
of its business makes such qualification necessary, except
in jurisdictions, if any, where a failure to be in good
standing has no material adverse effect on the business,
operations, assets or financial condition of the Company or
any such Subsidiary. For the purposes hereof, good standing
shall include qualification for any and all licenses and
payment of any and all taxes required in the jurisdiction of
its incorporation and in each jurisdiction in which the
Company transacts business. The Company has no Subsidiaries
except as set forth on Exhibit G hereto. Exhibit G sets
forth with respect to each such Subsidiary, its name,
address, place of incorporation, each state in which it is
qualified as a foreign corporation, and the percentage
ownership of its capital stock by the Company.
5.2 Authorization and Enforceability. The Company has
the power and authority to execute, deliver and perform this
Agreement, the Note relating to the requested Advance and
all other Loan Documents to which the Company is party and
to make the borrowings hereunder. The execution, delivery
and performance by the Company of this Agreement, the Note
relating to the requested Advance and all other Loan
Documents to which the Company is party and the making of
the borrowings hereunder and thereunder, have been duly and
validly authorized by all necessary corporate action on the
part of the Company (none of which actions has been modified
or rescinded, and all of which actions are in full force and
effect) and do not and will not conflict with or violate any
provision of law, of any judgments binding upon the Company,
or of the articles of incorporation or by-laws of the
Company, conflict with or result in a breach of or
constitute a default or require any consent under, or result
in the creation of any Lien upon any property or assets of
the Company other than the Lien on the Collateral granted
hereunder, or result in or require the acceleration of any
indebtedness of the Company pursuant to any agreement,
instrument or indenture to which the Company is a party or
by which the Company or its property may be bound or
affected. This Agreement, the Note relating to the
requested Advance and all other Loan Documents contemplated
hereby or thereby constitute legal, valid, and binding
obligations of the Company, enforceable in accordance with
their respective terms, except as limited by bankruptcy,
insolvency or other such laws affecting the enforcement of
creditors' rights.
5.3 Approvals. The execution and delivery of this
Agreement, the Note relating to the requested Advance and
all other Loan Documents and the performance of the
Company's obligations hereunder and thereunder and the
validity and enforceability hereof and thereof do not
require any license, consent, approval or other action of
any state or federal agency or governmental or regulatory
authority other than those which have been obtained and
remain in full force and effect.
5.4 Financial Condition. The balance sheet of the
Company (and, if applicable, its Subsidiaries, on a
consolidated basis) as at the Statement Date, and the
related statements of income and changes in stockholders'
equity for the fiscal period ended on the Statement Date,
heretofore furnished to the Lender, fairly present the
financial condition of the Company (and its Subsidiaries) as
at the Statement Date and the results of its operations for
the fiscal period ended on the Statement Date. At the
present time there are no material unrealized or anticipated
losses from any loans, advances or other commitments of the
Company except as heretofore disclosed to the Lender in
writing. Said financial statements were prepared in
accordance with GAAP applied on a consistent basis
throughout the periods involved. Since the Statement Date,
there has been no material adverse change in the business,
operations, assets or financial condition of the Company
(and its Subsidiaries), nor is the Company aware of any
state of facts which (with or without notice or lapse of
time or both) would or could result in any such material
adverse change.
5.5 Litigation. There are no actions, claims, suits
or proceedings pending or, to the knowledge of the Company,
threatened or reasonably anticipated against or affecting
the Company or any Subsidiary of the Company in any court or
before any arbitrator or before any government commission,
board, bureau or other administrative agency which may
reasonably be expected to result in any material and adverse
change in the business, operations, assets or financial
condition of the Company as a whole, or which would affect
the validity or enforceability of this Agreement, the Notes
or any other Loan Document.
5.6 Compliance with Laws. Neither the Company nor any
Subsidiary of the Company is in violation of any provision
of any law, or of any judgment, award, rule, regulation,
order, decree, writ or injunction of any court or public
regulatory body or authority which might have a material
adverse effect on the business, operations, assets or
financial condition of the Company as a whole or which would
affect the validity or enforceability of this Agreement, the
Notes or any other Loan Document.
5.7 Regulations G and U. The Company is not engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing
or carrying Margin Stock, and no part of the proceeds of any
Advances made hereunder will be used to purchase or carry
any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock.
5.8 Investment Company Act. The Company is not an
"investment company" or controlled by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
5.9 Payment of Taxes. The Company and each of its
Subsidiaries has filed or caused to be filed all federal,
state and local income, excise, property and other tax
returns with respect to the operations of the Company and
its Subsidiaries which are required to be filed, all such
returns are true and correct, and the Company and each of
its Subsidiaries has paid or caused to be paid all taxes as
shown on such returns or on any assessment, to the extent
that such taxes have become due, including, but not limited
to, all FICA payments and withholding taxes, if appropriate.
5.10 Agreements. Neither the Company nor any
Subsidiary of the Company is a party to any agreement,
instrument or indenture or subject to any restriction
materially and adversely affecting its business, operations,
assets or financial condition, except as disclosed in the
financial statements described in Section 5.4 hereof.
Neither the Company nor any Subsidiary of the Company is in
default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any
agreement, instrument, or indenture which default could have
a material adverse effect on the business, operations,
properties or financial condition of the Company as a whole.
No holder of any indebtedness of the Company or of any of
its Subsidiaries has given notice of any asserted default
thereunder, and no liquidation or dissolution of the Company
or of any of its Subsidiaries and no receivership,
insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Company or of any of its
Subsidiaries or any of its properties is pending, or to the
knowledge of the Company, threatened.
5.11 Title to Properties. The Company and each
Subsidiary of the Company has good, valid, insurable (in the
case of real property) and marketable title to all of its
properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described
in Section 5.4 hereof, except for such properties and assets
as have been disposed of since the date of such financial
statements as no longer used or useful in the conduct of its
business or as have been disposed of in the ordinary course
of business, and all such properties and assets are free and
clear of all Liens except as disclosed in such financial
statements.
5.12 ERISA. All plans ("Plans") of a type described in
Section 3(3) of ERISA in respect of which the Company or any
Subsidiary of the Company is an "Employer," as defined in
Section 3(5) of ERISA, are in substantial compliance with
ERISA, and none of such Plans is insolvent or in
reorganization, has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Internal
Revenue Code, and neither the Company nor any Subsidiary of
the Company has incurred any material liability (including
any material contingent liability) to or on account of any
such Plan pursuant to Sections 4062, 4063, 4064, 4201 or
4204 of ERISA; and no proceedings have been instituted to
terminate any such Plan, and no condition exists which
presents a material risk to the Company or a Subsidiary of
the Company of incurring a liability to or on account of any
such Plan pursuant to any of the foregoing Sections of
ERISA. No Plan or trust forming a part thereof has been
terminated since September 1, 1974.
5.13 Eligibility. The Company is approved and
qualified and in good standing as a lender or
seller/servicer, as set forth below, and meets all
requirements applicable to its status as such:
5.13(a) FHLMC approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold,
sell and service Multifamily Mortgage Loans to be sold
to FHLMC.
5.14 Place of Business. The principal place of
business of the Company is 1845 Woodall Rodgers Freeway,
Suite 1700, Dallas, Texas 75201.
5.15 Special Representations Concerning Collateral.
The Company hereby represents and warrants to the Lender, as
of the date of this Agreement and as of the date of each
Advance Request and the making of each Advance, that:
5.15(a) The Company is the legal and
equitable owner and holder, free and clear of all Liens
(other than Liens granted hereunder), of the Pledged
Mortgages and the Pledged Securities. All Pledged
Mortgages, Pledged Securities and Purchase Commitments
have been duly authorized and validly issued to the
Company, and all of the foregoing items of Collateral
comply with all of the requirements of this Agreement,
and have been and will continue to be validly pledged
or assigned to the Lender, subject to no other Liens.
5.15(b) The Company has, and will continue
to have, the full right, power and authority to pledge
the Collateral pledged and to be pledged by it
hereunder.
5.15(c) Any Mortgage Loan and any related
document included in the Pledged Mortgages (1) has been
duly executed and delivered by the parties thereto at a
closing held not more than fifteen (15) days prior to
the date of the Advance Request for such Mortgage Loan,
(2) has been made in compliance with all applicable
requirements of the Real Estate Settlement Procedures
Act, Equal Credit Opportunity Act, the federal
Truth-In-Lending Act and all other applicable laws and
regulations, (3) is and will continue to be valid and
enforceable in accordance with its terms, without
defense or offset, (4) has not been modified or amended
except in writing, which writing is part of the
Collateral Documents, nor any requirements thereof
waived, (5) has been evaluated or appraised in
accordance with Title XI of FIRREA, and (6) complies
and will continue to comply with the terms of this
Agreement and with the related Purchase Commitment held
by the Company. Each Mortgage Loan has been fully
advanced in the face amount thereof and each Mortgage
is a first Lien on the premises described therein, and
has or will have a title insurance policy, in American
Land Title Association form or equivalent thereof, from
a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the
usual requirements of Investors purchasing such
Mortgage Loans.
5.15(d) No default has occurred under any
Mortgage Loan to be included in the Pledged Mortgages,
and, if any default has occurred with respect to the
Pledged Mortgages, the Company will promptly notify the
Lender.
5.15(e) All fire and casualty policies
covering the premises encumbered by each Mortgage
included in the Pledged Mortgages (1) name and will
continue to name the Company and its successors and
assigns as the insured under a standard mortgagee
clause, (2) are and will continue to be in full force
and effect, and (3) afford and will continue to afford
insurance against fire and such other risks as are
usually insured against in the broad form of extended
coverage insurance from time to time available.
5.15(f) Pledged Mortgages secured by
premises located in a special flood hazard area
designated as such by the Director of the Federal
Emergency Management Agency and shall continue to be
covered by special flood insurance under the National
Flood Insurance Program.
5.15(g) Each Pledged Mortgage, against
which an Advance is made on the basis of a Purchase
Commitment, meets all requirements of such Purchase
Commitment. The Company shall assure that Pledged
Mortgages which are intended to be used in the
formation of Mortgage-backed Securities shall comply
or, prior to the formation of any such Mortgage-backed
Security, shall comply with the requirements of the
governmental instrumentality, department or agency
guaranteeing such Mortgage-backed Security.
5.16 Servicing. All of the Company's Servicing
Contracts are in full force and effect, and except as
otherwise indicated, are unencumbered by Liens. No default
or event which, with notice or lapse of time or both, would
become a default, exists under any such Servicing Contract.
6. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees that, so long
as any Advance is outstanding or there remain any
Obligations to be paid or performed under this Agreement or
under any other Loan Document, the Company shall:
6.1 Payment of Notes. Punctually pay or cause to be
paid all Obligations payable hereunder and under the Notes
in accordance with the terms hereof and thereof.
6.2 Financial Statements and Other Reports. Deliver
to the Lender:
6.2(a) As soon as available and in any
event within ninety (90) days after the close of each
fiscal year of the Parent, statements of income,
changes in stockholders' equity and cash flows of the
Parent (and, if applicable, its Subsidiaries, on a
consolidated basis) for such year, and the related
balance sheet as at the end of such year (setting forth
in comparative form the corresponding figures for the
preceding fiscal year), all in reasonable detail and
accompanied by an opinion in form and substance
satisfactory to the Lender and prepared by an
accounting firm reasonably satisfactory to the Lender,
or other independent certified public accountants of
recognized standing selected by the Parent and
acceptable to the Lender, as to said financial
statements and a certificate signed by the chief
accounting officer of the Parent stating that said
financial statements fairly present the financial
condition and results of operations of the Parent (and,
if applicable, its Subsidiaries) as at the end of, and
for, such year.
6.2(b) As soon as available and in any
event within ninety (90) days after the close of each
fiscal year of the Company, statements of income,
changes in stockholders' equity and cash flows of the
Company (and, if applicable, its Subsidiaries, on a
consolidated basis) for such year, and the related
balance sheet as at the end of such year (setting forth
in comparative form the corresponding figures for the
preceding fiscal year), all in reasonable detail and a
certificate signed by the chief accounting officer of
the Company stating that said financial statements
fairly present the financial condition and results of
operations of the Company (and, if applicable, its
Subsidiaries) as at the end of, and for, such year.
Notwithstanding the above, if at any time the financial
statements of the Company are prepared by an
independent certified public accountant, then the
Company shall provide the audited financial statements
to the Lender.
6.2(c) As soon as available and in any
event within ninety (90) days after the close of each
fiscal year of the Company, an Annual Agreed Upon
Procedures Report prepared by an independent certified
public accountant which report certifies that the
Company was operating within FHLMC guidelines.
6.2(d) As soon as available and in any
event within ninety (90) days after the end of each
fiscal year of the Company, a consolidated report (the
"Loan Production Report") as of the end of the fiscal
year, presenting the total dollar volume and the number
of Mortgage Loans originated or purchased during the
fiscal year, specified by property type and loan type
or Investor (e.g. FHA, GNMA, FNMA, FHLMC and other.)
6.2(e) As soon as available and in any
event within forty-five (45) days after the close of
each calendar quarter, statements of income and changes
in stockholders' equity of the Company (and, if
applicable its Subsidiaries, on a consolidated basis)
for the period from the beginning of the Company's
fiscal year to the end of the immediately preceding
month, and the related balance sheet as at the end of
such calendar quarter, all in reasonable detail and
certified as to the fairness of presentation by the
chief accounting officer of the Company, subject,
however, to year-end audit adjustments.
6.2(f) As soon as available and in any
event within forty-five (45) days after the close of
each calendar quarter, a consolidated report (the
"Servicing Portfolio Report") as of the end of the
immediately preceding calendar quarter detailing the
Company's Servicing Portfolio (specified by investor,
type, recourse and non-recourse) which report shall
indicate Mortgage Loans which (A) are current and in
good standing, (B) are more than 30, 60 or 90 days past
due, respectively, (D) are the subject of pending
bankruptcy or foreclosure proceedings, or (E) have been
converted (through foreclosure or other proceedings in
lieu thereof) by the Company into real estate owned by
the Company.
6.2(g) As soon as available and in any
event within sixty (60) days after receipt thereof by
the Company, copies of the most recent audits completed
by FNMA, FHLMC or HUD. Copies of the most recent
Mortgage Bankers' Financial Reporting Forms (FHLMC Form
1055/FNMA Form 1002) which the Company shall have
filed.
6.2(h) From time to time, with reasonable
promptness, such further information regarding the
business, operations, properties or financial condition
of the Company as the Lender may reasonably request.
6.3 Maintenance of Existence; Conduct of Business.
Preserve and maintain its corporate existence in good
standing and all of its rights, privileges, licenses and
franchises necessary or desirable in the normal conduct of
its business, including, without limitation, its eligibility
as lender, seller/servicer and issuer described under
Section 5.13 hereof; conduct its business in an orderly and
efficient manner; maintain a net worth of acceptable assets
as required at any and all times for maintaining the
Company's status as a FHA, FNMA or FHLMC approved mortgagee
or GNMA issuer; and make no change in the nature or
character of its business or engage in any business in which
it was not engaged on the date of this Agreement.
6.4 Compliance with Applicable Laws. Comply with the
requirements of all applicable laws, rules, regulations and
orders of any governmental authority, a breach of which
could materially adversely affect its business, operations,
assets, or financial condition, except where contested in
good faith and by appropriate proceedings.
6.5 Inspection of Properties and Books. Permit
authorized representatives of the Lender to discuss the
business, operations, assets and financial condition of the
Company and its Subsidiaries with its officers and employees
and to examine its books of account and make copies or
extracts thereof, all at such reasonable times as the Lender
may request. The Company will instruct its accountants to
answer candidly any and all questions that the officers of
the Lender or any Participant or any authorized
representatives of the Lender or any Participant may address
to them in reference to the financial condition or affairs
of the Company and its Subsidiaries. The Company may have
its representatives in attendance at any meetings between
the officers or other representatives of the Lender or any
Participant and the Company accountants held in accordance
with this authorization. Notwithstanding the above, the
Lender and all Participants agree to give the Company prior
Notice before meeting with the Company's accountants.
6.6 Payment of Debt, Taxes, etc. Pay and perform all
obligations and indebtedness of the Company, and cause to be
paid and performed all obligations and indebtedness of its
Subsidiaries, promptly and in accordance with the terms
thereof and pay and discharge or cause to be paid and
discharged promptly all taxes, assessments and governmental
charges or levies imposed upon the Company or its
Subsidiaries or upon their respective income, receipts or
properties before the same shall become past due, as well as
all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might become a Lien or charge
upon such properties or any part thereof; provided, however,
that the Company and its Subsidiaries shall not be required
to pay taxes, assessments or governmental charges or levies
or claims for labor, materials or supplies for which the
Company or its Subsidiaries shall have obtained an adequate
bond or adequate insurance or which are being contested in
good faith and by proper proceedings which are being
reasonably and diligently pursued and for which proper
reserves have been created.
6.7 Insurance. Maintain (a) errors and omissions
insurance or mortgage impairment insurance, and blanket bond
coverage, with such companies and in such amounts as satisfy
prevailing HUD, FNMA, FHLMC and GNMA requirements applicable
to a qualified mortgage originating institution, and (b)
liability insurance and fire and other hazard insurance on
its properties, with responsible insurance companies
approved by the Lender, in such amounts and against such
risks as is customarily carried by similar businesses
operating in the same vicinity.
6.8 Closing Instructions. Indemnify and hold the
Lender harmless from and against any loss, including
reasonable attorneys' fees and costs, attributable to the
failure of a title insurance company, agent or approved
attorney to comply with the disbursement or instruction
letter or letters of the Company relating to any Mortgage
Loan. The Lender shall have the right to pre-approve the
closing instructions of the Company to the title insurance
company, agent or attorney in any case where the Mortgage
Loan to be created at settlement is intended to be
warehoused by the Company to be included as Collateral
pursuant hereto.
6.9 Subordination of Certain Indebtedness. Cause any
indebtedness of the Company, incurred after the date of this
Agreement, to any shareholder, director or officer of the
Company, or to any Affiliate of the Company or of any
Subsidiary of the Company, to be subordinated to all
Obligations, by the execution of a Subordination of Debt
Agreement in the form of Exhibit F hereto and deliver to the
Lender an executed copy of said Agreement, certified by the
corporate secretary of the Company to be true and complete
and in full force and effect.
6.10 Other Loan Obligations. Exhibit J hereto is a
true and complete list of all such lines of credit or
agreements with other lenders as of the date hereof and the
Company hereby agrees to give the Lender Notice of the
addition of new lines of credit or agreements.
6.11 Use of Proceeds of Advances. Use the proceeds of
each Advance solely for the purpose of financing or
purchasing Pledged Mortgages, including the issuance of
Mortgage-backed Securities based thereon.
6.12 Special Affirmative Covenants Concerning
Collateral. The Company hereby covenants and agrees that,
so long as any Advance is outstanding or there remain any
Obligations to be paid or performed under this Agreement or
under any other Loan Document, the Company shall:
6.12(a) Warrant and defend the right, title
and interest of the Lender in and to the Collateral
against the claims and demands of all Persons
whomsoever.
6.12(b) Service or cause to be serviced all
Mortgage Loans in accordance with the standard
requirements of the issuers of Purchase Commitments
covering the same and all applicable HUD, FNMA and
FHLMC requirements, including without limitation
taking all actions necessary to enforce the obligations
of the obligors under such Mortgage Loans. The Company
shall service or cause to be serviced all Mortgage
Loans backing Pledged Securities in accordance with
applicable governmental requirements and requirements
of issuers of Purchase Commitments covering the same.
The Company shall hold all escrow funds collected in
respect of Pledged Mortgages and Mortgage Loans backing
Pledged Securities in trust, without commingling the
same with non-custodial funds, and apply the same for
the purposes for which such funds were collected.
6.12(c) Execute and deliver to the Lender
such Uniform Commercial Code financing statements with
respect to the Collateral as the Lender may request.
The Company shall also execute and deliver to the
Lender such further instruments of sale, pledge or
assignment or transfer, and such powers of attorney, as
required by the Lender, and shall do and perform all
matters and things necessary or desirable to be done or
observed, for the purpose of effectively creating,
maintaining and preserving the security and benefits
intended to be afforded the Lender under this
Agreement. The Lender shall have all the rights and
remedies of a secured party under the Uniform
Commercial Code of Minnesota, or any other applicable
law, in addition to all rights provided for herein.
6.12(d) Notify the Lender within two (2)
Business Days of any default under, or of the
termination of, any Purchase Commitment relating to any
Pledged Mortgage, or Pledged Security.
6.12(e) Promptly comply in all respects
with the terms and conditions of all Purchase
Commitments, and all extensions, renewals and
modifications or substitutions thereof or thereto. The
Company will cause to be delivered to the Investor the
Pledged Mortgages and Pledged Securities to be sold
under each Purchase Commitment not later than three (3)
Business Days prior to the mandatory delivery date
thereof.
6.12(f) Maintain, at its principal office
or in a regional office approved by the Lender, or in
the office of a computer service bureau engaged by the
Company and approved by the Lender, and, upon request,
shall make available to the Lender the originals, or
copies in any case where the originals have been
delivered to the Lender or to an Investor, of its
Mortgage Notes and Mortgages included in Pledged
Mortgages, Mortgage-backed Securities delivered to the
Lender as Pledged Securities, Purchase Commitments, and
all related Mortgage Loan documents and instruments,
and all files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards,
accounting records and other information and data
relating to the Collateral.
7. NEGATIVE COVENANTS.
The Company hereby covenants and agrees that, so long
as any Advance is outstanding or there remain any
Obligations to be paid or performed, the Company shall not,
either directly or indirectly, without the prior written
consent of the Lender:
7.1 Contingent Liabilities. Assume, guarantee,
endorse, or otherwise become contingently liable for the
obligation of any Person except by endorsement of negotiable
instruments for deposit or collection in the ordinary course
of business and excluding the sale of Mortgage Loans with
recourse in the ordinary course of the Company's business.
7.2 Merger; Sale of Assets; Acquisitions. Except in
the ordinary course of business, liquidate, dissolve,
consolidate or merge or sell any substantial part of its
assets, or acquire any substantial part of the assets of
another.
7.3 Deferral of Subordinated Debt. During such time
as an Advance is outstanding hereunder, pay in advance of
the stated maturity thereof any Subordinated Debt of the
Company or, if a Default or Event of Default hereunder shall
have occurred, make any payment of any kind thereafter on
such Subordinated Debt until all Obligations have been paid
and performed in full and any applicable preference period
has expired.
7.4 Loss of Eligibility. Take any action that would
cause the Company to lose all or any part of its status as
an eligible lender, seller/servicer and issuer as described
under Section 5.13 hereof.
7.5 Debt to Tangible Net Worth Ratio. Permit the
ratio of Debt to Tangible Net Worth of the Company (and its
Subsidiaries, on a consolidated basis) at any time to exceed
20 to 1.
7.6 Minimum Tangible Net Worth. Permit Tangible Net
Worth of the Company (and its Subsidiaries, on a
consolidated basis) at any time to be less than Five Hundred
Thousand Dollars ($500,000).
7.7 Minimum Servicing Portfolio. Permit the Servicing
Portfolio of the Company to be less than Fifty Million
Dollars ($50,000,000).
7.8 Special Negative Covenants Concerning Collateral.
7.8(a) The Company shall not amend or
modify, or waive any of the terms and conditions of, or
settle or compromise any claim in respect of, any
Pledged Mortgages or Pledged Securities.
7.8(b) The Company shall not sell, assign,
transfer or otherwise dispose of, or grant any option
with respect to, or pledge or otherwise encumber
(except pursuant to this Agreement or as permitted
herein) any of the Collateral or any interest therein.
7.8(c) The Company shall not make any
compromise, adjustment or settlement in respect of any
of the Collateral or accept other than cash in payment
or liquidation of the Collateral.
8. DEFAULTS; REMEDIES.
8.1 Events of Default. The occurrence of any of the
following conditions or events shall be an event of default
("Event of Default"):
8.1(a) Failure to pay the principal of any
Advance when due, whether at stated maturity, by
acceleration, or otherwise; or failure to pay any
installment of interest on any Advance or any other
amount due under this Agreement within ten (10) days
after the due date; or failure to pay, within any
applicable grace period, the principal or interest on
any other indebtedness due the Lender; or
8.1(b) Failure of the Company or any of
its Subsidiaries to pay, or any default in the payment
of any principal or interest on, any other indebtedness
or in the payment of any contingent obligation within
any period of grace provided; breach or default with
respect to any other material term of any other
indebtedness or of any loan agreement, mortgage,
indenture or other agreement relating thereto, if the
effect of such breach or default is to cause, or to
permit the holder or holders thereof (or a trustee on
behalf of such holder or holders) to cause,
indebtedness of the Company or its Subsidiaries in the
aggregate amount of Fifty Thousand Dollars ($50,000) or
more to become or be declared due prior to its stated
maturity (upon the giving or receiving of notice, lapse
of time, both, or otherwise); or
8.1(c) Failure of the Company to perform
or comply with any term or condition applicable to it
contained in Sections 6.3, 6.11 and 6.12 or in any
Section of Article 7 of this Agreement; or
8.1(d) Any of the Company's
representations or warranties made or deemed made
herein or in any other Loan Document, or in any
statement or certificate at any time given by the
Company in writing pursuant hereto or thereto shall be
inaccurate or incomplete in any material respect on the
date as of which made or deemed made; or
8.1(e) The Company shall default in the
performance of or compliance with any term contained in
this Agreement other than those referred to above in
Subsections 8.1(a), 8.1(c) or 8.1(d) and such default
shall not have been remedied or waived within thirty
(30) days after the earliest of (i) receipt by the
Company of Notice from the Lender of such default, or
(ii) receipt by the Lender of Notice from the Company
of such default.
8.1(f) (1) A court having jurisdiction shall
enter a decree or order for relief in respect of the
Company, any Subsidiary of the Company in an
involuntary case under any applicable bankruptcy,
insolvency or other similar law in respect of the
Company, any Subsidiary of the Company now or hereafter
in effect, which decree or order is not stayed; or a
filing of a voluntary case under any applicable
bankruptcy, insolvency or other similar law in respect
of the Company, any Subsidiary of the Company has
occurred; any other similar relief shall be granted
under any applicable federal or state law; or (2) the
filing of any involuntary case in respect of the
Company, any Subsidiary of the Company or under any
applicable bankruptcy, insolvency or other similar law;
a decree or order of a court having jurisdiction for
the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer
having similar powers over the Company, any Subsidiary
of the Company, or over all or a substantial part of
their respective property, shall have been entered; or
the involuntary appointment of an interim or permanent
receiver, trustee or other custodian of the Company,
any Subsidiary of the Company for all or a substantial
part of their respective property; or the issuance of a
warrant of attachment, execution or similar process
against any substantial part of the property of the
Company, any Subsidiary of the Company, and the
continuance of any such events in Subsection (2) above
for sixty (60) days unless dismissed, bonded off or
discharged; or
8.1(g) The Company, any Subsidiary of the
Company shall consent to the entry of an order for
relief in an involuntary case, or to the conversion to
an involuntary case, under any such law, or shall
consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a
substantial part of its property; the making by the
Company, any Subsidiary of the Company of any
assignment for the benefit of creditors; or the
inability or failure of the Company, any Subsidiary of
the Company, or the admission by the Company, any
Subsidiary of the Company in writing of its inability,
to pay its debts as such debts become due; or
8.1(h) Failure of the Company to perform
any contractual obligations which it may have to
repurchase Mortgage Loans, if such obligations in the
aggregate exceed One Million Dollars ($1,000,000); or
8.1(i) Any money judgment, writ or warrant
of attachment, or similar process involving in any case
an amount in excess of One Hundred Thousand Dollars
($100,000) shall be entered or filed against the
Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
8.1(j) Any order, judgment or decree shall
be entered against the Company decreeing the
dissolution or split up of the Company and such order
shall remain undischarged or unstayed for a period in
excess of twenty (20) days; or
8.1(k) Any Plan maintained by the Company
or any of its Subsidiaries shall be terminated within
the meaning of Title IV of ERISA or a trustee shall be
appointed by an appropriate United States district
court to administer any Plan, or the Pension Benefit
Guaranty Corporation (or any successor thereto) shall
institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the
date thereof the Company's liability or any such
Subsidiary's liability (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty
Corporation (or any successor thereto) for unfunded
guaranteed vested benefits under the Plan exceeds the
then current value of assets accumulated in such Plan
by more than Twenty-Five Thousand Dollars ($25,000) (or
in the case of a termination involving the Company or
any of its Subsidiaries as a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA) the withdrawing
employer's proportionate share of such excess shall
exceed such amount); or
8.1(l) The Company or any of its
Subsidiaries as employer under a Multiemployer Plan
shall have made a complete or partial withdrawal from
such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal
liability in an annual amount exceeding Twenty-Five
Thousand Dollars ($25,000); or
8.1(m) The Company shall purport to
disavow its obligations hereunder or shall contest the
validity or enforceability hereof; or the Lender's
security interest on any portion of the Collateral
shall become unenforceable or otherwise impaired;
provided that, subject to the Lender's approval, no
Event of Default shall occur as a result of such
impairment if all Advances made against any such
Collateral shall be paid in full within ten (10) days
of the date of such impairment; or
8.1(n) (a) The Parent shall consent to the
appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or
relating to the Parent or of or relating to all or
substantially all of its property, or (b) a decree or
order of a court or agency or supervisory authority
having jurisdiction over the Parent for the appointment
of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or the winding
up or liquidation of its affairs, shall have been
entered against the Parent, or (c) the Parent shall
admit in writing its inability to pay its debts
generally as they become due, file a petition to take
advantage of any applicable insolvency or
reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment
of its obligations; or
8.1(o) There shall be a material adverse
change in the financial condition, business or
operations of the Company.
8.2 Remedies.
8.2(a) Upon the occurrence of any Event of
Default described in Sections 8.1(f) or 8.1(g), the
unpaid principal amount of and accrued interest on the
Notes and all other Obligations shall automatically
become due and payable, without presentment, demand or
other requirements of any kind, all of which are hereby
expressly waived by the Company.
8.2(b) Upon the occurrence of any Event of
Default, other than those described in Sections 8.1(f)
and 8.1(g), the Lender may, by Notice to the Company,
declare all Obligations to be immediately due and
payable, whereupon the same shall forthwith become due
and payable, together with all accrued interest
thereon, and the obligation of the Lender to make any
Advances shall thereupon terminate.
8.2(c) Upon the occurrence of any Event of
Default, the Lender may also do any of the following:
(1) Foreclose upon or otherwise
enforce its security interest in and Lien on the
Collateral to secure all payments and performance
of the Obligations in any manner permitted by law
or provided for hereunder.
(2) Notify all obligors in respect
of Collateral that the Collateral has been
assigned to the Lender and that all payments
thereon are to be made directly to the Lender or
such other party as may be designated by the
Lender; settle, compromise, or release, in whole
or in part, any amounts owing on the Collateral,
any such obligor or any Investor or any portion of
the Collateral, on terms acceptable to the Lender;
enforce payment and prosecute any action or
proceeding with respect to any and all Collateral;
and where any such Collateral is in default,
foreclose on and enforce security interests in,
such Collateral by any available judicial
procedure or without judicial process and sell
property acquired as a result of any such
foreclosure.
(3) Act, or contract with a third
party to act, as servicer or subservicer of each
item of Collateral requiring servicing and perform
all obligations required in connection with
Servicing Contracts and Purchase Commitments, such
third party's fees to be paid by the Company.
(4) Require the Company to
assemble the Collateral and/or books and records
relating thereto and make such available to the
Lender at a place to be designated by the Lender.
(5) Enter onto property where any
Collateral or books and records relating thereto
are located and take possession thereof with or
without judicial process.
(6) Prior to the disposition of
the Collateral, prepare it for disposition in any
manner and to the extent the Lender deems
appropriate.
(7) Exercise all rights and
remedies of a secured creditor under the Uniform
Commercial Code of Minnesota or other applicable
law, including, but not limited to, selling or
otherwise disposing of the Collateral, or any part
thereof, at one or more public or private sales,
whether or not such Collateral is present at the
place of sale, for cash or credit or future
delivery, on such terms and in such manner as the
Lender may determine, including, without
limitation, sale pursuant to any applicable
Purchase Commitment. If notice is required under
such applicable law, the Lender will give the
Company not less than ten (10) days' notice of any
such public sale or of the date after which any
private sale may be held. The Company agrees that
ten (10) days' notice shall be reasonable notice.
The Lender may, without notice or publication,
adjourn any public or private sale or cause the
same to be adjourned from time to time by
announcement at the time and place fixed for the
sale, and such sale may be made at any time or
place to which the same may be so adjourned. In
case of any sale of all or any part of the
Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Lender
until the selling price is paid by the purchaser
thereof, but the Lender shall not incur any
liability in case of the failure of such purchaser
to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may
again be sold upon like notice. The Lender may,
however, instead of exercising the power of sale
herein conferred upon it, proceed by a suit or
suits at law or in equity to collect all amounts
due upon the Collateral or to foreclose the pledge
of and sell the Collateral or any portion thereof
under a judgment or decree of a court or courts of
competent jurisdiction, or both.
(8) Proceed against the Company on
the Notes.
8.2(d) The Lender shall incur no liability
as a result of the sale or other disposition of the
Collateral, or any part thereof, at any public or
private sale or disposition. The Company hereby waives
(to the extent permitted by law) any claims it may have
against the Lender arising by reason of the fact that
the price at which the Collateral may have been sold at
such private sale was less than the price which might
have been obtained at a public sale or was less than
the aggregate amount of the outstanding Advances and
the unpaid interest accrued thereon, even if the Lender
accepts the first offer received and does not offer the
Collateral to more than one offeree. Any sale of
Collateral pursuant to the terms of a Purchase
Commitment shall be deemed to have been made in a
commercially reasonable manner.
8.2(e) The Company acknowledges that
Mortgage Loans and Mortgage-backed Securities are
collateral of a type which is customarily sold on a
recognized market. The Company waives any right it may
have to prior notice of the sale of any Pledged
Mortgage or Pledged Security.
8.2(f) The Company specifically waives and
releases (to the extent permitted by law) any equity or
right of redemption, all rights of redemption, stay or
appraisal which the Company has or may have under any
rule of law or statute now existing or hereafter
adopted, and any right to require the Lender to (1)
proceed against any Person, (2) proceed against or
exhaust any of the Collateral or pursue its rights and
remedies as against the Collateral in any particular
order, or (3) pursue any other remedy in its power.
The Lender shall not be required to take any steps
necessary to preserve any rights of the Company against
holders of mortgages prior in lien to the Lien of any
Mortgage included in the Collateral or to preserve
rights against prior parties.
8.2(g) The Lender may, but shall not be
obligated to, advance any sums or do any act or thing
necessary to uphold and enforce the Lien and priority
of, or the security intended to be afforded by, any
Mortgage included in the Collateral, including, without
limitation, payment of delinquent taxes or assessments
and insurance premiums. All advances, charges, costs
and expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Lender in
exercising any right, power or remedy conferred by this
Agreement, or in the enforcement hereof, together with
interest thereon, at the Default Rate, from the time of
payment until repaid, shall become a part of the
principal balance outstanding hereunder and under the
Notes.
8.2(h) No failure on the part of the
Lender to exercise, and no delay in exercising, any
right, power or remedy provided hereunder, at law or in
equity shall operate as a waiver thereof; nor shall any
single or partial exercise by the Lender of any right,
power or remedy provided hereunder, at law or in equity
preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. Without
intending to limit the foregoing, all defenses based on
the statute of limitations are hereby waived by the
Company to the extent permitted by law. The remedies
herein provided are cumulative and are not exclusive of
any remedies provided at law or in equity.
8.3 Application of Proceeds. The proceeds of any
sale, disposition or other enforcement of the Lender's
security interest in all or any part of the Collateral shall
be applied by the Lender:
First, to the payment of the costs and expenses of such
sale or enforcement, including reasonable compensation to
the Lender's agents and counsel, and all expenses,
liabilities and advances made or incurred by or on behalf of
the Lender in connection therewith;
Second, to the payment of interest accrued and unpaid
on the Notes;
Third, to the payment of any other Obligations due
(other than principal and interest) under the Notes or this
Agreement;
Fourth, to the payment of the outstanding principal
balance of the Notes; and
Finally, to the payment to the Company, or to its
successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining from
such proceeds.
If the proceeds of any such sale, disposition or other
enforcement are insufficient to cover the costs and expenses
of such sale, as aforesaid, and the payment in full of all
Obligations, the Company shall remain liable for any
deficiency.
8.4 Lender Appointed Attorney-in-Fact. The Lender is
hereby appointed the attorney-in-fact of the Company, with
full power of substitution, for the purpose of carrying out
the provisions hereof and taking any action and executing
any instruments which the Lender may deem necessary or
advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled
with an interest. Without limiting the generality of the
foregoing, the Lender shall have the right and power to give
notices of its security interest in the Collateral to any
Person, either in the name of the Company or in its own
name, to endorse all Pledged Mortgages or Pledged Securities
payable to the order of the Company, to change or cause to
be changed the book-entry registration or name of subscriber
or Investor on any Pledged Security, or to receive, endorse
and collect all checks made payable to the order of the
Company representing any payment on account of the principal
of or interest on, or the proceeds of sale of, any of the
Pledged Mortgages or Pledged Securities and to give full
discharge for the same.
8.5 Right of Set-Off. If the Company shall default in
the payment of the Notes or any Note, any interest accrued
thereon, or any other sums which may become payable
hereunder when due, or in the performance of any of its
other obligations or liabilities under this Agreement, the
Lender, shall have the right, at any time and from time to
time, without notice, to set-off and to appropriate or apply
any and all property or indebtedness of any kind at any time
held or owing by the Lender to or for the credit or the
account of the Company against and on account of the
Obligations, irrespective of whether or not the Lender shall
have made any demand hereunder and whether or not said
Obligations shall have matured.
9. NOTICES.
All notices, demands, consents, requests and other
communications required or permitted to be given or made
hereunder (collectively, "Notices") shall, except as
otherwise expressly provided hereunder, be in writing and
shall be delivered in person or telecopied or mailed, first
class or delivered by overnight courier, return receipt
requested, postage prepaid, addressed to the respective
parties hereto at their respective addresses hereinafter set
forth or, as to any such party, at such other address as may
be designated by it in a Notice to the other. All Notices
shall be conclusively deemed to have been properly given or
made when duly delivered, in person, by telecopy or by
overnight courier, or if mailed, on the date of receipt as
noted on the return receipt, addressed as follows:
if to the Company: AMRESCO CAPITAL CORPORATION
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201
Attention: Edward L. Hurley,
Vice President
Telecopier No.: (214) 953-7977
with a copy to: AMRESCO CAPITAL CORPORATION
6303 Blue Lagoon Drive
Suite 410
Miami, Florida 33126
Attention: Larry Silvester
Vice President
Telecopier No.: (305) 264-4960
if to the Lender: Residential Funding Corporation
440 Sawgrass Corp. Parkway
Suite 212
Sunrise, Florida 33325
Attention: Robin Swanson
Telecopier No.: (305) 846-8352
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.
The Company shall: (a) pay all out-of-pocket costs
and expenses of the Lender, including, without limitation,
reasonable fees and disbursements of counsel (including
allocated costs of internal counsel), in connection with the
preparation, negotiation, documentation, amendment,
enforcement and administration of this Agreement, the Notes,
and other Loan Documents and the making and repayment of the
Advances and the payment of interest thereon; (b) indemnify,
pay, and hold harmless the Lender and any holder of the
Notes from and against, any and all present and future
stamp, documentary and other similar taxes with respect to
the foregoing matters and save the Lender and the holder or
holders of the Notes harmless from and against any and all
liabilities with respect to or resulting from any delay or
omission to pay such taxes; (c) indemnify, pay and hold
harmless the Lender and any of its officers, directors,
employees or agents and any subsequent holder of the Notes
(collectively called the "Indemnitees") from and against any
and all liabilities, obligations, losses, damages,
penalties, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including
without limitation, the reasonable fees and disbursements of
counsel of the Indemnitees (including allocated costs of
internal counsel) in connection with any investigative,
administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto) which may
be imposed upon, incurred by or asserted against such
Indemnitees in any manner relating to or arising out of this
Agreement, the Notes, or any other Loan Document or any of
the transactions contemplated hereby or thereby (the
"Indemnified Liabilities"); provided, however, that the
Company shall have no obligation hereunder with respect to
Indemnified Liabilities arising from the gross negligence or
willful misconduct of any such Indemnitees. To the extent
that the undertaking to indemnify, pay and hold harmless as
set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the
Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them. The agreement
of the Company contained in this Subsection (c) shall
survive the expiration or termination of this Agreement and
the payment in full of the Obligations. Attorneys' fees and
disbursements incurred in enforcing, or on appeal from, a
judgment pursuant hereto shall be recoverable separately
from and in addition to any other amount included in such
judgment, and this clause is intended to be severable from
the other provisions of this Agreement and to survive and
not be merged into such judgment.
11. FINANCIAL INFORMATION.
All financial statements and reports furnished to the
Lender hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent with that applied in preparing
the financial statements as at the end of and for the last
fiscal year ended (except to the extent otherwise required
to conform to good accounting practice).
12. MISCELLANEOUS.
12.1 Terms Binding Upon Successors; Survival of
Representations. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
All representations, warranties, covenants and agreements
herein contained on the part of the Company shall survive
the making of any Advance and the execution of the Notes,
and shall be effective so long as there remain any
Obligations to be paid or performed.
12.2 Assignment. This Agreement may not be assigned by
the Company. This Agreement and the Notes along with the
Lender's security interest in any or all of the Collateral,
may, at any time, be transferred or assigned, in whole or in
part, by the Lender, and any assignee thereof may enforce
this Agreement, the Notes and such security interest.
12.3 Amendments. Except as otherwise provided in this
Agreement, this Agreement may not be amended, modified or
supplemented unless such amendment, modification or
supplement is set forth in a writing signed by the parties
hereto.
12.4 Governing Law. This Agreement and the other Loan
Documents shall be governed by the laws of the State of
Minnesota, without reference to its principles of conflicts
of laws.
12.5 Participations. The Lender may at any time sell,
assign or grant participations in, or otherwise transfer to
any other Person (a "Participant"), all or part of the
Obligations. Without limitation of the exclusive right of
the Lender to collect and enforce such Obligations, the
Company agrees that each disposition will give rise to a
debtor-creditor relationship of the Company to the
Participant, and the Company authorizes each Participant,
upon the occurrence of an Event of Default, to proceed
directly by right of setoff, banker's lien, or otherwise,
against any assets of the Company which may be in the hands
of such Participant. The Company authorizes the Lender to
disclose to any prospective Participant and any Participant
any and all information in the Lender's possession
concerning the Company, this Agreement and the Collateral;
provided, however, that the Lender shall give the Company
five (5) Business Days prior Notice before such information
is provided to a prospective Participant, such Notice to
identify the prospective Participant and the Lender shall
give the Company Notice of a sale of a participation within
five (5) Business Days thereafter, (however, the Lender's
failure to so notify the Company shall in no way affect or
impact such sale).
12.6 Relationship of the Parties. This Agreement
provides for the making of Advances by the Lender, in its
capacity as a lender, to the Company, in its capacity as a
borrower, and for the payment of interest, repayment of
principal by the Company to the Lender, and for the payment
of certain fees by the Company to the Lender. The
relationship between the Lender and the Company is limited
to that of creditor/secured party, on the one hand, and
debtor, on the other hand. The provisions herein for
compliance with financial covenants and delivery of
financial statements are intended solely for the benefit of
the Lender to protect its interests as lender in assuring
payments of interest and repayment of principal and payment
of certain fees, and nothing contained in this Agreement
shall be construed as permitting or obligating the Lender to
act as a financial or business advisor or consultant to the
Company, as permitting or obligating the Lender to control
the Company or to conduct the Company's operations, as
creating any fiduciary obligation on the part of the Lender
to the Company, or as creating any joint venture, agency, or
other relationship between the parties hereto other than as
explicitly and specifically stated in this Agreement. The
Company acknowledges that it has had the opportunity to
obtain the advice of experienced counsel of its own choosing
in connection with the negotiation and execution of this
Agreement and to obtain the advice of such counsel with
respect to all matters contained herein, including, without
limitation, the provision for waiver of trial by jury. The
Company further acknowledges that it is experienced with
respect to financial and credit matters and has made its own
independent decisions to apply to the Lender for credit and
to execute and deliver this Agreement.
12.7 Severability. If any provision of this Agreement
shall be declared to be illegal or unenforceable in any
respect, such illegal or unenforceable provision shall be
and become absolutely null and void and of no force and
effect as though such provision were not in fact set forth
herein, but all other covenants, terms, conditions and
provisions hereof shall nevertheless continue to be valid
and enforceable.
12.8 Operational Reviews. From time to time upon
request, the Company shall permit the Lender or its
representative access to its premises and records for the
purpose of conducting a review of the Company's general
mortgage business methods, policies, and procedures,
auditing loan files and reviewing financial and operational
aspects of the Company's business.
12.9 Consent to Credit References. The Company hereby
consents to the disclosure of information regarding the
Company and its relationships with the Lender to Persons
making credit inquiries to the Lender. This consent is
revocable by the Company at any time upon Notice to the
Lender as provided in Section 9 hereof.
12.10 Consent to Jurisdiction. The Company hereby
agrees that any action or proceeding under the Loan
Documents, the Notes or any document delivered pursuant
hereto may be commenced against it in any court of competent
jurisdiction within the State of Minnesota, by service of
process upon the Company by first class registered or
certified mail, return receipt requested, addressed to the
Company at its address last known to the Lender. The
Company agrees that any such suit, action or proceeding
arising out of or relating to this Agreement or any other
such document may be instituted in the Hennepin County,
State District Court or in the United States District Court
for the District of Minnesota at the option of the Lender;
and the Company hereby waives any objection to the
jurisdiction or venue of any such court with respect to, or
the convenience of any court as a forum for, any such suit,
action or proceeding. Nothing herein shall affect the right
of the Lender to accomplish service of process in any other
manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other
jurisdiction or court.
12.11 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
an original, but all such counterparts shall together
constitute but one and the same instrument.
12.12 Entire Agreement. This Agreement, the Note
and the other Loan Documents represent the final agreement
among the parties hereto and thereto with respect to the
subject matter hereof and thereof, and may not be
contradicted by evidence of prior or contemporaneous oral
agreements among such parties. There are no oral agreements
among the parties with respect to the subject matter hereof
and thereof.
12.13 WAIVER OF JURY TRIAL. THE COMPANY AND THE
LENDER EACH HEREBY (a) COVENANTS AND AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND
(b) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT
THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY THE COMPANY AND THE LENDER,
AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT OF A JURY
TRIAL WOULD OTHERWISE ACCRUE. THE LENDER AND THE COMPANY IS
EACH HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS
AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT
MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL.
FURTHER, THE COMPANY AND THE LENDER EACH HEREBY CERTIFIES
THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY,
INCLUDING THE OTHER PARTY'S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR
AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
AMRESCO CAPITAL CORPORATION,
a Texas corporation
By:
Its:
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:
Its: Director
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On , 19__ before me, a Notary Public,
personally appeared , the
of AMRESCO CAPITAL CORPORATION, a Texas corporation, 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/she executed the same
in his/her authorized capacity, and that by his/her signature on
the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On , 19__ before me, a Notary Public,
personally appeared , the
Director of RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, 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/she executed the same in his/her authorized capacity, and that
by his/her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
EXHIBIT A
PROJECT PROMISSORY NOTE
$ Date:
FOR VALUE RECEIVED, the undersigned, AMRESCO CAPITAL
CORPORATION, a Texas corporation, (the "Company"), hereby
promises to pay to the order of RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation (the "Lender" or, together with its
successors and assigns, the "Holder") whose principal place of
business is 8400 Normandale Lake Blvd., Suite 600, Minneapolis,
Minnesota 55437, or at such other place as the Holder may
designate from time to time, the principal sum of
Dollars ($ ) (or the unpaid balance of all principal
advanced against this Project Promissory Note
(the "Note"), if that amount is less), and to pay interest on
said principal sum or such part thereof as shall remain unpaid
from time to time, from the date of the Advances relating to this
Note until repaid in full, and interest on all past due amounts,
both principal and accrued interest, at the rate and at the times
set forth in the Warehousing Credit and Security Agreement
described below, together with all other fees and charges due
under the Agreement. All payments hereunder shall be made in
lawful money of the United States and in immediately available
funds.
This Note is given to evidence an actual warehouse facility
in the above amount and is one of the Notes referred to in that
certain Warehousing Credit and Security Agreement ("the
Agreement") dated as of August 15, 1995, between the Company and
the Lender, as the same may be amended or supplemented from time
to time, and is entitled to the benefits thereof. Reference is
hereby made to the Agreement (which is incorporated herein by
reference as fully and with the same effect as if set forth
herein at length) for a description of the Collateral, a
statement of the covenants and agreements, a statement of the
rights and remedies and securities afforded thereby and other
matters contained therein. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given
them in the Agreement.
Advances made under this Note shall be made to fund the
Project Mortgage Loan for the period from the date of this Note
to and including the earlier of (a) the date on which the Company
receives the proceeds of the sale or other disposition of the
Project Mortgage Loan, or (b) (the "Stated
Maturity Date"). All Advances under the Agreement shall
constitute a single indebtedness, and all of the Collateral shall
be security for this Note and all other Notes made by the Company
under the terms of the Agreement, and for the performance of all
the Obligations.
All remaining unpaid principal, accrued unpaid interest and
Warehousing Fees due and owing on this Note shall be finally due
and payable on the Stated Maturity Date or on any earlier date to
which the maturity of this Note is accelerated pursuant to the
provisions of the Agreement.
This Note may be prepaid in whole or in part at any time
without premium or penalty.
Should this Note be placed in the hands of attorneys for
collection, the Company agrees to pay, in addition to principal
and interest, fees and charges due under the Agreement, and all
costs of collecting this Note, including reasonable attorneys'
fees and expenses.
The Company hereby waive demand, notice, protest and
presentment.
This Note shall be construed and enforced in accordance with
the laws of the State of Minnesota, without reference to its
principles of conflicts of law.
IN WITNESS WHEREOF, the Company has executed this Note as of
the day and year first above written.
AMRESCO CAPITAL CORPORATION,
a Texas corporation
By:
Its:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On , 19__ before me, a Notary Public,
personally appeared , the
of AMRESCO CAPITAL CORPORATION, a Texas corporation, 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/she executed the same
in his/her authorized capacity, and that by his/her signature on
the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
EXHIBIT B
(INTENTIONALLY OMITTED)
EXHIBIT C-MF/TRANS
REQUEST FOR ADVANCE AGAINST MORTGAGE LOANS
CONVENTIONAL MULTIFAMILY MORTGAGE LOANS
FNMA FHLMC
Mortgage Company: AMRESCO CAPITAL CORPORATION
Loan No.: Warehouse Date:
Project Name: Contract/Pool No.:
Note Amount: Interest Rate:
Note Date:
Advance Amount:
Investor: Expiration Date:
Investor Purchase Price:
Title Company/Closing Agent:
Title Contact Person: Phone No.:
Security Rate: Issue Date: Maturity Date:
WIRE TRANSFER INFORMATION
Wire Amount: Date of Wire:
Receiving Bank: ABA No.:
City & State:
Credit Account Name: Number:
Advise: Phone:
REQUIRED DOCUMENTATION
Attached please find the following documents in connection with
the above request:
( ) Original Mortgage Note, endorsed by the Company in blank and
without recourse.
( ) Assignment of Mortgage in blank, in recordable form.
( ) Assignment of the security agreement, in blank.
( ) Assignment of the UCC financing statements in recordable
form.
( ) Copy of the title insurance commitment to issue title
insurance marked to show final policy exceptions.
( ) FHLMC Form 64A, FNMA Form 4257 or other Investor Commitment
(signed).
( ) Check payable to the Lender for the Warehousing Fee.
AMRESCO CAPITAL CORPORATION
AUTHORIZED SIGNATURE(S)
EXHIBIT D-CONV/TRAN
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
CONVENTIONAL MULTI-FAMILY MORTGAGE LOANS
The following procedures and documentation requirements must
be observed in all respects by the Company. All documents must
be satisfactory to Residential Funding Corporation, a Delaware
corporation (the "Lender") in its sole discretion. Terms used
below, which are not otherwise defined, shall have the meanings
given them in the Warehousing Credit and Security Agreement, as
amended, modified or renewed from time to time. The term
"Mortgagee" as used below shall have the same meaning as the term
"Company". The FNMA and FHLMC form numbers referred to herein
are for convenience only and the Company shall use the equivalent
forms required at the time of delivery of the Mortgage Loans or
Mortgage-backed Securities.
I. AT LEAST TEN BUSINESS DAYS PRIOR TO CLOSING:
The Lender must receive the following:
(1) A signed letter providing the following
information on each Mortgage Loan:
(a) Mortgagor's name;
(b) Project name;
(c) Case/Loan Number;
(d) Expected closing date;
(e) Closing amount;
(f) Name and address of Company's counsel to
be present at closing;
(g) Title company name, address and contact
person.
(2) Copy of Mortgagee's Commitment to Mortgagor.
(3) Copy of the signed and accepted letter of
commitment from the Investor to purchase the Mortgage
Loan.
II. AT LEAST ONE BUSINESS DAY PRIOR TO CLOSING:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit C-MF).
(2) Original Mortgage Note, endorsed by the Company in
blank and without recourse.
(3) Original Lender escrow instruction letter to the
title company, countersigned by the title company
representative involved with the transaction (see
below).
(4) Assignment of Mortgage in blank, in recordable
form but unrecorded.
(5) Assignment of the security agreement in blank.
(6) Assignment of the UCC financing statements in
blank, in recordable form but unrecorded.
(7) For FHLMC-committed Conventional Multi-family
Mortgage Loans the signed Conventional Multifamily
Immediate Delivery Purchase Contract and Prior Approval
Conversion Amendment (FHLMC Form 64A).
(8) For FNMA-committed Conventional Multi-family
Mortgage Loans, a copy of the signed Mortgage Purchase
and Delivery Commitment (FNMA Form 4257).
(9) A copy of the title insurance Commitment to issue
a policy of title insurance marked to show the final
policy exceptions.
(10) Check payable to the Lender for the Warehousing
Fee.
Upon receipt of the letter required under Section I above,
in form and substance satisfactory to the Lender, the Lender
will issue its escrow instructions to the title company.
The funds representing the Advance, when wired by the
Lender, are to be held in the escrow account of the title
company and disbursed in accordance with the closing letter
of the Company or its counsel only as authorized by the
Lender in its escrow instructions. No funds will be
advanced by the Lender prior to its receipt of all documents
called for under Section II above. Disbursement will be
authorized only after the title company is prepared to issue
its title insurance policy, in an amount not less than the
amount of the Mortgage Note. In the event the Mortgage Loan
is not closed and the related Mortgage recorded by 3:00 p.m.
on the date of the Advance, the title company shall be
instructed to immediately return the funds to the Lender.
Written confirmation of the Lender's escrow instructions by
the title company will be required by the Lender before
making funds available.
III. ON THE NEXT BUSINESS DAY FOLLOWING CLOSING:
The Lender must receive the following:
(1) A duplicate original or copy of the title
insurance policy or binder certified true by the title
company.
(2) A copy of the Mortgage, certified true by the
title company.
IV. NO LATER THAN TWO BUSINESS DAYS PRIOR TO DELIVERY DATE:
The Lender must receive the following:
(1) Signed shipping instructions for the delivery of
the Mortgage Loan or Mortgage-backed Security. These
instructions must include the following:
(a) Name and address of the Investor to
which Loan Documents are to be shipped and
preferred method of delivery.
(b) Funding amount due the Company.
(c) For Mortgage-backed Securities
deliveries, signed Securities Delivery
Instructions form attached hereto as Schedule I.
(d) Delivery date.
(2) For FHLMC-committed Conventional Multi-family
Mortgage Loans, the following additional documents must
be received:
(a) Original Contract Delivery Summary
(FHLMC Form 381) marked to indicate that the
mortgages being delivered are subject to a
security interest.
(b) For cash payments, the signed original
Wire Transfer Authorization for a Cash Warehouse
Delivery (FHLMC Form 987), showing the Lender as
warehouse lender and specifying the cash
collateral account designated by the Lender as the
receiving account for loan purchase proceeds.
(c) For FHLMC Mortgage-backed Securities
payments, the original Settlement Information and
Delivery Authorization (FHLMC Form 939),
designating the Lender as the Warehouse Lender and
instructing FHLMC to deliver the Mortgage-backed
Securities to the Lender's custody account at
Chemical Bank NY (CHEMICAL NYC/GEOCUST/MR9229490).
(d) Completed, but not signed, Warehouse
Lender Release of Security Interest (FHLMC Form
996), to be signed by the Lender.
(3) For FNMA-committed Conventional Multi-family
Mortgage Loans, the following documents must be
received:
(a) For cash payments, the signed original
Wire Transfer Request (FNMA Form 4639), showing
the cash collateral account designated by the
Lender as the receiving account for loan purchase
proceeds.
(b) For FNMA Mortgage-backed Security
payments, an original Delivery Schedule (FNMA Form
2014), instructing FNMA to issue the Mortgage-
backed Security in the name of the Company, to
deliver the Mortgage-backed Security to the
Lender's custody account at Chemical Bank NY
(CHEMICAL NYC/GEOCUST/MR9229490), and bearing the
following instructions: "These instructions may
not be changed without the prior written approval
of Residential Funding Corporation, Preston A.
Lyvers Director or Patti Erfan, Director."
(c) Executed bailee letter with Schedule A
(in form approved by FNMA and the Lender).
(4) The remainder of the documents required for
shipping to the Investor as specified by the Investor
or in the applicable Seller/Servicer Guide.
Upon instruction by the Company, the Lender will complete the
endorsement of the Mortgage Note in favor of the Investor and
make arrangements for delivery of the complete loan package, with
a bailee letter, to the office of the Investor specified by the
Company, or if applicable, to an Approved Custodian for the
Mortgage-backed Security to be issued. Upon receipt of a
Mortgage-backed Security, the Lender will deliver such Mortgage-
backed Security to the Investor which issued the Purchase
Commitment. Mortgage-backed Securities will be released to the
Investor only upon payment of the purchase proceeds to the
Lender. Cash proceeds of sales of Mortgage Loans and Mortgage-
backed Securities shall be applied to any amounts outstanding
under the Commitment. Provided no Default exists, the Lender
shall return any excess proceeds of the sale of Mortgage Loans or
Mortgage-backed Securities to the Company.
SCHEDULE I
RESIDENTIAL FUNDING CORPORATION
WAREHOUSING LENDING DIVISION
Security Delivery Instructions
INSTRUCTIONS MUST BE RECEIVED TWO (2) BUSINESS DAYS IN ADVANCE OF
PICK-UP/DELIVERY
BOOK-ENTRY DATE: ______________________ SETTLEMENT DATE:
ISSUER:________________________________ SECURITY: $
NO. OF CERTIFICATES: __________________ 1)
2)
3)
CUSIP #______________
Pool #_______________ MI#______________ Coupon Rate:
Issue Date:(M/D/Y) _________________________ Maturity
Date:(M/D/Y)
POOL TYPE (circle one):
GNMA: GNMA I GNMA II
FHLMC: FIXED ARM DISCOUNT NOTE
FNMA: FIXED ARM DISCOUNT NOTE DEBENTURES
REMIC
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $
_______________________________ ( ) Free
Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $
_______________________________ ( ) Free
Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $
_______________________________ ( ) Free
Delivery
AUTHORIZED SIGNATURE:
TITLE:
EXHIBIT
E-MF/APPROVAL
APPROVAL REQUEST FOR ADVANCES
AGAINST MORTGAGE LOANS
Mortgage Company Name:
Date of Submission:
Investor: ____ FNMA ____ FHLMC _____ OTHER (FHA Loans)
Company Loan No.:
Project Name:
Estimated Note Amount:
Expected Warehouse Date:
Contract/Pool No.:
AUTHORIZED SIGNATURE(S)
Name:
Title:
Required Documentation:
Pursuant to Section 2.2(a) of the Warehousing Credit and Security Agreement
(the "Agreement"), attached please find the following documents in
connection with the above request:
1. Multifamily Loan Application (FNMA Form 1053/FHLMC Form 75)
or
FHA Firm Commitment to Insure
5. Officer's Certificate (Exhibit I-MF) as of
Based on the information provided herein, Residential Funding Corporation
approves the warehousing of the requested Mortgage Loan subject to the
satisfaction of the conditions set forth in Sections 4.1 and 4.2 of
the Agreement and with the procedures set forth in Exhibit D-CONV/TRAN
or Exhibit D-FHA/CONV to the Agreement.
APPROVED:
RESIDENTIAL FUNDING CORPORATION
By: Warehouse Interest Rate:
Its: Warehouse Advance Rate: %
APPROVAL DATE: Warehousing Fee:
EXHIBIT F
RESIDENTIAL FUNDING CORPORATION
SUBORDINATION OF DEBT AGREEMENT
, 19
To: Residential Funding Corporation
8400 Normandale Lake Blvd., Suite 600
Minneapolis, Minnesota 55437
(hereinafter referred to as the "Lender")
The undersigned (hereinafter referred to as the "Creditor"),
creditor of AMRESCO CAPITAL CORPORATION, a Texas corporation
(hereinafter referred to as the "Company"), desires that the
Lender extend or continue to extend such financial accommodations
to the Company as the Company may require and as the Lender may
deem proper. For the purpose of inducing the Lender to grant,
continue or renew such financial accommodations, and in
consideration thereof, the Creditor agrees as follows:
1. That at the present time the Company is indebted to the
Creditor in the principal amounts set forth below:
PRINCIPAL AMOUNT
TYPE OF FACILITY OF DEBT FROM THE
OR LOAN COMPANY
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
(Notes, if any, are to be delivered to the Lender)
2. That all claims of the Creditor against the Company now or
hereafter existing are and shall be at all times subject and
subordinate to any and all claims now or hereafter which the
Lender may have against the Company (and all extensions,
renewals, modifications, replacements and substitutions of
or for the same), for so long as any such claim or claims of
the Lender shall exist.
3. That the Creditor shall not (a) except to the extent
expressly permitted in Section 4 hereof, receive payment of
or collect, in whole or in part, or sue upon, any claim or
claims now or hereafter existing which the Creditor may hold
against the Company; (b) sell, assign, transfer, pledge,
hypothecate or encumber such claim or claims except subject
expressly to this Agreement; (c) enforce any lien the
Creditor may now or in the future have on any debt owing by
the Company to the Creditor; and/or (d) join in any petition
in bankruptcy, assignment for the benefit of creditors or
creditors' agreement, except as directed by the Lender, so
long as any claim of the Lender against the Company, or
commitment of the Lender to extend credit to the Company, is
in existence.
4. So long as no event described in clauses (a) through (d) of
Section 6 below (a "Liquidation Event") shall have occurred
and no default shall have occurred in payment or performance
of any obligation of the Company to the Lender, regularly
scheduled payments of interest and principal on the claims
of the Creditor may be made as and when the same become due
and payable (it being understood that no prepayment shall be
made of such claims and no modification or acceleration, for
default or otherwise, of such maturity dates shall be
permitted). After the occurrence of a Liquidation Event or
of default in payment or performance of any obligation of
the Company to the Lender, no interest and no principal
payments on the claims of the Creditor shall be made without
the prior written consent of the Lender. The subordination
of claims of the Creditor hereunder shall remain in effect
so long as there shall be outstanding any obligation of the
Company to the Lender (for this purpose, the Company shall
be deemed obligated to the Lender so long as the Lender
shall have outstanding any commitment to make any loan to
the Company, whether or not any such loan shall have been
made or advanced).
5. In the event that any Creditor receives a payment from the
Company in violation of the terms of this Agreement, such
Creditor (a) shall hold such money in trust for the benefit
of Lender, (b) shall segregate such payment from (and shall
not commingle such payment with any of) the other funds of
such Creditor, and (c) shall forthwith remit such payment to
Lender in the exact form received (but with any necessary
endorsement).
6. In case of (a) any assignment by the Company for the benefit
of creditors, (b) any bankruptcy proceedings instituted by
or against the Company, (c) the appointment of any receiver
for the Company's business or assets, or (d) any dissolution
or winding up of the affairs of the Company, the Company and
any assignee, trustee in bankruptcy, receiver, or other
person or persons in charge, are hereby directed to pay to
the Lender the full amount of the Lender's claim against the
Company before making any payment of principal or interest
to the Creditor and the Creditor hereby sells, transfers,
sets over and assigns to the Lender all claims the Creditor
may now or hereafter have against the Company and in any
security therefor, and the proceeds thereof, and all rights
to any payments, dividends or other distributions arising
therefrom. If the Creditor does not file a proper claim or
proof of debt in the form required in such proceeding prior
to thirty (30) days before the expiration of the time to
file such claim in such proceedings, then the Lender has the
right (but no obligation) to do so and is hereby authorized
to file an appropriate claim or claims for and on behalf of
the Creditor.
7. For violation of this Agreement, the Creditor shall be
liable to the Lender for all loss and damage sustained by
reason of such breach, and upon any such violation, the
Lender may accelerate the maturity of its claims against the
Company, at the Lender's option.
8. The Creditor will, at any time and from time to time,
promptly execute and deliver all further instruments and
documents, and take all further action, that may be
reasonably necessary in order to protect any right or
interest granted hereby or to enable the Lender to exercise
and enforce its rights and remedies hereunder.
9. The Creditor will not amend, extend or in any way modify the
terms of its claims against the Company, as such terms exist
as of the date of this Agreement, without the prior written
consent of the Lender. The Creditor agrees to provide to
the Lender, upon the occurrence thereof, notice of the
existence of any event of default (however defined or
described) under any document or agreement relating to its
claims against the Company, or any condition, act or event,
which with the giving of notice or the passage of time or
both would constitute an event of default (however defined
or described) thereunder.
10. All rights and interest of the Lender hereunder, and all
agreements and obligations of the Creditor hereunder, shall
remain in full force and effect irrespective of:
(a) any sale, assignment, pledge, encumbrance or other
disposition of the claims of the Lender against the Company
(the "Senior Claims") and/or any document or instrument
executed in connection therewith;
(b) any change in the time, manner or place of payment
of, or in any other terms of, all or any of the Senior
Claims, or any refinancing thereof, or any other amendment,
modification, extension or renewal of or waiver of or any
consent to departure from any document or instrument
relating thereto, including, without limitation, changes in
the terms of the repayment of loan proceeds, modifications,
extensions or renewals of payment dates, changes in interest
rate or the advancement of additional funds by the Lender in
its discretion; or
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of
the Senior Claims.
11. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment
or performance of all or any portion of the Senior Claims is
rescinded or must otherwise be returned by the Lender or any
other party to the documents relating thereto upon the
insolvency, bankruptcy or reorganization of any such party
or otherwise, all as though such payment had not been made.
12. The Creditor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to this
Agreement and any requirement that the Lender protect,
secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take
any action against the Creditor or any other person or
entity or any collateral.
13. No failure on the part of the Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law.
14. No amendment or waiver of any provision of this Agreement
nor consent to any departure by the Creditor therefrom shall
in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which given.
15. The Creditor agrees to pay upon demand, to the Lender the
amount of any and all expenses, including the reasonable
fees and expenses of its counsel and all court costs and
other reasonable litigation expenses, including but not
limited to expert witness fees, document copying expenses,
exhibit preparation costs, and courier, postage and
communication expenses, which the Lender may incur in
connection with the exercise or enforcement of any of its
rights or interest hereunder.
16. All notices, request and demands that may be required or
otherwise provided for or contemplated under the terms of
this Agreement shall, whether or not so stated, be in
writing, and shall be given by any of the following means:
(a) personal delivery; (b) reputable overnight courier
service; or (c) registered or certified first class mail,
return receipt requested. Any notice, request or demand
sent pursuant to clause (a) above shall be deemed received
upon personal delivery, and if sent pursuant to clause (b)
shall be deemed received on the next business day following
delivery to the courier service, and if sent pursuant to
clause (c) shall be deemed received three (3) days following
deposit in the mail.
The addresses for notices are as follows:
If to the Creditor, addressed to:
If to the Lender, addressed to :
Residential Funding Corporation
440 Sawgrass Corp. Parkway
Suite 212
Sunrise, Florida 33325
Attention: Robin Swanson
Warehouse Lending Officer
Telecopier No.: (305) 846-8352
Such addresses may be changed by written notice to the other
parties given in the manner provided above.
17. This Agreement shall be governed in all respects by the laws
of the State of Minnesota and shall be binding upon and
shall inure to the benefit of the Creditor, the Lender and
the Company, and their respective heirs, executors,
administrators, personal representatives, successors and
assigns. This Agreement and any claim or claims of the
Lender pursuant hereto may be assigned by the Lender, in
whole or in part, at any time, without notice to the
Creditor or the Company.
(Creditor)
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR A CORPORATION.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On , _____ before me, a Notary Public,
personally appeared , the
of , 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/she executed the same in his/her
authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR AN INDIVIDUAL.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this
_____ day of _________________, _____, by
.
Notary Public
My Commission Expires:
ACCEPTANCE OF SUBORDINATION OF DEBT
AGREEMENT BY THE COMPANY
The Company named in the Subordination of Debt Agreement set
forth hereinbefore, hereby (i) represents and warrants to the
Lender that it is presently indebted to the Creditor executing
said Subordination of Debt Agreement in the aggregate principal
amount of Dollars ($
); and (ii) accepts and consents to the Subordination of Debt
Agreement, and agrees to be bound by all of the provisions
thereof and to recognize all priorities and other rights granted
thereby to RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, its successors and assigns, and to perform in
accordance therewith.
AMRESCO CAPITAL CORPORATION,
a Texas corporation
By:
Its:
Dated:
EXHIBIT G
SUBSIDIARIES
States
Qualified
to do
Name Incorporated Business Owned (%)
NONE
EXHIBIT H
FORM OF OPINION OF COUNSEL
Residential Funding Corporation
Attention: Sandra L. Oakes
8400 Normandale Lake Blvd., Suite 600
Minneapolis, Minnesota 55437
Re: Warehouse Facility (the "Loan") under Warehousing Credit and
Security Agreement (the "Agreement") by and between
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender") and AMRESCO CAPITAL CORPORATION, a Texas
corporation (the "Company") and secured by the "Collateral"
(as defined in the Agreement).
Gentlemen:
We are special counsel to the Company in connection with the
Loan. As counsel, we have prepared and/or examined the following
documents:
1. Executed copy of the Warehousing Credit and Security
Agreement (Multi-Family Mortgage Loans) by and between the
Company and the Lender, dated August 15, 1995 (the
"Agreement").
2. Undated UCC Financing Statements perfecting a security
interest in collateral, tangible and intangible.
3. The Articles of Incorporation of the Company, together with
amendments thereto, as certified by the Secretary of State
of the State of Texas.
4. The Bylaws of the Company, as certified on
, 19 by the Secretary of the Company as then being
complete, accurate and in effect.
5. Resolutions of the Board of Directors of the Company,
adopted at a meeting held on , 19 ,
as certified by the Secretary of the Company on
, 19 as then being complete, accurate and in effect,
authorizing the borrowing of the Loan and the execution and
delivery of and performance under the Agreement.
6. Certificate of Good Standing for the Company, dated
, 19 , issued by the Secretary of State of the State of
Texas.1
The above enumerated items, numbered 1 and 2 are
collectively referred to as the "Loan Documents."
The opinions which follow are subject to the following
assumptions, limitations and qualifications:
A. We have assumed the genuineness of all signatures, other
than of the Company and the Guarantor, the authenticity of
all documents submitted to us as originals, and the
conformity with the original documents of all documents
submitted to us as reproduced copies, and the authenticity
of all such latter documents.
B. We have assumed the organization, existence, good standing
and capacity of all persons and entities other than the
Company and the Guarantor, and that such parties, other than
the Company and the Guarantor, have the right, power and
authority to execute and deliver the Loan Documents and to
perform thereunder.
C. We have assumed that the Lender's obligations under the
Agreement are within the powers of the Lender and have been
duly and validly authorized and that the Agreement has been
duly executed and validly delivered by the Lender.
D. As to various questions of fact material to this opinion, we
have made such factual inquiries of the Company and the
Guarantor, and have examined such other documents and made
such examinations of applicable laws, as we have deemed
necessary for purposes of the opinions expressed herein.
However, where we state that a matter is to the best of our
knowledge, we have relied upon the written statements
[copies attached] of the Guarantor and the officers of the
Company, with no inquiry as to the facts other than as
necessary to establish that such reliance was reasonable on
our part.
Based upon such examinations and investigations, and such
other investigations and examinations as we have deemed necessary
for the purposes of the opinions expressed herein, and subject to
the assumptions stated above in paragraphs A through D,
inclusive, and in our capacity as special counsel for the Company
and the Guarantor, we are of the opinion that:
[Opinions Concerning Company]
1. The Company and each Subsidiary of the Company2 is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated and has the full legal power and authority to
own its property and to carry on its business as currently
conducted.
2. The Company and each Subsidiary of the Company is duly
qualified to do business as a foreign corporation and is in
good standing in all jurisdictions where the ownership of
its property or the conduct of its business makes such
qualification necessary.
3. The Company has the power and authority to execute, deliver
and perform the Loan Documents. The execution, delivery and
performance of the Loan Documents by the Company, including
without limitation, the borrowings under the Agreement and
the pledge of the Collateral, have been duly and validly
authorized by all necessary actions on the part of the
Company.
4. The Loan Documents have been duly executed and delivered by
the Company. The Loan Documents constitute the legal, valid
and binding obligations of the Company and are enforceable
in accordance with their respective terms against the
Company, except that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the rights of creditors, and the
enforceability of certain remedies provided for in the Loan
Documents may be to the exercise of judicial discretion.
5. Upon delivery to the Lender of those items of Collateral,
consisting of promissory notes secured by mortgages or deeds
of trust ("Pledged Mortgages") or mortgage-backed securities
("Pledged Securities"), or in the case of Pledged Securities
issued in book-entry form, or issued in certificated form
and delivered to a clearing corporation (as such term is
defined in the Uniform Commercial Code) or its nominee, upon
(a) registration of such Pledged Securities in the name of a
financial intermediary (as such term is defined in the
Uniform Commercial Code) in an account containing only
customer securities, (b) the notation of Lender's security
interest in such Pledged Securities on the records of such
financial intermediary, by book entry or otherwise, and (c)
the sending by such financial intermediary to the Lender of
confirmation of such notation, the Lender will have a valid
and perfected first security interest therein. We assume,
in giving this opinion, that such items of Collateral will
be owned by the Company and that, at the time the Lender's
security interest is noted on the records of any financial
intermediary, such Pledged Securities will be free of any
interest created through the Federal Reserve Bank, clearing
corporation and/or financial intermediary. With respect to
Pledged Mortgages, the laws of certain jurisdictions may
require the recordation of an assignment of such deeds of
trust or mortgages in order to perfect a security interest
in the deed of trust or mortgage (as opposed to the notes
secured thereby). If the Lender does not record its
assignment of deeds of trust or mortgages in such
jurisdictions, we express no opinion as to the Lender's
perfected security interest in such deeds of trust and
mortgages (as opposed to the notes secured thereby)
constituting part of the Collateral.
6. The execution, delivery and performance by the Company of
the Loan Documents, will not (i) conflict with or violate
any provision of the Articles of Incorporation or By-laws of
the Company; (ii) require any license, approval or other
action by any governmental authority that has not been
obtained; (iii) result in the creation of any lien, charge
or encumbrance upon any property or assets of the Company
other than in favor of the Lender; (iv) to the best of our
knowledge, result in a violation or breach of any term or
provision, constitute a default under, or result in or
require the acceleration of any indebtedness of the Company
pursuant to, any agreement or other instrument to which the
Company may be bound or to which the Company or any of its
property may be subject; or (v) to the best of our
knowledge, result in any violation of the provisions of any
law or any order of any court or any governmental agency, to
which the Company may be bound or to which the Company or
any of its property may be subject.
7. To the best of our knowledge, there are no actions, suits,
or proceedings pending or threatened against or affecting
the Company, in any court or before any arbitrator or
governmental authority which, if adversely determined, may
reasonably be expected to result in any material and adverse
change in the business, operations, assets or financial
condition of the Company as a whole.
8. To the best of our knowledge, the Company is not in
violation of any provision of any law, or of any judgment,
award, rule, regulation, order, decree, writ or injunction
of any court or public regulatory body or authority which
might have a materially adverse effect on the business,
operations, assets or financial condition of the Company as
a whole.
9. To the best of our knowledge, the Company is not engaged
principally, or as one of its principal activities, in the
business of extending credit for the purpose of purchasing
or carrying stock subject to the provisions of Regulation G
of the Board of Governors of the Federal Reserve System.
10. To the best of our knowledge, the Company is not an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
11. To the best of our knowledge, the Company is not a party to
any agreement, instrument or indenture which materially and
adversely restricts the business, operations, assets or
financial condition of the Company.
12. To the best of our knowledge, (i) the Company is not in
default in the performance, observance or fulfillment of any
agreement, instrument, or indenture which default would have
a materially adverse effect on the business, operations,
properties or financial condition of the Company; (ii) no
holder of any indebtedness of the Company has given notice
of any asserted default under any agreement, instrument, or
indenture of the Company and no receivership, insolvency,
bankruptcy, reorganization or other similar proceedings
relative to the Company or any of the properties of the
Company is pending or threatened.
This opinion may be relied upon by you and your successors
and assigns and by any participant in the Loan.
All capitalized terms used herein, not otherwise defined
herein, shall have the meanings given such terms in the
Agreement.
Very truly yours,
By:
EXHIBIT I-MF
OFFICER'S CERTIFICATE
Reference is made to that certain Warehousing Credit and
Security Agreement between AMRESCO CAPITAL CORPORATION, a Texas
corporation, and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, dated as of August 15, 1995 (as the same may be
amended, modified, supplemented, renewed or restated from time to
time, the "Agreement"). All capitalized terms used herein and
all Section numbers given herein refer to those terms and
Sections set forth in the Agreement. This Officer's Certificate
is submitted to the Lenders pursuant to Section 2.2(a)(2).
The undersigned hereby certifies to the Lenders that as of
the close of business on , 19
("Statement Date",) and with respect to the Company and its
Subsidiaries on a consolidated basis:
1. As illustrated in the attached calculations supporting this
Officer's Certificate, the Company met the covenants set
forth in Sections 7.5, 7.6, and 7.7 of the Agreement, or if
the Company did not meet any of such covenants, a detailed
explanation is attached setting forth the nature and period
of the existence of the Default and the action the Company
has taken, is taking, and proposes to take with respect
thereto.
2. No payments in advance of the scheduled maturity date have
been made with respect to any Subordinated Debt. The
Company has incurred no Debt required to be subordinated
pursuant to Section 6.9.
3. There has been no transfer, directly or indirectly, of the
majority interest of outstanding capital stock of the
Company.
4. The Company was approved, qualified and in good standing as
a seller/servicer or issuer for the types of Mortgage Loans
it has originated since the last Statement Date.
5. No default has been declared under any line of credit or
agreement with any other lender, nor has any line of credit
or agreement with any other lender been terminated,
cancelled, reduced, or not renewed for cause, or if the
above has occurred a writing is attached containing the
details thereof.
6. No action, suit or proceeding has been instituted by or
against the Company or any of its Subsidiaries in any
federal or state court or before any commission or other
regulatory body (federal, state or local, domestic or
foreign) or if any proceeding has been threatened against
the Company or any of its Subsidiaries a writing is attached
containing the details thereof.
7. No filing, recording or assessment of any federal, state or
local tax Lien has been made against the Company, or any of
its assets or any of its Subsidiaries.
8. No transfer, loss or termination of any Servicing Contract
to which the Company is a party, or which is held for the
benefit of the Company has occurred or if a transfer, loss
or termination has occurred, the reason for such transfer,
loss or termination, if known to the Company.
9. No other action, event or condition of any nature which may
lead to or result in a material adverse effect upon the
business, operations, assets or financial condition of the
Company and its Subsidiaries or which, with or without
notice or lapse of time or both, would constitute a default
under any other agreement, instrument or indenture to which
the Company or any of its Subsidiaries is a party or to
which the Company or any of its Subsidiaries, its properties
or assets, may be subject has occurred.
10. I have reviewed the terms of the Agreement and have made, or
caused to be made under my supervision, a review in
reasonable detail of the transactions and conditions of the
Company (and, if applicable, its Subsidiaries) and that such
review has not disclosed the existence, and I have no
knowledge of the existence, of any Default or Event of
Default, or if any Default or Event of Default existed or
exists, a detailed explanation is attached specifying the
nature and period of the existence of the Default and the
action the Company has taken, is taking and proposes to take
with respect thereto.
Dated:
AMRESCO CAPITAL CORPORATION,
a Texas corporation
By:
Its:
CALCULATIONS SUPPORTING OFFICER'S CERTIFICATE
Company Name: AMRESCO CAPITAL CORPORATION and its Subsidiaries
Statement Date:
All financial calculations set forth herein are as of the
Statement Date.
I. TANGIBLE NET WORTH
A. Tangible Net Worth of the Company is:
Excess of total assets over total liabilities: $
Plus: Loan loss reserves: $
Plus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $
Minus: Advances to owners, officers or
Affiliates: $
Minus: Investments in Affiliates: $
Minus: Assets pledged to secure liabilities
not included in Debt: $
Minus: Intangible assets: $
Minus: Any other HUD nonacceptable assets: $
Minus: Other assets unacceptable to the
Lender: $
TANGIBLE NET WORTH $
B. Requirements of Section 7.6 of the Agreement:
MINIMUM TANGIBLE NET WORTH OF $500,000.
C. Covenant Satisfied:____ Covenant Not
Satisfied:____
II. DEBT OF THE COMPANY
Total liabilities $
Minus: Loan loss reserves: $
Minus: Subordinated Debt not due within one year
of the Statement Date (or any
portion
thereof): $
Minus: Deferred taxes arising from capitalized
excess servicing fees: $
DEBT $
III. RATIO OF DEBT TO TANGIBLE NET WORTH
A. The ratio of Debt to Tangible Net Worth (II to
I.A) is:
to 1
B. Requirements of Section 7.5 of the Agreement:
The ratio of Debt to Tangible Net Worth shall not
exceed 20 to 1.
C. Covenant Satisfied:____ Covenant Not
Satisfied:____
IV. MINIMUM SERVICING PORTFOLIO
A. SERVICING PORTFOLIO OF THE COMPANY
IS: $
B. Requirements of Section 7.7 of the Agreement:
MINIMUM SERVICING PORTFOLIO OF $50,000,000.
C. Covenant Satisfied:____ Covenant Not
Satisfied:____
EXHIBIT J
SCHEDULE OF EXISTING LINES OF CREDIT
LENDER NAME COMMITMENT AMOUNT EXPIRATION DATE
(to be completed by Company)
EXHIBIT K
FORM FOR FUNDING BANK
LETTER AGREEMENT
(Letterhead of the Company)
August 15, 1995
The First National Bank of Chicago
One North State Street
Chicago, IL 60602
Gentlemen:
The undersigned, AMRESCO CAPITAL CORPORATION (the
"Company"), hereby authorizes The FIRST NATIONAL BANK OF CHICAGO
(the "Funding Bank") to permit RESIDENTIAL FUNDING CORPORATION
(the "Lender") to debit and access information on the Company's
accounts held by the Funding Bank as outlined below. The Company
hereby directs and authorizes the Funding Bank to follow the
directions of the Lender in debiting such accounts.
The Company authorizes the Lender to access account
information from time to time for the Company's operating account
no. (the "Operating Account") for
the purpose of verifying balance information. In addition, the
Company requests that the Lender, and the Company hereby
authorizes the Lender, to debit the Operating Account to the
extent necessary to cover (a) wires to be initiated by the Lender
in accordance with the Company's instructions as set forth in the
Request for Advance for the purposes permitted in the Warehousing
Credit and Security Agreement ("Agreement") by and between the
Company and the Lender; and (b) for amounts due and owing to the
Lender, including but not limited to principal, interest and
fees.
Upon the termination or expiration of the Agreement, the
Company hereby authorizes the Lender to close the Operating
Account and any other accounts which have been established by the
Company and the Lender to facilitate transactions under the
Agreement, and the Company directs the Funding Bank to follow the
directions of the Lender in closing such accounts. The Company
hereby directs and authorizes the Funding Bank to follow all of
the foregoing instructions of the Lender.
Very truly yours,
AMRESCO CAPITAL CORPORATION,
a Texas corporation
By:
Its:
ACKNOWLEDGED AND AGREED THIS
DAY OF , .
THE FIRST NATIONAL BANK OF CHICAGO
By:
Its:
EXHIBIT A
UCC FINANCING STATEMENT
DEBTOR: AMRESCO CAPITAL CORPORATION
SECURED PARTY: RESIDENTIAL FUNDING CORPORATION
All of Debtor's right, title and interest in the following
(the "Collateral"):
(a) All Mortgage Loans covered by Purchase Commitments from
Investors other than FNMA, including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans which from time to time
are delivered or caused to be delivered to the Secured Party
(including delivery to a third party on behalf of the Secured
Party), come into the possession, custody or control of the
Secured Party for the purpose of assignment or pledge or in
respect of which an Advance has been made by the Secured Party
("Pledged Mortgages");
(b) All Mortgage-backed Securities (the "Pledged
Securities") which are from time to time created in whole or in
part on the basis of the Mortgage Loans pledged to the Secured
Party and are delivered or caused to be delivered to, or are
otherwise in the possession of the Secured Party, its agent,
bailee or custodian as assignee or pledged to the Secured Party,
or for such purpose are registered by book-entry in the name of,
the Secured Party (including delivery to or registration in the
name of a third party on behalf of the Secured Party) or in
respect of which from time to time an Advance has been made by
the Secured Party;
(c) All commitments issued by the FHA to insure any
Mortgage Loans included in the Mortgage Loans pledged to the
Secured Party; all guaranties related to Pledged Securities; all
Purchase Commitments held by the Debtor covering the Mortgage
Loans pledged to the Secured Party or the Pledged Securities and
all proceeds resulting from the sale thereof to Investors
pursuant thereto; and all personal property, contract rights,
servicing and servicing fees and income or other proceeds,
amounts and payments payable to the Debtor as compensation or
reimbursement, accounts and general intangibles of whatsoever
kind relating to the Mortgage Loans pledged to the Secured Party,
the Pledged Securities, said FHA commitments and the Purchase
Commitments, and all other documents or instruments relating to
the Mortgage Loans pledged to the Secured Party and the Pledged
Securities, including, without limitation, any interest of the
Debtor in any fire, casualty or hazard insurance policies and any
awards made by any public body or decreed by any court of
competent jurisdiction for a taking or for degradation of value
in any eminent domain proceeding as the same relate to the
Mortgage Loans pledged to the Secured Party;
(d) All right, title and interest of the Debtor in and to
all escrow accounts, documents, instruments, files, surveys,
certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records (including all
information, records, tapes, data, programs, discs and cards
necessary or helpful in the administration or servicing of the
Collateral) and other information and data of the Debtor relating
to the Collateral;
(e) All now existing or hereafter acquired cash delivered
to or otherwise in the possession of the Secured Party or its
agent, bailee or custodian or designated on the books and records
of the Debtor as assigned and pledged to the Secured Party;
(f) All cash and non-cash proceeds of the Collateral,
including all dividends, distributions and other rights in
connection with, and all additions to, modifications of and
replacements for, the Collateral, and all products and proceeds
of the Collateral, together with whatever is receivable or
received when the Collateral or proceeds thereof are sold,
collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary, including, without
limitation, all rights to payment with respect to any cause of
action affecting or relating to the Collateral or proceeds
thereof.
Capitalized terms defined herein shall have the following
meanings:
"Advance" means a disbursement by the Secured Party to the
Debtor, including readvances of funds previously advanced to the
Debtor and repaid to the Secured Party.
"FHA" means the Federal Housing Administration and any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation and
any successor thereto.
"FNMA" means The Federal National Mortgage Association and
any successor thereto.
"GNMA" means the Government National Mortgage Association
and any successor thereto.
"Investor" means FNMA, FHLMC or a financially responsible
private institution which is deemed acceptable by the Secured
Party from time to time in its sole discretion.
"Mortgage" means a mortgage or deed of trust on improved
real property.
"Mortgage-backed Securities" means GNMA, FNMA or FHLMC
securities that are backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note.
"Mortgage Note" means a note secured by a Mortgage.
"Purchase Commitment" means a written commitment, in form
and substance satisfactory to the Secured Party, issued in favor
of the Debtor by an Investor pursuant to which that Investor
commits to purchase Mortgage Loans or Mortgage-backed Securities.
"VA" means the Department of Veterans Administration and any
successor thereto.
THIS DOCUMENT WAS DRAFTED BY:
Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
CLOSING CHECKLIST
COMPANY: AMRESCO CAPITAL CORPORATION
DATE
RECEIVED EXCEPTION
1. Warehousing Credit and Security Agreement
a. Exhibit G (Subsidiaries)
b. Exhibit J (Schedule of Existing
Warehouse Lines)
2. UCC Financing Statements
3. Funding Bank Agreement
4. Company's Certificate of Secretary
a. Articles of Incorporation
certified by Secretary of State
b. Bylaws
c. Certificate of Good
Standing
from Secretary of State of
incorporation state
d. Certificate of Good
Standing
from Secretary of States
where
doing business
e. Incumbency Certificate
f. Corporate Resolutions
5. Opinion of Counsel for Company
6. Financial Statements of the Company
a. Audited dated April 30, 1995
7. Seller/Servicer Approvals required per
Section 5.10
a. FHLMC
8. Errors and Omissions Policies
9. Mortgage Bankers Blanket Bond Policy
10. Documentation Fee
11. Tax, lien and judgment search for:
a. Company
12. Disbursement, Payoff, and Operating
Accounts opened
13. Eligibility Memo (FOR RFC PURPOSES ONLY)
Account Officer: Date:
Regional Vice President: Date:
CERTIFICATE OF SECRETARY
OF
AMRESCO CAPITAL CORPORATION
I, the undersigned, hereby certify that I am the Secretary
of AMRESCO CAPITAL CORPORATION, a Texas corporation (the
"Company"), and have knowledge of the matters contained in this
Certificate and hereby certify that:
1. The Articles of Incorporation of the Company
attached to this Certificate as Exhibit "A", the
By-Laws of the Company attached to this
Certificate as Exhibit "B", and the Certificates
of Good Standing of the Company attached to this
Certificate as Exhibit "C" are true and correct
copies of the current Articles of Incorporation,
By-Laws, and Certificates of Good Standing of the
Company, have not been altered, modified or
amended and are still in full force and effect.
2. The Company is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Texas (the jurisdiction where
it is incorporated) and has complied with all
certifications, filings and requirements necessary
to continue as a corporation in the State of Texas
and is qualified to do business as a foreign
corporation and in good standing in all
jurisdictions where the conduct of its business
makes such qualification necessary.
3. In connection with a multi-family warehouse
facility made to the Company by RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation (the
"Lender"), the Company has the valid power and
authority to execute and deliver to the Lender the
Warehousing Credit and Security Agreement and such
other security documents as required by the
Lender.
4. The names of the officers of the Company and
any other persons authorized to act under the
resolutions attached hereto and their official
signatures are as shown on the Certificate of
Incumbency attached hereto as Exhibit "D".
5. The resolutions attached to this Certificate
as Exhibit "E" were duly adopted either: (a) by
unanimous written action of the Board of Directors
of the Company; or (b) at a meeting of the Board
of Directors of the Company held on the day
of , 19 , at which
meeting a quorum was present. I am the keeper of
the Minute Book of the Company and said
resolutions have been entered therein, have not
been altered, amended, repealed or rescinded, and
are now in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of the Company as of this _____ day of August, 1995.
Secretary
[SEAL]
EXHIBIT "A"
ARTICLES OF INCORPORATION
EXHIBIT "B"
BY-LAWS
EXHIBIT "C"
CERTIFICATE OF GOOD STANDING
EXHIBIT "D"
CERTIFICATE AS TO INCUMBENCY
TO: RESIDENTIAL FUNDING CORPORATION
I hereby certify to you that I am the duly elected and
qualified Secretary of AMRESCO CAPITAL CORPORATION, a Texas
corporation ("Company") and that, as such, I am authorized to
execute this Certificate on behalf of the Company. I further
certify that the persons named below are duly elected, qualified
and acting officers of the Company, holding on the date hereof
the respective titles set forth opposite their respective names,
and that the respective signatures set forth opposite their names
are their true and genuine signatures:
Name Title Signature
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
____________________ ________________ ____________________
You may conclusively rely on this Certificate until formally
advised by a like Certificate of any changes herein.
IN WITNESS WHEREOF, I have hereunto executed this
Certificate on this _____ day of ____________________, 19___.
Secretary
EXHIBIT "E"
AMRESCO CAPITAL CORPORATION
RESOLUTIONS OF BOARD OF DIRECTORS
WHEREAS, AMRESCO CAPITAL CORPORATION, a Texas corporation
(the "Company"), proposes to borrow from RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation (the "Lender"), a Delete
multi-family warehouse facility (the "Loan"); and
WHEREAS, to evidence the Loan, the Company proposes to
execute and deliver the following instruments, each dated as of
August 15, 1995 unless otherwise indicated (herein collectively
referred to as the "Loan Documents"):
(a) A Warehousing Credit and Security Agreement
(Multi-family Mortgage Loans) evidencing the Loan
and creating a security interest in the Collateral
defined therein in favor of the Lender;
(b) Undated Financing Statements perfecting a
security interest in collateral, tangible and
intangible;
copies of which have been presented to the Board of Directors of
the Company; and
WHEREAS, the Board of Directors of the Company have
determined that it will be in the best interests of the Company
for the Company to borrow the Loan.
RESOLVED, that these resolutions are enacted by the Board of
Directors of the Company on their behalf and on behalf of the
Company.
FURTHER RESOLVED, that the Company shall borrow the Loan to
be evidenced and secured by the Loan Documents.
FURTHER RESOLVED, that the Loan Documents in the form
presented to the Board of Directors of the Company are hereby
approved and copies thereof are filed in the records of the
Company with these Resolutions.
FURTHER RESOLVED, that any
(insert minimum number required to sign) of the following
officers of the Company:
(list titles of officers authorized), shall be and are
authorized, empowered and directed in the name of and on behalf
of the Company, to execute, acknowledge and deliver the Loan
Documents, and each of them, in the form approved by the Board of
Directors of the Company as aforesaid, with such changes therein
as may be acceptable to such officers, as conclusively evidenced
by their execution thereof.
FURTHER RESOLVED, that such officers shall be and are hereby
authorized, empowered and directed to do and perform each and
every act and execute any and all documents and instruments in
the name of the Company as may be necessary or desirable to
enable the Company to borrow the Loan and to carry out the
purpose and intent of the foregoing Resolutions.
FURTHER RESOLVED, that any
(insert minimum number required to sign) of the following
officers of the Company:
(list titles of officers authorized), shall be and are
authorized, empowered and directed in the name of and on behalf
of the Company, to execute, acknowledge and deliver any bailee
pledge agreements, advance requests, shipping requests, wire
transfer instructions, assignments, security delivery
instructions and trust receipts and to endorse notes in the name
of the Company, in any form prescribed by the Lender.
FURTHER RESOLVED, that the Company hereby authorizes the
Lender to accept the Company's bailee pledge agreements, advance
requests, shipping requests, wire transfer instructions and
security delivery instructions transmitted to the Lender via
facsimile or electronic transmission, and that said documents,
when transmitted by facsimile or electronic transmission, shall
have the same force and effect as the originals.
FURTHER RESOLVED, that these Resolutions shall remain in
full force and effect and the Lender shall be fully protected in
acting thereon until written notice of their change or revocation
has been duly given to and received by the Lender, and the Lender
is authorized to accept, and the Secretary of the Company shall
from time to time provide, signed certificates of the Secretary
setting forth any change of names of officers and other persons
authorized to act hereunder on behalf of the Company, which
certificates shall become a part of these Resolutions.
_______________________________
1A certificate of good standing, dated as of a date within
ninety (90) days of the date of the Agreement, for the state
where the Company is incorporated and for each state where the
Company is transacting business as a foreign corporation should
be listed.
2In the alternative, state that the Company has no
Subsidiaries.
REVOLVING LOAN AGREEMENT Page 10
423610.11D
REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT is entered into as of the
29th day of September, 1995, by and among AMRESCO, INC., a
Delaware corporation, and the entities designated as "Borrowers"
on Schedule I attached hereto (as modified from time to time),
and NationsBank of Texas, N.A., a national banking association,
for itself and as agent, and the lending institutions designated
as "Lenders" on Schedule I hereto (as modified from time to
time).
PRELIMINARY STATEMENT
Borrowers have requested that Lenders make available two
revolving credit facilities in an aggregate amount not to exceed
One Hundred Seventy-Five Million and No/100 Dollars
($175,000,000.00). Upon and subject to the terms of this
Agreement, Lenders are willing to make such revolving credit
facilities available to Borrowers. Accordingly, in consideration
of the mutual covenants contained herein, Borrowers, Agent and
Lenders agree as follows:
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions. The following terms, as used
herein, have the following meanings:
Account Debtor means, collectively, the "borrower" and each
other obligor, guarantor or other liable party under any Assigned
Loan.
Acquired Loans means the loans and mortgages included in any
Asset Portfolio acquired by any of the Borrowers, and which have
not been disposed of by any such Borrower.
Adjusted LIBOR Rate shall mean on the applicable Effective
Date, with respect to a LIBOR Rate Advance, a rate per annum
equal to the sum of (a) the quotient of (i) the LIBOR Rate on the
applicable Effective Date, divided by (ii) the remainder of 1.00
minus the LIBOR Reserve Requirement, if any, on the applicable
Effective Date, plus (b) the FDIC Percentage in effect on the
applicable Effective Date, together with any additional
impositions, assessments, fees or surcharges that may be imposed
on Agent or any Lender (expressed as a percentage), to the extent
such impositions, assessments, fees or surcharges are not
reflected in the FDIC Percentage or the LIBOR Reserve Requirement
and are generally imposed on banks with capitalization and
supervisory risk factors comparable to Agent, plus (c) the LIBOR
Margin.
Administrative Fee means an aggregate annual fee of
Twenty-Five Thousand and No/100 Dollars ($25,000.00).
Advances means Corporate Facility Advances and/or Portfolio
Facility Advances.
Affiliate means, as to any Person, any Subsidiary of such
Person, or any Person which, directly or indirectly, controls, is
controlled by, or is under common control with such Person. For
the purposes of this definition, "control" means the possession
of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
Agent means NationsBank, in its capacity as agent for the
Lenders hereunder, or any successor agent pursuant to Section
10.5 or any agreement entered into pursuant to Section 10.6.
Agreement means this Revolving Loan Agreement and all
renewals, extensions, modifications, amendments and
rearrangements thereof.
AMRESCO means AMRESCO, Inc., a Delaware corporation, that
directly or indirectly owns 100% of the capital stock of the
other Borrowers.
Applicable Environmental Laws has the meaning set forth in
Section 7.7.
Applicable Rate has the meaning set forth in Section 3.3.
Approved Subordinated Debt means Debt issued by AMRESCO
which is unsecured and subordinated to payment of the Credit
Facilities and the terms of which (including, without limitation,
the subordination provisions thereof) have been approved in
writing by the Required Lenders.
Arranger means NationsBanc Capital Markets, Inc.
Asset Portfolios means one or more pools or portfolios of
(a) performing, non-performing or under-performing loans, and/or
(b) real estate or other assets acquired in connection with the
foreclosure, restructure or settlement of non-performing or
under-performing loans, together with all documents, instruments,
certificates and other information related thereto.
Asset Portfolio Report means a report showing various
information concerning each Asset Portfolio which is included as
an Eligible Investment, such report being in form as attached to
the Borrowing Base Schedule as Annex A.
Assigned Loans means the Acquired Loans included in the
Asset Portfolios which are Eligible Investments, and which have
not been disposed of by the applicable Borrower as contemplated
and permitted by this Agreement and the other Loan Documents.
Assignment and Acceptance has the meaning set forth in
Section 11.10.
Authorized Officer means, as to any Borrower, or any other
Person, any of its Chairman, Vice-Chairman, President, Executive
Vice President(s), Chief Financial Officer, Chief Accounting
Officer, Treasurer or Assistant Treasurer, who are duly
authorized by the Board of Directors of such Person to execute
the Loan Documents or any other documents or certificates to be
executed by such Person hereunder or in connection with any
Advance or Letter of Credit.
Available Commitment means the aggregate amount which
Borrowers are entitled to borrow under the terms of this
Agreement, which amount shall initially be (a) as to the
Corporate Facility, Seventy-Five Million and No/100 Dollars
($75,000,000.00), subject to reduction pursuant to the terms of
Section 2.1(a) or as otherwise provided in the Loan Documents,
and (b) as to the Portfolio Facility, One Hundred Million and
No/100 Dollars ($100,000,000.00); provided, however, that until
such time that Lenders, in addition to the Initial Lenders, agree
to make Advances hereunder (as evidenced by an addendum or
modification to Schedule I being attached hereto and the issuance
by Borrowers of additional Notes to such Lenders), (i) the
Available Commitment under the Corporate Facility shall equal the
greater of $43,928,571.00 and the sum of (A) the aggregate Loan
Commitment Amounts of the Initial Lenders under the Corporate
Facility plus (B) the aggregate Loan Commitment Amounts under the
Corporate Facility of any other Lenders hereafter added as a
Lender to this Agreement (other than through an assignment or
participation of an existing Lender's interest in the Credit
Facilities), and (ii) the Available Commitment under the
Portfolio Facility shall equal the greater of $58,571,429.00 and
the sum of (A) the aggregate Loan Commitment Amounts of the
Initial Lenders under the Portfolio Facility plus (B) the
aggregate Loan Commitment Amounts under the sPortfolio Facility
of any other Lenders hereafter added as a Lender under this
Agreement (other than through an assignment or participation of
an existing Lender's interest in the Credit Facilities).
Base Rate means, on any date of determination, the greater
of (a) the rate of interest per annum most recently announced by
Agent as its prime rate in effect at its principal office (which,
in the case of NationsBank shall mean its principal office in
Dallas, Texas), automatically fluctuating upward and downward
until and at the time specified in each such announcement without
special notice to any Borrower or any other Person, which prime
rate may not necessarily represent the lowest or best rate
actually charged to a customer and (b) the sum of the Federal
Funds Rate plus .50%.
Borrower Due Diligence Reports means the various written
reports, information and other materials that a Borrower prepared
or assembled and has available at the offices designated in
Section 7.12 hereof containing descriptions and evaluations of
the Acquired Loans and Mortgaged Properties included in a
particular Asset Portfolio, and the applicable Borrower's
assessments and projections regarding same, or other information
regarding such Acquired Loans and the Mortgaged Property,
including copies of purchase agreements, copies of any appraisals
or environmental site assessments, and the "Round Table" books
for each such Asset Portfolio summarizing the applicable
Borrower's due diligence regarding such Acquired Loans and the
Mortgaged Property.
Borrowers means AMRESCO and each of the entities designated
on Schedule I as a "Borrower," as such Schedule I may be
supplemented pursuant to Section 2.4.
Borrowing Base means an amount equal to the lesser of
(a) the sum of (i) the aggregate amount obtained by adding the
products obtained by multiplying the applicable Borrowing
Percentage times the Net Investment Value of the Eligible
Investments (excluding, however, the Net Investment Value of any
Performing Assigned Loans), plus (ii) eighty percent (80%) of the
Net Investment Value of Performing Assigned Loans at the time of
determination, provided, that, in no event shall the amount
included under clause (ii) exceed the lesser of twenty percent
(20%) of the total availability under the Portfolio Facility on
the date of determination, or Fifteen Million and No/100 Dollars
($15,000,000.00), or (b) the quotient of (i) the net present
value (discounted at nine percent (9%)) of the Projected Net Cash
Flow from Eligible Investments as determined by Borrower and not
reasonably objected to by Agent (provided, that, with respect to
the Projected Net Cash Flow from any Eligible Investment in which
Heller Financial, Inc. has a profits interest as described in
Section 8.8(g), Borrowers shall include only 75% of the net
present value of such Projected Net Cash Flow for the purposes of
this calculation), divided by (ii) 1.70; provided that, in
computing the Borrowing Base the portion of the Borrowing Base
attributable to Wholly-Owned Real Estate Portfolios shall not
exceed twenty-five percent (25%) of the aggregate Borrowing Base.
Borrowing Base Schedule means the schedule which (a) lists
each Eligible Investment and the current Net Investment Value
thereof with any back-up schedule required by Section 7.1(g),
(b) the aggregate Net Investment Values of the Performing
Assigned Loans included in Eligible Investments, (c) designates
the number of months since each such Eligible Investment was
initially acquired by any Borrower, (d) shows the net present
value (discounted at nine percent (9%)) of the Projected Net Cash
Flow from Eligible Investments for each Eligible Investment, (e)
shows the aggregate Net Investment Value and aggregate net
present values of Projected Net Cash Flow related to any Wholly-
Owned Real Estate Portfolios included in the Borrowing Base, (f)
calculates the Borrowing Base and shows how such calculation was
made, and (g) includes a completed Asset Portfolio Report if such
Borrowing Base Schedule is being delivered with Borrowers'
quarterly financial statements, which Borrowing Base Schedule
shall be in substantially the form attached as Schedule I to the
Request for Advance.
Borrowing Percentage means the following percentages for the
following time periods:
Time Elapsed Since Initial
Purchase By Any Borrower of Eligible Investment Percentage
Less than 6 months 80%
Greater than or equal to 6 months, but less than 12 months 70%
Greater than or equal to 12 months, but less than 18 months 60%
Greater than or equal to 18 months, but less than 24 months 25%
Greater than or equal to 24 months 0%
Bridge Loan means a loan in an initial amount equal to
Twenty-Five Million and No/100 Dollars ($25,000,000.00), to be
used by Borrowers for the purposes set forth in Section 2.5
hereof and to be repaid as provided in Section 3.14.
Bridge Loan Advances means advances by Bridge Loan Lender to
Borrowers under the Bridge Loan pursuant to the terms and
conditions of this Agreement.
Bridge Loan Commitment means the commitment by the Bridge
Loan Lender to make the Bridge Loan, as the same is reduced from
time to time pursuant to Section 2.5.
Bridge Loan Lender means NationsBank, and its successors and
assigns.
Bridge Loan Percentage means the percentage obtained by
dividing (a) the Bridge Loan Commitment by (b) the sum of the
Available Commitment related to the Corporate Facility plus the
Bridge Loan Commitment.
Business Day means (a) for all purposes other than as
covered by clause (b) of this definition, any day of the week,
other than Saturday, Sunday or other day Agent or any Lender is
required or authorized by law or executive order to close, and
(b) with respect to all requests, notices and determinations in
connection with LIBOR Rate Advances, a day which is a Business
Day described in clause (a) of this definition and which is a day
for trading by and between banks for Dollar deposits in the
London interbank market.
CERCLA has the meaning set forth in Section 7.7.
Change in Control means (a) the acquisition by a person (as
such term is used in Section 13(d) and Section 14(d)(2) of the
Exchange Act) or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act) of the
beneficial ownership of issued and outstanding shares of the
voting stock of AMRESCO, the result of which acquisition is that
such person or such group possess in excess of 50% of the
combined voting power of all the issued and outstanding voting
stock of AMRESCO, or (b) during any period of twelve consecutive
calendar months, individuals who were directors of AMRESCO on the
first day of such period shall cease to constitute a majority of
the Board of Directors of AMRESCO; provided, however, that the
Existing Control Group shall not be deemed to be persons or
members of such acquiring group in determining whether such
direct or indirect beneficial ownership or power has been
acquired by any person or any group.
Closing Date means the effective date of execution of this
Agreement as designated in the first paragraph of this Agreement.
Code means the Internal Revenue Code of 1986, as amended.
Collateral means all property, assets and interests of any
kind securing the Credit Facilities (including, without
limitation, all Advances and the Letters of Credit) pursuant to
this Agreement or any of the other Loan Documents, which shall
include, without limitation, all Assigned Loans.
Collateral Assignment means the collateral assignment of
promissory notes and liens and, collectively, all collateral
assignments of promissory notes and liens, executed by any
Borrower in favor of Agent, on behalf and for the benefit of
Lenders, as security for the Credit Facilities, which collateral
assignment is intended to cover all of the Assigned Loans and all
renewals, modifications, amendments, supplements and restatements
thereof, which collateral assignment shall be in the form
attached hereto as Exhibit B.
Commitment Fee shall mean the non-refundable fee equal to
the product of (a) the applicable percentage in effect as
computed pursuant to Schedule II attached hereto, times, (b) the
average daily unused portion of the Available Commitment after
adjustment for the Letter of Credit Exposure.
Compliance Letter means a letter from Deloitte & Touche (or
such other firm approved by the Required Lenders) stating that
such firm has reviewed the calculation of the then current
Borrowing Base and all components of the Borrowing Base and such
calculations are accurate and comply with the requirements of
this Agreement, and containing such other information Agent may
reasonably request, and otherwise being in substantially the form
attached hereto as Exhibit D-1.
Consequential Loss has the meaning set forth in
Section 3.6(d).
Consolidated Capitalization means, as of any date, the sum
of (a) Consolidated Funded Debt plus (b) Consolidated Tangible
Net Worth.
Consolidated EBITDA means, for any period, determined in
accordance with GAAP on a consolidated basis for AMRESCO and its
Subsidiaries, the sum of consolidated net income before taxes and
non-recurring gains or losses, plus depreciation, plus
amortization, plus interest expense, each as deducted in
determining such consolidated net income before taxes.
Consolidated Funded Debt means, as of any date, all Debt
which is evidenced by promissory notes, loan agreements, bonds or
similar instruments, as such amount is required to be shown on
AMRESCO's consolidated financial statements prepared in
accordance with GAAP (including, without limitation, Approved
Subordinated Debt), but excludes the Investment Line of Credit.
Consolidated Interest Expense means, for any period, the
interest expense which is required to be shown as such on the
financial statements of AMRESCO and its Subsidiaries, on a
consolidated basis, prepared in accordance with GAAP.
Consolidated Lease Expense means, for any period, the lease
expense under all Operating Leases for AMRESCO and its
Subsidiaries on a consolidated basis.
Consolidated Net Income means, as of the first day of each
calendar quarter, the net income after taxes of AMRESCO and its
Subsidiaries, on a consolidated basis, determined in accordance
with GAAP, for the immediately preceding calendar quarter, which
amount shall be zero if there was a net loss for the immediately
preceding calendar quarter.
Consolidated Tangible Net Worth means, as of any date, (a)
the total shareholder's equity (including capital stock,
additional paid-in capital and retained earnings after deducting
treasury stock) which would appear on a consolidated balance
sheet of AMRESCO and its Subsidiaries prepared as of such date in
accordance with GAAP, less (b) the aggregate book value of
Intangible Assets shown on such balance sheet of such Person,
prepared in accordance with GAAP, provided that, for purposes of
determining the financial covenants in Article VIII, the
percentage of Consolidated Tangible Net Worth attributable to (i)
the Excluded Subsidiaries, shall not exceed ten percent (10%) of
total Consolidated Tangible Net Worth, and (ii) Permitted Foreign
Assets, shall not exceed twenty-five percent (25%) of total
Consolidated Tangible Net Worth, and less (c) unamortized debt
discount and expenses.
Corporate Facility means that portion of the Credit Facility
which is to be used by AMRESCO for itself and the other Borrowers
for the purposes listed in Section 2.1(a).
Corporate Facility Advance means an Advance made by Lenders
to any Borrower under the Corporate Facility pursuant to the
terms and conditions of this Agreement.
Corporate Facility Notes means the promissory notes in the
form attached hereto as Exhibit A to be issued by Borrowers to
each Lender in the amount of such Lender's Loan Percentage of the
Corporate Facility.
Credit Facilities means the credit facilities arranged by
Lenders for Borrowers as evidenced by this Agreement, consisting
of the Corporate Facility and the Portfolio Facility.
Credit Period means the period commencing on the date of
this Agreement and ending on the applicable Termination Date.
Custodial Agreement means each Custodial Agreement in form
approved by Agent by and between the Custodian, AMRESCO, for
itself and on behalf of Borrowers, and Agent whereby Custodian
agrees to act as bailee for the documents evidencing certain of
the Assigned Loans, as any such Custodial Agreement may be
amended or supplemented from time to time, together with any
replacement or substitution therefor.
Custodian means a financial institution approved by the
Required Lenders to act as a custodian under a Custodial
Agreement. The initial Custodians shall be Fleet National Bank,
a national banking association, and Bank One, Texas, NA, a
national banking association.
Debt of any Person means at any date, without duplication,
(a) all indebtedness, obligations and liabilities of such Person
for borrowed money, (b) all indebtedness, obligations and
liabilities of such Person evidenced by bonds, debentures, notes
or other similar instruments, whether recourse or non-recourse
and whether secured or unsecured, (c) all other indebtedness
(including capitalized lease obligations) of such Person on which
interest charges are customarily paid or accrued, (d) all other
indebtedness and obligations of such Person including, without
limitation, trade payables and Interest Hedge Agreements, (e) all
obligations for indebtedness in respect of Guarantees by such
Person, (f) the unfunded or unreimbursed portion of all letters
of credit issued for the account of such Person, and (g) all
personal liability of such Person as a general partner or joint
venturer of a partnership or joint venture for obligations of
such partnership or joint venture of the nature described in
(a) through (f) preceding.
Default means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
Default Rate means the fluctuating per annum rate of
interest equal to the lesser of (a) four percent (4.0%) plus the
Base Rate, or (b) the Maximum Lawful Rate.
Designated Successor Agent means, at any given time, the
Lender other than Agent which has the largest Loan Percentage;
provided, however, if two or more such Lenders have the same Loan
Percentage at such time, then the Designated Successor Agent
shall be such of those Lenders having the same Loan Percentage
which has the largest net worth; and, provided further, that if
the Required Lenders object to the newly named Designated
Successor Agent, or if any Lender determined to be a Designated
Successor Agent declines to serve as successor Agent, in writing
delivered to the outgoing Agent within seven (7) Business Days
after such Designated Successor Agent is determined, then the
Lender other than Agent or such rejected or declining Designated
Successor Agent which has the next largest Loan Percentage shall
be the Designated Successor Agent. For each such Lender that is
a member of a bank holding company, its net worth shall be deemed
to be the consolidated net worth of its bank holding company.
DIDMCA means the Depositary Institutions Deregulation and
Monetary Control Act of 1980, Public Law 96-221, as amended,
codified at 12 U.S.C. 1735f-7.
Distressed Assets means (a) one or more non-performing or
under-performing loans or (b) real estate or other assets
acquired or received in connection with the foreclosure,
restructure or settlement of any non-performing or under-
performing loans.
Distribution by any Person, means (a) with respect to any
stock issued by such Person or any partnership or joint venture
interest of such person, the retirement, redemption, repurchase,
or other acquisition for value of such stock, partnership or
joint venture interest, (b) the declaration or payment (without
duplication) of any dividend or other distribution, whether
monetary or in kind, on or with respect to any stock, partnership
or joint venture of any Person, and (c) any other payment or
distribution of assets of a similar nature or in respect of an
equity investment.
Dollars and the "$" symbol shall refer to currency of the
United States of America.
Effective Date has the meaning set forth in Section 3.5.
Eligible Assignee means any of (a) a commercial bank
organized under the laws of the United States, or any State
thereof or the District of Columbia; (b) a savings and loan
association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia;
(c) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political
subdivision of any such country, provided that such bank is
acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the
OECD; (d) the central bank of any country which is a member of
the OECD; or (e) an insurance company, pension fund, credit
corporation or other finance company organized under the laws of
any state of the United States; provided, however, that no
institution described in clause (a), (b), (c), (d), or (e) above
shall be an Eligible Assignee unless it has total assets in
excess of $5 billion; and, provided further, that an institution
described in clause (c) or (d) above must maintain a branch or
agency under the laws of the United States.
Eligible Investments are investments in Asset Portfolios
(a) which are wholly-owned by any Borrower, (b) for which Lenders
have a perfected, first priority lien or security interest in the
related Acquired Loans and other assets included in such Asset
Portfolios (except for the net profits interest granted by
AMRESCO New Hampshire, Inc. and referenced in Section 8.8(g) and
except that Lenders may not have filed a Mortgage received with
respect to any or all of the Mortgaged Properties), and (c) with
respect to which Borrowers have timely delivered all related
documents and agreements required to be delivered under the
applicable Custodial Agreements.
Employee Plan means at any time an employee benefit plan as
defined in Section 3(3) of ERISA that is now or was previously
maintained, sponsored or contributed to by any Borrower or any
ERISA Affiliate of any Borrower.
ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all regulations
issued pursuant thereto.
ERISA Affiliate means any person that is treated as a single
employer with any Borrower under Section 414 of the Code.
Event of Default has the meaning set forth in Section 9.1.
Exchange Act shall mean the Securities Exchange Act of 1934,
as amended.
Excluded Loans means those Acquired Loans which are secured
by bank stock, time shares, property with significant
environmental clean up requirements (as determined by Agent), any
assets which are located outside of the United States (other than
Canada, territories of the United States, or, otherwise approved
by the Required Lenders), or other assets designated by Agent
from time to time in writing to AMRESCO.
Excluded Subsidiaries means, collectively, (a) Whiterock
Investments, Inc., a Delaware corporation, AMRESCO Advisors,
Inc., a Texas corporation, AMRESCO Realty Advisors, Inc., a
Georgia corporation, BEI Asset Managers, Inc., a Texas
corporation, and any other existing or future Subsidiary of any
Borrower which is subject to the Investment Advisors Act of 1940,
as amended, (b) any special purpose subsidiary which has been
established to acquire loan portfolios and has obtained
Nonrecourse Debt in connection with such acquisitions or
indebtedness where recourse is limited just to such special
purpose subsidiary, and which does not own Eligible Investments
or any other Collateral included in determining the Borrowing
Base (and which, after the Closing Date, is approved by Agent as
an Excluded Subsidiary), and (c) such other Subsidiaries
designated by AMRESCO as excluded subsidiaries and approved by
the Required Lenders.
Existing Control Group shall mean CGW Southeast Partners,
James Cotton and Gerald Eickhoff.
FDIC Percentage shall mean, on any day, the net assessment
rate (expressed as a percentage rounded to the next highest 1/100
of 1%) which is in effect on such day (under the regulations of
the Federal Deposit Insurance Corporation or any successor) for
determining the assessments paid by Agent to the Federal Deposit
Insurance Corporation (or any successor) for insuring
Eurocurrency deposits made in dollars at Agent's principal
offices (which for NationsBank shall be its offices in Dallas,
Texas). Each determination of said percentage made by Agent
shall, in the absence of manifest error, be binding and
conclusive.
Federal Funds Rate means, for any day, the rate per annum
(rounded upwards if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate
quoted to Agent on such day on such transactions from three
Federal funds brokers of recognized standing.
Fiscal Year means any fiscal year of any Borrower commencing
on January 1 and ending on December 31.
Fixed Charge Coverage Ratio means, for any date of
determination, the ratio of (a) the sum of (i) Consolidated
EBITDA plus (ii) Consolidated Lease Expense, both for the
immediately preceding twelve calendar months, to (b) the sum of
(i) Consolidated Interest Expense plus (ii) Consolidated Lease
Expense, both for the immediately preceding twelve calendar
months.
GAAP means generally accepted accounting principles
consistently applied as in effect at the time of application of
the provisions hereof; provided, however, that wherever in this
Agreement principles of consolidation different from those
required by generally accepted accounting principles are
specified, the principles of consolidation specified in this
Agreement shall govern.
Governmental Authority means any government, any state or
other political subdivision thereof, or any Person exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Guaranty by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership
arrangements, by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain
financial statement conditions, by "comfort letter" or other
similar undertaking of support or otherwise), or (b) entered into
for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of
business.
Impositions means all real estate and personal property
taxes; charges for any easement, license or agreement maintained
for the benefit of any of the real property of any Borrower, or
any part thereof; and all other taxes, charges and assessments
and any interest, costs or penalties with respect thereto,
general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever, which at any time
prior to or after the execution hereof may be assessed, levied or
imposed upon any of the real property of any Borrower, or any
part thereof, or the ownership, use, sale, occupancy or enjoyment
thereof, in each case which, if not timely paid or otherwise
discharged, would materially and adversely affect (a) such
ownership, use, sale, occupancy or enjoyment, or (b) the
financial condition of any Borrower.
Initial Lenders means NationsBank, Bank One, Texas, NA,
First Interstate Bank of Texas, N.A. and Morgan Guaranty Trust
Company of New York.
Intangible Assets of any Person means those assets of such
Person which are (a) deferred assets, other than prepaid
insurance and prepaid taxes, (b) patents, copyrights, trademarks,
tradenames, franchises, goodwill, experimental expenses and other
similar assets which would be classified as intangible assets on
a balance sheet of such Person, prepared in accordance with GAAP,
(c) unamortized discount and expenses, and (d) assets located,
and notes and receivables due from obligors domiciled, outside
the United States of America, other than Permitted Foreign
Assets.
Interest Adjustment Date shall mean the earlier of either
the last day of an Interest Period or the Termination Date.
Interest Coverage Ratio means, for any date of
determination, the ratio of (a) Consolidated EBITDA for the
immediately preceding twelve calendar months to (b) Consolidated
Interest Expense for the immediately preceding twelve calendar
months.
Interest Hedge Agreements means any and all agreements,
devises or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates,
including, but not limited to, interest rate cap or collar
protection agreements, interest rate swap agreements or interest
rate options, as the same may be amended or modified and in
effect from time to time, and any and all terminations or
assignments of any of the foregoing.
Interest Period shall mean, with respect to a LIBOR Rate
Advance, a period selected by AMRESCO of 30, 60, 90, 120, or 180
days, commencing on the Effective Date of any LIBOR Rate Advance;
provided that any Interest Period ending on a date later than the
Termination Date shall be deemed to end on the Termination Date.
Investment Grade means a Qualified Investment Rating of BBB-
or higher using the rating classification employed by Fitch
Investors Service, Inc. or such comparable rating employed by
another rating agency.
Investment Line of Credit means the line of credit to
AMRESCO made by NationsBank, such line of credit being in the
amount of Thirty-Five Million and No/100 Dollars ($35,000,000.00)
for the purchase of liquid short-term investments, as the same
may be renewed, extended, modified, amended or replaced from time
to time.
Issuing Lender means NationsBank in its capacity as issuer
of the Letters of Credit.
Legal Requirements means (a) any and all present and future
judicial decisions, statutes, laws, rulings, rules, orders,
regulations, permits, licenses, certificates, or ordinances of
any Governmental Authority in any way applicable to any Borrower,
(b) the presently or subsequently effective bylaws and articles
of incorporation and any other form of business association
agreement of any Borrower, (c) any and all covenants, conditions
or restrictions applicable to the Collateral or the ownership,
use or occupancy thereof, and (d) any and all leases or contracts
(written or oral) of any nature that relate in any way to any
Collateral, or any portion thereof, or to which any Borrower may
be bound, and in each case which, if violated, would materially
and adversely affect (i) the present or potential ownership, use,
sale, occupancy or possession of the Collateral or any part
thereof, by any Borrower, (ii) the Lenders' Liens or (iii) the
financial condition of any Borrower.
Lenders means each of the financial institutions listed as a
"Lender" on Schedule I attached hereto as the same may be
modified or amended from time to time.
Lenders' Liens means all liens, security interests, charges,
pledges or encumbrances created by the Loan Documents.
Letter of Credit Exposure means the aggregate amount of the
unfunded portion of each Letter of Credit outstanding at any
time.
Letter of Credit Fee has the meaning set forth in
Section 2.3(c).
Letters of Credit means all letters of credit issued by the
Issuing Lender for the account of any Borrower pursuant to this
Agreement.
LIBOR Margin means the applicable margins based on AMRESCO's
Consolidated Funded Debt to Consolidated EBITDA ratio computed as
of the last day of each calendar quarter on a trailing four-
quarter basis or a Qualified Investment Rating (whichever results
in the lowest applicable margin), as determined pursuant to
Schedule II attached hereto.
LIBOR Rate shall mean, with respect to a LIBOR Rate Advance
for the Interest Period applicable thereto, the rate of interest
determined by Agent at which deposits in dollars for the relevant
Interest Period are offered based on information presented on the
Telerate Screen as of 11:00 A.M. (London time) on the day which
is two (2) Business Days prior to the first day of such Interest
Period; provided, that if at least two such offered rates appear
on the Telerate Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by Agent) will
be the rate used; provided, further, that if Telerate ceases to
provide LIBOR quotations, such rate shall be the average rate of
interest determined by Agent at which deposits in Dollars are
offered for the relevant Interest Period by Agent (or its
successor) to banks with combined capital and surplus in excess
of $500,000,000 in the London interbank market as of 11:00 A.M.
(London time) on the applicable Effective Date.
LIBOR Rate Advance shall mean an Advance which bears
interest computed with reference to the LIBOR Rate.
LIBOR Reserve Requirement shall mean, on any day, that
percentage (expressed as a decimal fraction) which is in effect
on such date, as provided by the Federal Reserve System for
determining the maximum reserve requirements generally applicable
to financial institutions regulated by the Federal Reserve Board
comparable in size and type to Agent (including, without
limitation, basic supplemental, marginal and emergency reserves)
under Regulation D with respect to "Eurocurrency liabilities" as
currently defined in Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding (or, if reserves for Eurocurrency
liabilities are not separately stated in such regulations, the
other applicable category of liabilities which includes deposits
by reference to which the interest rate on a LIBOR Rate Advance
is determined). Each determination by Agent of the LIBOR Reserve
Requirement, shall, in the absence of manifest error, be
conclusive and binding.
Lien means with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
Loan Commitment Amount means, with respect to each Lender,
the amount indicated as such Lender's Loan Commitment Amount
opposite the name of such Lender with respect to each of the
Corporate Facility and the Portfolio Facility in Schedule I, as
such amount (a) may be reduced from time to time, as a result of
a reduction in the Available Commitment as provided in this
Agreement, or (b) may be adjusted from time to time to account
for any assignment of a Lender's interest as provided in Section
11.10.
Loan Documents means this Agreement, the Notes, the Pledge
Agreements, the Letters of Credit, the LOC Applications, the
Collateral Assignments, the Lockbox Agreement, the Security
Agreements, all related financing statements, and all other
agreements, statements, certificates, documents or instruments
evidencing, securing or pertaining to the Credit Facilities
(including the Letters of Credit) or otherwise executed and/or
delivered from time to time pursuant to or in connection with
this Agreement, as the same may be modified, amended, renewed,
extended, rearranged, restated or replaced from time to time.
Loan Percentage means, with respect to each Lender, the
percentage indicated as such Lender's Loan Percentage opposite
the name of such Lender on Schedule I, as such percentage may be
adjusted from time to time to account for any assignments of a
Lender's interest as provided in Section 11.10.
LOC Application has the meaning set forth in Section 2.2(d).
Lockbox means a post office box, or collectively post office
boxes, established by Borrowers and Lockbox Agent pursuant to the
provisions of Section 5.7 and the Lockbox Agreement.
Lockbox Account means a cash collateral account or accounts
maintained with Lockbox Agent and styled "(name of particular
Borrower) Lockbox Account for the Benefit and Under the Control
of NationsBank of Texas, N.A., as Agent for Lenders," which
accounts shall be (a) subject to the provisions of Section 5.7.,
and (b) pledged and assigned to Lenders as additional security
for the payment, performance and observance of the Obligations.
Lockbox Agent means NationsBank.
Lockbox Agreement means that certain Lockbox Agreement,
dated as of the Closing Date, executed by and among Borrowers,
Agent and Lockbox Agent, substantially in the form attached
hereto as Exhibit F, and all amendments, modifications and
replacements thereof.
Margin Regulations mean Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System, as in effect
from time to time.
Margin Stock means "margin stock" as defined in
Regulation U.
Maximum Lawful Rate means the maximum rate (or, if the
context so permits or requires, an amount calculated at such
rate) of interest which, at the time in question would not cause
the interest charged on the Credit Facilities at such time to
exceed the maximum amount which Lenders would be allowed to
contract for, charge, take, reserve, or receive under applicable
federal or state law after taking into account, to the extent
required by applicable law, any and all relevant payments, fees
or charges under the Loan Documents. If and to the extent the
laws of the State of Texas are applicable for purposes of
determining the "Maximum Lawful Rate", such term shall mean the
"indicated rate ceiling" from time to time in effect under
Article 5069-1.04, Title 79, Revised Civil Statutes of Texas,
1925, as amended, or, if permitted by applicable law and
effective upon the giving of the notices required by such Article
5069-1.04 (or effective upon any other date otherwise specified
by applicable law), the "quarterly ceiling" or "annualized
ceiling" from time to time in effect under such Article
5069-1.04, whichever Agent shall elect to substitute for the
"indicated rate ceiling," and vice versa, each such substitution
to have the effect provided in such Article 5069-1.04, and Agent
shall be entitled to make such election from time to time and one
or more times and, without notice to any Borrower, to leave any
such substitute rate in effect for subsequent periods in
accordance with subsection (h)(1) of such Article 5069-1.04. If
under federal or state law there is no legal limitation on the
amount or rate of interest that may be charged on amounts
outstanding under the Credit Facilities, there shall be no
Maximum Lawful Rate, notwithstanding any reference thereto herein
or in any of the Loan Documents.
Minimum Notice Requirement has the meaning set forth in
Section 3.5.
Mortgage means any deed of trust or mortgage covering a
Mortgaged Property executed by any Borrower, granted to Agent,
for the benefit of the Lenders, to secure repayment of the Credit
Facilities and the Obligations, substantially in the form
approved by Agent, and all renewals, extensions, modifications,
amendments or supplements thereto, and all mortgages or deeds of
trust given in renewal, extension, modification, restatement or
replacement thereof.
Mortgaged Property or Mortgaged Properties means any and all
lots or parcels of land which any Borrower owns on the Closing
Date or which it may hereafter acquire as part of an Asset
Portfolio or any Underlying Real Estate which any Borrower may
hereafter own as a result of a foreclosure or deed-in-lieu of
foreclosure or otherwise, and improvements, fixtures and personal
property located thereon and all other property referenced in and
subject to the Mortgages. The Mortgaged Property is intended to
include all of the above-described real property whether or not a
Mortgage is actually granted or filed.
NationsBank means NationsBank of Texas, N.A., a national
banking association, and its successors.
Net Collections for any calendar month means an amount equal
to (a) any and all cash proceeds received by any Borrower from
its ownership, management and disposition of any and all assets
in any Asset Portfolio, including, without limitation, interest
and principal payments on Acquired Loans from any source, loan
settlement payments, any restructure or commitment or other loan
fees, payments on any judgments or settlement of litigation with
respect to Acquired Loans, proceeds from the sale of Acquired
Loans or Mortgaged Property, income from any Mortgaged Property,
but excluding any escrow deposits paid to any Borrower for tax or
insurance escrows under the Acquired Loans, minus (b) expenses
incurred and paid by any Borrower from, and any normal and
customary expenses reserved or accrued on a monthly basis related
to, its ownership, management and sale of assets in the Asset
Portfolio (including without limitation any advances of committed
principal that any Borrower is legally required to make under any
of the Acquired Loans) (such expenses not to exceed in the
aggregate 10% of the gross collections from such assets); it
being expressly understood and agreed that there shall be no
deduction for any disbursements by any Borrower of any tax or
insurance escrows held for the Acquired Loans.
Net Investment Value means the Net Purchase Price less the
Net Collections actually received by a Borrower or Borrowers as
of the date of determination from the applicable Asset Portfolio
less any write down of the value of the applicable Asset
Portfolio required by GAAP or otherwise made by any Borrower.
Net Purchase Price means the actual purchase price paid by
the applicable Borrower or Borrowers for an Asset Portfolio,
excluding (a) any costs or adjustments for legal fees, travel,
due diligence expenses or other "soft" costs, (b) the portion of
the purchase price allocated to Excluded Loans, and (c) the
portion of the purchase price allocated to any Acquired Loan
which has a purchase price allocation in excess of Seven Million
Five Hundred Thousand and No/100 Dollars ($7,500,000.00) or such
larger limit approved in writing by the Required Lenders for any
particular Acquired Loan.
Nonrecourse Debt means indebtedness of any Person (a) used
to finance the acquisition of, or refinance the costs of
carrying, assets by such Person which is secured solely by the
assets acquired or refinanced with such financing and (b) with
respect to which or to the portion of which such Person has no
liability for payment other than the assets pledged.
Note means each Corporate Facility Note and Portfolio
Facility Note; Notes means all of the Corporate Facility Notes
and Portfolio Facility Notes issued to Lenders pursuant to this
Agreement.
Obligations means all present and future indebtedness,
obligations and liabilities, or any part thereof, of any Borrower
now or hereafter existing or arising under or in connection with
this Agreement, the Notes or any other of the Loan Documents
(specifically including, without limitation, the principal amount
outstanding under the Notes), pursuant to the Loan Documents,
together with: (a) all interest accrued thereon; (b) all
reasonable costs, expenses, and attorneys' fees of counsel to
Agent and Lenders (as a group) and of counsel to any Lender
(subject to the limitations set forth in Section 11.4) incurred
in the documentation of any amendments, waivers or extensions of
the Loan Documents or administration, enforcement or collection
thereof (specifically including, without limitation, any of the
foregoing incurred in connection with any bankruptcy or other
insolvency proceedings of any Borrower); (c) the reimbursement
and payment of all sums which might be advanced by Agent or any
Lender to pay or satisfy amounts required to be paid by any
Borrower under this Agreement or under any other instrument,
agreement or document at any time executed in connection with or
as security for any part of the Credit Facilities (including the
Letters of Credit); (d) all amounts owed by any Borrower with
respect to any Interest Hedge Agreements between any Borrower and
any Lender (such amounts limited, however, to $1,000,000.00 in
the aggregate); and (e) all costs, charges, reasonable
commissions, reasonable attorneys' fees and expenses owing and to
become owing in connection with the documentation,
administration, enforcement and collection of the foregoing
obligations and indebtedness, and those owing or to become owing
in connection with the repossession, operation, maintenance,
preservation or foreclosure of any or all of the Collateral;
regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several. The
Obligations shall include all renewals, extensions,
modifications, rearrangements and replacements of any of the
above-described obligations and indebtedness. The term
"Obligation" shall also include all amounts owed by Borrowers
under or with respect to the Bridge Loan, including, without
limitation, principal and interest, as the same may be renewed,
extended or modified (but shall specifically not include any
portion of the Bridge Loan replaced by the issuance of any equity
of Borrowers or the Approved Subordinated Debt).
Operating Lease means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial
Accounting Standards No. 13 dated November, 1976, or otherwise in
accordance with GAAP.
PBGC means the Pension Benefit Guaranty Corporation, or its
successors.
Participation Fee means the nonrefundable participation fee
to be paid by Borrowers on the Closing Date to each of the
Lenders in the amounts shown for each such Lender on Schedule I
attached hereto.
Pension Plan means any Employee Plan that is now or was
previously covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.
Performing Assigned Loan means each Assigned Loan (a) which,
over the immediately preceding 90-day period, has accrued and
been paying interest and principal no less often than quarterly
(and with no less than two such payments having been made) in an
amount which is sufficient to amortize the legal balance of the
Assigned Loan as of the time of its acquisition by a Borrower
(less any payments received and applied to reduce such Assigned
Loan), and interest thereon at a rate not less than the existing
Base Rate, in equal installments over fifteen years, and (b)
which at no time during the immediately preceding 90-day period
has been 30 or more days past due.
Permitted Encumbrances means with respect to any asset in an
Asset Portfolio or any Mortgaged Property:
(a) Liens securing the Notes in favor of the Lenders;
(b) Exceptions affecting title which are shown in a
Title Policy included in Borrowers' files or are described with
respect to a particular Assigned Loan, Mortgaged Property or
parcel of the Underlying Real Estate in the applicable Borrower
Due Diligence Reports;
(c) In the case of any portion of the Mortgaged
Property that is not covered by a Title Policy, minor defects in
title or customary easements, platted building lines, restrictive
covenants, mineral reservations and similar exceptions affecting
title which do not secure the payment of money;
(d) Inchoate statutory or operators' liens securing
obligations for labor, services, materials and supplies furnished
to the Mortgaged Properties, which (i) are not delinquent, or
(ii) are being contested by any Borrower in good faith and for
which such Borrower has obtained a proper payment and performance
bond in the amount of the contested claim;
(e) Mechanics', materialmen's, warehousemen's,
journeymen's and carriers' liens and other similar liens arising
by operation of law or statute in the ordinary course of business
if (i) the underlying claim is not delinquent and did not in any
event cover a billing period not exceeding sixty (60) days, or
(ii) unless the claim giving rise to such lien is being contested
by any Borrower in good faith and for which such Borrower has
obtained a proper payment and performance bond in the amount of
the contested claim; and
(f) Liens for Taxes or Impositions not yet due or not
yet delinquent, or, if delinquent, that are being contested by
any Borrower as permitted by and in accordance with the terms and
conditions set forth in Section 7.5.
Permitted Foreign Assets means only those assets which are
(a) included in an Asset Portfolio acquired by any Borrower
either directly or through investments in Persons who acquire
Asset Portfolios, and (b) located in Canada, Mexico, Australia,
Japan or any country which is a member of the European Economic
Community.
Permitted Investments means (a) time deposits or
certificates of deposit in any Lender or other investments or
securities offered by any Lender (including eurodollar deposits),
(b) obligations backed by the full faith and credit of the United
States of America, (c) commercial paper rated P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation
on the date of acquisition, (d) subject to any limitations
contained in this Agreement, investments in Asset Portfolios, or
Persons acquiring an Asset Portfolio, that will be managed by a
Borrower or an Affiliate of a Borrower, including, without
limitation Eligible Investments, (e) Related Investments, (f)
subject to any limitations contained in this Agreement,
including, without limitation, the limitations set forth in
Section 8.11, investments in the Excluded Subsidiaries,
(g) subject to any limitations contained in this Agreement,
including, without limitation, the limitations set forth in
Section 8.11, amounts advanced by AMRESCO or AMRESCO Capital
Corporation in connection with Warehouse Line Loans and/or
Residential Funding Loans, or (h) subject to any limitations
contained in this Agreement, acquisitions made with Corporate
Facility Advances.
Person means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
Pledge Agreement shall mean the Stock Pledge Agreement or
Stock Pledge Agreements executed by the appropriate Borrowers
covering all of the issued and outstanding stock of each
Subsidiary of Borrowers, each such Pledge Agreement to be in the
form attached hereto as Exhibit C.
Portfolio Facility means that portion of the Credit Facility
which is to be used for the purposes listed in Section 2.1(b).
Portfolio Facility Advance means an Advance made by Lenders
to any Borrower under the Portfolio Facility pursuant to the
terms and conditions of this Agreement.
Portfolio Facility Notes means the promissory notes in the
form attached hereto as Exhibit A-1 to be issued by Borrowers to
each Lender in the amount of such Lender's Loan Percentage of the
Portfolio Facility.
Principal Debt means, at the time of any determination
thereof, the aggregate unpaid principal balance of all Advances.
Projected Net Cash Flow means the net cash flow which
Borrowers reasonably expect to receive from an Asset Portfolio
(excluding net cash flow from Excluded Loans) which has been
determined in a manner consistent with Borrowers' past practices
and not less comprehensive than industry practices, which cash
flow projection has been made or updated not later than six
months from the date when it is to be used under this Agreement.
Purchase Money Lien has the meaning set forth in Section
8.8.
Qualified Investment Rating means the currently effective
rating of the Portfolio Facility at the time of determination, if
any, given by Fitch Investors Service, Inc., Standard & Poor's
Corporation, Moody's Investors Services, Inc., Duff & Phelps,
Inc. or such other rating agency acceptable to the Required
Lenders.
Real Estate Loans means Acquired Loans (a) which have a
purchase price of greater than Two Million Five Hundred Thousand
and No/100 Dollars ($2,500,000.00), (b) which are secured by
land, office buildings, retail centers, hotels/motels,
multi-family properties, or industrial properties, (c) if
improved, which are secured by non-owner occupied facilities, and
(d) where the primary source of repayment is proceeds from the
operation or liquidation of the real estate. A loan must meet
all of the above tests to be deemed a Real Estate Loan.
Register has the meaning set forth in Section 11.10 hereof.
Regulation U means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time and
shall include any successor or other regulation or official
interpretation of the Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or
carrying margin stocks that is applicable to member banks of the
Federal Reserve System.
Regulatory Change shall mean the adoption of any applicable
law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority charged with
the administration thereof.
Related Investments means investments in joint ventures,
asset-backed securities and direct participations in, and
acquisitions of, any right to manage and/or service assets, which
investments are consistent with the business of Borrowers as
described in Section 7.2, and however such investments are
recorded on the financial statements of any Borrower.
Request for Advance means a written request for an Advance
or a Letter of Credit, substantially in the form attached hereto
as Exhibit D, which shall (a) specify (i) the date of such an
Advance or Letter of Credit, which shall be a Business Day, (ii)
what portion of such Advance is to be a Corporate Facility
Advance or a Portfolio Facility Advance, (iii) what portion of
such Advance is to be a LIBOR Rate Advance or Variable Rate
Advance, and (iv) the aggregate amount of such Advance or Letter
of Credit; and (b) contain a certification of an Authorized
Officer of AMRESCO (acting for itself and on behalf of any
Borrower which will use the proceeds of such Advance) as of the
date of such Loan or Letter of Credit certifying (i) as to the
solvency of Borrowers (determined in accordance with Section
6.19), (ii) that the intended use of the proceeds of such Advance
or Letter of Credit does not violate the provisions of this
Agreement (including, without limitation, Sections 2.1, 6.15 and
7.10) or any other Loan Document, (iii) as to the matters set
forth in Section 4.2(b) and (c), in the case of an Advance, or
the matters set forth in Section 4.3(c) and (d), in the case of a
Letter of Credit, and (iv) with respect to a Portfolio Advance
for which the Asset Portfolio being acquired is included in the
then current Borrowing Base, that Borrowers possess or will
possess on the funding date of such Advance, the originals of the
promissory notes evidencing the Assigned Loans included in such
Asset Portfolio and will deliver such original promissory notes
to a Custodian on the Business Day following the acquisition of
such Asset Portfolio.
Required Lenders means:
(a) Except as provided in clause (b) below or as
expressly stated otherwise in this Agreement or in any other Loan
Document, at any time and with respect to any matter hereunder or
relating to the Credit Facilities, both (i) the Lenders holding
at the time in question a portion of the Credit Facilities
(including participations in Letters of Credit) equal to or
greater than fifty-one percent (51%) of the sum of (A) the
aggregate unpaid principal amount of the Notes, plus (B) the
Letter of Credit Exposure (or, if no Advances or Letters of
Credit are outstanding, then Lenders holding at the time in
question fifty-one percent (51%) of the aggregate Loan Commitment
Amounts of all Lenders) and (ii) no fewer than fifty percent
(50%) of the Lenders in number; and
(b) With respect to (i) any alteration of the interest
rate applicable to the Credit Facilities, or (ii) any alteration
of the amount of any fees payable to the Lenders (excluding the
Agent in such capacity or the Arranger) under this Agreement, or
(iii) any extension of the maturity date of the Credit Facilities
or the due date of any installment of principal or interest or
any fees on the Credit Facilities, or (iv) forgiveness of any
principal or interest under the Credit Facilities, or (v) any
increase in the amount of the Credit Facilities, or (vi) any
change in the definition of Loan Percentage, or (vii) the release
of any Lenders' Liens on any Collateral after the occurrence of a
Default, or (viii) the reinstatement of the Notes and other
indebtedness pursuant to the provisions in Section 9.2(a) hereof,
or (ix) any consent of Lenders required by Section 11.10(a)(i)
hereof, or (x) any alteration of the provisions of this
definition of Required Lenders, all the Lenders.
Residential Funding Loans mean the real estate loans
originally funded under the Residential Funding Warehousing
Facility, and shall include any such loan which is refinanced but
is still held by AMRESCO, AMRESCO Capital Corporation or any
other Subsidiary.
Residential Funding Warehousing Facility means the credit
facility evidenced by that certain Warehousing Credit and
Security Agreement (Multi-Family Mortgage Loans), dated as of
August 15, 1995, between AMRESCO Capital Corporation and
Residential Funding Corporation.
Rights means rights, remedies, powers, privileges and
benefits.
SEC means the federal Securities and Exchange Commission,
and its successors.
Security Agreement means a Security Agreement in the form
attached hereto as Exhibit E, as the same may be modified or
amended from time to time.
Security Documents means the Collateral Assignment, the
Security Agreement, the Pledge Agreements, the Lockbox Agreement,
all Mortgages and all other documents or instruments granting a
Lien in favor of the Lenders (or Agent for the benefit or on
behalf of the Lenders) as collateral for the Loans, and all
financing statements related thereto, and all modifications,
renewals or extensions thereof and any documents executed in
modification, renewal, extension or replacement thereof.
Standard Industry Practices means such due diligence,
collateral control and collection procedures that are customarily
followed by Persons actively engaged in the business of acquiring
Distressed Assets in a bulk transaction.
Structure Fee means the fee to be paid by AMRESCO to the
Arranger pursuant to a separate letter executed by AMRESCO and
Arranger on or prior to the date of this Agreement.
Subsidiary means, (a) for any Person other than AMRESCO, any
corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions (including that of a general partner) are at
the time directly or indirectly owned, collectively, by such
Person and any Subsidiaries of such Person, or (b) for AMRESCO,
any corporation wholly-owned by AMRESCO or any other entity of
which 100% of the securities or other ownership interests are at
the time directly or indirectly owned, collectively, by AMRESCO
and any Subsidiaries of AMRESCO. The term Subsidiary shall
include Subsidiaries of Subsidiaries (and so on).
Supplement to Schedule I means an addendum to this
Agreement, the other Loan Documents, Schedule I to the Collateral
Assignment, and Schedule I to the Security Agreement, in form as
attached hereto as Exhibit G and as contemplated by Section 2.4.
Taxes means all taxes, assessments, filing or other fees,
levies, imposts, duties, deductions, withholdings, stamp taxes,
interest equalization taxes, capital transaction taxes, foreign
exchange taxes or other charges of any nature whatsoever, from
time to time or at any time imposed by law or any federal, state
or local governmental agency. "Tax" means any one of the
foregoing.
Telerate Screen means the display designated as Screen 3750
on the Telerate System or such other screen on the Telerate
System as shall display the London interbank offered rates for
deposits in U.S. dollars quoted by selected banks.
Termination Date means September 29, 1997, as to the
Corporate Facility, and 364 days from the Closing Date as to the
Portfolio Facility (provided, that Borrowers will have the option
to extend the outstanding balance of the Portfolio Facility for
an additional one-year period as a term loan as provided in
Section 3.2).
Title Company means a title company or title companies
selected by any Borrower and not disapproved by Agent, together
with any issuing agent that issues all or any part of a Title
Policy.
Title Policy means a Mortgagee or Loan Policy of Title
Insurance issued and underwritten by a Title Company for the
benefit of (a) Agent, on behalf of the Lenders, covering that
portion of the Mortgaged Property therein described and insuring
the lien of the Mortgage which covers such portion of the
Mortgaged Property, or (b) any Borrower insuring a lien on
Underlying Real Estate securing an Assigned Loan.
Transfer of Lien means an absolute assignment of note and
liens (including, without limitation, all mortgages and any other
security for each of the Assigned Loans), executed by any
Borrower to Agent, for the benefit of the Lenders, in the form
attached as Exhibit B to the Collateral Assignment (which
document may also be referred to as an "Assignment of Lien " in
certain states).
UCC means the Uniform Commercial Code in effect under the
laws of the State of Texas, as amended, or, if stated with
reference to another jurisdiction, the Uniform Commercial Code as
adopted in the relevant jurisdiction.
Underlying Real Estate means the real property, together
with all improvements thereon, which secures any of the Assigned
Loans, or any one of such parcels of real property.
Variable Rate means a fluctuating rate of interest equal to
the Base Rate.
Variable Rate Advance shall mean an Advance which will bear
interest computed with reference to the Variable Rate.
Warehouse Line of Credit means the line of credit to AMRESCO
Capital Corporation, and guaranteed by AMRESCO, made by
NationsBank, such line of credit being in the original amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00), for the
funding of real estate loans, as the same may be renewed,
extended, modified, amended or replaced from time to time.
Warehouse Line Loans means the real estate loans funded
under the Warehouse Line of Credit, and shall include any such
loan which is refinanced but is still held by AMRESCO, AMRESCO
Capital Corporation or any other Subsidiary.
Wholly-Owned Real Estate Portfolios means Asset Portfolios
that are 100% owned by any Borrower where more than 50% of the
Purchase Price is allocated to Real Estate Loans.
Section 1.2. Singular and Plural of Definitions. Each
term defined in the singular form in Section 1.1 shall mean the
plural thereof when the plural form of such term is used in this
Agreement, and each term defined in the plural form in
Section 1.1 shall mean the singular thereof when the singular
form of such term is used in this Agreement.
Section 1.3. Substantive Definitions. The use of defined
terms herein is for convenience and the wording of defined terms
shall not affect or limit the terms and provisions hereof;
provided, however, that the terms, provisions and agreements set
forth in the definitions contained in Section 1.1 shall be
substantive terms of this Agreement and fully binding on the
parties hereto.
Section 1.4. Money. Unless stipulated otherwise, all
references herein or in any of the Loan Documents to "Dollars,"
"$," "money," "payments" or other similar financial or monetary
terms are references to lawful money of the United States of
America.
Section 1.5. Captions; References. The captions in this
Agreement and in the table of contents hereof are for convenience
of reference only and shall not define, affect or limit any of
the terms or provisions hereof. All references herein to
Articles and Sections are, unless specified otherwise, references
to articles and sections of this Agreement. Unless specifically
indicated otherwise, all references herein to an "Exhibit,"
"Annex" or "Schedule" are references to exhibits, annexes or
schedules attached hereto, all of which are incorporated herein
and made a part hereof for all purposes, the same as if set forth
fully herein, it being understood that if any exhibit, annex or
schedule attached hereto which is to be executed and delivered
contains blanks, the same shall be completed correctly and in
accordance with this Agreement prior to or at the time of the
execution and delivery thereof. The words "herein," "hereof,"
"hereunder" and other similar compounds of the word "here" when
used in this Agreement shall refer to the entire Agreement and
not to any particular provision or section unless specifically
indicated otherwise.
Section 1.6. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE II
COMMITMENT
Section 2.1. Credit Facilities Commitment. Each Lender
severally agrees, subject to and upon the terms, covenants and
conditions of this Agreement, to make Advances to any Borrower,
or, with respect to Letters of Credit, to cause the Issuing Bank
to issue Letters of Credit for the account of any Borrower, and
each Borrower shall be entitled to obtain in the manner set forth
in Section 2.2:
(a) Corporate Facility Advances. One or more Advances
for (i) general working capital purposes, (ii) acquisitions of
equity interests in other Persons, (iii) Permitted Investments,
and (iv) other business needs approved by the Required Lenders,
which, subject to the Loan Documents, Borrower may borrow, repay,
and reborrow under this Agreement; provided, that, (A) each such
Corporate Facility Advance must occur on a Business Day and no
later than the Business Day immediately preceding the Termination
Date for the Corporate Facility, (B) each such Corporate Facility
Advance must be in an amount not less than the limitations
provided in Section 2.2, and (C) on any date of determination,
the aggregate outstanding balance of Corporate Facility Advances
shall never exceed the Available Commitment for the Corporate
Facility less the Letter of Credit Exposure. The initial
Available Commitment under the Corporate Facility shall be in the
maximum amount of Seventy-Five Million and No/100 Dollars
($75,000,000.00); provided, that the maximum amount of such
Available Commitment shall reduce to Fifty Million and No/100
($50,000,000.00) upon the earlier to occur of March 31, 1996, or
the issuance by any Borrower (or the receipt by any Borrower of
the proceeds obtained by the issuance of any Subsidiary) of
additional common stock or other equity (other than the issuance
thereof to another Borrower) or any Approved Subordinated Debt.
(b) Portfolio Facility Advances. One or more Advances
to (i) refinance Debt incurred in connection with the purchase of
the existing Asset Portfolios; (ii) finance future acquisitions
of Asset Portfolios; and (iii) finance the acquisitions of
entities for the purpose of resolving Distressed Assets owned by
such entities, which, subject to the Loan Documents, Borrowers
may borrow, repay, and reborrow under this Agreement; provided,
that (A) each such Portfolio Facility Advance must occur on a
Business Day and no later than the Business Day immediately
preceding the original Termination Date of the Portfolio
Facility, (B) each such Portfolio Facility Advance must be in an
amount not less than the limitations provided in Section 2.2, and
shall not exceed Sixteen Million and No/100 Dollars
($16,000,000.00) without the consent of the Required Lenders, and
(C) at no time shall the aggregate outstanding balance of all
Portfolio Facility Advances ever exceed the lesser of (x) the
then effective Borrowing Base or (y) the Available Commitment
under the Portfolio Facility.
(c) Letters of Credit. Letters of Credit issued by
the Issuing Lender for the account of Borrowers for any of the
purposes for which Borrower can obtain a Corporate Facility
Advance; provided, that, (i) each such Letter of Credit shall be
issued on a Business Day, (ii) each such Letter of Credit must be
funded under the Corporate Facility, (iii) after the issuance of
any such Letter of Credit, (A) the Letter of Credit Exposure plus
the outstanding balance of Corporate Facility Advances must be
less than or equal to the Available Commitment under the
Corporate Facility (as the same may be adjusted as herein
provided), and (B) the Letter of Credit Exposure shall not exceed
Ten Million and No/100 Dollars ($10,000,000.00), and (iv) each
such Letter of Credit must have an expiration date no later than
the Termination Date for the Corporate Facility. To the extent
that funds are ever drawn under any of the Letters of Credit,
each such draw will be paid by the Issuing Lender, and each of
the Lenders will make a Corporate Facility Advance in the amount
of such Lender's Loan Percentage of the amount so paid by the
Issuing Lender to reimburse the issuing Lender for such draw.
In no event shall any Lender be required to make any
Advances in excess of such Lender's Loan Percentage of the amount
required to be advanced by the Lenders under the above provisions
of this Section 2.1 or which would cause any Lender to have made
Advances in excess of such Lender's Loan Commitment Amount.
Section 2.2. Method of Borrowing. Each Borrower shall be
entitled to obtain Loans and Letters of Credit from Lenders
pursuant to Section 2.1 in the following manner:
(a) Variable Rate Advances. In the case of any
Variable Rate Advance, AMRESCO (acting for itself or on behalf of
any Borrower), through an Authorized Officer, shall give Agent
prior to 10:00 a.m., Dallas, Texas time, on the date of any such
proposed Advance, an irrevocable written notice of its intention
to borrow or reborrow such Variable Rate Advance hereunder. Such
notice of borrowing shall specify the requested funding date,
which shall be a Business Day, the amount of the proposed
aggregate Variable Rate Advances to be made by Lenders and shall
be accompanied by the documents required to be delivered pursuant
to Article IV. The aggregate amount of Variable Rate Advances to
be made on any funding date shall not be less than One Million
and No/100 Dollars ($1,000,000.00) or greater whole multiples of
One Hundred Thousand and No/100 Dollars ($100,000.00).
(b) LIBOR Rate Advances. In the case of LIBOR Rate
Advances, AMRESCO (acting for itself or on behalf of any
Borrower), through an Authorized Officer, shall give Agent at
least three Business Days' irrevocable written notice of its
intention to borrow or reborrow such advance hereunder. Notice
shall be given to Agent prior to 10:00 a.m., Dallas, Texas time,
in order for such Business Day to count toward the minimum number
of Business Days required. LIBOR Rate Advances shall in all
cases be subject to availability and to Section 3.5 hereof. For
LIBOR Rate Advances, the notice of borrowing shall specify the
requested funding date, which shall be a Business Day, the amount
of the proposed aggregate LIBOR Rate Advances to be made by
Lenders, the Interest Period selected by AMRESCO (provided that
no such Interest Period shall extend past the applicable
Termination Date) and shall be accompanied by the documents
required to be delivered pursuant to Article IV. The aggregate
amount of LIBOR Rate Advances to be made on any funding date
shall not be less than Five Million and No/100 Dollars
($5,000,000.00) or greater whole multiples of One Million and
No/100 Dollars ($1,000,000.00).
(c) Notice To Lenders. Agent shall promptly notify
Lenders of each notice received from AMRESCO pursuant to this
Section 2.2. Each Lender shall, not later than noon, Dallas,
Texas time, on the date of any Advance, deliver to Agent, at its
address set forth herein, such Lender's Loan Percentage of such
Advance in immediately available funds in accordance with Agent's
instructions. Prior to 2:00 p.m., Dallas, Texas time, on the
date of any Advance hereunder Agent shall, subject to
satisfaction of the conditions set forth in Article IV, disburse
the amounts made available to Agent by the Lenders by (i)
transferring such amounts by wire transfer pursuant to AMRESCO's
instructions, or (ii) in the absence of such instructions,
crediting such amounts to the account of AMRESCO maintained with
Agent. All Advances shall be made by each Lender according to
its Loan Percentage.
(d) Method of Issuing Letters of Credit. Not less
than three (3) Business Days prior to the requested date of
issuance of any Letter of Credit, AMRESCO (for itself or on
behalf of any Borrower) shall deliver to Agent a Request For
Advance and shall execute and deliver to the Issuing Lender the
customary letter of credit application and agreement used by the
Issuing Lender from time to time (the "LOC Application").
Nothing in this Agreement shall prohibit the Issuing Lender from
modifying the form of LOC Application in effect from time to time
in connection with the issuance of any Letter of Credit, provided
that, such modification does not substantially modify this
Agreement to the detriment of Borrowers. In the event of a
direct conflict between the provisions of the LOC Application and
this Agreement, the provisions of this Agreement shall govern.
In no event shall a Letter of Credit have an expiration date
which is later than the Termination Date of the Corporate
Facility. Letters of Credit may be standby letters of credit
only and may be issued on behalf of any Borrower. Upon
satisfaction of the applicable conditions precedent set forth in
Article IV, and subject to the other terms and conditions of this
Agreement, the Issuing Lender shall issue Letters of Credit for
the account of any Borrower within three (3) Business Days from
receipt by the Issuing Lender of the fully-executed LOC
Application (so long as the requested terms of such Letter of
Credit are acceptable to the Issuing Lender in its reasonable
discretion).
Immediately upon the issuance of each Letter of Credit, the
Issuing Lender shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed to have purchased
and received from the Issuing Lender, in each case irrevocably
and without any further action by any party, an undivided
interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of Borrowers under this Agreement
in respect thereof in an amount equal to the product of (x) such
Lender's Loan Percentage times (y) the maximum amount available
to be drawn under such Letter of Credit (assuming compliance with
all conditions to drawing). Within the limits of the Corporate
Facility, and subject to the limits referred to above, Borrowers
may request the issuance of Letters of Credit under this Section
2.2(d), repay any Advances resulting from drawings thereunder
pursuant to this Section 2.2(d) and request the issuance of
additional Letters of Credit under this Section 2.2(d).
The payment by the Issuing Lender of a draft drawn under any
Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Lender of a Corporate
Facility Advance, which shall bear interest at the Variable Rate,
in the amount of such draft (but without any requirement for
compliance with the conditions set forth in Article IV hereof).
In the event that a drawing under any Letter of Credit is not
reimbursed by Borrowers by 10:00 a.m. (Dallas time) on the first
Business Day after such drawing, the Issuing Lender shall
promptly notify Agent and each other Lender. Each such Lender
shall, on the first Business Day following such notification,
make a Corporate Facility Advance, which shall bear interest at
the Variable Rate, and shall be used to repay the applicable
portion of the Issuing Lender's advance with respect to such
Letter of Credit, in an amount equal to the amount of its
participation in such drawing for application to reimburse the
Issuing Lender (but without any requirement for compliance with
the applicable conditions set forth in Article IV hereof) and
shall make available to Agent for the account of the Issuing
Lender, by deposit at Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to
make available to Agent for the account of the Issuing Lender the
amount of such Advance, the Issuing Lender shall be entitled to
recover such amount on demand from such Lender together with
interest thereon at a rate per annum equal to the lesser of
(i) the Maximum Lawful Rate or (ii) the Federal Funds Rate.
Section 2.3. Fees.
(a) Participation Fee. In consideration of the commitment
of each Lender to make Advances upon the terms and conditions set
forth in this Agreement and the reserving of sufficient funds by
each Lender from which to make disbursement of the Advances,
Borrowers shall pay to each such Lender on the Closing Date its
Participation Fee.
(b) Commitment Fee. Throughout the Credit Period,
Borrowers shall pay to Agent for the account of each Lender, such
Lender's Loan Percentage of the Commitment Fee, such fee to be
computed based on the number of actual days elapsed assuming each
calendar year consisted of 360 days, and due and payable
quarterly in arrears, commencing on January 1, 1996, and
continuing on the first day of each calendar quarter thereafter,
with a final payment of such Commitment Fee being due and payable
upon the Termination Date of the latest to occur of the Corporate
Facility or the Portfolio Facility.
(c) Letter of Credit Fees. Borrowers shall pay to Agent
for the account of each Lender a letter of credit fee (the
"Letter of Credit Fee") (which shall be payable quarterly in
arrears, commencing on January 1, 1996, and continuing on the
first day of each calendar quarter thereafter, with a final
payment of such Letter of Credit Fee being due and payable on the
Termination Date for the Corporate Facility) on the average daily
amount available for drawing under all outstanding Letters of
Credit at the following per annum percentages, applicable in the
following situations:
Annual
Applicability Percentage
(a) Qualified Investment Rating of 1.5%
below Investment Grade or unrated
(b) Qualified Investment Rating of 1%
Investment Grade or higher
The fee payable in respect of the Letters of Credit shall be
subject to reduction or increase, as set forth in the table
above. Subject to Section 11.8 hereof, such fee shall be
computed on the basis of the actual number of days elapsed. In
addition to the Letter of Credit Fee, Borrowers shall pay to
Agent for the account of the Issuing Lender an issuance fee
(which shall be due and payable on the date of issuance of each
Letter of Credit) in an amount equal to Three Hundred and No/100
Dollars ($300.00).
(d) Structure Fee. In consideration for the
Arranger's efforts in structuring the Credit Facilities and
arranging for such Credit Facilities, Borrowers agree to pay
Arranger the Structure Fee on the Closing Date.
(e) Administrative Fees. In consideration for Agent's
administration services under the Credit Facilities, Borrowers
agree to pay Agent the Administrative Fee in advance in equal
quarterly payments, commencing on October 1, 1995, and continuing
on the first day of each calendar quarter thereafter, until such
time the Notes are paid in full, all Letters of Credit have been
terminated, and Lenders' commitment to make Advances under this
Agreement have been terminated.
Section 2.4. Additional Borrowers. Upon the earlier to
occur of (1) thirty (30) days after the filing of articles of
incorporation, certificates of limited partnership or similar
organizational documents with the appropriate Governmental
Authority of any future Subsidiary of any Borrower or (2) two (2)
Business Days prior to the date that such Subsidiary obtains an
Advance (or the proceeds of any Advance from another Borrower) or
includes any of its assets in the Borrowing Base, Borrowers shall
cause to be delivered to Agent (a) a Supplement to Schedule I
properly executed by such future Subsidiary (other than an
Excluded Subsidiary), (b) a Pledge Agreement and all financing
statements related thereto, properly executed by the appropriate
Borrower pursuant to which all of the outstanding shares of stock
of such future Subsidiary are pledged to Agent (for the benefit
of Lenders), together with the original stock certificates
accompanied by stock powers executed in blank by the appropriate
Borrower evidencing all of such outstanding shares of stock, and
(c) all resolutions, certificates or documents Agent may
reasonably request relating to the formation, existence and good
standing of such future Subsidiary, corporate authority for the
execution and validity of the Loan Documents described in clauses
(a) and (b) immediately above and any other documents and matters
relevant to the formation of such future Subsidiary and its
status as a Borrower hereunder, all in form and substance
satisfactory to Agent, which resolutions, certificates and
documents shall include, without limitation, (i) the articles of
incorporation and bylaws of such future Subsidiary,
(ii) resolutions of the board of directors of such future
Subsidiary authorizing the execution of the Loan Documents
described in clauses (a) and (b) immediately above on behalf of
such future Subsidiary and the granting of all the relevant
Lenders' Liens as security for the Credit Facilities and the
Letters of Credit, (iii) certificates of incumbency for the
officers of such future Subsidiary, and (iv) certificates of
corporate existence and good standing issued by the state of
incorporation of such future Subsidiary and from the appropriate
governmental authority of each state in which such future
Subsidiary is required by applicable law to be qualified.
Section 2.5. Bridge Loan Commitment. Bridge Lender
hereby agrees, subject to and upon the terms, covenants and
conditions of this Agreement, to make Bridge Loan Advances, and
each Borrower shall be entitled to obtain Bridge Loan Advances in
the manner set forth in Section 2.2 with respect to Corporate
Facility Advances, so long as each Bridge Loan Advance is made
simultaneously with, and for the same purpose as, a Corporate
Facility Advance; provided, that, (i) Borrowers shall not be
entitled to obtain Bridge Loan Advances after December 31, 1995;
(ii) each such Bridge Loan Advance must be in an amount which,
when added to the Corporate Facility Advance made simultaneously
therewith, does not exceed the limitation provided in Section 2.2
with respect to Corporate Facility Advances; and (iii) on any
date of determination, the aggregate outstanding balances of
Bridge Loan Advances shall never exceed the Bridge Loan
Commitment.
ARTICLE III
TERMS OF CREDIT FACILITIES
Section 3.1. Notes. The Corporate Facility shall be
evidenced by the Corporate Facility Notes, and the Portfolio
Facility shall be evidenced by the Portfolio Facility Notes.
Each Lender shall receive an originally executed Corporate
Facility Note and a Portfolio Facility Note in an amount equal to
such Lender's Loan Amount of the Corporate Facility and the
Portfolio Facility, respectively.
Section 3.2. Maturity. All outstanding principal of the
Notes, together with all accrued but unpaid interest and other
amounts owed with respect thereto, shall be due and payable in
full on the applicable Termination Date. Borrowers shall be
entitled to extend the original Termination Date of the Portfolio
Facility (i.e., 364 days from the Closing Date) until September
29, 1997, provided, that (a) AMRESCO sends a written notice to
Agent thirty (30) days prior to such original Termination Date
requesting such extension, (b) Borrowers shall not be entitled to
obtain Portfolio Facility Advances after the original Termination
Date of the Portfolio Facility, (c) at the time of such request
and on the original Termination Date of the Portfolio Facility
there shall not have occurred a Default or Event of Default which
is continuing, and (d) Borrowers shall have executed and
delivered to Agent such documents, instruments or agreements as
Agent may reasonably request to evidence such extension.
Section 3.3. Interest Rate. Interest on the Advances
shall accrue at a rate per annum equal to the lesser of (a) at
Borrowers' option, the Variable Rate, or the Adjusted LIBOR Rate,
subject, however, to the provisions of Section 11.8 (the
"Applicable Rate"), or (b) the Maximum Lawful Rate; provided,
however, if at any time the Applicable Rate exceeds the Maximum
Lawful Rate, resulting in the charging of interest hereunder to
be limited to the Maximum Lawful Rate, then any subsequent
reduction in the Applicable Rate shall not reduce the rate of
interest below the Maximum Lawful Rate until the total amount of
interest accrued on the indebtedness evidenced hereby equals the
amount of interest which would have accrued on such indebtedness
if the Applicable Rate had at all times been in effect.
Without notice to any Borrower or anyone else, the Variable
Rate and the Maximum Lawful Rate shall each automatically
fluctuate upward and downward as and in the amount by which the
Base Rate and Maximum Lawful Rate, respectively, fluctuate,
subject always to limitations contained in this Agreement. In
addition, the Adjusted LIBOR Rate shall fluctuate upward and
downward as and in the amount by which the LIBOR Margin
fluctuates, subject always to limitations contained in this
Agreement, any such changes in the LIBOR Margin and, therefore,
the Adjusted LIBOR Rate, to occur on the Business Day following
the receipt by Agent of the quarterly financial statements and
related officer's certificate required to be delivered by AMRESCO
pursuant to Sections 7.1(b) and (c) hereof.
Section 3.4. Interest Payments. Interest on the Notes,
computed as provided in Section 3.11, shall be due and payable as
it accrues on (a) the first day of each calendar quarter
commencing on January 1, 1996, and continuing on the first day of
each April, July, October, and January thereafter until the
applicable Termination Date, and (b) at the end of each Interest
Period as to any LIBOR Rate Advance then expiring, and on demand
after the applicable Termination Date so long as any principal of
any Note remains unpaid.
Section 3.5. LIBOR Rate Advances.
(a) Upon at least three (3) Business Days' prior written
notice from AMRESCO to Agent ("Minimum Notice Requirement"),
Borrowers may, on any Interest Adjustment Date (other than the
Termination Date), convert amounts of any LIBOR Rate Advances
into Variable Rate Advances with interest accruing thereon, with
reference to the Variable Rate, as provided in Section 3.3 above.
(b) Upon satisfaction by AMRESCO of the Minimum Notice
Requirement, and subject to the conditions provided in this
Agreement or the Notes, Borrowers may, on any date prior to the
Termination Date, convert amounts of not less than Five Million
and No/100 Dollars ($5,000,000.00) in the aggregate on the same
date (or any whole multiple of One Million and No/100 Dollars
($1,000,000.00) in excess thereof) of any Variable Rate Advances
into LIBOR Rate Advances with interest accruing thereon with
reference to the Adjusted LIBOR Rate as provided in Section 3.3
above, for the Interest Period selected in such notice.
(c) To the extent Borrowers have not made an effective
election under and in accordance with subparagraphs (a) or (b)
above (including, without limitation, at the expiration of an
Interest Period), the Applicable Rate shall be the rate specified
pursuant to the provisions contained herein for Variable Rate
Advances. If Borrowers have failed to make such election at the
end of an Interest Period, the Lenders shall be deemed to have
made a Variable Rate Advance in the amount, and in replacement,
of the LIBOR Rate Advance then maturing.
Each notice of LIBOR Rate election by Borrowers must
satisfy the Minimum Notice Requirement and shall include the
following: (i) Borrowers' election of the Adjusted LIBOR Rate;
(ii) Borrowers' choice of an Interest Period during which the
Adjusted LIBOR Rate will apply; (iii) Borrowers' election of the
"Effective Date" (herein so called) on which the LIBOR Rate
Advances shall begin; and (iv) the amount of outstanding loan
principal which for all LIBOR Rate Advances to be made on the
same Effective Date shall not be less than Five Million and
No/100 Dollars ($5,000,000.00) (or any whole multiple of One
Million and No/100 Dollars ($1,000,000.00) in excess thereof), to
which the Adjusted LIBOR Rate shall apply. AMRESCO shall make
the above elections on behalf of all Borrowers and shall give
notice of such election to Agent on behalf of Lenders.
Borrowers' election to convert to the Adjusted LIBOR Rate is
subject to the following conditions: (1) the Interest Period
shall be limited to a period commencing on the Effective Date and
ending on a date 30, 60, 90, 120 or 180 days later elected by
AMRESCO in its notice to Agent; (2) AMRESCO's written notice of
an election shall be received by Agent in time to satisfy the
Minimum Notice Requirement; (3) the last day of the Interest
Period will not be subsequent in time to the Termination Date;
(4) in the case of a continuation of a LIBOR Rate Advance, the
Interest Period applicable after such continuation shall commence
on the last day of the preceding Interest Period; (5) no LIBOR
Rate election shall be made if Agent determines by reason of
circumstances affecting the interbank Eurodollar market that
either adequate or reasonable means do not exist for ascertaining
the Adjusted LIBOR Rate for any Interest Period, or it becomes
impracticable for Agent to obtain funds by purchasing U.S.
dollars in the interbank Eurodollar market, or if Agent or any
Lender determines that the Adjusted LIBOR Rate will not
adequately or fairly reflect the costs to any Lender of
maintaining the applicable LIBOR Rate Advances at such rate, or
if as a result of any Regulatory Change, it shall become unlawful
or impossible for Lenders to maintain any such LIBOR Rate
election; (6) there shall never be more than ten (10) LIBOR Rate
Advances, in the aggregate, in effect at any one time hereunder;
and (7) no LIBOR Rate election shall be made after the occurrence
and during the continuance of a Default or Event of Default.
If, on or after the Closing Date, any Regulatory Change
shall make it unlawful or impossible for any Lender (or its
Eurodollar lending office) to make, maintain or fund LIBOR Rate
Advances and such Lender shall so notify Agent, Agent shall
forthwith give notice thereof to the other Lenders and AMRESCO,
whereupon until such Lender notifies AMRESCO and Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make LIBOR Rate Advances shall be
suspended. If such Lender shall determine that it may not
lawfully continue to maintain and fund any of its outstanding
LIBOR Rate Advances to maturity and shall so specify in such
notice, Borrowers shall immediately prepay in full the then
outstanding principal amount of such Lender's portion of the
LIBOR Rate Advances, together with accrued interest thereon.
Concurrently with prepaying such portion of the LIBOR Rate
Advances, Borrowers shall borrow a Variable Rate Advance in an
equal principal amount from such Lender (on which interest and
principal shall be payable contemporaneously with the related
LIBOR Rate Advances of the other Lenders), and such Lender shall
make such Variable Rate Advance. If a Lender shall be unable to
make, maintain or fund LIBOR Rate Advances as above provided for
more than sixty days, and the other Lenders are not similarly
restricted, Borrowers shall be entitled to designate an Eligible
Assignee acceptable to Agent to purchase the interest of the
Lender which is unable to fund LIBOR Rate Advances, and such
Lender shall sell its interest to such Eligible Assignee within
ten Business Days of the Borrowers' request.
Borrowers shall indemnify Agent and Lenders against any loss
or expense which Agent or Lenders may, as a consequence of
Borrowers' failure to make a payment on the date such payment is
due hereunder or the payment, prepayment or conversion of any
LIBOR Rate Advances hereunder on a day other than an Interest
Adjustment Date, sustain or incur in liquidating or employing
deposits from third parties acquired to effect, fund or maintain
any such LIBOR Rate Advances or any part thereof, including,
without limitation, any Consequential Loss.
Borrowers shall also indemnify Lenders against and reimburse
Lenders for increased costs to Lenders, as a result of any
Regulatory Change, in the maintaining of any LIBOR Rate Advances.
Agent shall give AMRESCO written notice of such costs within
ninety (90) days of its or any Lender's implementation and/or
compliance with any such Regulatory Change and such costs shall
be reimbursed to such Lender prior to the earlier of (i) the
Termination Date or (ii) ten (10) days following written notice
thereof from Agent to AMRESCO. All payments made pursuant to
this paragraph shall be made free and clear, without reduction
for, or account of, any present or future taxes or other levies
of any nature, excluding net income and franchise taxes.
Section 3.6. Payments of Advances; Reduction of Commitment
Amount.
(a) At any time, Borrowers may by notice from AMRESCO to
Agent prior to 10:00 a.m. (Dallas, Texas time) at least one
Business Day prior to the date on which prepayment under this
Section 3.6 is to be made, voluntarily prepay outstanding
Advances from time to time and at any time, in whole or in part,
without premium or penalty; provided, that (i) each such partial
payment must be in a minimum amount of at least One Million and
No/100 Dollars ($1,000,000.00), (ii) Borrowers shall pay any
related Consequential Losses within ten days after Agent's demand
therefor, and (iii) AMRESCO must notify Agent whether such
prepayments are to be applied against the Corporate Facility or
the Portfolio Facility. Each such optional prepayment shall be
applied ratably in accordance with Section 3.9 to pay the amounts
owed to each Lender under the Credit Facilities.
(b) If the outstanding principal balance of the Corporate
Facility plus the Letter of Credit Exposure ever exceeds the
Available Commitment of the Corporate Facility, Borrowers shall
make a mandatory prepayment on the principal amount of the
Corporate Facility in at least the amount of such excess together
with any Consequential Loss arising as a result thereof. If the
outstanding principal balance of the Portfolio Facility ever
exceeds the lesser of (i) the Available Commitment of the
Portfolio Facility or (ii) the Borrowing Base, Borrowers shall
make a mandatory prepayment on the principal amount of the
Portfolio Facility in at least the amount of such excess together
with any Consequential Loss arising as a result thereof.
(c) Borrowers shall make mandatory prepayments of the
principal amount of the Corporate Facility from time to time, and
at any time, in an amount equal to (i) the proceeds (less
customary and reasonable closing costs) received by any Borrower
after the Closing Date from its issuance of common stock or other
equity or any Approved Subordinated Debt (other than as a result
of the issuance thereof to another Borrower) and (ii) the net
sale proceeds received by any Borrower from the sale of any asset
which has either a value at the time of the sale (as shown on the
books of such Borrower), or an aggregate sales price and all
other consideration for such sale, in excess of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00) (excluding,
however, the proceeds from the sale of an Assigned Loan included
in the Borrowing Base, if, within five Business Days from the
receipt of any Borrower of such sale proceeds, either such
proceeds are used to reduce the outstanding balance of the
Portfolio Facility or AMRESCO delivers to Agent an updated
Borrowing Base Schedule showing that the aggregate outstanding
Portfolio Advances does not exceed the Borrowing Base). If at
the time of any mandatory prepayment of the Corporate Facility
required pursuant to the immediately preceding sentence there are
no outstanding Corporate Facility Advances, then the required
mandatory prepayment shall be applied against the principal
balance of the Portfolio Facility. Borrowers shall pay on demand
given by Agent any Consequential Loss arising as a result of any
such mandatory prepayment.
(d) Borrowers may reduce the Available Commitment at any
time and from time to time provided that (i) notice of such
reduction must be received by Agent by 10:00 a.m. Dallas, Texas,
time on the fifth Business Day preceding the effective date of
such reduction, (ii) each such reduction in the Available
Commitment must be in a minimum amount of Ten Million and No/100
Dollars ($10,000,000.00) or any whole multiple of One Million and
No/100 Dollars ($1,000,000.00) in excess thereof, (iii) if the
aggregate outstanding principal balance of the applicable Credit
Facility exceeds the Available Commitment for such Credit
Facility as so reduced, Borrower shall make a mandatory
prepayment on the principal amount of such Credit Facility in at
least the amount of such excess, together with any Consequential
Loss arising as a result thereof, (iv) Borrowers shall not be
entitled to reduce the Available Commitment of the Corporate
Facility to an amount which is less than the Letter of Credit
Exposure at such time, (v) Borrowers shall not be entitled to an
increase in the Available Commitment once it has been so reduced,
and (vi) in no event shall Borrowers be entitled to so reduce the
Available Commitment below $20,000,000.00, unless Borrowers have
elected to terminate the Available Commitment in full.
(e) If Borrower shall prepay any LIBOR Rate Advance prior
to the expiration of its applicable Interest Period, a prepayment
fee shall be due to Lenders in an amount equal to the
consequential loss (the "Consequential Loss") incurred by Lenders
as a result of any such prepayment, such Consequential Loss to be
computed as the product of (i) the amount of the sum so prepaid
multiplied by (ii) the difference (but not less than 0.00) of
(A) the 360-day interest yield (as of the applicable Effective
Date and expressed as a decimal) on a Treasury Obligation
selected by Agent and having, as of the applicable Effective
Date, a remaining term until its maturity approximately equal to
the original Interest Period, minus (B) the 360-day interest
yield (as of the Business Day immediately preceding the
prepayment date and expressed as a decimal) on a Treasury
Obligation selected by Agent and having, as of the Business Day
preceding the prepayment date, a remaining term until maturity
approximately equal to the unexpired portion of the Interest
Period, multiplied by (iii) the quotient of (A) the number of
calendar days in the unexpired portion of the Interest Period,
divided by (B) 360. For purposes of computing a prepayment fee,
the Treasury Obligations selected by Agent shall be from among
those included in the over-the-counter quotations supplied to The
Wall Street Journal by the Federal Reserve Bank of New York City
based on transactions of $1,000,000.00 or more. Any prepayment
fee required to be paid by Borrowers pursuant to this Section 3.6
or any other provisions of this Agreement or of the other Loan
Documents in connection with the prepayment of any LIBOR Rate
Advances shall be due and payable whether such prepayment is
being made voluntarily or involuntarily, including, without
limitation, as a result of an acceleration of sums due under
LIBOR Rate Advances or any part thereof due to an Event of
Default.
Section 3.7. Schedules on Notes. Each Lender is hereby
authorized to record the date and amount of the initial principal
balance of its Notes and the date and amount of each advance and
repayment of principal on such Notes, and to attach any such
recording as a schedule to the Notes whereupon such schedule
shall constitute a part of such Notes for all purposes. Any such
recording shall constitute prima facie evidence of the accuracy
of the information so recorded; provided that the absence or
inaccuracy of any such schedule or notation thereon shall not
limit or otherwise affect the liability of Borrowers for the
repayment of all amounts outstanding under the Notes together
with interest thereon.
Section 3.8. General Provisions as to Payments. All
payments and indemnities required to be made by Borrowers under
any of the Loan Documents shall be joint and several obligations
of Borrowers. Borrowers shall make each payment of principal and
interest on the Credit Facilities and all fees payable hereunder
or under any other Loan Document not later than 12:00 noon
(Dallas time) on the date when due, in Federal or other funds
immediately available in Dallas, Texas, to Agent at Agent's
address for payments set forth in Schedule I. Agent will
promptly (and if such payment is received by Agent by 12:00 noon
(Dallas, Texas time), and otherwise if reasonably possible, on
the same Business Day, and in any event not later than the next
Business Day after receipt of such payment) distribute to each
Lender a payment on the applicable Note, such Lender's pro rata
share of each such payment received by Agent for the account of
Lenders. For purposes of calculating accrued interest on the
Credit Facilities, any payment received by Agent as aforesaid by
12:00 noon (Dallas, Texas time) on any Business Day shall be
deemed made on such day; otherwise, such payment shall be deemed
made on the next Business Day after receipt by Agent. Whenever
any payment of principal or interest on the Credit Facilities, or
any fees under the Loan Documents, shall be due on a day which is
not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. If the date for
any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended
time.
Section 3.9. Application of Payments. All payments made
on the Credit Facilities and all proceeds from the sale of any
assets securing the Credit Facilities or the exercise of any
right of setoff hereunder shall be ratably paid to each Lender in
accordance with its Loan Percentage, subject to the provisions of
Article X and any provision in the Loan Documents or agreements
among the Lenders providing for the application of such proceeds
against expenses or other amounts. Except as (a) to principal
payments made pursuant to Section 3.6(a), (b) or (c)(iii), (b)
provided in Section 9.10, and (c) otherwise specifically provided
in this Agreement or in any Loan Document, all prepayments on the
Credit Facilities shall be applied against accrued but unpaid
interest and then against the principal portion of the Credit
Facilities; provided, however, that, unless otherwise designated
by AMRESCO or required by law, prepayments and involuntary
payments received by the holder hereof and applied to principal
hereunder shall be applied first to the Variable Rate Advances
(or that portion of LIBOR Rate Advances not subject to a
prepayment penalty) and then to reduce LIBOR Rate Advances and
shall be applied against the Corporate Facility before being
applied to the Portfolio Facility.
Section 3.10. Post-Default Interest; Past Due Principal and
Interest. After maturity of the Notes or the occurrence of an
Event of Default, the outstanding principal balance of the Notes
shall, at the option of the Required Lenders, bear interest at
the Default Rate. Any past due principal of and, to the extent
permitted by law, past due interest on the Notes shall bear
interest, payable as it accrues on demand, for each day until
paid at the Default Rate. Such interest shall continue to accrue
at the Default Rate notwithstanding the entry of a judgment with
respect to any of the Obligations or the foreclosure of any of
the Lenders' Liens, except as otherwise provided by applicable
law.
Section 3.11. Computation of Interest and Fees. All
interest payable on the Notes hereunder or the amount of any fees
hereunder shall be computed based on the number of days elapsed
and 360-days per year, subject to the provisions hereof limiting
interest to the maximum permitted by applicable law.
Section 3.12. Capital Adequacy. If any present or future
law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or the
interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required
or expected to be maintained by any Lender or any corporation
controlling such Lender and such Lender reasonably determines
that the amount of capital so required or expected to be
maintained is increased by or based upon the existence of the
Credit Facilities or the Letters of Credit, then such Lender may
notify AMRESCO of such fact, and commencing ninety (90) days
following such notice, Borrowers shall pay to such Lender or
Agent (for such Lender) from time to time on demand, as an
additional fee payable hereunder, such amount as Lender shall
determine in good faith and certify in a notice to AMRESCO in
reasonable detail to be an amount that will adequately compensate
such Lender in light of these circumstances for its increased
costs of maintaining such capital. Each Lender shall allocate
such cost increases among its customers in good faith and on an
equitable basis.
Section 3.13. Deposit of Cash Collateral. Upon the
occurrence of any Event of Default, Borrowers shall, on the next
succeeding Business Day, deposit in a segregated, interest
bearing account with Agent such funds as Agent may request, up to
a maximum amount equal to the aggregate existing Letter of Credit
Exposure. Any funds so deposited shall be held by Agent as
security for the Credit Facilities (including the Letters of
Credit) and Borrowers will, in connection therewith, execute and
deliver such assignments and security agreements in form and
substance satisfactory to Agent which Agent may, in its
discretion, require. As drafts or demands for payment are
presented under any Letter of Credit, Borrowers hereby
irrevocably direct Agent to apply such funds to satisfy such
drafts or demands. When all Letters of Credit have expired and
the Notes have been repaid in full (and Lenders have no
obligation to make further Advances or issue Letters of Credit
hereunder) or such Event of Default has been cured to the
satisfaction of Agent, Agent shall release to AMRESCO any
remaining funds deposited under this Section 3.13. Whenever
Borrowers are required to make deposits under this Section 3.13
and fail to do so on the day such deposit is due, Lenders may
make such deposit using any funds of Borrowers then available to
any Lender.
Section 3.14. Terms of Bridge Loan. During the term of the
Bridge Loan, the Bridge Loan Lender shall make a Bridge Loan
Advance simultaneously with (and for the same purposes as
requested for) each Corporate Facility Advance in an amount equal
to the Bridge Loan Percentage times the amount requested to be
funded under the Corporate Facility pursuant to the applicable
Request For Advance. The remaining portion of the requested
advance shall be funded by the Lenders pursuant to the terms of
this Agreement as a Corporate Facility Advance. Prior to
December 31, 1995, payments made by Borrowers to be applied
against the Corporate Facility shall be allocated to the Bridge
Loan in an amount equal to the Bridge Loan Percentage times such
payment, with the remaining portion of such payment applied
against the Corporate Facility. After December 31, 1995,
Borrowers shall (i) no longer be entitled to obtain Bridge Loan
Advances, and (ii) make equal monthly payments on the Bridge Loan
in an amount equal to one-sixth of the aggregate Bridge Loan
Advances outstanding as of January 1, 1996, such payments to be
made in consecutive monthly installments on the last Business Day
of each month, commencing on January 31, 1996.
Borrowers shall also be required to make mandatory
prepayments on the Bridge Loan from time to time in an amount by
which the aggregate outstanding Bridge Loan Advances exceeds the
Bridge Loan Commitment. The Bridge Loan Commitment shall be
reduced from time to time (i) in an amount by which the Available
Commitment applicable to the Corporate Facility increases after
the Closing Date, and (ii) in an amount equal to the proceeds
obtained by any Borrower (or the receipt by any Borrower of the
proceeds obtained by the issuance of any Subsidiary) of
additional common stock or other equity (other than the issuance
thereof to another Borrower) or any Approved Subordinated Debt.
To the extent that the proceeds of any common stock or other
equity, or the Approved Subordinated Debt, is applied to reduce
the Bridge Loan as a result of the reduction in the Bridge Loan
Commitment above provided, then Borrower shall not to required be
make the mandatory prepayments contemplated by Section 3.6(c)
hereof.
The Bridge Loan shall be secured by the Collateral on a pro
rata basis with the Credit Facilities. All of the
representations and warranties made by Borrowers to Lenders under
this Agreement and the other Loan Documents are hereby also made
in favor of the Bridge Loan Lender, all of the covenants and
agreements contained in Articles VII and VIII of this Agreement
are hereby also made for the benefit of the Bridge Loan Lender,
and a Default or Event of Default under the Corporate Facilities
shall also be a default or event of default, as applicable, under
the Bridge Loan.
Agent shall also act as agent for the Bridge Loan Lender
with respect to the Bridge Loan for the same purposes, and in the
same manner, as Agent is acting on behalf of the Lenders with
respect to the Credit Facilities. Bridge Loan Lender
acknowledges and agrees that the terms of such agency
relationship shall be as set forth in Article X hereof. Lender
and Bridge Loan Lender agree that, so long as the Bridge Loan is
outstanding, for purposes of clause (a) of the definition of
Required Lenders, Required Lenders shall mean both (A) the
Lenders and the Bridge Loan Lender holding at the time in
question fifty-one percent (51%) of the sum of (i) the aggregate
unpaid principal amount of the Notes, plus (ii) the Letter of
Credit Exposure, plus (iii) the outstanding balance of the Bridge
Loan and (B) and no fewer than fifty percent (50%) of the Lenders
in number. The other terms of the Bridge Loan shall be as set
forth in a letter agreement between Borrowers and the Bridge Loan
Lender executed as of the Closing Date.
ARTICLE IV
CONDITIONS TO FUNDING
Section 4.1. Conditions To Initial Advance or Letter of
Credit. The obligation of Lenders to fund the initial Advance or
the Issuing Lender to issue any Letter of Credit, whichever is
first, as provided herein is subject to the satisfaction of the
following conditions and requirements:
(a) receipt by Agent of (i) this Agreement, properly
executed by Borrowers, (ii) evidence acceptable to Agent that
Borrowers have paid all fees and expenses required to be paid by
Borrowers as of the date of such Advance or issuance, (iii) the
Compliance Letter for the initial Borrowing Base, and (iv) the
initial Asset Portfolio Report;
(b) receipt by each Lender of its Notes, properly
executed by Borrowers;
(c) receipt by Agent of a Pledge Agreement and all
financing statements related thereto, properly executed by the
appropriate Borrowers, together with the original stock
certificates accompanied by stock powers executed in blank by the
appropriate Borrowers evidencing all of the outstanding shares of
stock of each Subsidiary of Borrowers (other than those
Subsidiaries listed in clause (a) of the definition of Excluded
Subsidiaries);
(d) receipt by Agent of a Collateral Assignment and
all financing statements related thereto, properly executed by
the appropriate Borrowers;
(e) receipt by Agent of the Security Agreement and all
financing statements related thereto, properly executed by
Borrowers;
(f) receipt by Agent of the Lockbox Agreement,
properly executed by Borrowers and the Lockbox Agent;
(g) receipt by the Custodians of the original
promissory notes evidencing the Assigned Loans owned by any
Borrower as of the Closing Date, together with allonge
endorsements attached thereto (in form acceptable to Agent)
executed in blank by the appropriate Borrower and all other
documents required to be delivered to the Custodian pursuant to
the terms of the Custodial Agreement or the Loan Documents
(including, without limitation, as required by Section 5.2);
(h) receipt by Agent from each Custodian of the
certificate required to be delivered under its respective
Custodial Agreement to reflect receipt by the Custodian of the
items referenced in (g) above;
(i) receipt by Agent of fully executed Custodial
Agreements from the initial Custodians;
(j) receipt by Agent of an opinion of general counsel
for each Borrower, opining as to the due organization and
existence of each Borrower, the enforceability of each of the
Loan Documents and such other matters as Agent may reasonably
request, in form and substance satisfactory to Agent;
(k) receipt by Agent of all resolutions, certificates
or documents it may reasonably request relating to the formation,
existence and good standing of each Borrower on the date hereof,
corporate authority for the execution and validity of this
Agreement and the other Loan Documents, and any other matters
relevant to this Agreement, all in form and substance
satisfactory to Agent, which resolutions, certificates and
documents shall include, without limitation, (i) the articles of
incorporation and bylaws of each Borrower, (ii) resolutions of
the board of directors of each Borrower authorizing the execution
of the Loan Documents on behalf of each such Borrower and the
granting of all the Lenders' Liens as security for the Credit
Facilities and the Letters of Credit, (iii) certificates of
incumbency for the officers of each Borrower, and
(iv) certificates of corporate existence and good standing issued
by the state of incorporation of each Borrower and from the
appropriate governmental authority of each state in which each
Borrower is required by applicable law to be qualified;
(l) filing officer certificates (or commercial reports
similar thereto, if satisfactory to Agent) under Section 9-407(2)
of the UCC, releases or partial releases of liens or financing
statements, and other evidence satisfactory to Agent that there
are no Liens on any assets of any Borrower, except Permitted
Encumbrances;
(m) satisfaction of all conditions contained in
Section 4.2 if an Advance is being made, or satisfaction of all
conditions contained in Section 4.3 if a Letter of Credit is
being issued;
(n) copies of certificates of insurance for each
policy maintained by any Borrower, together with evidence of
payment of all premiums thereon;
(o) a power of attorney executed by Borrowers (other
than AMRESCO) to AMRESCO entitling AMRESCO to take various
actions under the Loan Documents in favor of all Borrowers or any
Borrower; and
(p) all other documents, instruments, certificates and
information to be delivered on or before the Closing Date
pursuant to the terms of this Agreement.
All the documents, instruments, certificates, information,
evidences and opinions referred to in this Section 4.1 shall be
delivered to Agent no later than the Closing Date, and Lenders
shall not be bound by or obligated hereunder until Agent has
received all such items.
Section 4.2. Conditions To All Advances. The obligation
of Lenders to fund any Advance as provided herein is subject to
the satisfaction of the following conditions and requirements:
(a) timely receipt by Agent of a Request For Advance;
(b) immediately before and after giving effect to such
Advance, no Default shall have occurred and be continuing and the
making of such Advance shall not cause a Default;
(c) the representations and warranties contained in
this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such
Advance, except that all representations and warranties that
speak as of a particular date shall only be required on the date
of each such Advance to be true and correct in all material
respects as of the date to which such representation or warranty
speaks and not as of any subsequent date; and
(d) such other information and documentation as Agent
shall reasonably deem necessary or desirable in connection with
the funding of such Advance.
Section 4.3. Conditions to Letters of Credit. The
obligation of the Issuing Lender to issue any Letter of Credit as
provided herein is subject to the satisfaction by Borrowers of
the following conditions and requirements:
(a) timely receipt by the Issuing Lender of a fully
completed LOC Application;
(b) timely receipt by Agent of a Request For Advance;
(c) immediately before and after the issuance of such
Letter of Credit, no Default shall have occurred and be
continuing and the issuance of any Letter of Credit shall not
cause a Default;
(d) the representations and warranties contained in
this Agreement and in the other Loan Documents shall be true in
all material respects on and as of the date of issuance of such
Letter of Credit, except that all representations and warranties
that speak as of a particular date shall only be required on the
date of issuance of each such Letter of Credit to be true and
correct in all material respects as of the date to which such
representation or warranty speaks and not as of any subsequent
date;
(e) timely receipt by Agent (on behalf of the Issuing
Lender) of the issuance fee required to be paid by the Issuing
Lender related to the issuance of such Letter of Credit; and
(f) such other information and documentation as Agent
or the Issuing Lender shall reasonably deem necessary or
desirable in connection with the issuance of such Letter of
Credit.
ARTICLE V
COLLATERAL
Section 5.1. Security. The Credit Facilities, the Letters
of Credit, and the Obligations shall all be secured by the liens
and security interests created by the Security Documents and any
and all other Collateral described herein, and all proceeds
thereof, until the particular item of Collateral is released or
until the Letters of Credit have expired and the Credit
Facilities and all the Obligations are paid and performed in full
(and any obligation of Lenders to make Advances has been
terminated).
Section 5.2. Requirements For Assigned Loans. With
respect to each of the Assigned Loans, Borrower shall deliver to
a Custodian the documents required by the applicable Custodial
Agreement which shall include, without limitation, the following:
(a) Either (i) the original promissory note or notes
evidencing the Assigned Loan properly endorsed showing
endorsements thereof from the original holder thereof, and all
subsequent holders, to a Borrower, together with an endorsement
thereof by such Borrower to Agent, on behalf of Lenders (in form
satisfactory to Agent), which endorsement may be an allonge
endorsement, (ii) with respect to those Assigned Loans where the
original promissory note has been lost, an original lost note
affidavit in form which is sufficient under the UCC or the laws
of any applicable jurisdiction to enable the owner thereof to
maintain an action on the related promissory notes and recover
from any party liable thereon, and properly executed by the
Person which sold such promissory note to the applicable
Borrower, or (iii) with respect to those Assigned Loans for which
Borrowers have a participation interest, the original or a copy
of the participation certificate or agreement evidencing the
applicable Borrower's interest in such Assigned Loans;
(b) Copies of the mortgage, deed of trust or other
security documents by which a lien or security interest has been
granted to secure the Assigned Loan;
(c) A Transfer of Liens properly executed and
acknowledged by the appropriate Borrower;
(d) To the extent in the possession of a Borrower or
an Affiliate of a Borrower, a Title Policy and certificate of
hazard and/or liability insurance with respect to any Underlying
Real Estate; and
(e) Such other information related to the Underlying
Real Estate, to the extent in the possession of any Borrower or
an Affiliate of any Borrower, as Agent shall reasonably request.
Section 5.3. Requirements for Mortgaged Properties. With
respect to each of the Mortgaged Properties, the Borrower which
owns such Mortgaged Property shall deliver to a Custodian the
documents required by the applicable Custodial Agreement with
respect thereto which shall include, without limitation, the
following:
(a) A copy of the deed or conveyance instrument by
which the applicable Borrower took title to the Mortgaged
Property;
(b) A Title Policy (which Title Policy may be a
mortgagee policy of title insurance which has converted to an
owner's policy of title insurance after foreclosure), for each
Mortgaged Property with a value in excess of One Hundred Thousand
and No/100 Dollars ($100,000.00) and, unless covered under an
umbrella policy approved by Agent, a certificate of hazard and/or
liability insurance covering the Mortgaged Property;
(c) A properly executed and acknowledged Mortgage; and
(d) Such other information as Agent shall reasonably
request.
Section 5.4. Recording. The Custodial Agreements shall
provide that the Custodian shall hold the original of each
Mortgage and Transfer of Liens for recording in the appropriate
real estate records if and when (i) a Default occurs, or
(ii) Agent delivers ten (10) days prior written notice to the
Custodians and AMRESCO that the Required Lenders require the
recordation of such Mortgages or Transfers of Liens. After the
occurrence of any of the above events, the Custodians or Agent
shall record all Mortgages and Transfers of Liens then held by
the Custodians, and Borrowers shall be required to pay, or
reimburse the Lenders for the payment of, all filing fees,
mortgage and stamp taxes and other expenses incurred by Lenders,
Agent or Custodians in connection with the recordation of the
Mortgages and Transfers of Liens.
Section 5.5. Timing of Deliveries. The items referenced
in Sections 5.2 and 5.3 must be delivered to a Custodian under a
Custodial Agreement within the time periods specified in such
Custodial Agreement and Borrowers must deliver to Agent a
supplement to the Collateral Assignment covering any Assigned
Loans or Mortgaged Property acquired by any Borrower after the
Closing Date, no later than the earlier to occur of (i) a
Default, (ii) thirty (30) days after the effective date of the
acquisition by the applicable Borrower of such Assigned Loans or
Mortgaged Property, or (iii) the date on which Borrower requests
that such Assigned Loans or Mortgaged Property be included in the
Borrowing Base.
Section 5.6. Agent's Discretion. All requirements for the
Collateral are imposed solely and exclusively for the benefit of
the Lenders but are to be enforced and monitored solely and
exclusively by Agent in accordance with the provisions of the
Loan Documents. No Person (including Borrower or any other
Lender) other than Agent shall have any standing to require
satisfaction of any such requirements. Agent shall be entitled
to require delivery of the items referenced in Section 5.2 and
Section 5.3 at any time and, from time to time (subject to the
limitation contained in Section 5.4), and the failure of Agent to
request any such items at any particular time shall not
constitute a waiver of the Lenders' rights to thereafter require
that such items be delivered.
Section 5.7. Lockbox; Lockbox Account.
(a) Notwithstanding any provision herein or in the
other Loan Documents to the contrary, Borrowers agree that they
have instructed, or will cause instructions to be given to, all
Account Debtors, or contemporaneously with the execution of this
Agreement or within thirty (30) days after the addition of an
Asset Portfolio to the Borrowing Base will instruct, or will
cause instructions to be given to, all Account Debtors, pursuant
to a letter from the appropriate Borrower or the seller of such
Asset Portfolio in form approved by Agent, to mail all payments
and other remittances owing with respect to the Assigned Loans
directly to the Lockbox. Lockbox Agent will have exclusive and
unrestricted access to the Lockbox and will have complete and
exclusive authority to receive, pick up and open all mail
addressed to the Lockbox, whether registered, certified, insured
or otherwise. Borrowers will have no access to or control over
the Lockbox or any checks or monies received in the Lockbox. All
items received and monies collected in connection with the
Assigned Loans will be processed by the Lockbox Agent pursuant to
the terms of the Lockbox Agreement, and in the event any checks
or monies shall be submitted to any Borrower by any Account
Debtor under the Assigned Loans, or shall otherwise come into the
possession of any Borrower, the same shall be deemed held by such
Borrower in trust for Lenders, and such Borrower shall deliver
the same to the Lockbox Agent within three (3) Business Days
after received by such Borrower, endorsed if appropriate, for
deposit into the Lockbox Account.
(b) Prior to the occurrence of a Default, on each
Business Day during the Credit Period, the Lockbox Agent shall,
and Borrowers hereby authorize and instruct the Lockbox Agent to,
withdraw all funds from the Lockbox Account, if any, and deposit
same into AMRESCO's operating account at NationsBank as
designated in writing from time to time by AMRESCO to the Lockbox
Agent. Upon the occurrence of a Default and thereafter, all
amounts in the Lockbox Account shall be disbursed to and applied
by Lockbox Agent and Agent to reduce the outstanding obligations
as provided in Section 9.10.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lenders that:
Section 6.1. Existence and Power of Borrowers. Each
Borrower (a) is a corporation duly created, validly existing and
in good standing under the laws of the state, province or country
under which it is organized, and is or will be qualified and in
good standing as a foreign corporation under the laws of each
state where such qualification is necessary for such Borrower to
conduct its business; and (b) has all corporate powers and all
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and as
contemplated to be conducted, except where the failure to have
any such item would not have a material adverse effect on such
Borrower's business and financial condition.
Section 6.2. Subsidiaries. Other than the Excluded
Subsidiaries, all direct and indirect Subsidiaries of AMRESCO are
Borrowers. All stock of each Subsidiary has been collaterally
assigned to Agent (on behalf of Lenders) pursuant to a Pledge
Agreement, other than Subsidiaries identified in clause (a) of
the definition of Excluded Subsidiaries. No Borrower is an
Excluded Subsidiary.
Section 6.3. Authorization; Contravention. The execution,
delivery and performance of this Agreement, the Notes, the LOC
Applications, the Security Documents and the other Loan Documents
by each Borrower are within each such Borrower's corporate
powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with,
any governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or bylaws of
any such Borrower or of any agreement, judgment, injunction,
order, decree or other instrument binding upon any such Borrower
or result in the creation or imposition of any Lien on any asset
of any such Borrower except Liens securing the Notes.
Section 6.4. Enforceable Obligations. This Agreement, the
Notes, the LOC Applications and the other Loan Documents each
constitutes a valid and binding agreement of each Borrower, which
is a party thereto, enforceable in accordance with its terms
except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent transfer or similar laws
affecting creditors rights generally, and (b) the availability of
equitable remedies may be limited by equitable principles of
general applicability.
Section 6.5. Financial Information.
(a) The current financial statements of each Borrower
and all of the other financial reports and information of each
Borrower that have been delivered to Lenders are true and correct
in all material respects as of the date of such current financial
statements and other reports and information.
(b) Except as disclosed in writing to Lenders prior to
the execution and delivery of this Agreement, since July 31,
1995, there has been no material adverse change in the business,
financial position or results of operations of any Borrower; and,
there exists no condition, event or occurrence that, individually
or in the aggregate, could reasonably be expected to result in a
material adverse change in the business, financial position or
results of operations of any Borrower.
Section 6.6. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of any Borrower,
threatened against or affecting, any Borrower before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, financial
position or results of operations of such Borrower or which could
in any manner draw into question the validity of the Loan
Documents.
Section 6.7. ERISA.
(a) Each Employee Plan has been maintained and
administered in substantial compliance with the applicable
requirements of the Code and ERISA. No circumstances exist with
respect to any Employee Plan that could have a material adverse
effect on any Borrower.
(b) With respect to each Pension Plan, (i) no
accumulated funding deficiency (within the meaning of
Section 412(a) of the Code), whether waived or unwaived, exists;
(ii) the present value of accrued benefits (based on the most
recent actuarial valuation prepared for each such plan, if any,
in accordance with ongoing assumptions) does not exceed the
current value of plan assets allocable to such benefits by a
material amount; (iii) no reportable event (within the meaning of
Section 4043 of ERISA) other than purchases and sales of
securities from a plan trustee as reported in the audited
financial statements of such plan has occurred; (iv) no
uncorrected prohibited transactions (within the meaning of
Section 4975 of the Code) exist which could have a material
adverse effect on any Borrower; (v) to the extent such plan is
covered by PBGC, no material liability to the PBGC exists and no
circumstances exist that could reasonably be expected to result
in any such liability; and (vi) no material withdrawal liability
(within the meaning of Section 4201(a) of ERISA) exists and no
circumstances exist that could reasonably be expected to result
in any such liability.
(c) As of the date hereof, no Borrower has any
obligation under any Employee Plan to provide post-employment
health care benefits to any of its current or former employees,
except as may be required by Section 4980B of the Code.
Section 6.8. Taxes and Filing of Tax Returns. Each
Borrower has filed all material tax returns required to have been
filed and has paid all Taxes shown to be due and payable on such
returns, including interest and penalties, and all other Taxes
which are payable by such party, to the extent the same have
become due and payable other than Taxes with respect to which a
failure to pay would not have a material adverse effect on such
Borrower. None of the Borrowers has any knowledge of any
proposed Tax assessment against any Borrower other than customary
ad valorem taxes or other Taxes to become due in the normal
course of business, and all Tax liabilities of each Borrower are
adequately provided for. No income tax liability of any Borrower
has been asserted by the Internal Revenue Service for Taxes in
excess of those already paid, the payment of which would have a
material adverse affect on such Borrower.
Section 6.9. Ownership of Assets. Each Borrower has good
and indefeasible title to all of the Collateral and all other
assets reflected on its most current financial statements
delivered to Lenders. Except for Permitted Encumbrances, there
is no Lien on any property of any Borrower, and the execution,
delivery, performance or observance of the Loan Documents will
not require or result in the creation of any lien on any such
property. Borrowers have properly granted to Lenders a perfected
security interest in all Assigned Loans and a valid first lien on
all Mortgaged Properties owned by Borrowers which have not been
previously released pursuant to the terms of the applicable
Custodial Agreement (including, without limitation, all Assigned
Loans and Mortgaged Properties included in the current Borrowing
Base). Borrowers have requested as an accommodation to Borrowers
because of the number of Assigned Loans and for ease of
administering the Credit Facilities that the Assigned Loans be
endorsed by using an allonge endorsement and Borrowers
acknowledge that, if an allonge endorsement is so used in
connection with an Assigned Loan, Borrowers intend such
endorsement to be a part of the Assigned Loan as fully as if such
endorsement was made on the instrument itself.
Section 6.10. Business; Compliance. Each Borrower has
performed and abided by all obligations required to be performed
by it under any license, permit, order, authorization, grant,
contract, agreement, or regulation to which it is a party or by
which it or any of its assets are bound and which, if such
Borrower were to fail to perform or abide by, such failure would
have a material adverse effect on the business operations of such
Borrower.
Section 6.11. Licenses, Permits. Each Borrower possesses
such valid franchises, licenses, permits, consents,
authorizations, exemptions and orders of Governmental
Authorities, as are necessary to carry on its business as now
being conducted, other than violations which would not (either
individually or collectively) have a material adverse effect on
the financial condition or operations of such Borrower.
Section 6.12. Compliance with Law. The business and
operations of each Borrower have been and are being conducted in
accordance with all applicable laws, rules and regulations of all
Governmental Authorities, other than violations which would not
(either individually or collectively) have a material adverse
effect on the financial condition or operations of such Borrower.
Section 6.13. Full Disclosure. All information heretofore
furnished by any Borrower (or any other party on any Borrower's
behalf) to Agent and Lenders for purposes of or in connection
with this Agreement or any transaction contemplated hereby is,
and all such information hereafter furnished by any Borrower to
Agent and any Lender will be, true and accurate in every material
respect and shall be, to the best of the knowledge and belief of
the party furnishing such information, without material omission.
Each of the Borrowers has, to the best of its knowledge,
disclosed to Agent in writing any and all facts which might
reasonably be expected to materially and adversely affect the
business, operations, prospects or condition, financial or
otherwise, of any Borrower, or the ability of any Borrower to
perform its obligations under this Agreement or the other Loan
Documents.
Section 6.14. Environmental Matters.
(a) With respect to assets of Borrowers, other than any
Mortgaged Property, and except for conditions, circumstances or
violations that would not, individually or in the aggregate, have
a material adverse effect on the financial condition, operation
or business of any Borrower, none of the Borrowers (i) knows of
any environmental condition or circumstance, such as the presence
of any hazardous substance (as defined in Section 7.7), adversely
affecting the properties or operation of any Borrower, (ii) has
received any report of a violation by any Borrower of any
Applicable Environmental Law, or (iii) knows that any Borrower is
under any obligation to remedy any violation of any Applicable
Environmental Laws.
(b) With respect to the Mortgaged Properties, (i) no
portion of any Mortgaged Property is contaminated by any
substance or material presently identified to be toxic or
hazardous according to any Applicable Environmental Law,
including, without limitation, any asbestos, polychlorinated
biphenyl, radioactive substance, methane, volatile hydrocarbons,
industrial solvents or any other material or substance which has
in the past or could foreseeably at the present time or at any
time in the future cause or constitute a material health, safety
or other environmental hazard to any Person or property, except
as otherwise disclosed in the Borrower Due Diligence Reports or
otherwise disclosed in writing to Agent, (ii) none of the
Borrowers nor, to the knowledge of any Borrower, any other Person
has caused or suffered to occur a discharge, spillage,
uncontrolled loss, seepage or filtration of oil or petroleum or
chemical liquids or solids, liquid or gaseous products or
hazardous waste, or hazardous substance at, upon, under or within
any portion of any Mortgaged Property or any contiguous real
estate which either (A) would be a violation of Applicable
Environmental Law or (B) has not been remediated so as to cure
any violation of Applicable Environmental Law (such remediation
having been accomplished without increasing the potential
environmental liability of any Borrower or Lender), (iii) none of
the Borrowers nor, to the knowledge of any Borrower, any other
Person has been or is involved in operations at or near any
portion of any Mortgaged Property which could lead to the
imposition on any Borrower or any operator of such Mortgaged
Property of liability which could have a material adverse effect
on the financial condition or business operations of any
Borrower, or the creation of a lien on such property, under any
Applicable Environmental Law, (iv) none of the Borrowers nor any
other Person has permitted any tenant or occupant of any portion
of any Mortgaged Property, to engage in any activity that could
lead to the imposition of liability on such tenant or occupant,
any Borrower or any operator of any of such property which could
have a material adverse effect on the financial condition or
business operations of any Borrower, or could lead to the
creation of a lien on such property, under any Applicable
Environmental Law, or (v) to the knowledge of any Borrower, no
part of any Mortgaged Property is contaminated by any substance
or material presently identified to be toxic or hazardous
according to any Applicable Environmental Law, except as
otherwise disclosed in the Borrower Due Diligence Reports or
otherwise described in writing to Agent.
(c) With respect to the Underlying Real Estate, to the
knowledge of any Borrower, no part of any Underlying Real Estate
is contaminated by any substance or material presently identified
to be toxic or hazardous according to any Applicable
Environmental Law, or if any part of any Mortgaged Property or
any Underlying Real Estate is so contaminated the holder of the
related Assigned Loan is not subject to liability resulting from
such contamination because such party is a secured lender, as
opposed to an owner, of such property.
Section 6.15. Purpose of Credit. Each Borrower will use
the proceeds of the Corporate Facility and the Portfolio Facility
for the purposes stated in Section 2.1 hereof. No part of the
proceeds of the Credit Facilities will be used, directly or
indirectly, for a purpose which violates any law, rule or
regulation. No Borrower will, directly or indirectly, use any of
the proceeds of the Credit Facilities for the purpose of
purchasing or carrying, or retiring any Debt which was originally
incurred to purchase or carry, any "margin stock" as defined in
the Margin Regulations, or to purchase or carry any "security
that is publicly-held" within the meaning of Regulation T of the
Board of Governors of the Federal Reserve System, or otherwise
take or permit any action which would involve a violation of such
Margin Regulations or any other regulation of such Board of
Governors. Neither of the Credit Facilities is secured, directly
or indirectly, in whole or in part, by collateral that includes
any "margin stock" within the meaning of the Margin Regulations.
No Borrower will engage principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" within the meaning
of the Margin Regulations.
Section 6.16. Governmental Regulations. No Borrower is
subject to regulation under the Investment Advisers Act of 1940,
as amended. No Borrower is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, any Margin Regulations
or any other law, rule or regulation which regulates the
incurrence of Debt.
Section 6.17. Indebtedness. No Borrower is an obligor on
any Debt other than Debt permitted by Section 8.6. No Borrower
is (nor will any Borrower ever become) an obligor on any Debt of
any Excluded Subsidiary, and none of the assets of any Borrower
have been pledged to secure, or otherwise given as security for,
any Debt of any Excluded Subsidiary.
Section 6.18. Insurance. Each Borrower maintains with
financially sound, responsible and reputable insurance companies
or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized
by the jurisdictions in which it operates) insurance concerning
its properties and business against such casualties and
contingencies and of such types and in such amounts (and with
co-insurance and deductibles) as is customary for the same or
similar businesses.
Section 6.19. Solvency. On a consolidated basis as of the
Closing Date (a) the aggregate fair market value of Borrowers'
assets exceeds their liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise),
(b) Borrowers have sufficient cash flow to enable them to pay
their Debts as they mature, and (c) Borrowers have a reasonable
amount of capital to conduct their business as presently
contemplated.
Section 6.20. Due Diligence Procedures. The due diligence,
collateral control and collection procedures used by Borrowers
with respect to the Assigned Loans are no less stringent than
Standard Industry Practices. All Borrower Due Diligence Reports
have been prepared or reviewed by a Borrower. The factual
information contained in the Borrower Due Diligence Reports,
including without limitation, regarding title to and the
condition of each Assigned Loan (but not including valuation
amounts and cash flow projections) has not been intentionally
misstated by Borrowers, and, with respect to the Asset Portfolios
taken as a whole, the Borrower Due Diligence Reports accurately
reflected the material facts concerning each of the Assigned
Loans and Mortgaged Properties included in such Asset Portfolios
at the time the Borrower Due Diligence Reports were prepared.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as Lenders'
commitment to make Advances under the Credit Facilities remains
in effect, any Letters of Credit remain outstanding or any of the
Obligations remain unpaid:
Section 7.1. Information From AMRESCO. AMRESCO will
deliver, or cause to be delivered, to Agent on behalf of Lenders:
(a) As soon as available and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of
AMRESCO, a consolidated balance sheet of AMRESCO and its
Subsidiaries as of the end of such Fiscal Year and the related
statements of income and cash flow for such Fiscal Year, setting
forth in each case in comparative form the figures for the
previous Fiscal Year, all reported by AMRESCO in accordance with
GAAP and audited by Deloitte & Touche (or its successors) or
other independent public accountants reasonably acceptable to
Agent.
(b) As soon as available and in any event within
forty-five (45) days after the end of each calendar quarter, a
consolidating and consolidated balance sheet and related
statement of income of AMRESCO and its Subsidiaries as of the end
of such quarter and year-to-date, all certified by the chief
financial officer or the chief accounting officer of AMRESCO as
to fairness of presentation and as to whether such financial
statements fairly reflect the financial condition of AMRESCO and
its Subsidiaries as of the date of delivery thereof, subject to
year-end adjustments. Such financial statements shall be
prepared in conformity with GAAP, except that certain information
and note disclosures normally included in annual financial
statements prepared in accordance with GAAP may be condensed or
omitted provided that the disclosures made are adequate to make
the information presented not misleading, and GAAP shall be
applied on a basis consistent with the financial statements
referred to in Section 7.1(a).
(c) Simultaneously with the delivery of each set of
financial statements referred to in Sections 7.1(a) and (b) and
each Request for Advance, a certificate of an Authorized Officer
of AMRESCO, (i) setting forth in reasonable detail the
calculations required to establish whether Borrowers were in
compliance with the requirements of Sections 8.1 through and
including Section 8.5, on the date of such financial statements,
and (ii) with respect only to the financial statements delivered
pursuant to Sections 7.1(a) and (b), stating, to the best of such
Authorized Officer's knowledge and belief, whether or not such
financial statements fairly reflect the financial condition of
AMRESCO and its Subsidiaries and results of AMRESCO's and its
Subsidiaries' operations as of the date of the delivery of such
financial statements.
(d) Simultaneously with the delivery of each set of
financial statements referred to in Section 7.1(b), or more
frequently as requested by the Required Lenders, a Compliance
Letter prepared at Borrowers' expense covering the then most
recent Borrowing Base Schedule.
(e) Promptly after the filing thereof, a true, correct
and complete copy of each Form 10-K and Form 10-Q and each other
report filed by or on behalf of AMRESCO with the SEC.
(f) Immediately upon the occurrence of any Default, a
certificate of an Authorized Officer of AMRESCO setting forth the
details thereof and the action which AMRESCO or any applicable
Borrower is taking or proposes to take with respect thereto.
(g) Within fifteen (15) days after the end of each
calendar month, a current Borrowing Base Schedule, which if
requested by Agent, shall include a back-up schedule listing each
Assigned Loan by Asset Portfolio and designating (i) whether each
such Assigned Loan is a Performing Assigned Loan or not a
Performing Assigned Loan, and (ii) which Asset Portfolios are
Wholly-Owned Real Estate Portfolios. AMRESCO will update the
Borrowing Base Schedule each month, which updated schedule will
be submitted to Agent for review and approval. The Borrowing
Base Schedule so submitted by AMRESCO shall be effective unless
disapproved by Agent. If Agent disapproves a Borrowing Base
Schedule, the most recent Borrowing Base Schedule (with
appropriate modification to reflect changes in the Borrowing
Percentages due to the passage of time) which has not been
disapproved by Agent shall be deemed to be the effective
Borrowing Base Schedule. AMRESCO shall also deliver a Borrowing
Base Schedule with each Request for Advance if, since the date of
the currently effective Borrowing Base Schedule, Borrowers have
(A) sold or otherwise disposed of either (x) an asset which
contributed an amount equal to or greater than One Million and
No/100 Dollars ($1,000,000.00) to the Net Investment Value of its
applicable Asset Portfolio or (y) any Asset Portfolio included in
the currently effective Borrowing Base or (B) desire to include
new Eligible Investments in the Borrowing Base.
(h) Prompt notification of (i) any material adverse
change in the financial condition of any Borrower, including,
without limitation, the occurrence of any litigation which could
reasonably be expected to have a material adverse effect on any
Borrower, or (ii) the occurrence of any acceleration of the
maturity of any indebtedness owing by any Borrower, or any
default under any indenture, mortgage, agreement, contract or
other instrument to which any Borrower is a party or by which any
Borrower or any properties of any Borrower are bound, if such
default or acceleration might have a material adverse effect upon
the financial condition of any Borrower.
(i) From time to time such additional information
regarding the financial position or business of any Borrower,
and/or any Borrower's Subsidiaries as Agent, at the request of
any Lender, may reasonably request, including, without
limitation, financial projections of any Borrower and information
concerning the insurance being maintained by Borrowers.
Section 7.2. Business of Borrowers. The primary business
of Borrowers is, and Borrowers covenant that it shall remain,
mortgage banking and other similar financial services and the
acquisition, ownership and disposition of Asset Portfolios either
directly or through investments in Persons who acquire, own and
dispose of Asset Portfolios, or other businesses ancillary or
related to such primary business.
Section 7.3. Right of Inspection. Each Borrower will
permit Agent or any Lender, or any officer, employee or agent of
any such party, to visit and inspect any of the assets of any
Borrower, examine the books of record and accounts of any
Borrower (including, without limitation, all Borrower Due
Diligence Reports), take copies and extracts therefrom, and
discuss the affairs, finances and accounts of any Borrower with
the respective officers, accountants and auditors of such
Borrower, all at such reasonable times and as often as Agent or
any Lender may reasonably require, all at the expense of
Borrowers; provided, that, prior to the occurrence of a Default,
each Lender will make no more than two such visits or inspections
in any twelve month period. Each Lender covenants and agrees to
preserve the confidentiality of any financial data concerning any
Borrower, any Subsidiary of any Borrower or related to any
Borrower's, or any Borrower's Subsidiaries' businesses or
operations or any information with respect to which any Borrower
has (a) an obligation of confidentiality to a third party (to the
extent such obligation has been disclosed to such Lender) or
(b) informed such Lender of the confidential nature of the
specific information, except to the extent such Lender is
required to disclose such information pursuant to any applicable
law, rule, regulation or order of any Governmental Authority;
provided that (i) any information contained in any annual report,
or any Form 10-K, Form 10-Q or Form 8-K reports (if any) which
have been delivered to the SEC, or any other annual or quarterly
reports to the stockholders of any Borrower subject to the
reporting requirements of the Securities Exchange Act of 1934, as
amended, proxy material delivered to the stockholders of any
Borrower or any report delivered to the SEC, or any other
information that is in the public domain or has become publicly
known, shall not in any event be deemed confidential, and
(ii) each Lender may make any information received by it
available (A) to a transferee of or participant in any interest
in the Loans or the Notes, provided that such transferee or
participant agrees in writing to be bound by the provisions of
this Section 7.3, (B) to any accountants or other professionals
engaged by such Lender, provided that each such accountant or
professional agrees to be bound by the provisions of this Section
7.3, or (C) in connection with the enforcement of any of the Loan
Documents or any litigation in connection therewith.
Section 7.4. Maintenance of Insurance. Each Borrower will
at all times maintain or cause to be maintained insurance
covering its respective risks as are customarily carried by
businesses similarly situated including, without limitation, the
following: (a) workmen's compensation insurance;
(b) comprehensive general public liability and property damage
insurance in respect of all activities in which such Borrower
might incur personal liability for the death or injury of an
employee or third person, or damage to or destruction of
another's property; (c) insurance against loss or damage by fire,
lightning, hail, tornado, explosion and other similar risk; and
(d) comprehensive automobile liability insurance. Each Borrower
shall maintain coverage with respect to the foregoing risks in
such coverage amounts as are customarily carried by businesses
similarly situated.
Section 7.5. Payment of Taxes, Impositions and Claims.
Each Borrower shall pay (a) all Taxes imposed upon it or any of
its assets or with respect to any of its franchises, business,
income or profits, and all Impositions not later than the due
date thereof, or before any material penalty or interest may
accrue thereon and (b) all material claims (including, without
limitation, claims for labor, services, materials and supplies)
for sums which have become due and payable and which by law have
or might become a Lien on any of its assets; provided, however,
payment of Taxes, Impositions or claims shall not be required if
and for so long as (i) the amount, applicability or validity
thereof is currently being contested in good faith by appropriate
action promptly initiated and diligently conducted in accordance
with good business practices and no material part of the property
or assets of any Borrower are subject to levy or execution,
(ii) such Borrower as required in accordance with GAAP, shall
have set aside on its books reserves (segregated to the extent
required by GAAP) deemed by it to be adequate with respect
thereto, and (iii) such Borrower has notified Agent of such
circumstances, in detail satisfactory to Agent, and, provided
further, that such Borrower shall pay any such Tax, Imposition or
claim if such contest is not successful and in any event prior to
the commencement of any action to realize upon or foreclose any
lien against any part of the Collateral.
Section 7.6. Compliance with Laws and Documents. Each
Borrower shall at all times comply, and cause each of its
Subsidiaries to comply, with all Legal Requirements, the articles
of incorporation and bylaws of such Borrower, and each Borrower's
Subsidiaries and any other agreement to which any Borrower, or
any Subsidiary of any Borrower is a party, unless its failure to
so comply alone or in the aggregate would not have a material
adverse effect on the financial condition or operations of such
Borrower, together with its Subsidiaries taken as a whole.
Section 7.7. Environmental Law Compliance and Indemnity.
Borrowers agree to promptly pay and discharge when due all debts,
claims, liabilities and obligations with respect to any clean-up
measures necessary for any Borrower to comply with Applicable
Environmental Laws affecting any Borrower, provided that, with
respect to any single tract or parcel of real property, any
Borrower shall not be required to take such action if failure to
take such action would not have a material adverse effect on the
financial condition of any Borrower or would, in the reasonable
opinion of Agent, have the potential for creating any liability
or claim against Agent or any of the Lenders. Borrowers hereby
indemnify and agree to defend and hold Agent and each Lender and
its successors and assigns harmless from and against any and all
claims, demands, causes of action, loss, damage, liabilities,
costs and expenses (including reasonable attorneys' fees and
court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by
Agent or any Lender at any time and from time to time including,
without limitation, those asserted or arising subsequent to the
payment or other satisfaction of the Notes and expiration of the
Letters of Credit, by reason of, arising out of or related in any
way to Agent's and Lenders' entering into this Agreement and the
transactions herein contemplated, INCLUDING MATTERS ARISING OUT
OF THE ORDINARY NEGLIGENCE OF AGENT OR ANY LENDER, BUT EXCLUDING
MATTERS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF AGENT OR ANY LENDER. It shall not be a defense to the
covenant of Borrowers to indemnify that the act, omission, event
or circumstance did not constitute a violation of any Applicable
Environmental Law at the time of its existence or occurrence.
The terms "hazardous substance" and "release" shall have the
meanings specified in the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), and the terms "solid waste"
and "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976 ("RCRA"); provided, to the
extent that any other applicable laws of the United States of
America or political subdivision thereof establish a meaning for
"hazardous substance," "release," "solid waste," or "disposed"
which is broader than that specified in either SARA or RCRA, such
broader meaning shall apply. As used in this Agreement,
"Applicable Environmental Law" shall mean and include the
singular, and "Applicable Environmental Laws" shall mean and
include the collective aggregate of the following: Any law,
statute, ordinance, rule, regulation, order or determination of
any governmental authority or any board of fire underwriters (or
other body exercising similar functions), or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any Borrower pertaining to health, safety or the environment,
including, without limitation, all applicable flood disaster laws
and health, safety and environmental laws and regulations
pertaining to health, safety or the environment, including
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, the Superfund Amendments
and Reauthorization Act of 1986, the Occupational Safety and
Health Act, the Texas Water Code, the Texas Solid Waste Disposal
Act, the Texas Workers' Compensation Laws, and any federal, state
or municipal laws, ordinances, regulations or law which may now
or hereafter require removal of asbestos or other hazardous
wastes from any property of any Borrower or impose any liability
on Agent or any Lender related to asbestos or other hazardous
wastes in any property of any Borrower. The provisions of this
Section 7.7 shall survive the repayment of the Notes and
expiration of the Letters of Credit. In the event of the
transfer of the Notes or any portion thereof, each Lender or any
prior holder of the Notes and any participants shall continue to
be benefitted by this indemnity and agreement with respect to the
period of such holding of the Notes.
Section 7.8. Covenant Compliance. Each Borrower shall
perform and comply with all covenants, obligations and agreements
contained in this Agreement and in the Loan Documents.
Section 7.9. Quantity and Quality of Documents. All
certificates, opinions, reports and documents to be delivered
from time to time hereunder shall be in such number of
counterparts as Agent may reasonably request and in form
reasonably acceptable to Agent, and counterpart signature pages
to any such documents may be attached to and shall, together with
all counterparts, constitute one and the same document.
Section 7.10. Use of Proceeds. Each Borrower will use the
proceeds of the Credit Facilities (including the Letters of
Credit) solely for the purposes represented in this Agreement and
shall not use such proceeds, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing
or carrying any Margin Stock and none of such proceeds will be
used in violation of applicable law (including, without
limitation, the Margin Regulations).
Section 7.11. Additional Documents. Each Borrower shall
execute and deliver or cause to be executed and delivered to
Agent upon Agent's request such other and further instruments or
documents as in the judgment of Agent may be required to better
effectuate the transactions contemplated herein or to conform,
create, evidence, perfect, preserve or maintain the Lenders'
Liens or the Lenders' rights hereunder or under the Loan
Documents, and each Borrower shall do all such additional acts,
give such assurances and execute such instruments as Agent may
reasonably require to vest more completely in and assure to
Lenders their rights under this Agreement.
Section 7.12. Compliance With Due Diligence Standards;
Offices and Files. Borrowers shall at all times comply with
Standard Industry Practices and Borrowers' past procedures
related to due diligence, collateral control, collection and
reporting procedures with respect to all Acquired Loans.
Borrowers principal office shall at all times be maintained at
1845 Woodall Rodgers Freeway, Suite 1700, Dallas, Texas, and
Borrowers' books, records and files related to the Assigned Loans
(including, without limitation, the Borrower Due Diligence
Reports) shall at all times be maintained at Borrowers' principal
office, at 5310 Harvest Hill, Suite 210, Dallas, Texas, or 10
Dorrance Street, Providence, Rhode Island, or Two Corporate Park,
Suite 100, Irvine, California 92714, unless in either such
instance, AMRESCO gives Agent thirty (30) days prior written
notice of a change in address. Borrowers shall maintain all
files related to the Assigned Loans in a reasonably prudent
manner.
Section 7.13. Appraisals. Agent may require, and Borrowers
shall deliver to Agent promptly upon request therefor (but no
more than once each twelve month period) with respect to any
given portion of the Mortgaged Property which has a cost in
excess of One Hundred Thousand and No/100 Dollars ($100,000.00)
and for which the Lenders have requested the recordation of a
Mortgage under this Agreement, a new appraisal for such portion
of the Mortgaged Property. If required by applicable
regulations, Agent may order any such appraisal directly, and
Borrower shall reimburse Agent for the reasonable cost of such
appraisal upon request by Agent. Agent shall provide AMRESCO
with a copy of any such appraisal ordered by Agent. Each such
appraisal shall be in form and substance satisfactory to Agent.
ARTICLE VIII
NEGATIVE COVENANTS
Each Borrower covenants and agrees that without the prior
written consent of the Required Lenders, so long as Lenders'
commitment to make Advances under the Credit Facilities remains
in effect, any Letters of Credit remain outstanding or any of the
Obligations remain unpaid:
Section 8.1. Minimum Consolidated Tangible Net Worth.
Borrowers shall not permit Consolidated Tangible Net Worth to be
less than the sum of (a) Seventy-Five Million and No/100 Dollars
($75,000,000.00) plus (b) fifty percent (50%) of the cumulative
Consolidated Net Income for each calendar quarter commencing on
September 1, 1995, through the quarter ending immediately prior
to, or on, the date as of which compliance with this covenant is
being measured, plus (c) the amount of any proceeds (less
reasonable and customary transaction costs) received by AMRESCO
from the issuance of any additional shares of stock or other
equity instruments.
Section 8.2. Consolidated Funded Debt to Consolidated
Capitalization. Borrowers shall not permit Consolidated Funded
Debt as a percentage of Consolidated Capitalization to be greater
than seventy percent (70%) from the Closing Date to June 30,
1996, sixty-seven and one-half percent (67.5%) from July 1, 1996,
through December 31, 1996, and sixty-five percent (65%) after
December 31, 1996; provided, that, for the purposes of this
covenant, there shall be excluded from Consolidated Funded Debt
and Consolidated Capitalization, the aggregate amount of advances
under the Warehouse Line of Credit which have been outstanding
for six months or less as of the date compliance with this
covenant is being determined.
Section 8.3. Coverage Ratios. Borrowers shall not permit
(a) the Fixed Charge Coverage Ratio to be less than 2.50 to 1.00;
and (b) the Interest Coverage Ratio to be less than 3.50 to 1.00.
Section 8.4. Consolidated Funded Debt to Consolidated
EBITDA. As of the last day of any calendar quarter, Borrowers
shall not permit Consolidated Funded Debt to Consolidated EBITDA
(for the immediately preceding four calendar quarters) to be
greater than 3.5 to 1.0 from the Closing Date to March 31, 1996;
3.25 to 1.0 from April 1, 1996, to June 30, 1996; and 3.0 to 1.0
after June 30, 1996. For the purposes of this covenant, there
shall be excluded from Consolidated Funded Debt, any Nonrecourse
Debt, and from Consolidated EBITDA any income or earnings from
Excluded Subsidiaries.
Section 8.5. Corporate Facility Outstandings to
Consolidated EBITDA. As of the last day of any calendar quarter,
Borrowers shall not permit the outstanding Corporate Facility
Advances to Consolidated EBITDA (for the immediately preceding
four calendar quarters) to exceed 1.75 to 1.0 from the Closing
Date to December 31, 1995; 1.5 to 1.0 from January 1, 1996, to
March 31, 1996; 1.25 to 1.0 from April 1, 1996, to June 30, 1996;
and 1.0 to 1.0 after June 30, 1996.
Section 8.6. Limitation on Debt and Foreign Exchange
Exposure. No Borrower shall incur any Debt, except (a) the
Credit Facilities (including the Letters of Credit),
(b) obligations not to exceed One Million and No/100 Dollars
($1,000,000.00) under Interest Hedge Agreements which protect
against interest fluctuations under the Credit Facilities, (c)
the Investment Line of Credit, the Warehouse Line of Credit, and
the Residential Funding Warehousing Facility, (d) Debt between
any of the Borrowers, (e) Debt secured by purchase money security
interests not to exceed $250,000.00 in the aggregate at any time,
(f) Guaranties in connection with Debt otherwise permitted by
this Section 8.6, (g) Guaranties in the form of indemnity
obligations or typical repurchase obligations related to the sale
by any Borrower of assets in the ordinary course of its business,
(h) leases of office space used by any Borrower in the ordinary
course of its business, (i) Debt in respect of current accounts
payable incurred in the ordinary course of any Borrower's
business, (j) Approved Subordinated Debt in an amount as approved
by the Required Lenders, (k) the Bridge Loan, and (l) the Debt of
AMRESCO MBS I, Inc., under that certain Global Master Repurchase
Agreement, dated as of September 22, 1995, by and between Nomura
Grand Cayman, Ltd. and AMRESCO MBS I, Inc. No Borrower shall
engage in any foreign exchange transaction or transactions which
at any time in the aggregate exceed the equivalent of U.S.
$10,000,000.00. No Borrower shall permit any Excluded Subsidiary
to incur any Debt other than Debt of the types described in
clauses (e) through (i) above and Nonrecourse Debt incurred in
connection with the acquisition of loan portfolios or Debt for
the acquisition of loan portfolios where recourse is limited just
to such Excluded Subsidiary (provided that the aggregate of such
loan portfolio-related Debt [both Nonrecourse Debt and recourse
Debt] shall not exceed One Hundred Million and No/100 Dollars
($100,000,000.00) for all Excluded Subsidiaries). No Borrower or
Subsidiary shall make payments on, or approve by board of
director action or otherwise the payment of any amounts on, the
Approved Subordinated Debt after the occurrence of a Default or,
prior to the occurrence of a Default, which would exceed the
scheduled payments due under the documents evidencing the
Approved Subordinated Debt as approved by the Required Lenders.
Section 8.7. Limitation on Sale of Properties. No
Borrower shall sell, assign, convey, exchange, lease or otherwise
dispose of any of its properties, rights, assets or business,
whether now owned or hereafter acquired, except in the ordinary
course of its business.
Section 8.8. Limitations on Liens. No Borrower shall, and
no Borrower shall permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any of its assets
or to give a negative pledge to any Person with respect to any of
its assets, except for (a) the Lender's Liens; (b) the Permitted
Encumbrances; (c) with respect to equipment or inventory, (i)
landlord's liens arising in the ordinary course of any Borrower's
business and (ii) Liens on equipment or supplies hereafter
acquired by any Borrower in the ordinary course of such
Borrower's business to secure the purchase price of such
equipment or supplies and any such Lien existing on such
equipment or supplies at the time of acquisition by such Borrower
(individually, a "Purchase Money Lien"), provided that (A) no
Purchase Money Lien shall cover any property other than the
equipment or supplies so acquired, and (B) the Debt secured by
such Purchase Money Lien shall not exceed one hundred percent
(100%) of the purchase price of such equipment or supplies; (d)
Liens on the Collateral to secure obligations under Interest
Hedge Agreements related to the Credit Facilities, so long as the
provider of any such Interest Hedge Agreement is a Lender and the
maximum obligation so secured by the Collateral does not exceed
One Million and No/100 Dollars ($1,000,000.00); (e) Liens to
secure permitted Nonrecourse Debt, provided that (i) no such Lien
shall cover any property other than property purchased or
refinanced with proceeds of permitted Nonrecourse Debt, and (ii)
the Nonrecourse Debt secured by such Lien shall not exceed one
hundred percent (100%) of the purchase price of such property;
(f) liens on the Collateral securing the Bridge Loan on a pari
passu basis with the Lenders' Liens; (g) the six percent (6%) net
profits interest granted by AMRESCO New Hampshire, Inc. to Heller
Financial, Inc. pursuant to Section 3.6 of that certain Term Loan
Agreement, dated as of December 31, 1993, among AMRESCO New
Hampshire, Inc., AMRESCO Holdings, Inc. and Heller Financial,
Inc.; and (h) liens involuntarily filed against any asset of any
Borrower or Subsidiary, provided, that within fifteen (15) days
after such filing, the applicable Borrower or Subsidiary has
obtained a release of any such lien or is contesting the filing
of such lien in good faith and an adequate bond has been obtained
to satisfy in full any claim which such lien secures.
Section 8.9. Limitation on Loans to Shareholders. No
Borrower shall advance any Debt to any Borrower's shareholders
(which prohibition includes, without limitation, the advancing of
funds to the Excluded Subsidiaries), except for Debt advanced to
a shareholder which is also a Borrower, without the prior written
consent of the Required Lenders.
Section 8.10. Consolidations, Mergers, Sales of Assets, and
Maintenance. No Borrower shall, and no Borrower shall permit any
of its Subsidiaries to, (a) consolidate or merge with or into any
other Person except for (i) mergers of any Borrower into another
Borrower or (ii) mergers of any Borrower (other than AMRESCO)
with or into any other Person which also becomes a "Borrower"
under this Agreement and delivers all Loan Documents required by
this Agreement and otherwise complies with Section 5.7, so long
as the tangible net worth (as determined in accordance with GAAP)
of the Person which is being merged with a Borrower does not
exceed Five Million and No/100 Dollars ($5,000,000.00), (b) sell,
lease, abandon or otherwise transfer all or any material part of
its assets to any Person, in one or a series of related
transactions, other than the sale of assets singly or in bulk in
the normal course of business, (c) other than in connection with
(i) a consolidation or merger permitted in clause (a) immediately
above or (ii) the dissolution of any Borrower of which Agent has
been notified and the distribution of all of the assets of such
Borrower to another Borrower, terminate, or fail to maintain, its
corporate existence or qualification, as applicable, in the state
of its incorporation and any other applicable jurisdiction where
the business of such Borrower requires such qualification
(provided that nothing herein shall permit the dissolution of
AMRESCO or the failure of AMRESCO to maintain its corporate
existence and qualification to do business as elsewhere required
in this Agreement), or (d) terminate, or fail to maintain, its
good standing and qualification to transact business in all
jurisdictions where the failure to maintain its good standing or
qualification to transact business could have a material adverse
effect on its financial condition or operations.
Section 8.11. Investments. After the date hereof, no
Borrower shall, and no Borrower shall permit any of its
Subsidiaries to, directly or indirectly, make any loans,
advances, extensions of credit or capital contributions to, make
any investment in, or purchase any stock or securities of, or
interest in, any Person (including, without limitation, a
Subsidiary of any Borrower unless such Subsidiary has become a
"Borrower" under this Agreement as required hereby), except for
Permitted Investments; provided, that (a) the purchase price of
acquisitions of corporate entities shall not exceed Twenty
Million and No/100 Dollars ($20,000,000.00) in the aggregate
during the Credit Period (except that Borrowers shall be entitled
to make corporate acquisitions in excess of such Twenty Million
and No/100 Dollars ($20,000,000.00) limitation, by an aggregate
amount equal to the proceeds received by AMRESCO [net of closing
costs] from the issuance of additional common stock or other
equity or other Approved Subordinated Debt, but not to exceed an
additional Twenty Million and No/100 Dollars ($20,000,000.00),
and only if such proceeds have not been applied to the Related
Investments limitation as provided in clause (c) below), and with
respect to any such corporate acquisition for which the aggregate
purchase price and all the consideration for such acquisition is
in excess of Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00), Borrowers must obtain the prior written
consent of the Required Lenders and Agent to make such
acquisition, (b) with respect to Related Investments, if the
aggregate amount of any such Related Investment exceeds Seven
Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00),
AMRESCO shall provide to Agent all information regarding such
Related Investment as Agent shall request, and Borrowers must
obtain the prior written consent of the Required Lenders and
Agent prior to making such Related Investment, (c) in no event
shall the aggregate Related Investments made by Borrowers during
the Credit Period exceed Forty Million and No/100 Dollars
($40,000,000.00) (based on Borrowers' costs) (except that
Borrowers shall be entitled to make Related Investments in excess
of said Forty Million and No/100 Dollars ($40,000,000.00)
limitation, by an aggregate amount equal to the proceeds received
by AMRESCO [net of closing costs] from the issuance of additional
common stock or other equity or Approved Subordinated Debt, but
not to exceed an additional Forty Million and No/100 Dollars
($40,000,000.00), and only if such proceeds have not been applied
to the corporate acquisition limitation as provided in clause (a)
above), (d) Borrowers' aggregate investment in real estate
(excluding Mortgaged Properties acquired through foreclosure) as
shown on Borrowers' books shall not exceed Fifteen Million and
No/100 Dollars ($15,000,000.00) at any time during the Credit
Period, (e) in no event shall any investments in the Excluded
Subsidiaries be permitted if (i) the aggregate amount of such
investments made and not repaid at any time exceeds Twenty
Million and No/100 Dollars ($20,000,000.00) or (ii) the
investment in any Excluded Subsidiary exceeds forty percent (40%)
of the purchase price paid by such Excluded Subsidiary for any
Asset Portfolio acquired by such Excluded Subsidiary, (f) in no
event shall the sum of (i) any advances, extensions of credit, or
other investments made by AMRESCO or AMRESCO Capital Corporation
in connection with Warehouse Line Loans or Residential Funding
Loans plus (i) the aggregate amount of Warehouse Line Loans and
Residential Funding Loans which continue to be held by AMRESCO,
AMRESCO Capital Corporation or any Subsidiary 180 days (in the
case of Warehousing Line Loans) or 60 days (in the case of
Residential Funding Loans) after the origination thereof exceed
Fifteen Million and No/100 Dollars ($15,000,000.00) at any time,
and (g) without the prior written consent of the Required
Lenders, no such Person shall acquire or invest in any Asset
Portfolio if more than sixty percent (60%) of the purchase price
of such Asset Portfolio is attributable to loans secured by
single family residences or duplexes.
Section 8.12. Distributions. No Borrower shall make or
declare any Distributions after the occurrence of a Default.
Prior to the occurrence of a Default, (a) AMRESCO shall be
entitled to make Distributions in any Fiscal Year in an amount
not to exceed twenty-five percent (25%) of the net income of
AMRESCO (determined in accordance with GAAP) for such Fiscal Year
on a consolidated basis and (b) each Borrower (other than
AMRESCO) shall be entitled to make Distributions in any Fiscal
Year to another Borrower.
Section 8.13. Limitation on Contingent Liabilities. No
Borrower shall create, incur, assume or suffer to exist any
contingent liabilities, except for Guaranties permitted by
Section 8.6 and litigation claims which do not result in a
violation of Section 9.1(i).
Section 8.14. Transactions with Affiliates. No Borrower
shall engage in any transaction with an Affiliate of any Borrower
unless such transaction is generally as favorable to such
Borrower as could be obtained in an arm's length transaction with
an unaffiliated Person in accordance with prevailing industry
customs and practices.
Section 8.15. Employee Plans.
(a) Each Borrower shall, and shall cause each member
of its Controlled Group (as that term is defined in the Code) to,
maintain and administer any Employee Plan in accordance with the
applicable requirements of the Code and ERISA. No Borrower shall
permit or suffer to exist any circumstances with respect to any
Employee Plan that could have a material adverse effect on such
Borrower.
(b) With respect to any Pension Plan, no Borrower
shall (i) permit any accumulated funding deficiency (within the
meaning of Section 412(a) of the Code), whether waived or
unwaived, to exist; (ii) permit the present value of accrued
benefits (based on the most recent actuarial valuation prepared
for each such plan, if any, in accordance with ongoing actuarial
assumptions) to exceed the current value of plan assets allocable
to such benefits by a material amount; (iii) permit any
reportable event (within the meaning of Section 4043 of ERISA) to
occur, other than purchases and sales of securities from a plan
trustee as reported in the audited financial statements of such
plan; (iv) permit a prohibited transaction (within the meaning of
Section 4975 of the Code) to occur which has or could have a
material adverse effect on any Borrower; (v) incur any material
liability to the PBGC; or (vi) incur any material withdrawal
liability (within the meaning of Section 4201(a) of ERISA).
(c) No Borrower shall incur a material obligation to
provide post-employment health care benefits to any of its
current or former employees, except as may be required by
Section 4980B of the Code or otherwise required by law.
Section 8.16. Use Violations. No Borrower shall use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any of its properties in any manner
which (a) violates any Legal Requirement unless such violation
would not have a material adverse effect on the financial
condition, operations or business of any Borrower, (b) may be
dangerous unless safeguarded as required by law, (c) constitutes
a public or private nuisance, (d) makes void, voidable or
cancelable any insurance then in force with respect thereto or
(e) makes void, voidable, or cancelable any governmental permit.
Section 8.17. Exceptions to Covenants. No Borrower shall
take or permit to be taken any action or fail to take any action
which is permitted by any of the covenants contained in this
Agreement if such action or omission would result in the breach
of any other covenant contained in this Agreement.
Section 8.18. Fiscal Year and Accounting Methods. No
Borrower will change its Fiscal Year or its method of accounting
(other than changes as are concurred with by such Borrower's
independent public accountants as being required by GAAP).
Section 8.19. Governmental Regulations. No Borrower will
conduct its business in such a way that it will become subject to
regulation under the Investment Advisers Act of 1940, as amended.
No Borrower will conduct its business in such a way that it will
become subject to regulation under the Investment Company Act of
1940, as amended, or the Public Utility Holding Company Act of
1935, as amended, or any other laws, rules or regulations which
regulate the incurrence of Debt.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default. The term "Event of
Default" as used in this Agreement, shall mean any one of the
following:
(a) The failure of any Borrower to pay when due any
principal of or interest on the Notes, or any fees, charges or
any other amounts payable to Agent, Arranger, or any Lender
hereunder or under any of the Notes or other Loan Documents,
including, without limitation, the Participation Fees, the
Commitment Fees, the Agent's Administrative Fee, the Structure
Fee and Letter of Credit Fees;
(b) The failure, refusal or neglect of any Borrower to
observe, perform or comply with any covenant or agreement
contained in Article VIII other than Sections 8.14 and 8.15;
(c) The failure, refusal or neglect of any Borrower to
properly observe, perform or comply with any covenant, agreement
or obligation contained in this Agreement, or any of the other
Loan Documents [other than those covered by Sections 9.1(a) and
(b)] and the continuation of such failure, refusal or neglect for
fifteen (15) days after written notice thereof has been given to
AMRESCO by Agent or a representative of Agent;
(d) Any representation, warranty, certification or
statement made by any Borrower (either for itself or for any
other Person) in this Agreement or by any Borrower or any other
Person on behalf of any Borrower in any certificate, financial
statement or other document delivered pursuant to this Agreement
or any other Loan Document shall prove to have been untrue in any
material respect when made or deemed to have been made;
(e) The occurrence of (1) any event or condition which
(i) results in the acceleration of the maturity of any Debt of
any Borrower, or (ii) constitutes a default under any Debt of any
Borrower, provided, that if notice is required to be given under
the documents evidencing or securing such Debt prior to
acceleration thereof, it shall not be an Event of Default
hereunder until Borrower has received written notice of such
default, (2) a default or event of default under the documents
evidencing or securing the Bridge Loan (without any notice having
to be given by the Bridge Loan Lender) or (3) a default or event
of default under the documents evidencing or securing the
Approved Subordinated Debt or the payment by any Borrower, or the
approval of the board of directors of any Borrower for the
payment, of amounts under the Approved Subordinated Debt in
excess of the regularly scheduled payments thereunder or which
would otherwise cause a violation by any Borrower of any covenant
or condition contained in any of the Loan Documents;
(f) The filing or commencement by any Borrower or any
Subsidiary of any Borrower of a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or any Borrower or any Subsidiary of any
Borrower shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; provided,
however, that, with respect to any violation of this Section
9.1(f) that pertains to a Subsidiary of any Borrower (which
Subsidiary is not also a Borrower), it shall not be an Event of
Default if such violation does not (i) otherwise result in an
Event of Default or (ii) have a material adverse effect on the
business, financial position or results of operations of any
Borrower;
(g) The filing or commencement of an involuntary case
or other proceeding against Borrower or any Subsidiary of any
Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of sixty (60) days;
or an order for relief shall be entered against any Borrower or
any Subsidiary of any Borrower under the federal bankruptcy laws
as now or hereafter in effect; provided, however, that, with
respect to any violation of this Section 9.1(g) that pertains to
a Subsidiary of any Borrower (which Subsidiary is not also a
Borrower), it shall not be an Event of Default if such violation
does not (i) otherwise result in an Event of Default or (ii) have
a material adverse effect on the business, financial position or
results of operations of any Borrower;
(h) The liquidation or dissolution of any Borrower,
other than any liquidation or dissolution of any Borrower (other
than AMRESCO) permitted by Section 8.10;
(i) One or more judgments or orders for the payment of
money aggregating in excess of $500,000.00 shall be rendered
against any Borrower and/or any Subsidiary of any Borrower and
such judgment or order (A) shall continue unsatisfied and
unstayed (unless bonded with a supersedeas bond at least equal to
such judgment or order) for a period of thirty (30) days, unless
any such Borrower or Subsidiary has obtained an indemnification
of the full amount of such judgment or order by a third party
approved by the Required Lenders [it being acknowledged that an
indemnification from any Lender or the Resolution Trust
Corporation shall be deemed an approved third party for purposes
of this subparagraph (i)] pursuant to a written indemnification
agreement approved by the Required Lenders, or (B) is not fully
paid and satisfied at least ten (10) days prior to the date on
which any of its assets may be lawfully sold to satisfy such
judgment or order;
(j) The Lenders' Liens with respect to the Collateral,
or any part thereof, shall not constitute first and prior liens
and/or security interests; or
(k) There shall occur a Change in Control of AMRESCO.
It is understood and agreed by each Borrower that any of the
foregoing "Events of Default" shall constitute an Event of
Default under each of the Notes, and that such "Events of
Default" are cumulative and in addition to any default or events
of default contained in any of the other Loan Documents, and that
in the event of any discrepancy or inconsistency between any
Event of Default hereunder and any default or event of default
contained in any other Loan Document, the description of the
Event of Default stated herein shall control.
Section 9.2. Remedies. Upon the occurrence of an Event of
Default, Agent, at the direction and election of the Required
Lenders, acting by or through any of its agents, trustees or
other Persons, without notice (unless expressly provided for
herein), demand or presentment (including, without limitation,
notice of default, notice of intent to accelerate or of
acceleration) all of which are hereby waived, and in addition to
any other provision of this Agreement or any other Loan Document,
to exercise any or all of the following rights, remedies and
recourses:
(a) Declare the unpaid principal balance of each of
the Notes, the accrued and unpaid interest thereon and any other
accrued but unpaid portion of the Obligations to be immediately
due and payable, without notice (expressly including, but not
limited to, notice of default, notice of intent to accelerate or
of acceleration), except any notice that is expressly required by
the terms of this Agreement, presentment, protest, demand or
action of any nature whatsoever, each of which hereby is
expressly waived by each of the Borrowers, whereupon the same
shall become immediately due and payable. Notwithstanding the
foregoing or anything to the contrary contained herein or in any
Loan Document, upon the occurrence of an Event of Default
described in Section 9.1(f) or Section 9.1(g) by any Borrower,
the entire unpaid principal balance of the Notes, and all
accrued, unpaid interest thereon shall automatically be
accelerated and immediately be due and payable in full, without
notice (expressly including, but not limited to, notice of
default, intent to accelerate or of acceleration), presentment,
protest, demand or action of any nature whatsoever, each of which
hereby is expressly waived by each of the Borrowers; provided,
however, that if accelerated automatically pursuant to this
sentence, the Notes and all such indebtedness may be reinstated
at the option and upon the written approval of the Required
Lenders.
(b) Enter upon the Mortgaged Property or any other
Collateral or any part thereof and take exclusive possession
thereof and of all books, records and accounts relating thereto
(including, without limitation, all Borrower Due Diligence
Reports). If any Borrower remains in possession of all or any
part of the Collateral after an Event of Default occurs and is
continuing and without Agent's prior written consent thereto,
Agent may invoke any and all legal remedies to dispossess any
Borrower, including specifically one or more actions for
declaratory or injunctive relief, forcible entry and detainer,
trespass to try title and writ of restriction. Nothing contained
in the foregoing sentence shall, however, be construed to impose
any greater obligation or any prerequisites to acquiring
possession of the Collateral or any part thereof after an Event
of Default occurs than would have existed in the absence of such
sentence.
(c) Hold, lease, manage, operate or otherwise use or
permit the use of the Mortgaged Property, the Assigned Loans and
all other Collateral, or any part thereof, either by itself or by
other Persons, in such manner, for such time and upon such other
terms as Agent may deem to be prudent and reasonable under the
circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with
reference thereto, from time to time, as Agent shall deem
necessary or desirable), and apply all proceeds from the
Mortgaged Property, the Assigned Loans and all other Collateral
in connection therewith in accordance with the provisions of
Section 9.10 hereof.
(d) Sell or offer for sale the Collateral, or any part
thereof, in such portions, order and parcels as Agent may
determine, with or without having first taken possession of same,
in accordance with the provisions of the applicable Loan
Documents and applicable Legal Requirements.
(e) Make application to a court of competent
jurisdiction, as a matter of strict right and, except as
otherwise provided by applicable law, without notice to any
Borrower or without regard to the adequacy of the Collateral for
the payment of the Obligations, for the appointment of a receiver
of the Collateral, or any part thereof, and, to the extent
permitted by applicable law, each Borrower does hereby
irrevocably consent to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain, sell, dispose
and otherwise operate the Collateral, or any part thereof, upon
such terms that may be approved by the court, and shall apply all
proceeds from such operation of the Collateral in accordance with
the provisions of Section 9.10 hereof.
(f) Exercise any and all other rights, remedies and
recourses granted hereunder or under the Loan Documents or
otherwise now or hereafter existing in equity, at law, by virtue
of statute or otherwise.
Section 9.3. Rights of Set-Off.
(a) In addition to the Lender's Liens, each Borrower
hereby expressly grants to Lenders the right of setoff against
all deposits and other sums at any time held or credited by or
due from any Lender to each Borrower, in accordance with the
provisions of this Section 9.3. The rights of each Lender under
this Section 9.3 are in addition to other rights and remedies
(including, without limitation, other rights of setoff under law
or equity) which such Lender may have under law or by agreement.
(b) Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by
law, at its option, without notice or demand and without
liability, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, excepting,
however, any fiduciary or escrow accounts established by any
Borrower into which only funds of unrelated third-parties are
deposited, and provided that such Borrower has informed such
Lender and Agent of the nature of such accounts) at any time
held, and other indebtedness at any time owing, by any Lender to
or for the credit or the account of any Borrower against any and
all of the Obligations now or hereafter existing under this
Agreement, the Notes and the other Loan Documents, in such order
and manner as such Lender may determine, subject, however, to the
agreements contained in Section 10.14 hereof, regardless of
whether such Lender shall have made any demand under this
Agreement or the Notes and although such obligations may be
unmatured.
(c) Each Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that each Lender and any
holder of a participation in any of the Notes (with the
appropriate consent of such Lender) may exercise rights of setoff
or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were
a direct creditor of such Borrower in the amount of such
participation.
Section 9.4. Remedies Cumulative, Concurrent and
Non-Exclusive. Lenders shall have all rights, remedies and
recourses granted in the Loan Documents, and available at law or
equity and same (a) shall be cumulative and concurrent, (b) may
be pursued separately, successively or concurrently against any
Borrower, or any others obligated under any of the Notes, or
against any one or more of them, at the sole discretion of
Lenders, (c) may be exercised as often as the occasion therefor
shall arise, it being agreed by each Borrower that the exercise
or failure to exercise any of same shall in no event be construed
as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be,
non-exclusive.
Section 9.5. No Conditions Precedent to Exercise Remedies.
Each Borrower and other Person hereafter obligated for payment or
fulfillment of all or any part of the Obligations shall not,
except as otherwise provided by applicable law, be relieved of
such obligation by reason of (a) the failure of a trustee to
comply with any request of any Borrower, or any other Person so
obligated to foreclose the Lenders' Liens or to enforce any
provisions of the Loan Documents, (b) the release, regardless of
consideration, of any Person obligated with respect to the
Obligations, or of the Collateral or any part thereof, or the
addition of any other property to the Collateral, (c) any
agreement or stipulation between any subsequent owner of the
Collateral and Agent or any Lender extending, renewing,
rearranging or in any other way modifying the terms of the Loan
Documents without first having obtained the consent of, given
notice to or paid any consideration to any Borrower, or such
other Person, and in such event, each Borrower and all such other
Persons shall continue to be liable to make payments in
accordance with the terms of any such extension or modification
agreement unless expressly released and discharged in writing by
the Required Lenders, and (d) any other act or occurrence, save
and except the complete payment of the Obligations. Each
Borrower waives any right to require Lenders to proceed against
any other Person, exhaust any Collateral, or pursue any other
remedy in Lenders' power. All dealings between Borrower and any
Lender, whether or not resulting in the creation of the
Obligations, shall conclusively be presumed to have been had or
consummated upon reliance upon this Agreement. Borrower
authorizes Lenders, without notice or demand and without any
reservation of rights against any Borrower and without affecting
liability hereunder or on the Obligations, from time to time, to
(i) renew, extend for any period, accelerate, modify, compromise,
settle, or release the obligation of any other Person that may be
obligated with respect to any or all of the Obligations or
Collateral; (ii) take and hold any other property as collateral,
other than the Collateral, for the payment of any or all of the
Obligations, and exchange, enforce, waive, and release any or all
of the Collateral or other property; and (iii) after the
occurrence of an Event of Default, apply the Collateral or other
property and direct the order or manner of sale thereof in
accordance with the terms of this Agreement and the Security
Documents.
Section 9.6. Release of and Resort to Collateral. The
release or substitution of all or any part of the Collateral,
regardless of consideration, shall not in any way impair, affect,
subordinate, or release the Lenders' Liens or their status as
first and prior Liens in and to any remaining Collateral. For
payment and performance of the Obligations, Lenders may resort to
any other security therefor held by a trustee in such order and
manner as Required Lenders may elect.
Section 9.7. Waivers. To the full extent permitted by
law, each Borrower hereby irrevocably and unconditionally waives
and releases (a) all benefit that might accrue to any Borrower by
virtue of any present or future law exempting the Collateral from
attachment, levy or sale on execution or providing for any
appraisement, evaluation, stay of execution, exemption from civil
process, redemption or extension of time for payment, (b) except
as specifically provided for herein, all notices of any Default
or Event of Default or of any trustee's or Lenders' election to
exercise or his or their actual exercise of any right, remedy or
recourse provided for under the Loan Documents, (c) any right to
a marshalling of assets with respect to the Notes or the Letters
of Credit or any of the Collateral or any Debt of any Borrower,
or a sale in inverse order of alienation and (d) except as
specifically provided for herein, any and all right to receive
demand, grace, notice, presentment for payment, protest, notice
of intention to accelerate the Obligations or notice of
acceleration of the Obligations.
Section 9.8. Discontinuance of Proceedings. In case Agent
shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to
discontinue or abandon same for any reason, Agent shall have the
unqualified right to do so and, in such event, each Borrower and
Lenders shall be restored to their former positions with respect
to the Obligations, the Loan Documents, the Collateral and
otherwise, and the rights, remedies, recourses and powers of
Agent and Lenders shall continue as if same had never been
invoked.
Section 9.9. Power of Attorney. Each Borrower hereby
irrevocably appoints Agent, acting for all the Lenders, as the
true and lawful attorney of such Borrower with full power of
substitution for, and on behalf of such Borrower, and in its
name, upon the request and instruction of Borrower and in any
event after the occurrence of an Event of Default (or prior to
the occurrence of any Event of Default if Agent otherwise
reasonably believes it is necessary to take such action), to take
any action to preserve, maintain, protect or enforce the rights
and interests of such Borrower with respect to the Collateral,
including, without limitation, to (i) endorse any Assigned Loans
to Agent, on behalf of Lenders, or to any other Person,
(ii) enforce, cure any default or otherwise act with respect to
any leases, sales contracts, management or marketing contracts or
any other agreements pertaining to or affecting any of the
Mortgaged Property, (iii) take all such action and to execute all
such documents as Agent deems necessary or desirable to operate
or preserve or protect the Assigned Loans and the collateral
therefor or the Mortgaged Property, (iv) sue for, demand or
collect any sums owing to any Borrower under the Assigned Loans
or under leases or other agreements affecting the Mortgaged
Property and (v) exercising any rights of Borrower under any
purchase agreement related to any Assigned Loan. The power so
vested in Agent under this Section 9.9 is one coupled with an
interest and shall be irrevocable, except by written instrument
executed jointly by each Borrower and Agent and filed for record
in the Office of the County Clerk of Dallas County, Texas.
Notwithstanding the foregoing, Agent shall be under no obligation
to exercise any of the foregoing rights or take any action
necessary to preserve any right in any asset subject to the
Lenders' Liens against any other Person, and Agent, to the extent
permitted herein or by applicable law, may exercise any of the
foregoing rights without incurring any responsibility or
liability to any Borrower or any other Person and without in any
way affecting the Obligations or any other obligations of any
Borrower to Lenders. Borrowers, jointly and severally, agree to
reimburse Agent and Lenders upon demand for any costs and
expenses, including, without limitation, reasonable attorneys'
fees and collection costs, that Agent or any Lender may incur
while acting as the attorney-in-fact of each Borrower as provided
hereunder (or pursuant to the attorney-in-fact herein created),
all of which costs and expenses shall be included in the
Obligations.
Section 9.10. Application of Proceeds. All payments on the
Notes or the Letters of Credit received by any Lender during the
existence of an Event of Default (unless otherwise elected by
Lenders), and the proceeds of any sale or disposition of, and all
proceeds generated by the holding, leasing, operation or other
use of, the Collateral, or any part thereof, during the existence
of an Event of Default and upon the exercise of Lenders' rights
and remedies hereunder or under any of the Loan Documents, shall
be applied by Lenders, the applicable trustee or the receiver, if
one is appointed, to the extent that funds are so available
therefrom, as determined by the Required Lenders (provided that,
as among themselves, Lenders agree that any such proceeds shall
be applied as contemplated by Article X hereof).
ARTICLE X
AGENT AND THE LENDERS
Section 10.1. Appointment and Authorization of Agent.
(a) Each Lender hereby irrevocably appoints and authorizes
Agent as its nominee and agent, in its name and on its behalf:
(i) to act as nominee for and on behalf of such Lender in and
under all Loan Documents; (ii) to arrange the means whereby the
funds of the Lenders are to be made available to Borrowers under
the Loan Documents; (iii) to take such action as may be requested
by any Lender under the Loan Documents (when such Lender is
entitled to make such request under the Loan Documents and after
such requesting Lender has obtained the concurrence of such other
Lenders as may be required under the Loan Documents); (iv) to
receive all documents and items to be furnished to the Lenders
under the Loan Documents; (v) to promptly distribute to each
Lender the material information, requests, documents and items
received from Borrowers under the Loan Documents; (vi) to
promptly distribute to each Lender such Lender's Loan Percentage
of each payment or prepayment in accordance with the terms of the
Loan Documents; and (vii) to deliver to the appropriate Persons
requests, demands, approvals and consents received from the
Lenders.
(b) The obligations of Agent hereunder are only those
expressly set forth herein. Each Lender and each Borrower agree
that Agent is not a fiduciary for the Lenders or for Borrowers
but simply is acting in the capacity described herein to
alleviate administrative burdens for both Borrowers and the
Lenders and that Agent has no duties or responsibilities to the
Lenders or Borrowers except those expressly set forth herein.
Without limiting the generality of the foregoing, Agent shall not
be required to take any action or exercise any right or remedy
with respect to any Default or Event of Default, except if
requested by the Required Lenders. Notwithstanding the
administrative authority delegated to Agent, Agent shall not
cause or permit any modification of the Loan Documents or take
other action relating to the Credit Facilities specifically
requiring the consent or approval of the Required Lenders without
such consent or approval. Action taken by Agent including,
without limitation, any exercise of remedies or initiation of
suit or other legal proceedings made in accordance with the
instructions of the Required Lenders or as otherwise permitted by
this Article X, shall be binding upon each of the Lenders.
(c) Agent, in its capacity as a Lender, shall have the same
Rights under the Loan Documents as any other Lender and may
exercise the same as though it were not acting as Agent, and any
resignation by Agent hereunder shall not impair or otherwise
affect any Rights which it has or may have in its capacity as an
individual Lender.
(d) Agent may now or hereafter be engaged in one or more
loan, letter of credit, leasing, or other financing transactions
with any Borrower, act as trustee or depositary for any Borrower
or otherwise be engaged in other transactions with any Borrower
and/or its Affiliates (collectively, the "other activities") not
the subject of the Loan Documents. Without limiting the Rights
of the Lenders specifically set forth in the Loan Documents,
Agent shall not be responsible to account to the Lenders for such
other activities, and no Lender shall have any interest in any
other activities, any present or future guaranties by or for the
account of any Borrower which are not contemplated or included in
the Loan Documents (any present or future offset exercised by
Agent in respect of such other activities), any present or future
property taken as security for any such other activities, or any
property now or hereafter in the possession or control of Agent
which may be or become security for the Obligations by reason of
the general description of indebtedness secured or of property
contained in any other agreements, documents or instruments
related to any such other activities; provided that, if any
payments in respect of such guaranties, such property or the
proceeds thereof or any offset shall be applied to reduction of
the Obligations, then each Lender shall be entitled to share in
such application according to its Loan Percentage thereof.
Section 10.2. Possession of Instruments by Agent. Agent
shall exercise all rights and remedies under the Loan Documents
and take all actions with respect thereto in accordance with the
request or direction of the Required Lenders, or otherwise as and
to the extent provided herein or in the other Loan Documents;
provided, however, that Agent may take such actions in its name
without the joinder of the Lenders, and Borrowers and all third
parties shall be entitled to rely on the actions taken by Agent
with respect to the execution by Agent of any and all agreements,
financing statements, affidavits, notices or any other type of
document or instrument pertaining thereto, including, without
limitation, in connection with the exercise of any rights or
remedies of the Lenders under the Loan Documents (and
specifically including any foreclosure proceedings under any of
the Security Documents or legal proceedings), and the same shall
be binding upon all the Lenders as to any third party relying on
such actions of Agent. Agent shall also be the named secured
party or beneficiary under the Security Documents and shall take
and maintain possession of all the Security Documents, as agent
for and on behalf of all the Lenders, and the grant to Agent of
any Lien under any Security Document shall be for the ratable
benefit of the Lenders.
Section 10.3. Expenses. Each Lender shall pay its Loan
Percentage of any reasonable expenses (including, without
limitation, court costs, reasonable attorneys' fees and other
costs of collection) incurred by Agent in connection with any of
the Loan Documents if Agent does not receive reimbursement
therefor from other sources within thirty (30) days after
incurred; provided that, and subject to the terms and conditions
of Section 11.4, each Lender shall be entitled to receive its
Loan Percentage of any reimbursement for such expenses, or part
thereof, which Agent subsequently receives from such other
sources.
Section 10.4. Delegation of Duties; Reliance; Consultation.
Lenders may perform any of their duties or exercise any of their
Rights under the Loan Documents by or through Agent, and Lenders
and Agent may perform any of their duties or exercise any of
their Rights under the Loan Documents by or through their
respective officers, directors, employees, attorneys, agents, or
other representatives (collectively, "Representatives"). Agent,
Lenders, and their respective Representatives shall (a) be
entitled to rely upon (and shall be protected in relying upon)
any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telecopy, telegram, telex or teletype message,
statement, order or other documents or conversation believed by
any of them to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters,
upon opinion of counsel selected by Agent or such Lender, (b) be
entitled to deem and treat each Lender as the owner and holder of
its Loan Percentage for all purposes until, subject to Section
11.9, written notice of the assignment or transfer thereof shall
have been given to and received by Agent (and, any request,
authorization, consent or approval of any Lender shall be
conclusive and binding on each subsequent holder, assignee, or
transferee of such Lender's Loan Percentage or Participant
therein until such notice is given and received), and (c) not be
deemed to have notice of the occurrence of a Default or an Event
of Default unless notified thereof by another Lender or AMRESCO.
Agent may consult with legal counsel, independent public
accountants, consultants, appraisers and other experts selected
by Agent, and shall not be liable for any action taken or omitted
to be taken by Agent in good faith in accordance with the advice
of such counsel, accountants or experts. Any such counsel,
accountants or other experts shall be engaged to represent and
render services to all Lenders as a group unless otherwise
specified by Agent.
Section 10.5. Limitation of Agent's Liability.
(a) Neither Agent nor any of its Representatives shall be
liable for any action taken or omitted to be taken by it or them
under the Loan Documents in good faith and believed by it or them
to be within the discretion or power conferred upon it or them by
the Loan Documents or be responsible for the consequences of any
error of judgment or negligence, except for gross negligence or
willful misconduct, and neither Agent nor any of its
Representatives has a fiduciary relationship with any Lender by
virtue of the Loan Documents (provided that nothing herein shall
negate the obligation of Agent to account for funds received by
it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Agent shall not be compelled to do
any act under the Loan Documents or to take any action toward the
execution or enforcement of the powers thereby created or to
prosecute or defend any suit in respect of the Loan Documents.
If Agent requests instructions from the Lenders with respect to
any act or action (including, but not limited to, any failure to
act) in connection with any Loan Document, Agent shall be
entitled (but shall not be required) to refrain (without
incurring any liability to any Person by so refraining) from such
act or action unless and until it has received such instructions.
In no event, however, shall Agent or any of its Representatives
be required to take any action which it or they reasonably
determine could incur for it or them criminal or civil liability.
(c) Agent shall not be responsible in any manner to any
Lender or any participant of a Lender for, and each Lender
represents and warrants that it has not relied upon Agent in
respect of, (i) the creditworthiness of Borrowers and the risks
involved to such Lender, (ii) the effectiveness, enforceability,
genuineness, validity, or the due execution of any Loan Document,
(iii) any representation, warranty, document, certificate,
report, or statement made therein or furnished thereunder or in
connection therewith, (iv) the existence, priority, or perfection
of any Lien granted or purported to be granted under any Loan
Document, or (v) the observation of or compliance with any of the
terms, covenants, or conditions of any Loan Document on the part
of Borrowers. Each Lender jointly and severally agrees to
indemnify Agent and hold it harmless from and against (but
limited to such Lender's Loan Percentage of) any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses, and reasonable
disbursements of any kind or nature whatsoever (including counsel
fees and disbursements) which may be imposed on, asserted
against, or incurred by Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by Agent
under the Loan Documents (provided that, although Agent shall
have the right to be indemnified for its ordinary negligence,
Agent shall not have the right to be indemnified hereunder for
its own fraud, gross negligence, or willful misconduct).
Section 10.6. Default; Collateral. Upon the occurrence and
continuance of a Default or an Event of Default, Agent shall make
a recommendation to Lenders of any actions to be taken and each
of the Lenders agree to promptly confer in order that Lenders can
consider such course of action or any other actions to be taken
for the enforcement of the Rights of Lenders; provided that Agent
shall be entitled (but not obligated) to proceed to take any
actions necessary in its reasonable judgment to preserve Rights,
pending agreement by Lenders on the course of action to be taken.
If the Required Lenders cannot agree on a course of action to be
taken within sixty (60) days following Agent's initial
recommendation, Agent shall thereafter take such action as Agent
deems advisable to enforce the Rights of Lenders. Any action
directed or approved by the Required Lenders, including without
limitation, any exercise of remedies or initiation of suit or
other legal proceedings, shall be binding upon each Lender. In
actions with respect to any property of Borrowers, Agent is
acting for the account of each Lender to the extent of each
Lender's Loan Percentage. Any and all agreements to subordinate
(whether made heretofore or hereafter) other indebtedness or
obligations of Borrowers to the Obligations shall be construed as
being for the benefit of each Lender to the extent of its
respective Loan Percentage. If Agent acquires any security for
the Obligations or any guaranty of the Obligations upon or in
lieu of foreclosure, the same shall be held for the benefit of
each Lender in proportion to such Lender's respective Loan
Percentage.
Lenders agree, among themselves, that unless otherwise
agreed to by Agent and the Required Lenders, all monies collected
or received by Agent in respect of the security of the Credit
Facilities, directly or indirectly, shall be applied (a) to the
Administrative Fee and all costs of collection or maintenance of
the Collateral, and then to interest or principal as recommended
by Agent and approved by the Required Lenders, (b) as to proceeds
received by Lenders from the liquidation of any Eligible
Investments, and related Approved Loans, included in the
Collateral, such proceeds shall be applied first to reduce the
Portfolio Facility and then to reduce the Corporate Facility, and
(c) to the amounts owed to any Lender under any Interest Hedge
Agreement, only after payment in full of the outstanding
principal and interest under the Credit Facilities and the Bridge
Loan.
Section 10.7. Lenders' Decision. Lenders agree as among
themselves that any decisions or elections to be made by Lenders
(and not Agent) under this Agreement and the other Loan Documents
shall be made by the Required Lenders, except in the case, if
any, where a specific different number or percentage of Lenders
is expressly required under this Agreement or any other Loan
Documents (use of the terms "Lenders" in any of the Loan
Documents, without an express provision for different voting
rights other than as set forth in the definition of Required
Lenders, does not imply that unanimous consent is thereby
required). Agent may, at its election, request any
determination, vote, consent or approval by Lenders in writing or
orally (by telephone or in person). In addition, if any request
by Agent for Lenders' determination or approval hereunder is made
in writing and such writing contains written notice to Lenders
requesting a response within five Business Days, or longer, from
the date Lenders are deemed to have received notice as herein
provided (and setting forth the actual date of the last day of
the Lender reply period), then Lenders shall use reasonable
efforts to reply within the applicable reply period, provided,
that if any such Lender does not reply within the applicable
reply period, such Lender shall be deemed not to have approved of
or consented to or concurred with such recommendation or
determination.
Section 10.8. Limitation of Liability of Lenders. To the
extent permitted by law, (a) neither Agent nor any Lender or
participant of a Lender shall incur any liability to any other
Lender or participant of a Lender except for acts or omissions in
bad faith, and (b) neither Agent nor any Lender or participant of
a Lender shall incur any liability to Borrowers or any other
Person for any act or omission or any other Lender or any
participant.
Section 10.9. Relationship of Lenders. Nothing herein
shall be construed as creating a partnership or venture among
Agent and Lenders or among Lenders.
Section 10.10. Debtor-Creditor Relationship. Each Lender
has and shall maintain a direct creditor-debtor relationship with
Borrowers and will have direct recourse, singly or in the
aggregate, against Borrowers, subject to the terms and conditions
of the Loan Documents. Notwithstanding the foregoing, any right,
remedy, action, omission or waiver respecting this Agreement, the
Notes, the Security Documents and the other Loan Documents shall
only be exercised, made, taken, or permitted by Agent, acting
upon the direction of the Required Lenders, as the agent for all
Lenders; provided, however, that if the Required Lenders have
elected and directed Agent to institute suit against any Borrower
for payment of any past due amounts under the Notes or any other
Obligations for which Lenders have recourse against any Borrower,
or in the event of any bankruptcy proceedings or other legal
proceedings relating to this Agreement against any Borrower, each
Lender shall be entitled, at its option, to bring or join in such
proceedings in its own name.
Section 10.11. Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement and each of the other Loan Documents
to which it is a party or to which Agent is a party for its
benefit. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement
or with respect to the Credit Facilities.
Section 10.12. Removal of Agent. Lenders, acting by written
notice to Agent from and agreed to by all of the Lenders other
than Agent, may remove for cause the then current Agent, as
Agent, and appoint one of the other Lenders as the successor
Agent. Upon the appointment of a successor Agent, the removed
Agent and the successor Agent shall execute such documents as any
Lender may reasonably request to reflect such appointment of a
successor Agent and shall notify AMRESCO of such change in the
Agent. The successor Agent shall be vested with all rights,
powers and privileges and be bound to all duties, obligations and
responsibilities of Agent in and under this Agreement and the
other Loan Documents; provided, however, that until such time as
AMRESCO is notified in writing signed by both the removed and
successor Agents as to the appointment of the successor Agent,
Borrowers shall be entitled to rely on any decision, approval or
other act by the removed Agent as binding on Lenders, and may pay
to Agent any amounts due or owing by Borrowers under the Loan
Documents.
Section 10.13. Resignation by Agent. An Agent's status as
Agent under this Agreement shall automatically terminate fifteen
(15) days after the closing or liquidation of such Agent or
fifteen (15) days after such Agent is adjudicated insolvent.
Additionally, Agent may resign its position as Agent at any time
by giving at least thirty (30) days written notice thereof to
AMRESCO and the other Lenders. Upon any such occurrence causing
a termination of Agent or the delivery of such notice of
resignation from Agent, the Required Lenders and AMRESCO shall
select a successor Agent. If the Required Lenders and AMRESCO
cannot agree upon the choice of the successor Agent within ten
(10) days after the occurrence causing a termination in the case
of a termination of Agent, or ten (10) days prior to the
effective resignation date set forth in Agent's resignation
notice in the case of a resignation by Agent, then the Designated
Successor Agent shall become the successor Agent. AMRESCO shall
be entitled to participate in the selection of the replacement
Agent only prior to the occurrence of a Default. Upon any such
termination or resignation, (a) the successor Agent shall
automatically be vested with all rights, powers and privileges
and be bound to all duties, obligations and responsibilities of
Agent in and under this Agreement and the other Loan Documents
and shall thereafter be deemed the "Agent" for all purposes under
the Loan Documents and (b) such terminating or resigning Agent
shall act only in a custodial capacity for the holding by it of
any funds theretofore received from Borrowers and any such funds
shall be held in trust for the benefit of the Lenders or
Borrowers, as the case may be. Additionally, upon the successor
Agent becoming Agent as provided in this Section 10.13, the
terminating or resigning Agent and the new Agent shall execute
such documents as any Lender may reasonably request to reflect
such succession. All costs incurred in connection with the
execution of such documents shall be paid by Lenders in
proportion to each Lender's Loan Percentage.
Section 10.14. Sharing of Payments and Setoffs. Each Lender
agrees that if it should receive any amount (whether by voluntary
payment, by realization upon any Collateral, by the exercise of
the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents
or otherwise) which is applicable to the payment of the principal
of or interest on the Credit Facilities, of a sum which with
respect to the related sum or sums received by the other Lenders
exceeds such Lender's Loan Percentage, then such Lender receiving
such excess payment shall purchase without recourse or warranty
from the other Lenders an interest in the indebtedness of any
Borrower to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount;
provided that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest. This Section 10.14 shall not
impair the right of any Lender to exercise any right of setoff or
counterclaim it may have with respect to any funds in an account
pledged to such Lender to secure only indebtedness other than the
Obligations, and to apply the amount received or subject to such
exercise to the payment of such other indebtedness, it being
expressly agreed by all the Lenders, however, that until the
Obligations are paid and satisfied in full, any and all amounts
received by any Lender from offset of any account of any Borrower
that either (a) constitutes Collateral or (b) contains funds
exclusively derived from or related to the Collateral, shall be
applied to the Obligations, and not to any other indebtedness of
any Borrower to such Lender, except in the case of a certificate
of deposit or other designated account (but in no event any
operating account of any Borrower) that is specifically pledged
or assigned to a Lender as security for indebtedness other than
the Obligations.
Section 10.15. Non-advancing Lenders. In the event that
any Lender shall fail or refuse to advance its Loan Percentage of
any payment or reimbursement by the Lenders as required
hereunder, or of any amount to be funded pursuant to
Section 10.3, when it is obligated to do so, Agent shall notify
the other Lenders of such failure, and such remaining Lenders, or
any of them, may elect, at their sole option and discretion
(without any obligation whatsoever to do so), to advance such
non-advancing Lender's portion, pro rata in accordance with the
proportion that the Loan Percentage of each Lender electing to
make such advance bears to the Loan Percentages of all Lenders
electing to make such advance. Upon making any such advance, and
notwithstanding anything to the contrary expressed or implied
herein or in the Notes or any Loan Document, all subsequent
payments made on the Credit Facilities and all proceeds realized
from the sale of any Collateral securing the Credit Facilities or
from the exercise of right of setoff or other remedies under this
Agreement or the other Loan Documents, shall be applied, in the
manner described below, only to Lenders other than the
non-advancing Lender (and the non-advancing Lender shall not be
entitled to receive the same), until the amounts advanced by such
advancing Lenders on behalf of the non-advancing Lender (together
with the interest earned thereon pursuant to this Agreement and
the Notes), have been repaid in full. As among Lenders other
than the non-advancing Lender, Lenders that advanced funds on
behalf of the non-advancing Lender shall receive the portion the
non-advancing Lender would have been entitled to receive had it
advanced (together with the interest earned thereon pursuant to
this Agreement and the Notes), to be applied pro rata in
accordance with the amounts advanced by each such advancing
Lender, until the amounts advanced by such Lenders on behalf of
the non-advancing Lender (together with the interest earned
thereon pursuant to this Agreement and the Notes), have been
repaid in full; any Lender that advanced only on its own behalf
based on its Loan Percentage shall be repaid based on such Loan
Percentage. In addition, any Lenders that advance funds on
behalf of a non-advancing Lender pursuant to this Section 10.15
shall (i) receive a proportionate share (based on the amounts so
advanced by such Lenders) of the amount the non-advancing Lender
would have been entitled to receive of any distribution of any
Collateral securing the Credit Facilities in the event the same
are distributed among Lenders, and (ii) have a claim against such
non-advancing Lender for the amounts so advanced and shall be
entitled to all rights and remedies at law or in equity to
recover any unpaid amounts. A non-advancing Lender shall not be
entitled to vote on any matters hereunder or related to the
Credit Facilities (and its interest shall be excluded for
purposes of determining the requisite percentage or number of
Lenders for a vote) so long as such Lender remains a non-
advancing Lender.
Section 10.16. Benefit of Lenders. All terms, conditions
and agreements set forth in this Article X, specifically
including, without limitation, the provisions of Section 10.14
are for the sole and exclusive benefit of Lenders, and neither
Borrowers nor any other Person shall be entitled to rely on or
seek the benefit of such provisions; provided, however, that
Borrowers shall be entitled to rely on any decision, approval or
other act by Agent as binding Lenders.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Continuing Agreement. This is a continuing
Agreement and all the rights, powers and remedies of Lenders
hereunder and all agreements and obligations of Borrowers and
Lenders hereunder, shall continue to exist until all Advances
have been paid in full, the commitment of Lenders to make
Advances hereunder has been terminated, all Letters of Credit
have been terminated and all other Obligations have been paid in
full.
Section 11.2. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telecopy or similar writing), except for
any telephone notices as specifically provided for herein, may be
personally served or sent by telecopier, mail or the express mail
service of the United States Postal Service, Federal Express or
other equivalent overnight or expedited delivery service, and
(a) if given by personal service or telecopier (confirmed by
telephone), it shall be deemed to have been given upon receipt;
(b) if sent by telecopier without telephone confirmation, it
shall be deemed to have been given twenty-four (24) hours after
being given; (c) if sent by mail, it shall be deemed to have been
given upon the earlier of (i) actual receipt, or (ii) three (3)
Business Days after deposit in a depository of the United States
Postal Service, first class mail, postage prepaid; (d) if sent by
Federal Express, the express mail service of the United States
Postal Service or other equivalent overnight or expedited
delivery service, it shall be deemed given upon the earlier of
(i) actual receipt or (ii) twenty-four (24) hours after delivery
to such overnight or expedited delivery service, delivery charges
prepaid, and properly addressed to the applicable Borrower or
Lender; provided that notices to Agent under Article III and
Article IV shall not be effective until received. For purposes
hereof, the address of the parties to this Agreement shall be as
set forth in Schedule I attached hereto. Any party may, by
proper written notice hereunder to the other parties, change the
address to which notices shall thereafter be sent to it.
Notwithstanding anything to the contrary implied or expressed
herein, the notice requirements herein (including the method,
timing or deemed giving of any notice) is not intended to and
shall not be deemed to increase the number of days or to modify
the method of notice or to otherwise supplement or affect the
requirements for any notice required or sent pursuant to any
Legal Requirement (including, without limitation, any applicable
statutory or law requirement), or otherwise given hereunder, that
is not required under this Agreement or the other Loan Documents.
The provisions of this Section 11.2 shall control over any
conflicting contractual notice provisions contained in the Loan
Documents.
Section 11.3. No Waivers. No failure or delay by Agent or
any Lender in exercising any right, power or privilege hereunder
or under the Notes or any other Loan Document shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law or in any of the other Loan
Documents.
Section 11.4. Expenses; Documentary Taxes; Indemnification.
Borrowers, jointly and severally, agree to pay (a) all expenses
of Agent and the reasonable fees and disbursements of legal
counsel for Lenders as a group, in connection with the
negotiation, documentation and closing of the Credit Facilities,
and thereafter all reasonable expenses of Agent and Lenders in
connection with any waiver or consent hereunder or under the Loan
Documents or any amendment, supplement or replacement of any of
the Loan Documents, or any Default or alleged Default hereunder;
and (b) if a Default or an Event of Default occurs, all
out-of-pocket expenses incurred by Agent or Lenders, including
fees and disbursements of legal counsel in connection with such
Event of Default and collection and other enforcement proceedings
resulting therefrom (including, without limitation, any
bankruptcy or other insolvency proceedings), fees of auditors and
consultants incurred in connection therewith and investigation
expenses incurred by Lenders in connection therewith. Borrowers
shall, jointly and severally, indemnify Agent and each Lender
against any Taxes (other than Taxes on the income of any Lender)
imposed by reason of the execution and delivery of this Agreement
or the Notes. Borrowers further shall, jointly and severally,
indemnify Agent and each Lender and hold Agent and each Lender
harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for
Agent and Lenders in connection with any investigative,
administrative or judicial proceeding, whether or not Agent or
Lenders shall be designated a party thereto) which may be
incurred by Agent or any Lender relating to or arising out of
this Agreement or any actual or proposed use of proceeds of the
Notes or the Letters of Credit; PROVIDED THAT NEITHER AGENT NOR
ANY LENDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR
ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE
INTENTION HEREBY THAT AGENT AND EACH LENDER SHALL BE INDEMNIFIED
FOR THE CONSEQUENCES OF ITS NEGLIGENCE.
Section 11.5. Amendments and Waivers; Consent to Deviation.
Any provision of this Agreement, the Notes or the other Loan
Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrowers and
Required Lenders.
Section 11.6. Survival. All representations, warranties
and covenants made by any Borrower herein or in any certificate
or other instrument delivered by it or on its behalf under the
Loan Documents shall be considered to have been relied upon by
Lenders and shall survive the delivery to Agent or Lenders of
such Loan Documents or the extension of any of the Notes or the
issuance of any of the Letters of Credit (or any part thereof),
regardless of any investigation made by or on behalf of Agent or
any Lender.
Section 11.7. Prior Understandings; No Defenses; Release;
No Oral Agreements. This Agreement supersedes all other prior
understandings and agreements, whether written or not, between
the parties hereto relating specifically to the transactions
provided for herein. Each Borrower confirms that there are no
existing defenses, claims, counterclaims or rights of offset
against any Lender in connection with the negotiation,
preparation, execution, performance or any other matters related
to this Agreement or any of the other Loan Documents executed as
of the date hereof and any of the transactions contemplated
thereby, and each Borrower hereby expressly releases and
discharges each Lender, and its officers and representatives,
from any and all such claims, known or unknown. Each Borrower
further confirms that none of the Lenders has made any agreements
with, or commitments or representations to, any Borrower (either
in writing or orally) other than as expressly stated herein or in
the other Loan Documents executed as of the date hereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
To the fullest extent applicable, each Borrower and Lender
acknowledges and agrees that this Agreement and each of the Loan
Documents shall be subject to Section 26.02 of the Texas Business
and Commerce Code.
Section 11.8. Limitation on Interest. It is expressly
stipulated and agreed to be the intent of Borrowers and Lenders
at all times to comply with the applicable law governing the
maximum rate or amount of interest payable on or in connection
with the Notes, the Loans and the Letters of Credit. If the
applicable law is ever judicially interpreted so as to render
usurious any amount called for under the Notes or under any of
the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to any of the Loans or the
Letters of Credit, or if acceleration of the maturity of the
Notes, any prepayment by any Borrower, or any other circumstance
whatsoever, results in any Lender having been paid any interest
in excess of that permitted by applicable law, then it is the
express intent of Borrowers and Lenders that all excess amounts
theretofore collected by Lenders be credited on the principal
balance of the Notes (or, if the Notes have been or would thereby
be paid in full, refunded to Borrowers), and the provisions of
the Notes and the other applicable Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of
any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called
for hereunder and thereunder. The right to accelerate the
maturity of the Notes does not include the right to accelerate
any interest which has not otherwise accrued on the date of such
acceleration, and Lenders do not intend to collect any unearned
interest in the event of acceleration. All sums paid or agreed
to be paid to Lenders for the use, forbearance or detention of
the indebtedness evidenced hereby or by the Notes shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the
Maximum Lawful Rate or maximum amount of interest permitted under
applicable law. The term "applicable law" as used herein shall
mean the laws of the State of Texas, or DIDMCA or any other
applicable United States federal law to the extent that it
permits Lenders to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law. The
provisions of this Section 11.8 shall control all agreements
between Borrowers and Lenders.
Section 11.9. Invalid Provisions. If any provision of the
Loan Documents is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term thereof,
such provision shall be fully severable, the Loan Documents shall
be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and
the remaining provisions thereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the
Loan Documents a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
Section 11.10. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that (i) no Borrower
shall, directly or indirectly, assign or transfer, or attempt to
assign or transfer, any of its rights, duties or obligations
under this Agreement without the express prior written consent of
the Required Lenders, and (ii) the Lenders may not assign or
transfer any of their rights or interests in this Agreement, the
Notes, the other Loan Documents or the Loan, other than to an
Affiliate of such Lender, except in accordance with this Section
11.10. Prior to entering into any discussions with any potential
participant or assignee of its interest in the Credit Facilities,
the applicable Lender shall obtain AMRESCO's prior consent (if
AMRESCO's consent is required in connection with any assignment
or participation) and shall cause such proposed participant or
assignee to execute a confidentiality agreement to the same
effect as that contained in Section 7.3 hereof.
(b) Each Lender shall have the right, at any time and from
time to time, to assign all or a part of its rights, interests
and obligations under this Agreement and to sell or transfer to
any Person a participation interest in such Lender's portion of
the Credit Facilities, subject to and in accordance with the
following provisions:
(i) In the case of a participation, such Lender shall
remain the "Lender" for all purposes under the Loan
Documents (including without limitation any votes, elections
or other decisions of the Lenders hereunder) and shall
remain fully liable for its obligations hereunder, and Agent
shall continue to deal directly and solely with such Lender
under the Loan Documents and shall have no duty or
obligation to deal with any participant in any manner
(including without limitation, delivery of information or
distribution of any funds to any participant).
(ii) AMRESCO and Agent shall have given their prior
written consent for such assignment or participation;
provided that AMRESCO's consent shall not be unreasonably
withheld or delayed, and shall not be required during the
continuance of a Default.
(iii)Any such assignment or participation must be to an
Eligible Assignee and in an amount equal to or in excess of
Ten Million and No/100 Dollars ($10,000,000.00), or, if
less, 6% of the aggregate Available Commitment in effect
from time to time.
(c) In addition to the conditions and requirements set
forth in Section 11.10(b), any assignment by any Lender shall be
subject to the following conditions:
(i) Each assignment shall be of a constant, and not a
varying, percentage of all of the assigning Lender's rights
and obligations under this Agreement.
(ii) Any Assignment must include an equal interest in
both Credit Facilities.
(iii)The parties to any assignment shall execute and
deliver to the Agent, for recording in the Register (as
hereinafter defined), with a copy thereof to AMRESCO, an
Assignment and Acceptance, substantially in the form of
Exhibit H hereto (an "Assignment and Acceptance"), together
with any of the Notes subject to such assignment.
Upon execution of an Assignment and Acceptance, delivery by
the transferor Lender of an executed copy thereof to AMRESCO and
Agent (together with notice that payment of the purchase price,
as hereinafter provided, shall have been made), and payment by
such Purchaser to such transferor Lender of an amount equal to
the purchase price agreed between such transferor Lender and such
Purchaser, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance (which effective
date shall be at least five Business Days after the execution
thereof), (A) the assignee thereunder shall be a party to this
Agreement as a "Lender" hereunder and, to the extent provided in
such Assignment and Acceptance, shall have the rights and
obligations of a Lender hereunder, and (B) the assigning Lender
shall, to the extent provided in such assignment and upon payment
to the Agent of the registration fee referred to in
Section 11.10(e), be released from its obligations under this
Agreement, except for the confidentiality agreements contained in
Section 7.3, which shall survive any such assignment, and any
such other obligations which by their nature should survive any
such assignment.
(d) By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm to
and agree with each other and the other parties hereto as
follows: (i) other than the representation and warranty that it
is the legal and beneficial owner of the claim, the assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto;
(ii) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of any Borrower or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance
or observance by any Borrower or any other Person primarily or
secondarily liable in respect of any of the Obligations or any of
their Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements delivered to
Lenders by each Borrower and such other documents and information
as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the
assigning Lender, the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement; (v) such assignee represents
and warrants that it is an Eligible Assignee;(vi) such assignee
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and
the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are
reasonably incidental thereto; (vii) such assignee agrees that it
will perform in accordance with their terms all of the
obligations that by the terms of this Agreement and the other
Loan Documents are required to be performed by it as a Lender;
and (viii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and Acceptance.
(e) Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the
Lenders and the Loan Percentages of, and principal amount of the
Credit Facilities owing to the Lenders from time to time. The
entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by AMRESCO and the
Lenders at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the
assigning Lender agrees to pay to the Agent a registration fee in
the sum of $3,500.00.
(f) Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each
Note subject to such assignment, the Agent shall (i) record the
information contained therein in the Register, and (ii) give
prompt notice thereof to AMRESCO and the Lenders (other than the
assigning Lender), and Schedule I shall automatically be deemed
revised to reflect the name, address, Loan Amount and Loan
Percentage of the new Lender and the deletion of or changed
information for the assigning Lender, and Agent shall deliver to
AMRESCO and the Lenders, upon request by AMRESCO or any Lender,
an amended Schedule I reflecting such changes. Within five (5)
Business Days after receipt of such notice, Borrower, at the
Lenders' expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note payable to the
order of such Eligible Assignee in an amount equal to the amount
assigned to such Eligible Assignee pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained some
portion of its obligations hereunder, a new Note payable to the
order of the assigning Lender in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they
are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the assigned Notes. The surrendered
Notes shall be cancelled and returned to AMRESCO.
(g) Any Lender may at any time pledge all or any portion of
its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve
Banks organized under 4 of the Federal Reserve Act, 12 U.S.C.
1341. No such pledge or the enforcement thereof shall release
the pledgor Lender from its obligations hereunder or under any of
the other Loan Documents.
(h) Notwithstanding anything to the contrary contained
herein, a Lender may not sell or participate any of its interests
for a purchase price which, directly or indirectly, reflects a
discount from face value (i.e., the aggregate outstanding
principal portion of the Credit Facilities to be sold or
participated plus accrued and unpaid interest thereon), without
first offering such sale or participation at such discounted
price to the other Lenders on a pro rata basis, in which event
such other Lenders shall have thirty (30) days in which to elect
whether to purchase the interest to be sold.
(i) Any participant or new Lender hereunder shall agree in
writing to keep in confidence any financial information regarding
any Borrower that such Purchaser or Participant may receive as
provided in Section 7.3.
Section 11.11. Senior Debt; Borrower Subordination. The
indebtedness of Borrowers hereunder and under the Notes and all
of the Obligations is intended to be and shall be senior to any
subordinated indebtedness of any Borrower or any other
indebtedness of any Borrower secured by a Lien on any portion of
the Collateral (the foregoing shall not in any way imply Lenders'
consent to any such subordinate debt or Liens which is not
otherwise permitted by this Agreement). The Notes and any other
amounts advanced to or on behalf of any Borrower or any other
Person pursuant to the terms of this Agreement or any other Loan
Document, shall never be in a position subordinate to any Debt of
Borrower owing to any other Person, except with the knowledge and
written consent of Lenders. If any Borrower is now or hereafter
becomes indebted to any other Borrower, (a) such indebtedness and
all interest thereon shall, at all times, be subordinate in all
respects to the Obligations and to all liens, security interests
and rights now or hereafter existing to secure the Obligations;
and (b) any Borrower holding such inter-company indebtedness
shall not be entitled after the occurrence of a Default to
enforce or receive payment, directly or indirectly, of any such
indebtedness until the Obligations have been fully and finally
paid and performed.
Section 11.12. Revolving Loan. Borrowers and Lenders hereby
agree that, except for Section 15.10(b) thereof, the provisions
of Art. 5069-15.01 et seq. of the Revised Civil Statues of Texas,
1925, as amended (regulating certain revolving credit loans and
revolving triparty accounts) shall not govern or in any manner
apply to the Notes, the Letters of Credit or the Loan Documents.
Section 11.13. Construction. The parties hereto
acknowledge and agree that neither this Agreement nor any other
Loan Document shall be construed more favorably in favor of one
than the other based upon which party drafted the same, it being
acknowledged that all parties hereto contributed substantially to
the negotiations and preparation of this Agreement and the other
Loan Documents.
Section 11.14. APPLICABLE LAW. THIS AGREEMENT, THE NOTES
AND ALL THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION,
PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES, RELATED
TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED
STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OR OTHERWISE.
Section 11.15. SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS.
(a) Any legal action or proceeding with respect to this
Agreement or the Notes or any document related thereto may be
brought in the courts of the State of Texas or of the United
States of America for the Northern District of Texas, and, by
execution and delivery of this Agreement, each Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based
on the grounds of forum non conveniens, which any of them may now
or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions.
(b) Each Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such Borrower at its address
provided herein.
(c) Nothing contained in this Section 11.15 shall affect
the right of the Agent, any Lender or any holder of a Note to
serve process in any other manner permitted by law or commence
legal proceedings or otherwise proceed against any Borrower in
any other jurisdiction.
Section 11.16. JURY TRIAL WAIVER. BORROWERS AND LENDERS
EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
MATTER ARISING OR RELATING TO THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
Section 11.17. Counterparts. This Agreement and all
amendments hereto, and all the other Loan Documents may be
executed in any number of original counterparts, each of which
when so executed and delivered shall be an original, and all of
which, collectively, shall constitute one and the same agreement,
it being understood and agreed that the signature pages may be
detached from one or more counterparts and combined with the
signature pages from any other counterpart in order that one or
more fully executed originals may be assembled.
Section 11.18. Inconsistent Provisions. In the event of any
conflict or inconsistency between the terms of this Agreement and
the terms of the other Loan Documents, the terms of this
Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the Closing Date.
BORROWERS:
AMRESCO,INC., a Delaware corporation
By:
Thomas J. Andrus,
Treasurer
AMRESCO ASSET MARKETING ADVISORS,
INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO CANADA, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO CAPITAL CORPORATION
By:
Thomas J. Andrus,
Treasurer
AMRESCO EQUITIES CANADA INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO FINANCIAL I, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO FUNDING CORPORATION
By:
Thomas J. Andrus,
Treasurer
AMRESCO GENERAL PARTNERS, INC.
f/k/a
DAPA-3, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO INSTITUTIONAL, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO-MBS I, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO MANAGEMENT INC. f/k/a BEI
MANAGEMENT, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO MORTGAGE CAPITAL, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO NEW ENGLAND II, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO NEW HAMPSHIRE, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO RESIDENTIAL CREDIT
CORPORATION
By:
Thomas J. Andrus,
Treasurer
AMRESCO RHODE ISLAND, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO SERVICES CANADA INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO SERVICES, INC.
By:
Thomas J. Andrus,
Treasurer
AMRESCO 1994-N2, INC.
By:
Thomas J. Andrus,
Treasurer
ANH, INC.
By:
Thomas J. Andrus,
Treasurer
ASSET MANAGEMENT RESOLUTION COMPANY
By:
Thomas J. Andrus,
Treasurer
BEI GOLEMBE FINANCIAL, INC.
By:
Thomas J. Andrus,
Treasurer
BEI INSTITUTIONAL MANAGEMENT, INC.
By:
Thomas J. Andrus,
Treasurer
BEI MULTI-POOL, INC.
By:
Thomas J. Andrus,
Treasurer
BEI PORTFOLIO INVESTMENTS, INC.
By:
Thomas J. Andrus,
Treasurer
BEI PORTFOLIO MANAGERS, INC.
By:
Thomas J. Andrus,
Treasurer
BEI REAL ESTATE SERVICES, INC.
By:
Thomas J. Andrus,
Treasurer
BEI REAL ESTATE SERVICES OF
CALIFORNIA, INC.
By:
Thomas J. Andrus,
Treasurer
BEI REAL ESTATE SERVICES OF
COLORADO, INC.
By:
Thomas J. Andrus,
Treasurer
BEI SANJAC, INC.
By:
Thomas J. Andrus,
Treasurer
BEI SOUTHWEST, INC.
By:
Thomas J. Andrus,
Treasurer
BEI VENTURES, INC.
By:
Thomas J. Andrus,
Treasurer
BEI 1992 - N1, INC.
By:
Thomas J. Andrus,
Treasurer
BEI 1993 - N3, INC.
By:
Thomas J. Andrus,
Treasurer
BEI 1994 - N1, INC.
By:
Thomas J. Andrus,
Treasurer
ENT GREAT LAKES, INC.
By:
Thomas J. Andrus,
Treasurer
ENT, INC.
By:
Thomas J. Andrus,
Treasurer
ENT MIDWEST, INC.
By:
Thomas J. Andrus,
Treasurer
ENT NEW JERSEY, INC.
By:
Thomas J. Andrus,
Treasurer
ENT SOUTHERN CALIFORNIA, INC.
By:
Thomas J. Andrus,
Treasurer
GRANITE EQUITIES, INC.
By:
Thomas J. Andrus,
Treasurer
HOLLIDAY FENOGLIO, INC.
By:
Thomas J. Andrus,
Treasurer
LIFETIME HOMES OF NEW JERSEY, INC.
By:
Thomas J. Andrus,
Treasurer
LIFETIME HOMES OF SOUTH
CAROLINA, INC.
By:
Thomas J. Andrus,
Treasurer
LIFETIME INVESTMENTS OF NEW
JERSEY, INC.
By:
Thomas J. Andrus,
Treasurer
PRESTON HOLLOW ASSET HOLDINGS, INC.
By:
Thomas J. Andrus,
Treasurer
SPINNAKER REALTY CORPORATION
By:
Thomas J. Andrus,
Treasurer
V.N.J. CORPORATION
By:
Thomas J. Andrus,
Treasurer
AGENT:
NATIONSBANK OF TEXAS, N.A.,
a national banking association, as
Agent for Lenders
By:
Brian Schneider,
Vice President
LENDERS:
NATIONSBANK OF TEXAS, N.A., a
national banking association
By:
Brian Schneider,
Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, a New York state bank
BY:
NAME:
TITLE:
BANK ONE, TEXAS, NA,
a national banking association
BY:
NAME:
TITLE:
FIRST INTERSTATE BANK OF TEXAS,N.A.,
a national banking association
BY:
NAME:
TITLE:
BRIDGE LOAN LENDER:
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:
Brian Schneider,
Vice President
REVOLVING LOAN AGREEMENT
Dated as of
September 29, 1995
among
AMRESCO, INC.
AND THE OTHER ENTITIES DESIGNATED HEREIN
as Borrowers
and
NATIONSBANK OF TEXAS, N.A.
as Agent
and
NATIONSBANK OF TEXAS, N.A.
AND THE OTHER ENTITIES DESIGNATED HEREIN
as Lenders
TABLE OF CONTENTS
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions 1
Section 1.2. Singular and Plural of Definitions 27
Section 1.3. Substantive Definitions 27
Section 1.4. Money 27
Section 1.5. Captions; References 27
Section 1.6. Accounting Terms and Determinations 28
ARTICLE II
COMMITMENT
Section 2.1. Credit Facilities Commitment 28
Section 2.2. Method of Borrowing 29
Section 2.3. Fees 32
Section 2.4. Additional Borrowers 33
ARTICLE III
TERMS OF CREDIT FACILITIES
Section 3.1. Note 34
Section 3.2. Maturity 34
Section 3.3. Interest Rate 35
Section 3.4. Interest Payments 35
Section 3.5. LIBOR Rate Advances 35
Section 3.6. Payments of Advances; Reduction of
Commitment Amount 38
Section 3.7. Schedules on Notes 40
Section 3.8. General Provisions as to Payments 40
Section 3.9. Application of Payments 41
Section 3.10. Post-Default Interest; Past Due Principal
and Interest 41
Section 3.11. Computation of Interest and Fees 41
Section 3.12. Capital Adequacy 41
Section 3.13. Deposit of Cash Collateral 42
ARTICLE IV
CONDITIONS TO FUNDING
Section 4.1. Conditions To Initial Advance or
Letter of Credit 44
Section 4.2. Conditions To All Advances 46
Section 4.3. Conditions to Letters of Credit 46
ARTICLE V
COLLATERAL
Section 5.1. Security 47
Section 5.2. Requirements For Assigned Loans 47
Section 5.3. Requirements for Mortgaged Properties 48
Section 5.4. Recording 48
Section 5.5. Timing of Deliveries 49
Section 5.6. Agent's Discretion 49
Section 5.7. Lockbox; Lockbox Account 49
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1. Existence and Power of Borrowers 50
Section 6.2. Subsidiaries 50
Section 6.3. Authorization; Contravention 50
Section 6.4. Enforceable Obligations 51
Section 6.5. Financial Information 51
Section 6.6. Litigation 51
Section 6.7. ERISA 51
Section 6.8. Taxes and Filing of Tax Returns 52
Section 6.9. Ownership of Assets 52
Section 6.10. Business; Compliance 53
Section 6.11. Licenses, Permits 53
Section 6.12. Compliance with Law 53
Section 6.13. Full Disclosure 53
Section 6.14. Environmental Matters 53
Section 6.15. Purpose of Credit 55
Section 6.16. Governmental Regulations 55
Section 6.17. Indebtedness 55
Section 6.18. Insurance 56
Section 6.19. Solvency 56
Section 6.20. Due Diligence Procedures 56
ARTICLE VII
AFFIRMATIVE COVENANTS
Section 7.1. Information From AMRESCO 56
Section 7.2. Business of Borrowers 58
Section 7.3. Right of Inspection 59
Section 7.4. Maintenance of Insurance 59
Section 7.5. Payment of Taxes, Impositions and
Claims 60
Section 7.6. Compliance with Laws and Documents 60
Section 7.7. Environmental Law Compliance and Indemnity 60
Section 7.8. Covenant Compliance 62
Section 7.9. Quantity and Quality of Documents 62
Section 7.10. Use of Proceeds 62
Section 7.11. Additional Documents 62
Section 7.12.Compliance With Due Diligence Standards;
Offices and Files 62
Section 7.13. Appraisals 63
ARTICLE VIII
NEGATIVE COVENANTS
Section 8.1. Minimum Consolidated Tangible Net Worth 63
Section 8.2. Consolidated Funded Debt to Consolidated
Capitalization 63
Section 8.3. Coverage Ratio 64
Section 8.4. Consolidated Funded Debt to
Consolidated EBITDA 64
Section 8.5. Corporate Facility Outstandings to
Consolidated EBITDA 64
Section 8.6. Limitation on Debt and Foreign Exchange
Exposure 64
Section 8.7. Limitation on Sale of Properties 65
Section 8.8. Limitations on Liens 65
Section 8.9. Limitation on Loans to Shareholders 66
Section 8.10. Consolidations, Mergers, Sales of Assets,
and Maintenance 66
Section 8.11. Investments 66
Section 8.12. Distributions 68
Section 8.13. Limitation on Contingent Liabilities 68
Section 8.14. Transactions with Affiliates 68
Section 8.15. Employee Plans 68
Section 8.16. Use Violations 69
Section 8.17. Exceptions to Covenants 69
Section 8.18. Fiscal Year and Accounting Methods 69
Section 8.19. Governmental Regulations 69
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default 70
Section 9.2. Remedies 72
Section 9.3. Rights of Set-Off 74
Section 9.4. Remedies Cumulative, Concurrent and
Non-Exclusive 75
Section 9.5. No Conditions Precedent to Exercise
Remedies 75
Section 9.6. Release of and Resort to Collateral 76
Section 9.7. Waivers 76
Section 9.8. Discontinuance of Proceedings 76
Section 9.9. Power of Attorney 76
Section 9.10. Application of Proceeds 77
ARTICLE X
AGENT AND THE LENDERS
Section 10.1. Appointment and Authorization of Agent 78
Section 10.2. Possession of Instruments by Agent 79
Section 10.3. Expenses 79
Section 10.4. Delegation of Duties; Reliance;
Consultation 80
Section 10.5. Limitation of Agent's Liability 80
Section 10.6. Default; Collateral 81
Section 10.7. Lenders' Decision 82
Section 10.8. Limitation of Liability of Lenders 83
Section 10.9. Relationship of Lenders 83
Section 10.10. Debtor-Creditor Relationship 83
Section 10.11. Credit Decisions 83
Section 10.12. Removal of Agent 84
Section 10.13. Resignation by Agent 84
Section 10.14. Sharing of Payments and Setoffs. 85
Section 10.15. Non-advancing Lenders. 85
Section 10.16. Benefit of Lenders 86
ARTICLE XI
MISCELLANEOUS
Section 11.1. Continuing Agreement 86
Section 11.2. Notices 87
Section 11.3. No Waivers 87
Section 11.4. Expenses; Documentary Taxes;
Indemnification 88
Section 11.5. Amendments and Waivers; Consent to
Deviation 88
Section 11.6. Survival 88
Section 11.7. Prior Understandings; No Defenses;
Release; No Oral Agreements 89
Section 11.8. Limitation on Interest 89
Section 11.9. Invalid Provisions 90
Section 11.10. Successors and Assigns 90
Section 11.11. Senior Debt; Borrower Subordination 94
Section 11.12. Revolving Loan 94
Section 11.13. Construction 94
Section 11.14. APPLICABLE LAW 95
Section 11.15. SUBMISSION TO JURISDICTION; SERVICE
OF PROCESS 95
Section 11.16. JURY TRIAL WAIVER 95
Section 11.17. Counterparts 95
Section 11.18. Inconsistent Provisions 96
SCHEDULES AND EXHIBITS
SCHEDULE I - LENDERS AND BORROWERS
SCHEDULE II - COMMITMENT FEE PERCENTAGE; LIBOR MARGIN
EXHIBIT A - CORPORATE FACILITY NOTE
EXHIBIT A-1 - PORTFOLIO FACILITY NOTE
EXHIBIT B - COLLATERAL ASSIGNMENT
EXHIBIT C - PLEDGE AGREEMENT
EXHIBIT D - REQUEST FOR ADVANCE
EXHIBIT D-1 - FORM OF COMPLIANCE LETTER
EXHIBIT E - SECURITY AGREEMENT
EXHIBIT F - LOCKBOX AGREEMENT
EXHIBIT G - SUPPLEMENT TO SCHEDULE I
EXHIBIT H - ASSIGNMENT AND ACCEPTANCE
