UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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, TX 75201
(Address of principal executive (Zip Code)
offices)
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:
24,151,782 shares of common stock, $.05 par value per share,
as of July 31, 1995.
Location of Exhibit Index: Page 18
Page 1
<PAGE>
AMRESCO, INC.
INDEX
Page No.
COVER PAGE 1
INDEX 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets - June 3
30, 1995 and December 31, 1994
Consolidated Condensed Statements of Income -
Three and Six Months Ended June 30, 1995 and 4
1994
Consolidated Condensed Statement of
Shareholders' Equity - Six Months Ended June
June 30, 1995 5
Consolidated Condensed Statements of Cash
Flows - Six Months Ended June 30, 1995 and 1994 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 17
EXHIBIT INDEX 18
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited; dollars in thousands)
<CAPTION>
June 30, December 31,
1995 1994
ASSETS -------- --------
<S> <C> <C>
Cash and cash equivalents $ 18,683 $ 20,446
Accounts receivable, net of reserves of
$3,898 and $4,929, respectively 8,574 20,682
Mortgage loans held for sale (Note 2) 3,000
Investment in asset portfolios:
Loans 92,000 30,920
Partnerships and joint ventures 30,374 22,491
Real estate 7,393 11,171
Asset-backed securities 6,426 3,481
Deferred income taxes 15,354 17,207
Premises and equipment, net of accumulated
depreciation of $1,538 and $1,082,
respectively 4,601 4,301
Intangible assets, net of accumulated
amortization of $2,429 and $1,226,
respectively 29,494 30,668
Other assets 13,504 10,973
-------- --------
TOTAL ASSETS $229,403 $172,340
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 6,274 $ 4,891
Accrued employee compensation and
benefits 7,613 18,460
Notes payable 67,300 15,500
Mortgage warehouse debt (Note 2) 2,856
Nonrecourse debt (Note 2) 8,622 959
Income taxes payable 3,607 1,219
Payable to partners 2,115 3,907
Other liabilities 7,628 13,818
-------- --------
Total liabilities 106,015 58,754
-------- --------
SHAREHOLDERS' EQUITY:
Common stock, $0.05 par value, authorized
50,000,000 shares; 24,118,037 and
23,592,647 shares issued in 1995 and
1994, respectively 1,206 1,180
Capital in excess of par 77,671 74,691
Reductions for employee stock (826) (429)
Treasury stock, $0.05 par value, 24,339
shares in 1995 (160)
Retained earnings 45,497 38,144
-------- --------
Total shareholders' equity 123,388 113,586
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $229,403 $172,340
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
Page 3
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited; dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Asset management and disposition $ 8,135 $35,930 $18,968 $72,342
Earnings on asset portfolios 7,855 2,641 13,632 4,256
Mortgage banking 5,549 8,324
Other 1,807 1,889 3,262 4,425
-------- -------- -------- --------
Total revenues 23,346 40,460 44,186 81,023
-------- -------- -------- --------
EXPENSES:
Personnel 11,807 19,887 23,261 41,761
Occupancy 551 930 1,303 2,204
Equipment 552 623 1,017 1,397
Professional fees 738 3,488 1,893 6,409
General and administrative 2,559 5,528 3,531 9,322
Interest 863 655 1,278 1,309
Profit participations 71 42 362 70
-------- -------- -------- --------
Total expenses 17,141 31,153 32,645 62,472
-------- -------- -------- --------
Income from continuing
operations before taxes 6,205 9,307 11,541 18,551
Income tax expense 2,126 3,882 4,307 7,768
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS 4,079 5,425 7,234 10,783
Loss from discontinued
operations, net of $211
and $492 income tax
benefit, respectively (316) (738)
Gain from sale of discontinued
operations, net of $1,617
income tax expense 2,425 2,425
-------- -------- -------- --------
NET INCOME $6,504 $5,109 $9,659 $10,045
======== ======== ======== ========
Earnings per share for income
from continuing operations $0.17 $0.23 $0.30 $0.46
Earnings per share $0.27 $0.22 $0.40 $0.43
Weighted average shares
outstanding 24,428,849 23,403,735 24,305,838 23,335,101
</TABLE>
See notes to consolidated condensed financial statements.
Page 4
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 1995
(Unaudited; dollars in thousands, except share data)
<CAPTION>
Common Stock Reductions
--------------- Capital in for Total
Number of Excess of Employee Treasury Retained Shareholders'
Shares Amount Par Stock Stock Earnings Equity
---------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1995 23,592,647 $1,180 $74,691 $(429) $ - $38,144 $113,586
Exercise of stock
options 319,053 16 886 902
Issuance of common
stock for earnout 112,002 5 772 777
Issuance of common
stock for unearned
stock compensation 94,335 5 644 (649) -
Amortization of
unearned stock
compensation 74 74
Tax benefits from
employee stock
compensation 678 678
Repayment of notes
receivable for
officer's shares 89 89
Settlement of
notes receivable
for officers'
shares with
common stock
(14,339 shares) 89 (89) -
Acquisition of
treasury stock
(10,000 shares) (71) (71)
Dividends paid
($0.05 per share) (1,191) (1,191)
Dividends declared
($0.05 per share) (1,207) (1,207)
Foreign currency
translation
adjustments 92 92
Net income 9,659 9,659
---------- -------- -------- -------- -------- -------- ----------
JUNE 30, 1995 24,118,037 $1,206 $77,671 $(826) $(160) $45,497 $123,388
========== ======== ======== ======== ======== ======== ==========
</TABLE>
See notes to consolidated condensed financial statements.
Page 5
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
<CAPTION>
Six Months Ended June 30,
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 9,659 $ 10,045
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of discontinued operation (2,425)
Depreciation and amortization 1,763 1,354
Deferred tax provision 1,853 447
Loss on disposition of premises and equipment 72
Employee stock compensation 74
Increase (decrease) in cash for changes in:
Accounts receivable 12,108 12,846
Other assets (1,265) 4,892
Accounts payable 88 (4,884)
Income taxes payable 771 1,367
Other liabilities (20,195) (7,609)
-------- --------
Net cash provided by operating activities 2,503 18,458
-------- --------
INVESTING ACTIVITIES:
Purchase of mortgage loans held for sale (3,000)
Purchase of asset portfolios (92,811) (21,051)
Collections on asset portfolios 24,681 13,156
Proceeds from sale of subsidiary 6,250 1,385
Purchase of premises and equipment (932) (1,134)
-------- --------
Net cash used in investing activities (65,812) (7,644)
-------- --------
FINANCING ACTIVITIES:
Proceeds from notes payable, mortgage
warehouse debt and nonrecourse debt 98,831 4,394
Repayment of notes payable, mortgage
warehouse debt and nonrecourse (36,512) (15,055)
Stock options exercised 902 731
Tax benefit of employee stock compensation 678 1,354
Dividends paid (2,371) (1,131)
Purchase of treasury stock (71)
Repayment of notes receivable for
officers' shares 89 178
-------- --------
Net cash provided by (used in) financing
activities 61,546 (9,529)
-------- --------
Net increase (decrease) in cash and cash
equivalents (1,763) 1,285
Cash and cash equivalents, beginning of period 20,446 43,442
-------- --------
Cash and cash equivalents, end of period $ 18,683 $ 44,727
======== ========
SUPPLEMENTAL DISCLOSURE:
Income taxes paid $1,683 $1,261
Interest paid 1,524 1,128
Common stock issued for Holliday earnout 777
Common stock issued for unearned stock
compensation 649
Accounts payable recorded in connection
with acquisition 1,295
Notes receivable received in connection
with sale of subsidiary 818
</TABLE>
See notes to consolidated condensed financial statements.
Page 6
<PAGE>
AMRESCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated condensed
financial statements of AMRESCO, INC. and subsidiaries (the
"Company") have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results
that may be expected for the entire fiscal year or any other
interim period. For further information, refer to the
consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994. Certain reclassifications of
prior period amounts have been made to conform to the
current period presentation.
Mortgage banking activities - Mortgage loans held for
sale are carried at the lower of cost or market. Market is
determined on an individual loan basis based upon the
estimated fair value of similar loans for the month of
expected delivery.
Statement of Financial Accounting Standards ("SFAS")
No. 122, "Accounting for Mortgage Servicing Rights" (an
amendment of SFAS No. 65), which is effective for the fiscal
year 1996, requires mortgage banking enterprises to
recognize as separate assets rights to service mortgage
loans for others, whether such rights are originated by the
Company's own mortgage banking activities or purchased from
others. The Company will adopt SFAS No. 122 effective
January 1, 1996, and expects that the impact of such
adoption will be insignificant to it's financial condition
and results of operations.
2. Banking Arrangements
During the second quarter, the Company's revolving
credit line agreement with NationsBank of Texas, N.A. (the
"Bank") was increased from $50,000,000 to $75,000,000 under
terms similar to the original agreement until the Company
can complete an increased revolving credit line agreement
with a syndicate of banks. The revolving credit line agreement
will automatically reduce from $75,000,000 to $50,000,000 on
October 13, 1995.
On June 23, 1995, a wholly-owned subsidiary of the
Company borrowed $2,856,000 pursuant to a $25,000,000
mortgage warehouse revolving credit loan agreement with the
Bank to facilitate mortgage loan underwriting and
origination. This advance bears interest payable monthly at
the Bank's adjusted 30-day LIBOR rate plus 2% (8-1/8% at
June 30, 1995 for a term of 30 days from advance). The
advance is collateralized by the $3,000,000 of mortgage
loans outstanding at June 30, 1995 and the borrowing
entity/servicer's collection accounts.
Page 7
<PAGE>
On July 27, 1995, two wholly-owned subsidiaries of the
Company jointly entered into a $27,500,000 nonrecourse term
loan agreement with a financial services company. The loan
is collateralized by a security interest in the investments
in asset portfolios of the subsidiaries. The stated
interest rate for this debt is the financial company's
floating prime rate plus 1-1/2% (10-1/4% at July 27, 1995);
however, the borrowing entities may elect to have up to
three traunches of debt bear interest at adjusted LIBOR rate
plus 3% (8-15/16 at July 27, 1995 for a term of 180 days),
with the term of each traunche to be up to 180 days.
Interest is payable monthly. Principal payments are due
monthly and are equal to 90% of the net portfolio cash flow
for the preceding month. Additional principal reductions
may be required on a quarterly basis to meet minimum
principal payment requirements. The loan is nonrecourse to
the Company and matures on July 31, 1998. As part of the
agreement, the borrowing entities and the Company are
subject to both positive and negative covenants. In
conjunction with this loan agreement, existing nonrecourse
debt with a balance of $8,622,000 at June 30, 1995 was
repaid.
3. Discontinued Operations
On June 16, 1995, the Company sold substantially all of
the assets of its home banking and data processing
subsidiary, AMRESCO Services, Inc., for $6,250,000 in cash
with a gain of approximately $2,425,000, or $0.10 per share,
net of certain transaction costs and $1,617,000 provision
for income taxes. The Company adopted a plan on December 1,
1994, to sell the subsidiary. The book values of the net
assets sold in the transaction were as follows (in
thousands):
Cash $ 283
Accounts receivable 293
Premises and equipment 302
Other assets 65
Liabilities (199)
Net assets of discontinued -----
subsidiary $ 744
=====
4. Allowance for Loan Losses
As of January 1, 1995, the Company adopted the
provisions of Statement of Financial Standards ("SFAS") No.
114 "Accounting by Creditors for Impairment of a Loan" as
amended by SFAS 118. As of June 30, 1995, no allowance for
loan losses was required for the Company's loans.
Page 8
<PAGE>
5. Acquisitions
Effective June 30, 1995, a wholly-owned subsidiary of
the Company acquired substantially all of the assets of
CKSRS Housing Group, Ltd., a Miami, Florida-based commercial
mortgage banking company specializing in the origination,
sale and servicing of multifamily mortgages in Florida, for
$1,295,000. As of June 30, 1995, the purchase price was
allocated as follows (in thousands):
Mortgage servicing asset $ 86
Equipment, furniture and fixtures 10
Goodwill and non-compete agreement 1,245
Liabilities (46)
Net assets of acquired ------
company $1,295
======
The shown allocation of the purchase price is based on
the best available information and is subject to adjustment.
On July 18, 1995, the Company entered into a letter of
intent to acquire from EQ Services, Inc. 22 contracts to
service a total of $7.5 billion in commercial real estate
mortgages. The closing of the transaction is subject to the
execution of definitive agreements and the satisfaction of
certain customary conditions.
Page 9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
AMRESCO, INC. (the "Company" or "AMRESCO") is a leading
specialty financial servicing company engaged primarily in
the business of portfolio acquisitions, asset management and
disposition, loan origination/underwriting and loan servicing.
Historically, asset resolution and disposition services have
been AMRESCO's primary business; however, the asset
resolution industry is fundamentally changing. In
conjunction with this industry change, new markets for the
Company's asset management services have been developing,
and AMRESCO is building on its existing strengths to be a
significant competitor in these markets.
The Company's strategic objectives include the
continued acquisition of loan portfolios and generation of
new asset management contracts. The primary factors
affecting AMRESCO's asset acquisition and resolution
business are the availability of acquisition opportunities
and the Company's ability to favorably price its
acquisitions. During the first quarter and second quarter
of 1995, the Company entered into asset management contracts
covering assets of approximately $200 million and $500
million, respectively.
Additionally, the Company plans on further expanding
its mortgage banking presence through additional services,
targeted branch openings, and potential strategic
acquisitions. During the third quarter of 1994, the Company
acquired substantially all of the assets of Holliday
Fenoglio Dockerty & Gibson, Inc. and certain of its
affiliates ("Holliday Fenoglio"), which are originators and
servicers of commercial mortgage loans, for a maximum of
approximately $33.0 million based upon an initial payment of
$17.3 million in cash and $4.3 million in stock and three
additional annual payments contingent upon future financial
performance. In April of 1995, the first of these annual
payments was made totaling $3.8 million which consisted of
80% cash and 20% stock. The operations of Holliday Fenoglio
have been included in the Company's financial statements
from August 1, 1994, the effective date of the acquisition.
Also during 1994, the Company started operations of AMRESCO
Capital Corporation, a full service commercial mortgage
company providing commercial real estate financing directly,
through relationships with various independent mortgage
companies and strategic alliances with investment banks.
Effective June 30, 1995, AMRESCO Capital Corporation
acquired substantially all of the assets of CKSRS Housing
Group, Ltd., a Miami, Florida-based commercial mortgage
banking company specializing in the origination, sale and
servicing of multifamily mortgages in Florida, for
approximately $1.3 million.
On July 18, 1995, the Company entered into a letter of
intent to acquire from EQ Services, Inc. 22 contracts to
service a total of approximately $7.5 billion in commercial
real estate mortgages. The closing of the transaction is
subject to the execution of definitive agreements and the
satisfaction of certain customary conditions.
Page 10
<PAGE>
On December 1, 1994, the Company elected to dispose of
the operations of AMRESCO Services, Inc., its data
processing and home banking subsidiary, in order to
concentrate efforts in the Company's primary lines of
business. For 1994, the loss from such discontinued
operations totaled $2.2 million, or $0.09 per share. On
June 16, 1995, the Company sold substantially all of the
assets AMRESCO Services, Inc. in an all cash transaction ,
for a gain of approximately $2.4 million, or $0.10 per
share.
Asset management and disposition contracts are of a
finite duration, typically 3-5 years. Unless new assets are
added to these contracts during their terms, the amount of
total assets under management decreases over the terms of
these contracts. During the first quarter of 1995, the
asset management contract with the Federal Deposit Insurance
Corporation ("FDIC") concluded. During 1994, all the
existing management contracts with the Resolution Trust
Company ("RTC") expired. On August 31, 1994, the Company
and NationsBank Corporation concluded their asset management
contract (the "NationsBank Contract"). The NationsBank
Contract had an original term expiring in June 1997. The
Company received an early conclusion fee of $10.0 million.
The proceeds from the fee, net of expenses associated with
the conclusion, resulted in a one-time increase of $0.15 per
share in the third quarter of 1994.
Due to the expiration of the RTC contracts and the
winding down of the FDIC contract during 1994 and early
1995, as well as the conclusion of the NationsBank Contract,
there was a substantial reduction in staff providing asset
management services during 1994 and the first quarter of
1995. Severance costs were accrued at December 31, 1994.
Additionally, as a result of the expiration of the RTC
contracts, the conclusion of the FDIC contract, as well as
conclusion of the NationsBank Contract, lower levels of
revenue and income were recognized in the first and second
quarter of 1995 than was previously reported during the
other quarters of 1994.
The Company's strategy is to generate additional
revenues and earnings during 1995 through substantially
increased investments in wholly-owned asset portfolios, the
expansion of its commercial mortgage banking operations,
entering into new asset management contracts, the receipt of
incentive fees from existing asset management contracts and
the acquisitions of other businesses. Because of the
uncertainty of the timing and success of such efforts, no
assurances can be given that the planned additional revenues
and earnings will be generated during 1995. In addition,
the magnitude of such efforts will be governed to some
extent by the availability of capital. See "Liquidity and
Capital Resources."
The following discussion and analysis presents the
significant changes in the financial condition and results
of continuing operations of the Company for the quarter
ended June 30, 1995. This discussion should be read in
conjunction with the unaudited financial statements and
notes to the unaudited financial statements included
elsewhere in this report. The operations of acquired
businesses are included in the financial statements from the
date of acquisition.
Page 11
<PAGE>
The following results for the first quarter of 1995 are
discussed along with the second quarter results in order to
provide additional trend analysis due to the transitional
nature of the Company's business (in thousands).
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ ------------------
June 30, March 31, June 30, June 30, June 30,
1995 1995 1994 1995 1994
-------- -------- -------- -------- --------
REVENUES:
<S> <C> <C> <C> <C> <C>
Management fees $ 4,740 $ 5,125 $ 7,827 $ 9,865 $16,839
Disposition fees 3,531 5,045 21,542 8,576 43,036
Earnings on asset
portfolios 7,855 5,777 2,641 13,632 4,256
Mortgage banking 5,549 2,775 8,324
Other 1,807 1,455 1,889 3,262 4,425
-------- -------- -------- -------- --------
Total revenues before
assistance revenue 23,482 20,177 33,899 43,659 68,556
Assistance revenue (136) 663 6,561 527 12,467
-------- -------- -------- -------- --------
Total revenues 23,346 20,840 40,460 44,186 81,023
-------- -------- -------- -------- --------
EXPENSES:
Personnel 11,889 10,506 19,887 22,395 41,761
Other general and
administrative 4,454 3,629 4,008 8,083 6,865
Interest 863 415 655 1,278 1,309
Profit participations 71 291 42 362 70
-------- -------- -------- -------- --------
Total expenses before
reimbursable costs 17,277 14,841 24,592 32,118 50,005
Reimbursable costs (136) 663 6,561 527 12,467
-------- -------- -------- -------- --------
Total expenses 17,141 15,504 31,153 32,645 62,472
-------- -------- -------- -------- --------
Income from continuing
operations before taxes 6,205 5,336 9,307 11,541 18,551
Income tax expense on
continuing operations 2,126 2,181 3,882 4,307 7,768
-------- -------- -------- -------- --------
INCOME FROM
CONTINUING OPERATIONS 4,079 3,155 5,425 7,234 10,783
Discontinued operations -
Loss from operations
net of income
tax benefit (316) (738)
Gain from sale of
discontinued operations,
net of income
tax expense 2,425 2,425
-------- -------- -------- -------- --------
NET INCOME $ 6,504 $ 3,155 $ 5,109 $ 9,659 $10,045
======== ======== ======== ======== ========
</TABLE>
Page 12
<PAGE>
Results of Operations
Revenue for the Company's asset management services are
based on the contract value of assets managed and the
Company's success in disposing of such assets. The asset
base of each contract generally declines over the life of
the contract, thus reducing management fees payable
thereunder. Disposition fees, earned over the life of the
contract, are subject to fluctuation based on the
consideration received, timing of the sale or collection of
the managed assets and reaching specified earnings on behalf
of partners. Certain direct costs incurred in the management
of assets for the FDIC were paid by the Company and billed
to the FDIC. Such costs were included in reimbursable costs
and the related payment by the FDIC was included in
assistance revenue. Such costs fluctuated based on the
amount and nature of the assets managed, the seasonal timing
of property tax payments and the timing of asset
dispositions. Such costs did not effect net income, other
than the costs of such advanced funds, but at times required
sizable capital resources until reimbursed by the FDIC.
Revenue from the Company's commercial mortgage banking
activities is derived from the origination of commercial
mortgage loans, the placement of such loans with permanent
investors and the subsequent servicing of loans. Loan
placement and servicing fees, commitment fees and real
estate brokerage commissions, are recognized as earned.
Placement and servicing expenses are charged to expense as
incurred.
The Company must have future taxable income to realize
recorded deferred tax assets, including net operating loss
carryforward tax benefits obtained in the merger of AMRESCO
Holdings, Inc. with and into a subsidiary of BEI Holdings,
Ltd. on December 31, 1993. Certain of these benefits expire
beginning in 1995 and are subject to annual utilization
limitations. Management believes that recorded deferred tax
assets will be realized in the normal course of business.
Three Months Ended June 30, 1995 Compared to Three Months
Ended March 31, 1995
Revenues-- Revenues before assistance revenue for the
1995 second quarter were $23.5 million compared to $20.2
million for the 1995 first quarter. This increase reflected
a $2.1 million increase in earnings on asset portfolios due
to an increase in investments in asset portfolios. Mortgage
banking revenues increased by $2.8 million due to an
increase in loan originations/underwritings. These
increases were partially offset by a decrease in disposition
fees of $1.5 million from reduced revenues on government
sector contracts as most of these contracts concluded.
Assistance revenue and its offsetting reimbursable costs
declined in the second quarter of 1995 due to the conclusion
of the FDIC contract during the first quarter.
Expenses-- Total expenses before reimbursable costs
increased $2.4 million in the second quarter of 1995
compared to the previous quarter. Personnel expenses in the
second quarter of 1995 increased $1.4 million compared to
the previous quarter primarily due to an increase in
commission expense related to higher mortgage banking
revenues. Other general and administrative expenses
increased in the second quarter of 1995 primarily due to
increased acquisition-related travel expenses and a change
in estimate of bad debt expense on receivables related to
expired management contracts. The decrease in the effective
income tax rate for the second quarter of 1995 was primarily
due to permanent tax differences related to mortgages sold
by a partnership in which AMRESCO owns an interest for which
the acquired tax basis exceeded the book basis.
Page 13
<PAGE>
Three Months Ended June 30, 1995 Compared to Three Months
Ended June 30, 1994
Revenues-- Revenues before assistance revenue for the
1995 second quarter compared to the 1994 second quarter
reflected a $3.1 million decrease in management fees and a
$18.0 million decrease in disposition fees. The year ago
quarter included revenues from the NationsBank Contract that
concluded during the third quarter of 1994 for which the
Company received an early conclusion fee of $10.0 million in
August 1994. The decreases also resulted from reduced
revenues from government sector contracts as these contracts
concluded. These decreases were partially offset by earnings
from asset portfolios, which increased $5.2 million due to a
significant increase in investments in asset portfolios, and
from mortgage banking revenue, which increased $5.5 million,
due to the inclusion of Holliday Fenoglio, Inc., which was
purchased in August 1994.
Expenses-- Total expenses before reimbursable costs
decreased $7.3 million in the second quarter of 1995
compared to the second quarter of 1994. The year ago
quarter included expenses for the NationsBank Contract that
concluded in the third quarter of 1994 and for government
sector contracts that were concluding during 1994. Also, the
decrease in expenses compared to the year ago quarter
reflected the corporate downsizing initiatives that began in
the fourth quarter of 1994.
Six Months Ended June 30, 1995 Compared to Six Months Ended
June 30, 1994
Revenues-- Revenues before assistance revenue for the
first half of 1995 compared to the first half of 1994
reflected a $7.0 million decrease in management fees and a
$34.5 million decrease in disposition fees. The first half
of 1994 included revenues from the NationsBank Contract that
concluded during the third quarter of 1994 for which the
Company received an early conclusion fee of $10.0 million in
August 1994. The decreases also resulted from reduced
revenues from government sector contracts as these contracts
concluded. These decreases were partially offset by earnings
from asset portfolios, which increased $9.4 million due to a
significant increase in investments in asset portfolios, and
from mortgage banking revenue, which increased $8.3 million,
primarily due to the inclusion of Holliday Fenoglio, Inc.,
which was purchased in August 1994.
Expenses-- Total expenses before reimbursable costs
decreased $17.9 million in the first half of 1995 compared
to the first half of 1994. The first half of 1994 included
expenses for the NationsBank Contract that concluded in the
third quarter of 1994 and for government sector contracts
that were concluding during 1994. Also, the decrease in
expenses compared to the first half of 1994 reflected the
corporate downsizing initiatives that began in the fourth
quarter of 1994.
Liquidity and Capital Resources
The Company generates cash for operating requirements
primarily from fees from the management, servicing and
disposition of assets, and collections on asset portfolios.
Cash for investment in asset portfolios and business
acquisitions is primarily obtained through credit
facilities, including advances on the operating credit line
and nonrecourse debt. Management expects cash flow from
investments in asset portfolios to increase in 1995 compared
to 1994, primarily as a result of increased collections on
wholly-owned asset portfolios.
Page 14
<PAGE>
On November 2, 1994, the Company entered into a $50.0
million revolving line of credit agreement with NationsBank
of Texas, N.A. (the "Bank"), which matures and is payable in
full on April 30, 1996. The Company's revolver has been
temporarily increased to $75.0 million until a new facility
can be completed with a syndicate of banks, or until October 13,
1995. There was a balance of $31.0 million at 7-9/16%, $13.0 million
at 7-5/8%, $8.0 million at 7-3/4% and $15.3 million at 9-1/4% for
a total of $67.3 million outstanding, under such facility at
June 30, 1995. The Company has outstanding letters of credit
totaling $.4 million at June 30, 1995, which reduce the
available revolving line.
During July 1995, two wholly-owned subsidiaries of the
Company jointly entered into a nonrecourse debt agreement
for $27.5 million to support wholly-owned asset purchases.
This nonrecourse debt has an interest rate of the financing
company's prime rate plus 1-1/2% and/or LIBOR plus 3%.
During March 1995, a wholly-owned subsidiary of the
Company entered into a nonrecourse debt agreement with the
Bank for $15.5 million to support wholly-owned asset
purchases. This nonrecourse debt has an interest rate of
the Bank's prime rate plus 1-1/2% and/or LIBOR plus 3%.
There was a balance outstanding at June 30, 1995, of $8.6
million under this nonrecourse debt agreement, $2.5 million
at 9-1/16%, $5.0 million at 9-1/8% and $1.1 million at 10-
1/4%. The remaining balance of this nonrecourse debt was
paid off in July 1995 with issuance of the new nonrecourse
debt obtained in July 1995.
On April 28, 1995, AMRESCO Capital Corporation, a
subsidiary of the Company, entered into a warehouse line of
credit agreement with the Bank for $25.0 million to support
its commercial mortgage financing. The rate of interest on
advances is to be, as selected by the Company, tied to
either the Bank's floating prime rate or a rate equal to an
adjusted LIBOR rate plus 2%. On June 23, 1995, an advance of
$2,856,000, which bears interest at the Bank's adjusted 30-
day LIBOR rate plus 2% (8-1/8% at June 30, 1995 for a term
of 30 days) was obtained in conjunction with the
origination/underwriting of $3,000,000 mortgage loans held
for sale.
Accounts receivable decreased from $10.5 million at
March 31, 1995, to $8.6 million at June 30, 1995, due to the
conclusion and expiration of certain asset management
contracts.
The Company intends to pursue additional opportunities
in 1995 in asset acquisitions aggressively, both by
acquiring assets for its own account and by serving as an
investor with various capital partners who acquire such
assets, and acquisitions of new businesses and expansion of
current businesses. The funds for such acquisitions and
investments are anticipated to be provided in 1995 by cash
flows and borrowings under the Company's revolving line of
credit which was temporarily increased from $50 million to
$75 million during the second quarter. Additionally, the
Company is currently working with a syndicate of banks to
complete an increased revolving credit line agreement. As a
result, interest expense in 1995 will be higher than the
interest expense in 1994.
The Company believes that its funds on hand of $18.7
million at June 30, 1995, cash flow from operations, its
unused borrowing capacity under its credit lines and ability
to obtain other credit lines should be sufficient to meet
its anticipated operating needs and capital expenditures, as
well as planned new acquisitions and investments, for at
least the next twelve months. The magnitude of the
Company's acquisition and investment program will be
governed to some extent by the availability of such capital.
Page 15
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security
Holders.
On May 10, 1995, the Company held its 1995 Annual
Meeting of Shareholders at which the following matters
were considered and voted upon:
(a) Election of Directors.
Three (3) persons were elected as Class II
directors to serve as members of the Company's
Board of Directors for the terms of three (3) years ending
at the 1998 Annual Meeting. The number of
votes cast for each nominee and the number of
votes are as follows:
VOTES BROKER
NOMINEE CAST FOR WITHHELD ABSTENTIONS NON-VOTES
James P. Cotton, Jr. 16,401,653 357,073 0 0
William S. Green 16,401,778 356,948 0 0
Amy J. Jorgensen 16,399,153 359,573 0 0
The terms of the office of the following directors
who were not up for election continued after the
meeting: Richard L. Cravey; Gerald E. Eickhoff; Robert H.
Lutz, Jr.; Robert L. Adair III; John J. McDonough; and Bruce
W. Schnitzer.
(b) Approval of Amendments to the 1993 Key Individual
Stock Option Plan.
A proposal to approve certain amendments to the
Company's 1993 Key Individual Stock Option Plan
was approved by the shareholders. The number of shares
voting for the proposal: 15,658,307; votes withheld:
548,396; abstentions: 0.
(c) Approval of the 1995 Employee Stock Purchase Plan.
A proposal to approve the Company's 1995 Employee
Stock Purchase Plan was approved by the
shareholders. The number of shares voting for the proposal:
16,065,073; votes withheld: 185,356; abstentions: 0.
(d) Approval of the 1995 Stock Options and Award Plan.
A proposal to approve the Company's 1995 Stock
Option and Award Plan was approved by the
shareholders. The number of shares voting for the proposal:
14,275.535; votes withheld: 1,963,852; abstentions: 0.
(e) Approval of the 1995 Incentive Award Plan.
A proposal to approve the Company's 1995 Incentive
Award Plan was approved by the shareholders. The
number of shares voting for the proposal: 15,014,474;
votes withheld: 1,232,725; abstentions: 0.
Page 16
<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 18.
(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: August 14, 1995 By: /S/Barry L. Edwards
Barry L. Edwards
Executive Vice President,
Treasurer and
Chief Financial Officer
Page 17
<PAGE>
EXHIBIT INDEX
Page #
10(a). First Amendment to Credit Agreement dated as of
June 13, 1995, between AMRESCO, INC. and
NationsBank of Texas, N.A. which amended the
Revolving Credit Loan Agreement dated as of
November 2, 1994, between AMRESCO, INC. and
NationsBank of Texas, N.A. and associated
$75,000,000 Amended and Restated Promissory Note
10(b). Term Loan Agreement, dated as of July 18, 1995,
among AMRESCO New England, Inc., Oak Cliff
Financial, Inc., and Heller Financial, Inc.
10(c). Revolving Credit Loan Agreement, dated as of
April 28, 1995, among AMRESCO Capital
Corporation, AMRESCO, INC., and NationsBank of
Texas, N.A.
11. Computation of Per Share Earnings
27. Financial Data Schedule
Page 18
<PAGE>
AMRESCO, INC.
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---------- ---------- ---------- -----------
Net income $6,504,000 $5,109,000 $9,659,000 $10,045,000
========== ========== ========== ===========
Primary
-------
Weighted average shares
outstanding 23,945,761 22,653,347 23,826,330 22,552,551
Net effect of dilutive
stock options based on
the Treasury stock method
using average market
price 483,088 750,388 479,508 782,550
---------- ---------- ---------- ----------
Total 24,428,849 23,403,735 24,305,838 23,335,101
========== ========== ========== ==========
Earnings per share $0.2662 $0.2183 $0.3974 $0.4305
Fully diluted (a)
-----------------
Weighted average shares
outstanding 23,945,761 22,653,347 23,826,330 22,552,551
Net effect of dilutive
stock options based on
the Treasury stock method
using the higher of
average or ending market
price 603,095 754,420 567,499 792,383
---------- ---------- ---------- -----------
Total 24,548,856 23,407,767 24,393,829 23,344,934
========== ========== ========== ===========
Earnings per share $0.2649 $0.2183 $0.3960 $0.4303
(a) Fully diluted earnings per share is not presented for
any period in the financial statements as it is less than
3% dilutive and is, therefore, not required to be shown
under Accounting Principles Board Opinion No. 15.
Page 19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the AMRESCO, INC. June 30, 1995, 10-Q
and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 18,683
<SECURITIES> 0
<RECEIVABLES> 12,472
<ALLOWANCES> 3,898
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,139
<DEPRECIATION> 1,538
<TOTAL-ASSETS> 229,403
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,206
0
0
<OTHER-SE> 122,182
<TOTAL-LIABILITY-AND-EQUITY> 229,403
<SALES> 0
<TOTAL-REVENUES> 44,186
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,278
<INCOME-PRETAX> 11,541
<INCOME-TAX> 4,307
<INCOME-CONTINUING> 7,234
<DISCONTINUED> 2,425
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,659
<EPS-PRIMARY> $0.40
<EPS-DILUTED> 0
</TABLE>
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Agreement")
is entered into as of June 13, 1995, by and between Amresco,
Inc., a Delaware corporation ("Borrower"), and NationsBank of
Texas, N.A., a national banking association ("Lender"), and is
consented to by the subsidiaries of the Borrower listed on the
signature pages of this Agreement (collectively, the
"Guarantors").
R E C I T A L S :
WHEREAS, pursuant to that certain Revolving Credit Loan
Agreement (the "Credit Agreement") dated as of November 2, 1994,
executed by and between Borrower and Lender, Lender agreed to
make advances to Borrower on certain terms and conditions set
forth therein (each capitalized term used but not defined herein
shall have the meaning given to such term in the Credit Agreement
as amended); and
WHEREAS, Borrower has requested that Lender amend the Credit
Agreement in certain respects as hereinafter set forth; and
WHEREAS, Lender is agreeable to such request under the
present circumstances.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Borrower and Lender hereby agree as
follows:
A G R E E M E N T:
1. New Definitions. Section 1.1 of the Credit Agreement
is hereby amended to add the following definition in the
appropriate alphabetical order:
"Amresco New England Loan" means that certain
$14,375,050.00 term loan from Lender to Amresco New England, Inc.
pursuant to that certain Term Loan Agreement, dated March 20,
1995, by and between Amresco New England, Inc. and Lender.
2. Amendments to Definitions. The definitions of
"Adjusted LIBOR Rate," "Available Commitment" and "Variable Rate"
as set forth in Section 1.1 of the Credit Agreement are amended
in their entirety to read as follows:
"Adjusted LIBOR Rate shall mean on the applicable
Effective Date, with respect to a LIBOR Rate Portion, 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 on the applicable
Effective Date, plus (b) the FDIC Percentage in effect on the
applicable Effective Date, plus (c) one and three-quarters
percent (1.75%); provided, that, any LIBOR Rate Portion in effect
on the date of the First Amendment to Credit Agreement shall
continue to accrue interest at the rate in effect on such date
with respect to such LIBOR Rate Portion until the expiration of
the applicable Interest Period.
Available Commitment means the aggregate amount which
Borrower is entitled to borrow under the terms of this Agreement,
which amount shall initially be Seventy-Five Million and No/100
Dollars ($75,000,000.00), subject to reduction pursuant to the
terms of Section 3.6, including, without limitation, the
mandatory reduction required by Section 3.6(b), or as otherwise
provided in the Loan Documents.
Variable Rate means a fluctuating rate of interest
equal to the sum of (i) the Base Rate, plus (ii) one-quarter of
one percent (1/4%)."
3. Commitment. Section 2.1(a) of the Credit Agreement is
hereby amended by deleting the last proviso therein contained and
replacing it with the following:
"provided further, that, the aggregate amount of Loans
(x) permitted under this Agreement for the acquisition of equity
interest in any Person or Persons shall not exceed $25,000,000
and (y) outstanding at any time plus the Letter of Credit
Exposure at such time shall not exceed $65,000,000 until the
Amresco New England Loan has been refinanced, or Lender has been
able to assign or participate all of its interest in the Amresco
New England Loan, on terms acceptable to Lender (Lender and
Borrower hereby agreeing to cooperate with each other in
attempting to refinance, assign or participate the Amresco New
England Loan)."
4. Origination Fee. In consideration for the commitment
of Lender to increase the Available Commitment as provided in
this Agreement and the reserving of sufficient funds by Lender
from which to make disbursements of the Loan as so increased,
Borrower shall pay to Lender on the date hereof a non-refundable
commitment fee equal to $62,500.
5. Mandatory Reduction in Available Commitment. Section
3.6(b) of the Credit Agreement is hereby modified to include the
following as the first sentence thereof:
"The Available Commitment shall automatically reduce
from $75,000,000 to $50,000,000 on October 13, 1995, without any
further actions on the part of Borrower or Lender."
6. Reduction in Minimum Liquidity. Section 8.3 of the
Credit Agreement is hereafter amended to reduce the liquidity
requirement therein contained from $10,000,000.00 to
$7,000,000.00 from the date hereof to October 13, 1995. From and
after October 13, 1995, the liquidity requirement shall be
increased to $10,000,000.00.
7. Amended and Restated Note. To evidence the increase in
the Available Commitment contemplated by this Agreement, Borrower
shall execute and deliver to Lender on the date hereof an Amended
and Restated Promissory Note (the "Amended Note") in the form
attached hereto as Exhibit A. Such Amended Note replaces the
Note executed and delivered under the Credit Agreement and
extends the outstanding indebtedness under the Agreement.
8. Subsidiary Guaranties and Pledge Agreements. Each of
the Guarantors and pledgors under the Pledge Agreements are
executing this Agreement as provided below to evidence their
agreement and consent to the modification and amendments herein
contained and to acknowledge that their respective Subsidiary
Guaranties and Pledge Agreements continue to guaranty and secure
the obligations as amended and increased by this Agreement.
9. Certificates. This Agreement shall be effective as of
the date first above written when executed by all parties hereto
and consented to by the Guarantors and any pledgors under the
Pledge Agreements as provided on the signature pages hereto, and
upon receipt by Lender of the following, each in form, substance
and bearing a date satisfactory to Lender and its counsel:
(a) A certificate of the Secretary or Assistant
Secretary of Borrower and the Guarantors, respectively,
certifying (i) that, except as indicated therein, there has
been no change to the articles of incorporation or bylaws of
Borrower or the Guarantors since the same were furnished to
Lender in connection with the execution of the Credit
Agreement, (ii) as to the name and title of the officers of
Borrower and the Guarantors and the authority of such
officers to execute this Agreement, and (iii) that attached
thereto are true, correct and complete excerpts of
resolutions of the Board of Directors of Borrower or the
applicable Guarantor authorizing the execution of this
Agreement and the Amended Note.
(b) A certificate, signed by an authorized officer of
Borrower, stating that (i) as of the date of this Agreement
and after giving effect to this Agreement Borrower is in
compliance with Sections 8.1 through and including 8.4 of
the Credit Agreement, and (ii) to the best of such officer's
knowledge there does not exist a Default or Event of Default
under the Credit Agreement.
10. Effectiveness of Documents. Except as expressly
modified hereby, all terms, provisions, representations,
warranties, covenants and agreements of Borrower related to the
Obligations, whether contained in the Note, the Credit Agreement
as amended and/or any of the other Loan Documents, are hereby
ratified and confirmed by Borrower, and all such agreements shall
be and shall remain in full force and effect, enforceable in
accordance with their terms.
11. No Claims or Defenses. Each of Borrower and the
Guarantors, by the execution of this Agreement, hereby declares
that it has no offsets, claims, counterclaims, defenses or other
causes of action against Lender related to the Obligations, the
Credit Agreement as amended, any of the other Loan Documents or
the modification of the Credit Agreement pursuant to this
Agreement.
12. Authority. Each of Borrower and the Guarantors
represents and warrants that all requisite corporate action
necessary for it to enter into this Agreement and the Amended
Note has been taken.
13. Binding Agreement. This Agreement shall be binding
upon, and shall inure to the benefit of, each party hereto and
such party's legal representatives, successors and assigns.
14. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
15. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
16. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
EXECUTED as of the date first above written.
BORROWER:
AMRESCO, INC.,
a Delaware
corporation
By:
Barry L. Edwards,
Executive Vice
President
LENDER:
NATIONSBANK OF
TEXAS, N.A.,
a national banking association
By:
Brian Schneider,
Vice President
CONSENT OF GUARANTORS AND PLEDGORS
Each of the undersigned Guarantors and Pledgors under the Pledge
Agreements hereby (a) acknowledges its consent to this Agreement,
(b) ratifies and confirms all terms and provisions of the
Subsidiary Guaranty or Pledge Agreement to which it is a
signatory, (c) agrees that the Subsidiary Guaranty or Pledge
Agreement to which it is a signatory is and shall remain in full
force and effect, (d) acknowledges that there are no claims or
offsets against, or defenses or counterclaims to, the terms and
provisions of and the obligations created and evidenced by the
Subsidiary Guaranty or Pledge Agreement to which it is a
signatory, (e) reaffirms all agreements and obligations under the
Subsidiary Guaranty or Pledge Agreement to which it is a
signatory with respect to the Loans, the Notes, the Credit
Agreement as amended and all other documents, instruments or
agreements governing, securing or pertaining to the Loans, as the
same may be modified by this Agreement, and (f) represents and
warrants that all requisite corporate action necessary for it to
execute this Agreement has been taken.
AMRESCO ASSET
MARKETING ADVISORS, INC.
AMRESCO CANADA INC.
AMRESCO CAPITAL CORPORATION
AMRESCO EQUITIES
CANADA, INC.
AMRESCO SERVICES
CANADA, INC.
AMRESCO-FEDERAL, INC.
GRANITE EQUITIES, INC.
OAK CLIFF FINANCIAL, INC.
AMRESCO HOLDINGS, INC.
AMRESCO-INSTITUTIONAL, INC.
AMRESCO MANAGEMENT, INC.
AMRESCO NEW ENGLAND, INC.
AMRESCO NEW HAMPSHIRE, INC.
AMRESCO RHODE ISLAND, INC.
AMRESCO SERVICES, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BANK EARNINGS INTERNATIONAL LIMITED
BEI 1992-N1, INC.
BEI 1993-N3, INC.
BEI 1994-N1, INC.
BEI GOLEMBE FINANCIAL, INC.
BEI INSTITUTIONAL MANAGEMENT, INC.
BEI MANAGEMENT, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
BEI REAL ESTATE SERVICES OF CALIFORNIA,
INC.
BEI REAL ESTATE SERVICES OF COLORADO,
INC.
BEI SANJAC, INC.
BEI SOUTHWEST, INC.
BEI VENTURES, INC.
ENTERCHANGE, INC.
ENTERCHANGE GREAT LAKES, INC.
ENTERCHANGE MIDWEST, INC.
ENTERCHANGE NEW JERSEY, INC.
ENTERCHANGE SOUTHERN CALIFORNIA, INC.
HOLLIDAY FENOGLIO, INC.
LIFETIME HOMES OF NEW JERSEY, INC.
LIFETIME HOMES OF SOUTH CAROLINA, INC.
LIFETIME INVESTMENTS OF NEW JERSEY, INC.
SPINNAKER REALTY CORPORATION
V.N.J. CORPORATION
DAPA-3, INC.
ANH, INC.
By:________________________________________________
Barry L. Edwards,
As Executive Vice President
for each of the above companies
EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$75,000,000.00 Dallas, Texas June 13, 1995
FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation
("Maker"), hereby promises to pay to the order of NATIONSBANK OF
TEXAS, N.A., a national banking association ("Lender"), at its
banking house in the City of Dallas, Dallas County, Texas, or at
such other address in Dallas County, Texas, given to Maker by
Lender, the principal sum of Seventy-five Million and No/100
Dollars ($75,000,000.00), or so much thereof as may be advanced
and outstanding, together with interest, as hereinafter
described.
This Amended and Restated Note has been executed and
delivered pursuant to the terms of that certain Revolving Credit
Loan Agreement (as modified and amended, the "Loan Agreement")
dated November 2, 1994, executed by and between Maker and Lender,
as modified and amended by that certain First Amendment To Credit
Agreement (the "Amendment"), dated the date hereof, by and
between Maker and Lender. This Note is the note defined in the
Loan Agreement as the "Note", the terms and provisions of the
Loan Agreement related to this Note being incorporated herein by
reference for all purposes. This Note increases, amends and
restates in its entirety that certain Promissory Note, dated
November 2, 1994, in the stated amount of Fifty Million and
No/100 Dollars ($50,000,000.00) executed by Maker, payable to
Lender. Each capitalized term not expressly defined herein shall
have the meaning given to such term under the Loan Agreement.
Lender is entitled to the benefits of and security provided
for in the Loan Agreement, including, without limitation, all
liens and security interests arising under the Loan Agreement,
the Pledge Agreements, the Subsidiary Guaranties and any other
Loan Documents securing the Obligations.
1. Interest and Payment.
(a) Maturity. A portion of the principal of this Note
shall be due and payable as required by Section 3.6 of the Loan
Agreement, and the remaining outstanding balance hereof and all
accrued but unpaid interest hereon shall be due and payable in
full on the Termination Date.
(b) Accrual of Interest. Prior to the occurrence of
an Event of Default, interest on this Note shall accrue at a rate
per annum equal to the lesser of (1) at Maker's option, the
Variable Rate or the Adjusted LIBOR Rate, subject, however, to
the provisions of Section 10.8 of the Loan Agreement (the
"Applicable Rate"), or (2) 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; and
provided that in the absence of an effective election of or
conversion to the Adjusted LIBOR Rate in accordance with this
Section 1 and Section 3.5 of the Loan Agreement, this Note shall
bear interest prior to the occurrence of an Event of Default at
the lesser of (i) the Variable Rate or (ii) the Maximum Lawful
Rate. Interest on this Note shall be calculated at a daily rate
equal to 1/360 of the annual percentage rate which this Note
bears, subject to the provisions hereof limiting interest to the
Maximum Lawful Rate. Without notice to Maker or any other
Person, 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 the Maximum Lawful Rate, respectively,
fluctuate, subject always to limitations contained in this Note.
(c) Agreements Concerning Pricing Election. Reference
should be made to the provisions of Sections 3.3 and 3.5 of the
Loan Agreement concerning the terms, manner and agreements
related to the interest rate elections available to Maker under
this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in
Sections 3.4, 3.5 and 3.6 of the Loan Agreement.
(e) Costs Due to Regulatory Changes. Maker shall
indemnify Lender against and reimburse Lender for increased costs
to Lender, as a result of any Regulatory Change, in the
maintaining of any LIBOR Rate Portion. 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.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal
balance of this Note shall, at the option of Lender, bear
interest at the Default Rate. Any past due principal, and to the
extent permitted by law, past due interest on the Loan 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.
2. Default. The occurrence of a Default or an Event of
Default, as defined in the Loan Agreement, shall constitute,
respectively, a Default or an Event of Default under this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of an
Event of Default, the holder hereof shall have the right to
declare the unpaid principal balance of and accrued but unpaid
interest on this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable), to
foreclose any liens and security interests securing payment
hereof, to offset against this Note any sum or sums owed by it to
Maker and to exercise any of its other rights, powers and
remedies under this Note, under any other Loan Document, or at
law or in equity.
(b) No Waiver. Neither the failure by the holder
hereof to exercise, nor delay by the holder hereof in exercising,
the right to accelerate the maturity of this Note or any other
right, power or remedy upon any Default or Event of Default shall
be construed as a waiver of such Default or Event of Default or
as a waiver of the right to exercise any such right, power or
remedy at any time. No single or partial exercise by the holder
hereof of any right, power or remedy shall exhaust the same or
shall preclude any other or further exercise thereof, and every
such right, power or remedy may be exercised at any time and from
time to time. All rights and remedies provided for in this Note
and in any other Loan Document are cumulative of each other and
of any and all other rights and remedies existing at law or in
equity, and the holder hereof shall, in addition to the rights
and remedies provided herein or in any other Loan Document, be
entitled to avail itself of all such other rights and remedies as
may now or hereafter exist at law or in equity for the collection
of the indebtedness owing hereunder, and the resort to any right
or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in equity shall not prevent
the concurrent or subsequent employment of any other appropriate
rights or remedies. Without limiting the generality of the
foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or
which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not (i) constitute a
waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other
right, power or remedy at the time or at any subsequent time, or
nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment
and performance, or a novation in any respect.
4. Usury Savings Provisions.
(a) General Limitation. Notwithstanding anything
herein or in any other Loan Documents, expressed or implied, to
the contrary, in no event shall any interest rate charged
hereunder or under any of the other Loan Documents, or any
interest contracted for, collected or received by Lender, exceed
the Maximum Lawful Rate.
(b) Intent of Parties. It is expressly stipulated and
agreed to be the intent of Maker and Lender at all times to
comply with the applicable law governing the maximum rate or
amount of interest payable on or in connection with this Note.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to this Note, or if
acceleration of the maturity of this Note, any prepayment by
Maker, or any other circumstance whatsoever, results in Lender
having been paid any interest in excess of that permitted by
applicable law, then it is the express intent of Maker and Lender
that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if this Note
has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note 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 this Note
does not include the right to accelerate any interest which has
not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the
event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document 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. 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 Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law. The
provisions of this paragraph shall control all agreements between
Maker and Lender.
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on
which such payment is due shall be extended to the next
succeeding Business Day, and such extension of time shall be
included in the computation of the amount of interest then
payable.
(b) Manner of Payment. The manner in which payments
are to be made on this Note shall be governed by the provisions
hereof and the Loan Agreement, including, without limitation,
Section 3.8 of the Loan Agreement.
(c) Prepayments. Prepayments may be made on this Note
subject to and in accordance with Section 3.6 of the Loan
Agreement.
(d) Application of Payments. All payments made on
this Note as scheduled shall be applied, to the extent thereof,
first to accrued but unpaid interest and the balance to unpaid
principal. Nothing herein shall limit or impair any rights of
any holder hereof to apply as provided in the Loan Documents any
past due payments, any proceeds from the disposition of any
collateral by foreclosure or other collections after default.
Except to the extent specific provisions are set forth in this
Note or another Loan Document with respect to application of
payments, all payments received by the holder hereof shall be
applied, to the extent thereof, to the indebtedness owing by
Maker to the holder hereof in such order and manner as the holder
hereof shall deem appropriate, any instructions from Maker or
anyone else to the contrary notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity
or to collect, enforce or defend this Note or any other Loan
Document in any lawsuit or in any probate, reorganization,
bankruptcy or other proceeding, or if Maker sues any holder of
this Note in connection with this Note or any other Loan Document
and does not prevail, then Maker agrees to pay to each such
holder, in addition to principal and interest, all costs and
expenses incurred by such holder in trying to collect this Note
or in any such suit or proceeding, including attorneys' fees.
(f) Waivers and Acknowledgments. Maker and all
sureties, endorsers, guarantors and any other party now or
hereafter liable for the payment of this Note in whole or in
part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notice (except only for any notices which are specifically
required by this Note or any other Loan Document), filing of suit
and diligence in collecting this Note or enforcing any of the
security herefor; (ii) agree to any substitution, subordination,
exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (iii) agree that
the holder hereof shall not be required first to institute suit
or exhaust its remedies against Maker or others liable or to
become liable hereon or to enforce its rights against them or any
security herefor; (iv) consent to any extension or postponement
of time of payment of this Note for any period or periods of time
and to any partial payments, before or after maturity, and to any
other indulgences with respect hereto, without notice thereof to
any of them; and (v) submit (and waive all rights to object) to
personal jurisdiction in the State of Texas, and venue in Dallas
County, Texas, for the enforcement of any and all obligations
under the Loan Documents.
(g) Amendments in Writing. This Note may not be
changed, amended or modified except in a writing expressly
intended for such purpose and executed by the party against whom
enforcement of the change, amendment or modification is sought.
(h) Purpose of Proceeds. The proceeds of this Note
will be used solely for business purposes and not for personal,
family, household or agricultural purposes.
(i) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as
provided in Section 10.2 of the Loan Agreement.
(j) Assignments/Participations. Maker acknowledges
and agrees that the holder of this Note may, at any time and from
time to time, sell or transfer to any Person a participation
interest in the Loan, at any time without the consent of Maker.
(k) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by
or on behalf of Maker shall bind its successors and assigns and
shall be for the benefit of Lender and its successors and
assigns, whether so expressed or not.
(l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, 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 10.8 OF THE LOAN
AGREEMENT OR OTHERWISE.
(m) Time of the Essence. Time shall be of the essence
in this Note with respect to all of Maker's obligations
hereunder.
(n) INTEGRATION. THIS NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.
MAKER:
AMRESCO, INC., a Delaware corporation
By:_____________________________________
Barry L. Edwards,
Executive Vice President
AMENDED AND RESTATED PROMISSORY NOTE
$75,000,000.00 Dallas, Texas June 13, 1995
FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation
("Maker"), hereby promises to pay to the order of NATIONSBANK OF
TEXAS, N.A., a national banking association ("Lender"), at its
banking house in the City of Dallas, Dallas County, Texas, or at
such other address in Dallas County, Texas, given to Maker by
Lender, the principal sum of Seventy-five Million and No/100
Dollars ($75,000,000.00), or so much thereof as may be advanced
and outstanding, together with interest, as hereinafter
described.
This Amended and Restated Note has been executed and
delivered pursuant to the terms of that certain Revolving Credit
Loan Agreement (as modified and amended, the "Loan Agreement")
dated November 2, 1994, executed by and between Maker and Lender,
as modified and amended by that certain First Amendment To Credit
Agreement (the "Amendment"), dated the date hereof, by and
between Maker and Lender. This Note is the note defined in the
Loan Agreement as the "Note", the terms and provisions of the
Loan Agreement related to this Note being incorporated herein by
reference for all purposes. This Note increases, amends and
restates in its entirety that certain Promissory Note, dated
November 2, 1994, in the stated amount of Fifty Million and
No/100 Dollars ($50,000,000.00) executed by Maker, payable to
Lender. Each capitalized term not expressly defined herein shall
have the meaning given to such term under the Loan Agreement.
Lender is entitled to the benefits of and security provided
for in the Loan Agreement, including, without limitation, all
liens and security interests arising under the Loan Agreement,
the Pledge Agreements, the Subsidiary Guaranties and any other
Loan Documents securing the Obligations.
1. Interest and Payment.
(a) Maturity. A portion of the principal of this Note
shall be due and payable as required by Section 3.6 of the Loan
Agreement, and the remaining outstanding balance hereof and all
accrued but unpaid interest hereon shall be due and payable in
full on the Termination Date.
(b) Accrual of Interest. Prior to the occurrence of
an Event of Default, interest on this Note shall accrue at a rate
per annum equal to the lesser of (1) at Maker's option, the
Variable Rate or the Adjusted LIBOR Rate, subject, however, to
the provisions of Section 10.8 of the Loan Agreement (the
"Applicable Rate"), or (2) 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; and
provided that in the absence of an effective election of or
conversion to the Adjusted LIBOR Rate in accordance with this
Section 1 and Section 3.5 of the Loan Agreement, this Note shall
bear interest prior to the occurrence of an Event of Default at
the lesser of (i) the Variable Rate or (ii) the Maximum Lawful
Rate. Interest on this Note shall be calculated at a daily rate
equal to 1/360 of the annual percentage rate which this Note
bears, subject to the provisions hereof limiting interest to the
Maximum Lawful Rate. Without notice to Maker or any other
Person, 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 the Maximum Lawful Rate, respectively,
fluctuate, subject always to limitations contained in this Note.
(c) Agreements Concerning Pricing Election. Reference
should be made to the provisions of Sections 3.3 and 3.5 of the
Loan Agreement concerning the terms, manner and agreements
related to the interest rate elections available to Maker under
this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in
Sections 3.4, 3.5 and 3.6 of the Loan Agreement.
(e) Costs Due to Regulatory Changes. Maker shall
indemnify Lender against and reimburse Lender for increased costs
to Lender, as a result of any Regulatory Change, in the
maintaining of any LIBOR Rate Portion. 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.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal
balance of this Note shall, at the option of Lender, bear
interest at the Default Rate. Any past due principal, and to the
extent permitted by law, past due interest on the Loan 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.
2. Default. The occurrence of a Default or an Event of
Default, as defined in the Loan Agreement, shall constitute,
respectively, a Default or an Event of Default under this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of an
Event of Default, the holder hereof shall have the right to
declare the unpaid principal balance of and accrued but unpaid
interest on this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable), to
foreclose any liens and security interests securing payment
hereof, to offset against this Note any sum or sums owed by it to
Maker and to exercise any of its other rights, powers and
remedies under this Note, under any other Loan Document, or at
law or in equity.
(b) No Waiver. Neither the failure by the holder
hereof to exercise, nor delay by the holder hereof in exercising,
the right to accelerate the maturity of this Note or any other
right, power or remedy upon any Default or Event of Default shall
be construed as a waiver of such Default or Event of Default or
as a waiver of the right to exercise any such right, power or
remedy at any time. No single or partial exercise by the holder
hereof of any right, power or remedy shall exhaust the same or
shall preclude any other or further exercise thereof, and every
such right, power or remedy may be exercised at any time and from
time to time. All rights and remedies provided for in this Note
and in any other Loan Document are cumulative of each other and
of any and all other rights and remedies existing at law or in
equity, and the holder hereof shall, in addition to the rights
and remedies provided herein or in any other Loan Document, be
entitled to avail itself of all such other rights and remedies as
may now or hereafter exist at law or in equity for the collection
of the indebtedness owing hereunder, and the resort to any right
or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in equity shall not prevent
the concurrent or subsequent employment of any other appropriate
rights or remedies. Without limiting the generality of the
foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or
which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not (i) constitute a
waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other
right, power or remedy at the time or at any subsequent time, or
nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment
and performance, or a novation in any respect.
4. Usury Savings Provisions.
(a) General Limitation. Notwithstanding anything
herein or in any other Loan Documents, expressed or implied, to
the contrary, in no event shall any interest rate charged
hereunder or under any of the other Loan Documents, or any
interest contracted for, collected or received by Lender, exceed
the Maximum Lawful Rate.
(b) Intent of Parties. It is expressly stipulated and
agreed to be the intent of Maker and Lender at all times to
comply with the applicable law governing the maximum rate or
amount of interest payable on or in connection with this Note.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to this Note, or if
acceleration of the maturity of this Note, any prepayment by
Maker, or any other circumstance whatsoever, results in Lender
having been paid any interest in excess of that permitted by
applicable law, then it is the express intent of Maker and Lender
that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if this Note
has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note 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 this Note
does not include the right to accelerate any interest which has
not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the
event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document 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. 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 Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law. The
provisions of this paragraph shall control all agreements between
Maker and Lender.
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on
which such payment is due shall be extended to the next
succeeding Business Day, and such extension of time shall be
included in the computation of the amount of interest then
payable.
(b) Manner of Payment. The manner in which payments
are to be made on this Note shall be governed by the provisions
hereof and the Loan Agreement, including, without limitation,
Section 3.8 of the Loan Agreement.
(c) Prepayments. Prepayments may be made on this Note
subject to and in accordance with Section 3.6 of the Loan
Agreement.
(d) Application of Payments. All payments made on
this Note as scheduled shall be applied, to the extent thereof,
first to accrued but unpaid interest and the balance to unpaid
principal. Nothing herein shall limit or impair any rights of
any holder hereof to apply as provided in the Loan Documents any
past due payments, any proceeds from the disposition of any
collateral by foreclosure or other collections after default.
Except to the extent specific provisions are set forth in this
Note or another Loan Document with respect to application of
payments, all payments received by the holder hereof shall be
applied, to the extent thereof, to the indebtedness owing by
Maker to the holder hereof in such order and manner as the holder
hereof shall deem appropriate, any instructions from Maker or
anyone else to the contrary notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity
or to collect, enforce or defend this Note or any other Loan
Document in any lawsuit or in any probate, reorganization,
bankruptcy or other proceeding, or if Maker sues any holder of
this Note in connection with this Note or any other Loan Document
and does not prevail, then Maker agrees to pay to each such
holder, in addition to principal and interest, all costs and
expenses incurred by such holder in trying to collect this Note
or in any such suit or proceeding, including attorneys' fees.
(f) Waivers and Acknowledgments. Maker and all
sureties, endorsers, guarantors and any other party now or
hereafter liable for the payment of this Note in whole or in
part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notice (except only for any notices which are specifically
required by this Note or any other Loan Document), filing of suit
and diligence in collecting this Note or enforcing any of the
security herefor; (ii) agree to any substitution, subordination,
exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (iii) agree that
the holder hereof shall not be required first to institute suit
or exhaust its remedies against Maker or others liable or to
become liable hereon or to enforce its rights against them or any
security herefor; (iv) consent to any extension or postponement
of time of payment of this Note for any period or periods of time
and to any partial payments, before or after maturity, and to any
other indulgences with respect hereto, without notice thereof to
any of them; and (v) submit (and waive all rights to object) to
personal jurisdiction in the State of Texas, and venue in Dallas
County, Texas, for the enforcement of any and all obligations
under the Loan Documents.
(g) Amendments in Writing. This Note may not be
changed, amended or modified except in a writing expressly
intended for such purpose and executed by the party against whom
enforcement of the change, amendment or modification is sought.
(h) Purpose of Proceeds. The proceeds of this Note
will be used solely for business purposes and not for personal,
family, household or agricultural purposes.
(i) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as
provided in Section 10.2 of the Loan Agreement.
(j) Assignments/Participations. Maker acknowledges
and agrees that the holder of this Note may, at any time and from
time to time, sell or transfer to any Person a participation
interest in the Loan, at any time without the consent of Maker.
(k) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by
or on behalf of Maker shall bind its successors and assigns and
shall be for the benefit of Lender and its successors and
assigns, whether so expressed or not.
(l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, 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 10.8 OF THE LOAN
AGREEMENT OR OTHERWISE.
(m) Time of the Essence. Time shall be of the essence
in this Note with respect to all of Maker's obligations
hereunder.
(n) INTEGRATION. THIS NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.
MAKER:
AMRESCO, INC., a Delaware corporation
By:_____________________________________
Barry L. Edwards,
Executive Vice President
TERM LOAN
AGREEMENT Dated as of
July 18, 1995
among
AMRESCO NEW ENGLAND,
INC., OAK CLIFF
FINANCIAL, INC. THE
LENDERS LISTED
HEREIN
and
HELLER FINANCIAL,
INC. as
Agent
TABLE OF CONTENTS
Page ARTICLE I TERMS DEFINED
1.1 Definitions 1
1.2 Number and Gender 18
1.3 Substantive Definitions 18
1.4 Money 19
1.5 Captions; References 19
1.6 Accounting Terms and Determinations 19
ARTICLE II COMMITMENT
2.1 Commitment 19
2.2 Commitment Fees 19
2.3 Sources and Uses 20
ARTICLE III LOAN TERMS
3.1 Notes 20
3.2 Maturity 20
3.3 Interest Rate; LIBOR Election 20
3.4 Interest Payments 22
3.5 Mandatory Principal Payments 22
3.6 Voluntary Prepayments on the Loan 23
3.7 Schedules on Notes 25
3.8 General Provisions as to Payments 25
3.9 Application of Payments to the Lenders 25
3.10 Application of Payments to the Loan 25
3.11 PostDefault Interest; Past Due
Principal and Interest 26
3.12 Maximum Lawful Rate Adjustments 26
3.13 Computation of Interest and Fees 26
3.14 Security 26
3.15 Capital Adequacy; LIBOR Costs 27
3.16 Inability to Determine LIBOR Rate 27
3.17 Intentionally Omitted 27
3.18 LIBOR Rate UnlawfuL 27
3.19 Increased Costs 28
3.20 Assumptions Concerning LIBOR Tranche 29
ARTICLE IV COLLATERAL REQUIREMENTS
4.1 Requirements For Assigned Loans 29
4.2 Requirements for Mortgaged Properties 30
4.3 Recordation of Mortgages 30
4.4 Assignment of Collateral Sales Receivables 31
4.5 Agent's Discretion 31
ARTICLE V CONDITIONS TO FUNDING
5.1 Conditions 32
ARTICLE VI REPRESENTATIONS AND WARRANTIES
6.1 Existence and Power of Borrower 34
6.2 Authorization, Contravention 34
6.3 Enforceable Obligations 34
6.4 Financial Information 34
6.5 Litigation 35
6.6 ERISA 35
6.7 Taxes and Filing of Tax Returns 35
6.8 Title to Properties; Liens; Ownership 36
6.9 Business; Compliance 37
6.10 Licenses, Permits 37
6.11 Compliance with Law 37
6.12 Full Disclosure 37
6.13 Environmental Matters 37
6.14 Purpose of Credit 38
6.15 Governmental Regulations 39
6.16 Indebtedness 39
6.17 Insurance 39
6.18 Solvency 39
6.19 Pool Purchase Agreements 39
6.20 No Casualty or Condemnation 39
6.21 Access to the Properties 40
6.22 No Flood Zone 40
6.23 Participations 40
6.24 No Future Funding Obligations 40
ARTICLE VII AFFIRMATIVE COVENANTS
7.1 Information From Borrower 40
7.2 Business of Borrower 43
7.3 Right of Inspection 43
7.4 Maintenance of Insurance 44
7.5 Payment of Taxes, Impositions and Claims 44
7.6 Compliance with Laws and Documents 45
7.7 Agreements Related to Selected Asset Pool 45
7.8 Environmental Law Compliance and Indemnity 46
7.9 Collateral Assignment of Sales Contracts 46
7.10 Assurance Related to Mortgaged Property 46
7.11 Appraisals 47
7.12 Payment on Taking or Destruction 47
7.13 Covenant Compliance 48
7.14 Intentionally Deleted 48
7.15 Subordinated Debt of AMRESCO 48
7.16 Quantity and Quality of Documents 48
7.17 Additional Documents 48
7.18 Acquisition of Properties 48
7.19 Borrower Buyout Option 49
7.20 Maintenance and Repair 50
7.21 Right to Audit 50
7.22 Custodian 50
7.23 Lockbox 50
7.24 Notices to Obligor 50
7.25 Breaches of Pool Purchase Agreements 51
7.26 Account Status Reports, Meetings with Agent
and/or the Lenders 51
ARTICLE VIII NEGATIVE COVENANTS
8.1 Limitation on Sale of Properties 51
8.2 Limitation on Debt 51
8.3 Limitations on Liens 51
8.4 Consolidations, Mergers, Sales of Assets and
Maintenance 52
8.5 Investments 52
8.6 Distributions 52
8.7 Changes in Business/Ownership 52
8.8 Limitation on Contingent Liabilities 52
8.9 Transactions with Affiliates 52
8.10 Employee Plans 52
8.11 Alterations 53
8.12 Use Violations 53
8.13 Retention of Remaining Cash Flow 53
8.14 Exceptions to Covenants 53
8.15 Fiscal Year and Accounting Methods 54
8.16 Governmental Regulations 54
8.17 Servicing of Selected Asset Pool 54
8.18 Restructures 54
8.19 Release Prices 55
8.20 Disclosure or Use of Heller Name; Loan Terms 55
ARTICLE IX RELEASES
9.1 Releases and Sale of Collateral Prior to Default 55
9.2 Request for Releases 55
9.3 Releases After Default 55
ARTICLE X DEFAULTS AND REMEDIES
10.1 Events of Default 56
10.2 Remedies 58
10.3 Separate Sales 60
10.4 Rights of Set-Off 60
10.5 Remedies Cumulative, Concurrent and Non-Exclusive 61
10.6 No Conditions Precedent to Exercise Remedies 61
10.7 Release of and Resort to Collateral 62
10.8 Waivers 62
10.9 Discontinuance of Proceedings 62
10.10 Power of Attorney 62
10.11 Application of Proceeds 63
10.12 Certain Defaults 64
ARTICLE XI AGENT AND THE LENDERS
11.1 Appointment and Authorization of Agent 65
11.2 Possession of Instruments by Agent 66
11.3 Expenses 67
11.4 Delegation of Duties; Reliance; Consultation 67
11.5 Limitation of Agent's Liability 68
11.6 Default; Collateral 69
11.7 Lenders' Decision 69
11.8 Limitation of Liability of Lenders 69
11.9 Relationship of Lenders 70
11.10 Debtor-Creditor Relationship 70
11.11 Credit Decisions 70
11.12 Removal of Agent 70
11.13 Resignation by Agent 71
11.14 Sharing of Payments and Setoffs 71
11.15 Non-advancing Lenders 72
11.16 Benefit of Lenders 73
ARTICLE XII MISCELLANEOUS
12.1 Continuing Agreement 73
12.2 Notices 73
12.3 No Waivers 74
12.4 Expenses; Documentary Taxes; Indemnification 75
12.5 Amendments and Waivers; Consent to Deviation 75
12.6 Survival 75
12.7 Prior Understandings; No Defenses; Release; No Oral
Agreements 76
12.8 Limitation on Interest 76
12.9 Invalid Provisions 76
12.10 Successors and Assigns 77
12.11 Lenders' Right To Perform Borrower's Obligations 81
12.12 Senior Debt 82
12.13 Construction 82
12.14 Inconsistent Provisions 82
12.15 APPLICABLE LAW 83
12.16 VENUE 83
12.17 JURY TRIAL WAIVER 83
12.18 Counterparts 84
12.19 Recourse 84
EXHIBITS
EXHIBIT A - MORTGAGE FORM
EXHIBIT B - MORTGAGE ASSIGNMENT FORM
EXHIBIT C - PROMISSORY NOTE FORM
EXHIBIT D - REQUEST FOR RELEASE FORM
EXHIBIT E - PAYMENT CALCULATION FORM
EXHIBIT F - ASSIGNMENT AND ACCEPTANCE FORM
EXHIBIT G - BORROWER CERTIFICATE FORM
EXHIBIT H - CASH FLOW STATEMENT FORM
EXHIBIT I - LITIGATION
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this "Agreement") is entered into
as of the 18th day of July, 1995, by and among AMRESCO NEW
ENGLAND, INC., a Delaware corporation, OAK CLIFF FINANCIAL,
INC., a Delaware corporation, and HELLER FINANCIAL, INC., a
Delaware corporation, for itself and as Agent, and the other
lending institutions which may become parties hereto
pursuant to Section 12.10.
PRELIMINARY STATEMENT
Borrower has requested that the Lenders make a
term loan to Borrower in an amount up to Twenty-Seven
Million Five Hundred Thousand and No/100 Dollars
($27,500,000.00). Upon and subject to the terms of this
Agreement, the Lenders are willing to make the term loan to
Borrower. Accordingly, in
consideration of the mutual covenants contained
herein, Borrower, Agent and the Lenders agree as
follows:
ARTICLE I
TERMS DEFINED
1.1 Definitions. The following terms, as
used herein, have the following meanings:
"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 and, with respect to Borrower,
includes each holder of five percent (5%) or more of the
equity of Borrower. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power (i) to vote
more than fifty percent (50%) of the securities having
ordinary voting power for the election of directors of the
controlled Person, or (ii) 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 Heller, in its capacity as agent for the
Lenders hereunder, or any successor agent pursuant to
Section 11.12 or Section 11.13.
"Agreement" means this Term Loan Agreement, and
all renewals, extensions, modifications, amendments and
rearrangements thereof.
"AMRESCO" means AMRESCO, INC., a Delaware
corporation, that owns one hundred percent (100%) of the
capital stock of Borrower.
"Adjusted LIBOR Rate" means, on any date of determination
for the relevant Interest Period with respect to a LIBOR
Tranche, (a) 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 Reuters
Screen LIBOR Page 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 ("Interest Rate Determination Date");
provided, further, that if fewer than two offered rates
appear or if Reuters ceases to provide LIBOR quotations,
such rate shall be the rate of interest at which deposits in
Dollars are offered for the relevant Interest Period by any
of Bankers Trust Company, The Chase Manhattan Bank, National
Association or Chemical Bank to first class banks in the
London interbank market as of 11:00 a.m. (London time) on
the applicable Interest Rate Determination Date, divided by,
(b) a number equal to 1.0 minus LIBOR Reserve Requirement
in effect on the
Interest Rate Determination Date plus, as applicable, (c)
the FDIC Percentage in effect on such day, together with any
additional impositions, assessments, fees or surcharges that
may be imposed on Agent or any Lender, 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
capitalizations and supervisory risk factors comparable to
Bankers Trust Company, the Chase Manhattan Bank or Chemical
Bank.
"Applicable Environmental Laws" has the meaning
set forth in that certain Hazardous Substance
Indemnification Agreement of even date herewith executed by
Borrower in favor
of Agent and the Lenders.
"Appraisal" means an appraisal stating the
appraised value of all or a part of the Mortgaged Property
prepared by an appraiser independent of Borrower and all
Affiliates of Borrower and acceptable to Agent, which
appraisal satisfies all regulatory requirements applicable
to Agent and the Loan.
"Asset Portfolios" means one or more pools or
portfolios of (i) non-performing, under-performing or
performing loans, and/or (ii) real estate or other assets
acquired in
connection with the foreclosure, restructure or settlement
of nonperforming or under-performing loans, together with
all documents, instruments, certificates and other
information related thereto.
"Assigned Loan Documents" means the documents
evidencing and securing the Assigned Loans.
"Assigned Loans" means the loans and mortgages
included in the Selected Asset Pool, whether or not such
loans and mortgages have been properly assigned to Agent for
the Lenders as collateral for the Loan.
"Assignment and Acceptance" has the meaning set
forth in Section 12.10(c)(iv) hereof.
"Authorized Officer" means, as to Borrower or any
other Person, any of its Chairman, Vice-Chairman, President,
Executive Vice President(s), Senior Vice President(s), Chief
Financial Officer, Chief Accounting Officer or Treasurer, or
if such other Person is a partnership, its managing general
partner or any other general partner, who are duly
authorized by the Board of Directors, or applicable
partnership agreement, 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 the
Loan.
"Base Rate" means, on any date of determination, a
variable rate of interest per annum equal to the higher of:
(i) the rate of interest from time to time published by the
Wall Street Journal under the caption "Money Rates, Prime
Rate" or (ii) the Federal Funds Effective Rate. The
applicable Base Rate for any date not set forth shall be the
prime rate set forth for the last preceding date. In the
event the Wall Street Journal ceases to publish a Bank Prime
Loan rate or equivalent, the term "Base Rate" shall mean a
variable rate of interest per annum equal to the highest of
the "prime rate," "reference rate," "base rate" or other
similar rate announced from time to time by any of Bankers
Trust Company, The Chase Manhattan Bank, National
Association or Chemical Bank (with the understanding that
any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually
charged to any customer by such bank).
"Borrower" means, jointly and severally, AMRESCO
New England, Inc., a Delaware corporation, and Oak Cliff
Financial, Inc., a Delaware corporation, and their
respective successors. Unless the context otherwise requires
or unless specifically stated, "Borrower" means each
Borrower individually and Borrowers collectively.
"Borrower Due Diligence Reports" means the various
written reports, information and other materials that
Borrower
prepared or assembled and delivered to Agent prior to the
Closing Date containing descriptions and evaluations of the
Assigned Loans and Mortgaged Properties, and Borrower's
assessments and projections regarding same, or other
information regarding the Assigned Loans and the Mortgaged
Property, including copies of the Pool Purchase Agreements,
copies of any appraisals or environmental site assessments,
and the "Round Table" books for each loan portfolio
summarizing Borrower's due diligence regarding the Assigned
Loans and the Mortgaged Property acquired pursuant to each
of the Pool Purchase Agreements.
"Business Day" means (a) for all purposes other
than as covered by clause (b) below, any day excluding
Saturday, Sunday and any day which is a legal holiday under
the laws of the State of Illinois, or is a day on which
banking institutions located in Illinois are closed, and (b)
with respect to all notices, determinations, fundings and
payments in connection with Loans bearing interest at the
LIBOR Rate, any day that is a Business Day described in
clause (a) above and that is also a day for trading by and
between banks in Dollar deposits in the applicable interbank
LIBOR market.
"Business Plan" means Borrower's business plan for
servicing and disposition of the Assigned Loans, which
business plan shall be in form and substance approved by
Agent, which approval will not be unreasonably withheld,
provided that until the Business Plan with respect to the
Assigned Loans are delivered pursuant to Section 7.1(d),
Business Plan shall mean the Borrower Due Diligence Reports.
"Capital Lease" means any capital lease or
sublease which should be capitalized in accordance with GAAP
on a balance sheet.
"CERCLA" has the meaning set forth in that certain
Hazardous Substance Indemnification Agreement of even date
herewith executed by Borrower in favor of Agent and the
Lenders.
"Closing Date" means the effective date 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 Loan pursuant to this
Agreement or any of the Security Documents or other Loan
Documents.
"Collateral Assignment" means the collateral
assignment of promissory notes and liens and, collectively,
all collateral assignments of promissory notes and liens,
executed by Borrower in favor of Agent, on behalf and for
the benefit of the Lenders, as security for the Loan, which
collateral assignment is intended to cover all of the
Assigned Loans, and all renewals, modifications, amendments,
supplements and restatements thereof.
"Collateral Sales Receivables" means the amounts
payable in cash to Borrower (exclusive of all closing costs)
in connection with the sale of any portion of the assets
included in the Selected Asset Pool.
"Commitment Fee" means Two Hundred Seventy
Thousand Eight Hundred Ninety-Seven and 70/100 Dollars
($270,897.70).
"Credit Period" means the period commencing on
the Closing Date and ending on the Termination Date.
"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 nonrecourse 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 obligations for
indebtedness in respect of Guarantees by such Person, (e)
the unfunded or unreimbursed portion of all letters of
credit issued for the account of such Person, and (f) all
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 (e) 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%) 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 ne worth of its bank holding
company.
"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 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 mean and refer
to currency of the United States of America.
"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 which invests in
United States real estate loans and/or
mortgages as a significant part of its investment
portfolio; 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
$10 billion and unless debt obligations issued by such
financial institution (or by a parent entity owning
beneficially all of the capital stock of such financial
institution) are rated "Ba2" or higher by Moody's Investors
Service, Inc. or "BB" or higher by standard & Poor's
Corporation; 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.
"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 Borrower or any ERISA Affiliate of 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 it
treated as a single employer with Borrower under Section
414 of the Code.
"Event of Default" has the meaning set forth in
Section 10.1.
"Excess Interest" has the meaning set forth in
Section 12.8 hereof.
"Federal Funds Effective Rate" means, for any
day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on
the immediately following Business Day by the Federal
Reserve Bank of New York or, if such rate is not published
for any Business Day, the average of the quotations for the
day of the requested Loan received by Agent from three (3)
Federal funds brokers of recognized standing selected by Agent.
"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 in
Chicago, Illinois. Each determination of said percentage
made by Agent shall, in the absence of manifest error, be
binding and conclusive.
"Fiscal Year" means any fiscal year of Borrower
commencing on January 1 and ending on December 31.
"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
arrangement 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.
"Heller" means Heller Financial, Inc., a Delaware
corporation, and its successors.
"Impositions" means all real estate and personal
property taxes; charges for any easement, license or
agreement maintained for the benefit of the Mortgaged
Property or the Underlying Real Estate, 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 Mortgaged
Property or the Underlying Real Estate, 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, (b) the Lenders' Liens with respect to such
Mortgaged Property or the Assigned Loans or (c) the
financial condition of Borrower.
"Interest Adjustment Date" means the earlier of
either the last day of an Interest Period or the
Termination Date.
"Interest Period" means, subject to the
limitations set forth in Section 3.3(d), with respect to
any LIBOR Tranche, a period commencing on the LIBOR
Effective Date and ending on the numerically corresponding
day in the calendar month that is one, two, three or six
months thereafter, as Borrower may request in the Minimum
Notice Requirement.
"Investment Balance" means, with respect to each
Assigned Loan or Mortgaged Property, as the case may be,
the
allocated Purchase Price for each Assigned Loan or
Mortgaged Property, as the case may be (as set forth in the
related Pool Purchase Agreement, or if no specific
allocation was made in such Pool Purchase Agreement, as
determined on a pro rata basis with respect to that
portfolio purchase unless Agent approves a different
allocation), plus specific advances and expenses with
respect to such Assigned Loan or Mortgaged Property, less
any payments of principal and interest received with
respect to such Assigned Loan or Mortgaged Property, as the
case may be. With respect to Mortgaged Properties, the
Investment Balance will be deemed to be the lower of (a)
the remaining Investment Balance for the Assigned Loan with
respect to which such
Mortgaged Property was Underlying Real Estate and (b) fair
market value of such Mortgaged Property, in accordance with
GAAP.
"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 Borrower, any of the Mortgaged
Property or the Underlying Real Estate, or any other
Collateral, including the ownership, use, occupancy,
possession, operation, maintenance, alteration, repair or
reconstruction thereof, (b) the presently or subsequently
effective bylaws and articles of incorporation and any
partnership, limited partnership, joint venture, trust or
other form of business association agreement of 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
the Mortgaged Property the Underlying Real Estate or any
other Collateral, or any portion thereof, or to which
Borrower may be bound, including without limitation, any
lease pursuant to which Borrower is granted a possessory
interest in any Mortgaged Property, and in each case which,
if violated, could reasonably be anticipated to materially
and adversely affect (i) the present or potential
ownership, use, sale, occupancy or possession of the
Mortgaged Property, the Underlying Real Estate or any other
Collateral or any part thereof, by Borrower, (ii) the
Lenders' Liens or (iii) the financial condition of
Borrower.
"Lender" means Heller and any other Person who becomes an
assignee of any rights of a Lender pursuant to Section
12.10.
"Lenders' Liens" means all liens, mortgages,
security interests, charges, pledges or encumbrances
evidenced, created or intended to be created by the Loan
Documents.
"LIBOR Effective Date" has the meaning set forth
in Section 3.3(c) hereof.
"LIBOR Rate" means the sum of (a) the Adjusted
LIBOR Rate, plus (b) three percent (3%).
"LIBOR Reserve Requirement" means, 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 applicable
other category of liabilities which includes deposits by
reference to which the interest rate on a LIBOR Tranche is
determined). Each determination by Agent of the LIBOR
Reserve Requirement, shall, in the absence of manifest
error, be conclusive and binding.
"LIBOR Tranche" means that portion or those
portions of the Loan, if any, which bear interest at the
LIBOR Rate from time to time.
"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" means the term loan made by the Lenders to
Borrower pursuant to this Agreement, in an original
principal amount not to exceed Twenty-Seven Million Five
Hundred Thousand and No/100 Dollars ($27,500,000.00),
bearing interest and being payable as provided in Article
III.
"Loan Amount" means, with respect to each Lender,
the amount indicated as such Lender's Loan Amount opposite
the name of such Lender in Schedule I, as such amount (i)
may be reduced from time to time as payments are applied to
the Loan in accordance with the provisions of this
Agreement, or (ii) may be adjusted from time to time to
account for any assignments of a Lender's interest as
provided in Section 11.14 or Section 12.10.
"Loan Documents" means this Agreement, the Notes,
the Collateral Assignment, the Mortgages, all related
financing statements, and all other agreements, statements,
certificates, documents or instruments evidencing, securing
or pertaining to the Loan or otherwise executed and/or
delivered from time to time by Borrower 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 in 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 11.14 or Section 12.10.
"Major Assets" means the Selected Pool Assets
listed on Schedule V and identified as Tier One Assets.
"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 Loan at such
time
to exceed the maximum amount which the 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
Document. 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 Loan, there shall
be no Maximum Lawful Rate, notwithstanding any reference
thereto herein or in any of the Loan Documents.
"Minimum Cash Flow Payment" means for each of the
Quarterly Payment Dates shown on Schedule II the amount, if
any, required to reduce the outstanding principal balance
of the Loan as of such Quarterly Payment Date to the Loan
principal balance shown opposite such Quarterly Payment
Date on Schedule II.
"Minimum Notice Requirement" has the meaning set
forth in Section 3.3(b).
"Minimum Release Price" means with respect to
each Assigned Loan or Mortgaged Property as of the date of
determination eighty percent (80%) of the then current
Investment Balance in such Assigned Loan or Mortgaged
Property.
"Mortgage" means any deed of trust or mortgage
executed by Borrower, granted to Agent, for the benefit of
the Lenders, to secure repayment of the Loan and the
Obligations, substantially in the form attached hereto as
Exhibit A (with appropriate modifications required by
applicable local law), 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.
"Mortgage Assignment" means an absolute
assignment of note and mortgage and any other security for
each of the Assigned Loans, executed by Borrower to Agent,
for the benefit of the Lenders, substantially in the form
attached hereto as Exhibit B.
"Mortgaged Property or Mortgaged Properties"
means any and all lots or parcels of land which Borrower
owns on the Closing Date or any Underlying Real Estate
which Borrower may hereafter own as a result of a
foreclosure or deed-inlieu 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 Loan Agreement" means that certain
Term Loan Agreement dated as of March 20, 1995 among
Amresco New England, Inc., NationsBank of Texas, N.A., as
Agent and the lenders described therein, the loans with
respect to which are being repaid with a portion of the
proceeds of the Loan.
"Net Cash Flow" for any calendar month means an
amount
equal to (a) Portfolio Cash Flow during such month, minus
(b) the sum of (i) interest paid on the Loan, (ii) expenses
incurred and paid by 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 Selected Asset Pool (including without limitation any
advances of committed principal that Borrower is legally
required to make under any of the Assigned Loans which were
disclosed in the Borrower Due Diligence Reports), and (iii)
reasonable and necessary cash expenditures for Borrower's
administrative overhead, (including without limitation
reasonable legal fees of Borrower's internal counsel
related to assets in the Selected Asset Pool); provided
that, (x) the aggregate expenses described in clause (iii)
less the fees of the loan servicer shall not unless
otherwise approved by Lender, exceed the amounts set forth
in the Overhead Plan on a calendar year basis
and (y) Portfolio Cash Flow shall not be reduced by (1) any
disbursements by Borrower of any tax or insurance escrows
held for the Assigned Loans, or (2) any Shortfall Payments
or Permitted Working Capital Subordinated Debt, the
Subordinated Note, or any payments thereon, for purposes of
determining Net Cash Flow. Net Cash Flow shall not include
insurance or condemnation proceeds if such proceeds are
required by the Assigned Loan Documents or permitted by
Lender to be used for repair or restoration of a Mortgaged
Property or Underlying Real Estate.
"Note" means the promissory note of even date herewith, in
a stated principal amount not to exceed Twenty-Seven
Million Five Hundred Thousand and No/100 Dollars
($27,500,000.00), executed by Borrower and payable to the
order of Heller, substantially in the form attached hereto
as Exhibit C, and all renewals, extensions, modifications
and rearrangements thereof, and any and all promissory
notes given in renewal, extension, modification,
rearrangement or replacement thereof; and "Notes" includes
the Note and/or all of the promissory notes which may be
issued in replacement of the Note or subsequent Notes
pursuant to Section 12.10 hereof. "Obligations" means all
present and future indebtedness, obligations and
liabilities, or any part thereof, of 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: (i) all interest accrued
thereon; (ii) all reasonable costs, expenses, and
attorneys' fees of counsel to Agent and the Lenders (as a
group) and of counsel to any Lender (subject to the
limitations set forth in Section 12.4), 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 Borrower); (iii) the
reimbursement and payment of all sums which might be
advanced by the Lenders or any Lender to pay or satisfy
amounts required to be paid by 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 Loan or any amounts which
might be advanced by the Lenders or any Lender to pay any
taxes, insurance premiums, liens, assignments, charges or
claims against any or all of the collateral, or any
properties covered by any instrument executed or to be
executed by Borrower to secure any part of the Obligations;
and (iv) 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.
"Obligors" means collectively, each of the makers
of
the notes evidencing the Assigned Loans and all other
persons liable directly or as guarantors or sureties under
the Assigned Loan Documents.
"Overhead Plan" means Borrower's plan for the
calendar year that projects the overhead expenses which are
charged to Borrowers, including, without limitation, direct
expenses for personnel, occupancy, furniture and equipment,
data processing, telecommunications, supplies,
postage/courier, general liability insurance, travel,
marketing, subscriptions and other similar expenses, plus a
reasonable allocation of corporation overhead on a monthly
basis.
"PBGC" means the Pension Benefit Guaranty
Corporation, or its successors.
"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.
"Permitted Encumbrances" means with respect to any
asset in the Selected Asset Pool 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 approved by Agent or are described
with
respect to a particular Assigned Loan, Mortgaged
Property or parcel of the Underlying Real Estate in
the Borrower's 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 and do not materially impair
the value of such Mortgaged Property;
(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 Borrower in good faith and
for which 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) the claim
giving rise to such lien is being contested
by Borrower in good faith and for which 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 Borrower as permitted by and in
accordance with the terms and conditions set forth in
Section 7.5.
"Permitted Investments" means (i) time deposits
or certificates of deposit in financial institutions
approved by Agent, (ii) obligations backed by the full
faith, and credit of the United States of America, (iii)
commercial paper rated P-l by Moody's Investors Service,
Inc. or A-1 by Standard & Poor's Corporation on the date of
acquisition and (iv) the Selected Asset Pool.
"Permitted Shortfall Payments" has the meaning
set forth in Section 7.15 hereof.
"Permitted Subordinated Debt" means (a) the
amounts received by Borrower from AMRESCO for Shortfall
Payments which are accounted for by Borrower as
indebtedness, (b) Permitted Working Capital Subordinated
Debt, and (c) the indebtedness evidenced by the Subordinate
Note, all of which indebtedness is subordinate to the
Obligations and shall be subordinated to payment of the
Obligations in form satisfactory to Agent.
"Permitted Working Capital Subordinated Debt"
means amounts received by Borrower from AMRESCO in any
given month and accounted for by Borrower as indebtedness,
which amounts are used by Borrower to pay expenses related
to Borrower's ownership and management of the Selected
Asset Pool and administrative expenses required to be paid
during such month, such amounts so advanced by AMRESCO to
be shown on the monthly report to be submitted to Agent in
the form attached hereto as Exhibit E and delivered to
Agent by Borrower pursuant to Section 3.5 hereof.
"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.
"Pool Purchase Agreements" means the agreements
for the purchase and sale of Asset Portfolios described on
Schedule III executed by Borrower and the respective
Portfolio Sellers designated thereon, pursuant to which
Borrower acquired all the assets comprising the Selected
Asset Pool.
"Portfolio Cash Flow" means any and all cash
proceeds received by Borrower from its ownership,
management and disposition of any and all assets in the
Selected Asset Pool, including, without limitation,
interest and principal payments on Assigned 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 Assigned Loans,
proceeds from the sale of Assigned Loans, income from any
Mortgaged Property, insurance proceeds or condemnation
awards with respect to any Mortgaged Property, and proceeds
from the sale of Mortgaged Property, but excluding any
escrow deposits paid to Borrower for tax or insurance
escrows under the Assigned Loans or security or cash
collateral deposits (unless forfeited to Borrower) and all
proceeds from any Repurchase Payments received by Borrower
and paid to the Lenders pursuant to Section 3.5(b)
"Portfolio Seller" means each of the respective
sellers under each of the Pool Purchase Agreements as
designated on Schedule III.
"Pro Rata Part" means, at any time and as to each
Lender, the percentage of all outstanding indebtedness of
Borrower at such time owing to all the Lenders under the
Loan Documents that is owing by Borrower to such Lender.
"Quarterly Payment Date" means each of the dates
designated as a Quarterly Payment Date on Schedule II.
"Register" has the meaning set forth in Section
12.10(e) 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.
"Representatives" has the meaning set forth in
Section 11.4.
"Repurchase Payment" means the full proceeds
received by Borrower from any and all of the Portfolio
Sellers as a result of exercising Borrower's right to
require a Portfolio Seller to repurchase an asset included
in the Selected Asset Pool pursuant to the terms of any of
the Pool Purchase Agreements.
"Request For Release" means a Request For Release
in the form attached hereto as Exhibit D properly completed
and executed by Borrower.
"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 Loan, the
Lenders holding at the time in question at least
sixtysix and two-thirds percent (66-2/3%) of the
sum of the aggregate unpaid principal amount of
the Notes; and
(b) With respect to (i) any alteration of
the interest rate applicable to the Loan, or
(ii) any alteration of the amount of any fees
payable to the Lenders (excluding the Agent in
such capacity) under this Agreement, or (iii)
any extension of the maturity date of the Loan
or the due date of any installment of principal
or interest on the Loan, or (iv) forgiveness of
any principal or interest under the Loan, or (v)
any increase in the amount of the Loan, or (vi)
any change in the definition of Loan Percentage
or Pro Rata Part, or (vii) any alteration of the
provisions of this definition of Required
Lenders, all the Lenders.
"Required Principal Payments" has the meaning set
forth in Section 3.5 hereof.
"Restructure" has the meaning set forth in
Section 8.18 hereof.
"Rights" means rights, remedies, powers,
privileges and
benefits.
"SEC" means the federal Securities and Exchange
Commission, and its successors.
"Secured Creditor Safe Harbor" means the safe
harbor from environmental liability granted secured
creditors under CERCLA, as clarified and interpreted by
rules and regulations of the Environmental Protection
Agency and by case law and judicial decision, and any
similar legislation hereafter passed.
"Security Documents" means this Agreement with
respect to the assignment herein of Collateral Sales
Receivables and any other security granted herein, the
Collateral Assignment, 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 Loan, and all financing statements
related thereto, and all modifications, renewals or
extensions thereof and any documents executed in
modification, renewal, extension or replacement thereof.
"Selected Asset Pool" means all of the assets set
forth on Schedule V hereto acquired by Borrower from the
Portfolio Sellers pursuant to each of the Pool Purchase
Agreements and which have not been disposed of by Borrower
prior to the Closing Date or after the Closing Date as
contemplated and permitted by this Agreement and the other
Loan Documents.
"Shortfall Payment" means any payment made by
AMRESCO pursuant to Section 3.5 hereof, and Shortfall
Payments means the aggregate amount of such payments which
have, as of any date, not been repaid by Borrower.
"Status Reports" has the meaning set forth in
Section 7.1(c) hereof.
"Subordinate Note" means (i) that certain
promissory note dated August 26, 1994, from Amresco New
England, Inc., as maker, payable to the order of AMRESCO,
in the original principal amount of Twenty-Five Million and
No/100 Dollars ($25,000,000.00), which note shall have a
principal balance not in excess of Six Million and No/100
Dollars ($6,000,000.00) upon the funding of the Loan, (ii)
that certain promissory dated January 26, 1994, from Oak
Cliff Financial, Inc., as maker, payable to the order of
AMRESCO, in the original principal amount of Six Million
and No/100 Dollars ($6,000,000.00), which note shall have a
principal balance not in excess of Five Hundred Thousand
and No/100 Dollars ($500,000.00) upon the funding of the
Loan.
"Subsidiary" means, for any Person, 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. The term
Subsidiary shall include Subsidiaries of Subsidiaries (and
so on).
"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.
"Termination Date" means July 31, 1998.
"Title Company" means a title company or title
companies selected by Borrower and approved 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 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.
"UCC" means the Illinois Uniform Commercial Code,
as amended, or, if stated with reference to another
jurisdiction the Uniform Commercial Code as adopted in the
relevant
jurisdiction.
"Underling 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 plus one and one-half
percent (1.50%).
"Variable Rate Portion" means that portion of the
Loan which at the time in question bears interest at the
Variable Rate.
1.2 Number and Gender. 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. Words of any gender shall
include each other gender where appropriate.
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.
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.
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.
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
2.1 Commitment. Subject to and upon the terms,
covenants and conditions of this Agreement, Heller will
make the Loan to Borrower in one advance in an amount equal
to the lesser of (a) Twenty-Seven Million Five Hundred
Thousand and No/100 Dollars ($27,500,000.00) and (b) sixty-
five percent (65%) of Borrower's aggregate Investment
Balance of all of the assets comprising the Selected Asset
Pool on the Closing Date, with the Investment Balance for
such assets being determined as of July 1, 1995, minus One
Million Nine Hundred Thousand and No/100 Dollars
($1,900,000.00).
2.2 Commitment Fees. In consideration of the
commitment of Heller to make the Loan, Borrower shall pay
the Commitment Fee to Heller on the earlier of (a) ten (10)
days after the Loan is approved by Heller's credit
committee and (b) the Closing Date.
2.3 Sources and Uses. The sources and uses of
funds for closing the contemplated transaction are set
forth on Schedule VI.
ARTICLE III
LOAN TERMS
3.1 Notes. The Loan shall initially be
evidenced by the Note, which shall be executed by Borrower
and payable to the order of Heller. If any portion of the
Loan is hereafter assigned pursuant to Section 12.10, the
Loan shall be evidenced by separate promissory notes in the
same form as the Note, with each such Note payable to the
order of the applicable Lender in its Loan Amount.
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 Termination Date.
3.3 Interest Rate; LIBOR Election.
(a) Subject to Section 3.11, interest on the
Loan shall accrue at the rate per annum equal to
Borrower's option, (i) the Variable Rate or (ii) the
LIBOR Rate applicable to each LIBOR Tranche, subject
to the provisions hereof; provided, however, that as
to any portion of the outstanding principal balance of
the Loan that is not subject to an effective
election of or conversion to the LIBOR Rate in
accordance with the terms of this Agreement,
interest on such portion of the Loan shall
accrue at the Variable Rate. Without
notice to Borrower or any other Person, the
Variable Rate shall automatically fluctuate upward
and downward as and in the amount by which the Base
Rate fluctuates, subject always to limitations
contained in this Agreement.
(b) Upon at least two (2) Business Days' prior
written notice from Borrower to Agent (the "Minimum
Notice Requirement"), and subject to the conditions
provided in this Agreement, Borrower may, on any
date prior to the Termination Date, convert amounts
of not less than Two Hundred Thousand and No/100
Dollars ($200,000.00) (or any whole multiple of One
Hundred Thousand and No/100 Dollars ($100,000.00)
in excess thereof) of any Variable Rate Portion or
any expiring LIBOR Tranche into a LIBOR Tranche with interest
accruing thereon with reference to the LIBOR Rate
for the Interest Period selected in such notice.
(c) Each notice of a LIBOR Tranche election or
conversion by Borrower shall satisfy the Minimum
Notice Requirement, shall be irrevocable and shall
include the following: (i) Borrower's election of or
conversion to the LIBOR Rate; (ii) Borrower's choice
of an Interest Period during which the LIBOR Rate
will apply; (iii) Borrower's election of the
effective date (the "LIBOR Effective Date") on which
the LIBOR Tranche shall begin, which shall be a
Business Day at least two (2) Business Days after
delivery to Agent of such notice; and (iv) the
amount of the applicable LIBOR Tranche, which shall
be not less than Two Hundred Thousand and No/100
Dollars ($200,000.00) and in a whole multiple of One
Hundred Thousand and No/100 Dollars ($100,000.00).
(d) Borrower's election of or conversion to the
LIBOR Rate in all cases shall be subject to the
following conditions: (i) the Interest Period shall
be limited to a period commencing on the LIBOR
Effective Date and ending on a date either one, two,
three, or six months later as elected by Borrower in
its notice to Agent; (ii) Borrower's written notice
of an election shall be received by Agent in time to
satisfy the Minimum Notice Requirement; (iii) the
last day of the Interest Period will not be
subsequent in time to the Termination Date; (iv) in
the case of a continuation of an Interest Period,
the Interest Period applicable after such
continuation shall commence on the last day of the
preceding Interest Period; (iv) there shall never be
more than three (3) LIBOR Tranches, in the
aggregate, in effect at any one time under the Loan;
(v) no LIBOR Tranche election or conversion may be
made after the occurrence and during the continuance
of a Default or Event of Default; (vi) if an
Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day;
provided, that if any Interest Period would
otherwise expire on a day that is not a Business Day
but is a day of the month after which no further
Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business
Day; (vii) any Interest Period that begins on the
last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a
calendar month; and (viii) no Interest Period may
extend beyond a date
on which Borrower is required to make a scheduled payment
of principal of the Loans unless the sum of the Variable
Rate Portion plus LIBOR Tranches that have Interest
Periods expiring on or before such date equals or exceeds
the principal amount required to be paid on the Loans on
such date.
3.4 Interest Payments. Interest on the Loan,
computed as provided in Sections 3.12 and 12.8, shall be due
and payable as it accrues on the fifteenth (15th) day of each
month, for all interest accrued through the last day of the
immediately preceding calendar month, commencing on August 15,
1995, and continuing monthly thereafter until the maturity of
the Notes, with all accrued unpaid interest being due and
payable in full on the Termination Date, and on demand after
maturity so long as
any principal of the Notes remains unpaid.
3.5 Mandatory Principal Payments.
(a) On August 15, 1995, Borrower shall make a
principal payment on the Loan, which shall be in
addition to the monthly interest payment required
pursuant to Section 3.4 hereof, in an amount equal to
ninety percent (90%) of the difference between Net Cash
Flow for the immediately preceding calendar month less
One Million Nine Hundred Thousand Dollars ($1,900,000).
Commencing on September 15, 1995, and continuing
thereafter on the fifteenth (15th) day of each calendar
month until full and final payment of each of the Notes,
Borrower shall make a principal payment (individually, a
"Required Principal Payment", and collectively, the
"Required Principal Payments") on the Loan, which shall
be in addition to the monthly interest payment required
pursuant to Section 3.4 hereof, in an amount equal to (i)
on each such payment date other than a Quarterly Payment
Date, ninety percent (90%) of the Net Cash Flow for the
immediately preceding calendar month, and (ii) on each
Quarterly Payment Date, the greater of (A) ninety percent
(90%) of the Net Cash Flow for the immediately preceding
calendar month or (B) the Minimum Cash Flow Payment;
provided, however, that if an Event of Default is in
existence, the required payment amount in the preceding
clause (i) and clause (ii)(A) shall be equal to one
hundred percent (100%) of the Net Cash Flow for the
immediately preceding calendar month. If as of any
Quarterly Payment Date, the Net Cash Flow available for
the Required Principal Payment to be made as of such date
is less than the Minimum Cash Flow Payment required to be
made as of such date, then Borrower shall be entitled to
avoid a payment default under the Loan by borrowing or
otherwise receiving from AMRESCO an amount (the
"Shortfall-Payment") sufficient to pay such shortfall.
If as of any Quarterly Payment Date, the Net Cash Flow
available for the Required Principal Payment to be made
as of such date is greater than the Minimum Cash Flow
Payment required to be made as of such date, and no Event
of Default has occurred and no Default is in existence,
then Borrower shall be entitled one time during the
Credit Period to use such excess to repay the Shortfall
Payment, if any, received by Borrower from AMRESCO to
make the principal payment on the immediately preceding
Quarterly Payment Date, and the amount of the Required
Principal Payment due on the current Quarterly Payment
Date shall be correspondingly reduced by such amount, but
in no event less than the Minimum Cash Flow Payment due
on such Quarterly Payment Date.
(b) Borrower shall make additional principal payments
on the Loan on the fifteenth (15th) day of each calendar month
in an amount equal to the Repurchase Payments, if any,
received by Borrower during the
calendar month immediately preceding the applicable principal
payment date.
(c) Borrower shall deliver to Agent together with each
monthly principal payment a detailed explanation in the form
attached hereto as Exhibit E, showing Borrower's calculation
of the immediately preceding month's Net Cash Flow, any
Permitted Working Capital Subordinated Debt advanced by
AMRESCO during the preceding month, the applicable Required
Principal Payment, any Shortfall Payment or repayment by Borrower of a
Shortfall Payment, and any payment related to a
Repurchase Payment.
3.6 Voluntary Prepayments on the Loan.
(a) At any time, Borrower may, by notice to Agent prior
to 10:00 a.m. (Chicago, Illinois time) at least
one (1) Business Day prior to the date on which partial
prepayment of the Loan under this Section 3.6 is to be made
and at least three (3) Business Days prior to date on which
full prepayment of the Loan under this Section 3.6 is to be
made, prepay the Loan by paying the principal amount to be
prepaid. Any partial prepayment shall be in an amount which is
not less than Two Hundred Thousand and No/100 Dollars
($200,000.00) and is an integral multiple of One Hundred
Thousand and No/100 Dollars ($100,000.00). Each such optional
prepayment shall be applied ratably in accordance with Section
3.10 to pay the amounts owed to each Lender under the Loan.
(b) So long as no Event of Default shall then
exist, each such voluntary prepayment shall be applied (i)
first, to all costs and expenses then due and payable to Agent
or the Lenders hereunder or under the other Loan Documents,
(ii) second, to any past due accrued but unpaid interest owing
with respect to the Loan, and (iii) third, to the payment of
the unpaid principal balance of the Loan in the inverse order
of maturity (provided that any such principal prepayment shall
apply for purposes of determining the amount of each Minimum
Cash Flow Payment).
(c) Notwithstanding the foregoing, if Borrower shall
prepay any portion of a LIBOR Tranche prior to the expiration
of its applicable Interest Period, a prepayment fee shall be
due to Agent, for the Lenders, in an amount equal to 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 LIBOR Effective Date
and expressed as a decimal) on a U.S. Government Treasury bill
(a "Treasury Obligation") selected by Agent and having, as of
the applicable LIBOR 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 overthecounter quotations supplied to The Wall
Street Journal by the Federal Reserve Bank of New York City
based on transactions of One Million and No/100 Dollars
($1,000,000.00) or more.
(d) Borrower's election to make a voluntary
prepayment on the Loan under this Section 3.6 shall be
irrevocable once notice thereof has been given to Agent.
Any prepayment fee required to be paid by Borrower
pursuant to this Section 3.6 or any other provision of
this Agreement or of the other Loan Documents in
connection with the prepayment of any portion of a LIBOR
Tranche 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 a LIBOR Tranche or any part thereof due to
an Event of Default; provided, however, that if the
prepayment fee required to be paid by Borrower pursuant
to this Section 3.6 payable upon acceleration of maturity
of the Note constitutes interest under applicable law,
the amount of such prepayment fee, together with all
other amounts that constitute interest under applicable
law, will not exceed the
maximum amount of interest that may be lawfully charged
or received with respect to the Loan for the actual
period that the Loan is outstanding.
3.7 Schedules on Notes. Each Lender is hereby
authorized to record the date and amount of the initial
principal balance of its Note and the date and amount of each
repayment of principal on its Note, and to attach any such
recording as a schedule to its Note whereupon such schedule
shall constitute a part of its Note 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 Borrower
for the repayment of all amounts outstanding under the Notes
together with interest thereon.
3.8 General Provisions as to Payments. Borrower
shall make each payment of principal and interest on the Loan and
all fees payable hereunder or under any other Loan Document
not later than 12:00 noon (Chicago time) on the date when due,
in Federal or other funds immediately available in Chicago,
Illinois, 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 (Chicago, Illinois 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 as a
payment on its Note, such Lender's ratable share of each such
payment received by Agent for the account of the Lenders. For
purposes of calculating accrued interest on the Loan, any
payment received by Agent as aforesaid by 12:00 noon (Chicago,
Illinois 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 Loan, 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.
3.9 Application of Payments to the Lenders. All
payments made on the Loan and all proceeds realized from the
sale of any assets securing the Loan or the exercise of any
right of setoff hereunder shall be applied ratably to each
Lender in accordance with its Loan Percentage, subject to the
provisions of Sections 10.11 and Sections 11.14 and 11.15.
3.10 Application of Payments to the Loan. Except as
provided in Section 3.5, Section 10.11 and as otherwise
specifically provided in this Agreement or in any Loan
Document, all prepayments on the Loan shall be applied against
accrued but unpaid interest and then against the principal
portion of the Loan.
3.11 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
Loan 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 Loan
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.
3.12 Maximum Lawful Rate Adjustments. If at any time a
change in the Variable Rate or the LIBOR Rate shall cause the rate
of interest on the Loan to be limited to the Maximum Lawful
Rate, any subsequent reductions in the Variable Rate or the
LIBOR Rate, as applicable, shall not reduce the rate of
interest on the Loan below the Maximum Lawful Rate until the
total amount of interest accrued equals the amount of interest
which would have accrued if the Variable Rate or the LIBOR
Rate, as applicable, had at all times been in effect. In the
event that at maturity (stated or by acceleration), or at the
final payment of the Loan, the total amount of interest paid
or accrued on the Loan is less than the amount of interest
which would have accrued if the Variable Rate or the LIBOR
Rate, as applicable, had at all times been in effect with
respect thereto, then at such time, to the extent permitted by
law, Borrower shall pay to Agent, for the ratable benefit of
the Lenders, an amount equal to the difference between (a) the
lesser of the amount of interest which would have accrued if
the Variable Rate or the LIBOR Rate, as applicable, had at all
times been in effect and the amount of interest which would
have accrued if the Maximum Lawful Rate had at all times been
in effect, and (b) the amount of interest actually paid on the
Loan.
3.13 Computation of Interest and Fees. All interest
payable and the amount of any fees due on the Loan hereunder
or under the Note shall be computed based on the actual number
of days elapsed for the period for which interest is
calculated and as if each year was comprised of three hundred
sixty (360) days, except that any calculation of the Maximum
Lawful Rate shall be based on the actual number of days in the
applicable calendar year.
3.14 Security. The Loan and the Obligations shall
all be secured by the Collateral Assignment, the Mortgages,
the assignment of the Collateral Sales Receivables, and any
and all other Collateral described herein or in any of the
Security Documents, and any and all other collateral pledged
or assigned to the Lenders pursuant to this Agreement, and all
proceeds thereof, until the particular item of Collateral is
released or until the Loan and all the Obligations are paid
and Performed in full.
3.15 Capital Adequacy; LIBOR Costs.
(a) 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 Loan, then such Lender may
notify Borrower of such fact, and Borrower shall pay
to such Lender or the Agent from time to time on
demand, as an additional fee payable hereunder, such
amount as such Lender shall determine in good faith
and certify in a notice to Borrower 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.
(b) Nothing in this Section 3.15 shall be
construed or shall operate to require Borrower to
pay any interest, fees, costs or charges greater
than as permitted by applicable law.
3.16 Inability to Determine LIBOR Rate. In the
event that prior to the commencement of any Interest Period
relating to any LIBOR Rate Tranche, Agent shall determine in
the exercise of its reasonable business judgment that adequate
and reasonable methods do not exist for ascertaining the LIBOR
Rate for such Interest Period, Agent shall forthwith give
notice of such determination (which shall be conclusive and
binding on Borrower and the Lenders) to the Borrower and the
Lenders. In such event (a) any notice from Borrower
requesting a LIBOR Tranche shall be automatically withdrawn
and shall be deemed a request for a Variable Rate Portion and
(b) each LIBOR Tranche will automatically on the last day of
the then current Interest Period thereof convert to an amount
accruing interest at the Variable Rate, and no further LIBOR
Tranches will be permitted until Agent determines in the
exercise of its reasonable business judgment that the
circumstances giving rise to such suspension no longer exist,
whereupon Agent shall so notify Borrower and the Lenders.
3.17 Intentionally Omitted.
3.18 LIBOR Rate Unlawful. If on any date any Lender
shall have reasonably determined (which determination shall be
final and conclusive and binding upon all parties) that the
making or continuation of its LIBOR Rate Loans has become
unlawful or impossible under any law, governmental rule,
regulation or order with which such Lender believes, in good
faith, it must comply (whether or not having the force of law
and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall be an "Affected
Lender" and it shall promptly give notice (by telephone
confirmed in writing) to Borrower and Agent (which notice
Agent shall promptly transmit to each Lender) of that
determination. In such event, the obligation of the Affected
Lender to make or maintain its LIBOR Rate Loans during any
such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when
required by law and no later than the termination of the
Interest Period in effect at the time any such determination
pursuant to this subsection is made or, earlier, when required
by law, such LIBOR Tranche shall convert to a Variable Rate
Portion.
3.19 Increased Costs. If after the date hereof by
reason of, (1) the introduction of or any change (including,
without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation
of any treaty, law, rule, or regulation, or (2) the compliance
with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority
exercising control over banks or financial institutions
generally (whether or not having the force of law):
(a) any Lender (or its applicable lending office)
shall be subject to any tax, duty, levy, cost or other
charge (except for taxes on the overall net income or
alternative minimum taxable income of such Lender or
its applicable lending office imposed by the
jurisdiction in which such Lender's principal
executive office or applicable lending office is
organized, located or is doing business) with
respect to its Pro Rata Part of any LIBOR Tranche,
or the recording, registration, notarization or other
formalization of the LIBOR Tranche or the basis of
taxation of payments to any Lender of the principal of or
interest or commitment fees or any amount payable on its
Pro Rate Part of any LIBOR Tranche shall change; or
(b) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or
credit extended by, any Lender's applicable lending office
shall be imposed on any Lender or its applicable lending
office or the London interbank market.
and as a result thereof there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or
maintaining the LIBOR Tranche, or there shall be a reduction
in the amount received or receivable by that Lender or its
applicable lending office, then Borrower shall from time to
time, upon written notice from and demand by that Lender (with
a copy of such notice and demand to Agent), pay to Agent for
the account of that Lender, within five (5) Business Days
after receipt of such notice, demand and appropriate proof of
such cost, additional amounts sufficient to indemnify that
Lender against such increased cost or reduced amount. A
certificate as to the amount of such increased cost or reduced
amount, submitted to Borrower and Agent by that Lender, shall,
except for manifest error, be final, conclusive and binding
for all purposes.
3.20 Assumptions Concerning LIBOR Tranche.
Calculation of all amounts payable to a Lender under Sections
3.15, 3.18 or 3.19 shall be made as though that Lender had
actually funded its Pro Rata Part of any LIBOR Tranche through
the purchase of a LIBOR deposit bearing interest at the LIBOR
Tranche in an amount equal to the amount of such Lender's Pro
Rata Part of such LIBOR Tranche and having a maturity
comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit
from an offshore office to a domestic office in the United
States of America; provided, however, that each Lender may
fund its Pro Rata Part of any LIBOR Tranche in any manner it
sees fit and the foregoing assumption shall be utilized only
for the calculation of amounts payable under Sections 3.15,
3.18 or 3.19.
ARTICLE IV
COLLATERAL REQUIREMENTS
4.1 Requirements For Assigned Loans. With respect
to each of the Assigned Loans, Borrower shall deliver to Agent
the following:
(a) Either (i) the original promissory note or
notes evidencing the Assigned Loan properly endorsed to
Borrower by the appropriate Portfolio Seller, together
with an endorsement thereof by 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 designated on Schedule C
to the Collateral Assignment, 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 appropriate
Portfolio Seller, or (iii) with respect to those Assigned
Loans designated on Schedule B to the Collateral
Assignment, the original participation certificate
evidencing Borrower's interest in such Assigned Loans;
(b) As requested by Agent, a copy 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) As requested by Agent and to the extent in
the possession of Borrower or an Affiliate of Borrower,
a survey, mortgagee or loan policy of title insurance,
certificate of occupancy, zoning verification and
certificate of insurance with respect to the Underlying
Real Estate, all in form satisfactory to Agent;
(d) As required by Agent and to the extent in
the possession of Borrower or an Affiliate of
Borrower, such financial statements and other credit
information related to the obligees of the Assigned
Loans in Borrower's possession; and
(e) Such other plans and specifications, lien
waivers, appraisals, environmental reports and other
information related to the Underlying Real Estate, to
the extent in the possession of Borrower or an
Affiliate of Borrower, as Agent shall reasonably
request.
4.2 Requirements for Mortgaged Properties. With
respect to each of the Mortgaged Properties, Borrower shall
deliver the following, as requested by Agent, subject,
however, to the limitation contained in the last sentence
of Section 4.3 hereof:
(a) A copy of the deed or conveyance instrument
by which Borrower took title to the Mortgaged
Property;
(b) A survey, a Title Policy, certificate of
occupancy (if in Borrower's possession), zoning letter,
and certificate of insurance, all in form and, where
applicable, amount and issuer reasonably satisfactory to
Agent; and
(c) Such other lien waivers, evidence of
availability of utilities, appraisals, environmental
reports and other information as Agent shall reasonably
request.
4.3 Recordation of Mortgages. On or before the
Closing Date, Borrower shall deliver to Agent, on behalf of
the Lenders, a Mortgage with respect to each of the Mortgaged
Properties owned by Borrower as of the Closing Date.
Thereafter, Borrower shall deliver to Agent, on behalf of the
Lenders, a Mortgage with respect to any Underlying Real Estate
hereafter acquired by Borrower within ten (10) Business Days
from the date of acquisition. If no Default then exists,
Agent shall only record in the appropriate real estate records
each Mortgage representing a Mortgaged Property with a Minimum
Release Price in excess of Five Hundred Thousand and No/100
Dollars ($500,000.00). Agent shall hold the remaining original
Mortgages for recording in the appropriate real estate records
if and when, a Default occurs, including Borrower's failure to
make any Minimum Cash Flow Payment (excluding any Shortfall
Payments made by AMRESCO). After the occurrence of a Default,
Agent may, at the option of the Required Lenders, in their
sole discretion, record all Mortgages then held by Agent, and
Borrower shall be required to grant to Agent, to the extent
Borrower has not already done so, a first and prior lien on
all Underlying Real Estate then or thereafter acquired by
Borrower, subject to no exceptions other than Permitted
Encumbrances, for recording by Agent upon delivery thereof,
and Borrower 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 the Lenders in
connection with the recordation of the Mortgages. Agent shall
only be entitled to require delivery
of the items referenced in Section 4.2 if and when Lender is
permitted to record the Mortgages pursuant to this Section
4.3.
4.4 Assignment of Collateral Sales Receivables.
Borrower hereby pledges and assigns to Agent, for the ratable
benefit of the Lenders, and grants to Agent, for the ratable
benefit of the Lenders, a security interest in, all Collateral
Sales Receivables now existing or at any time hereafter
arising, and all proceeds thereof, to secure payment of the
Loan and the Obligations. Agent, on behalf of the Lenders,
shall have all rights and remedies of a secured party under
the UCC and otherwise under law or in equity with respect to
the Collateral Sales Receivables and the assignment and
security interest granted herein and in any other documents
pertaining thereto. Notwithstanding anything herein to the
contrary, the assignment of and security interest in the
Collateral Sales Receivables granted herein shall terminate
and no longer apply with respect to any portion of the
Collateral at such time as Agent has received the payments
required by Section 3.5 to the extent the same includes the
applicable proceeds in calculating Net Cash Flow.
4.5 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 4.1 and Section 4.2 at any time and, from time to
time, 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.
ARTICLE V
CONDITIONS TO FUNDING
5.1 Conditions. The obligation of Heller to fund
the Loan as provided herein is subject to the satisfaction of
the following conditions and requirements:
(a) receipt by Agent of this Agreement properly
executed by Borrower;
(b) receipt by Agent of the Note properly
executed by Borrower;
(c) receipt by Agent of the Collateral Assignment
and financing statements related thereto properly
executed by Borrower;
(d) receipt by Agent of executed allonge
endorsements for each of the Assigned Loans in form
acceptable to Heller by which Borrower endorses to
Agent on behalf of the Lenders the Assigned Loans;
(e) receipt by Agent of the Mortgages for each of
the Mortgaged Properties owned by Borrower as of the
Closing Date, which Mortgaged Properties are described
on Schedule IV;
(f) receipt by Agent of the financing
statements related to the assignment of
Collateral Sales Receivables pursuant to Section
4.4 and the respective Mortgages delivered
pursuant to Section 5.1(e);
(g) receipt by Agent of such other documents,
instruments and information as required by Sections
4.1 and 4.2 to be delivered to Agent as of the
Closing Date;
(h) receipt by Agent of an opinion of general
counsel for Borrower, opining as to the due
organization and existence of Borrower, the
authority of Borrower to execute the Loan Documents,
the enforceability of each of the Loan Documents and
such other matters as Agent may reasonably request,
in form and substance satisfactory to Agent;
(i) receipt by Agent of all resolutions,
certificates or documents it may reasonably request
relating to the formation, existence and good
standing of Borrower on the date hereof, corporate
authority for the execution and validity of this
Agreement and the other Loan Documents to which each
is a party, 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 Borrower, (ii)
resolutions of the board of directors of Borrower
authorizing the execution of the Loan Documents on
behalf of Borrower and the granting of all the
Lenders' Liens as security for the Loan, (iii)
certificates of incumbency for the officers of
Borrower, and (iv) certificates of corporate
existence and good standing issued by the state of
incorporation of Borrower and from the appropriate
governmental authority of each state in which
Borrower is required by applicable law to be
qualified;
(j) receipt by Agent of a copy of each of the
Pool Purchase Agreements and the other Borrower Due
Diligence Reports;
(k) 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 Borrower, except any
Permitted Encumbrances;
(l) copies of certificates of insurance for
each policy of insurance maintained by Borrower,
together with evidence of payment of all premiums
thereon;
(m) a detailed analysis of the manner in which
Borrower calculated the purchase price and
Borrower's Investment Balance for the Selected
Asset Pool;
(n) an original Mortgage Assignment for each
of the Assigned Loans properly executed and
acknowledged by Borrower;
(p) An assignment and subordination of each
management contract with respect to the Mortgaged
Properties consented to by the manager, if any;
(q) A pledge of the capital stock of each
Borrower executed by AMRESCO and the original stock
certificates appropriately endorsed;
(r) A Subordination Agreement executed by AMRESCO
in favor of Agent, on behalf of Lenders; and
(s) all other certificates and information to be
delivered on or before the Closing Date pursuant to the
terms of this Agreement.
All the documents, certificates, evidences and
opinions referred to in this Section 5.1 shall be delivered
to Agent no later than the Closing Date, and the Lenders shall
not be bound by or obligated hereunder until Agent has
received all such items.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Lenders
that:
6.1 Existence and Power of Borrower. Borrower (a)
is a corporation duly created, validly existing and in good
standing under the laws of the State of Delaware, 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 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
Borrower's business and financial condition.
6.2 Authorization, Contravention. The execution,
delivery and performance of this Agreement, the Notes, the
Collateral Assignment, the Mortgages and the other Loan
Documents by Borrower are within 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 Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon Borrower or result in
the creation or imposition of any Lien on any asset of
Borrower except Liens securing the Notes.
6.3 Enforceable Obligations. This Agreement, the
Notes, the Collateral Assignment, the Mortgages and the other
Loan Documents each constitute valid and binding agreements of
Borrower, enforceable in accordance with their 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.
6.4 Financial Information.
(a) All of the financial reports and information
of Borrower that have been delivered to Agent are true
and correct in all material respects as of the date of such
financial reports and information.
(b) Except as disclosed in writing by Borrower to
Agent prior to the execution and delivery of this
Agreement, since May 31, 1995 there has been no material
adverse change in the business, financial position or
results of operations of Borrower.
6.5 Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of Borrower,
threatened against or affecting, 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 Borrower or which could
in any manner draw into question the validity of the Loan
Documents, except as set forth on Exhibit I.
6.6 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 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 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, Borrower has no
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.
6.7 Taxes and Filing of Tax Returns. 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
Borrower. Borrower has no knowledge of any proposed Tax
assessment against Borrower other than customary ad valorem
taxes or other Taxes to become due in the normal course of
business, and all Tax liabilities of Borrower are adequately
provided for. No income tax liability of 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 Borrower.
6.8 Title to Properties; Liens; Ownership.
Borrower has good and indefeasible title to all of the
Collateral (subject to any applicable Permitted Encumbrances).
The Assigned Loans described in the schedules attached to the
Collateral Assignment and the Mortgaged Properties described
in Schedule IV constitute all of the assets in the Selected
Asset Pool, and Borrower has properly granted to Lenders a
perfected security interest in such Assigned Loans and a valid
first lien in such Mortgaged Properties, subject to no encumbrances or
exceptions other than any Permitted Encumbrances. The
Borrower Due Diligence Reports have been prepared or reviewed
by Borrower and delivered by Borrower to Agent, and the
factual information therein, including without limitation,
regarding title to and the condition of each asset in the
Selected Asset Pool (but not including valuation amounts and
cash flow projections) was true and correct as of the time the
Borrower Due Diligence Reports were prepared, and, with
respect to each asset taken as a whole, the Borrower Due
Diligence
Reports accurately reflected the material facts concerning
each of the Assigned Loans and the Mortgaged Properties
(including without limitation the lien priority
position of the mortgages and security interests securing the
Assigned Loans, any bankruptcy of, or material litigation
involving, the borrower under each Assigned Loan or any other
owner of the Underlying Real Estate, and the existence or
nonexistence of collateral for each Assigned Loan) at the time
the Borrower Due Diligence Reports were delivered to Agent.
In addition with respect to any of the Major Assets, as of the
Closing Date, there has been no material adverse change in the
factual information set forth in the Borrower Due Diligence
Reports that would materially adversely affect the valuation
or enforceability of such Assigned Loans. Borrower
acknowledges that Agent based its evaluation and due diligence
regarding the Collateral and the making of the Loan primarily
on the Borrower Due Diligence Reports and the lists and
descriptions of the Collateral provided by Borrower to Agent.
Borrower has requested as an accommodation to Borrower because
of the number of the Assigned Loans and for ease of
administering this credit facility that the Assigned Loans be
endorsed by using an allonge endorsement and Borrower
acknowledges that, if an allonge endorsement is so used in
connection with an Assigned Loan, Borrower intends such
endorsement to be a part of the Assigned Loan as fully as if
such endorsement was made on the instrument itself.
6.9 Business; Compliance. 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
Borrower were to fail to perform or abide by, such failure
would have a material adverse effect on the business
operations of Borrower.
6.10 Licenses, Permits. 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.
6.11 Compliance with Law. The business and
operations of Borrower have been and are being conducted in
accordance with all Legal Requirements, other than violations
which would not (either individually or collectively) have a
material adverse effect on the financial condition or
operations of Borrower.
6.12 Full Disclosure. All information heretofore
furnished by Borrower or AMRESCO (or any other party on
Borrower's or AMRESCO's behalf) to Agent for purposes of or in
connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by
Borrower to Agent or 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. Borrower has 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 Borrower,
or the ability of Borrower to perform its obligations under
this Agreement or the other Loan Documents.
6.13 Environmental Matters.
(a) No portion of the 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 a certificate executed by an
Authorized Officer of Borrower and delivered to Agent
prior to execution and delivery of this Agreement;
(b) neither Borrower nor, to the knowledge of
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 the
Mortgaged Property or any contiguous real estate
which either (i) would be a violation of Applicable
Environmental Law or (ii) 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 Borrower or the Lenders);
(c) neither Borrower nor, to the knowledge of
Borrower, any other Person has been or is involved
in operations at or near any portion of the
Mortgaged Property which could lead to the
imposition on 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 Borrower, or the creation
of a lien on such property, under any Applicable
Environmental Law;
(d) neither Borrower nor any other Person has
permitted any tenant or occupant of any portion of
the Mortgaged Property, to engage in any activity
that could lead to the imposition of liability on
such tenant or occupant, Borrower or any operator of
any of such property which could have a material
adverse effect on the financial condition or
business operations of Borrower, or could lead to
the creation of a lien on such property, under any
Applicable Environmental Law; or
(e) to the knowledge of Borrower, no part of
the Mortgaged Property or the 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 the Mortgaged Property or the Underlying
Real Estate is so contaminated either the holder of
the related Assigned Loan (or Borrower in the case
of any Mortgaged Property) is entitled to protection
from liability
resulting from such contamination because of the
Secured Creditor Safe Harbor and/or Borrower has or
will cause the applicable Portfolio Seller to
repurchase the related Assigned Loan under the terms
of the respective Pool Purchase Agreement, if
possible under the term of such agreement. No part
of the Mortgaged Property is located within any
property formerly used as a landfill.
6.14 Purpose of Credit. Borrower will use the
proceeds of the Loan to refinance a portion of the
aggregate purchase price under the Pool Purchase
Agreements for the Selected Asset Pool.
No part of the proceeds of the Loan will be used, directly or
indirectly, for a purpose which violates any law, rule or
regulation, including without limitation, the provisions of
Regulation U or any other Margin Regulations.
6.15 Governmental Regulations. Borrower is not
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. The Loan
is an exempt transaction under the Truth-in-Lending Act.
6.16 Indebtedness. Borrower is not an obligor on
any Debt other than Debt permitted under Section 8.2.
6.17 Insurance. 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.
6.18 Solvency. On the Closing Date (a) the aggregate
fair market value of Borrower's assets exceeds its liabilities
(whether contingent, subordinated, unmatured, unliquidated, or
otherwise), (b) Borrower has sufficient cash flow to enable it
to pay the Loan and any other of its Debts as they mature, and
(c) Borrower has a reasonable amount of capital to conduct its
business as presently contemplated.
6.19 Pool Purchase Agreements. Each of Borrower and,
to the best of Borrower's knowledge, the Portfolio Sellers has
fully performed its respective obligations under the Pool
Purchase Agreements which are required to be performed as of
the Closing Date. As of July 1, 1995, the aggregate of
Borrower's Investment Balances of all assets in the Selected
Asset Pool, as determined in accordance with Section 2.1 is
Forty-Four Million One Hundred Ninety-One Thousand Four
Hundred and 39/100 Dollars ($44,191,400.39). None of the Pool
Purchase Agreements has been terminated, modified or declared
in default by any party thereto, except for written
modifications delivered to Agent prior to or on the Closing
Date to delete loans from the Selected Asset Pool.
6.20 No Casualty or Condemnation. Except as previously
disclosed in writing to Agent and with respect to Mortgaged
Properties or Underlying Real Estate with a Minimum Release
Price in excess of Five Hundred Thousand and No/100 Dollars
($500,000.00) (i) there has been no material damage or
destruction to any part of such Mortgaged Properties or
Underlying Real Estate by fire or other casualty that has not
heretofore been repaired; (ii) to the best of Borrower's
knowledge, there are no existing material defects in the
improvements on such Mortgaged Properties or Underlying Real
Estate and no repairs or alterations thereof or modifications
thereto are reasonably necessary or appropriate except for
normal and routine maintenance; (iii) to the best of
Borrower's knowledge, no part of such Mortgage Properties or
Underlying Real Estate or improvements thereon have been taken
by the exercise of the power of eminent domain or condemnation
and there is no proceeding for such a taking pending or
threatened.
6.21 Access to the Properties. To the best of
Borrower's knowledge and except as previously disclosed in
writing to Agent (i) the existing access between the improvements
on such Mortgaged Properties and Underlying Real Estate and public
roads is sufficient to comply with all presently existing
laws, ordinances, regulations, agreements and restrictions
affecting the such properties for their present use, and (ii)
the streets, roads and avenues adjoining such Mortgaged
Properties and Underlying Real Estate have been fully improved
and dedicated to and accepted for maintenance and public use
by the public authority having jurisdiction thereover.
6.22 No Flood Zone. To the best of Borrower's
knowledge and except as previously disclosed in writing to
Agent, none of such Mortgaged Properties or Underlying Real
Estate is situated in an area designated as having special
flood hazards, as defined by the Flood Disaster Protection Act
of 1973, as amended.
6.23 Participations. Except as previously disclosed
in writing to Agent and to the best of Borrower's knowledge
with respect to Selected Pool Assets other than Major Assets,
no participations, syndications or co-lending arrangements
have been granted in or with respect to any of the Assigned
Loans, and no person other than Borrower, Agent and Lenders
has any right, title, or interest including, without
limitation, a participating interest, in any of the Assigned
Loans.
6.24 No Future Funding Obligations. Borrower has
no future funding obligations under any Assigned Loan.
ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any
of the Obligations remain unpaid:
7.1 Information From Borrower. Borrower will
deliver, or cause to be delivered, to Agent on behalf of the
Lenders:
(a) As soon as available and in any event within
one hundred twenty (120) days after the end of each
Fiscal Year of Borrower, (i) a balance sheet of
AMRESCO on a consolidated basis (including
consolidation with Borrower) 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; and (ii) a balance
sheet of Borrower and year end report in the form of
the Receipt Transaction Listing for Borrower
provided to Agent prior to the Closing Date.
(b) As soon as available and in any event
within thirty (30) days after the end of each
calendar month, (i) a trial balance of portfolio
activity, including, without limitation, a summary
of gross collections, expenses and administrative
costs, and net cash flow in form reasonably
satisfactory to Agent and attached hereto as Exhibit
H, and (ii) a schedule of all Mortgaged Property
acquired by Borrower during such month showing the
Investment Balance reflected on Borrower's books for
such Mortgaged Property, (iii) a report showing on
an asset by asset basis the variance
from Borrower's original projections for each asset, in
the form of the monthly Resolved Asset Report submitted
by Borrower to Agent prior to the Closing Date, and (iv)
a report showing for each pool of Assigned Loans
purchased under a Pool Purchase Agreement the activity
on each Assigned Loan and the variance from Borrower's
total estimated net cash recovery for such pool for the
month and year-to-date, in the form of the Month End
Transaction Log submitted by Borrower to Agent prior to
the Closing Date. The reports delivered pursuant to
clauses (i) and (ii) of this Section 7.1(b) shall be
certified by the chief financial officer or the chief
accounting officer of Borrower as to fairness of
presentation and as to whether such financial statements
fairly reflect the financial condition of Borrower 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) As soon as available and in any event within
sixty (60) days after the end of the first three calendar
quarters in each Fiscal Year and within 120 days after
the end of last quarter in each Fiscal Year a balance
sheet of Borrower and the related statement of income-for
such quarter and year-to-date, which balance sheet and
income statement may be on a consolidated basis with
AMRESCO.
(d) No less often than annually, a revised Business
Plan including a summary of projected cash flows for each
of the pools of Assigned Loans acquired under each of the
Pool Purchase Agreements, on an asset by asset basis, for
the twelve month period commencing on the preceding June
30, provided that with respect to the Assigned Loans
previously constituting collateral under the NationsBank
Loan Agreement the initial Business Plan shall be
delivered on or before August 30, 1995 and with respect
to the other Assigned Loans the initial Business Plan
will be delivered on or before February 28, 1996.
(e) Simultaneously with the delivery of each set
of financial statements referred to in Sections 7.1(a)
and (b), a certificate of an Authorized Officer of
Borrower, (i) stating, to the best of such officer's
knowledge and belief, whether there exists on the date of
such certificate any Default and, if any Default then
exists, setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect
thereto, and (ii) with respect only to the financial
statements delivered pursuant to Section 7.1(a), stating,
to the best of such officer's knowledge and belief,
whether or not such financial statements fairly reflect
the financial condition of Borrower and results of
Borrower's operations as of the date of the delivery of
such financial statements.
(f) Immediately upon any Authorized Officer of
Borrower becoming aware of the occurrence of any Default,
a certificate of an Authorized Officer of Borrower
setting forth the details thereof and the
action which Borrower is taking or proposes to take with
respect thereto.
(g) Prompt notification of (i) any material
adverse change in the financial condition of
Borrower, (ii) the occurrence of any acceleration of
the maturity of any indebtedness owing by Borrower,
(iii) the occurrence of any default under any other indebtedness
owing by Borrower or AMRESCO or any Subsidiary of
AMRESCO or (iv) any default under any other
indenture, mortgage, agreement, contract or other
instrument to which Borrower is a party or by which
Borrower or any properties of Borrower are bound, or
the filing of any legal proceeding against Borrower,
if such default or litigation might have a material
adverse effect upon the financial condition of
Borrower.
(h) On or before December 31 of each calendar
year, a revised Overhead Plan, provided that if
Borrower is unable to deliver the Overhead Plan by
such date, the most recent Overhead Plan previously
delivered to Agent shall apply.
(i) From time to time such additional
information regarding the financial position or
business of Borrower as Agent, at the request of any
Lender, may reasonably request.
7.2 Business of Borrower. The business of Borrower
is, and Borrower covenants that it shall remain, the
ownership, management, sale and other disposition of the
assets in the Selected Asset Pool.
7.3 Right of Inspection. Borrower will permit
Agent or Representatives of Agent or any of the Lenders to
visit and inspect any of the assets of Borrower (including,
without limitation, any of the Collateral), examine the books
of record and accounts of Borrower, take copies and extracts
therefrom, and discuss the affairs, finances and accounts of
Borrower with the respective officers, accountants and
auditors of Borrower, all at such reasonable times and as
often as Agent or any of the Lenders may desire, all at the
expense of Borrower. The Lenders covenant and agree to
preserve the confidentiality of any financial data concerning
Borrower or the Selected Asset Pool or related to Borrower'
businesses or operations or any information with respect to
which Borrower has (a) an obligation of confidentiality to a
third party (to the extent such obligation has been disclosed
to the Lenders) or (b) informed the Lenders of the
confidential nature of the specific information, except to the
extent the Lenders are 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), or any other annual or quarterly
reports to the stockholders of Borrower or AMRESCO subject to
the reporting requirements of the Securities Exchange Act of
1934, as amended, proxy material delivered to the stockholders
of Borrower or AMRESCO 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) a Lender may make any information
received by it available (A) to a transferee of or participant
in such Lender's portion of or interest in the Loan or the
Notes, provided that such transferee or participant agrees in
writing to be bound by the provisions of
this Section 7.3, or (B) in connection with the enforcement of
any of the Loan Documents or any litigation in connection
therewith.
7.4 Maintenance of Insurance.
(a) Subject to the standard set forth in Section
7.7(a), Borrower shall maintain force-placed insurance for
Assigned Loans where the mortgagor is not providing insurance
on the Underlying Real Estate. Borrower shall also provide
fire and extended coverage and commercial general liability
for Mortgaged Properties in such amounts and upon such terms
as Agent and/or the Lenders shall require. All policies of
Borrower shall be written by insurers approved by Agent. All
policies shall be endorsed to provide Agent at least thirty
(30) days written notice of material change, cancellation or
nonrenewal. Agent shall receive Certificates of Insurance
evidencing the required coverage and showing agent
as mortgagee/additional insured. Each fire and
extended coverage insurance policy shall provide that all
proceeds shall be payable to Agent, as their interests may
appear.
(b) Subject to the provisions of the Assigned Loan
Documents, Agent is empowered: (i) to make or file proofs of
loss or damage and to settle and adjust any claim under
insurance policies which insure against such risks; (ii) to
collect any such insurance proceeds which, after deduction of
Agent's reasonable costs and expenses, if any, in collecting
the same, may, at the option of Agent in its sole and absolute
discretion, be (x) applied in reduction of the Loan, whether
due or not, or (y) held by Agent and applied to pay for the
costs of repair, rebuilding or restoration of the improvements
in which event such proceeds shall be made available in the
manner and under such conditions as may require.
(c) Insurance coverage must be approved by James F.
Larsen, Larsen Risk Consultants, Inc., 10 North Street,
Easton, Connecticut 06612, (203) 268-4177, or such other
person or firm as may be designated by Agent.
7.5 Payment of Taxes, Impositions and Claims.
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
Borrower are subject to levy or execution, (ii) Borrower, and
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)
Borrower has notified Agent of such circumstances, in detail
satisfactory to Agent, and, provided further, that 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.
7.6 Compliance with Laws and Documents. Borrower
shall at all times comply with all Legal Requirements, the
certificate of incorporation and bylaws of Borrower and any
other agreement to which Borrower is a party, unless its
failure to so comply alone or in the aggregate could not
reasonably be expected to have a material adverse effect on
the financial condition or operations of Borrower.
7.7 Agreements Related to Selected Asset Pool.
Borrower agrees as follows with respect to the Selected Asset
Pool:
(a) Borrower shall maintain all files related to
the Assigned Loans in a reasonably prudent manner.
Borrower shall not release, surrender, terminate or
cause to be materially adversely affected any collateral
for, or any obligee under, any of the Assigned Loans
unless such actions are legally required or reasonably
and prudently taken in order to maximize realization
upon the Assigned Loans and other Collateral or any
such action would not have a materially adverse
affect on the financial condition or business of
Borrower. Borrower shall take or cause to be taken
all reasonable actions
necessary to prevent any obligee under any of the
Assigned Loans from taking any action which would
materially adversely affect the value or condition
of any collateral for an Assigned Loan or which
would release, terminate or adversely affect the
liens and security interests for any Assigned Loan.
Borrower shall take, or cause to be taken, all
reasonable actions to collect, restructure, settle,
foreclose on or otherwise deal with the Assigned
Loans, and shall administer the Selected Asset Pool,
taken as a whole, in a manner which is consistent
with customary industry standards and which Borrower
in good faith believes will achieve the net cash
flow projections set forth in the Borrower Due
Diligence Reports (as such projections may be
revised in the reports furnished to Agent pursuant
to Section 7.1). Borrower shall take or cause to be
taken all actions necessary to preserve and continue
its rights under the Pool Purchase Agreements, to
the extent such actions are feasible and prudent,
and shall not materially amend, terminate or
otherwise affect its rights under the Pool Purchase
Agreement without the prior written consent of
Agent, such consent not to be unreasonably withheld
or delayed.
(b) Borrower has, upon its acquisition of each
loan portfolio comprising the Selected Asset Pool,
conducted or caused to be conducted or commenced a
due diligence review of the assets and files
included therein in a manner consistent with the
reasonable and prudent practices and customary
industry standards and as described in the Borrower
Due Diligence Reports. Each such review has been, or
shall be, conducted in a timely and prudent manner.
After the occurrence of a Default, the Lenders shall
be entitled to require that Borrower exercise any
right it may have to require the Portfolio Sellers
to re-acquire a PartiCular asset or assets in the
Selected Asset Pool Borrower shall give Agent
written notice concurrently with any notification
given by Borrower to any Portfolio Seller under the
applicable Pool Purchase Agreement
requesting a repurchase of an Assigned Loan. In the
event that Borrower becomes aware that any information
contained in the Borrower Due Diligence Reports is materially
incorrect and will materially adversely affect the value
of the Assigned Loan or the Mortgaged Property, Borrower
shall notify Agent in writing of such fact.
7.8 Environmental Law Compliance and Indemnity.
Borrower has executed a Hazardous Substance Indemnification
Agreement, the terms of which are hereby incorporated herein
by reference.
7.9 Collateral Assignment of Sales Contracts.
Borrower will assign as collateral to Agent, on behalf of the
Lenders, at such time or times as Agent may request, any and
all rights (but none of the obligations) Borrower may have in
and to any contracts for the sale of any or all of the
Assigned Loans, the Mortgaged Properties, the Underlying Real
Estate or other assets included in the Specified Asset Pool
or resulting from the disposition of assets included in the
Specified Asset Pool. In this connection, if requested by
Agent, Borrower shall deliver a copy of any such contract to
Agent as soon as practicably possible, and in any event
within three (3) Business Days after any such request.
7.10 Assurance Related to Mortgaged Property. With
respect to each portion of the Mortgaged Property, upon the
reasonable request of Agent, Borrower will deliver to Agent
the following:
(a) Letter in favor of Agent, or title report or
endorsement (if, with respect to a title report or an
endorsement only, the subject Mortgage has been
recorded and such report or endorsement is available
at a nominal cost) from a Title Company, in form and
substance reasonably satisfactory to Agent (or other
evidence reasonably satisfactory to Agent)
confirming the existence and priority of the
Mortgage covering such portion and reflecting that
there have been no changes to the status of title to
such portion of the Mortgaged Property since the
time such Mortgage was executed or changes in the
status of the Title Policy relating to such portion
since the time such Mortgage was recorded.
(b) Certificates of occupancy or other like
evidences that the subject property is in compliance
with all Legal Requirements, if available from the
applicable Governmental Authority.
(c) Unless full contract price and adequate
performance and payment bonds have been issued in
favor of Agent by a surety acceptable to Agent with
respect to the construction of Improvements on such
portion, lien waivers or releases from all
contractors contracting directly with Borrower in
connection with the construction of any improvements
on the Mortgaged Property.
(d) Such other certificates, instruments or
other matters related to the Mortgaged Property as
Agent may reasonably request, including, without
limitation, the items specified in Section 4.2
hereof.
7.11 Appraisals. Agent may require, and
Borrower 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 an
Investment Balance in excess of One Hundred Thousand and
No/100 Dollars ($100,000.00), 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 Borrower
with a copy of any such Appraisal ordered by Agent. With
respect to any portion of the Mortgaged Property which has an
Investment Balance in excess of One Hundred Thousand and
No/100 Dollars ($100,000.00), and which is damaged by fire or
other casualty or with respect to which a proceeding for the
condemnation of all or a portion thereof has been instituted
or completed, Agent may require Borrower to deliver to Agent a
new Appraisal for such portion, regardless of whether Borrower
has given Agent an Appraisal for such portion within the
immediately preceding twelve month period, and such new
Appraisal for such portion of the Mortgaged Property shall
take into account the occurrence of such casualty or the
institution or completion of such condemnation proceeding.
7.12 Payment on Taking or Destruction. In the event
that damage, destruction or a taking shall occur in respect of
all or a portion of the Collateral, Borrower shall apply any
insurance or condemnation proceeds in respect thereof to the
payment of the Loan (as part of the Required Principal
Payment) and not to the restoration or modification of such
Collateral unless Agent (with the approval of the Required
Lenders) gives prior written consent
to such restoration or modification.
7.13 Covenant Compliance. Borrower shall perform and
comply with all covenants, obligations and agreements
contained in this Agreement and in the Loan Documents.
7.14 Intentionally Deleted.
7.15 Subordinated Debt of AMRESCO. All draws or other
advances to Borrower by AMRESCO, including without limitation,
Shortfall Payments and all other Permitted Subordinate Debt,
are and shall be subordinate in all respects to payment of the
Loan, and Borrower agrees to execute a document evidencing
such subordination, in form satisfactory to Agent, upon the
request of Agent. Borrower shall be entitled to repay any
Shortfall Payments (the "Permitted Shortfall Payments")
received from AMRESCO if, during the three consecutive
calendar months immediately preceding any such payment (i)
Borrower has made the Required Principal Payments and (ii) a
Default has not occurred and is continuing; provided that any
such Permitted Shortfall Payments shall not be deducted as an
expense for purposes of calculating Net Cash Flow. In
addition, except as provided in Section 3.5(a), Borrower shall
be entitled to repay any Shortfall Payments and any other
Permitted Subordinated Debt (including any interest payments
thereon) from Borrower's Net Cash Flow only to the extent that
such Net Cash Flow is not required for payment of the Required
Principal Payment and only if a Default has not occurred and
is continuing, and in compliance with all other terms and
covenants of this Agreement.
7.16 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.
7.17 Additional Documents. Borrower shall execute
and deliver or cause to be executed and delivered to Agent
and/or the Lenders 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 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 Agent and the Lenders their rights
under this Agreement and the other Loan Documents.
7.18 Acquisition of Properties. Prior to acquiring
any nonresidential Underlying Real Estate through foreclosure
or deed in lieu of foreclosure or otherwise, Borrower shall
cause (a) a Phase I environmental analysis or an alternative
environmental analysis acceptable to Lender to be performed on
such Underlying Real Estate, at Borrower's sole cost, and (b)
with respect to any Underlying Real Estate having a Minimum
Release Price in excess of Five Hundred Thousand and No/100
Dollars ($500,000.00) deliver to Agent (to the extent
available with reasonable efforts) for review and approval, if
applicable: (i) a copy of the form lease Borrower proposes to
use; (ii) a current rent roll; (iii) tenant estoppel letters
and subordination and attornment agreements acceptable to
Agent; (iv) if Agent so requests, copies of all leases and (v)
if Agent so requests, copies of all contracts (including
management and leasing contracts) affecting such Underlying
Real Estate. At Agent's option, Borrower shall obtain further
environmental analyses if, in Agent's reasonable
discretion, the Phase I report or other approved report
indicates a need for further investigation. In the event any
environmental report discloses the existence of hazardous
substances on such Underlying Real Estate, neither Borrower
nor any subsidiary of Borrower shall take title thereto
without Agent's written consent. Agent shall respond to
Borrower's request for consent within five (5) Business Days
after the receipt of such environmental report. If Agent fails
to respond within the time period, Agent shall be deemed to
have given consent to the acquisition of such Underlying Real
Estate.
Upon acquisition of any Underlying Real Estate,
Borrower shall deliver to Agent a Mortgage in the form
attached hereto as Exhibit A and, if required by Agent, a
separate assignment of leases and rents, and UCC financing
statements granting Agent, for the benefit of Lenders, a
perfected security interest in the Underlying Real Estate and
all personal property owned by Borrower and used in connection
therewith, subject only to such mortgages or liens accepted by
Agent. For each Mortgaged Property with respect to which a
mortgage is recorded pursuant to Section 4.3 hereof, Borrower
shall also deliver to Agent a loan policy of title insurance
in favor of Agent in the most recently revised ALTA or
equivalent form, in an amount not less than the Minimum
Release Price for such Mortgaged Property. The policy shall be
issued by a title insurance company satisfactory to Agent
insuring the mortgage or deed of trust placed by Agent on the
Mortgaged Property. Additionally, Borrower shall deliver to
Agent, upon the reasonable request of Agent, the items set
forth in Section 7.10 hereof. Borrower shall pay all taxes,
fees and charges incurred in connection with the recording or
filing of the foregoing documents and the issuance of the
title insurance policy.
7.19 Borrower Buyout Option. If (a) Agent elects to
deny Borrower's request to proceed with the acquisition of
title to the Underlying Real Estate through foreclosure or
deed in lieu of foreclosure or the modification for any of the
Underlying Real Estate due to the presence of hazardous
substances in or upon such Underlying Real Estate, or (b)
Agent and Borrower shall
disagree regarding the handling of any hazardous substances on
any Underlying Real Estate, Agent shall release such asset
from the Asset Portfolio upon payment to Lenders, other than
out of Portfolio Cash Flow, of the Minimum Release Price and
Borrower shall simultaneously transfer the asset to any person
other than a subsidiary of Borrower. Funds obtained by
Borrower from AMRESCO to pay such Minimum Release Price shall
be Permitted Working Capital Subordinated Debt.
7.20 Maintenance and Repair. Subject to Section
7.7(a), Borrower shall use reasonable good faith efforts to
keep each Mortgaged Property in good condition and repair.
7.21 Right to Audit. Upon ten (10) Business Days
prior notice, Agent and/or the Lenders may elect to audit all
books and records of Borrower which in any way pertain to the
Asset Portfolios and to physically inspect any of the
Underlying Real Estate or Mortgaged Properties. The expenses
of each such audit and inspection shall be paid by Agent;
provided, that if (i) a Default or Event of Default exists or
(ii) there is discrepancy between the results of such audit
and the reports previously delivered to Agent such that the
amount which the audit determines should have been paid to
Agent exceeds the amount actually paid to Agent by five
percent (5%) or more, then Borrower shall be liable for the
expense of such audit or inspection.
7.22 Custodian. The documents evidencing the
Assigned Loans and collateral therefor shall be delivered to
Fleet National Bank as custodian under that certain Custodial
Agreement of even date herewith among Agent, Borrower and
Fleet National Bank.
Borrower agrees not to interfere with the custodial agent's
performance of its duties under the custodial agreement or to
take any action that would be inconsistent in any way with the
terms of the custodial agreement. Borrower will pay all costs
and expenses of the custodial agent or of Agent in entering
into and maintaining the custodial agreement.
7.23 Lockbox. At the direction of Agent and/or the
Lenders, Borrower shall deposit with Agent the collection of
all gross income from the Assigned Loans and Agent shall have
the right to notify all applicable Obligors and tenants of
Mortgaged Property to deposit payments in such account with
Agent. Such account shall be in Agent's name, controlled by
Agent and established with Agent; provided, that such account
shall only be established if Agent reasonably deems itself
insecure or upon the occurrence of a Default or Event of
Default.
7.24 Notices to Obligor. Borrower shall promptly
notify each Obligor, or cause such Obligors to be notified, in
writing that all payments due and owing under the Assigned
Loan Documents are to be made to Borrower. Borrower agrees
that until such time as the Loan has been paid in full,
Borrower shall not revoke any of the notices previously sent
to the Obligors, so that at all times until the Note is paid
in full, payments from the Obligors shall be made to Borrower.
If an Event of Default or Default then exists, Agent shall
have the right to notify Obligors of Agent's interest in the
Assigned Loans and direct payments to Agent.
7.25 Breaches of Pool Purchase Agreements. Borrower
agrees to notify Agent promptly in the event Borrower becomes
aware of any material breach of any provision of any Pool
Purchase Agreement. In the event Borrower determines that it
may be entitled to a claim against any third party by reason
of any such breach, Borrower shall immediately notify Agent
thereof and, unless Borrower determines in good faith that
such action is inconsistent with maximizing realization upon
the Assigned Loans and other Collateral, take all actions that
may be reasonably required to enforce its rights under the
applicable Pool Purchase Agreement or otherwise; provided,
that if Borrower elects not to enforce its rights under such
Pool Purchase Agreement Lenders will release its lien upon the
Assigned Loan or Mortgaged Property giving rise to such
Material Breach upon payment to Lenders, other than out of
Portfolio Cash Flow, of the Minimum Release Price and Borrower
shall simultaneously transfer the asset to any Person other
than a subsidiary of Borrower. Funds obtained by Borrower
from AMRESCO to pay such Minimum Release Price shall be
Permitted Working Capital Subordinated Debt. In the event a
defaulting party pays any sum to Borrower for any reason,
Borrower agrees to deliver such sums to Agent immediately.
7.26 Account Status Reports, Meetings with Agent
and/or the Lenders. At the request of Agent and/or the
Lenders, an Authorized Officer of Borrower shall meet with
Agent and/or the Lenders to discuss the status of each
Assigned Loan and the Underlying Real Estate.
ARTICLE VIII
NEGATIVE COVENANTS
Borrower covenants and agrees that without the prior
written consent of Agent, acting on behalf of the Required
Lenders, so long as any of the Obligations remain unpaid:
8.1 Limitation on Sale of Properties. Borrower
shall not 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 or as required pursuant to this Agreement.
8.2 Limitation on Debt. Borrower shall not incur
any Debt except the Loan and any Permitted Subordinated Debt.
8.3 Limitations on Liens. Borrower shall not
create, incur, assume or suffer to exist any Lien upon any of
its assets, except for (i) the Lenders' Liens, and (ii) the
Permitted Encumbrances.
8.4 Consolidations, Mergers, Sales of Assets and
Maintenance. Borrower shall not (a) consolidate or merge with
or into any other Person, (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) terminate, or fail to maintain, its corporate
existence or qualification, in the State of Delaware, and any
other applicable jurisdiction where the business of Borrower
requires such qualification, 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.
8.5 Investments. Borrower shall not, 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 interests in, any Person,
except for Permitted Investments.
8.6 Distributions. Borrower shall not make or
declare any Distributions after the occurrence of a Default or
if Borrower will be unable to make any interest payment or
Required Principal Payment on the Loan after the making of
such Distribution.
8.7 Changes in Business/Ownership. Borrower shall
not make or permit any change in its basic business or
ownership.
8.8 Limitation on Contingent Liabilities.
Borrower shall not create, incur, assume or suffer to exist
any Guaranties.
8.9 Transactions with Affiliates.
Borrower shall not engage in any transaction
with an Affiliate of Borrower unless such transaction
is generally as favorable to Borrower
as could be obtained in an arm's length transaction with an
unaffiliated Person in accordance with prevailing industry
customs and practices.
8.10 Employee Plans.
(a) 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. Borrower shall not permit or
suffer to exist any circumstances with respect to
any Employee Plan that could have a material adverse
effect on Borrower.
(b) With respect to any Pension Plan, Borrower
shall not (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
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) Borrower shall not 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.
8.11 Alterations. Borrower shall not commit or
permit any waste of the Mortgaged Property or other
Collateral, or any portion thereof, and Borrower shall not
without the prior written consent of Agent make or permit to
be made any alterations or additions to the Mortgaged Property
of a material nature other than alterations or additions which
will not materially and adversely affect the value of any such
Mortgaged Property.
8.12 Use Violations. Borrower shall not use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, the Mortgaged Property in any
manner which (a) violates any Legal Requirement, (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.
8.13 Retention of Remaining Cash Flow. As long as a
Default has occurred and is continuing, Borrower shall not
permit any Net Cash Flow remaining after payment of the
Required Principal Payment to be distributed, advanced or
otherwise given to AMRESCO, any of AMRESCO's Subsidiaries or
any other Person.
8.14 Exceptions to Covenants. Borrower shall not
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.
8.15 Fiscal Year and Accounting Methods. Borrower
will not change its Fiscal Year or its method of accounting
(other than changes as are concurred with by Borrower's
independent public accountants as being required by GAAP).
8.16 Governmental Regulations. Borrower will not
conduct its business in such a way that it will become subject
to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as
amended, or any other laws, rules or regulations which
regulate the incurrence of Debt.
8.17 Servicing of Selected Asset Pool. Borrower
will not contract with any Person to service or administer all
or any part of the assets included in the Selected Asset Pool
other than a servicing agreement with another Subsidiary of
AMRESCO which satisfies the terms of Section 8.9 and can be
terminated by Agent after an Event of Default on thirty (30)
days prior written notice. Borrower shall not amend or
terminate the servicing agreement without the approval of
Agent, which shall not be unreasonably withheld. Each such
agreement shall be collaterally assigned to Agent and
subordinated to the Obligations pursuant to an agreement in
form and substance acceptable to Agent, and the
loan servicer or administrator shall acknowledge and consent
to said assignment and subordination. After the occurrence of
an Event of Default, and termination of any existing servicing
agreement, Agent shall be entitled to replace the servicer of
the Selected Asset Pool with Agent or an Affiliate of Agent or
any of the Lenders, or another third-party servicer reasonably
acceptable to Borrower, and Borrower agrees to deliver such
documents and execute such agreements as may be requested by
Agent to effectuate such new servicing arrangement.
8.18 Restructures. Borrower shall not Restructure
any Major Asset without Agent's and/or the Lenders' consent;
provided, that Borrower may, without such consent, Restructure
a Major Asset so long as each of the following criteria are
satisfied: (a) after Restructure the remaining term of the
Assigned Loan is not greater than Five (5) years; (b) the
stated interest amount yields an effective interest rate of
not less than ten percent (10%) based on the then current
Investment Balance of such Assigned Loan; (c) the principal
amount of the Assigned Loan after Restructure is not less than
the Minimum Release Price for such Assigned Loan; and (d)
Borrower does not release any collateral for or guarantor of
such Assigned Loan without receipt of commercially reasonable
and adequate consideration. For purposes hereof,
"Restructure" means any modification to or waiver of any of
the terms of an Assigned Loan if such modification or waiver
has the effect of changing the due date for any scheduled
payment of principal or interest, changing the applicable
interest rate, releasing any collateral
for or guaranty of the Assigned Loan, reducing or waiving any
portion of the principal balance of such Assigned Loan or
permitting the sale or junior financing of any Collateral.
8.19 Release Prices. Borrower shall not sell or
otherwise transfer any asset in the Selected Asset Pool other
than for cash or sell or otherwise transfer any Major Asset
for less than the Minimum Release Price plus Borrower's
closing costs for such transfer without Agent's prior
consent. In the event Borrower is permitted to and accepts
purchase money financing or other compensation (other than
cash) for the sale of any Underlying Real Estate, Borrower
shall grant Agent, for the benefit of Lenders, a perfected
security interest in the note evidencing such financing and
all security therefor.
8.20 Disclosure or Use of Heller Name; Loan Terms.
Unless Agent otherwise directs, Borrower shall not disclose to
any Obligor Agent's or any Lender's relationship to Borrower
or Agent's or any Lender's interest in the Assign Loans or the
terms of the Loan Documents. Borrower shall not use the name
"Heller Financial, Inc." or "Heller" in any advertising,
transaction or other written material, without Heller's prior
written consent; provided, however, that Borrower may give
Heller's name as a credit reference. Agent shall not use the
name "AMRESCO" in any advertising, transaction or other
written material, without Borrower's prior written consent.
Unless required by statute, regulation or court order, neither
party shall disclose to third parties (other than such party's
attorneys and accountants) the nature of the business
relationship between Agent or any Lender or between Agent and
Borrower or the terms of the Loan.
ARTICLE IX
RELEASES
9.1 Releases and Sale of Collateral Prior to
Default. So long as a Default has not occurred and is
continuing, Borrower shall be entitled to obtain a release or
releases of the Lender's Liens on Assigned Loans or Mortgaged
Properties or to sell
Assigned Loans or Mortgaged Properties on which Lender's Liens
have not yet been filed so long as (i) such releases or sales
occur in connection with the sale, repayment or the
disposition of any such assets and, in the case of Major
Assets, for not less than the Minimum Release Price and (ii)
Borrower includes the proceeds from each such sale, repayment
or other disposition in the computation of Net Cash Flow for
the period when received.
9.2 Request for Releases. In order to obtain a
release of the Lenders' Liens, including, without limitation,
the release of an original promissory note evidencing an
Assigned Loan, Borrower shall execute and deliver to Agent a
Request For Release properly completed not less than three (3)
Business Days prior to the requested date of release.
9.3 Releases After Default. After the occurrence
of a Default, Borrower shall not be entitled to any release of
the Lenders' Liens or to sell any Assigned Loans or Mortgaged
Property not then covered by a Lenders' Lien without the prior
written consent of the Lenders and the Lenders shall not be
required to comply with any Request For Releases then pending.
ARTICLE X
DEFAULTS AND REMEDIES
10.1 Events of Default. The term "Event of Default"
as used in this Agreement, shall mean any one of the
following:
(a) The failure of Borrower to pay when due any
principal of or interest on the Notes, or any fees,
charges
or any other amounts payable to the Lenders or Agent
hereunder or under the Notes or other Loan Documents,
including, without limitation, the
Commitment Fee;
(b) The failure, refusal or neglect of Borrower to
observe, perform or comply with any covenant or
agreement contained in Sections 7.2, 7.18 or Article VIII;
(c) The failure, refusal or neglect of 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 10.1(a) and (b) above) and the continuation
of such failure, refusal or neglect for fifteen (15) days
after written notice thereof has been given to Borrower
by Agent or the Lenders or a Representative of Agent or
the Lenders;
(d) Any representation, warranty, certification or
statement made by Borrower in this Agreement or the other
Loan Documents or by Borrower or any other Person on
behalf of Borrower in any certificate, financial
statement or other document delivered pursuant to this
Agreement, shall prove to have been untrue in any
material respect when made or deemed to have been made;
(e) The occurrence of any event or condition which
(i) results in the acceleration of the maturity of any
Debt of Borrower, or (ii) constitutes a default
(including any applicable notice and cure period if
provided for pursuant to the terms of such Debt) under
any Debt of Borrower of which Borrower has received
written notice and, in the case of any such default other
than a monetary default, such notice contains a notice of
intention to accelerate;
(f) The filing or commencement by 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 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;
(g) The filing or commencement of an involuntary case
or other proceeding against 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 Borrower under the federal
bankruptcy laws as now or hereafter in effect;
(h) The liquidation or dissolution of Borrower or
AMRESCO, or the transfer of any of the capital stock of
Borrower;
(i) One or more judgments or orders for the
payment of money aggregating in excess of Two Hundred
Thousand and No/100 Dollars ($200,000.00) shall be
rendered against Borrower and such judgment or order
(i) 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 or
(ii) 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
valid, first and prior liens and/or security interests
(except in the case of a Permitted Encumbrance and
liens on Mortgaged Property existing as of the
conveyance of title pursuant to foreclosure); or
(k) Borrower shall, without the express consent
and joinder of Agent, execute or file of record any
certificate or instrument which has the effect, or is
intended by Borrower to have the effect, of limiting
the amount of indebtedness that may be secured by the
Collateral, or any portion thereof, except as may
otherwise be required of Borrower under applicable law.
It is understood and agreed by Borrower that any of
the foregoing "Events of Default" shall constitute an Event of
Default under 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.
10.2 Remedies. Upon the occurrence of an Event of
Default, Agent, at the direction and election of the Required
Lenders, and acting by or through its Representatives or
otherwise, and on behalf of all the Lenders, without notice
(unless expressly provided for herein), demand or presentment
(including, without limitation, notice of default, notice of
intent to accelerate or notice of acceleration) all of which are
hereby waived, and in addition to any other provision of this
Agreement or any other Loan Document, may exercise any or all of
the following rights, remedies and recourses:
(a) Declare the unpaid principal balance 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
Borrower, 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 10.1(f)
or Section 10.1(g), 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
Borrower; 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.
If 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 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 10.11 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 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, 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 10.11 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.
10.3 Separate Sales. The Collateral may be sold in one
or more parcels or blocks and in such manner and order as Agent,
in its sole discretion, may elect, it being expressly understood
and agreed that the right of sale arising out of any Event of
Default shall not be exhausted by any one or more sales.
10.4 Rights of Set-Off.
(a) In addition to the Lenders' Liens, Borrower
hereby expressly grants to each Lender the right of setoff
against all deposits and other sums at any time held or
credited by or due from any Lender to Borrower, in
accordance with the provisions of this Section
10.4. The rights of each Lender under this Section
10.4 are in addition to other rights and remedies
(including, without limitation, other rights of setoff under
law or equity) which each 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 Borrower into which only funds of unrelated
thirdparties are deposited, and provided that Borrower has
informed Agent and the applicable Lender of the nature of
such accounts) at any time held, and other indebtedness at
any time owing, by such Lender to or for the credit or the
account of 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 in its sole discretion, regardless
of whether such Lender
shall have made any demand under this Agreement or the Notes
and although such obligations may be unmatured.
(c) Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender and
any holder of a participation in the Notes 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 Borrower in
the amount of such participation, provided that any such setoff
by the holder of a participation shall be subject to the
provisions of Section 11.14.
10.5 Remedies Cumulative, Concurrent and Non-
Exclusive. Agent, on behalf of the Lenders, shall have all
rights, remedies and recourses granted in the Loan Documents,
including, but not limited to, all the Security Documents, and
available at law or equity (including specifically those granted
by the UCC in effect and applicable to the Assigned Loans or the
Mortgaged Property, or any portion thereof) and same (a) shall be
cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Borrower, or any others
obligated under the Notes, or against the Assigned Loans or the
Mortgaged Property or against any one or more of them, at the
sole discretion of Agent, (c) may be exercised as often as the
occasion therefor shall arise, it being agreed by 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, nonexclusive.
10.6 No Conditions Precedent to Exercise Remedies.
Borrower and each 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 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 the Lenders 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 Borrower, or such other Person, and in such
event, 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 Lenders, and (d) any other act or
occurrence, save and except the complete payment of the
Obligations. Borrower waives any right to require the Lenders to
proceed against any other Person, exhaust any Collateral, or
pursue any other remedy in the Lenders' power. Until all the
Obligations shall have been paid in full, Borrower waives any
right to enforce any remedy which the Lenders now have or may
hereafter have against Borrower and waives any benefit of and any
right to participate in any Collateral or security whatsoever now
or hereafter held by the Lenders. Borrower authorizes the
Lenders, without notice or demand and without any reservation of
rights against 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.
10.7 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 (except for the Permitted Encumbrances) in
and to any remaining Collateral. For payment and performance of
the Obligations, Agent may resort to any other security therefor
held by a trustee in such order and manner as Agent may elect.
10.8 Waivers. To the full extent permitted by law,
Borrower hereby irrevocably and unconditionally waives and
releases (a) all benefit that might accrue to 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 Agent's election to
exercise or his or its 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 Loan or any of the
Collateral or any Debt of 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.
10.9 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, Borrower and the
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 the Lenders shall continue as if same had never been
invoked.
10.10 Power of Attorney. Borrower hereby
irrevocably appoints Agent, acting for all the Lenders, as the
true and lawful attorney of Borrower with full power of
substitution for, and on behalf of 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 is acting pursuant to
the provisions of Section 12.11 or 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 Borrower with respect to the Assigned Loans, the
Mortgaged Property or any other 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 Borrower under the Assigned Loans or
under leases or other agreements affecting the Mortgaged Property
and (v) exercising any rights of Borrower under the Pool Purchase
Agreements (including, without limitation, the right to require
the Portfolio Sellers to re-purchase certain Assigned Loans).
The power so vested in Agent under this Section 10.10 is one
coupled with an interest and shall be irrevocable, except by
written instrument executed jointly by Borrower and Agent.
Notwithstanding the foregoing, Agent and the Lenders 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 Borrower or any other Person and
without in any way affecting the Obligations or any other
obligations of Borrower to any Lender. Borrower shall reimburse
Agent upon demand for any costs and expenses, including, without
limitation, reasonable attorneys' fees and collection costs, that
Agent may incur while acting as the attorney-in-fact of Borrower
as provided hereunder, all of which costs and expenses shall be
included in the Obligations.
10.11 Application of Proceeds. All payments on the
Loan received by Agent or any Lender during the existence of an
Event of Default (unless otherwise elected by the Required
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 the
Lenders' rights and remedies hereunder or under any of the Loan
Documents, shall be applied by Agent, the applicable trustee or
the receiver, if one is appointed, to the extent that funds are
so available therefrom, in the following order of priority:
(a) First, to the payment of the costs and
expenses of taking possession of the Collateral and holding,
using, repairing, improving or selling the same, including
without limitation (i) reasonable trustee's and receiver's
fees, court costs, attorneys' and accountants' fees, (ii)
costs of advertisement and (iii) the payment of any and all
Impositions and
amounts secured by any Liens equal or superior to the
Lenders' Liens.
(b) Second, to the payment of all amounts and
Obligations, other than the unpaid principal balance of
the Notes and accrued unpaid interest thereon, due to
the Lenders, or any of them, under the Loan Documents,
and any advances made by the Lenders to effect
performance of any unperformed obligations of Borrower
under any of the Loan Documents, together with any
accrued interest thereon if and as provided in the Loan
Documents.
(c) Third, to the payment of any and all accrued
and unpaid interest due on the Loan.
(d) Fourth, to the payment of the unpaid
principal balance of the Loan, in such order and manner
as the Lenders shall elect.
(e) Fifth, to the extent known by Agent and
permitted by law, to the payment of any indebtedness or
obligation secured by Liens against the Collateral
which are subordinate to the Lenders' Liens.
(f) Sixth, to Borrower, or such other Person
entitled to the same.
10.12 Certain Defaults. Notwithstanding anything
to the contrary in this Article X or any other provision of this
Agreement, or the other Loan Documents, in the case of Default
occurring solely due to a breach or misrepresentation under
Sections 6.8, 6.20,6.21, 6.22, 6.23, 6.24, 7.7(b), 7.18 or 7.25
hereof or Section 2(b) of the Collateral Assignment with respect
to title to or the condition of any of the Collateral or
Underlying Real Estate, or Borrower's due diligence with respect
thereto (but not with respect to the Lender's Liens), Borrower
shall be entitled to cure such Default by making a payment on
the Loan in an amount equal to sixty-five percent (65%) of the
Investment Balance (determined in accordance with Section 2.1)
of the asset to which such Default relates within ten (10) days
of Agent's written notice to Borrower requesting such payment.
If Borrower timely makes such payment, then such
Default shall be deemed as not having occurred hereunder and
Agent and the Lenders shall not be entitled to exercise any
other Rights due to such Default; however, if Borrower fails to
make any such payment within such ten (10) day period, such
failure shall constitute an Event of Default.
ARTICLE XI
AGENT AND THE LENDERS
11.1 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 Borrower 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 arterial information, requests,
documents and items received from Borrower 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
Borrower agree that Agent is not a fiduciary for the
Lenders or for Borrower but simply is acting in the
capacity described herein to alleviate administrative
burdens for both Borrower and the Lenders and that
Agent has no duties or responsibilities to the Lenders
or Borrower 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 Loan 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, shall be
binding upon each of the Lenders. If Agent fails to
take any action under any Loan Document after a Default
or Event of Default and
within a reasonable time after being reasonably
requested to do so by the Required Lenders, Agent shall
not suffer or incur any liability as a result of such
failure or refusal, subject only to the right of the
Lenders to remove Agent for cause pursuant to Section
11.12.
(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 Borrower, act as trustee or
depositary for Borrower or otherwise be engaged in
other transactions with 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
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 or such property or the proceeds thereof
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.
11.2 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 Borrower 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.
11.3 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 12.4, 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.
11.4 Delegation of Duties; Reliance; Consultation. The
Lenders may perform any of their duties or exercise any of their
Rights under the Loan Documents by or through Agent, and the
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,
the 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
12.9, 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 Borrower.
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 the Lenders as a group unless otherwise
specified by Agent.
11.5 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 Borrower 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
Borrower. 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).
11.6 Default; Collateral. Upon the occurrence and
continuance of a Default or an Event of Default, Agent shall make
a recommendation to the Lenders of any actions to be taken and
each of the Lenders agree to promptly confer in order that the
Lenders can consider such course of action or any other actions to
be taken for the enforcement of the Rights of the 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 the 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 the
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
Borrower, 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 Borrower 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.
11.7 Lenders' Decision. The Lenders agree as among
themselves that any decisions or elections to be made by the
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
the Lenders is expressly required under this Agreement or any
other Loan Documents.
11.8 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 Borrower or any other Person for any
act or omission or any other Lender or any participant.
11.9 Relationship of Lenders. Nothing herein shall be
construed as creating a partnership or venture among Agent and the
Lenders or among the Lenders.
11.10 Debtor-Creditor Relationship. Each Lender has
and shall maintain a direct creditor-debtor relationship with
Borrower and will have direct recourse, singly or in the
aggregate, against Borrower, 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 the
Lenders; provided, however, that if the Required Lenders have
elected and directed Agent to institute suit against Borrower for
payment of any past due amounts under the Notes or any other
Obligations for which the Lenders have recourse against Borrower,
or in the event of any bankruptcy proceedings or other legal
proceedings relating to this Agreement against Borrower, each
Lender shall be entitled, at its option, to bring or join in such
proceedings in its own name.
11.11 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 Loan.
11.12 Removal of Agent. The 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 Borrower 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
Borrower is notified in writing signed by both the removed and
successor Agents as to the appointment of the successor Agent,
Borrower shall be entitled to rely on any decision, approval or
other act by the removed Agent as binding the Lenders, and may pay
to Agent any amounts due or owing by Borrower under the Loan
Documents.
11.13 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
Borrower 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 Borrower shall
select a successor Agent. If the Required Lenders and Borrower
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. 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 Borrower and any such funds shall be held in trust
for the benefit of the Lenders or Borrower, as the case may be.
Additionally, upon the successor Agent becoming Agent as provided
in this Section 11.13, 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 the Lenders in proportion to each Lender's Loan Percentage.
11.14 Sharing of Payments and Setoffs. Each Lender
agrees that if it should receive any amount (whether by voluntary
payment, by realization upon any Collateral for the Loan, 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 Loan, 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 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 11.14 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 Borrower that either (a) constitutes
Collateral for the Loan or (b) contains funds exclusively derived
from or related to the Property, shall be applied to the
Obligations, and not to any other indebtedness of 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
Borrower) that is specifically pledged or assigned to a Lender as
security for indebtedness other than the Obligations.
11.15 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 11.3, 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 the 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 Loan and all proceeds realized
from the sale of any Collateral securing the Loan 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 the 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 the Lenders other than the
nonadvancing Lender, the 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 11.15 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 Loans in the event the same are distributed among the
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 Loan (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.
11.16 Benefit of Lenders. All terms, conditions and
agreements set forth in this Article XI, specifically including,
without limitation, the provisions of Section 11.14
are for the sole and exclusive benefit of the Lenders, and
neither Borrower nor any other Person shall be entitled to rely
on or seek the
benefit of such provisions; provided, however, that Borrower
shall be entitled to rely on any decision, approval or other act
by Agent as binding the Lenders.
ARTICLE XII
MISCELLANEOUS
12.1 Continuing Agreement. This is a continuing
Agreement and all the rights, powers and remedies of the Lenders
hereunder and all agreements and obligations of Borrower and the
Lenders hereunder, shall continue to exist until the Obligations
are paid in full.
12.2 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 telex or 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, or actual receipt; (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 Borrower, Agent or the Lenders, as the case
may be; 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
follows:
Borrower: AMRESCO New England, Inc.
1845 Woodall Rodgers Freeway
Dallas, Texas 75201-2268
Attention: Thomas J. Andrus
Telecopy No. (214) 953-7824
With copy to: AMRESCO New England, Inc.
1845 Woodall Rodgers Freeway
Dallas, Texas 75201-2268
Attention: General Counsel
Telecopy No. (214) 953-7757
Agent: Heller Financial, Inc.
Real Estate Financial Services
Attn: Portfolio Manager,
Portfolio Business (Loan
No. 95-111)
500 West Monroe St., 15th Floor
Chicago, Illinois 60661
Telecopy: (312) 441-7119
With a copy to: Heller Financial, Inc.
Real Estate Financial Services
Attn: Group General Counsel
500 West Monroe St., 15th Floor
Chicago, Illinois 60661
Telecopy: (312) 441-7872
All Other
Lenders: At the respective
addresses of such Lenders set forth in
Schedule I.
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 12.2 shall control over any
conflicting contractual notice provisions contained in the Loan
Documents.
12.3 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.
12.4 Expenses; Documentary Taxes; Indemnification.
Borrower shall pay (a) all expenses of Agent, including
reasonable fees and disbursements of legal counsel for Agent, in
connection with the negotiation, documentation and closing of the
Loan, and thereafter 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 any Lender, 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 Agent
or any Lender in connection therewith; provided, however, that
Borrower shall not be obligated to pay any such costs, expenses
and legal fees of any Lender (other than Agent) in excess of Two
Thousand Five Hundred and No/100 Dollars ($2,500.00) for each
Lender. Borrower shall indemnify Agent and each Lender against
any Taxes imposed by reason of the execution and delivery of this
Agreement or the Notes. Borrower further shall indemnify each
Lender and hold 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 or any Lender (subject to the
Two Thousand Five Hundred and No/100 Dollars ($2,500.00)
limitation set forth above) in connection with any investigative,
administrative or judicial proceeding, whether or not Agent or
such Lender shall be designated a party thereto)
which may be incurred by any Lender (or by Agent in connection
with its actions as Agent hereunder), relating to or arising out
of this Agreement or any actual or proposed use of proceeds of
the Loan; provided that no Lender shall have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct, it being the intention hereby that a Lender or Agent
shall be indemnified for
the consequences of their negligence.
12.5 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 Borrower and
the Required Lenders (or by Agent on behalf of the Required
Lenders if so authorized by them, or if authorized under the
terms of this Agreement) and, if the rights or duties of Agent
are affected thereby, by Agent.
12.6 Survival. All representations, warranties and
covenants made by Borrower herein or in any certificate or other
instrument delivered by it or for its behalf under the Loan
Documents shall be considered to have been relied upon by the
Lenders and shall survive the delivery to the Lenders of such
Loan Documents or the extension of any of the Loan (or any part
thereof), regardless of any investigation made by or on behalf of
the Lenders.
12.7 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. Borrower confirms that there are no
existing defenses, claims, counterclaims or rights of offset
against the Lenders or Agent 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 Borrower hereby expressly releases and discharges
Agent and each Lender, and their officers and representatives,
from any and all such claims, known or unknown. Borrower further
confirms that neither Agent nor any of the Lenders have made any
agreements with, or commitments or representations to, 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.
12.8 Limitation on Interest.
(a) Notwithstanding anything herein or in the Loan
Documents, expressed or implied, to the contrary, in no event
shall any interest rate charged hereunder or under any of the
Notes or any of the Loan Documents, or any interest contracted
for, collected or received by the Lenders, or any of them exceed
the Maximum Lawful Rate or the maximum amount of interest
permitted under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement, any
of the Notes or the other Loan Documents shall involve exceeding
the Maximum Lawful Rate ("Excess Interest"), then ipso facto, the
obligation to be fulfilled shall be reduced to the Maximum Lawful
Rate and if, for any reason whatsoever, Agent or any Lender shall
receive, as interest, an amount which would be deemed unlawful
such interest shall be applied to the Loan (whether or not due
and payable), and not to the payment of interest, or refunded to
Borrower if such Loan has been paid in full. Neither Borrower
nor any guarantor or endorser shall have any action against Agent
or any Lender for any damages
whatsoever arising out of the payment or collection of any such
Excess Interest.
12.9 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.
12.10 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) Borrower
shall not, directly or indirectly, assign or transfer, or attempt
to assign or transfer, any of its rights, duties or obligation
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 except in accordance
with Section 11.14 and this Section 12.10. Prior to entering into
any discussions with any potential participant or assignee of its
interest in the Loan, the applicable Lender shall obtain
Borrower's prior consent 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 Loan, 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) Borrower and Agent shall have given their
prior written consent for such assignment or
participation; provided that Borrower's consent shall
not be unreasonably withheld or delayed with respect to
an assignment or participation by Heller, and shall
not
be required during the continuance of a Default.
(iii) Any such assignment or participation
must be to an Eligible Assignee.
(c) In addition to the conditions and
requirements set forth in Section 12.10(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) Heller's Loan Percentage shall not at any
time be less than forty percent (40%), unless otherwise
consented to in writing by Borrower; provided that
Borrower's consent shall not be required after the
occurrence and during the continuance of a Default.
(iii) At no time shall there be more than four
(4) Lenders under this Agreement, and no assignment
shall be made if as a result of such assignment there
would be more than four (4) Lenders hereunder.
(iv) 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
Borrower, an Assignment and Acceptance, substantially
in the form of Exhibit F 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 Borrower 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
12.10(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 the
Borrower or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or
observance by 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 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
Loans owing to the Lenders from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error,
and the Borrower, 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 the Borrower 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 Two Thousand and No/100
Dollars ($2,000.00).
(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 the Borrower 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
Borrower and the Lenders, upon request by Borrower 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 the Borrower.
(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 rom 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 Loan to be sold or participated plus
accrued and unpaid interest thereon), without first offering such
sale or participation 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) Notwithstanding anything to the contrary contained
herein, no participant of a Lender or new Lender by assignment
from an original Lender under this Agreement will be entitled to
sell a participation interest in or assign all or a portion of its
assigned interest or participation interest; provided, however,
that a new Lender by assignment from a Lender under this Agreement
will be entitled to (A) sell a participation interest in its Loan
Percentage subject to and upon the terms and conditions of this
Section 12.10, and (B) assign its entire interest in the Loan
to
one assignee or fifty percent (50%) of its interest in the Loan to
not more than two assignees, subject to and upon the terms and
conditions of this Section 12.10 (including without limitation
Section 12.10(c)(iii)).
(j) Any participant or new Lender hereunder shall agree
in writing to keep in confidence any financial information
regarding Borrower and its Affiliates that such Purchaser or
Participant may receive as provided in Section 7.3.
(k) Borrower shall execute, acknowledge and deliver a
certificate substantially in the form attached hereto as Exhibit G
upon the request of a Lender to satisfy a prospective Eligible
Assignee that the indebtedness (or interest therein) under the
Loan to be purchased or participated is outstanding in accordance
with the terms and provisions contained herein and in the other
Loan Documents pertaining thereto; provided that after September
20, 1995, Borrower shall not be obligated to deliver such a
certificate more than five (5) times in any twelve month period.
12.11 Lenders' Right To Perform Borrower's
Obligations.
(a) If Borrower shall fail, refuse or neglect to make
any payment or perform any act required by the Loan Documents,
then at any time thereafter, and without notice to or demand upon
Borrower and without waiving or releasing any other right, remedy
or recourse the Lenders may have because of same, Agent on behalf
of the Lenders, may (but shall not be obligated to) make such
payment or perform such act for the account of and at the expense
of Borrower, and shall have the right to take all such action with
respect to the Assigned Loans or the Mortgaged Property, as it may
reasonably deem necessary or appropriate; provided, however, if no
Event of Default is then in existence and Agent does not in good
faith believe that immediate action must be taken in order to
protect the Lenders' Liens or the security intended to be created
by the Loan Documents, then prior to making any such payment or
performing any such act, Agent shall give Borrower notice thereof
and a ten (10) day period to make any such payment or perform such
act before Agent does so. If Agent shall elect to pay such sums
due with reference to the Assigned Loans or the Mortgaged
Property, Agent may do so in reliance on any bill, statement or
assessment procured from the appropriate Governmental Authority or
other issuer thereof without inquiring into the accuracy or
validity thereof.
Similarly, in making any payments to protect the security intended
to be created by the Loan Documents, Agent shall not be bound to
inquire into the validity of any apparent or threatened adverse
title, Lien, encumbrance or claim before making an advance for the
purpose of preventing or removing the same. Agent shall give
notice (by telephone or other means permitted herein) to the
Lenders of all costs and expenses to be incurred or previously
incurred by Agent in enforcing its rights under this Agreement or
this Section 12.11. Not later than 12:00 noon (Chicago, Illinois
time) on the date which is ten (10) Business Days after any such
Lender receives such notice, such Lender shall make available its
Loan Percentage of such costs and expenses in Federal funds
immediately available in Chicago, Illinois to Agent at its
Chicago, Illinois address shown in Schedule I; provided, however,
that such Lender shall use its best efforts to make available its
Loan Percentage of such costs and expenses, in Federal funds
immediately available in Chicago, Illinois to Agent at its
Chicago, Illinois address within three (3) Business Days after it
receives such notice. In the event that any funds so received by
Agent from the Lenders are not used for the purposes collected,
Agent shall promptly return any such funds to the Lenders who
remitted same.
(b) Borrower shall indemnify the Lenders for all losses,
expenses, damages, claims and causes of action, including
reasonable attorneys' fees, incurred or accruing by reason of any
acts performed by Agent pursuant to the provisions of this Section
12.11 or by reason of any other provision in the Loan Documents.
All sums paid by the Lenders pursuant to this Section 12.11 or
such other provision of the Loan Documents, and all other sums
expended by the Lenders to which they shall be entitled to be
indemnified, together with interest thereon at the interest rate
from time to time in effect with respect to the Notes, shall
constitute additions to the Obligations, shall be secured by the
Liens created by the Loan Documents and shall be paid by Borrower
to the Lenders upon demand.
12.12 Senior Debt. The indebtedness of Borrower
hereunder and under the Notes and all of the Obligations is
intended to be and shall be senior to any other subordinated
indebtedness of Borrower or any other indebtedness of Borrower
secured by a Lien on any portion of the Collateral (the foregoing
shall not in any way imply the 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 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 prior written consent of the
Required Lenders.
12.13 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.
12.14 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.
12.15 APPLICABLE LAW. THIS AGREEMENT, THE NOTES AND
ALL THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION GOVERN
THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE
REMEDIES, RELATED TO ANY PART OF THE COLLATERAL.
12.16 VENUE. BORROWER AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN
CONNECTION WITH, OUT OF, RELATED TO OR FROM THE LOAN, THIS
AGREEMENT OR THE LOAN DOCUMENTS SHALL BE LITIGATED, AT AGENT'S AND
LENDERS' SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A
SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL,
STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE.
BORROWER IRREVOCABLY APPOINTS AND DESIGNATES C T CORPORATION
SYSTEM, WHOSE ADDRESS IS BORROWER, C/O C T CORPORATION SYSTEM, 208
S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT
SERVICE OF SUCH PROCESS UPON BORROWER SHALL CONSTITUTE PERSONAL
SERVICE OF PROCESS UPON BORROWER. IN THE EVENT SERVICE IS
UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN
CHICAGO, ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS AFTER
AGENT'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS)
ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY AGENT AND LENDERS OF
SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, AGENT SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO
DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO
BORROWER. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT
BY AGENT OR ANY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH
THIS PARAGRAPH.
12.17 JURY TRIAL WAIVER. BORROWER, AGENT AND THE
LENDERS EACH BY ITS ACCEPTANCE OF THIS AGREEMENT, HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT AND THE BUSINESS RELATIONSHIP
THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER, AGENT AND EACH
LENDER, AND BORROWER ACKNOWLEDGES THAT NO LENDER, AGENT NOR ANY
PERSON ACTING ON BEHALF OF SUCH PARTIES HAS MADE ANY
REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR
HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. BORROWER, AGENT AND LENDERS ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER, AGENT AND
LENDERS FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR
HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS
AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL.
12.18 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 any be assembled.
12.19 Recourse. Except as provided in the Agreement
of Parent and the Stock Pledge Agreement, each of even date
herewith and executed by AMRESCO in favor of Agent and Lenders,
recourse under this Agreement and the other Loan Documents is
limited to the assets and property of Borrower and, except as set
forth in said Agreement of Parent and Stock Pledge Agreement, no
shareholder, officer, director or employee of
Borrower shall be liable for any of the Obligations and Agent and
Lenders shall look solely to the assets of Borrower for
satisfaction thereof.
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.
BORROWER:
AMRESCO NEW ENGLAND, INC., a
Delaware corporation
By:____________________________
Thomas J. Andrus,
Treasurer
OAK CLIFF FINANCIAL, INC., a
Delaware corporation
By:____________________________
Thomas J. Andrus,
Treasurer
AGENT AND LENDER:
HELLER FINANCIAL, INC., a
Delaware corporation
By:____________________________
<PAGE>
EXHIBIT A
OPEN-END MORTGAGE, ASSIGNMENT,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS OPEN-END MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT AND
FINANCING STATEMENT (this "Mortgage"), dated as of the date
stated on the signature page hereto, is executed by Mortgagor for
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged by Mortgagor.
ARTICLE 1 - Certain Definitions; Granting Clauses; Secured
Indebtedness
Section 1.1. Certain Definitions and Reference Terms. In
addition to other terms defined herein, each of the following
terms shall have the meaning assigned to it:
"Agent": Heller Financial, Inc., a Delaware corporation,
and any successor Agent under Loan Agreement.
"Mortgagor": AMRESCO New England, Inc., a Delaware
corporation.
"Lender": Heller Financial, Inc., a Delaware corporation,
its successors, legal representatives, agents and assigns,
whether one or more.
"Loan Agreement": That certain Term Loan Agreement dated as
of July 18, 1995, executed by and among Oak Cliff Financial,
Inc., Mortgagor and Lender, as the same may be modified or
amended from time to time.
"Promissory Note": That certain Promissory Note dated as of
July 18, 1995, in the face amount of $27,500,000, executed by
Mortgagor and Oak Cliff Financial, Inc., payable to the order of
Lender, and finally maturing on July 31, 1998.
Section 1.2. Mortgaged Property. Mortgagor does hereby
GRANT unto Agent, on behalf and for the benefit of Lender and
each Holder (as hereinafter defined), and their successors and
assigns, forever, with MORTGAGE COVENANTS, the following:
(a) the real estate known as Greenfield Road, New Boston,
Hillsborough County, New Hampshire, (herein called the "Land") as
more particularly described in Exhibit A which is attached hereto
and incorporated herein by reference, and (i) all buildings,
structures and other improvements now or hereafter situated or to
be situated on the Land (herein together called the
"Improvements"); and (ii) all right, title and interest of
Mortgagor in and to (1) all streets, roads, alleys, easements,
rights-of-way or use, licenses, rights of ingress and egress,
vehicle parking rights and public places, existing or proposed,
abutting, adjacent, used in connection with or pertaining to the
Land or the Improvements; (2) any strips or gores between the
Land and abutting or adjacent properties; and (3) all water and
water rights, timber, crops and mineral interests on or
pertaining to the Land (the Land, Improvements and other rights,
titles and interests referred to in this clause (a) being herein
sometimes collectively called the "Premises"); (b) all fixtures,
equipment, systems, machinery, furniture, furnishings, inventory,
goods, building and construction materials, supplies, and
articles of personal property, of every kind and character, now
owned or hereafter acquired by Mortgagor, which are now or
hereafter attached to or situated in, on or about the Land or the
Improvements, or used in or necessary to the complete and proper
planning, development, use, occupancy, maintenance or operation
thereof, or acquired (whether delivered to the Land or stored
elsewhere) for use or installation in or on the Land or the
Improvements, and all renewals and replacements of, substitutions
for and additions to the foregoing (the properties referred to in
this clause (b) being herein sometimes collectively called the
"Accessories," all of which are hereby declared to be permanent
accessions to the Land); (c) all (i) plans and specifications
for the Improvements; (ii) Mortgagor's rights, but not liability
for any breach by Mortgagor, under all commitments, insurance
policies and other contracts and general intangibles (including
but not limited to trademarks, trade names and symbols) related
to the Premises or the Accessories or the operation thereof;
(iii) deposits (including but not limited to Mortgagor's rights
in tenants' security deposits, deposits with respect to utility
services to the Premises, and any deposits or reserves hereunder
or under any other Loan Document for taxes, insurance or
otherwise), money, accounts, instruments, documents, notes and
chattel paper arising from or by virtue of any transactions
related to the Premises or the Accessories; (iv) permits,
licenses, franchises, certificates and other rights and
privileges obtained in connection with the Premises or the
Accessories; (v) leases, rents, royalties, bonuses, issues,
profits, revenues and other benefits of the Premises and the
Accessories; (vi) oil, gas and other hydrocarbons and other
minerals produced from or allocated to the Land and all products
processed or obtained therefrom, and the proceeds thereof; and
(vii) engineering, accounting, title, legal, and other technical
or business data concerning the Mortgaged Property which are in
the possession of Mortgagor or in which Mortgagor can otherwise
grant a security interest; and (d) all (i) proceeds of or arising
from the properties, rights, titles and interests referred to
above in this Article 1, including but not limited to proceeds of
any sale, lease or other disposition thereof, proceeds of each
policy of insurance relating thereto (including premium refunds),
proceeds of the taking thereof or of any rights appurtenant
thereto, including change of grade of streets, curb cuts or other
rights of access, by eminent domain or transfer in lieu thereof
for public or quasi-public use under any law, and proceeds
arising out of any damage thereto; and (ii) other interests of
every kind and character which Mortgagor now has or hereafter
acquires in, to or for the benefit of the properties, rights,
titles and interests referred to above in this Article 1 and all
property used or useful in connection therewith, including but
not limited to hereditaments, appurtenances, profits and rights of
ingress and egress and remainders, reversions and reversionary
rights or interests; and if the estate of Mortgagor in any of the
property referred to above in this Article 1 is a leasehold
estate, this conveyance shall include, and the lien and security
interest created hereby shall encumber and extend to, all other or
additional title, estates, interests or rights which are now owned
or may hereafter be acquired by Mortgagor in or to the property
demised under the lease creating the leasehold estate by reason of
the exercise of options thereunder or by reason of amendment,
modification, supplement, extension or renewals of said lease
and all rights and benefits or whatsoever nature derived or to
be derived by virtue of said lease, including, without
limitation, the right to exercise options, to give consents
and to modify, amend, terminate or surrender such lease; TO HAVE
AND TO HOLD the foregoing rights, interests and
properties, and all rights, estates, powers and privileges
appurtenant thereto (herein collectively called the "Mortgaged
Property"), unto Agent, on behalf and for the benefit of Lender
and each Holder, and their successors or assigns, subject,
however, to the terms, provisions and conditions herein set
forth.
Section 1.3. Security Interest. Mortgagor hereby grants to
Agent, on behalf and for the benefit of Lender and each a first
security interest in all of the Mortgaged Property which
constitutes personal property or fixtures (herein sometimes
collectively called the "Collateral"). In addition to its rights
hereunder or otherwise, Agent and each Holder shall have all of the
rights of a secured party under the New Hampshire Uniform
Commercial Code or under the Uniform Commercial Code in force in
any other state to the extent the same is applicable law.
Information concerning the security interest created hereby may be
obtained from Agent, as secured party, at the address of Agent
stated at the end of this Mortgage. The mailing address of
Mortgagor is as stated at the end of this Mortgage.
Section 1.4. Notes, Loan Documents, Other Obligations. This
Mortgage is made to secure and enforce the payment and performance
of the following promissory notes, obligations, indebtedness and
liabilities: (a) the Promissory Note and all other notes given in
substitution therefor or in modification, renewal, extension or
restatement thereof, in whole or in part, including, without
limitation, all of the promissory notes which may be issued in
replacement of such Promissory Note or subsequent notes pursuant to
Section 12.10 of the Loan Agreement (such notes, as from time to
time supplemented, amended, or modified and all other notes given
in substitution therefor, or in modification, renewal or extension
thereof, in whole or in part, being hereinafter collectively called
the "Note", and Lender, or the subsequent holder or holders at the
time in question of the Note, or any of them, or any part thereof
or interest therein, or any of the secured indebtedness, as
hereinafter defined, being herein called "Holder"); (b) all
indebtedness and other obligations owed to Holder now or hereafter
incurred or arising pursuant to or permitted by the provisions of
the Note, this Mortgage, or any other document now or hereafter
evidencing, governing, guaranteeing or securing the secured
indebtedness, as hereinafter defined, or any part thereof or
otherwise executed in connection with the loan evidenced by the
Note, including but not limited to the Loan Agreement, any other
loan or credit agreement, tri-party financing agreement or other
agreement between Mortgagor and Holder, or among Mortgagor, Holder
and any other party or parties, pertaining to the repayment or use
of the proceeds of the loan evidenced by the Note (the Note, this
Mortgage, the Loan Agreement and such other documents, as they or
any of them may have been or may be from time to time supplemented,
amended or modified, being herein sometimes collectively called the
"Loan Documents"); and (c) all other debts, obligations and
liabilities of Mortgagor of every kind and character now or
hereafter existing in favor of Holder, including prepayment
charges, if any, and any advances, disbursements, payments and
reimbursements made and charges or costs incurred by Agent or any
Lender pursuant to the terms of any of the Loan Documents, (even if
the aggregate amount of the secured indebtedness, as hereinafter
defined, outstanding at any one time exceeds the face amount of the
Note), it being contemplated that Mortgagor may hereafter become
indebted to Holder for such further debts, obligations and
liabilities; provided, however, and notwithstanding the foregoing
provisions of this clause (c), this Mortgage shall not secure any
such other loan, advance, debt, obligation or liability with
respect to which Holder is by applicable law prohibited from
obtaining a lien on real estate. The indebtedness referred to in
this Section 1.4, and all renewals, extensions and modifications
thereof, and all substitutions therefor, in whole or in part, are
hereinafter sometimes referred to as the "secured indebtedness" or
the "indebtedness secured hereby."
ARTICLE 2 - Representations, Warranties and Covenants
Section 2.1. In addition and supplemental to the Mortgage
Covenants, Mortgagor represents, warrants, and covenants as
follows:
(a) Payment and Performance. Mortgagor will make due and
punctual payment of the secured indebtedness. Mortgagor will
timely and properly perform and comply with all of the covenants,
agreements, and conditions imposed upon it by this Mortgage and the
other Loan Documents and will not permit a default to occur
hereunder or thereunder. Time shall be of the essence in this
Mortgage with respect to all of Mortgagor's obligations hereunder.
(b) Title and Permitted Encumbrances. Mortgagor has, in
Mortgagor's own right, and Mortgagor covenants to maintain, lawful,
good, indefeasible, clear record and marketable title in fee to
such of the Mortgaged Property as is real property, and good and
marketable title to the remainder of the Mortgaged Property, free
and clear of all liens, security interests, and encumbrances except
for Permitted Encumbrances (as defined in the Loan Agreement).
Mortgagor will warrant and defend title to the Mortgaged Property,
to Holder, subject as aforesaid, against the claims and demands of
all persons claiming or to claim the same or any part thereof.
Mortgagor will not modify or permit modification of any Permitted
Encumbrance without the prior written consent of Holder. With
respect to each Mortgagor who is an individual, no part of the
Mortgaged Property constitutes his or her homestead of any type or
character. If any right or interest of Holder in the Mortgaged
Property or any part thereof shall be endangered or questioned or
shall be attacked directly or indirectly, Holder (whether or not
named as a party to legal proceedings with respect thereto), is
hereby authorized and empowered to take such steps as in its
discretion may be proper for the defense of any such legal
proceedings or the protection of such right or interest of Holder,
including but not limited to the employment of independent counsel,
the prosecution or defense of litigation, and the compromise or
discharge of adverse claims. All expenditures so made of every
kind and character shall be a demand obligation (which obligation
Mortgagor hereby promises to pay) owing by Mortgagor to Holder, and
Holder shall be subrogated to all rights of the person receiving
such payment.
(c) Insurance. Upon request by Holder, Mortgagor shall
obtain and maintain at Mortgagor's sole expense: (i) mortgagee
title insurance issued to Holder covering the Premises as required
by Holder; (ii) insurance with respect to all insurable Mortgaged
Property, against loss or damage by fire, lightning, windstorm,
explosion, hail, tornado and such hazards as are presently included
in so-called "extended coverage" and against such other insurable
hazards as Holder may require, in an amount not less than 100% of
the full replacement cost if available in the market place,
including the cost of debris removal, without deduction for
depreciation and sufficient to prevent Mortgagor and Holder from
becoming a coinsurer, such insurance to be in Builder's Risk
(non-reporting) form during and with respect to any construction on
the Premises; (iii) if and to the extent the Premises are in a
flood prone area, a federal flood insurance policy in an amount
equal to the lesser of the aggregate principal face amount of the
Note or the maximum amount available; and (iv) such other insurance
on the Mortgaged Property as may from time to time be required by
Holder and against other insurable hazards or casualties which at
the time are commonly insured against in the case of premises
similarly situated, due regard being given to the height, type,
construction, location, use and occupancy of buildings and
improvements. Such property insurance with respect to the
Mortgaged Property may be part of a "blanket" insurance policy
covering all property of Mortgagor. All insurance policies shall
be issued and maintained by insurers, in amounts, with deductibles,
and in form satisfactory to Holder, and shall require not less than
thirty (30) days' prior written notice to Holder of any
cancellation or change of coverage. Without limiting the
discretion of Holder with respect to required endorsements to
insurance policies, all such policies for loss of or damage to the
Mortgaged Property shall contain a standard mortgagee clause
(without contribution) naming Holder as mortgagee with loss
proceeds payable to Holder. The originals of each initial
insurance policy (or to the extent permitted by Holder, a copy of
the original policy and a satisfactory certificate of insurance),
or in the case that the Mortgaged Property is insured as part of a
blanket policy evidence that the Mortgaged Property is covered
thereby, shall be delivered to Holder upon request, with premiums
fully paid, and each renewal or substitute policy (or certificate)
shall be delivered to Holder, with premiums fully paid, at least
ten (10) days before the termination of the policy it renews or
replaces. Mortgagor shall pay all premiums on policies required
hereunder as they become due and payable and promptly deliver to
Holder evidence satisfactory to Holder of the timely payment
thereof. If any loss occurs at any time when Mortgagor has failed
to perform Mortgagor's covenants and agreements in this Section,
Holder shall nevertheless be entitled to the benefit of all
insurance covering the loss and held by or for Mortgagor, to the
same extent as if it had been made payable to Holder. Upon any
foreclosure hereof or transfer of title to the Mortgaged Property
in extinguishment of the whole or any part of the secured
indebtedness, all of Mortgagor's right, title and interest in and
to the insurance policies referred to in this Section (including
unearned premiums) and all proceeds payable thereunder shall
thereupon vest in the purchaser at foreclosure or other such
transferee, to the extent permissible under such policies. Holder
shall have the right (but not the obligation) to make proof of loss
for, settle and adjust any claim under, and receive the proceeds
of, all insurance for loss of or damage to the Mortgaged Property,
and the expenses incurred by Holder in the adjustment and
collection of insurance proceeds shall be a part of the secured
indebtedness and shall be due and payable to Holder on demand.
Holder shall not be, under any circumstances, liable or responsible
for failure to collect or exercise diligence in the collection of
any of such proceeds or for failure to see to the proper
application of any amount paid over to Mortgagor. Any such
proceeds received by Holder shall, after deduction therefrom of all
reasonable expenses actually incurred by Holder, including
attorneys' fees, at Holder's option be (1) released to Mortgagor,
or (2) applied (upon compliance with such terms and conditions as
may be required by Holder) to repair or restoration, either partly
or entirely, of the Mortgaged Property so damaged, or (3) applied
to the payment of the secured indebtedness in such order and manner
as Holder, in its sole discretion, may elect, whether or not due.
In any event, the unpaid portion of the secured indebtedness shall
remain in full force and effect and the payment thereof shall not
be excused.
(d) Reserve for Insurance, Taxes and Assessments. Upon
request of Holder at any time after a Default, to secure
Mortgagor's obligations referred to below, but not in lieu of such
obligations, Mortgagor will deposit with Holder a sum equal to ad
valorem and/or real estate taxes, assessments and charges (which
charges for the purpose of this paragraph shall include without
limitation any recurring charge which could result in a lien
against the Mortgaged Property) against the Mortgaged Property for
the current year and the premiums for such policies of insurance
for the current year, all as estimated by Holder and prorated to
the end of the calendar month following the month during which
Holder's request is made, and thereafter will deposit with Holder,
on each date when an installment of principal and/or interest is
due on the Note, sufficient funds (as estimated from time to time
by Holder) to permit Holder to pay at least fifteen (15) days prior
to the due date thereof, the next maturing ad valorem and/or real
estate taxes, assessments and charges and premiums for such
policies of insurance. Holder shall have the right to rely upon
tax information furnished by applicable taxing authorities in the
payment of such taxes or assessments and shall have no obligation
to make any protest of any such taxes or assessments. Any excess
over the amounts required for such purposes shall be held by Holder
for future use, applied to any secured indebtedness or refunded to
Mortgagor, at Holder's option, and any deficiency in such funds so
deposited shall be made up by Mortgagor upon demand of Holder. All
such funds so deposited shall bear no interest, may be mingled with
the general funds of Holder and shall be applied by Holder toward
the payment of such taxes, assessments, charges and premiums when
statements therefor are presented to Holder by Mortgagor (which
statements shall be presented by Mortgagor to Holder a reasonable
time before the applicable amount is due); provided, however, that,
if an Event of Default shall have occurred hereunder, such funds
may at Holder's option be applied to the payment of the secured
indebtedness in the order provided by Section 10.11 of the Loan
Agreement, and that Holder may at any time, in its discretion,
apply all or any part of such funds toward the payment of any such
taxes, assessments, charges or premiums which are past due,
together with any penalties or late charges with respect thereto.
The conveyance or transfer of Mortgagor's interest in the Mortgaged
Property for any reason (including without limitation the
foreclosure of a subordinate lien or security interest or a
transfer by operation of law) shall constitute an assignment or
transfer of Mortgagor's interest in and rights to such funds held
by Holder under this paragraph but subject to the rights of Holder
hereunder.
(e) Condemnation. Mortgagor shall notify Holder immediately
of any threatened or pending proceeding for condemnation affecting
the Mortgaged Property or arising out of damage to the Mortgaged
Property, and Mortgagor shall, at Mortgagor's expense but
consistent with the provisions of Section 7.7 of the Loan
Agreement, diligently prosecute any such proceedings. Holder shall
have the right (but not the obligation) to participate in any such
proceeding and to be represented by counsel of its own choice.
Subject to Section 7.12 of the Loan Agreement, Holder shall be
entitled to receive all sums which may be awarded or become payable
to Mortgagor for the condemnation of the Mortgaged Property, or any
part thereof, for public or quasi-public use, or by virtue of
private sale in lieu thereof, and any sums which may be awarded or
become payable to Mortgagor for injury or damage to the Mortgaged
Property. Mortgagor shall, promptly upon request of Holder,
execute such additional assignments and other documents as may be
necessary from time to time to permit such participation and to
enable Holder to collect and receipt for any such sums. All such
sums are hereby assigned to Holder, and shall, after deduction
therefrom of all reasonable expenses actually incurred by Holder,
including attorneys' fees, at Holder's option be applied in
accordance with Section 7.12 of the Loan Agreement. In any event
the unpaid portion of the secured indebtedness shall remain in full
force and effect and the payment thereof shall not be excused.
Holder shall not be, under any circumstances, liable or responsible
for failure to collect or to exercise diligence in the collection
of any such sum or for failure to see to the proper application of
any amount paid over to Mortgagor. Holder is hereby authorized, in
the name of Mortgagor, to execute and deliver valid acquittances
for, and to appeal from, any such award, judgment or decree.
(f) Compliance with Legal Requirements. To Borrower's
knowledge, no part of the Mortgaged Property constitutes a
nonconforming use under any zoning law or similar law or ordinance.
Mortgagor has or shall obtain and preserve in force all requisite
zoning, utility, building, health and operating permits from the
governmental authorities having jurisdiction over the Mortgaged
Property. If Mortgagor receives a notice or claim from any person
that the Mortgaged Property, or the use, operation or maintenance
thereof, is not in compliance with any Legal Requirement, Mortgagor
will promptly furnish a copy of such notice or claim to Holder.
(g) Maintenance, Repair and Restoration. Mortgagor will
maintain the Mortgaged Property consistent with the requirements of
Section 7.7 of the Loan Agreement. Notwithstanding the foregoing,
Mortgagor will not, without the prior written consent of Holder,
make any structural alteration to the Mortgaged Property or any
other alteration thereto which impairs the value thereof. If any
act or occurrence of any kind or nature (including any condemnation
or any casualty for which insurance was not obtained or obtainable)
shall result in damage to or loss or destruction of the Mortgaged
Property, Mortgagor shall give prompt notice thereof to Holder and
Mortgagor shall deal with the Mortgaged Property consistent with
the provisions of Section 7.7 of the Loan Agreement.
(h) No Other Liens. Mortgagor will not, without the prior
written consent of Holder, create, place or permit to be created or
placed, or through any act or failure to act, acquiesce in the
placing of, or allow to remain, any deed of trust, mortgage,
voluntary or involuntary lien, whether statutory, constitutional or
contractual, security interest, encumbrance or charge, or
conditional sale or other title retention document, against or
covering the Mortgaged Property, or any part thereof, other than
the Permitted Encumbrances, regardless of whether the same are
expressly or otherwise subordinate to the lien or security interest
created in this Mortgage, and should any of the foregoing become
attached hereafter in any manner to any part of the Mortgaged
Property without the prior written consent of Holder, Mortgagor
will cause the same to be promptly discharged and released.
Mortgagor will own all parts of the Mortgaged Property and will not
acquire any fixtures, equipment or other property forming a part of
the Mortgaged Property pursuant to a lease, license or similar
agreement, without the prior written consent of Holder. If Holder
consents to the voluntary grant by Mortgagor of any lien, security
interest, or other encumbrance (hereinafter called "Subordinate
Mortgage") covering any of the Mortgaged Property or if the
foregoing prohibition is determined by a court of competent
jurisdiction to be unenforceable as to a Subordinate Mortgage, any
such Subordinate Mortgage shall contain express covenants to the
effect that: (1) the Subordinate Mortgage is unconditionally
subordinate to this Mortgage; (2) if any action (whether judicial
or pursuant to a power of sale) shall be instituted to foreclose or
otherwise enforce the Subordinate Mortgage, no tenant of any of the
Leases (hereinafter defined) shall be named as a party defendant,
and no action shall be taken that would terminate any occupancy or
tenancy without the prior written consent of Holder; (3) Rents
(hereinafter defined), if collected by or for the holder of the
Subordinate Mortgage, shall be applied first to the payment of the
secured indebtedness then due and expenses incurred in the
ownership, operation and maintenance of the Mortgaged Property in
such order as Holder may determine, prior to being applied to any
indebtedness secured by the Subordinate Mortgage; and (4) written
notice of default under the Subordinate Mortgage and written notice
of the commencement of any action (whether judicial or pursuant to
a power of sale) to foreclose or otherwise enforce the Subordinate
Mortgage shall be given to Holder with or immediately after the
occurrence of any such default or commencement.
(i) Operation of Mortgaged Property. Mortgagor will operate
the Mortgaged Property consistent with the provisions of Section
7.7 of the Loan Agreement and will pay all fees or charges of any
kind in connection therewith. Mortgagor will not use or occupy, or
allow the use or occupancy of, the Mortgaged Property in any manner
which violates any Legal Requirement or which constitutes a public
or private nuisance or which makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with respect
thereto. Mortgagor will not initiate or permit any zoning
reclassification of the Mortgaged Property or seek any variance
under existing zoning ordinances applicable to the Mortgaged
Property or use or permit the use of the Mortgaged Property in such
a manner which would result in such use becoming a nonconforming
use under applicable zoning ordinances or other Legal Requirement.
Mortgagor will not impose any restrictive covenants or encumbrances
upon the Mortgaged Property, execute or file any subdivision plat
affecting the Mortgaged Property or consent to the annexation of
the Mortgaged Property to any municipality, if any such action
would impair the value of the Mortgaged Property. Mortgagor will
not do or suffer to be done any act whereby the value of any part
of the Mortgaged Property may be lessened. Without the prior
written consent of Holder, there shall be no drilling or
exploration for or extraction, removal or production of any
mineral, hydrocarbon, gas, natural element, compound or substance
(including sand and gravel) from the surface or subsurface of the
Land regardless of the depth thereof or the method of mining or
extraction thereof. Mortgagor will cause all debts and liabilities
of any character (including without limitation all debts and
liabilities for labor, material and equipment and all debts and
charges for utilities servicing the Mortgaged Property) incurred in
the construction, maintenance, operation and development of the
Mortgaged Property to be promptly paid. Notwithstanding the
foregoing, Holder will take no remedial action with respect to
Mortgagor's failure to comply with this Section 2.1(j) if its
failure to so comply could not have a material adverse effect on
the Mortgaged Property or the financial condition or operation of
Borrower together with its subsidiaries taken as a whole.
(j) Status of Mortgagor. Mortgagor is not a "foreign person"
within the meaning of the Internal Revenue Code of 1986, as amended
(hereinafter called the "Code"), Sections 1445 and 7701 (i.e.
Mortgagor is not a non-resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are
defined in the Code and any regulations promulgated thereunder).
The loan evidenced by the Note is solely for business purposes, and
is not for personal, family, household or agricultural purposes.
Mortgagor's principal place of business and chief executive office,
and the place where Mortgagor keeps its books and records
concerning the Mortgaged Property has for the preceding four
months been and will continue to be (unless Mortgagor notifies
Holder of any change in writing prior to the date of such change)
the address of Mortgagor set forth at the end of this Mortgage.
(k) Environmental.
(i) Current Status. The Mortgaged Property and Mortgagor are
not in violation of or subject to any existing, pending or, to the
best knowledge of Mortgagor, threatened investigation or inquiry by
any governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws
as they now exist or are hereafter enacted and/or amended are
hereinafter sometimes collectively called "Applicable Environmental
Laws"), including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
(as amended from time to time, hereinafter called "CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
Amendments of 1980, and the Hazardous and Solid Waste Amendments of
1984 (as amended from time to time, hereinafter called "RCRA"),
N.H. RSA 130-A (Lead Paint), N.H. RSA 141-E (Asbestos Management
and Control), N.H. RSA 146-A (Oil Spillage in Public Waters), N.H.
RSA 146-C (Underground Storage Tanks and Facilities), N.H. RSA 147A
(Hazardous Waste Management), N.H. RSA 147-B (Cleanup fund), N.H.
RSA 147-C (Hazardous Waste Facility Review), N.H. RSA 147-D
(Hazardous Waste Fee), N.H. RSA 149-M (Solid Waste Management),
N.H. RSA 485-A (Sewage Disposal), N.H. RSA 485 (Safe Drinking Water
Act), N.H. RSA 485-C (Groundwater Protection Act), N.H. RSA 482
(Well Protection), N.H. RSA 482-A (Wetlands), N.H. RSA 483-B
(Shoreland Protection Act), NH RSA 483 (Rivers Protection Act) (as
amended from time to time, hereinafter, whether one or more, called
the "New Hampshire Environmental Statutes"), as each may be amended
from time to time, and this representation will continue to be true
and correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the Mortgaged Property and Mortgagor. Mortgagor
has not obtained and is not required to obtain any permit, license
or other authorization to construct, occupy, operate or use any of
the Improvements or Accessories by reason of any Applicable
Environmental Laws. There is no storage tank or similar vessel
situated on or under the surface of the Land which would violate
the Applicable Environmental Laws, unless otherwise disclosed to
Agent. Mortgagor undertook, at the time of acquisition of the
Mortgaged Property, all appropriate inquiry into the previous
ownership and uses of the Mortgaged Property consistent with good
commercial or customary practice. Mortgagor has taken all steps
necessary to determine and has determined that no hazardous
substances or solid wastes are present, have been disposed of or
otherwise released on or to the Mortgaged Property. The use which
Mortgagor (and each tenant or other occupant) makes and intends to
make of the Mortgaged Property will not result in the disposal or
other release of any hazardous substance or solid waste on or to
the Mortgaged Property. There is not present in the Mortgaged
Property any asbestos, material containing asbestos which is or may
become friable or material containing asbestos deemed hazardous by
Applicable Environmental Laws. The terms "hazardous substance" and
"release" as used in this Mortgage shall have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") shall have the meanings specified in RCRA; provided,
that if either CERCLA or RCRA is amended so as to broaden the
meaning of any term defined thereby, such broader meaning shall
apply hereunder subsequent to the effective date of such amendment
and provided further, to the extent that the laws of New Hampshire
establish a meaning for "hazardous substance," "release," "solid
waste," or "disposal" which is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply to that
portion of the Mortgaged Property located in such state(s).
(ii) Future Performance. Mortgagor will not cause or permit
the Mortgaged Property or Mortgagor to be in violation of, or do
anything or permit anything to be done which will subject the
Mortgaged Property to any remedial obligations under, any
Applicable Environmental Laws, including without limitation CERCLA,
RCRA, and the New Hampshire Environmental Statutes, assuming
disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances, if any, pertaining to
the Mortgaged Property. Mortgagor will promptly notify Holder in
writing of any existing, pending or, to the best knowledge of
Mortgagor, threatened investigation or inquiry by any governmental
authority in connection with any Applicable Environmental Laws.
Mortgagor will take all steps necessary to determine that no
hazardous substances or solid wastes are present or have been
disposed of or otherwise released on or to the Mortgaged Property.
Mortgagor will not cause or permit the storage, disposal or other
release of any hazardous substance or solid waste on or to the
Mortgaged Property and Mortgagor covenants and agrees to keep or
cause the Mortgaged Property to be kept free of any hazardous
substance or solid waste and to remove the same (or if removal is
not required by law, to take whatever action is required by law)
promptly upon discovery, at Mortgagor's sole expense. Mortgagor
will not install in the Mortgaged Property, nor permit to be
installed in the Mortgaged Property, asbestos, material containing
asbestos which is or may become friable or material containing
asbestos deemed hazardous by Applicable Environmental Laws, and, if
any such asbestos or material containing asbestos exists in or on
the Mortgaged Property, whether installed by Mortgagor or others,
Mortgagor will remove the same (or if removal is not required by
law, will take whatever action is required by law, including
without limitation implementing any required operation and
maintenance program) promptly upon discovery and at Mortgagor's
sole expense. Without limitation of Holder's rights to declare a
default hereunder and to exercise all remedies available by reason
thereof, if Mortgagor fails to comply with or perform any of the
foregoing covenants and obligations, Holder may (without any
obligation, express or implied) remove any hazardous substance,
solid waste, asbestos or material containing asbestos from the
Mortgaged Property (or if removal is not required by law, take
whatever action is required by law including without limitation
implementing any required operation and maintenance program) and
the cost of the removal or such other action shall be a demand
obligation owing by Mortgagor to Holder (which obligation Mortgagor
hereby promises to pay) pursuant to this Mortgage. Mortgagor
grants to Holder and its agents, employees, contractors and
consultants access to the Mortgaged Property and the license (which
is coupled with an interest and irrevocable while this Mortgage is
in effect) to remove the hazardous substance, solid waste, asbestos
or material containing asbestos (or if removal is not required by
law, to take whatever action is required by law including without
limitation implementing any required operation and maintenance
program) and agrees to indemnify and save Holder harmless from all
costs and expenses involved therewith. Upon Holder's reasonable
request, at any time and from time to time during the existence of
this Mortgage, Mortgagor will provide at Mortgagor's sole expense
an inspection or audit of the Mortgaged Property from an
engineering or consulting firm approved by Holder, indicating the
presence or absence of hazardous substances, solid waste, asbestos
or material containing asbestos on the Mortgaged Property. If
Mortgagor fails to provide same after ten (10) days' notice, Holder
may order same, and Mortgagor grants to Holder and its employees,
agents, contractors and consultants access to the Mortgaged
Property and a license (which is coupled with an interest and
irrevocable while this Mortgage is in effect) to perform
inspections and tests, including but not limited to the taking of
soil borings and groundwater samples. The cost of such inspections
and tests shall be a demand obligation owing by Mortgagor (which
Mortgagor hereby promises to pay) to Holder pursuant to this
Mortgage.
(l) Further Assurances. Mortgagor will, promptly on request
of Holder, (i) correct any defect, error or omission which may be
discovered in the contents, execution or acknowledgment of this
Mortgage or any other Loan Document; (ii) execute, acknowledge,
deliver, procure and record and/or file such further documents
(including, without limitation, further deeds of trust, security
agreements, financing statements, continuation statements, and
assignments of rents or leases) and do such further acts as may be
necessary, desirable or proper to carry out more effectively the
purposes of this Mortgage, to more fully identify and subject to
the liens and security interests hereof any property intended to be
covered hereby (including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances
to the Mortgaged Property) or as deemed advisable by Holder to
protect the lien or the security interest hereunder against the
rights or interests of third persons; and (iii) provide such
certificates, documents, reports, information, affidavits and other
instruments and do such further acts as may be necessary, desirable
or proper in the reasonable determination of Holder to enable
Holder to comply with the requirements or requests of any agency
having jurisdiction over Holder or any examiners of such agencies
with respect to the indebtedness secured hereby, Mortgagor or the
Mortgaged Property. Mortgagor shall pay all reasonable costs
connected with any of the foregoing.
(m) Fees and Expenses; Indemnification. Mortgagor shall pay
all expenses and reimburse Holder for all expenditures, including
reasonable attorney's fees and expenses, incurred or expended in
connection with (i) the breach by Mortgagor of any covenant,
agreement, warranty or condition contained herein or in any other
Loan Document, (ii) Holder's exercise of any of its rights and
remedies hereunder or under any other Loan Document or Holder's
protection of the Mortgaged Property or Holder's liens and security
interests therein, or (iii) any amendments to this Mortgage, the
Note or any other Loan Document or any matter requested by
Mortgagor or any approval required hereunder. Mortgagor will
indemnify and hold harmless Holder (for purposes of this paragraph,
the term "Holder" shall include the directors, officers, partners,
employees and agents of Holder, and any persons or entities owned
or controlled by, owning or controlling, or under common control or
affiliated with Holder) from and against, and reimburse them for,
all claims, demands, liabilities, losses, damages (including
without limitation consequential damages), causes of action,
judgments, penalties, costs and expenses (including without
limitation, reasonable attorneys' fees and expenses) which may be
imposed upon, asserted against or incurred or paid by Holder by
reason of, on account of, in connection with, or arising out of:
(a) any bodily injury or death or property damage occurring in or
upon or in the vicinity of the Mortgaged Property through any cause
whatsoever; (b) any act performed or omitted to be performed
hereunder or the breach of any representation or warranty herein;
(c) any transaction, act, omission, event or circumstance arising
out of or in any way connected with the Mortgaged Property or with
this Mortgage or any other Loan Document; (d) the breach of any
representation or warranty of Mortgagor as set forth herein
regarding asbestos, material containing asbestos or Applicable
Environmental Laws; (e) the failure of Mortgagor to perform any
obligation herein required to be performed by Mortgagor regarding
asbestos, material containing asbestos or Applicable Environmental
Laws; (f) any violation on or before the Release Date (as
hereinafter defined) of any Applicable Environmental Law in effect
on or before the Release Date; (g) the removal of hazardous
substances or solid wastes from the Mortgaged Property (or if
removal is prohibited by law, the taking of whatever action is
required by law); (h) the removal of asbestos or material
containing asbestos from the Mortgaged Property (or if removal is
prohibited by law, the taking of whatever action is required by law
including without limitation the implementation of any required
operation and maintenance program); (i) any act, omission, event or
circumstance existing or occurring on or prior to the Release Date
(including without limitation the presence on the Mortgaged
Property or release from the Mortgaged Property of hazardous
substances, solid wastes, asbestos or material containing asbestos
on or prior to the Release Date), resulting from or in connection
with the ownership, construction, occupancy, operation, use and/or
maintenance of the Mortgaged Property, regardless of whether the
act, omission, event or circumstance constituted a violation of any
Applicable Environmental Law at the time of its existence or
occurrence; and (j) any and all claims or proceedings (whether
brought by private party or governmental agency) for bodily injury,
property damage, abatement or remediation, environmental damage or
impairment or any other injury or damage resulting from or relating
to any hazardous substance, solid waste, asbestos or material
containing asbestos located upon or migrating into, from or through
the Mortgaged Property (whether or not any or all of the foregoing
was caused by Mortgagor or its tenant or subtenant, or a prior
owner of the Mortgaged Property or its tenant or subtenant, or any
third party and whether or not the alleged liability is
attributable to the handling, storage, generation, transportation
or disposal of such substance, waste, asbestos or material
containing asbestos or the mere presence of such substance, waste,
asbestos or material containing asbestos on the Mortgaged
Property). Without limitation, the foregoing indemnities shall
apply to each indemnified party with respect to claims, demands,
losses, damages (including consequential damages), liabilities,
causes of action, judgments, penalties, costs and expenses
(including attorneys' fees and court costs) which in whole or in
part are caused by or arise out of the ordinary negligence of such
(and/or any other) indemnified party. However, such indemnities
shall not apply to a particular indemnified party to the extent the
subject of the indemnification is caused by or arises out of the
gross negligence or willful misconduct of that indemnified party.
The "Release Date" as used herein shall mean the earlier of the
following two dates: (i) the date on which the indebtedness and
obligations secured hereby have been paid and performed in full and
this Mortgage has been released, or (ii) the date on which the lien
of this Mortgage is foreclosed or a conveyance by deed in lieu of
such foreclosure is fully effective; provided, if such payment,
performance, release, foreclosure or conveyance is challenged, in
bankruptcy proceedings or otherwise, the Release Date shall be
deemed not to have occurred until such challenge is rejected,
dismissed or withdrawn with prejudice. The foregoing indemnities
shall not terminate upon the Release Date or upon the release,
foreclosure or other termination of this Mortgage but will survive
the Release Date, foreclosure of this Mortgage or conveyance in
lieu of foreclosure, and the repayment of the secured indebtedness
and the discharge and release of this Mortgage and the other
documents evidencing and/or securing the secured indebtedness. Any
amount to be paid under this paragraph by Mortgagor to Holder shall
be a demand obligation owing by Mortgagor (which Mortgagor hereby
promises to pay) to Holder pursuant to this Mortgage. Nothing in
this paragraph, elsewhere in this Mortgage or in any other Loan
Document shall limit or impair any rights or remedies of Holder
against Mortgagor or any third party under Applicable Environmental
Laws, including without limitation any rights of contribution or
indemnification available thereunder.
(n) Taxes on Note or Mortgage. Mortgagor will promptly pay
all income, franchise and other taxes owing by Mortgagor and any
stamp taxes or other taxes (unless such payment by Mortgagor is
prohibited by law) which may be required to be paid with respect to
the Note, this Mortgage or any other instrument evidencing or
securing any of the secured indebtedness. In the event of the
enactment after this date of any law of any governmental entity
applicable to Holder, the Note, the Mortgaged Property or this
Mortgage deducting from the value of property for the purpose of
taxation any lien or security interest thereon, or imposing upon
Holder the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by
Mortgagor, or changing in any way the laws relating to the taxation
of deeds of trust or mortgages or security agreements or debts
secured by deeds of trust or mortgages or security agreements or
the interest of the mortgagee or secured party in the property
covered thereby, or the manner of collection of such taxes, so as
to affect this Mortgage or the indebtedness secured hereby or
Holder, then, and in any such event, Mortgagor, upon demand by
Holder, shall pay such taxes, assessments, charges or liens, or
reimburse Holder therefor; provided, however, that if in the
opinion of counsel for Holder (i) it might be unlawful to require
Mortgagor to make such payment or (ii) the making of such payment
might result in the imposition of interest beyond the maximum
amount permitted by law, then and in such event, Holder may elect,
by notice in writing given to Mortgagor, to declare all of the
indebtedness secured hereby to be and become due and payable sixty
(60) days from the giving of such notice.
(o) Payment of Real Estate Taxes. Subject to Section 7.5 of
the Loan Agreement, Mortgagor will promptly pay when due all taxes,
assessments, charges or liens of every kind and nature whatsoever
now or hereafter imposed, levied or assessed upon or against the
Mortgaged Property or against the interest of Holder in the
Mortgaged Property.
Section 2.2. Performance by Holder on Mortgagor's Behalf.
Mortgagor agrees that, if Mortgagor fails to perform any act or to
take any action which under any Loan Document Mortgagor is required
to perform or take, or to pay any money which under any Loan
Document Mortgagor is required to pay, and whether or not the
failure then constitutes a default hereunder or thereunder, and
whether or not there has occurred any default or defaults hereunder
or the secured indebtedness has been accelerated, Holder, in
Mortgagor's name or its own name, may, but shall not be obligated
to, perform or cause to be performed such act or take such action
or pay such money, and any expenses so incurred by Holder and any
money so paid by Holder shall be a demand obligation owing by
Mortgagor to Holder (which obligation Mortgagor hereby promises to
pay), shall be a part of the indebtedness secured hereby, and
Holder, upon making such payment, shall be subrogated to all of the
rights of the person, entity or body politic receiving such
payment. Holder shall have the right to enter upon the Mortgaged
Property for any such purposes. No such payment or performance by
Holder shall waive or cure any default or waive any right, remedy
or recourse of Holder. Any such payment may be made by Holder in
reliance on any statement, invoice or claim without inquiry into
the validity or accuracy thereof. Each amount due and owing by
Mortgagor to Holder pursuant to this Mortgage shall bear interest,
from the date such amount becomes due until paid, at the rate per
annum provided in the Note for interest on past due principal owed
on the Note but never in excess of the maximum nonusurious amount
permitted by applicable law; and all such amounts, together with
such interest thereon, shall automatically and without notice be a
part of the indebtedness secured hereby. The amount and nature of
any expense by Holder hereunder and the time when paid shall be
fully established by the certificate of Holder or any of Holder's
officers or agents.
Section 2.3. Absence of Obligations of Holder with Respect to
Mortgaged Property. Notwithstanding anything in this Mortgage to
the contrary, including, without limitation, the definition of
"Mortgaged Property" and/or the provisions of Article 3 hereof, (i)
to the extent permitted by applicable law, the Mortgaged Property
is composed of Mortgagor's rights, title and interests therein but
not Mortgagor's obligations, duties or liabilities pertaining
thereto, (ii) Holder neither assumes nor shall have any
obligations, duties or liabilities in connection with any portion
of the items described in connection with the definition of
"Mortgaged Property" herein, either prior to or after obtaining
title to such Mortgaged Property, whether by foreclosure sale, the
granting of a deed of lieu of foreclosure or otherwise, and (iii)
Holder may, at any time prior to or after the acquisition of title
to any portion of the Mortgaged Property as above described, advise
any party in writing as to the extent of Holder's interest therein
and/or expressly disaffirm in writing any rights, interests,
obligations, duties and/or liabilities with respect to such
Mortgaged Property or matters related thereto. Without limiting
the generality of the foregoing, it is understood and agreed that
Holder shall have no obligations, duties or liabilities prior to or
after acquisition of title to any portion of the Mortgaged
Property, as lessee under any lease or purchaser or seller under
any contract or option unless Holder elects otherwise by written
notification.
ARTICLE 3 - Assignment of Rents
Section 3.1. Assignment of Rents, Etc. Mortgagor does hereby
absolutely and unconditionally assign, transfer and set over to
Holder all Rents (hereinafter defined), to be applied by Holder in
payment of the secured indebtedness, and the rights (but not the
obligations) of Mortgagor under any Leases (hereinafter defined).
Notwithstanding any provision of this Mortgage or any Loan Document
which might be construed to the contrary, the assignment in this
Section is an absolute assignment and not merely a security
interest; however, Holder's rights as to the assignment shall be
exercised only upon the occurrence of an Event of Default. Prior
to an Event of Default, Mortgagor shall have a license to collect
and receive all Rents as trustee for the benefit of Holder and
Mortgagor, and Mortgagor shall apply the funds so collected first
to the payment of the secured indebtedness in such manner as Holder
elects and thereafter to the account of Mortgagor. Upon the
occurrence of an Event of Default hereunder, Holder shall have the
right, power and privilege (but shall be under no duty) to
terminate such license, and upon such termination, Holder shall be
entitled to immediate possession of all Rents regardless of the
value of the security for the secured indebtedness and regardless
of whether Holder has initiated any action to take possession of
any portion of the Mortgaged Property. In the event that a court
of competent jurisdiction determines that, notwithstanding the
expressed intent of the parties, Holder's interest in the Rents
constitutes a lien on or security interest in or pledge of the
Rents, it is agreed and understood that a notice to Mortgagor after
the occurrence of an Event of Default, advising Mortgagor of the
revocation of Mortgagor's license to collect such Rents, shall be
sufficient action by Holder to (i) perfect such lien on or security
interest in or pledge of the Rents, (ii) take possession of the
Rents, and (iii) entitle Holder to immediate and direct payment of
the Rents, for application as provided in this Mortgage, all
without the necessity of any further action by Holder, including,
without limitation, any action to obtain possession of the Land,
Improvements or any other portion of the Mortgaged Property.
Mortgagor hereby authorizes and directs the tenants under the
Leases to pay Rents to Holder upon written demand by Holder,
without further consent of Mortgagor and regardless of whether
Holder has taken possession of any other portion of the Mortgaged
Property, and the tenants may rely upon any written statement
delivered by Holder to the tenants. Any such payment to Holder
shall constitute payment to Mortgagor under the Leases, and
Mortgagor hereby appoints Holder as Mortgagor's lawful
attorney-in-fact for giving, and Holder is hereby empowered to
give, acquittances to any tenants for such payments to Holder after
an Event of Default. Upon request by Holder, Mortgagor shall
deliver to Holder executed originals of all Leases and copies of
all records relating thereto. There shall be no merger of the
leasehold estates, created by the Leases, with the fee estate of
the Land without the prior written consent of Holder. The
assignment contained in this Section shall become null and void
upon the release of this Mortgage. As used herein: (i) "Lease"
means any existing or future lease, sublease or other agreement
under the terms of which any person has or acquires any right to
occupy or use the Mortgaged Property, or any part thereof, or
interest therein, and all extensions, renewals, modifications and
replacements thereof; and (ii) "Rents" means all of the rents,
revenue, income, profits and proceeds to be derived from the
Mortgaged Property or arising from the use of enjoyment of any
portion thereof or from any Lease, including but not limited to
liquidated damages following default under any such Lease, all
proceeds payable under any policy of insurance covering loss of
rents resulting from untenantability caused by damage to any part
of the Mortgaged Property, all of Mortgagor's rights to recover
monetary amounts from any tenant in bankruptcy including, without
limitation, rights of recovery for use and occupancy and damage
claims arising out of Lease defaults, including rejections, under
any applicable Debtor Relief Law, together with any sums of money
that may now or at any time hereafter be or become due and payable
to Mortgagor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind
or character arising under any and all present and all future oil,
gas and mining leases covering the Mortgaged Property or any part
thereof, and all proceeds and other amounts paid or owing to
Mortgagor under or pursuant to any and all contracts and bonds
relating to the construction, erection or renovation of the
Mortgaged Property.
Section 3.2. Covenants, Representations and Warranties
Concerning Leases and Rents. Mortgagor covenants, represents and
warrants that: (i) Mortgagor has good title to the Rents hereby
assigned and authority to assign them, and good title to all
existing Leases, and no other person has or will acquire any right,
title or interest in such Rents or Leases; (ii) unless otherwise
stated herein, no Rents have been or will be assigned, mortgaged or
pledged; (iii) no Rents have been or will be anticipated, waived,
released, discounted, set off or compromised; (iv) except as stated
in the Leases, Mortgagor has not received any funds or deposits
from any tenant for which credit has not already been made on
account of accrued Rents; (v) Mortgagor shall perform all of its
obligations under the Leases and enforce the tenants' obligations
under the Leases to the extent enforcement is prudent under the
circumstances; (vi) Mortgagor will not, except where the tenant is
in default thereunder, terminate or consent to the cancellation or
surrender of any Lease having an unexpired term of one year or more
unless consistent with the provisions of Section 7.8 of the Loan
Agreement; (vii) Mortgagor will not execute any Lease of all or any
substantial portion of the Mortgaged Property except for actual
occupancy by the tenant thereunder; (viii) Mortgagor shall defend,
at Mortgagor's expense, any proceeding pertaining to any Lease,
including, if Holder so requests, any such proceeding to which
Holder is a party; (ix) Mortgagor shall as often as requested by
Holder, within ten (10) days of each request, deliver to Holder a
complete rent roll of the Mortgaged Property in such detail as
Holder may require; and (x) Mortgagor shall not receive or collect
Rents more than one (1) month in advance.
Section 3.3. No Liability of Holder. Holder's acceptance of
this assignment shall not, prior to entry upon and taking
possession of the Mortgaged Property by Holder, be deemed to
constitute Holder a "mortgagee in possession," nor obligate Holder
to appear in or defend any proceeding relating to any Lease or to
the Mortgaged Property, or to take any action hereunder, expend any
money, incur any expenses, or perform any obligation or liability
under any Lease, or assume any obligation for any deposit delivered
to Mortgagor by any tenant and not delivered to Holder. Holder
shall not be liable for any injury or damage to person or property
in or about the Mortgaged Property. Neither enforcement of
Holder's rights regarding Rents (including collection of Rents) nor
possession of the Mortgaged Property by Holder (nor both), shall
render Holder liable on any obligation under any Lease. Holder
neither has nor assumes any obligations as lessor or landlord with
respect to any Lease.
Section 3.4. Absolute Obligation to Pay Note. The assignment
of Rents does not constitute payment. Nothing herein contained
shall detract from or limit the obligations to make prompt payment
of the Note, and any and all other secured indebtedness, at the
time and in the manner provided in the Note and in the other Loan
Documents, regardless of whether the Rents herein assigned are
sufficient to pay same, and the rights under this Article 3 shall
be cumulative of all other rights of Holder under the Loan
Documents.
ARTICLE 4 - Default
Section 4.1. Events of Default. The occurrence of any one of
the following shall at Holder's option be a default under this
Mortgage ("default"):
(a) Failure to Pay Indebtedness. Any of the secured
indebtedness is not paid when due, whether by acceleration or
otherwise.
(b) Default Under Loan Agreement. The occurrence of a
Default or an Event of Default under and as defined in the
Loan Agreement.
(c) Default Under this Mortgage. The failure to observe
or perform any covenant, agreement, condition, term or
provision of this Mortgage, including, without limitation, the
STATUTORY CONDITIONS.
Section 4.2 Notice and Cure. If any provision of this
Mortgage or any other Loan Document provides for Holder to give to
Mortgagor any notice regarding a default or incipient default, then
if Holder shall fail to give such notice to Mortgagor as provided,
the sole and exclusive remedy of Mortgagor for such failure shall
be to seek appropriate equitable relief to enforce the agreement to
give such notice and to have any acceleration of the maturity of
the Note and the secured indebtedness postponed or revoked and
foreclosure proceedings in connection therewith delayed, postponed
or terminated pending or upon the curing of such default in the
manner and during the period of time permitted by such agreement,
if any, and Mortgagor shall have no right to damages or any other
type of relief not herein specifically set out against Holder, all
of which damages or other relief are hereby waived by Mortgagor.
Nothing herein or in any other Loan Document shall operate or be
construed to add on or make cumulative any cure or grace periods
specified in any of the Loan Documents.
ARTICLE 5 - Remedies
Section 5.1. Certain Remedies. If a default shall occur,
Holder may at its option exercise any one or more of the following
remedies, without notice (unless notice is required by applicable
statute):
(a) Acceleration. Upon the occurrence of any default, Holder
at any time and from time to time may without notice to Mortgagor
or any other person declare any or all of the secured indebtedness
immediately due and payable and all such secured indebtedness shall
thereupon be immediately due and payable, without presentment,
demand, protest, notice of protest, notice of acceleration or of
intention to accelerate or any other notice or declaration of any
kind, all of which are hereby expressly waived by Mortgagor.
Without limitation of the foregoing, upon the occurrence of a
default described in Sections 10.1(f) or 10.1(g) of the Loan
Agreement, all of the secured indebtedness shall thereupon be
immediately due and payable, without presentment, demand, protest,
notice of protest, declaration or notice of acceleration or
intention to accelerate, or any other notice, declaration or act of
any kind, all of which are hereby expressly waived by Mortgagor.
(b) Enforcement of Assignment of Rents. Prior or subsequent
to taking possession of any portion of the Mortgaged Property or
taking any action with respect to such possession, Holder may: (1)
collect and/or sue for the Rents in Holder's own name, give
receipts and releases therefor, and after deducting all expenses of
collection, including attorneys' fees and expenses, apply the net
proceeds thereof to any secured indebtedness as Holder may elect
and/or to the operation and management of the Mortgaged Property,
including the payment of management, brokerage and attorney's fees
and expenses; and (2) require Mortgagor to transfer all security
deposits and records thereof to Holder together with original
counterparts of the Leases.
(c) Foreclosure. This Mortgage is upon the STATUTORY
CONDITIONS and upon the further condition that all covenants and
agreements of Mortgagor in the Note, this Mortgage, the Loan
Agreement, and all other Loan Documents and in all other mortgages,
debts and obligations of or from Mortgagor to Holder, now existing
or hereinafter incurred, shall be kept and fully performed, and
upon any breach of the same Holder shall have the STATUTORY POWER
OF SALE and any other powers given by statute or any of the Loan
Documents.
(d) Uniform Commercial Code. Without limitation of Holder's
rights of enforcement with respect to the Collateral or any part
thereof in accordance with the procedures for foreclosure of real
estate, Holder may exercise its rights of enforcement with respect
to the Collateral or any part thereof under the New Hampshire
Uniform Commercial Code, as amended, (or under the Uniform
Commercial Code in force in any other state to the extent the same
is applicable law) and in conjunction with, in addition to or in
substitution for those rights and remedies: (1) Holder may enter
upon Mortgagor's premises to take possession of, assemble and
collect the Collateral or to render it unusable; (2) Holder may
require Mortgagor to assemble the Collateral and make it available
at a place Holder designates which is mutually convenient to allow
Holder to take possession or dispose of the Collateral; (3) written
notice mailed to Mortgagor as provided herein at least five (5)
days prior to the date of public sale of the Collateral or prior to
the date after which private sale of the Collateral will be made
shall constitute reasonable notice; (4) any sale made pursuant to
the provisions of this Section shall be deemed to have been a
public sale conducted in a commercially reasonable manner if held
contemporaneously with and upon the same notice as required for the
sale of the Mortgaged Property under power of sale as provided in
paragraph (c) above in this Section 5.1; (5) in the event of a
foreclosure sale, whether under judgment of a court, by power of
sale or otherwise, the Collateral and the other Mortgaged Property
may, at the option of Holder, be sold as a whole; (6) it shall not
be necessary that Holder take possession of the Collateral or any
part thereof prior to the time that any sale pursuant to the
provisions of this Section is conducted and it shall not be
necessary that the Collateral or any part thereof be present at the
location of such sale; (7) prior to application of proceeds of
disposition of the Collateral to the secured indebtedness, such
proceeds shall be applied to the reasonable expenses of retaking,
holding, preparing for sale or lease, selling, leasing and the like
and the reasonable attorneys' fees and legal expenses incurred by
Holder; (8) any and all statements of fact or other recitals made
in any bill of sale or assignment or other instrument evidencing
any foreclosure sale hereunder as to nonpayment of the secured
indebtedness or as to the occurrence of any default, or as to
Holder having declared all of such indebtedness to be due and
payable, or as to notice of time, place and terms of sale and of
the properties to be sold having been duly given, or as to any
other act or thing having been duly done by Holder, shall be taken
as prima facie evidence of the truth of the facts so stated and
recited; and (9) Holder may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident
to any sale held by Holder, including the sending of notices and
the conduct of the sale, but in the name and on behalf of Holder.
(e) Lawsuits. Holder may proceed by a suit or suits in
equity or at law, whether for the specific performance of any
covenant or agreement herein contained or in aid of the execution
of any power herein granted, or for any foreclosure hereunder or
for the sale of the Mortgaged Property under the judgment or decree
of any court or courts of competent jurisdiction.
(f) Entry on Mortgaged Property. Holder is authorized, prior
or subsequent to the institution of any foreclosure proceedings, in
person, by agent or by court-appointed receiver to enter upon the
Mortgaged Property, or any part thereof, and to take possession of
the Mortgaged Property and all books and records relating thereto,
and to exercise without interference from Mortgagor any and all
rights which Mortgagor has with respect to the management,
possession, operation, protection or preservation of the Mortgaged
Property. All costs, expenses and liabilities of every character
incurred by Holder in managing, operating, maintaining, protecting
or preserving the Mortgaged Property shall constitute a demand
obligation of Mortgagor (which obligation Mortgagor hereby promises
to pay) to Holder pursuant to this Mortgage. If necessary to
obtain the possession provided for above, Holder may invoke any and
all remedies to dispossess Mortgagor. In connection with any
action taken by Holder pursuant to this Section, Holder shall not
be liable for any loss sustained by Mortgagor resulting from any
act or omission of Holder in managing the Mortgaged Property unless
such loss is caused by the willful misconduct or gross negligence
of Holder, nor shall Holder be obligated to perform or discharge
any obligation, duty or liability of Mortgagor arising under any
agreement forming a part of the Mortgaged Property or arising under
any Permitted Encumbrance or otherwise arising. Mortgagor hereby
assents to, ratifies and confirms any and all actions of Holder
with respect to the Mortgaged Property taken under this Section.
(g) Receiver. Upon the occurrence of an Event of Default,
Holder shall as a matter of right be entitled to the appointment of
a receiver or receivers for all or any part of the Mortgaged
Property, whether such receivership be incident to a proposed sale
(or sales) of such property or otherwise, and without regard to the
value of the Mortgaged Property or the solvency of any person or
persons liable for the payment of the indebtedness secured hereby,
and Mortgagor does hereby irrevocably consent to the appointment of
such receiver or receivers, waives any and all defenses to such
appointment, agrees not to oppose any application therefor by
Holder, and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of Holder to application
of Rents as provided in Article 3 hereof. Any such receiver shall
have all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate
the Mortgaged Property upon such terms as may be approved by the
court, and shall apply the Rents in accordance with the provisions
of Section 3.1 hereof. Nothing herein is to be construed to
deprive Holder of any other right, remedy or privilege it may have
under the law to have a receiver appointed. Any money advanced by
Holder in connection with any such receivership shall be a demand
obligation (which obligation Mortgagor hereby promises to pay)
owing by Mortgagor to Holder pursuant to this Mortgage.
(h) Other Rights and Remedies. Holder may foreclose any and
all rights of Mortgagor in and to the Mortgaged Property, whether
by sale, entry or in any other manner provided for hereunder or
under the laws of New Hampshire, and exercise any and all other
rights and remedies which Holder may have under the Loan Documents,
or at law or in equity or otherwise.
Section 5.2. Effective as Mortgage. This instrument shall be
effective as a mortgage and upon the occurrence of a default may be
foreclosed as to any of the Mortgaged Property in any manner
permitted by applicable law. In the event a non-judicial
foreclosure hereunder shall be commenced, Holder may at any time
before the sale of the Mortgaged Property abandon the non-judicial
sale, without prejudice, and may then institute suit for the
collection of the Note and/or any other secured indebtedness, and
for the foreclosure of this Mortgage. It is agreed that if Holder
should institute a suit for the collection of the Note or any other
secured indebtedness and for the foreclosure of this Mortgage,
Holder may at any time before the entry of a final judgment in said
suit dismiss the same, and thereafter sell the Mortgaged Property
by non-judicial foreclosure.
Section 5.3. Proceeds of Foreclosure. The proceeds of any
sale held by Holder or any receiver or public officer in
foreclosure of the liens and security interests evidenced hereby
shall be applied: FIRST, to the payment of all necessary costs and
expenses incident to such foreclosure sale, including but not
limited to all attorneys' fees and legal expenses, and all court
costs and charges of every character in the event foreclosed by
suit; SECOND, to the payment of the secured indebtedness (including
specifically without limitation the principal, accrued interest and
attorneys' fees due and unpaid on the Note and the amounts due and
unpaid and owed to Holder under this Mortgage) in such manner and
order as Holder may elect; and THIRD, the remainder, if any there
shall be, shall be paid to Mortgagor, or to Mortgagor's heirs,
devisees, representatives, successors or assigns, or such other
persons as may be entitled thereto by law; provided, however, that
if Holder is uncertain which person or persons are so entitled,
Holder may interplead such remainder in any court of competent
jurisdiction, and the amount of any attorneys' fees, court costs
and expenses incurred in such action shall be deemed to be a
portion of the secured indebtedness, reimbursable (without
limitation) from such remainder.
Section 5.4. Holder as Purchaser. Holder shall have the
right to become the purchaser at any foreclosure sale held pursuant
to this Mortgage, and any Holder purchasing at any such sale shall
have the right to credit upon the amount of the bid made therefor,
to the extent necessary to satisfy such bid, the secured
indebtedness owing to such Holder, or if such Holder holds less
than all of such indebtedness the pro rata part thereof owing to
such Holder, accounting to all other Holders not joining in such
bid in cash for the portion of such bid or bids apportionable to
such nonbidding Holder or Holders.
Section 5.5. Foreclosure as to Matured Debt. Upon the
occurrence of a default, Holder shall have the right to proceed
with foreclosure (judicial or nonjudicial) of the liens and
security interests hereunder without declaring the entire secured
indebtedness due, and in such event any such foreclosure sale may
be made subject to the unmatured part of the secured indebtedness;
and any such sale shall not in any manner affect the unmatured part
of the secured indebtedness, but as to such unmatured part this
Mortgage shall remain in full force and effect just as though no
sale had been made. The proceeds of such sale shall be applied as
provided in Section 5.3 except that the amount paid under clause
SECOND thereof shall be only the matured portion of the secured
indebtedness and any proceeds of such sale in excess of those
provided for in clauses FIRST and SECOND (modified as provided
above) shall be applied to the prepayment (without penalty) of any
other secured indebtedness in such manner and order and to such
extent as Holder deems advisable, and the remainder, if any, shall
be applied as provided in clause THIRD of Section 5.3 hereof.
Several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the secured indebtedness.
Section 5.6. Remedies Cumulative. All remedies provided for
herein and in any other Loan Document are cumulative of each other
and of any and all other remedies existing at law or in equity, and
Holder shall, in addition to the remedies provided herein or in any
other Loan Document, be entitled to avail itself of all such other
remedies as may now or hereafter exist at law or in equity for the
collection of the secured indebtedness and the enforcement of the
covenants herein and the foreclosure of the liens and security
interests evidenced hereby, and the resort to any remedy provided
for hereunder or under any such other Loan Document or provided for
by law or in equity shall not prevent the concurrent or subsequent
employment of any other appropriate remedy or remedies.
Section 5.7. Holder's Discretion as to Security. Holder may
resort to any security given by this Mortgage or to any other
security now existing or hereafter given to secure the payment of
the secured indebtedness, in whole or in part, and in such portions
and in such order as may seem best to Holder in its sole and
uncontrolled discretion, and any such action shall not in anywise
be considered as a waiver of any of the rights, benefits, liens or
security interests evidenced by this Mortgage.
Section 5.8. Mortgagor's Waiver of Certain Rights. To the
full extent Mortgagor may do so, Mortgagor agrees that Mortgagor
will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, and
Mortgagor, for Mortgagor, Mortgagor's heirs, devisees,
representatives, successors and assigns, and for any and all
persons ever claiming any interest in the Mortgaged Property, to
the extent permitted by applicable law, hereby waives and releases
all rights of redemption, valuation, appraisement, stay of
execution, notice of intention to mature or declare due the whole
of the secured indebtedness, notice of election to mature or
declare due the whole of the secured indebtedness and all rights to
a marshaling of assets of Mortgagor, including the Mortgaged
Property, or to a sale in inverse order of alienation in the event
of foreclosure of the liens and/or security interests hereby
created. Mortgagor shall not have or assert any right under any
statute or rule of law pertaining to the marshaling of assets, sale
in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatever
to defeat, reduce or affect the right of Holder under the terms of
this Mortgage to a sale of the Mortgaged Property for the
collection of the secured indebtedness without any prior or
different resort for collection, or the right of Holder under the
terms of this Mortgage to the payment of the secured indebtedness
out of the proceeds of sale of the Mortgaged Property in preference
to every other claimant whatever. Mortgagor waives any right or
remedy which Mortgagor may have or be able to assert pursuant to
the New Hampshire Uniform Commercial Code or any other provision of
New Hampshire law, pertaining to the rights and remedies of
sureties. If any law referred to in this Section and now in force,
of which Mortgagor or Mortgagor's heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in
the Mortgaged Property might take advantage despite this Section,
shall hereafter be repealed or cease to be in force, such law shall
not thereafter be deemed to preclude the application of this
section.
Section 5.9. Delivery of Possession After Foreclosure. In
the event there is a foreclosure sale hereunder and at the time of
such sale, Mortgagor or Mortgagor's heirs, devisees,
representatives, successors or assigns are occupying or using the
Mortgaged Property, or any part thereof, each and all (to the
extent, but only to the extent, that Mortgagor or Mortgagor's
heirs, devisees, representatives, successors or assigns are in
possession of the Mortgaged Property) shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day to day, terminable at the will of either landlord
or tenant, at a reasonable rental per day based upon the value of
the property occupied, such rental to be due daily to the
purchaser; and to the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein
apparently to the contrary, have the sole option to demand
immediate possession following the sale or to permit the occupants
to remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible
detainer) in any court having jurisdiction.
ARTICLE 6 - Miscellaneous
Section 6.1. Scope of Mortgage. This Mortgage is a mortgage
of both real and personal property, a security agreement, a
financing statement and an assignment, and also covers proceeds and
fixtures.
Section 6.2. Effective as a Financing Statement. This
Mortgage shall be effective as a financing statement filed as a
fixture filing with respect to all fixtures included within the
Mortgaged Property and is to be filed for record in the real estate
records of each county where any part of the Mortgaged Property
(including said fixtures) is situated. This Mortgage shall also be
effective as a financing statement covering minerals or the like
(including oil and gas) and accounts subject to the New Hampshire
Uniform Commercial Code, as amended, and similar provisions (if
any) of the Uniform Commercial Code as enacted in any other state
where the Mortgaged Property is situated, which will be financed at
the wellhead or minehead of the wells or mines located on the
Mortgaged Property and is to be filed for record in the real estate
records of each county where any part of the Mortgaged Property is
situated. This Mortgage shall also be effective as a financing
statement covering any other Mortgaged Property and may be filed in
any other appropriate filing or recording office. The mailing
address of Mortgagor is the address of Mortgagor set forth at the
end of this Mortgage and the address of Holder from which
information concerning the security interests hereunder may be
obtained is the address of Holder set forth at the end of this
Mortgage. A carbon, photographic or other reproduction of this
Mortgage or of any financing statement relating to this Mortgage
shall be sufficient as a financing statement for any of the
purposes referred to in this Section.
Section 6.3. Notice to Account Debtors. In addition to the
rights granted elsewhere in this Mortgage, Holder may at any time
notify the account debtors or obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness
included in the Collateral to pay Holder directly.
Section 6.4. Waiver by Holder. Holder may at any time and
from time to time by a specific writing intended for the purpose:
(a) waive compliance by Mortgagor with any covenant herein made by
Mortgagor to the extent and in the manner specified in such
writing; (b) consent to Mortgagor's doing any act which hereunder
Mortgagor is prohibited from doing, or to Mortgagor's failing to do
any act which hereunder Mortgagor is required to do, to the extent
and in the manner specified in such writing; (c) release any part
of the Mortgaged Property or any interest therein from the lien and
security interest of this Mortgage; or (d) release any party
liable, either directly or indirectly, for the secured indebtedness
or for any covenant herein or in any other Loan Document, without
impairing or releasing the liability of any other party. No such
act shall in any way affect the rights or powers of Holder
hereunder except to the extent specifically agreed to by Holder in
such writing.
Section 6.5. No Impairment of Security. The lien, security
interest and other security rights of Holder hereunder shall not be
impaired by any indulgence, moratorium or release granted by Holder
including, but not limited to, any renewal, extension or
modification which Holder may grant with respect to any secured
indebtedness, or any surrender, compromise, release, renewal,
extension, exchange or substitution which Holder may grant in
respect of the Mortgaged Property, or any part thereof or any
interest therein, or any release or indulgence granted to any
endorser, guarantor or surety of any secured indebtedness. The
taking of additional security by Holder shall not release or impair
the lien, security interest or other security rights of Holder
hereunder or affect the liability of Mortgagor or of any endorser,
guarantor or surety, or improve the right of any junior lienholder
in the Mortgaged Property (without implying hereby Holder's consent
to any junior lien).
Section 6.6. Acts Not Constituting Waiver by Holder. Holder
may waive any default without waiving any other prior or subsequent
default. Holder may remedy any default without waiving the default
remedied. Neither failure by Holder to exercise, nor delay by
Holder in exercising, any right, power or remedy upon any default
shall be construed as a waiver of such default or as a waiver of
the right to exercise any such right, power or remedy at a later
date. No single or partial exercise by Holder of any right, power
or remedy hereunder shall exhaust the same or shall preclude any
other or further exercise thereof, and every such right, power or
remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof nor
consent to any departure by Mortgagor therefrom shall in any event
be effective unless the same shall be in writing and signed by
Holder and then such waiver or consent shall be effective only in
the specific instance, for the purpose for which given and to the
extent therein specified. No notice to nor demand on Mortgagor in
any case shall of itself entitle Mortgagor to any other or further
notice or demand in similar or other circumstances. Remittances in
payment of any part of the secured indebtedness other than in the
required amount in immediately available U.S. funds shall not,
regardless of any receipt or credit issued therefor, constitute
payment until the required amount is actually received by Holder in
immediately available U.S. funds and shall be made and accepted
subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank
or banks. Acceptance by Holder of any payment in an amount less
than the amount then due on any secured indebtedness shall be
deemed an acceptance on account only and shall not in any way
excuse the existence of a default hereunder.
Section 6.7. Mortgagor's Successors. If the ownership of the
Mortgaged Property or any part thereof becomes vested in a person
other than Mortgagor, Holder may, without notice to Mortgagor, deal
with such successor or successors in interest with reference to
this Mortgage and to the indebtedness secured hereby in the same
manner as with Mortgagor, without in any way vitiating or
discharging Mortgagor's liability hereunder or for the payment of
the indebtedness or performance of the obligations secured hereby.
No transfer of the Mortgaged Property, no forbearance on the part
of Holder, and no extension of the time for the payment of the
indebtedness secured hereby given by Holder shall operate to
release, discharge, modify, change or affect, in whole or in part,
the liability of Mortgagor hereunder for the payment of the
indebtedness or performance of the obligations secured hereby or
the liability of any other person hereunder for the payment of the
indebtedness secured hereby. Each Mortgagor agrees that it shall
be bound by any modification of this Mortgage or any of the other
Loan Documents made by Holder and any subsequent owner of the
Mortgaged Property, with or without notice to such Mortgagor, and
no such modifications shall impair the obligations of such
Mortgagor under this Mortgage or any other Loan Document. Nothing
in this Section or elsewhere in this Mortgage shall be construed to
imply Holder's consent to any transfer of the Mortgaged Property.
Section 6.8. Place of Payment; Forum. All secured
indebtedness which may be owing hereunder at any time by Mortgagor
shall be payable at the place designated in the Note (or if no such
designation is made, at the address of Holder indicated at the end
of this Mortgage). Mortgagor hereby irrevocably submits generally
and unconditionally for itself and in respect of its property to
the non-exclusive jurisdiction of any Illinois state court, or any
United States federal court, sitting in the City of Chicago,
Illinois, and to the non-exclusive jurisdiction of any state or
United States federal court sitting in the state in which any of
the Mortgaged Property is located, over any suit, action or
proceeding arising out of or relating to this Mortgage or the
secured indebtedness. Mortgagor hereby agrees and consents that,
in addition to any methods of service of process provided for under
applicable law, all service of process in any such suit, action or
proceeding in any Illinois state court, or any United States
federal court, sitting in the City of Chicago, Illinois may be made
by certified or registered mail, return receipt requested, directed
to Mortgagor at its address stated in this Mortgage, or at a
subsequent address of which Holder received actual notice from
Mortgagor in accordance with this Mortgage, and service so made
shall be complete five (5) days after the same shall have been so
mailed.
Section 6.9. Subrogation to Existing Liens; Vendor's Lien.
To the extent that proceeds of the Note will be used to pay
indebtedness secured by any outstanding lien, security interest,
charge or prior encumbrance against the Mortgaged Property, such
proceeds have been advanced by Holder at Mortgagor's request, and
Holder shall be subrogated to any and all rights, security
interests and liens owned by any owner or holder of such
outstanding liens, security interests, charges or encumbrances,
however remote, irrespective of whether said liens, security
interests, charges or encumbrances are released, and all of the
same are recognized as valid and subsisting and are renewed and
continued and merged herein to secure the secured indebtedness, but
the terms and provisions of this Mortgage shall govern and control
the manner and terms of enforcement of the liens, security
interests, charges and encumbrances to which Holder is subrogated
hereunder. It is expressly understood that, in consideration of
the payment of such indebtedness by Holder, Mortgagor hereby waives
and releases all demands and causes of action for offsets and
payments in connection with the said indebtedness. If all or any
portion of the proceeds of the loan evidenced by the Note or of any
other secured indebtedness has been advanced for the purpose of
paying the purchase price for all or a part of the Mortgaged
Property, no vendor's lien is waived; and Holder shall have, and is
hereby granted, a vendor's lien on the Mortgaged Property as
cumulative additional security for the secured indebtedness.
Holder may foreclose under this Mortgage or under the vendor's lien
without waiving the other or may foreclose under both.
Section 6.10. Application of Payments to Certain
Indebtedness. If any part of the secured indebtedness cannot be
lawfully secured by this Mortgage or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security
interest hereof to the full extent of such indebtedness, then all
payments made shall be applied on said indebtedness first in
discharge of that portion thereof which is not secured by this
Mortgage.
Section 6.11. Compliance with Usury Laws. It is the intent
of Mortgagor and Holder and all other parties to the Loan Documents
to conform to and contract in strict compliance with applicable
usury law from time to time in effect. All agreements between
Holder and Mortgagor (or any other party liable with respect to any
indebtedness under the Loan Documents) are hereby limited by the
provisions of this Section which shall override and control all
such agreements, whether now existing or hereafter arising and
whether written or oral. In no way, nor in any event or
contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any
obligation), shall the interest contacted for, charged or received
under this Mortgage, the Note or otherwise, exceed the maximum
amount permissible under applicable law. If, from any possible
construction of any document, interest would otherwise be payable
in excess of the maximum lawful amount, any such construction shall
be subject to the provisions of this Section and such document
shall be automatically reformed and the interest payable shall be
automatically reduced to the maximum amount permitted under
applicable law, without the necessity of execution of any amendment
or new document. If Holder shall ever receive anything of value
which is characterized as interest under applicable law and which
would apart from this provision be in excess of the maximum lawful
amount, an amount equal to the amount which would have been
excessive interest shall, without penalty, be applied to the
reduction of the principal amount owing on the secured indebtedness
in the inverse order of its maturity and not to the payment of
interest, or refunded to Mortgagor or the other payor thereof if
and to the extent such amount which would have been excessive
exceeds such unpaid principal. The right to accelerate maturity of
the Note or any other secured indebtedness does not include the
right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Holder does not intend to charge
or receive any unearned interest in the event of acceleration. All
interest paid or agreed to be paid to Holder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full stated term (including any renewal or
extension) of such indebtedness so that the amount of interest on
account of such indebtedness does not exceed the maximum permitted
by applicable law. As used in this Section, the term "applicable
law" shall mean the laws of the State of Illinois or the federal
laws of the United States applicable to this transaction, whichever
laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
Section 6.12. Release of Mortgage. If all of the secured
indebtedness be paid as the same becomes due and payable and all of
the covenants, warranties, undertakings and agreements made in this
Mortgage are kept and performed, and all obligations, if any, of
Holder for further advances have been terminated, then, and in that
event only, all rights under this Mortgage shall terminate (except
to the extent expressly provided herein with respect to
indemnifications and other rights which are to continue following
the release hereof) and the Mortgaged Property shall become wholly
clear of the liens, security interests, conveyances and assignments
evidenced hereby, and such liens and security interests shall be
released by Holder in due form at Mortgagor's cost. Without
limitation, all provisions herein for indemnity of Holder shall
survive discharge of the secured indebtedness and any foreclosure,
release (including a partial release) or termination of this
Mortgage.
Section 6.13. Notices. All notices, requests, consents,
demands and other communications required or which any party
desires to give hereunder or under any other Loan Document shall be
in writing and shall be deemed sufficiently given if given in
accordance with Section 12.2 of the Loan Agreement; provided that,
service of any notice required by New Hampshire law, as amended,
shall be considered complete when the requirements of any such
statute are met. Notwithstanding the foregoing, no notice of
change of address shall be effective except upon receipt. This
Section shall not be construed in any way to affect or impair any
waiver of notice or demand provided in any Loan Document or to
require giving of notice or demand to or upon any person in any
situation or for any reason.
Section 6.14. Invalidity of Certain Provisions. A
determination that any provision of this Mortgage is unenforceable
or invalid shall not affect the enforceability or validity of any
other provision and the determination that the application of any
provision of this Mortgage to any person or circumstance is illegal
or unenforceable shall not affect the enforceability or validity of
such provision as it may apply to other persons or circumstances.
Section 6.15. Gender; Titles; Construction. Within this
Mortgage, words of any gender shall be held and construed to
include any other gender, and words in the singular number shall be
held and construed to include the plural, unless the context
otherwise requires. Titles appearing at the beginning of any
subdivisions hereof are for convenience only, do not constitute any
part of such subdivisions, and shall be disregarded in construing
the language contained in such subdivisions. The use of the words
"herein," "hereof," "hereunder" and other similar compounds of the
word "here" shall refer to this entire Mortgage and not to any
particular Article, Section, paragraph or provision. Words
importing persons shall include firms, associations, partnerships
(including limited partnerships), joint ventures, trusts,
corporations and other legal entities, including public or
governmental bodies, agencies or instrumentalities, as well as
natural persons.
Section 6.16. Reporting Compliance. Mortgagor agrees to
comply with any and all reporting requirements applicable to the
transaction evidenced by the Note and secured by this Mortgage
which are set forth in any law, statute, ordinance, rule,
regulation, order or determination of any governmental authority,
including but not limited to The International Investment Survey
Act of 1976, The Agricultural Foreign Investment Disclosure Act of
1978, The Foreign Investment in Real Property Tax Act of 1980 and
the Tax Reform Act of 1984 and further agrees upon request of
Holder to furnish Holder with evidence of such compliance.
Section 6.17. Holder's Consent. Except where otherwise
expressly provided herein, in any instance hereunder where the
approval, consent or the exercise of judgment of Holder is
required, the granting or denial of such approval or consent and
the exercise of such judgment shall be within the sole discretion
of Holder, and Holder shall not, for any reason or to any extent,
be required to grant such approval or consent or exercise such
judgment in any particular manner, regardless of the reasonableness
of either the request or Holder's judgment.
Section 6.18. Mortgagor. Unless the context clearly
indicates otherwise, as used in this Mortgage, "Mortgagor" means
the grantors named in Section 1.1 hereof or any of them. The
obligations of Mortgagor hereunder shall be joint and several. If
any Mortgagor, or any signatory who signs on behalf of any
Mortgagor, is a corporation, partnership or other legal entity,
Mortgagor and any such signatory, and the person or persons signing
for it, represent and warrant to Holder that this instrument is
executed, acknowledged and delivered by Mortgagor's duly authorized
representatives. If Mortgagor is an individual, no power of
attorney granted by Mortgagor herein shall terminate on Mortgagor's
disability.
Section 6.19. Execution; Recording. This Mortgage has been
executed in several counterparts, all of which are identical, and
all of which counterparts together shall constitute one and the
same instrument. The date or dates reflected in the
acknowledgments hereto indicate the date or dates of actual
execution of this Mortgage, but such execution is as of the date
shown on the first page hereof, and for purposes of identification
and reference the date of this Mortgage shall be deemed to be the
date reflected on the first page hereof. Mortgagor will cause this
Mortgage and all amendments and supplements thereto and
substitutions therefor and all financing statements and
continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Holder
shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
Section 6.20. Successors and Assigns. The terms, provisions,
covenants and conditions hereof shall be binding upon Mortgagor,
and the heirs, devisees, representatives, successors and assigns of
Mortgagor, and shall inure to the benefit of Holder and its
respective heirs, devisees, representatives, successors,
substitutes and assigns and shall constitute covenants running with
the Land. All references in this Mortgage to Mortgagor or Holder
shall be deemed to include all such heirs, devisees,
representatives, successors, substitutes and assigns. All persons
dealing with the Mortgaged Property (other than Mortgagor) shall be
entitled to assume that Lender is the only Holder, and may deal
with Agent or Lender (including without limitation accepting from
or relying upon full or partial releases hereof executed by Agent
or Lender only) without further inquiry as to the existence of
other Holders, until given actual notice of facts to the contrary
or until this Mortgage is supplemented or amended of record to show
the existence of other Holders.
Section 6.21. Modification or Termination. The Loan
Documents may only be modified or terminated by a written
instrument or instruments intended for that purpose and executed by
the party against which enforcement of the modification or
termination is asserted. Any alleged modification or termination
which is not so documented shall not be effective as to any party.
Section 6.22. No Partnership, etc.. The relationship between
Holder and Mortgagor is solely that of lender and borrower. Holder
has no fiduciary or other special relationship with Mortgagor.
Nothing contained in the Loan Documents is intended to create any
partnership, joint venture or association between Mortgagor and
Holder or in any way make Holder a co-principal with Mortgagor with
reference to the Mortgaged Property. Any inferences to the contrary
of any of the foregoing are hereby expressly negated.
Section 6.23. Agent Action. Agent has been appointed by
Holder to act as the Holder under this Mortgage, for and on behalf
of each Lender and each Holder; accordingly, all references to the
term "Holder" in this Mortgage shall mean and refer to Agent, who
shall have all right, title and interest of the Holder under this
Mortgage. Pursuant to the Loan Agreement and any other agreements
among Agent and Lender, Agent has been granted the right, on behalf
of Lender, to take actions, expend sums and incur obligations with
respect to the Mortgaged Property, including exercising all of the
rights, remedies and recourses available to Holder under this
Mortgage (all the foregoing herein collectively called "Agent
Action"). All persons and entities dealing with Agent may
conclusively presume that Agent has the absolute right to take any
Agent Action and that Agent has obtained any such approval that may
be necessary for any of such Agent Action. Accordingly, any such
Agent Action taken by Agent shall be binding upon each Lender and
each Holder to the same extent as if each Holder had joined in such
Agent Action regardless of whether any specific approval was
obtained. No person dealing with Agent or Mortgagor shall be
required to determine Agent's authority to take any such Agent
Action, or to determine any fact or circumstance bearing upon the
existence of Agent's authority, or to see to the application or
distribution of any revenue or proceeds received by Agent. At any
time and from time to time, in accordance with the terms of the
Loan Agreement, Agent may designate another person or entity as
"Agent" by executing an instrument to such effect and filing such
instrument for record in the real property records of the county in
which the Property is located. Upon such appointment of a
successor Agent as herein provided, such successor Agent shall,
without any further act, deed or conveyance, become vested with all
of the estates, properties, rights and powers of its or his
predecessor with like effect as if such successor Agent had
originally been named as Agent herein. If the Agent designated a
successor Agent is a bank or a corporation and the instrument
designating such successor Agent is executed by an officer of such
bank or corporation, then such instrument shall be conclusively
presumed to have been executed with proper bank or corporate
authority and shall be valid and sufficient without proof of any
action by the Board of Directors or a superior officer of such bank
or corporation.
Section 6.24. Applicable Law. THIS MORTGAGE, AND ITS
VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW HAMPSHIRE (WITHOUT REGARD TO ANY CONFLICT
OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW.
Section 6.25. Conflict With Loan Agreement. In the event of
any conflict or inconsistency between the terms of this Mortgage
and the terms of the Loan Agreement, the terms of the Loan
Agreement shall control.
Section 6.26. Entire Agreement. The Loan Documents
constitute the entire understanding and agreement between Mortgagor
and Holder with respect to the transactions arising in connection
with the indebtedness secured hereby and supersede all prior
written or oral understandings and agreements between Mortgagor and
Holder with respect to the matters addressed in the Loan Documents.
Mortgagor hereby acknowledges that, except as incorporated in
writing in the Loan Documents, there are not, and were not, and no
persons are or were authorized by Holder to make, any
representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the matters addressed in
the Loan Documents.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this instrument is executed by Mortgagor
as of the 18th day of July, 1995.
MORTGAGOR:
AMRESCO NEW ENGLAND, INC.
a Delaware corporation
By:
Its:
The address and federal tax identification The address of
Agent and Lender is:
number of Mortgagor are:
AMRESCO New England, Inc. Heller Financial, Inc.
1845 Woodall Rodgers Freeway 500 West Monroe Street
Dallas, Texas 75201-2268 15th Floor
Fed. Tax I.D. No. 75-2544400 Chicago, Illinois 60661
STATE OF ILLINOIS
COUNTY OF COOK
The foregoing instrument was acknowledged before me this 18th
day of July, 1995, by Bruce Robertson, Senior Vice President of
AMRESCO New England, Inc., a Delaware corporation, on behalf of the
corporation.
_________________________________________
Notary Public/Justice of the
Peace
EXHIBIT A
(Description of the Land)
<PAGE>
EXHIBIT B
ASSIGNMENT OF MORTGAGE
STATE OF CONNECTICUT
COUNTY OF ____________
WHEREAS, the undersigned, AMRESCO NEW ENGLAND, INC., a
Delaware corporation ("Assignor"), is the present owner and holder
of one or more promissory notes described on Exhibit A attached
hereto and incorporated herein by reference for all purposes
(collectively, and as renewed, extended, amended or restated from
time to time, the "Note"), which Note is secured by certain liens
and security interests created by the mortgage(s) and other
instruments described on Exhibit A (collectively, and as renewed,
extended, amended or restated from time to time, the "Mortgage"),
which Mortgage covers certain real property and improvements and any
related property more particularly described therein.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
undersigned has TRANSFERRED, ASSIGNED, SET OVER, GRANTED and
CONVEYED and by these presents hereby TRANSFERS, ASSIGNS, SETS OVER,
GRANTS and CONVEYS to HELLER FINANCIAL, INC., a Delaware
corporation, ("Assignee"), all right, title and interest of the
undersigned in and to the following:
(a) The Note and all indebtedness now or hereafter
evidenced thereby or owed in respect thereof;
(b) All of the rights, benefits, privileges, liens,
security interests and assignments owned, held, accruing and to
accrue to, and for the benefit of, the undersigned in respect
of the Note, including, without limitation, under the Mortgage;
and
(c) All other liens, security interests, lien priority
agreements, guaranties, bonds, pledges, assignments, contract
rights, covenants, commitments, leases, agreements, rights,
benefits and privileges (including, without limitation, those
accruing under any and all security agreements, participation
agreements, collateral assignments, subordination or parity
agreements, casualty insurance policies and binders,
mortgagee's title insurance policies and binders, payment bonds
and performance bonds) in any way accruing or to accrue to the
benefit of the undersigned, in any fashion in respect of the
Note or any indebtedness now or thereafter evidenced thereby or
owed in respect thereof, and together with all proceeds,
monies, payments, income, collections and benefits from or
attributable or accruing thereto, and all other agreements now
existing or hereafter arising that provide collateral security
or financial or other support for the payment of the Note.
This Assignment of Mortgage is intended to be and shall
constitute a direct and absolute assignment.
This Assignment of Mortgage is made pursuant to and subject to
the terms of that certain Term Loan Agreement dated as of July 18,
1995 among Assignee, as Agent, certain Lender described therein, Oak
Cliff Financial, Inc. and that certain Collateral Assignment of
Promissory Note and Liens (and Open-End Mortgage and Security
Agreement) (the "Collateral Assignment") dated as of July 18, 1995
executed by Assignor, Oak Cliff Financial, Inc. and Assignee.
This Assignment of Mortgage is without recourse or warranty
except as provided in the Loan Agreement and the Collateral
Assignment.
Pursuant to Section 4 of the Collateral Assignment the terms of
which are hereby incorporated by reference, Assignor hereby grants
to Assignee a mortgage lien against the real property, improvements
and related property described in the Mortgage.
This Assignment of Mortgage may be executed in any number of
counterparts which shall together constitute but one and the same
agreement.
IN WITNESS WHEREOF, Assignor has hereunto set or caused to be
set its hand and seal as of the ____ day of _____________, 1995.
Signed, Sealed, and Delivered ASSIGNOR:
in the Presence of:
AMRESCO NEW ENGLAND, INC.
a Delaware corporation
________________________________
Thomas J. Andrus
________________________________ Treasurer
The address and federal tax The address of Assignee:
identification number of
Assignor are:
AMRESCO New England, Inc. Heller Financial, Inc.
1845 Woodall Rodgers Freeway 15th Floor
Suite 1700 500 West Monroe Street
Dallas, Texas 75201-2268 Chicago, Illinois 60661
Fed. Tax I.D. No. 75-2544400
STATE OF TEXAS
COUNTY OF DALLAS
On this day of July, 1995, personally appeared Thomas J.
Andrus, Treasurer of AMRESCO New England, Inc., a Delaware
corporation, signer and sealer of the foregoing instrument, and
acknowledged the same to be his/her free act and deed and the free
act and deed of said corporation, before me.
________________________________
Notary Public/Commissioner of the
Superior Court
<PAGE>
EXHIBIT C
PROMISSORY NOTE
$27,500,000 Chicago, Illinois
July 18, 1995 FOR
VALUE RECEIVED, AMRESCO NEW ENGLAND, INC., a
Delaware corporation and OAK CLIFF FINANCIAL, INC., a Delaware
corporation (collectively, "Maker"), hereby unconditionally, jointly
and severally, promise to pay to the order of HELLER FINANCIAL, INC.,
a Delaware corporation ("Lender"), at 500 West Monroe Street, 15th
Floor, Chicago, Illinois 60661, or at such
other address given to Maker by Lender, the principal sum of Twenty
Seven Million Five Hundred Thousand and No/100 Dollars
($27,500,000.00), or so much thereof as may be advanced and
outstanding, together with interest, as hereinafter described.
This Note has been executed and delivered pursuant to,
and is subject to and governed by, the terms of that certain Term
Loan Agreement (as the same be modified, amended, supplemented,
extended or restated from time to time the "Loan Agreement") dated as
of even date herewith, executed by and among Maker and Lender (as
Lender and Agent), and any other parties that may become lenders
thereunder, and is the "Note" evidencing the Loan therein referenced,
the terms of the Loan Agreement being incorporated herein by
reference for all purposes. Unless otherwise defined herein or
indicated otherwise, each capitalized term used herein shall have the
meaning given to such term in the Loan Agreement. The terms of the
Loan Agreement shall govern in the case of any
inconsistency between such terms and the terms hereof. This Note is
secured by the Loan Agreement, the
Collateral Assignment, the Mortgages, the other Security Documents
and all the other Loan Documents, and all liens and security
interests created or evidenced thereby. Any holder hereof shall be
entitled to all benefits of and remedies and security set forth in
the Loan Agreement and all the other Loan Documents.
I. Interest and Payment.
(a) Maturity. The entire principal balance of this Note,
and all accrued but unpaid interest hereon, shall be due and payable
in full on the Termination Date.
(b) Accrual of Interest. Subject to Paragraph 1(f)
below, interest on this Note shall accrue at a rate per annum equal
to the lesser of (i) at Maker's option, the Variable Rate or the
LIBOR Rate applicable to each LIBOR Tranche, subject, however, to
the provisions of the Loan Agreement, or (ii) the Maximum Lawful
Rate; provided, however, that as to any portion of the outstanding
principal balance hereof that is not subject to an effective
election of or conversion to the LIBOR Rate in accordance with the
terms of the Loan Agreement, interest on such portion of this Note
shall accrue interest at the lesser of (i) the Variable Rate or (ii)
the Maximum Lawful Rate. Interest on this Note shall be calculated
at a daily rate equal to 1/360 of the annual percentage rate which
this Note bears, subject to the provisions hereof limiting interest
to the Maximum Lawful Rate. Without notice to Maker or any other
Person, 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 the Maximum Lawful Rate, respectively,
fluctuate, subject always to limitations contained in this Note and
the Loan Agreement.
(c) Agreements Concerning Pricing Election. Reference
should be made to the provisions of Section 3.3 of the Loan
Agreement concerning the terms, manner and agreements related to the
interest rate elections available to Maker under this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in Article
III of the Loan Agreement, which provides, in part, for monthly
payments of principal on the fifteenth (15th) day of each month, in
the amounts and as more particularly set forth therein, and monthly
payments of accrued, unpaid interest on the fifteenth (15th) day of
each month.
(e) Costs Due to Regulatory Changes. Maker shall
indemnify Lender against and reimburse Lender for increased costs to
Lender, as a result of any Regulatory Change, in the maintaining of
any LIBOR Rate Portion. 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.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal balance
of this Note shall, at the option of Lender, bear interest at the
Default Rate. Any past due principal, and to the extent permitted
by law, past due interest on the Loan 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 Lender's Liens.
(g) Maximum Lawful Rate Adjustments. If at any time a
change in the Variable Rate or the LIBOR Rate shall cause the rate
of interest on this Note to be limited to the Maximum Lawful Rate,
any subsequent reductions in the Variable Rate or the LIBOR Rate, as
applicable, shall not reduce the rate of interest on this Note below
the Maximum Lawful Rate until the total amount of interest accrued
equals the amount of interest which would have accrued if
the Variable Rate or the LIBOR Rate, as applicable, had at all times
been in effect. In the event that at maturity (stated or by
acceleration), or at the final payment of the Loan, the total amount
of interest paid or accrued on the Loan is less than the amount of
interest which would have accrued if the Variable Rate or the LIBOR
Rate, as applicable, had at all times been in effect with respect
thereto, then at such time, to the extent permitted by law, Borrower
shall pay to Agent, for the ratable benefit of the Lenders, an
amount equal to the difference between (i) the lesser of the amount
of interest which would have accrued if the Variable Rate or the
LIBOR Rate, as applicable, had at all times been in effect and the
amount of interest which would have accrued if the Maximum Lawful
Rate had at all times been in effect, and
(ii) the amount of interest actually paid on the Loan.
2. Default. The occurrence of a Default or an Event of
Default, under and as defined in the Loan Agreement, shall
constitute, respectively, a Default or an Event of Default under
this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of an
Event of Default, the holder hereof, acting by and through Agent in
accordance with the terms of Articles X and XI of the Loan
Agreement, shall have the right to declare the entire unpaid
principal balance of, and all accrued unpaid interest on, this Note
at once due and payable (and upon such declaration, the same shall
be at once due and payable), to foreclose any and all liens and
security interests securing payment hereof, to offset against this
Note any sum or sums owed by it to Maker, and to exercise any of its
other rights, powers and remedies under this Note, under the Loan
Agreement or any other Loan Document, or at law or in equity.
(b) No Waiver. Neither the failure by the holder hereof
to exercise, nor delay by the holder hereof in exercising, the right
to accelerate the maturity of this Note or any other right, power or
remedy upon any Default or Event of Default shall be construed as a
waiver of such Default or Event of Default or as a waiver of the
right to exercise any such right, power or remedy at any time. No
single or partial exercise by the holder hereof of any right, power
or remedy shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right, power or remedy may
be exercised at any time and from time to time. All rights and
remedies provided for in this Note and in any other Loan Document
are cumulative of each other and of any and all other rights and
remedies existing at law or in equity, and the holder hereof shall,
in addition to the rights and remedies provided herein or in any
other Loan Document, be entitled to avail itself of all such other
rights and remedies as may now or hereafter exist at law or in
equity for the collection of the indebtedness owing hereunder, and
the resort to any right or remedy provided for hereunder or under
any such other Loan Document or provided for by law or in equity
shall not prevent the concurrent or subsequent employment of any
other appropriate rights or remedies. Without limiting the
generality of the foregoing provisions, the acceptance by the holder
hereof from time to time of any payment under this Note which is
past due or which is less than the payment in full of all amounts
due and payable at the time of such payment, shall not (i)
constitute a waiver of or impair or extinguish the rights of the
holder hereof to accelerate the maturity of this Note or to exercise
any other right, power or remedy at the time or any subsequent time,
or nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment and
performance, or a novation in any respect.
4. Lawful Rate of Interest. Notwithstanding anything
herein or in any other Loan Documents, expressed or implied, to the
contrary, in no event shall any interest rate charged hereunder or
under any of the other Loan Documents, or any interest contracted
for, collected or received by Lender or any holder hereof, exceed
the Maximum Lawful Rate. If, from any circumstances whatsoever,
fulfillment of any provision of this Note and the other Loan
Documents shall involve exceeding the Maximum Lawful Rate ("Excess
Interest"), then ipso facto, the obligation to be fulfilled shall be
reduced to the highest lawful rate of interest permissible under
such law and if, for any reason whatsoever, Lender shall receive, as
interest, an amount which would be deemed unlawful under such
applicable law, such interest shall be applied to the Loan (whether
or not due and payable), and not to the payment of interest, or
refunded to Maker if such Loan
has been paid in full. Neither Maker nor any guarantor or endorser
shall have any action against Lender for any damages whatsoever
arising out of the payment or collection of any such Excess
Interest.
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on
which such payment is due shall be extended to the next succeeding
Business Day, and such extension of time shall be included in the
computation of the amount of interest then payable.
(b) Manner of Payment. The manner in which payments are
to be made on this Note shall be governed by the provisions hereof
and the Loan Agreement, including, without limitation, Section 3.8
of the Loan Agreement.
(c) Prepayments. Prepayments may be made on this Note
subject to and in accordance with Section 3.6 of the Loan Agreement.
(d) Application of Payments. All payments made on this
Note shall be applied in accordance with Sections 3.5, 3.10 and
10.11 of the Loan Agreement, as applicable. Nothing herein shall
limit or impair any rights of any holder hereof to apply as provided
in the Loan Documents any past due payments, any proceeds from the
disposition of any collateral by foreclosure or other collections
after default. Except to the extent specific provisions are set
forth in this Note or another Loan Document with respect to
application of payments, all payments received by the holder hereof
shall be applied, to the extent thereof, to the indebtedness owing
by Maker to the holder hereof in such order and manner as the holder
hereof shall deem appropriate, any instructions from Maker or anyone
else to the contrary notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity or
to collect, enforce or defend this Note or any other Loan Document
in any lawsuit or in any probate, reorganization, bankruptcy or
other proceeding, or if Maker sues any holder of this Note in
connection with this Note or any other Loan Document and does not
prevail, then Maker agrees to pay to each such holder, in addition
to principal and interest, all costs and expenses incurred by such
holder in trying to collect this Note or in any such suit or
proceeding, including reasonable attorneys' fees.
(f) Waivers and Acknowledgments. Maker and all
sureties, endorsers, guarantors and any other party now or hereafter
liable for the payment of this Note in whole or in part, hereby
severally (i) waive demand, presentment for payment, notice of
dishonor and of nonpayment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration and all other notice
(except only for any notice that is specifically required by the
terms of the Loan Agreement or any other Loan Document), filing of
suit and diligence in collecting this Note or enforcing any of the
security herefor; (ii) agree to any substitution, subordination,
exchange or release of any such security or the release of any party
primarily or secondarily liable hereon; (iii) agree that the holder
hereof shall not be required first to institute suit or exhaust its
remedies against Maker or others
liable or to become liable hereon or to enforce its rights against
them or any security herefor; (iv) consent to any extension or
postponement of time of payment of this Note for any period or
periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without
notice thereof to any of them; and (v) submit (and waive
all rights to object) to personal jurisdiction in the State of
Illinois, and venue in Cook County, Illinois, for the enforcement of
any and all obligations under the Loan Documents.
(g) Amendments in Writing. This Note may not be changed,
amended or modified except in a writing expressly intended for such
purpose and executed by the party against whom enforcement of the
change, amendment or modification is sought.
(h) Purpose of Proceeds. The proceeds of this Note will
be used solely for business purposes and not for personal, family,
household or agricultural purposes.
(i) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as
provided in Section 12.2 of the Loan Agreement.
(j) Assignments/Participation. Maker acknowledges and
agrees that the holder of this Note may, at any time and from time
to time, assign all or a portion of its interest in the Loan or
transfer to any Person a participation interest in the Loan, subject
to and in accordance with the terms and conditions of the Loan
Agreement, including Section 12.10 thereof.
(k) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by or
on behalf of Maker shall bind their respective successors and
assigns and shall be for the benefit of Lender and any holder
hereof, and their successors and assigns, whether so expressed or
not.
(l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY ILLINOIS LAW, 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 12.8 OF THE LOAN AGREEMENT
OR OTHERWISE.
(m) Time of the Essence. Time shall be of the essence in
this Note with respect to all of Maker's obligations hereunder. (n)
INTEGRATION. THIS NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note as
of the date first above written.
MAKER:
AMRESCO NEW ENGLAND, INC., a
Delaware corporation
By_____________________________
Its__________________________
OAK CLIFF FINANCIAL, INC., a
Delaware corporation
By_____________________________
Its__________________________
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
TO: [Custodian]
RE: Custodial Agreement dated as of July ___, 1995, by and among
Fleet National Bank, AMRESCO New England, Inc., Oak Cliff
Financial and Heller Financial, Inc.
In connection with the administration of the Collateral Loans held
by you as Custodian for the Agent under the above-referenced
Custodial Agreement, we request the release, and acknowledge
receipt, of the (Custodian's Mortgage File/specify documents) for
the Collateral Loan described below, for the reason indicated.
Capitalized terms used in this request have the meanings assigned
to them in the Custodial Agreement referred to above.
Mortgagor's or Obligor's Name, Address & Zip Code:
Collateral Loan Number:
Reason for Request Documents:
Settlement
Amount Date
__1. Collateral Loan Paid in Full $__________ _________
(The Owner hereby certifies that all
amounts received in connection
therewith have been credited to the
Collection Account as provided in the
Loan Agreement.)
__2. Collateral Loan Paid in Full $__________ _________
(The Owner hereby certifies that
the Repurchase Price [as defined in the
Purchase Agreement] has been credited to the
Collection Account as provided in the Loan
Agreement.)
__3. Collateral Loan Paid in Full $__________ _________
(The Owner hereby certifies that all
proceeds of foreclosure, insurance or other liquidation
have been finally receive and credited to the
Collection Account pursuant to the Loan Agreement.)
__4. Collateral Loan in Foreclosure
__5. Other (explain)
______________________________________________________
______________________________________________________
If box 1, 2 or 3 above is checked, and if all or part of the
Custodian's Mortgage File was previously released to us, please
release to us our previous receipt on file with you, as well as any
additional documents in your possession relating to the above
specified Collateral Loan.
If box 4 or 5 above is checked, upon our return of all of the above
documents to you as Custodian, and payment of the appropriate fee,
please acknowledge your receipt by signing in the space indicated
below, and returning this form.
AMRESCO New England, Inc.
By:_______________________________
Printed Name:______________________
Title:_____________________________
Date:_____________________________
Signature of Agent required for release of documents if box 4 or 5
above is checked:
HELLER FINANCIAL, INC.
By:_______________________________
Printed Name:______________________
Title:_____________________________
Mortgage File returned to Custodian:
FLEET NATIONAL BANK
By:_______________________________
Printed Name:______________________
Title:_____________________________
Date:_____________________________
TO CUSTODIAN: Please acknowledge by our signature and execution of
the above request.
<PAGE>
EXHIBIT E
AMRESCO NEW ENGLAND, INC.
CERTIFICATE OF COMPLIANCE as of
______________ 199__
for Calendar Month _______, 199__
Total Cash Proceeds from Selected $________
Asset Pool
Less: Heller Interest ($__________)
Total Available for expenses $________
Less: Asset specific expenses $__________
Administrative/overhead expenses $__________
Accrued expenses $__________
Subtotal ($__________)
Net Cash Flow Available for
Principal Payment $__________
Principal payment to Agent
(90% of Net Cash Flow)* $__________
Plus: Portfolio Seller Repurchase Payment $__________
Total Heller Loan Principal Payment $__________
Ending Heller Loan Balance as of________ $________
Payment to Subordinated Debt Holder(s)
(10% of Net Cash Flow) $________
Permitted Working Capital
Subordinated Debt (PWCS)
Beginning Permitted Working $__________
Capital Subordinated Debt
PWCS for the month of ___ $__________
Less: Repayment from 10% of Net Cash Flow ($__________)
Repayment from sources other ($__________)
than Net Cash Flow
Cumulative Total PWCS debt $__________
Permitted Shortfall Payment
(10% of Net Cash Flow) $________
or
(up to 100% of Net $__________
Cash Flow if permitted
under 3.5(a)) $_________
*Recalculation of Principal
Payment to Agent if 3.5(a)
Permitted Shortfall Payment
deducted $__________
<PAGE>
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE is made and entered into
effective as of the ____ day of __________, 19__, by and between
______________________________, a _______________________
("Assignor"), and ________________________________, a
_____________________________________ ("Assignee").
R E C I T A L S:
I. Pursuant to the terms and provisions of that certain
Term Loan Agreement (the "Loan Agreement") dated as of July 18,
1995, executed by and between AMRESCO New England, Inc., a Delaware
corporation, Oak Cliff Financial, Inc., a Delaware corporation
(collectively, "Borrower"), Heller Financial, Inc., a Delaware
corporation, as agent ("Agent") for and on behalf of itself (herein
referred to as "Heller" in such individual capacity), and for the
other lenders (collectively, the "Lenders") from time to time party
to the Loan Agreement, the Lenders made a loan (the "Loan") to
Borrower in the principal amount of up to $27,500,000.00, which Loan
is evidenced by [that certain Promissory Note (the "Note") dated of
even date therewith, in the
original principal face amount of $27,500,000.00, executed by
Borrower and payable to the order of Heller - describe current
Note(s) if different]. Each capitalized term defined in the Loan
Agreement and used herein without definition shall have the same
meaning assigned to such term in the Loan Agreement.
II. Assignor owns and holds a __________________ percent
(___%) undivided interest in the Loan, the Loan Agreement, the
Security Documents, and all of the other Loan Documents, as one of
the Lenders thereunder, as more particularly set forth therein.
III. Assignor desires to assign to Assignee [all of its]
[a ____________ percent (___%) interest in all of Assignor's] right,
title and interest in, to and under the Loan, the Loan Agreement,
the Security Documents, and all of the other Loan Documents.
NOW, THEREFORE, for and in consideration of Ten and No/100
Dollars ($10.00), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and
confessed, Assignor and Assignee hereby covenant and agree as
follows:
There are automatic paragraph numbers here. 1. Assignor
has SOLD, ASSIGNED, TRANSFERRED and CONVEYED, and by
these presents does hereby SELL, ASSIGN, TRANSFER and
CONVEY, unto Assignee [all of] [a ______________
percent (___%) in all of] Assignor's ______________
percent (___%) interest in all of Assignor's rights,
interest and obligations under the Loan Agreement,
the Security Documents and all of the other Loan
Documents as of the Assignment Date (hereinafter
defined) (the "Assigned Interest").
2. Assignee hereby assumes all
obligations of Assignor with respect to the Assigned
Interest.
3. Assignor hereby represents and
warrants to Assignee that Assignor is the legal and
beneficial owner of the Assigned Interest and that
Assignor is legally authorized to enter into this
Assignment and Acceptance.
4. Assignee hereby confirms and
acknowledges that, except as specifically set
forth herein, Assignor: (i) makes no
representation or warranty and assumes no
responsibility with respect to any statements,
warranties or representations made in or in
connection with any Loan Document, or the execution,
legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant
thereto, other than that it is the legal and
beneficial owner of the Assigned Interest and that
such interest is free and clear of any adverse claim;
(ii) makes no representation or warranty and assumes
no responsibility with respect to the value or
condition of, or title to, the Assigned Loans or the
Mortgaged Property or any other Collateral, or
the financial condition of Borrower; and (iii) makes
no representation or warranty and assumes no
responsibility with respect to the performance or
observance by Borrower of any of its obligations
under any Loan Document or any other instrument or
document furnished pursuant thereto.
5. Assignor requests that Agent
exchange Assignor's Note for [one new Note] [two new
Notes] executed by the Borrower and payable to
[Assignee] [each of Assignor and Assignee] as
follows:
Notes Payable to
the Order of: Amount of Note
[Assignor] $_______________
[Assignee] $_______________
6. Assignee represents and warrants that
(a) it is legally authorized to enter into this
Assignment and Acceptance, and (b) it is an Eligible
Assignee.
7. Assignee hereby: (i) appoints Agent
as the Agent under the Loan Agreement and other Loan
Documents and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under
the Loan Agreement and the other Loan Documents as
are delegated to Agent by the terms thereof; (ii)
confirms that it has received a copy of the Loan
Documents, together with copies of such financial
statements of Borrower and such other documents and
information as it has deemed appropriate to make its
own credit analysis and decision to enter into this
Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon Assignor, any
other Lender, or the Agent, 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
the Loan Documents, subject to and in accordance with
Article X of the Loan Agreement; (iv) agrees with
Assignor for the benefit of Agent, each other Lender
and Borrower that it will perform all of the
obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender
thereunder, and that it shall be liable directly to
Assignor, Agent, Borrower, and each other Lender for
the performance of such obligations; and (v) agrees
not to disclose any financial information of the
Borrower or other confidential information regarding
the Loan as and to the extent provided in Section 7.3
of the Loan Agreement.
8. The effective date of this
Assignment and Acceptance shall be _________________,
19__ (the "Assignment Date"), determined in
accordance with Section 12.10(c) of the Loan
Agreement. Following the execution of this
Assignment and Acceptance, each party hereto and each
Person consenting hereto shall deliver its duly
executed counterpart hereof to the Agent for
acceptance and recording in the Register by the
Agent.
9. As of the Assignment Date, (i)
Assignee shall be a "Lender" under the Loan Documents
and, to the extent provided in this Assignment and
Acceptance and subject to the terms of Article X of
the Loan Agreement, shall have the rights and
obligations of a Lender thereunder, and (ii) Assignor
shall, with respect only to the Assigned Interest,
relinquish its rights and be released from its
obligations, under the Loan Documents, subject to
Section 12.10 of the Loan Agreement.
10. Upon acceptance and recording of the
Assignment and Acceptance, from and after the
Assignment Date, Agent shall make all payments in
respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to
Assignee. On the Assignment Date, Assignee will pay
to the Agent for the pro rata account of Assignor an
amount equal to the percentage of Assignor's interest
assigned to Assignee hereunder, times the aggregate
Loan Amount of Assignor.
11. If Assignee is organized under the
laws of a jurisdiction outside the United States, it
hereby represents that it has delivered to Assignor
and Agent completed and signed copies of any forms
that may be required by the United States Internal
Revenue Service in order to certify Assignee's
exemption from United States withholding taxes with
respect to any payment or distributions made or to be
made to Assignee with respect to the Loan or under
the Loan Agreement or such other documents as are
necessary to indicate that all such payments or
distributions are subject to such taxes at a rate
reduced by an applicable tax treaty.
12. Assignee hereby irrevocably submits
generally and unconditionally for itself and in
respect of its property to the non-exclusive
jurisdiction of any Illinois state court, or any
United States federal court sitting in the City of
Chicago, over any suit, action or proceeding arising
out of or relating to this Agreement or the
Obligations. Assignee hereby agrees and
consents that, in addition to any methods of service
or process provided for under applicable law, all
service of process in any such suit, action or
proceeding in any Illinois state court, or any United
States federal court sitting in the City of Chicago,
Illinois, may be made by certified or registered
mail, return receipt requested, directed to Assignee
at the address of Assignee stated at the end of this
Agreement or at a subsequent address of which
Assignor and Agent received actual notice from
Assignee in accordance with the Loan Agreement, and
service so made shall be completed five (5) days
after the same shall have been so mailed.
13. This Assignment and Acceptance shall
be governed by, and construed in accordance with, the
laws of the State of Illinois, without giving effect
to the conflict of laws principles thereof.
14. This Assignment and Acceptance may be
executed in any number of counterparts which shall
together constitute but one and the same agreement.
IN WITNESS WHEREOF, Assignor and Assignee have executed
this Assignment and Acceptance as of the date first above written.
ASSIGNOR:
___________________, a ______________
___________________________
By:
________________________________
Name:___________________________
Title:__________________________
ASSIGNEE:
Address of Assignee:
_________________, a
________________
____________________ ___________________________
____________________
____________________
By:__________________________________
Name:___________________________ Title:__________________________
ACKNOWLEDGED and ACCEPTED as of
the ___ day of _______, 199_.
AGENT:
HELLER FINANCIAL, INC.,
a Delaware corporation
By:______________________
Name:_______________
Title:______________
STATE OF ________________
COUNTY OF _______________
This instrument was acknowledged before me, on the ___
day of __________, 199_, by ________________________,
__________________ of __________________________, a
_____________________________, on behalf of said _______________.
_____________________________________
Notary Public - State of
____________
My commission expires:
_____________________________________
_________________________ Printed Name of Notary Public
STATE OF ________________
COUNTY OF _______________
This instrument was acknowledged before me, on the ___
day of __________, 199_, by ________________________,
__________________ of __________________________, a
_____________________________, on behalf of said _______________.
_____________________________________
Notary Public - State of ____________
My commission expires:
_____________________________________ _________________________
Printed Name of Notary Public
<PAGE>
EXHIBIT G
FORM OF BORROWER CERTIFICATE
This CERTIFICATE is made and entered into as of the ____
day of __________, 19__, by AMRESCO New England, Inc., a Delaware
corporation and Oak Cliff Financial, Inc., a Delaware corporation
(collectively, "Borrower") in favor of Heller Financial, Inc., a
Delaware corporation, as agent ("Agent") for and on behalf of
itself (herein referred to as "Heller" in such individual
capacity), and for the other lenders (collectively, the "Lenders")
from time to time party to the Loan Agreement (defined below), and
___________________, a __________________________ ("Assignee"). R E
C I T A L S:
I. Pursuant to the terms and provisions of that certain
Term Loan Agreement (the "Loan Agreement") dated as of July 18,
1995, executed by and among Borrower, Agent and the Lenders, the
Lenders made a loan (the "Loan") to Borrower in the principal amount
of $27,500,000.00, which Loan is evidenced by [that certain
Promissory Note (the "Note") dated of even date therewith, in the
original principal face amount of $27,500,000.00, executed by
Borrower and payable to the order of
Heller - describe current Note(s) if different]. Each capitalized
term defined in the Loan Agreement and used herein without
definition shall have the same meaning assigned to such term in the
Loan Agreement.
II. Agent has informed Borrower that [applicable Lender's
name] intends to assign to Assignee [all of its interest] [a
_____________ percent (___%) undivided interest in its interest]
(the "Interest") in the Note, the Loan Agreement, the Security
Documents and all of the other documents evidencing, securing or
pertaining to the Loan (collectively, the "Loan Documents"), as one
of the Lenders thereunder.
III. Pursuant to Section 12.10(k) of the Loan Agreement,
Borrower has agreed to execute this Certificate in connection with
the proposed assignment of such Interest in the Loan and the Loan
Documents to Assignee.
NOW, THEREFORE, for and in consideration of Ten and No/100
Dollars ($10.00), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and
confessed, Borrower hereby certifies and agrees as follows:
There are automatic paragraph numbers here. 1. Documents
Not Modified. The Loan Documents have not been released,
subordinated, altered or otherwise modified in any respect [other
than as described on Schedule I hereto], and are valid and binding
obligations of Borrower and in full force and effect on the date
hereof.
2. Unpaid Balance. According to Borrower's records, as
of [_____________, 199_, - last payment date], the entire unpaid
principal balance of the Loan is $________. All payments of
principal, interest and any other monetary obligations on the Loan
are current.
3. No Defaults by Borrower. As of the date hereof, no
monetary default and, to Borrower's knowledge, no non-monetary
default exists under any provision of any of the Loan Documents and,
to Borrower's knowledge, no event or circumstance has occurred which
with notice or the passage of time, or both, could constitute a
default under any of the Loan Documents.
4. No Offsets or Defenses. Borrower has no current,
actual knowledge of any default or breach by Agent or the Lenders
under the Loan Documents, or of any claims, offsets or defenses with
respect to the enforcement of the Loan Agreement or any of the other
Loan Documents; provided, however, that Borrower does not hereby
waive any claims, offsets or defenses that it may have.
5. Consent to Sale. Borrower consents to the sale and
assignment of the Interest in the Loan Documents to Assignee, and
such assignment will not constitute a default under the Loan
Documents.
6. Acknowledgement of Reliance. Borrower acknowledges
that Agent, the Lenders and Assignee are relying on the statements
set forth herein in connection with the execution by Borrower of
this Certificate.
7. Successors and Assigns. This Certificate and the
terms hereof shall inure to the benefit of and be binding on
Borrower and its successors and assigns, and inure to the benefit of
Agent, the Lenders, Assignee and their respective successors and
assigns.
8. Governing Law. This Certificate shall be governed
by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to the conflict of laws principles
thereof.
IN WITNESS WHEREOF, intending to be legally bound, each of
the undersigned has caused this Certificate to be executed on its
behalf by its officer thereunto duly authorized, as of the date
first above written.
BORROWER:
AMRESCO NEW ENGLAND, INC., a Delaware
corporation
By:
________________________________
Name:___________________________
Title:__________________________
OAK CLIFF FINANCIAL, INC., a Delaware
corporation
By:
________________________________
Name:___________________________
Title:__________________________
STATE OF ________________
COUNTY OF _______________
This instrument was acknowledged before me, on the ___ day
of __________, 199_, by ________________________, __________________
of AMRESCO New England, Inc., a Delaware corporation, on behalf of
said corporation.
_____________________________________
Notary Public - State of ____________
My commission expires: _____________________________________
_________________________ Printed Name of Notary Public
STATE OF ________________
COUNTY OF _______________
This instrument was acknowledged before me, on the ___
day of __________, 199_, by ________________________,
__________________ of Oak Cliff Financial, Inc., a Delaware
corporation, on behalf of said corporation.
_____________________________________
Notary Public - State of
____________
My commission expires:
_____________________________________
_________________________ Printed Name of Notary Public
<PAGE>
EXHBIT H
<TABLE>
ANEI-BONHAM 1
CASH RECEIPT TRANSACTIONS LISTING 3/1/95 TO 3/31/95
<CAPTION>
Tran Tran
Note # Date Code Cust # Customer Name Acct_Par Tran_Tot Principal Interest
------- ------ -- ------- ------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4679486 3/1/95 C 4260121 CHABOT 4260121 -330.65 -149.58 -181.07
4679742 3/1/95 C 4259883 WHITCOMB 4259883 -1184.52 -215.82 -968.70
4679783 3/1/95 C 4259990 DIONNE'S 4259990 -779.18 -779.18
4679858 3/1/95 C 4259982 DIONNE R 4259982 -779.00 -779.00
4679940 3/1/95 C 4259792 NORTHLAN 4259792 -1600.00 -1600.00
4680013 3/1/95 C 4259792 NORTHLAN 4259792 -1500.00 -1500.00
4679395 3/1/95 C 4260238 STATE LI 4260238 -425.00 -96.56 -328.44
4679429 3/1/95 C 4260238 STATE LI 4260238 -1903.43 -1903.43
4679668 3/3/95 C 4259933 NADEAU R 4259933 -3000.00 -3000.00
4679973 3/3/95 C 4259875 GRANT & 4259875 -500.00 -500.00
4679791 3/7/95 C 4259883 WHITCOMB 4259883 -144.71 -144.71
4679494 3/7/95 C 4260121 CHABOT 4260121 -598.53 -139.45 -459.08
4679726 3/15/95 C 4259966 LONGO JO 4259966 -1586.00 -1586.00
4679718 3/17/95 C 4259883 WHITCOMB 4259883 -1090.65 -377.53 -713.12
4679957 3/17/95 C 4259867 DOMBROWS 4259867 -102700.00 -91700.00 -11000.00
4679726 3/22/95 C 4259966 LONGO JO 4259966 -1079.00 -1079.00
4679858 3/22/95 C 4259982 DIONNE R 4259982 -1558.18 -1558.18
4679874 3/22/95 C 4260170 RING ELL 4260170 -200.38 -100.00 -100.38
4679502 3/23/95 C 4260204 NESTOR T 4260204 -50.59 -50.59
4679510 3/23/95 C 4260204 NESTOR T 4260204 -1068.42 -1020.31 -48.11
4679601 3/23/95 C 4260089 MOUSSEAU 4260089 -66000.00 -26000.00 -40000.00
4679635 3/23/95 C 4259917 TILTON D 4259917 -4392.43 -4189.19 -203.24
4679668 3/23/95 C 4259933 NADEAU R 4259933 -3000.00 -3000.00
4679486 3/27/95 C 4260121 CHABOT 4260121 -330.65 -150.65 -180.00
4680013 3/27/95 C 4259792 NORTHLAN 4259792 -3100.00 -3100.00
4679742 3/29/95 C 4259883 WHITCOMB 4259883 -1184.52 -310.94 -873.58
</TABLE>
<PAGE>
EXHIBIT I
NONE
REVOLVING CREDIT LOAN AGREEMENT
DATED AS OF
APRIL 28, 1995
BY AND AMONG
AMRESCO CAPITAL CORPORATION,
AMRESCO, INC.
AND NATIONSBANK
OF TEXAS, N.A.
<PAGE>
TABLE OF CONTENTS
PRELIMINARY STATEMENT
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions 1
Section 1.2. Singular and Plural of Definitions 21
Section 1.3. Substantive Definitions 21
Section 1.4. Money 21
Section 1.5. Captions; References 21
Section 1.6. Accounting Terms and Determinations 22
ARTICLE II
LOAN TERMS
Section 2.1. Commitment to Lend 22
Section 2.2. Fees 22
Section 2.3. Note. 23
Section 2.4. Conditions to Borrowing. 23
Section 2.5. Maturity 24
Section 2.6. Interest Rate; LIBOR Election 24
Section 2.7. Payments 26
Section 2.8. Prepayments on the Loan 27
Section 2.9. Schedules on Notes 28
Section 2.10. General Provisions as to Payments 28
Section 2.11. Application of Payments and Prepayments 28
Section 2.12. Maximum Lawful Rate Adjustments. 29
Section 2.13.Post-Default Interest; Past Due Principal
and Interest 29
Section 2.14. Computation of Interest and Fees 29
Section 2.15. Capital Adequacy; LIBOR Costs 30
Section 2.16. Taxes 30
Section 2.17. Use of Loan Proceeds. 31
Section 2.18. Option to Extend Loan 31
ARTICLE III
COLLATERAL
Section 3.1. Collateral 32
Section 3.2. Characteristics of Mortgage Loans. 32
Section 3.3. Mortgage Loan Underwriting, Origination
and Servicing 33
Section 3.4. Assignment of Servicing Agreements and
Hedge Agreements 34
Section 3.5. Release of Mortgage Loans. 36
Section 3.6. Mandatory Redemption 37
Section 3.7. Mortgage Loan Payments; Accounts 39
Section 3.8. Guaranty of Certain Obligations by AMRESCO 42
ARTICLE IV
CONDITIONS APPLICABLE TO THE CLOSING AND MORTGAGE LOAN ADVANCES
Section 4.1. Conditions to Closing. 47
Section 4.2. Request for Advance; Mortgage Loan Submission
Package; Approval of Mortgage Loans. 49
Section 4.3. Additional Conditions to All Mortgage Loan
Advances; Delivery of Original Mortgage Loan
Documents. 51
Section 4.4. Post-Advance Delivery Items. 54
Section 4.5. Post-Advance Review and Approval. 54
Section 4.6. No Waiver. 55
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. Existence and Power of Borrower. 55
Section 5.2. Authorization; Contravention 55
Section 5.3. Enforceable Obligations 56
Section 5.4. Financial and Other Information 56
Section 5.5. Litigation 56
Section 5.6. ERISA 57
Section 5.7. Taxes and Filing of Tax Returns 57
Section 5.8. Ownership of Assets. 57
Section 5.9. Business; Compliance With Law 58
Section 5.10. Licenses, Permits 58
Section 5.11. Full Disclosure 58
Section 5.12. Environmental Matters. 58
Section 5.13. Purpose of Credit 58
Section 5.14. Governmental Regulations 59
Section 5.15. Indebtedness 59
Section 5.16. Insurance 59
Section 5.17. Solvency 59
Section 5.18. Insider. 60
Section 5.19. Not a Foreign Person 60
Section 5.20. Principal Office, Etc. 60
Section 5.21. Inducement to Lender 60
Section 5.22. No Default. 60
Section 5.23. Fiscal Year. 60
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
RELATED TO THE MORTGAGE LOANS
Section 6.1. No Prior Liens 61
Section 6.2. Authority 61
Section 6.3. No Cross-Collateralization; Whole Loan 61
Section 6.4. Compliance With Lending Laws 61
Section 6.5. Mortgage Lending Practices 61
Section 6.6. Origination, Underwriting and Servicing 62
Section 6.7. Mortgage Loan Submission Package 62
Section 6.8. No Future Advances 62
Section 6.9. Due Execution and Delivery; Enforceability 62
Section 6.10. Assignment of Mortgage 62
Section 6.11. Mortgage as First Lien 63
Section 6.12. No Modification or Release 63
Section 6.13. Taxes and Assessments 63
Section 6.14. Escrowed Funds 63
Section 6.15. No Advances 63
Section 6.16. Loan-to-Value Ratio 63
Section 6.17. Debt Service Coverage Ratio 63
Section 6.18. No Mechanics Liens 64
Section 6.19. No Protrusions or Encroachments; Zoning 64
Section 6.20. Assignment of Rents 64
Section 6.21. Title Policy 64
Section 6.22. Insurance 64
Section 6.23. No Event of Default; No Cross-Default 65
Section 6.24. Fee Estate 65
Section 6.25. Monthly Payments 65
Section 6.26. No Damage or Condemnation Proceedings 65
Section 6.27. Rights and Remedies 66
Section 6.28. No Other Security 66
Section 6.29. Trustee Under Deeds of Trust 66
Section 6.30. Environmental Audit. 66
Section 6.31. Separate Tax Assessment 66
Section 6.32. Compliance With Laws; Certificate of
Occupancy; Zoning 66
Section 6.33. No Substandard Loans 67
Section 6.34. Mortgage Loan Documents 67
Section 6.35. Appraisals 67
ARTICLE VII
AFFIRMATIVE COVENANTS
Section 7.1. Information From Borrower 67
Section 7.2. Interest Rate Protection 69
Section 7.3. Ordering of Appraisals 70
Section 7.4. Inspection and Audit of Books and Records 70
Section 7.5. Inspections and Audits of Mortgage Loan
Files 70
Section 7.6. Inspection of Mortgaged Property. 70
Section 7.7. Maintenance of Insurance 71
Section 7.8. Payment of Taxes, Impositions and Claims 72
Section 7.9. Compliance with Legal Requirements 72
Section 7.10. Existence, Franchises and Permits 72
Section 7.11. Notice to Lender 72
Section 7.12. Covenant Compliance 73
Section 7.13. Quantity and Quality of Documents 74
Section 7.14. Costs and Expenses 74
Section 7.15. Additional Documents 74
Section 7.16. Defense of Actions 74
Section 7.17. Loan Participations; Pledge 75
Section 7.18. Estoppel Certificate 75
Section 7.19. Disclaimer of Loan Extension 75
ARTICLE VIII
NEGATIVE COVENANTS
Section 8.1. Minimum Liquidity 76
Section 8.2. Total Liabilities to Tangible Net Worth 76
Section 8.3. Minimum Tangible Net Worth. 76
Section 8.4. Limitation on Sale of Properties 76
Section 8.5. Limitation on Debt 76
Section 8.6. Limitations on Liens 76
Section 8.7. Consolidations, Mergers, Sales of Assets,
and Maintenance 76
Section 8.8. Investments 77
Section 8.9. Limitation on Distributions 77
Section 8.10. Identity and Place of Business 77
Section 8.11. Limitation on Contingent Liabilities 77
Section 8.12. Transactions with Affiliates 77
Section 8.13. Employee Plans 78
Section 8.14. Use Violations 78
Section 8.15. Exceptions to Covenants 78
Section 8.16. Fiscal Year and Accounting Methods 79
Section 8.17. Governmental Regulations 79
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default 79
Section 9.2. Remedies 81
Section 9.3. Separate Sales 83
Section 9.4. Rights of Setoff 83
Section 9.5. Remedies Cumulative, Concurrent and
Non-Exclusive 84
Section 9.6. No Conditions Precedent to Exercise
Remedies 85
Section 9.7. Release of and Resort to Collateral 85
Section 9.8. Waivers 86
Section 9.9. Discontinuance of Proceedings 86
Section 9.10. Power of Attorney 86
Section 9.11. Application of Proceeds After Default 88
Section 9.12. Failure to Give Notice and/or Cure 89
ARTICLE X
MISCELLANEOUS
Section 10.1. Continuing Agreement 89
Section 10.2. Notices 89
Section 10.3. Indemnification. 91
Section 10.4. Amendments and Waivers; Consent to
Deviation. 92
Section 10.5. Survival 93
Section 10.6. Prior Understandings; No Defenses;
Release; No Oral Agreements 93
Section 10.7. Limitation on Interest 94
Section 10.8. Invalid Provisions 95
Section 10.9. Successors and Assigns. 95
Section 10.10.Lender's Right To Perform Obligations of
Borrower and Its Affiliates. 95
Section 10.11. Senior Debt 96
Section 10.12. Table of Contents and Captions 96
Section 10.13. Construction 96
Section 10.14. Loan Documents 96
Section 10.15. No Third Party Beneficiary 96
Section 10.16. Borrower in Control 96
Section 10.17. No Partnership, etc. 96
Section 10.18. Place of Payment; Forum 97
Section 10.19. Lender's Consent 97
Section 10.20. Time of Essence 97
Section 10.21. Counterparts 97
Section 10.22. Renewal, Extension or Rearrangement 98
Section 10.23. APPLICABLE LAW 98
Section 10.24. ARBITRATION 98
Section 10.25. JURY TRIAL WAIVER 99
Section 10.26. Revolving Loan 99
Section 10.27. Inconsistent Provisions 99
Section 10.28. Recourse Liability 100
EXHIBIT A - FORM OF ASSIGNMENT OF ACCOUNTS
EXHIBIT B - FORM OF COLLATERAL ASSIGNMENT OF NOTES AND LIENS
EXHIBIT C - FORM OF MEMORANDUM OF COLLATERAL ASSIGNMENT
EXHIBIT D - FORM OF ALLONGE
EXHIBIT E - FORM OF NOTE
EXHIBIT F - FORM OF TRANSFER OF NOTE AND
LIENS
EXHIBIT G-1 - FORM OF REQUEST FOR ADVANCE
EXHIBIT G-2 - FORM OF REQUEST FOR PRE-APPROVAL
CONDITION
EXHIBIT H - UNDERWRITING MANUAL
EXHIBIT I - FORM OF TITLE COMPANY INSTRUCTION LETTER
SCHEDULE I - REQUIREMENTS FOR MORTGAGE LOAN SUBMISSION PACKAGE
SCHEDULE II - UNDERWRITING CRITERIA
<PAGE>
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT (this
"Agreement") is entered into as of the 28th day of April,
1995, among AMRESCO CAPITAL CORPORATION, a Texas
corporation ("Borrower"), AMRESCO, INC., a Delaware
corporation ("AMRESCO"), and NATIONSBANK OF TEXAS, N.A., a
national banking association ("Lender").
PRELIMINARY STATEMENT
Borrower has requested that Lender make
available to Borrower a line of credit facility of up to
Twenty-Five Million and No/100 Dollars ($25,000,000) for
the purpose of financing the origination and warehousing
by Borrower of approved mortgage loans. Subject to
and upon the terms and conditions of this Agreement,
Lender is willing to make such funding available to
Borrower. Accordingly, in consideration of the mutual
covenants
contained herein, Borrower and Lender agree as follows:
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions. The following terms, as
used herein, have the following meanings:
Adjusted LIBOR Rate means, on any date of
determination for the relevant Interest Period, a rate of
interest per annum equal to the sum of (a) the quotient
obtained by dividing (i) the rate of interest per annum
equal to the interest settlement rate for U.S. Dollars as
published by the British Bankers Association as of 11:00
a.m. London time two (2) Business Days (on which
commercial banks are open for international business in
London) before the first day of such Interest Period, for
the approximate principal amount of the applicable LIBOR
Portion, and for a period comparable to the applicable
Interest Period; provided, that if no such rate is
published by the British Bankers Association, then no
LIBOR Rate may be elected pursuant to this Agreement, by
(ii) the remainder of 1.00 minus the LIBOR Reserve
Requirement on such day, plus (b) the FDIC Percentage in
effect on such day, together with any
additional impositions, assessments, fees or surcharges
that may be imposed on Lender.
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 and, with respect to Borrower, includes each
holder of five percent (5.0%) or more of the equity
interests of Borrower, and also specifically includes,
without limitation, AMRESCO and Servicer. 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.
Agreement means this Revolving Credit Loan Agreement
and all renewals, extensions, modifications, amendments and
rearrangements thereof.
Allonge means an allonge endorsement in the form of
Exhibit D attached hereto executed by Borrower in
connection with any Mortgage Loan, pursuant to which
Borrower endorses to Lender the related Mortgage Note.
AMRESCO has the meaning set forth in the first
paragraph of this Agreement. Borrower is a wholly-
owned subsidiary of AMRESCO.
Applicable Environmental Laws means 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
Mortgaged Property pertaining to health, safety or the
environment.
Appraisal means, with respect to any Mortgaged
Property, an MAI appraisal stating the appraised value
of such Mortgaged Property, ordered by Borrower,
prepared by an Independent Appraiser who is certified by
the state in which the applicable Mortgaged Property is
located, which appraisal must satisfy all appraisal
policies and procedures of Borrower as set forth in the
Underwriting Manual, as well as all legal requirements
applicable to Lender and the Loan, including, without
limitation, all applicable regulations and guidelines
issued under FIRREA.
Approved Property Type means any commercial real
estate developed and used for either office, retail,
industrial or multifamily use.
Asset Portfolios means one or more pools or
portfolios of (a) loans, whether performing, non-performing or
under-performing, and/or (b) real estate or other assets
acquired in connection with the foreclosure, restructure or
settlement of loans by any holder thereof, together
with all documents, instruments, certificates and other
information related thereto.
Assignment of Rents means, with respect to any
Mortgage Loan, an assignment of leases, rents and profits
granted by the applicable Mortgage Borrower in favor of
the holder of the applicable Mortgage Note, as security
for the payment of any Mortgage Note, and assigning to
the holder of the applicable Mortgage Note a first
lien security interest in all income, profits, rents
and leases in connection with the applicable Mortgaged
Property, whether incorporated into the terms of a
Mortgage or evidenced by a separate agreement, and all
renewals, extensions, modifications, amendments or
supplements thereto, and all assignments of rents given in renewal,
extension, modification, restatement or replacement thereof.
Assignment of Accounts means, collectively, one or
more assignments of even date herewith, executed by
Borrower or Servicer, as applicable, in favor of
Lender, assigning the Holdback Accounts, the Lender's
Control Account, the Collection Account, and
the other Servicing Accounts as security for the
payment and performance of the Obligations, which
Assignment of Accounts shall be substantially in the form
attached hereto as Exhibit A, and all renewals,
extensions, modifications, supplements or replacements thereof.
Authorized Officer means, as to each of Borrower
and AMRESCO, its Chairman, its President, its Vice
President(s), its Chief Financial Officer or
Treasurer, its Chief Accounting
Officer, or any other Person duly authorized by the
appropriate resolution of the Board of Directors and the
bylaws of Borrower or AMRESCO, as applicable, to execute
the Loan Documents or any other
documents or certificates to be executed by Borrower or
AMRESCO hereunder or in connection with the Loan.
Borrower has the meaning set forth in the first
paragraph of this Agreement.
Business Day means any day of the week other than
Saturday, Sunday or any other day on which Lender is
required or authorized by law or executive order to close.
Closing Date means the date of execution and
delivery of this Agreement.
Code means the Internal Revenue Code of 1986, as
amended from time to time, any successor statute
thereto, and any temporary or final regulations of the
United States Department of the Treasury promulgated
pursuant thereto.
Collateral means all property, assets and interests of
any kind securing or to secure the Loan and the Obligations
pursuant to this Agreement or any of the other Loan
Documents, including, without limitation, all Mortgage
Loans that are now or hereafter originated by Borrower
with the proceeds of any Mortgage Loan Advance, the
Lender's Control Account, the Holdback Accounts, the
Collection Account, the other Servicing Accounts, the
Servicing Agreements and the Hedge Agreements assigned
pursuant to Section 3.4, together with all books, records
and accounts relating to any of the foregoing and all
proceeds thereof, substitutions therefor and additions
thereto, including, without limitation, all cash and cash
equivalents received upon the disposition of any of the
foregoing.
Collateral Assignment of Notes and Liens means a
collateral assignment of all Mortgage Loans now or
hereafter acquired by Borrower and pledge of, and grant of
a security interest in, all Mortgage Notes and other
instruments evidencing such Mortgage Loans, of even date
herewith, executed by Borrower in favor of Lender, as
security for the payment and performance of the
Obligations, assigning to Lender a first lien security
interest in all such Mortgage Loans and Mortgage Notes,
including all Mortgage Loan Documents, which Collateral
Assignment of Notes and Liens shall be substantially in
the form attached hereto as Exhibit B, and all
renewals, extensions,modifications, supplements and
replacements thereof.
Collection Account means an interest bearing
account established by Servicer with Lender for the benefit
of Borrower and styled "Amresco Capital Corp Operating
Account", account number 1293139334, which account
shall be (a) funded and disbursed in accordance with
Section 3.7 and (b) pledged and assigned to Lender as
additional security for the payment, performance and observance
of the Obligations, all as more particularly described in
the Assignment of Accounts.
Commitment Fee has the meaning set forth in Section
2.2(a).
Compliance Certificate has the meaning set forth in
Section 7.1(c).
Consequential Loss has the meaning set forth in
Section 2.8(c).
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 (including Borrower) prepared as of such
date in accordance with GAAP, less (b) the aggregate book
value of Intangible Assets shown on such balance sheet,
provided that, for purposes of determining the financial
covenant in Section 8.2, the percentage of Consolidated
Tangible Net Worth attributed to Permitted Foreign Assets
shall not exceed twenty-five percent (25%) of total
Consolidated Tangible Net Worth.
Consolidated Total Liabilities means, as of any date,
the total liabilities (including all Debt) which would
appear on a consolidated balance sheet of AMRESCO and
its Subsidiaries (including Borrower) prepared as of such
date in accordance with GAAP.
Current Financial Statements has the meaning set
forth in Section 4.1(a)(ix) hereof.
Cut-Off Date means the fifteenth (15th) day of any
calendar month, or if the fifteenth (15th) day in not a
Business Day, the first Business Day following the
fifteenth (15th) day of such month.
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 any capital lease or sublease which should be
capitalized in accordance with GAAP on a balance sheet), of
such Person on which interest charges are customarily paid
or accrued, (d) all obligations for indebtedness in respect
of Guarantees by such Person, (e) the unfunded or
unreimbursed portion of all letters of credit issued
for the account of such Person, and (f) all 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 (e) 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%) per annum plus the Prime Rate, or (b) the Maximum
Lawful Rate.
DIDMCA means the Depositary Institutions Deregulation
and Monetary Control Act of 1980, Public Law 96-221, as
amended.
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 ofsuch stock,
partnership or joint venture interest, (b) the declaration
or payment of any dividend or other distribution, whether
monetary or in kind, on or with respect to any stock,
partnership or joint venture interest 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.
Employee Plan means at any time an employee benefit
plan as defined in Section 3(3) of ERISA.
Environmental Indemnity means, with respect to any
Mortgage Loan, an environmental indemnity agreement
executed by the applicable Mortgage Borrower and/or an
Affiliate of such applicable Mortgage Borrower, in
favor of Borrower, concerning certain environmental
matters with respect to the applicable Mortgaged
Property, and all renewals, extensions, modifications,
amendments or supplements thereto, and all
environmental indemnity agreements given in renewal,
extension, modification, restatement or replacement
thereof.
ERISA means the Employee Retirement Income Security
Act of 1974, as amended from time to time, together with
all regulations issued pursuant thereto.
ESA means a written environmental site assessment
prepared by an independent, expert commercial environmental
site assessment engineering firm and made in accordance
with Borrower's established guidelines set forth in the
Underwriting Manual.
ESA Review Memo means a memorandum, in form and
substance satisfactory to Lender, prepared by or for
Borrower evaluating an ESA.
Escrowed Funds means that portion of any Mortgage
Loan Payment that constitutes escrowed funds for property
reserves, taxes, insurance and any other deposits required
by the Mortgage Loan Documents related to a Mortgaged
Property.
Event of Default has the meaning set forth in Section
9.1.
Extended Maturity Date has the meaning set forth in
Section 2.18(a).
Extension Option has the meaning set forth in
Section 2.18(a).
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 to the Federal Deposit Insurance
Corporation (or any successor) by financial institutions
with capitalization and supervisory risk factors comparable
to Lender insuring foreign time deposits made in dollars.
Each determination of said percentage made by Lender shall, in
the absence of manifest error, constitute prima facie
evidence of said percentage.
Fidelity Bonds means, collectively, any and all
fidelity bonds and policies of fidelity insurance,
dishonesty coverage and/or errors and omissions coverage
covering Servicer and any sub-servicers of the Mortgage
Loans, which bonds and policies shall be in form and
substance, and issued by an insurer satisfactory to,
Lender, and as to which Lender shall be named an "additional
insured" and/or "loss payee", as appropriate.
Financing Statements means, collectively, all
financing statements executed or to be executed by
Borrower or any Affiliate of Borrower to perfect the
security interests in any
Collateral securing the Loan.
FIRREA means the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from
time to time, any successor statute thereto, and any
temporary or final regulations of the Office of the
Comptroller of the Currency and/or any other federal agency
promulgated pursuant thereto, as amended from time to time.
Fiscal Year means any fiscal year of Borrower or
any Affiliate of Borrower, as applicable.
GAAP means generally accepted accounting
principles consistently applied as in effect at the time of
application of the provisions hereof.
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.
Guarantee 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).
Guaranteed Obligation has the meaning set forth in
Section 3.8.
Hedge Agreements means, collectively, any interest
rate protection agreements required to be purchased by
Borrower pursuant to Section 7.2 and the documents
evidencing, authorizing and otherwise pertaining to any
futures account related thereto (including, without
limitation, with respect to the Hedge Agreement
between Borrower and Smith Breeden Associates, Inc., the
Agreement for Services and the related Futures Account
Agreement and Futures Account Disclosure Documents from
Salomon Brothers Inc.), which Hedge Agreements shall be
assigned to Lender pursuant to Section 3.4; provided
that, Lender has approved that certain Agreement for
Services made as of April 26, 1995, between Borrower,
as "Customer", and Smith Breeden Associates, Inc., as
"Consultant", and the related Futures Account Agreement
and Futures Account Disclosure Documents from Salomon Brothers Inc.
Holdback Account means a cash collateral account
maintained with Lender, which account shall be (a) subject
to the provisions of Section 3.7 and (b) pledged and
assigned to Lender as additional security for the
payment, performance and observance of the Obligations,
all as more particularly described in the Assignment of
Accounts.
Holdback Amount means that portion of the proceeds of
any Mortgage Loan (or the amount of any and all proceeds
of any equity contribution of any Mortgage Borrower)
required under the related Mortgage Loan Documents (including,
without limitation, the Escrow Agreement for Debt Service, the
Escrow Agreement for Improvements, and the Tenant
Improvement and Leasing Commission agreement) to be
advanced (or paid) after the date of the initial advance of
such Mortgage Loan.
Impositions means all real estate and personal
property taxes, charges for any easement, license or
agreement maintained for the benefit of any real or
personal property 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 such property 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, (b)
any of Lender's Liens with respect to any such property
or (c) the financial condition of Borrower or any
Affiliate of Borrower.
Improvements means, with respect to any Mortgaged
Property, (a) all of the improvements now existing or
hereafter constructed or placed on the Land, and (b) all
other site improvements on the Land.
Independent Appraiser means any appraiser who (a) is in
fact independent and is not an Affiliate of Lender,
Borrower, AMRESCO, Servicer, the applicable Mortgage
Borrower, or any Affiliate thereof, (b) does not have
any direct or indirect interest, financial or otherwise,
in the transactions contemplated in this Agreement, in
the applicable Mortgaged Property or in Lender, Borrower,
AMRESCO, Servicer, the applicable Mortgage Borrower, or any
Affiliate thereof, and (c) is not connected with Lender,
Borrower, AMRESCO, Servicer, the applicable Mortgage
Borrower, or any Affiliate thereof as an officer, employee,
agent, promoter, underwriter, trustee, partner, director
or Person performing similar functions.
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 debt discount and expense, and (d) assets
located, and notes and receivables due from obligors
domiciled, outside of the United States of America, other
than Permitted Foreign Assets.
Interest Adjustment Date means the earlier of the last
day of an Interest Period or the Termination Date.
Interest Period means a one month period as
elected by Borrower from time to time, commencing on the
first day that any LIBOR Portion shall be outstanding;
provided, however, that (a) no Interest Period may end on
a date subsequent to the Maturity Date of the Loan, (b) any
Interest Period which commences on the last LIBOR Business
Day of a calendar month (or on any day for which there
is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the
last LIBOR Business Day of the next succeeding calendar
month and (c) each Interest Period which would otherwise
end on a day which is not a LIBOR Business Day shall end
on the next succeeding LIBOR Business Day, or, if such
next succeeding LIBOR Business Day falls in the next
succeeding calendar month, on the next preceding LIBOR
Business Day.
Land means, with respect to any Mortgaged Property,
those certain tracts or parcels of land constituting
part of such Mortgaged Property.
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 Borrower, any Affiliate of
Borrower or any Collateral, (b) the presently or
subsequently effective bylaws and articles of
incorporation or any partnership, limited partnership,
joint venture, trust or other form of business association
agreement, as the case may be, of Borrower and any
Affiliate of Borrower, and (c) any and all contracts
(written or oral) of any nature that relate in any way to
any Mortgaged Property or any Collateral, or to which
Borrower or any Affiliate of Borrower may be bound, which,
if violated, could have a Material Adverse Effect.
Lender has the meaning set forth in the first
paragraph of this Agreement.
Lender's Control Account means an interest bearing
cash collateral account maintained with Lender and styled
"Amresco Capital Corp Lender Account" account number
1293139326, which account shall be (a) subject to the
provisions of Section 3.7 and (b) pledged and assigned to
Lender as additional security for the payment, performance
and observance of the Obligations, all as more
particularly described in the Assignment of Accounts.
Lender's Liens means all liens, mortgages,
security interests, charges, pledges or encumbrances created
by the Loan Documents.
LIBOR Business Day means, with respect to any LIBOR
Portion, a day which is both a Business Day and a day on
which dealings in Dollar deposits are carried out in the
interbank market selected by Lender with respect to such
LIBOR Portion.
LIBOR Effective Date has the meaning set forth in
Section 2.6(d) hereof.
LIBOR Portion means that portion or those portions of
the Loan bearing interest at the LIBOR Rate.
LIBOR Rate means, on any date of determination, the
sum of (a) the Adjusted LIBOR Rate plus (b) two percent
(2%).
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 member banks of the Federal
Reserve System with a capitalization comparable to Lender
(including, without limitation, basic, supplemental, special, 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 applicable other category of
liabilities which includes deposits by reference to which
the interest rate on a LIBOR Portion is determined).
Each determination by Lender 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,
deed of trust,title retention document, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset.
Loan means the mortgage warehousing line of credit
made by Lender to Borrower pursuant to this Agreement, in an
original principal amount not to exceed $25,000,000, evidenced
by the Note, bearing interest and payable as provided in
Article II, and all indebtedness thereunder.
Loan Commitment means the total amount of loan
proceeds available to Borrower under the Loan, which shall
be $25,000,000, subject, however, to all terms and
conditions contained herein and in the other Loan
Documents.
Loan Documents means this Agreement, the Note, the
Collateral Assignment of Notes and Liens, each
Memorandum of Collateral Assignment, each Transfer of
Note and Liens, the Assignment of Accounts, all related
Financing Statements, and all other agreements, statements,
certificates, documents or instruments evidencing,
securing or pertaining to the Loan 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.
Lockbox means a post office box established by Servicer
with Lender, and subject to the provisions of Section 3.7.
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.
Material Adverse Effect means an effect resulting from
any circumstance or event of whatever nature (including,
without limitation, the filing of, or any adverse
determination or development in, any litigation,
arbitration or governmental investigation or proceeding)
which (a) could have any adverse effect upon the validity of
any material provision in any Loan Document such as to render
the substantive rights and remedies of Lender inadequate for the
practical realization of the benefits intended to be provided
thereby, (b) could have any adverse effect whatsoever upon the
enforceability of any Loan Document such as to render the substantive
rights and remedies of Lender inadequate for the practical realization of
the benefits intended to be provided thereby, (c) could be material and
adverse to any of the Collateral or the business, operations,
financial condition or assets of Borrower or AMRESCO, (d) could impair
the ability of Borrower or AMRESCO to fulfill any material obligation
under the Loan Documents or of Servicer to fulfill any material
obligation under the Servicing Agreements or (e) causes a Default
or Event of Default.
Maturity Date means, as of any given date, the maturity
date of the Loan then in effect, which shall be either the
Original Maturity Date, or, subject to the terms and
provisions of Section 2.18, the Extended Maturity Date.
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 Loan at such time to
exceed the maximum amount which Lender 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 federal or state law, any
and all relevant payments, fees or charges under the Loan Documents.
If and to the extent the laws 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
Lender 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 Lender shall be
entitled to make such election from time to time and
one or more times and, without notice to Borrower or
any other obligor, 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
applicable 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 Loan, there shall be no
Maximum Lawful Rate, notwithstanding any reference thereto
herein or in any of the other Loan Documents.
Memorandum of Collateral Assignment means, with
respect to any Mortgage Loan, a memorandum in recordable form,
substantially in the form of Exhibit C (revised to the
extent necessary to conform with local law and practice in the
jurisdiction in which the related Mortgaged Property is located),
to be executed by Borrower in favor of Lender in connection with
the related Mortgage Loan Advance, whereby Borrower willacknowledge
the assignment of such Mortgage Loan as Collateral for the Loan
pursuant to the Collateral Assignment of Notes and Liens.
Minimum Notice Requirement has the meaning set
forth in Section 2.6(b) hereof.
Mortgage means, with respect to any Mortgage Loan, a
deed of trust or mortgage, granted by the Mortgage
Borrower as security for the related Mortgage Loan, and
granting to the holder of such Mortgage Loan a first lien
and security interest with respect to the applicable Mortgaged
Property, 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.
Mortgage Borrower means, collectively, with respect to
any Mortgage Loan, the borrower or borrowers,
including any guarantors, under such Mortgage Loan, and the owner of
the related Mortgaged Property if such owner is a Person
other than such borrower(s).
Mortgage Loan means a loan originated by Borrower,
evidenced by a Mortgage Note and secured by a Mortgage
and for which Borrower has requested or received a
Mortgage Loan Advance hereunder.
Mortgage Loan Advance means, with respect to any
Mortgage Loan, the amount of proceeds of the Loan actually
advanced by Lender in connection with the origination of such Mortgage
Loan, not to exceed ninety-five percent (95%) of the
original principal amount of such Mortgage Loan.
Mortgage Loan Closing Certificate means, with respect
to any Mortgage Loan, a certificate executed by the
Mortgage Borrower, certifying to Borrower as to certain facts related to
the Mortgage Borrower, the Mortgaged Property and the
Mortgage Loan.
Mortgage Loan Debt Service means, for any period
with respect to a particular Mortgage Loan, the principal
and interest payment required, scheduled or anticipated
during such period, based on the interest rate and
amortization schedule set forth in the applicable Mortgage
Note.
Mortgage Loan Documents means collectively, with
respect to any Mortgage Loan, a Mortgage Note,
Environmental Indemnity, Mortgage, Assignment of Rents,
the Mortgage Loan Guaranty, the Mortgage Loan Closing
Certificate, the Mortgage Loan Financing Statements and
all other related agreements, statements, financing
statements, certificates, documents or instruments
evidencing, governing, securing, guaranteeing or
otherwise pertaining to such Mortgage Loan, as the same may
be modified, amended, renewed, extended, rearranged,
restated or replaced from time to time.
Mortgage Loan Financing Statements means,
collectively, with respect to any Mortgage Loan, all
financing statements executed or to be executed by any
Mortgage Borrower or any other Person to perfect the
security interests in any collateral securing such
Mortgage Loan.
Mortgage Loan Guaranty means, with respect to any
Mortgage Loan, any guaranty agreement pursuant to which any
Person shall guarantee any obligations of the Mortgage
Borrower under the Mortgage Loan Documents.
Mortgage Loan Number means, with respect to any
Mortgage Loan, the loan number by which such Mortgage Loan
is identified on the books and records of Borrower, as set
forth in the related Request for Advance.
Mortgage Loan Payments means, with respect to any
Mortgage Loan, all payments now or hereafter made by the
Mortgage Borrower of principal, interest, Escrowed Funds
and other amounts due under the Mortgage Loan Documents.
Mortgage Loan Submission Package shall have the
meaning set forth in Section 4.2(a).
Mortgage Note means one or more promissory notes
evidencing a Mortgage Loan, each executed by the Mortgage
Borrower, payable to the order of Borrower,and all renewals,
extensions, modifications, amendments or supplements thereto,
and all promissory notes given in renewal, extension,
modification, reinstatement or replacement thereof.
Mortgaged Property means all Land and Improvements
thereon, and any personal property, fixtures, leases and
other property or rights pertaining thereto, subject to a
Mortgage securing a Mortgage Loan and constituting an
Approved Property Type.
Mortgaged Property Legal Requirements means, as to
any Mortgaged Property, (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 the
Mortgaged Property, (b) any and all covenants, conditions
or restrictions applicable to the Mortgaged Property or
the ownership, use or occupancy thereof, and (c) any and
all loans or contracts that relate in any way to the
Mortgaged Property which, if violated, would have a
material adverse effect on the present or potential
ownership, use, sale, occupancy or possession of the
Mortgaged Property by the applicable Mortgage Borrower.
Multi-Employer Plan means at any time an employee
benefit plan as described in Section 3(37) of ERISA.
Note means that certain promissory note of even
date herewith, in an aggregate stated principal amount not
to exceed $25,000,000, executed by Borrower and payable to
the order of Lender, substantially in the form attached
hereto as Exhibit E, and all renewals, extensions,
modifications, amendments orsupplements thereto, and all
promissory notes given in renewal, extension, modification,
restatement or replacement thereof, including, without
limitation, any separate promissory notes executed by Borrower
and payable to the order of any assignee of Lender as contemplated
by Section 10.9.
Obligations means all present and future
indebtedness, obligations and liabilities, or any part
thereof, of Borrower or any Affiliate of Borrower now or
hereafter existing or arising under or in connection with
this Agreement, the Note or any of the other Loan Documents
(specifically including,without limitation, the principal amount
outstanding under the Note), together with: (a) all interest accrued
thereon; (b) all costs and expenses, including, without limitation,
reasonable attorneys' fees, for which Borrower is responsible
pursuant to Section 7.14; (c) the reimbursement and payment
of all sums which might be advanced by Lender in accordance
with the terms of this Agreement or any other Loan
Document to pay or satisfy amounts required to be paid by
Borrower under this Agreement or under any other Loan
Document or any amounts which might be advanced by Lender
to pay any Taxes, Impositions, insurance premiums, liens,
assignments, charges or claims against 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; and (d) all indemnity obligations of Borrower
under the Loan Documents, including, without limitation,
Section 10.3. The Obligations shall include all
renewals, extensions, modifications, rearrangements and
replacements of any of the above-described obligations
and indebtedness.
Original Maturity Date means January 25, 1997.
PBGC means the Pension Benefit Guaranty Corporation,
or its successors.
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.
Permitted Debt means (a) the Loan, (b) one or
more additional mortgage warehousing lines of credit in the
aggregate amount of up to $25,000,000, (b) the
Guaranty executed by Borrower in connection with that
certain $50,000,000 working capital line of credit from
Lender to Borrower, (c) Debt between Lender and Borrower
or between Borrower and any Affiliate of Borrower, (d)
Guaranties in the form of indemnity obligations or typical
repurchase obligations related to the sale by Borrower or
any Affiliate of Borrower of assets in the ordinary course
of its business, and (e) Debt in respect of current
accounts payable incurred in the ordinary course of
Borrower's business.
Permitted Encumbrances means, with respect to any
Mortgaged Property:
(a) Any Liens securing the related Mortgage Note;
and
(b) Exceptions affecting title which are shown
in a Title Policy obtained pursuant to a Title Commitment
approved by Borrower in accordance with Borrower's
guidelines set forth in the Underwriting Manual.
Permitted Foreign Assets means only those assets which
are (a) included in an Asset Portfolio acquired by AMRESCO
or any Subsidiary of AMRESCO 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 Lender or other investment
grade investments or securities offered by Lender, (b) U.S.
Government Securities, (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) loans,
advances, or extensions of credit in the ordinary course
of Borrower's business, and (e) loans, advances,
extensions of credit or capital contributions to, or any
investment in, or purchase of any stock or securities of,
or interest in, any existing or future Subsidiary of
Borrower who is engaged in the same business as Borrower.
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.
Pre-Approval Conditions means, with respect to any
Mortgage Loan, any of the following facts or
characteristics:
(a) A ground lease covering any portion of the
related Mortgaged Property that is not subordinate to the
lien of the related Mortgage;
(b) A ground lease covering any portion of the
related Mortgaged Property that is subordinate to the lien
of the related Mortgage but that has a remaining term that
does not exceed the greater of (i) fifteen (15) years past
the maturity date of such Mortgage Loan, (ii) the
amortization term of the Mortgage Loan plus five (5)
years, or (iii) the term referenced in any statutory
requirements applicable to insurance companies that have
been (or will be) listed in the related Mortgage Loan
Submission Package as potential investors;
(c) Other debt secured by the related Mortgaged
Property, even if subordinate to such Mortgage Loan;
(d) Any environmental problem with respect to the
Mortgaged Property as to which the estimated aggregate cost
of remediation is equal to or greater than $50,000 or is
for any reason not satisfactorily quantifiable;
(e) Any environmental problem with respect to the
Mortgaged Property (i) as to which the estimated
aggregate cost of remediation is less than $50,000; and
(ii) as to which (A) a reserve adequate to accomplish
the appropriate remediation will not be established at
the closing of such Mortgage Loan in a manner
satisfactory to Borrower and Lender, (B) the appropriate
remediation will not be completed in a time frame
acceptable to Borrower and Lender, and/or (c) an
operations and maintenance program acceptable to Borrower
and Lender is not in place;
(f) With respect to any Mortgaged Property consisting
of a multi-family project, buildings with flat roofs;
(g) With respect to any Mortgaged Property consisting
of an office project, buildings located in the downtown
area of the applicable town or city;
(h) With respect to any Mortgaged Property consisting
of an industrial project, buildings with less than 20
foot clear ceiling height; and/or
(i) The usage of percentage rents in the
underwriting of such Mortgage Loan.
Pre-Funding Approval Period means, with respect
to a proposed Mortgage Loan as to which (a) a complete
Mortgage Loan Submission Package has been received by
Lender and (b) no PreApproval Conditions exist other than
those, if any, expressly consented to in writing by
Lender prior to receipt by Lender of such complete
Mortgage Loan Submission Package, the period of time
during which Lender may approve or disapprove the funding by
Lender of such Mortgage Loan, which period shall be two
(2) Business Days following Lender's receipt of such
complete Mortgage Loan Submission Package. Notwithstanding
the foregoing, however, in the event Borrower shall submit
one or more Mortgage Loan Submission Packages prior to the
expiration of any PreFunding Approval Period then in
effect, Borrower shall be deemed to have submitted such
new Mortgage Loan Submission Packages on the first (1st)
Business Day following the expiration of the PreFunding
Approval Period then in effect, so that no two Pre
Funding Approval Periods shall overlap.
Post-Funding Approval Period means the period of time
during which Lender, having received a Mortgage Loan
Submission Package related to a Mortgage Loan, and having
made a Mortgage Loan Advance to fund the origination
by Borrower of such Mortgage Loan, may formally accept
or reject such Mortgage Loan, which period shall be
thirty (30) days following the making of such Mortgage
Loan Advance and the pledge and assignment of such
Mortgage Loan as Collateral.
Prime Rate means, on any date of determination, the
rate of interest per annum most recently established by
Lender as its "prime rate." Such rate is set by Lender
as a general reference rate of interest, taking into account
such factors as it may deem appropriate, it being understood
that many of Lender's commercial or other loans are priced
in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer, that
it may not correspond with future increases or decreases
in interest rates charged by other lenders or market rates
in general and that Lender may make various commercial or
other loans at rates of interest having no relationship to
such rate.
Prime Rate Portion means that portion or those
portions of the Loan, if any, which bear interest at the
Prime Rate.
Proceeds means all "Proceeds" as such term is
defined in Section 9.306(a) of the UCC.
Regulation D means Regulation D 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 uniform reserve
requirements on all depository institutions
with transactions accounts or nonpersonal time deposits
that is applicable to member banks of the Federal Reserve System.
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 has the meaning set forth in
Section 2.6(e).
Release/Redemption Price means, with respect to any
Mortgage Loan pledged as Collateral, an amount equal to
the difference between (a) the Mortgage Loan Advance for
such Mortgage Loan, less (b) any and all principal
payments made on the Note pursuant to Section 2.7(b)(i) or
(ii) with respect to such Mortgage Loan.
Remittance Date means the twenty-fifth (25th) day of
any calendar month, or if the twenty-fifth (25th) day
in not a Business Day, the first Business Day following
the twenty-fifth (25th) day of such month.
Request for Advance has the meaning set forth in
Section 4.2(a).
Request for Pre-Approval Conditions has the meaning
set forth in Section 4.2(c).
Review Fee has the meaning set forth in Section 2.2(b).
Rights means rights, remedies, powers, privileges
and benefits.
Servicer means, collectively, each Person(s)
agreeing to perform the duties and obligations of master
servicer of Mortgage Loans pursuant to a Servicing
Agreement, which Person shall be approved in writing by
Lender; provided that, Lender has approved AMRESCO
Management, Inc., a Texas corporation, or Holliday,
Fenoglio, Dockerty & Gibson, Inc., a Delaware
corporation, to serve as Servicer.
Servicing Accounts means the Collection Account and
all other accounts maintained by the Servicer and sub-
servicers of Mortgage Loans (on its or their own behalf
or on Borrower's behalf, as applicable) into which any
part of a Mortgage Loan Payment is or may be deposited,
all of which shall be maintained with Lender, all as more
particularly described in the Assignment of Accounts.
Servicing Agreements means, collectively, any
servicing or sub-servicing agreements now or hereafter
executed by Borrower, Servicer or any Affiliate of
either of them in connection with the servicing or sub-
servicing of Mortgage Loans, and all rights of Borrower
arising pursuant to or in connection with such
agreements.
Special Flood Hazard Area means an area identified
pursuant to the Flood Disaster Protection Act of 1973 as
having special flood hazards.
Subsidiary means, for any Person, 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. The term Subsidiary shall
include Subsidiaries of Subsidiaries (and so on).
Survey means, with respect to any Mortgaged
Property, a survey prepared in compliance with the
requirements established by Borrower and approved by
Lender, dated not earlier than sixty (60) days prior to
the date of closing of the related Mortgage Loan
containing a legal description identical to the description
of such Mortgaged Property in the applicable Mortgage and
Title Policy and a certification by the surveyor in form
established by Borrower and approved by Lender.
Tangible Net Worth of a Person, as of any date, means
the total shareholder's equity (including capital stock,
additional paid-in capital and retained earnings after
deducting treasury stock) which would appear on the
balance sheet of such Person prepared as of such date
in accordance with GAAP, less the aggregate book value
of Intangible Assets shown on such balance sheet.
Taxes means all taxes, assessments, filing or other
fees, levies, imposts, duties, deductions, withholdings,
stamp taxes, interest equalization taxes, income 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; and Tax means any one of the
foregoing.
Termination Date means October 25, 1996, until such
time as the Extension Option has been exercised, and thereafter,
"Termination Date" means October 25, 1997.
Title Company means a title company or title
companies selected by Borrower from a list previously
approved by Lender, that issues all or any part of any
Title Policy or Title Policy Commitment. Neither
Borrower nor the applicable Mortgage Borrower, nor any
counsel of Borrower or the applicable Mortgage Borrower,
nor any Affiliate of Borrower or the applicable
Mortgage Borrower shall have any interest, direct or
indirect, in the Title Company selected for the related
Mortgage Loan or any portion of the premium paid for the
related Title Policy.
Title Company Instruction Letter means an instruction
letter substantially in the form attached hereto as
Exhibit I from Borrower to the Title Company (or any other
title company closing the related Mortgage Loan) in
connection with the closing of a Mortgage Loan.
Title Policy means, with respect to any Mortgaged
Property, an ALTA standard form title insurance loan
policy (or, if such form is not available, an equivalent
form of mortgagee title insurance policy) issued by a
Title Company and delivered to Lender pursuant to Section
4.4(b).
Title Insurance Commitment means, with respect to
any Mortgaged Property, a commitment in form as
promulgated and legally applicable in the state in which
such Mortgaged Property is located, by which a Title
Company agrees to issue and underwrite for the benefit
of Borrower, a Title Policy in the full amount of the
applicable Mortgage Loan.
Transfer of Note and Liens means, with respect to
any Mortgage Loan, an absolute transfer, in recordable form,
of the applicable Mortgage Note and all liens
securing the same,executed by Borrower in blank,
absolutely assigning the applicable Mortgage Loan Documents,
which Transfer of Note and Liens shall be substantially in the form
attached hereto as Exhibit F, and shall be held unrecorded by Lender
unless and until an Event of Default shall occur, all as more particularly
provided in the Collateral Assignment of Notes and Liens.
Treasury Obligation means a U.S. Government Treasury
bill.
UCC means TEX. BUS. COM. CODE ANN. 1.101-11.108
(Vernon Supp. 1985), as amended, or, if stated with reference to another
jurisdiction, the Uniform Commercial Code as adopted in
the relevant jurisdiction.
Underwriting Criteria has the meaning set forth in
Section 5.4(d).
Underwriting Manual has the meaning set forth in
Section 5.4(d).
Underwriting NOI means, with respect to any Mortgage
Loan, the net operating income (either on an annual basis
or converted to an average monthly figure, as applicable)
of the related Mortgaged Property as determined by
Borrower in connection with the underwriting of such
Mortgage Loan in accordance with Borrower's ordinary and
customary underwriting procedures and the Underwriting
Criteria.
U.S. Government Securities means securities that
are (a) direct obligations of the United States of America
for the full and timely payment of which the full faith and
credit of the United States of America is pledged or (b)
obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United
States of America, the full and timely payment of which
is unconditionally guaranteed as a full faith and credit
obligation of the United States of America,
which in either case are not callable or redeemable at the
option of the issuer thereof.
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
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 other 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
LOAN TERMS
Section 2.1. Commitment to Lend. Subject to and
upon the terms, covenants and conditions of this Agreement,
Lender agrees to fund Mortgage Loan Advances to Borrower
in accordance with this Agreement. Lender's commitment
to make Mortgage Loan Advances hereunder (a) shall
expire and terminate automatically on the Termination
Date; (b) may be terminated upon written notice of
Borrower delivered to Lender at least thirty (30) days
prior to the effective date of such termination, as set
forth in such written notice; and (c) shall, at the option of
Lender pursuant to Section 9.2(b), be terminable at any
time after the occurrence of an Event of Default. Such
Mortgage Loan Advances shall be made on a revolving credit
basis from time to time on any Business Day in such amounts
as Borrower may request, and Borrower may make borrowings and
repayments and reborrowings in respect thereof without premium
or penalty; provided, however, that (i) in no event shall the aggregate
principal amount of all Mortgage Loan Advances at any time
outstanding exceed $25,000,000, (ii) each Mortgage Loan Advance
shall be in a minimum amount of $2,850,000, and (iii) the
amount of any Mortgage Loan Advance shall not exceed
ninety-five percent (95%) of the original principal amount
of the Mortgage Loan originated or to be originated with
the proceeds of such Mortgage Loan Advance.
Section 2.2. Fees. (a) In consideration for
Lender's commitment to make Mortgage Loan Advances under
the Loan as provided in this Agreement and to make funds available for
such Mortgage Loan Advances, Lender has earned, and Borrower
agrees to pay the following amounts to Lender (collectively, the
"Commitment Fee"): (i) a non-refundable loan origination
fee in the amount of $62,500, which shall be due and payable on
the Closing Date, provided that Lender shall apply the
$10,000 nonrefundable application fee paid by Borrower to
Lender prior to the Closing Date towards the satisfaction of such
origination fee; and (ii) commencing on the twenty-fifth
(25th) day of the third month after the Closing Date and
continuing on the twentyfifth (25th) day of each third month
thereafter until the earlier to occur of (A) the date
on which the outstanding principal balance of the Note,
together with all accrued but unpaid interest thereon,
and all unpaid fees due in connection with the Loan have
been paid in full following a termination of Lender's
commitment to lend hereunder pursuant to Section 2.1(b) or
(B) the Termination Date, a non-refundable unused fee equal
to the product of one-eighth of one percent (1/8%) per
annum, multiplied by the average daily unused portion of the Loan
Commitment during the immediately preceding calendar quarter, such
commitment fee to be computed based on the number of
actual days elapsed, assuming each calendar year
consisted of 360 days, subject, however, to
proportionate adjustments if the Closing Date occurs or
the term of the Loan ends other than at the beginning or
end of a calendar quarter. Borrower and Lender acknowledge
and agree that the Commitment Fee is a bona fide
commitment fee and is intended as reasonable
compensation to Lender for committing to make funds
available to Borrower as described herein and for no other
purpose.
(b) Borrower shall also pay to Lender, with respect to
each Mortgage Loan Submission Package delivered to Lender,
a review fee (the "Review Fee") covering all travel costs
and expenses and reasonable attorneys' fees associated with
Lender's review of such Mortgage Loan Submission Package
and the related Mortgaged Property, which review fee shall
be equal to the greater of (i) $4,000 or (ii) in the
event Lender notifies Borrower that the costs (as
determined by Lender) associated with Lender's review of
such Mortgage Loan Submission Package shall exceed $4,000
and Borrower notifies Lender that it is willing to pay
the full amount of such review costs (as determined by
Lender). If Borrower notifies Lender that it is unwilling to
pay, or otherwise fails to pay in accordance with this
Section 2.2(b) and Section 4.3(b), the full amount of such review
costs (as determined by Lender), the related Mortgage Loan
Submission Package shall be deemed withdrawn and Lender
shall have no further obligation with respect thereto.
Section 2.3. Note. The Loan shall be evidenced by
the Note. Interest on the Loan, at the rate or rates
specified in Section 2.6 and in the Note, shall be computed
on the unpaid principal balance of the Note which exists from time to
time.
Section 2.4. Conditions to Borrowing. Borrower
shall not be entitled to any Mortgage Loan Advance under
the Note, unless and until Borrower shall have satisfied
each of the conditions precedent set forth in Sections
4.1, 4.2 and 4.3, to the extent applicable.
Section 2.5. Maturity. The entire outstanding
principal balance of the Note, together with all accrued but
unpaid interest thereon and all other amounts owed with
respect thereto, shall be due and payable in full on the
Maturity Date (unless earlier payment is required pursuant to
this Agreement); provided, however, that (a) any unfunded commitment under
the Note shall expire and terminate automatically on the
Termination Date, and (b) with respect to each
Mortgage Loan Advance outstanding as of the Termination
Date, Borrower shall have the lesser of (i) the number of
days remaining in the 30-day period referenced in Section
3.6(a), if applicable, (ii) the number of days remaining
in the 5-Business Day period referenced in Section 3.6(b),
if applicable, (iii) the number of days remaining in the
180-day period referenced in Section 3.6(c), if
applicable, or (iv) the number of days remaining until
the Maturity Date, in which to pay in full the
outstanding principal balance of such Mortgage Loan
Advance, together with all accrued but unpaid interest
thereon.
Section 2.6. Interest Rate; LIBOR Election. (a)
Prior to the occurrence of a Default or an Event of
Default, interest on each Mortgage Loan Advance under the
Note shall accrue at the rate per annum applicable to such
Mortgage Loan Advance from time to time, which rate as to
each such Mortgage Loan Advance shall be equal to the
lesser of (i) at Borrower's option, the Prime
Rate or the LIBOR Rate or (ii) the Maximum Lawful Rate,
subject to the provisions hereof and of the Note; provided,
however, that in the absence of an effective election of or
conversion to the LIBOR Rate in accordance with this
Agreement and the Note, interest on each such Mortgage
Loan Advance shall accrue prior to the occurrence of a
Default or an Event of Default at the lesser of (i) the
Prime Rate or (ii) the Maximum Lawful Rate. Without notice
to Borrower or any other Person, the Prime Rate and the
Maximum Lawful Rate shall each automatically fluctuate
upward and downward as and in the amount by which the
Prime Rate and the Maximum Lawful Rate, respectively,
fluctuate, subject always to limitations contained in this
Agreement.
(b) Upon prior written notice given by Borrower to
Lender by telecopy (in which case receipt must be confirmed
by telephone and, if required by Lender, by written
answerback) by 11:00 a.m. (Dallas, Texas time) at least two
(2) Business Days prior to the LIBOR Effective Date and
containing all information required by this Section 2.6
(the "Minimum Notice Requirement"), and subject to the
further conditions provided in this Agreement and the
Note, Borrower may elect to convert amounts then
accruing interest at the Prime Rate into a LIBOR Portion
with interest accruing at the lesser of the LIBOR Rate or
the Maximum Lawful Rate. In the event Borrower shall
revise and resubmit any such written notice previously
submitted, such revised notice shall be given to Lender
at least two (2) Business Days prior to the requested
Mortgage Loan Advance.
(c) Upon satisfaction of the Minimum Notice
Requirement, and subject to the further conditions provided
in this Agreement and the Note, Borrower may, on any
Interest Adjustment Date (other than the Termination Date)
convert any LIBOR Portion into a Prime Rate Portion with
interest accruing thereon at the lesser of the Prime Rate or
the Maximum Lawful Rate.
(d) Each notice of a LIBOR Portion election or
conversion by Borrower must satisfy the Minimum Notice
Requirement and shall include the following: (i)
Borrower's election of or conversion to the LIBOR Rate;
(ii) Borrower's choice of an Interest Period during which
the LIBOR Rate will apply; (iii) Borrower's election of the
effective date for such Interest Period, which shall be a
Business Day at least two (2) Business Days after
delivery to Lender of such notice (the "LIBOR Effective
Date") on which the LIBOR Portion shall begin; and (iv) the
Mortgage Loan Number for the Mortgage Loan Advance to which
such LIBOR Portion pertains.
(e) Borrower's election of or conversion to the LIBOR
Rate is subject to the following conditions: (i) the
Interest Period shall be limited to a period commencing on
the LIBOR Effective Date and ending on a date one
month later; (ii) Borrower's written notice of an election
shall be received by Lender in time to satisfy the Minimum
Notice Requirement; (iii) the last day of the Interest
Period will not be subsequent in time to the
Termination Date; (iv) in the case of a continuation
of an Interest Period, the Interest Period applicable
after such continuation shall commence on the last day
of the preceding Interest Period; (iv) there shall never
be more than one (1) LIBOR Portion in effect at any
one time under the Loan with respect to any Mortgage
Loan Advance; (v) no LIBOR Portion election or
conversion may be made after the occurrence and during
the continuance of a Default or Event of Default; and (vi)
the amount of the original LIBOR Portion with respect to
any Mortgage Loan shall be greater than or equal to
$2,850,000. In addition, no LIBOR Portion election or
conversion shall be made if Lender determines by reason
of circumstances affecting the interbank Eurodollar
market, either adequate or reasonable means
do not exist for ascertaining the Adjusted LIBOR Rate for
any Interest Period, or it becomes impracticable for Lender
to obtain funds by purchasing U.S. dollars in the
interbank Eurodollar market, or if Lender determines that
the Adjusted LIBOR Rate will not adequately or fairly
reflect the costs to Lender of making or maintaining the
applicable LIBOR Portion at such rate, or if as a result of
any change in applicable law, treaty, rule or
regulation (whether domestic or foreign), or in
the interpretation thereof by any Governmental Authority
charged with the administration thereof, whether or not
having the force of law (a "Regulatory Change"), it
shall become unlawful or impossible for Lender to make
or maintain any such LIBOR Portion.
Section 2.7. Payments.
(a) Interest on the Note, computed as
provided in Sections 2.6 and 10.7, shall be due and
payable on the twenty-fifth (25th) day of each calendar
month commencing on the twentyfifth (25th) day of the first
(1st) month after the initial Mortgage Loan Advance, and
continuing on the twenty-fifth (25th) day of each calendar month
thereafter until the Maturity Date.
(b) Principal payments on the Note shall be due and
payable as follows:
(i) Borrower shall pay or cause to be
paid to Lender on the twenty-fifth (25th) dayof each calendar
month commencing on the twenty- fifth (25th) day of the first
(1st) month after the initial Mortgage Loan Advance, and continuing
on the twenty-fifth (25th) day of each calendar month thereafter
until the Maturity Date, the aggregate amount of all principal payments
received by Borrower or Servicer, as the case may be, with respect to
any and all Mortgage Loans and not previously paid to Lender, together
with a schedule acceptable to Lender showing a loan-by-loan break down of
(A) such aggregate amount of all principal payments and
(B) the related beginning and ending principal balances; provided,
however, that if a LIBOR Portion is then outstanding with respect to
any Mortgage Loan, the applicable principal payments will be applied by Lender
on the related Interest Adjustment Date;
(ii) In the event that ninety (90) days
shall elapse following the making of any
Mortgage Loan Advance and the related
Mortgage Loan remains as Collateral for the
Loan, Borrower shall pay to Lender, on the fifth
(5th) day following the expiration of such ninety
(90) days, a principal payment in an amount
equal to five percent (5%) of the original
principal
amount of such Mortgage Loan;
(iii) In the event of (A) any sale
of a Mortgage Loan or (B) the prepayment in
full of a Mortgage Loan, Borrower shall
pay to Lender,
simultaneously with Lender's release of Lender's
Liens with respect to such Mortgage Loan,
the Release/Redemption Price for such Mortgage
Loan, as more particularly described in Section
3.5; and
(iv) in the event of any
circumstance requiring mandatory redemption
pursuant to Section 3.6, Borrower shall pay to
Lender the Release/Redemption Price for
such Mortgage Loan, as more particularly
described in Sections 3.6 and 3.8.
(c) In addition to the payments required in Sections
2.7(a) and (b), all accrued but unpaid interest on the
Note, together with the entire outstanding principal
amount, shall be due and payable in full on the Maturity
Date, unless earlier payment is required pursuant to
Section 2.5 or any other section of this Agreement.
Section 2.8. Prepayments on the Loan. (a)
Subject to Section 2.8(c), after giving Lender advance
written notice of its intent to prepay, Borrower may
voluntarily prepay the Loan from time to time and at
any time, in whole or in part, without premium or
penalty; provided that (i) such notice must be
received by Lender by 10:00 a.m. (Dallas, Texas time) on
the third (3rd) Business Day preceding the date of such
payment, and (ii) Borrower shall pay any related
Consequential Loss within five (5) days after demand
therefor. Each notice of prepayment shall specify the
prepayment date and the manner in which such prepayment
is to be applied, to the extent Borrower is entitled to
specify the application thereof pursuant to Section
2.11, and shall constitute a binding obligation of Borrower to
make a prepayment on the date stated therein.
(b) If the outstanding principal balance of the Loan
ever exceeds the Loan Commitment, then upon demand by
Lender, Borrower shall make a mandatory prepayment on the
principal amount of the Loan in at least the amount of
such excess, together with any Consequential Loss arising
as a result thereof.
(c) If Borrower shall prepay any portion of a LIBOR
Portion at any time other than the last day of the
Interest Period applicable thereto, a prepayment fee shall
be due to Lender in an amount equal to the consequential
loss (the "Consequential Loss") incurred by Lender 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 LIBOR Effective Date and expressed as a decimal)
on a Treasury Obligation selected by Lender and having, as
of the applicable LIBOR 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 Lender 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 Lender 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 or more. Any prepayment fee required to be
paid by Borrower pursuant to this Section 2.8 or any
other provision of this Agreement or of the other Loan
Documents in connection with the prepayment of any
portion of a LIBOR Portion 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 a LIBOR Portion
or any part thereof due to an Event of Default.
Section 2.9. Schedules on Notes. Lender is
hereby authorized to record on the Note the date and
amount of the portion of each Mortgage Loan Advance
funded by Lender, and the date and amount of each
repayment of principal on the Note, and to attach any such
recording as a schedule to the Note whereupon
such schedule shall constitute a part of the Note 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 Borrower for the
repayment of all amounts outstanding under the Note
together with interest thereon.
Section 2.10. General Provisions as to Payments.
Borrower shall make each payment of principal and interest
on the Loan and all fees payable hereunder or under any
other Loan Document without setoff or counterclaim not
later than 12:00 noon (Dallas, Texas time) on the date
when due, in Federal or other funds immediately
available in Dallas, Texas, to Lender at the
following address:
NationsBank of Texas, N.A., 901 Main Street, Suite 5100,
Dallas, Texas 75202, Attention: Real Estate Loan
Administration. Any
payment under the Note or under any other Loan Document
other than in the required amount and in good, unrestricted
U.S. funds immediately available to Lender shall not,
regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually
received by Lender in such funds and shall be made and
accepted subject to the condition that any check or draft
may be handled for collection in accordance with the
practice of the collecting bank or banks. For purposes of
calculating accrued interest on the Loan, any payment
received by Lender 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 Lender.
Subject to the definition of the term "Interest
Period," whenever any payment of principal or interest on
the Loan, 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 2.11. Application of Payments and
Prepayments. So long as no Default or Event of Default
has occurred and is continuing, prepayments of the Loan
shall be applied in the following order: (a) if the
prepayment is being made pursuant to Section 2.8(b), to
the principal portion of the Loan to the extent
required by Section 2.8(b), as applicable; (b) to accrued
interest on the Loan or to the remaining principal portion
of the Loan, except as Borrower may specify in a notice of
prepayment delivered pursuant to Section 2.8(a), in the
order of (i) the Prime Rate Portion and (ii) LIBOR
Portions; and (c) to the remaining Obligations in the
order and manner as Borrower may direct.
After the occurrence and during the continuance of a
Default or Event of Default, any payment or prepayment
made on the Loan and any proceeds from the sale of any
Collateral or the exercise of any Rights shall be applied as
specifically set forth in any of the Loan Documents
(including, without limitation, Section 9.11 hereof) and
otherwise against the Obligations in such order and manner
as Lender deems appropriate.
Section 2.12. Maximum Lawful Rate Adjustments. If at
any time a change in the Prime Rate or the LIBOR Rate shall
cause the rate of interest on the Loan or any portion
thereof, including, without limitation, any Mortgage Loan
Advance, to be limited to the Maximum Lawful Rate, any
subsequent reductions in the Prime Rate or the LIBOR Rate,
as applicable, shall not reduce the rate of interest on the
Loan below the Maximum Lawful Rate until the total amount
of interest accrued equals the amount of interest which
would have accrued if the Prime Rate or the LIBOR Rate, as
applicable, had at all times been in effect. In the event
that at maturity (stated or by acceleration), or at the
final payment of the Loan, the total amount of interest
paid or accrued on the Loan is less than the amount of
interest which would have accrued if the Prime Rate or the
LIBOR Rate, as applicable, had at all times been in effect
with respect thereto, then at such time, to the extent
permitted by law, Borrower shall pay to Lender an amount
equal to the difference between (a) the lesser of the
amount of interest which would have accrued if the Prime
Rate or the LIBOR Rate, as applicable, had at all times
been in effect and the amount of interest which would
have accrued if the Maximum Lawful Rate had at all times
been in effect, and (b) the amount of interest actually
paid on the Loan.
Section 2.13. Post-Default Interest; Past Due
Principal and Interest. After the maturity of the Note or
the occurrence of an Event of Default, the outstanding
principal balance of the Note shall, at the option of
Lender, bear interest at the Default Rate. Any past due
principal of and, to the extent permitted by law, past due interest on
the Loan 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 Lender's Liens.
Section 2.14. Computation of Interest and Fees. All
interest payable and the amount of any fees due on the
Loan hereunder or under the Notes shall be computed
based on the actual number of days elapsed for the period
for which interest is calculated and as if each year was
comprised of three hundred sixty (360) days, except that
any calculation of the Maximum Lawful Rate shall be
based on the actual number of days in the applicable
calendar year.
Section 2.15. Capital Adequacy; LIBOR Costs. (a) If
any present or future law, governmental rule, regulation,
policy, guideline or directive or the interpretation thereof
by a court or Governmental Authority with appropriate
jurisdiction (whether or not having the force of law)
affects the amount of capital required or expected to
be maintained by Lender or any corporation controlling
Lender and 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 Loan Commitment or the
Loan, then Lender may notify Borrower of
such fact, and commencing ninety (90) days following such
notice (unless Lender's commitment to lend hereunder has been
terminated pursuant to Section 2.1(b) and the outstanding
principal balance of the Note, together with all
accrued but unpaid interest thereon, and all unpaid fees
due in connection with the Loan have been paid in full),
Borrower shall pay to 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 Borrower in reasonable detail to be an
amount that will adequately compensate Lender in light of
these circumstances for its increased costs of maintaining
such capital. Lender shall allocate such cost increases
among its customers in good faith and on an equitable
basis.
(b) If, as a result of any Regulatory Change, Lender
shall incur increased costs in the making or maintaining of
any LIBOR Portion, then Lender may notify Borrower of
such fact, and commencing ninety (90) days following such
notice, Borrower shall pay to 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 Borrower in reasonable detail to be an amount
that will adequately compensate Lender in light of
these circumstances for its increased costs as a result of
such Regulatory Change. Lender shall allocate such cost
increases among its customers in good faith and on an
equitable basis.
(c) Subject to any applicable legal requirement to
which Lender is subject (including, without limitation, Regulation
D), no increase in the LIBOR Reserve Requirement shall be
effective as to the Loan until ninety (90) days after
Lender has notified Borrower of such increase, and
commencing ninety (90) days following such notice, such
increase shall be effective as to the Loan from the date
such increase was first applicable to Lender.
Section 2.16. Taxes. All amounts payable by Borrower
under the Loan Documents (whether principal, interest, fees,
expenses, or otherwise) to or for the account of Lender
shall be paid in full, free of any deductions or
withholdings for or on account of any Taxes. If Borrower is
prohibited by law from paying any such amount free of any
such deductions and withholdings, then, effective as of
ninety (90) days after notice of such fact has been given
to Borrower by Lender, Borrower shall pay to or for the
account of Lender at the same time and in the same manner
that such original amount is otherwise due under the
Loan Documents, such additional amount as may be necessary
in order that the actual amount received by Lender after
deduction and/or withholding (and after payment of any
additional Taxes due as a consequence of the payment of
such additional amount, and so on) will equal the amount
Lender would have received if such deduction or
withholding were not made. Nothing contained in this
Section 2.16 shall be construed to make Borrower
responsible for the payment of any domestic state or federal Taxes
owing by Lender based on Lender's income.
Section 2.17. Use of Loan Proceeds. Mortgage Loan
Advances shall be used strictly for the purpose of funding the
warehousing of Mortgage Loans with a view towards selling
individual Mortgage Loans through whole loan disposition to
institutional or other investors. No Mortgage Loan
Advance shall be used for any purpose which would
violate any Margin Regulations or any other applicable
state or federal regulations.
Section 2.18. Option to Extend Loan. (a) Subject to
the provisions of this Section 2.18, Borrower shall have
the option (the "Extension Option") to extend the final
maturity date of the Note from the Original Maturity Date
to January 25, 1998 (the "Extended Maturity Date").
(b) The Extension Option is exercisable only as
provided below, and subject to satisfaction of the following
conditions:
(i) Lender shall have received written
notice of the exercise thereof at least thirty (30)
days, but not more than ninety (90) days, prior to the
Termination Date;
(ii) At the time of such written notice
from Borrower and at the commencement of such
extension, (A) the maturity of the Loan shall not
have been accelerated and there shall have occurred
under the Loan Documents no Default or Event of
Default (including, without limitation, a Default or
Event of Default with respect to the agreements of
Borrower and AMRESCO contained in Sections 8.1
through 8.3), (B) Borrower shall provide a certificate
acceptable to Lender that no event or circumstance that
could result in a Material Adverse Effect shall have
occurred, and (C) neither Borrower nor any Affiliate of
Borrower shall be party to or have threatened any
litigation against Lender or any Affiliate of Lender;
(iii) Lender shall have received all of the
items required in Sections 4.2 and 4.3 relating to the
conditions precedent to any Mortgage Loan Advance; and
(iv) Prior to the commencement of any
such extension, (A) Borrower shall pay to Lender a
renewal fee equal to one-fourth of one percent
(1/4%) of the Loan Commitment, (B) Borrower shall
pay all reasonable costs and expenses payable to
third parties incurred by Lender in connection with
such extension, (C) if requested by Lender, Borrower
shall execute, deliver and record a renewal,
extension and modification agreement containing terms
and provisions consistent with this Section
2.18 and satisfactory to Lender in form, substance
and content, (D) Borrower and AMRESCO shall each deliver to
Lender a certificate showing in detail all
calculations necessary to establish compliance with
Sections 8.1 through 8.3, (E) all applicable Legal
Requirements shall have been satisfied with respect to
such extension, and (F) Lender shall have
received such other information as Lender may at the
time reasonably require regarding Borrower and, to
the extent Borrower is entitled to receive the
requested items of information pursuant to the
applicable Mortgage Loan Documents, each Mortgage Borrower
and/or Mortgaged Property.
(c) After any such extension, the Loan shall continue
to be governed, and Borrower shall continue to be
bound, by all applicable terms, covenants and conditions
contained in the Loan Documents, including but not
limited to those concerning the monthly payment of
accrued interest on the Loan, and in any such event, the
unpaid principal balance and all accrued but unpaid
interest on the Loan shall be due and payable in full at
the Extended Maturity Date, unless earlier payment is
required pursuant to Section 2.5 or any other section in
this Agreement.
ARTICLE III
COLLATERAL
Section 3.1. Collateral. To secure the payment of
the Note and the performance by Borrower of the Obligations,
Borrower has granted to Lender pursuant to the Loan
Documents a first and prior security interest in and to
the Collateral, and shall execute all documents and
instruments, and perform all other acts reasonably deemed
necessary by Lender, to perfect and maintain the security
interest and priority of Lender in and to such
Collateral.
Section 3.2. Characteristics of Mortgage Loans. Each
proposed Mortgage Loan that is the subject of a Mortgage
Loan Submission Package shall (a) be in an amount not
less than $3,000,000 nor greater than $15,000,000; (b) be
secured by a first lien on Mortgaged Property of an
Approved Property Type that, in Lender's judgment, is of
grade B+ or higher quality; (c) be in an original
principal amount no greater than seventy-five percent (75%)
of the value of the applicable Mortgaged Property as set
forth in the Appraisal of such Mortgaged Property; (d)
have a ratio of (i) the monthly Underwriting NOI from
the Mortgaged Property to (ii) the monthly Mortgage Loan
Debt Service equal to or greater than 1.25 to 1.00;
(e) satisfy the Underwriting Criteria; and (f) be funded to
the related Mortgage Borrower (or, if applicable, into one or more
Holdback Accounts) in a single advance by Borrower.
Section 3.3. Mortgage Loan Underwriting, Origination
and Servicing.
(a) Borrower will be the sole underwriter and
original holder with respect to the Mortgage Loans. The
Mortgage Loans may be brokered to Borrower by mortgage
bankers and brokers. To the extent any Mortgage Loan is merely
procured by these mortgage bankers and brokers, then such mortgage
bankers and brokers need not be approved by Lender, it being agreed
that no such mortgage bankers or brokers shall function as
correspondents in originating Mortgage Loans (including, without
limitation, underwriting or closing any Mortgage Loans).
(b) Servicer shall service the Mortgage Loans
prior to Default in accordance with the terms of the
applicable Servicing Agreement; provided, however, that
Servicer shall be entitled to enter into one or more sub-
servicing agreements to provide for the performance of
its obligations, provided that any such sub-servicer and
sub-servicing agreement shall be satisfactory to Lender,
and Servicer will remain primarily responsible to
Borrower for the fulfillment of all servicing
obligations. Borrower shall deliver to Lender upon receipt a
copy of any and all sub-servicing agreements executed by
Servicer with respect to any of the Mortgage Loans.
Borrower has pledged and assigned to Lender all of its
rights (but not its obligations or liabilities) under all
Servicing Agreements pursuant to Section 3.4 and, with
respect to the Lender's Control Account, the Holdback
Accounts, the Collection Account and all other Servicing
Accounts, pursuant to the Assignment of Accounts, and
Borrower shall execute such other documents as Lender
may require to further evidence, perfect and protect such
assignments.
(c) The prior written consent of Lender will be
required in connection with the granting by Borrower of (i)
any waiver of any default or event of default which has
occurred under any Mortgage Loan Document and which remains
uncured after the giving of any required notice and the
expiration of any applicable period of grace, if any, or
(ii) any material modification, waiver (other than a
waiver of default or event of default), consent or
amendment with respect to any Mortgage Loan, including,
without limitation, any release or subordination of any
Liens on all or any part of the Mortgaged Property and any
release, limitation or modification of the obligations of
the Mortgage Borrower, any guarantor or any other Person
liable under any of the Mortgage Loan Documents. In the
event Borrower shall deliver to Lender a written request
for prior consent to any such material modification,
waiver, consent or amendment (which request shall include
a copy of the proposed documentation and all other
information Lender may require to fully evaluate such
request), Lender shall have seven (7) Business Days after
receipt thereof in which to grant or deny such consent.
If Lender shall fail to respond within such period, the
requested consent shall be deemed not granted.
Section 3.4. Assignment of Servicing Agreements and
Hedge Agreements. Borrower hereby absolutely and
unconditionally transfers, assigns and conveys to Lender all of
Borrower's rights, titles and interests, but not its
obligations, duties or liabilities for any breach, in,
under and to the Servicing Agreements and the Hedge
Agreements, upon the following terms and conditions:
(a) Borrower covenants, represents and warrants that:
(i) Borrower has and at all times will have good title to
all rights and interests granted to Borrower under the
Servicing Agreements and the Hedge Agreements, subject to
no claims, offsets, liens, security interests or encumbrances
other than pursuant to the Loan Documents; (ii) the original
(or copy certified by Borrower as true and complete) of any Servicing
Agreement or Hedge Agreement Borrower has furnished or
will furnish to Lender, is and shall be a true and
complete copy thereof, and all Servicing Agreements and Hedge
Agreements are or will be when executed valid and enforceable,
and in full force and effect; (iii) other than pursuant to this
Section 3.4, no Servicing Agreement or Hedge Agreement has been or
will be assigned, mortgaged, pledged or otherwise encumbered, and no Person
other than Borrower and the other party therein named has or will acquire
any right, title or interest therein; (iv) no rights or obligations
under any Servicing Agreement or Hedge Agreement have been
or will be waived, released, discounted,
set off or compromised; (v) Borrower shall perform all of its
obligations under and with respect to the Servicing Agreements and
Hedge Agreements, including, without limitation, any obligation
to make any applicable margin or premium payment or to perform any
other obligation attendant to transactions or positions in any
purchase and sale of futures contract pursuant to any
Hedge Agreement; (vi) Borrower shall defend, at Borrower's
expense, any proceeding pertaining to any Servicing Agreement
or Hedge Agreement, including, if Lender so requests, any such proceeding to
which Lender is a party; and (vii) each Servicing Agreement and
Hedge Agreement shall contain a provision pursuant to which
the party or parties other than Borrower therein named
shall consent to the assignment to Lender of such agreement
and shall agree that such agreement may be terminated by
Lender in the event Lender exercises its rights as
assignee in accordance with this Section 3.4.
(b) Notwithstanding any provision of this Agreement
or any other Loan Document which might be construed to the
contrary, the assignment made pursuant to this Section 3.4
constitutes an absolute assignment and not a security interest;
however, Lender's rights as assignee with respect to all
Servicing Agreements and all Hedge Agreements shall be effective and
exercisable only upon the occurrence of an Event of
Default. Prior to an Event of Default, Borrower shall have
a license to enforce all rights and remedies and receive
all benefits afforded to Borrower under and with respect
to the Servicing Agreements and the Hedge Agreements as
trustee for the benefit of Lender; provided that without
the prior written consent of Lender, Borrower shall not
(i) terminate or replace the Servicer or (ii) cancel,
amend, revoke, terminate or alter any of the Servicing
Agreements or Hedge Agreements, or do or suffer to be done
any other act which would limit, impair or adversely affect
the interests of Lender constituted by this assignment without
the prior written consent of Lender. Upon the
occurrence of an Event of Default, Lender shall have
the right, power and privilege (but shall be under no
duty) to terminate such license, and upon such termination,
Lender shall thereafter be entitled to enforce all rights
and receive all benefits to which Borrower would
otherwise be entitled under and with respect to the
Servicing Agreements and the Hedge Agreements. Without
limiting the foregoing sentence, Borrower will, and will
cause any related account manager to, at all times (whether
before or after the occurrence of an Event of Default)
take any and every action or refrain from taking any
action (whether or not at the request of Lender) necessary
to maintain each Hedge Agreement in full force and effect
and to avoid any loss with respect thereto.
(c) Neither this assignment nor the
termination of Borrower's license nor any other action
by Lender shall constitute an assumption by Lender of any
obligation under or with respect to any of the Servicing Agreements
or the Hedge Agreements, and Borrower and/or its Affiliates shall
continue to be liable for all obligations of Borrower
and/or its Affiliates thereunder.
(d) Lender shall have the right at any time (but shall
have no obligation) to take in its name or in the name of
Borrower suchaction as Lender may at any time determine to be necessary
or advisable to cure any default under or with respect to
any Servicing Agreement or Hedge Agreement or to protect
the rights of Borrower or Lender thereunder; provided,
however, that prior to the occurrence of a Default, Lender
shall give prior written notice to Borrower before taking
any such action. Lender shall not incur any liability if
any action so taken by it or on its behalf shall prove
to be inadequate or invalid, and Borrower agrees to hold
Lender free and harmless against and from any loss, cost,
liability or expense (including, but not limited to,
attorneys' fees and expenses) incurred in connection with
any such action, as provided in Section 10.3.
(e) Borrower covenants and agrees to enforce
compliance by each other party to any Servicing Agreement or Hedge
Agreement with all terms and provisions thereof, including,
without limitation, Servicer, and to notify Lender immediately upon
any breach, default or event of default under any Servicing
Agreement or Hedge Agreement by Borrower or any other
party thereto. If Borrower fails to so enforce any
Servicing Agreement or Hedge Agreement, Borrower hereby
irrevocably and unconditionally authorizes Lender and
grants Lender a continuing, irrevocable and unconditional
power of attorney (which power of attorney is coupled
with an interest) in the name, place and stead of
Borrower, and without notice to or further consent or
authorization from Borrower or any other Person, upon
the occurrence of an Event of Default, to take any and all
actions that Lender reasonably deems necessary or advisable to enforce
compliance by any party to any Servicing Agreement or
Hedge Agreement, including, without limitation, Servicer,
all as more particularly provided in Section 9.10.
(f) In the event that a court of competent
jurisdiction determines that, notwithstanding the expressed intent of
the parties, Lender's interest in the Servicing Agreements
and the Hedge Agreements does not constitute an absolute
assignment as provided in this Section 3.4, then in the
alternative, Borrower hereby transfers, pledges, assigns
and conveys, and grants a currently effective security
interest in, all Borrower's rights, titles and interests,
but not its obligations, duties or liabilities for any breach,
in, under and to the Servicing Agreements and the Hedge Agreements, as
collateral security for the payment and performance of
all Obligations. In any such event, it is agreed and
understood that Lender shall have all rights and benefits
to which a secured party is entitled at law or in equity,
including, without limitation, under the Uniform Commercial
Code as adopted and in effect in the State of Texas, and
upon any foreclosure by Lender of its security interest in
any Mortgage Notes, all right, title and interest of
Borrower in and to Servicing Agreements and the Hedge
Agreements shall automatically be conveyed in connection
therewith.
Section 3.5. Release of Mortgage Loans. (a) Prior
to the occurrence of a Default, Borrower may from time to
time notify Lender in writing (including the
applicable Mortgage Loan Number(s), the original
principal amount(s) and the estimated Release/Redemption
Price(s)) of the proposed sale of one or more Mortgage
Loans pursuant to a whole loan disposition and,
simultaneously with the receipt by Lender of
immediately available funds in an amount equal to the
Release/Redemption Price of such Mortgage Loan or Loans being sold,
Lender shall deliver to the purchaser or, pursuant to an instruction
letter acceptable to Lender, to the title company closing
the purchase of the related Mortgage Loan or Loans, the
Mortgage Note(s) being sold together with the related
Mortgage Loan Documents and one or more releases of
Lender's Liens related to such Mortgage Note(s) in form
satisfactory to Lender and such purchaser; provided,
however, in no event shall Lender be obligated to deliver
such Mortgage Note(s), related Mortgage Loan Documents or
releases if the related Mortgage Loan or Loans are cross-
collateralized with any other Mortgage Loan, in
accordance with Section 6.3 or otherwise, unless such other
Mortgage Loan is also being sold as part of the same sale
and Lender simultaneously receives immediately available
funds in an amount equal to the Release/Redemption Price of
such other Mortgage Loan. After the occurrence of an Event of Default,
any sale of any Mortgage Loan shall be permitted in Lender's sole and
absolute discretion only.
(b) Lender's Liens in all Mortgage Loans to be
sold as contemplated in Section 3.5(a) shall continue in
effect until such time as Lender shall have received in full the
Release/Redemption Price as described in Section 3.5(a).
Lender shall, upon its receipt of such payment, promptly apply
the amount of such payment to the outstanding principal amount
of the Loan.
(c) Lender shall be under no duty at any time to
credit Borrower for any amounts due from any purchaser in
respect of any purchase of any Mortgage Loan contemplated
under Section 3.5(a) above, until Lender has actually received immediately
available funds for such Mortgage Loan in the amount equal to
the applicable Release/Redemption Price, and Lender shall be
under no duty at any time to collect any amounts or
otherwise enforce any obligations due from any purchaser
in respect of any such purchase.
Section 3.6. Mandatory Redemption. Borrower
hereby agrees, with respect to any Mortgage Loan pledged as
Collateral, that after the occurrence of any event or
circumstance requiring mandatory redemption pursuant to
this Section 3.6, it shall pay to Lender in immediately
available funds the Release/Redemption Price of such Mortgage
Loan required to be redeemed, together with any Consequential
Loss if applicable. Such obligation of Borrower is also an obligation
of AMRESCO pursuant to Section 3.8. Events requiring
mandatory redemption of any Mortgage Loan
and the respective time periods for redemption are as
follows:
(a) The delivery by Lender to Borrower of written
notice that it has rejected such Mortgage Loan as Collateral
pursuant to Section 4.5, in which case the Release/Redemption Price must be
received by Lender within thirty (30) days after
delivery by Lender to Borrower of such written notice, unless, on or before
the expiration of such thirty (30)-day period, Borrower
has, in Lender's sole and absolute discretion, rectified,
removed, cured or otherwise remedied any and all events,
occurrences, omissions, deficiencies or other
circumstances on which the rejection by Lender of such
Mortgage Loan as Collateral was based;
(b) The occurrence, existence or commencement of any
one or more of the following events:
(i) a default or event of default under any
Mortgage Loan Document related to such Mortgage
Loan and the continuance thereof beyond the expiration of any
applicable cure period (including, without limitation,
any monetary or non-monetary default and any breach
of any representations, warranties or covenants under the Mortgage Loan
Documents);
(ii) the receipt by Borrower, Servicer,
AMRESCO or Lender of written notice of any credits, offsets or
adjustments in connection with any Mortgage Loan;
(iii) (A) any casualty event affecting any
Mortgaged Property, or portion thereof which, based on
evidence satisfactory to Lender, cannot be completely
repaired or restored, prior to the expiration of the
applicable 180-day period referenced in Section
3.6(c), to the same or better condition as existed
prior to such occurrence, or (B) the failure of
Borrower, within five (5) days after Borrower becomes
aware of such casualty event, to notify Lender in
writing of the occurrence of such casualty event, or
(C) the failure of Borrower, within ten (10) Business
Days after Borrower becomes aware of such casualty
event, to deliver to Lender satisfactory evidence that
the Mortgaged Property can be so completely
repaired or restored prior to the
expiration of such 180-day period;
(iv) the filing of any condemnation proceeding
which materially affects the parking area or any building
which is part of any Mortgaged Property, or the
failure of Borrower to notify Lender in writing within
five (5) days after the filing of any condemnation
proceeding (whether or not material) affecting any
Mortgaged Property, or portion thereof; or
(v) any of the representations and warranties
set forth in Article VI proves to have been false when
made or is no longer true and correct;in each of which
cases the Release/Redemption Price must be received by
Lender within five (5) Business Days after the occurrence
of such event; or
(c) The expiration of one hundred eighty (180)
days following the date of the pledge and assignment of such
Mortgage Loan as Collateral, in which case the
Release/Redemption Price must be received by Lender
within five (5) Business Days after the expiration of such
one hundred eighty (180)-day period.
Prior to the occurrence of a Default, Borrower shall be
entitled to obtain a release of Lender's Liens in any such Mortgage
Loan required to be redeemed pursuant to this Section 3.6
upon receipt by Lender of the Release/Redemption Price
applicable to such Mortgage Loan. After the occurrence
of a Default, any such release shall be given by
Lender only in Lender's sole and absolute discretion.
Section 3.7. Mortgage Loan Payments; Accounts. (a)
All Mortgage Loan Payments will be forwarded by the
Mortgage Borrowers directly to Servicer or the applicable
sub-servicer, or, at Servicer's election, to the
Lockbox, and initially deposited into one or more
Servicing Accounts. Servicer and all sub-servicers shall
have obtained one or more Fidelity Bonds acceptable in
all respects to Borrower and Lender.
Borrower shall deposit, or cause to be deposited, each Holdback
Amount into a separate Holdback Account.
(b) Servicer and all sub-servicers shall be
subject to binding, irrevocable instructions to deposit
payments received by Servicer on any Mortgage Loan in any
calendar month as follows:
(i) First, the full amount of any and
all principal payments received by Servicer on any of
the Mortgage Loans and deposited into the Collection
Account on or before the Cut-Off Date for such month
shall be deposited into the Lender's Control Account on
the Remittance Date for such month. The full amount
of any such principal payments so received by
Servicer after the Cut-Off Date for such month
shall be so deposited on the Remittance Date for the
next calendar month.
(ii) Second, the full amount of any and
all Escrowed Funds received by Servicer on any of the
Mortgage Loans and deposited into the Collection
Account on or before the Cut-Off Date for such month
shall be deposited into a separate Servicing Account
on the Remittance Day for such month. The full amount
of any such Escrowed Funds so received by Servicer after
the Cut-Off Day for such month shall be so deposited on the
Remittance Date for the next calendar month.
(iii) Third, the remaining amount of any
other Mortgage Loan Payments received by Servicer on
any of the Mortgage Loans and deposited into the Collection
Account on or before the Cut-Off Date for such
month, plus interest accrued thereon, shall be
disbursed on the Remittance Date for such month in
accordance with the provisions of the related Servicing
Agreement applicable to such other Mortgage Loan Payments.
The remaining amount of any such other Mortgage Loan Payments
so received by Servicer after the Cut-Off Date for such month shall
be so deposited on the Remittance Date for the next
calendar month.
In the event the Collection Account on any Remittance Date
does not contain sufficient funds to be transferred to the
Lender's Control Account to pay the monthly principal
payments next due on the Note in accordance with Section
2.7(b)(i), Borrower shall cause Servicer to notify Lender
of the occurrence of such event and Borrower shall
immediately deposit into the Collection Account an
amount equal to the difference between (1) the amount of
such monthly principal payments and (2) the available
balance in the Collection Account. Notwithstanding
anything contained herein, in the other Loan Documents or
in any Servicing Agreement to the contrary, the failure of
Servicer or any sub-servicer to act as contemplated in
this Agreement, the other Loan Documents or any Servicing
Agreement shall not limit or affect the obligation of
Borrower hereunder or under the Note to make payments
of principal and interest on the Note when due or
otherwise limit or affect any Obligations of Borrower.
(c) In addition to all Servicing Accounts, the
Collection Account, the Lender's Control Account and each
Holdback Account shall be maintained with Lender and assigned to
Lender as Collateral for the Loan pursuant to the
Assignment of Accounts. Lender and Borrower will have the
following rights with respect to each of such accounts:
(i) Lender will have exclusive control
and dominion over and unrestricted access to the
Lender's Control Account and, other than the right to
make deposits thereto, Borrower will have no control
over or access to the Lender's Control Account.
Lender and Borrower understand and agree that Lender
has exclusive control and dominion over transfers
from the Lender's Control Account, and that neither
Borrower nor any of its Affiliates (including,
without limitation, Servicer) has any right to make
withdrawals from the Lender's Control Account or to
direct any transfers therefrom at any time except
written requests
made from time to time in connection with principal
payments on the Note made in accordance with Section
2.7(b)(i). In this regard, Borrower's obligation to make any
principal payment pursuant to Section 2.7(b)(i)
shall be deemed discharged if adequate funds are in
the Lender's Control Account on the applicable
Remittance Date or Interest Adjustment Date, as
applicable, to make such principal payment in the
amount then required under such Section, and Lender
will apply such funds from the Lender's Control
Account to the Loan in satisfaction of such
principal payment.
(ii) With respect to each Holdback
Account, Lender will determine in its sole and
absolute discretion after reviewing the nature of, and
the timing of the release of, the Holdback Amounts
deposited therein whether such Holdback Account
will be under Lender's exclusive control and
dominion. If Lender determines that such Holdback
Account will be under Lender's exclusive control and
dominion, Lender will have exclusive control and
dominion over and unrestricted access to such Holdback
Account and, other than the right to make deposits
thereto, Borrower will have no control over or
access to such Holdback Account. Lender and Borrower
understand and agree that, (A) Lender will have
exclusive control and dominion over transfers from such
Holdback Account, and (B) neither Borrower nor any of
its Affiliates (including, without limitation,
Servicer) has any right to make withdrawals from such
Holdback Account or to direct any transfers therefrom
at any time. Notwithstanding the foregoing, prior to the
occurrence, existence or commencement of an event
described in Section 3.6(b)(i), Lender shall advance
such Holdback Amounts in accordance with the applicable
provisions in the related Mortgage Loan Documents. If Lender
determines that such Holdback Account will not be
under Lender's exclusive control and dominion,
Borrower will have unrestricted access to such
Holdback Account prior to the occurrence of a
Default. After the occurrence of a Default, such
Holdback Account and Borrower's rights with respect thereto
shall be subject to the limitations contained in Section 3.7(d),
any limitations contained in any Loan Document which
apply after the occurrence of a Default, and any and
all remedies of Lender contained in the Loan Documents.
(iii) Prior to the occurrence of a
Default, Borrower will have unrestricted access to the
Collection Account. After the occurrence of a Default, the Collection
Account and Borrower's rights with respect thereto
shall be subject to the limitations contained in Section 3.7(d),
any limitations contained in any Loan Document which
apply after the occurrence of a Default, and any and
all remedies of Lender contained in the Loan Documents.
(d) In the event (i) any portion of any Mortgage
Loan Payment constituting principal on any Mortgage Loan,
(ii) any Holdback Amount which is supposed to be deposited
into a Holdback Account that is under Lender's exclusive
control and dominion under subparagraph (c)(ii)
immediately above, or (iii) after the occurrence of a
Default, (A) any portion of any Mortgage Loan Payment
constituting interest on any Mortgage Loan or (B) any
Holdback Amount which is supposed to be deposited into a
Holdback Account that is not under Lender's exclusive
control and dominion under subparagraph (c)(ii) immediately
above, shall be submitted to Borrower by any Mortgage
Borrower, or shall otherwise come into the possession of
Borrower, the same shall be deemed held by Borrower in
trust for Lender, and Borrower shall use its best
efforts to deliver the same to Lender within one (1)
Business Day after receipt by Borrower, and will, in any
event, deliver the same to Lender within three (3)
Business Days after receipt by Borrower, endorsed if
appropriate, for deposit into the Lender's Control
Account, in the case of a payment described in clauses (i)
or (iii)(A) immediately above, or into the applicable
Holdback Account(s), in the case of a Holdback Amount,
which applicable Holdback Account(s) shall, after the
occurrence of such Default, be under Lender's exclusive
control and dominion under subparagraph (c)(ii)
immediately above. In addition, Borrower shall deliver
or cause to be delivered to Servicer within one (1) Business
Day after receipt by Borrower, all other amounts coming
into Borrower's possession, endorsed if appropriate, for deposit
into the applicable Servicing Account.
(e) Servicer and each sub-servicer shall retain
all Escrowed Funds related to the Mortgage Loans serviced by
it in a separate Servicing Account pursuant to the terms of
its Servicing Agreement, which separate Servicing Accounts,
together with all other Servicing Accounts, shall be
maintained with Lender and assigned to Lender as
Collateral for the Loan pursuant to the Assignment of
Accounts; provided, however, that under no
circumstances will any Escrowed Funds in any such
Servicing Accounts be used to pay any amounts owing under
the Note.
(f) On each Remittance Date commencing with the
first Remittance Date following the initial Mortgage Loan
Advance and continuing on each Remittance Date thereafter
until the Maturity Date, Borrower shall deliver or cause to
be delivered to Lender a schedule acceptable to Lender
showing a loan-by-loan break down (including the
applicable Mortgage Loan Number and name of the related
Mortgage Borrower) of all amounts in the Lender's Control
Account, each of the Holdback Accounts, the Collection
Account and each of the other Servicing Accounts into which
the Escrowed Funds have been deposited, in each case as of
the last day of the preceding calendar month, and (i) in
the case of the Lender's Control Account, showing the
ending principal balance for each Mortgage Loan and the
date of deposit and the amount of each principal payment
deposited into the Lender's Control Account during the
applicable month, (ii) in the case of the Collection
Account, showing the date of deposit and the amount of
each interest payment deposited into the Collection Account
during the applicable month, (iii) in the case of each
of the Holdback Accounts, the date and the amount of each
payment deposited into, or withdrawal made from, such
Holdback Account during the applicable month, and (iv)
in the case of each of the Servicing Accounts into which
the Escrowed Funds have been deposited, the date and the
amount of each payment deposited into, or withdrawal made
from, such Servicing Account during the applicable month.
Section 3.8. Guaranty of Certain Obligations by
AMRESCO. (a) AMRESCO guarantees that the portion of the
Obligations arising underSection 3.6 (collectively, the
"Guaranteed Obligation") will be performed and will be paid in full in
cash when due and payable, this guarantee being a guarantee
of payment and not of collectability and being absolute
and in no way conditional or contingent. In the event
that any part of the Guaranteed Obligation shall not
have been so paid in full when due and payable, AMRESCO
shall without notice of any kind immediately pay or
cause to be paid to Lender the amount of such Guaranteed
Obligation then due and payable and unpaid. The
obligation of AMRESCO under this Section 3.8 shall
not be affected by the invalidity, unenforceability or
irrecoverability of any of the Obligations as against
Borrower, any other guarantor thereof or any other Person.
For purposes hereof, the Obligations, including, without
limitation, the Guaranteed Obligation, shall be due and
payable under the terms of this Agreement or any other Loan
Document notwithstanding the fact that the collection or
enforcement thereof may be stayed or
enjoined under the Code or other applicable law.
(b) AMRESCO acknowledges that Lender has entered into
this Agreement in reliance on this Section 3.8 being a
continuing irrevocable agreement, and AMRESCO agrees that
its guarantee may not be revoked in whole or in part.
The obligations of AMRESCO hereunder shall terminate when
the commitment of Lender to extend credit under this
Agreement shall have terminated and all of the Obligations have been
indefeasibly paid in full in cash and
discharged; provided, however, that (i) if a claim is made
upon Lender at any time for repayment or recovery of any
amounts or any property received by Lender from any source on account
of any of the Guaranteed Obligation and Lender repays or
returns any amounts or property so received (including interest thereon to
the extent required to be paid by Lender) or (ii) if
Lender becomes liable for any part of such claim by reason of (A)
any judgment or order of any court or administrative
authority having competent jurisdiction, or (B) any
settlement or compromise of any such claim, then AMRESCO shall remain
liable under this Agreement for the amounts so repaid or property so
returned or the amounts for which Lender becomes liable (such amounts
being deemed part of the Guaranteed Obligation) to the same
extent as if such amounts or property had never been received by
Lender, notwithstanding any termination hereof or the
cancellation of any instrument or agreement evidencing any
of the Obligations. Not later than five (5) Business Days after
receipt of notice from Lender, AMRESCO shall pay to Lender an amount equal
to the amount of such repayment or return for which Lender has
so become liable. Payments hereunder by AMRESCO may be
required by Lender on any number of occasions.
(c) AMRESCO hereby agrees that neither Lender's
rights and remedies nor AMRESCO's obligations under the
terms of this Agreement shall be released, diminished,
impaired, reduced or affected by any one or more of the following:
(i) any limitation of liability or
recourse in any other Loan Document;
(ii) the taking or accepting of any other
security or guaranty for, or right of recourse with
respect to, any or all of the Obligations;
(iii) any release, surrender,
exchange, subordination, deterioration, waste,
impairment or loss of, or any failure to create or
perfect any Lien with respect to any Collateral or any
other security at any time existing or purported,
believed or expected to exist in connection with any
or all of the Obligations;
(iv) any partial release of the
liability of AMRESCO hereunder;
(v) the death, insolvency,
bankruptcy, disability, dissolution,
liquidation, termination, receivership,
reorganization, change of form, name, structure
or ownership, sale of all assets, or lack of
corporate, partnership or other power of Borrower,
AMRESCO or any party at any time liable for the
payment or performance of any or all of the Obligations,
whether now existing or hereafter occurring;
(vi) renewal, extension, modification or
rearrangement of the payment or performance of any or
all of the Obligations, either with or without notice
to or consent of AMRESCO, or any adjustment,
indulgence, forbearance or compromise that may be
granted or given by Lender to Borrower or AMRESCO
from time to time;
(vii) any neglect, delay, omission,
failure or refusal of Lender to take or prosecute any action for
the collection or enforcement of any of the
Obligations or to foreclose or take or prosecute any
action to foreclose upon any Collateral or any other
security therefor or to take or prosecute any action
in connection with any Loan Document;
(viii) any failure of Lender to notify
AMRESCO of (A) any creation, renewal, extension,
rearrangement, modification, restatement or assignment of the
Obligations or any part thereof or of any Loan
Documents, (B) any release of or change in any
Collateral or other security for the Loan, (C) any
other action taken or refrained from being taken by
Lender against Borrower, any Collateral or any other
security for the Loan or other recourse with respect
thereto, or (D) any new agreement between Lender
and Borrower, it being understood that Lender shall
not be required to give AMRESCO any notice of any
kind under any circumstances with respect to or in
connection with the Obligations;
(ix) the unenforceability of all or any
part of the Obligations against Borrower, whether due to
the determination that the Obligations exceed the
amount permitted by law or violates any usury law, or
that the act of creating the Obligations, or any part
thereof, is ultra vires, or that the officers or persons creating
same acted in excess of their authority, or that Borrower has any
valid defense, claim or offset with respect thereto, or
otherwise, it being agreed that AMRESCO shall remain
liable hereon regardless of whether Borrower or any
other Person be found not liable on the Obligations,
or any part thereof, for any reason; or
(x) any payment by Borrower to Lender is
held to constitute a preference under the Code or any
other applicable bankruptcy laws or if for any other
reason Lender is required to refund such payment or pay
the amount thereof to someone else.
It is the intent of AMRESCO and Lender that the
obligations and liabilities of AMRESCO hereunder are absolute and
unconditional under any and all circumstances and that until
the Obligations are fully and finally paid and performed, such
obligations and liabilities shall not be discharged or
released, in whole or in part, by any act or occurrence
which might, but for the provisions of this Section 3.8,
be deemed a legal or equitable discharge or release of a
guarantor.
No delay or omission on the part of Lender in
exercising any right under this Agreement or any other Loan
Document or under any guarantee of the Obligations or with
respect to the Collateral shall operate as a waiver or relinquishment of
such right. No action which Lender or Borrower or any other Person
may take or refrain from taking with respect to the
Obligations, including any amendments thereto or
modifications thereof or waivers with respect thereto,
shall affect the provisions of this Agreement or the
obligations of AMRESCO hereunder. None of the rights of
Lender shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part
AMRESCO,Borrower or any other Person, or by any noncompliance by
AMRESCO, Borrower or any other Person with the terms,
provisions and covenants of this Agreement or any
other Loan Document, regardless of any knowledge
thereof which Lender may have or otherwise be charged
with.
(d) No waiver of any Default or Event of Default on
the part of AMRESCO or of any breach of any of the
provisions of this Agreement or of any other Loan Document
shall be considered a waiver of any other or subsequent
default or breach, and no delay or omission in exercising
or enforcing the rights and powers granted herein or in
any other Loan Document shall be construed as a waiver of
such rights and powers, and likewise no exercise or
enforcement of any rights or powers hereunder or under
any other Loan Document shall be held to exhaust such
rights and powers, and every such right and power may be
exercised from time to time. The granting of any
consent, approval or waiver by Lender shall be limited to
the specific instance and purpose and shall not constitute
consent or approval in any other instance or for any other
purpose. No notice to nor demand on AMRESCO in any case
shall of itself entitle AMRESCO to any other or further
notice or demand in similar or other circumstances. No
provision of this Agreement nor any right, remedy or
recourse of Lender with respect hereto, nor any default
or breach, can be waived, nor can this Agreement or
AMRESCO be released or discharged in any way or to any
extent, except specifically by a writing intended for
that purpose (referring specifically to this Section 3.8)
executed by Lender.
(e) AMRESCO acknowledges and agrees that it has made
such investigation as it deems desirable of the risks
undertaken by it in entering into this Agreement and is
fully satisfied that it understands all such risks.
AMRESCO hereby waives any obligation which may now or
hereafter exist on the part of Lender to inform it of the
risks being undertaken by entering into this Agreement or
of any changes in such risks and, from and after the
date hereof, AMRESCO undertakes to keep itself informed of
such risks and any changes therein. AMRESCO hereby
expressly waives any duty which may now or hereafter
exist on the part of Lender to disclose to AMRESCO any
matter related to the business, operations, character,
collateral, credit, condition (financial or otherwise),
income or prospects of Borrower, any Affiliate of Borrower
or any Mortgage Borrower or any of the properties or
management of any of the foregoing, whether now or
hereafter known by Lender. AMRESCO represents, warrants and
agrees that it assumes sole responsibility for obtaining
from Borrower all information concerning this Agreement
and all other Loan Documents and all other information
as to Borrower, any Affiliate of Borrower or any
Mortgage Borrower or their properties or management as
AMRESCO deems necessary or desirable.
(f) AMRESCO represents that (i) it is in its best
interest and in pursuit of the purposes for which it was
organized as an integral part of the business conducted
and proposed to be conducted by Borrower and its
Subsidiaries, and reasonably necessary and convenient in
connection with the conduct of the business conducted and
proposed to be conducted by it, to induce Lender to enter
into this Agreement and to extend credit to Borrower by
making the guarantee contemplated by this Section 3.8;
(ii) the credit available hereunder will directly or
indirectly inure to its benefit; and (iii) by virtue of
the foregoing it is receiving at least reasonably
equivalent value from Lender for its guarantee hereunder.
AMRESCO acknowledges that it has been advised by Lender
that Lender is unwilling to enter into this Agreement
unless the guarantee contemplated by this Section 3.8
is given by it. AMRESCO represents that (A) it
will not be rendered insolvent as a result of entering into
this Agreement, (B) after giving effect to
the transactions contemplated by this Agreement, it will have
assets having a fair saleable value in excess of the amount
required to pay its probable liability on its existing debts as they
become absolute and matured, (C) it has, and will have,
access to adequate capital for the conduct of its
business and (D) it has the ability to pay its debts
from time to time incurred in connection therewith as such
debts mature.
(g) AMRESCO agrees that, until the Obligations are
paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset and other claims
against Borrower or any other Person in any way obligated
for payment of performance of any of the Obligations arising by
contract or operation of law in connection with any payment made or
required to be made by AMRESCO under this Agreement. After
the payment in full of the Obligations, AMRESCO shall be
entitled to exercise against Borrower and any such other
Person all such rights of reimbursement, subrogation,
contribution and offset, and all such other claims, to the
fullest extent permitted by law.
(h) AMRESCO covenants and agrees that after the
occurrence of an Event of Default all Debt, claims and
liabilities then or thereafter owing by Borrower or any other
Person in any way obligated for payment or performance of any of the
Obligations to AMRESCO whether arising hereunder or
otherwise are hereby subordinated to the prior payment in
full of the Obligations and are so subordinated as a
claim against Borrower or such other Person or any
of their assets, whether such claim be in the
ordinary course of business or in the event of
voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Debt,
claim or liability will be made or received while any
such Event of Default exists.
ARTICLE IV
CONDITIONS APPLICABLE TO THE CLOSING AND MORTGAGE LOAN
ADVANCES
The agreement of Lender to become a party to this
Agreement and to make Mortgage Loan Advances as provided
herein is subject to the satisfaction of the following
conditions and requirements:
Section 4.1. Conditions to Closing. Prior to
the execution of this Agreement by Lender:
(a) Borrower shall have delivered and Lender
shall have received the following documents, certificates,
instruments and other items,all duly executed and, where
appropriate, acknowledged, in each case in form and substance
acceptable to Lender:
(i) This Agreement;
(ii) The Note;
(iii) The Collateral Assignment of Notes and
Liens;
(iv) The Assignment of Accounts;
(v) Such Financing Statements,
acknowledgments
and other documents, instruments and agreements as
Lender may require in its sole and absolute
discretion to fully evidence and perfect Lender's
Liens to be created pursuant
o this Agreement and any other Loan Document;
(vi) All resolutions, certificates or
documents that Lender may reasonably require relating to the
formation, existence and good standing of Borrower,
AMRESCO and Servicer as of the Closing Date, the proper
authority for the execution and validity of this
Agreement and the other Loan Documents by the Person executing same,
and any other matters relevant to this Agreement, all in form
and substance satisfactory to Lender, including,
without limitation, (A) the certified articles of
incorporation and bylaws of Borrower and AMRESCO and
any and all amendments thereto and all filings with the
Secretary of State of the state of formation of Borrower and
AMRESCO related thereto,(B) certified resolutions or unanimous
consent of theboard of directors of Borrower, AMRESCO and Servicer
authorizing the execution of the Loan Documents on
behalf of Borrower, AMRESCO and Servicer, as
applicable, (C) a certificate of incumbency for the
officers of Borrower, AMRESCO and
Servicer, (D) a certificate of existence and good
standing issued by the Secretary of State of the state
of formation of Borrower and AMRESCO, and (E) a
certificate of authority to transact business for each
state in which Borrower or AMRESCO is required to so
qualify;
(vii) A written opinion of counsel for Borrower
and AMRESCO, addressed to Lender, opining (A) as to
the due organization, existence, qualification and good
standing of Borrower and AMRESCO, (B) as to the
nonexistence of any violation under any applicable
Legal Requirements or other documents or agreements to
which Borrower or AMRESCO is a party, (C) that
neither the Loan nor any of the financing arrangements
(including, but not limited to, fees, interest and other
charges) as reflected in this Agreement and in the other
Loan Documents violates any usury law of the State of
Texas or any other applicable usury law, (D) as to the
due authorization of the Loan Documents by all necessary
actions of Borrower and AMRESCO, as applicable, and
the due execution of such Loan Documents by the Persons
authorized to do so, (E) that the Note and each of
the other Loan Documents establish binding
obligations of Borrower and AMRESCO, as applicable,
and are enforceable in accordance with its terms under
the laws of the State of Texas, (F) that none of
AMRESCO, Borrower, or any other Subsidiary of AMRESCO
is a party to any litigation or
potential litigation, which, if adversely determined, would impair
the ability of Borrower or AMRESCO to meet its
Obligations to Lender, (G) that the Liens granted in
favor of Lender with respect to the Collateral
pursuant to the Loan Documents have been properly
perfected, and (H) being otherwise in form and
substance satisfactory to Lender;
(viii) Financial statements of most recent
date available of Borrower and AMRESCO, which shall
include (A) the quarterly financial statements of
Borrower and AMRESCO, on a consolidated and
consolidating basis, together with a Compliance
Certificate in accordance with Section 7.1(c), and (B)
annual financial statements of Borrower and AMRESCO as of
December 31, 1994, on a consolidated and consolidating
basis, together with a Compliance Certificate, all
in accordance with the requirements of Section
7.1
(collectively, the "Current Financial Statements"); and
(ix) Evidence satisfactory to Lender that
a Default hereunder or under any other Loan Document will
not create a default under any documentation evidencing
other Debt owed by Borrower or AMRESCO.
(b) Borrower shall have delivered to Lender and
Lender shall have approved evidence that all insurance
required to be maintained pursuant to this
Agreement, including, without limitation, pursuant to Section 7.7,
has been obtained in accordance with this Agreement and is in
effect.
(c) Borrower shall have delivered to Lender and
Lender shall have approved all other documents,
certificates and information to be delivered on or
before the Closing Date pursuant to the terms of this
Agreement or otherwise required by Lender as a condition
to closing.
(d) Lender shall have approved the form of
Mortgage Loan Documents and the forms of Servicing
Agreement and Hedge Agreement.All the documents, certificates,
evidences and opinionsreferred to in this Section 4.1 shall be delivered
by expedited delivery service to and received by Lender no
later than the Closing Date or such earlier date
required hereby, and Lender shall not be bound by or
obligated under this Agreement or any of the other Loan
Documents until Lender has received all such items.
Section 4.2. Request for Advance; Mortgage Loan
Submission Package; Approval of Mortgage Loans.
(a) In addition to the requirements set forth in
Sections 4.1 and 4.3, prior to the funding of the
initial Mortgage Loan Advance and any subsequent
Mortgage Loan Advance hereunder, Borrower shall have
delivered to Lender (to the attention of Ruth Gavlick) a
request for advance signed by the President or any
Executive Vice President of Borrower (a "Request for
Advance"), which request shall be in the form attached
hereto as Exhibit G1. Together with such Request for Advance,
Borrower shall have delivered by expedited delivery service
to Lender (to the attention of Ruth Gavlick) all of the items
listed in Schedule I (a "Mortgage Loan Submission
Package") with respect to each Mortgage Loan
proposed to be funded in connection with the
requested Mortgage Loan Advance.
(b) With respect to any proposed Mortgage Loan,
both the Request for Advance and the Mortgage Loan
Submission Package shall be delivered by 9:00 a.m.
(Dallas, Texas time) at least two (2) Business Days
prior to the requested Mortgage Loan Advance. If any such Mortgage
Loan is not expressly approved or
disapproved (including, without limitation, if Lender
requests missing or additional information in
connection therewith) by written notice delivered by
Lender to Borrower by 5:00 p.m. (Dallas, Texas time)
on the last Business Day of the applicable Pre-Funding
Approval Period, such Mortgage Loan shall be deemed
approved by Lender for the funding of the Mortgage Loan
Advance requested in the applicable Request for
Advance. Subject to satisfaction of the requirements
set forth in Sections 4.1 and 4.3 and if by 10:00
a.m. (Dallas, Texas time) on any Business Day, Lender
has received confirmation (by telecopy or telephone) from
the President or any Vice President of Borrower for
funding such Mortgage Loan advance, Lender shall fund
such Mortgage Loan Advance by the end of the same Business
Day. If such confirmation is received after 10:00 a.m. (Dallas, Texas
time), Lender may in its discretion fund such Mortgage
Loan on the same or the next Business Day. The
applicable Pre-Funding Approval Period and any other
time period which commences upon delivery of the Request
for Advance and/or the Mortgage Loan Submission
Package shall not commence unless and until (i) both the
Request for Advance and the Mortgage Loan Submission
Package (A) have been received by Lender and (B) are complete in all
respects, (ii) all items listed in the Mortgage Loan
Submission Package are complete in all respects, and
(iii) all conditions contained in Section 3.2 have been satisfied with
respect to the related proposed Mortgage Loan. Lender agrees that it
will not refuse to fund a Mortgage Loan Advance
otherwise approved or deemed to be approved under this Agreement
solely on the basis of an incomplete Request for Advance or
Mortgage Loan Submission Package if notice thereof was not delivered to
Borrower by Lender within two (2) Business Days after the
delivery to Lender of such Request for Advance or
Mortgage Loan Submission Package by 9:00 a.m. (Dallas,
Texas time) on any Business Day.
(c) With respect to any proposed Mortgage Loan as
to which one or more Pre-Approval Conditions exist, Borrower shall
deliver to Lender (to the attention of Ruth Gavlick)
by 9:00 a.m. (Dallas, Texas time) on any Business
Day (i) a request for consideration of Pre-Approval
Conditions signed by the President or any Vice
President of Borrower (a "Request for Pre-Approval
Conditions"), which request shall be in the form attached
hereto as Exhibit G-2, (ii) as much of the Mortgage
Loan Submission Package as is then available, if any,
and (iii) all information necessary
for Lender to fully evaluate such Pre-Approval
Condition(s) and to be fully apprised of all
facts and circumstances related to such Pre-Approval Condition(s).
If any such Pre-Approval Condition is not
expressly approved or disapproved (including, without limitation, if
Lender requests missing or additional information in
connection therewith) by written notice delivered by Lender to
Borrower by 5:00 p.m. (Dallas, Texas time) on the third (3rd)
Business Day following delivery of all items referenced
in, and in accordance with, the immediately preceding
sentence, such Pre-Approval Condition shall be deemed
not approved by Lender and Borrower shall not be
permitted to submit such proposed Mortgage Loan for
funding under Section 4.2(b); provided, however, that in the event
of any such failure to respond by Lender (but not in the event that
Lender requests missing or additional information in
connection with a Pre-Approval Condition), Lender shall
waive, for the same month in which the related Request for Pre-Approval
Condition was submitted only, the portion of the Commitment Fee
referenced in Section 2.2(a)(ii). If Lender, in its sole and
absolute discretion, shall approve any Pre-Approval
Condition in accordance with this Section 4.2(c), Borrower may
submit the related Mortgage Loan for funding under
Section 4.2(a) and, without limiting the rights of
Lender under this Agreement to otherwise not approve such Mortgage Loan,
Lender may, in its sole and absolute discretion, notify Borrower in
writing, on or before the expiration of the applicable
three (3) Business Day-period referenced above in this
Section 4.2(c), that Lender will approve such funding
at a lesser percentage than ninety-five percent (95%)
of the original principal amount thereof and/or impose
such other limitations or conditions on such funding as
Lender in its sole and absolute discretion shall deem appropriate.
The applicable three (3) Business Day-period referenced above
in this Section 4.2(c) and any other time period which
commences upon delivery of the Request for Pre-
Approval Condition shall not commence unless and until
the Request for Pre-Approval Condition and the
information described in clause (iii) immediately above
(A) have been received by Lender and (B) are complete
in all respects. Lender agrees to notify Borrower when the
applicable three (3) Business Day-period referenced above has
commenced.
Section 4.3. Additional Conditions to All
Mortgage Loan Advances;Delivery of Original Mortgage Loan Documents.
In addition to the requirements set forth in Sections 4.1
and 4.2, prior to the funding of the initial Mortgage
Loan Advance and any subsequent Mortgage Loan Advance hereunder:
(a) Borrower shall have paid to Lender, in
accordance with Section 2.2, any portion of the
Commitment Fee then due and remaining unpaid.
(b) Borrower shall have paid to Lender the Review
Fee for each Mortgage Loan Submission Package
submitted pursuant to Section 4.2.
(c) Prior to or simultaneously with the funding
of any Mortgage Loan Advance, Borrower shall have delivered or
caused to have been delivered to Lender or, pursuant to
a Title Company Instruction Letter (a fully-
executed copy of which shall have been delivered to Lender prior
to the funding of such Mortgage Loan Advance), to the Title Company
(or any other title company closing the related Mortgage Loan)
all of the following items with respect to the related
Mortgage Loan, all of which shall, to the extent applicable, be duly
executed by all parties thereto and/or acknowledged:
(i) the original Mortgage Note, together
with an Allonge;
(ii) an original Mortgage covering the
related
Mortgaged Property;
(iii) an original Assignment of Rents
covering the related Mortgaged Property;
(iv) an original Environmental Indemnity
covering such Mortgaged Property;
(v) an original Mortgage Loan
Guaranty, if applicable;
(vi) an original Mortgage Loan
Closing
Certificate;
(vii) originals or copies of all
Mortgage Loan Financing Statements, in form and substance
satisfactory to Lender, executed by the Mortgage
Borrower with respect to each applicable Mortgage
Loan Document;
(viii) an original opinion of counsel in
form and substance satisfactory to Lender, opining as to
the due formation of the applicable Mortgage
Borrower, the due execution, delivery and
authorization of the documents referenced in the
preceding clauses (i) through (v) and the
enforceability of the documents referenced in the
preceding clauses (i) through (iv);
(ix) originals of any and all
amendments, modifications and supplements to, and waivers
related to such Mortgage Loan Documents, and all original
stock certificates, insurance policies or other original
items of collateral for a Mortgage Loan perfected
by possession;
(x) An original related Memorandum of
Collateral Assignment;
(xi) An original related Transfer of
Note and Liens (to be held by Lender unrecorded unless and
until an Event of Default shall occur);
(xii) With respect to each UCC-1
Mortgage Loan Financing Statement, an original form of UCC-2
or UCC-3 financing statement, executed by Borrower
in blank and in a form suitable for filing,
sufficient to disclose an absolute assignment to
Lender of Borrower's security interest in the
collateral described therein (to be held by
Lender unrecorded unless and until an Event of
Default shall occur);
(xiii) All resolutions, certificates or
documents that Lender may reasonably request relating to the
formation, existence and good standing of the
applicable Mortgage Borrower, together with
satisfactory evidence of proper authority for
the execution and validity of the related
Mortgage Loan Documents by the Person executing
same, and any other documents executed in
connection with such Mortgage Loan Advance, all in form and
substance satisfactory to Lender; and
(xiv) All other memoranda, documents,
agreements or items prepared or obtained by Borrower in connection
with such Mortgage Loan or that are customarily
required by financial institutions in connection
with real estate loans secured by liens on
properties with uses similar to those of the
Mortgaged Properties.
(d) Immediately before and after giving effect
to such Mortgage Loan Advance, no Default shall have occurred
and be continuing, and the making of such Mortgage Loan
Advance shall not cause a Default.
(e) The representations and warranties contained in
Article V of 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 Mortgage Loan
Advance as if such representations and warranties had been made on
and as of such dates, and the
representations and warranties contained in Article VI
of this Agreement shall be true and correct on and as of
the date of such Mortgage Loan Advance as to each
Mortgage Loan to be pledged as Collateral in connection
with such Mortgage Loan Advance.
(f) There shall not exist any default by
Borrower or AMRESCO under any Debt, nor shall there have
occurred, in Lender's opinion, a material adverse
change (i) in the financial condition of AMRESCO,
Borrower or any other Subsidiary of AMRESCO since the
date of the Current Financial Statements, or (ii) in
the results of the operations, properties, assets,
ownership, management or condition
(financial or otherwise) of AMRESCO,
Borrower or any other Subsidiary of AMRESCO from
that which existed at the Closing Date.
(g) Borrower shall have delivered to Lender all
other Loan Documents or items reasonably required by
Lender.
Section 4.4. Post-Advance Delivery Items.
Following the funding of any Mortgage Loan Advance,
Borrower shall deliver to Lender (to the extent not
already received by Lender) the following:
(a) Within one (1) Business Day after such
funding, the items listed in Section 4.3(c) with respect to the
Mortgage Loan funded with the proceeds of such
Mortgage Loan Advance (including, without
limitation, the original related Mortgage Note,
together with an Allonge), except for those of such
items as are referenced in subparagraphs (b), (c) and
(d) immediately below.
(b) Within thirty (30) days after such funding,
recorded originals of the related Mortgage, Assignment of Rents,
Mortgage Loan Financing Statements and Memorandum
of Collateral Assignment, or if recorded originals
are not then available, copies certified by Borrower
to be true and complete copies of the originals
submitted for recording, together with evidence of
recordation satisfactory to Lender, and together with
such other documents, instruments or agreements as
Lender may deem necessary or appropriate, in its sole
discretion, to protect, create or confirm the rights,
remedies and benefits of Lender with respect to such
Mortgaged Property under applicable law.
(c) Within thirty (30) days after such
funding, the original Title Policy with respect to
the related Mortgaged Property, together with all
endorsements thereto, if any.
(d) A Certificate or Certificates evidencing UCC
searches conducted not before twenty-five (25) days
prior to the related Request for Advance with "bring down" certificates, if
requested by Lender, dated as of the date of funding of
such Mortgage Loan Advance, in the state and county in
which the related Mortgaged Property is located and
reflecting no Liens affecting each related Mortgaged
Property or the applicable Mortgage Borrower (with
respect to tax liens or Liens on any of such
Mortgaged Property), other than any Permitted
Encumbrances.
Section 4.5. Post-Advance Review and Approval.
Following the making of any Mortgage Loan Advance,
Lender shall have a period of thirty (30) days in which to review the
Mortgage Loan Submission Package and all other documents
and items submitted to Lender under this Article IV in
connection with the related Mortgage Loan, and to formally accept
or reject such Mortgage Loan in Lender's sole and absolute
discretion. If any such Mortgage Loan is not
expressly accepted or rejected (including, without
limitation, if Lender requests additional information in
connection therewith) by written notice delivered by
Lender to Borrower by 5:00 p.m. (Dallas, Texas time) on
the last Business Day of the applicable Post-Funding
Approval Period, such Mortgage Loan shall be deemed
approved by Lender. Any notice of rejection pursuant to
the immediately preceding sentence shall contain an
explanation of why such Mortgage Loan was rejected as
Collateral. The delivery of a notice of rejection
pursuant to this Section 4.5 shall constitute an event requiring
mandatory redemption pursuant to Section 3.6.
Section 4.6. No Waiver. No Mortgage Loan
Advance shall (a) constitute a waiver of any condition precedent
to the obligation of Lender to make any further Mortgage Loan
Advances or (b) preclude Lender from thereafter
declaring the failure of Borrower to satisfy such
condition precedent to be a Default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loan, Borrower
represents and warrants to Lender that:
Section 5.1. Existence and Power of Borrower.
Each ofBorrower and AMRESCO (a) is a corporation duly created, validly
existing and in good standing under the laws of the
state in which it was incorporated, 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 corporation 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 corporation's business
and financial condition.
Section 5.2. Authorization; Contravention. The
execution, delivery and performance of this Agreement
and the other Loan Documents to which Borrower or
AMRESCO is or is to become a party, and the
transactions contemplated hereby and thereby, (a) are
within corporate powers of Borrower or AMRESCO, as
applicable, (b) have been duly authorized by all
necessary procedures on the part of Borrower or
AMRESCO, as applicable, (c) 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 Legal
Requirements to which Borrower or AMRESCO is subject
or any judgment, order, writ, injunction, license or
permit applicable to Borrower or AMRESCO, (d) do not
conflict with or result in any breach or contravention of
any provision of the charter documents or articles of
incorporation or bylaws of, or any other agreement or
other instrument binding upon Borrower or AMRESCO,
and (e) will not result in the creation or imposition of
any Lien on any asset of Borrower or AMRESCO, except
Lender's Liens securing the Note.
Section 5.3. Enforceable Obligations. This
Agreement and the other Loan Documents to which Borrower
or AMRESCO is or is to become a party each constitute (or
will constitute when executed) valid and binding
obligations of Borrower or AMRESCO, as
applicable, enforceable in accordance with their
respective 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 5.4. Financial and Other Information.
(a) The Current Financial Statements of
Borrower and AMRESCO that have been delivered to Lender
are true and correct in all material respects as of the
date of such Current Financial Statements, have been
prepared in accordance with GAAP, and fairly present
the financial condition of Borrower or AMRESCO, as
applicable, as of the date thereof, and the results of
operations for the period shown.
(b) Except as disclosed in writing by
Borrower or AMRESCO to Lender prior to the execution
and delivery of this Agreement, since September 30,
1994, there has been no change in the business,
financial condition or results of operations of
AMRESCO, Borrower or any other Subsidiary of AMRESCO
which could result in a Material Adverse Effect.
(c) There are no contingent liabilities of
Borrower or AMRESCO as of or since the date of such
Current Financial Statements known to the Authorized
Officers of Borrower or AMRESCO that are required to
be noted (or otherwise reflected) on Borrower's or
AMRESCO's financial statements pursuant to GAAP but are
not disclosed in such Current Financial Statements.
(d) Attached hereto as Exhibit H is a true,
correct and complete copy of Borrower's most current Underwriting
Policies and Procedural Manual (the "Underwriting
Manual"). Set forth in Schedule II is a true, correct and complete
copy of Borrower's most current underwriting
guidelines for specific property types (the
"Underwriting Criteria"). Both the Underwriting Manual and
the Underwriting Criteria have been approved by Borrower and AMRESCO
and shall not be amended, supplemented or otherwise modified
without the prior written consent of Lender, except to
correct typographical errors and to make non-substantive
changes for the sake of clarity.
Section 5.5. Litigation. There are no actions,
suits, investigations or proceedings pending, or to the
knowledge of Borrower or AMRESCO, threatened against
or affecting, AMRESCO, Borrower or any other Subsidiary
of AMRESCO 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 result in a Material Adverse Effect.
Section 5.6. 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 result in a Material Adverse
Effect.
(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 AMRESCO, Borrower or any
other Subsidiary of AMRESCO; (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, none of AMRESCO,
Borrower or any other Subsidiary of AMRESCO 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 5.7. Taxes and Filing of Tax Returns.
Borrower has filed all 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
Borrower, 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.
Borrower has no knowledge of any proposed Tax
assessment against Borrower other than Taxes to become
due in the normal course of business, and all Tax
liabilities of Borrower are adequately provided for. No
income tax liability of 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 Effect.
Section 5.8. Ownership of Assets. Borrower has
good and indefeasible title to all of its properties
reflected on its most current financial statements
delivered to Lender. Except for Liens permitted by
Section 8.6, there is no Lien on any property
of 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.
Section 5.9. Business; Compliance With Law.
Borrower has performed and abided by all obligations (a) required
to be performed by it under any license, permit, order,
authorization, grant, contract, agreement, or regulation
to which Borrower is a party or by which Borrower
or its assets are bound, and (b) which, if Borrower
were to fail to perform or abide by, would have a
Material Adverse Effect. The business and operations of
Borrower have been and are being conducted in accordance
with all Legal Requirements, other than violations which
would not (either individually or collectively) have a
Material Adverse Effect.
Section 5.10. Licenses, Permits. 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.
Section 5.11. Full Disclosure. All information
heretofore furnished by Borrower or any Affiliate of Borrower (or
by any other Person on behalf of Borrower or any
Affiliate of Borrower) to Lender for purposes of or in
connection with this Agreement or any transaction
contemplated hereby is, and all such information
hereafter furnished by or on behalf of Borrower or any
Affiliate of Borrower to Lender will be, true and
accurate in every material respect and is and shall
be, to the best of the knowledge and belief of the
party furnishing such information, without material
omission. Borrower and each of its Affiliates have
disclosed to Lender in writing any and all facts which
might reasonably be expected to have a Material Adverse
Effect.
Section 5.12. Environmental Matters.
Except for conditions, circumstances or violations that
would not, individually or in the aggregate, have a
Material Adverse Effect, Borrower (a) does not know of
any environmental condition or circumstance, such as
the presence of any hazardous substance adversely
affecting the properties or operation of AMRESCO,
Borrower or any other Subsidiary of AMRESCO, (b) has not
received any report of a violation by AMRESCO,
Borrower or any other Subsidiary of AMRESCO of any
Applicable Environmental Law, or (c) knows of no
obligation that AMRESCO, Borrower or any other
Subsidiary of AMRESCO may have to remedy any violation
of any Applicable Environmental Laws.
Section 5.13. Purpose of Credit. Borrower will
use the proceeds of the Loan to fund the origination
and warehousing of Mortgage Loans. No part of the
proceeds of the Loan will be used, directly or
indirectly, for a purpose which violates any Legal
Requirement, including without limitation, the
provisions of Regulation U. Borrower will not, directly
or indirectly, use any of the proceeds of the Loan 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. The
Loan is not secured, directly or indirectly, in whole or
in part, by collateral that includes any "margin stock"
within the meaning of the Margin Regulations.
Borrower will not 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 5.14. Governmental Regulations. Borrower
is not subject to regulation under the Investment
Advisers Act of 1940, as amended. Borrower is not
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 Legal Requirement which regulates the
incurrence of Debt. Neither the obtaining by Borrower of the
Loan nor the performance by Borrower or any of its Affiliates
of any obligations or agreements contemplated in the Loan
Documents will violate any Legal Requirement.
Section 5.15. Indebtedness. Borrower is not an
obligor on any Debt except to the extent permitted
pursuant to Section 8.5.
Section 5.16. Insurance. 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, and that complies
with the requirements of Section 7.7. Borrower has
not received any notice from any insurer or its
agent requiring any action with respect to any matter
or cancelling or threatening to cancel any policy of
insurance, and all requirements of all insurance
policies have been satisfied.
Section 5.17. Solvency. On the Closing Date
(a) the aggregate fair market value of the assets of
each of Borrower and AMRESCO exceeds its
liabilities (whether contingent, subordinated,
unmatured, unliquidated, or otherwise), (b) each of
Borrower and AMRESCO has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) each of
Borrower and AMRESCO has a sufficient amount of
capital to conduct its business as presently
contemplated.
Section 5.18. Insider. Neither Borrower nor any
Person having "control" (as that term is defined in 12
U.S.C 375b(9)(B) or in regulations promulgated pursuant
thereto) of Borrower is, or is a "related
interest" of, an "executive officer",
"director", or Person who "directly or indirectly, or
acting through or in concert with one or more persons,
owns, controls, or has the power to vote more than 10
percent of any class of voting securities" or other
"insider" (as those terms are defined in 12 U.S.C. 375b
or in regulations promulgated pursuant
thereto) of Lender, of a bank holding company of which
Lender is a subsidiary, or of any subsidiary of a bank
holding company of which Lender is a
subsidiary, or of any bank at which Lender
maintains a correspondent account, or, of any bank
which maintains a correspondent account with Lender.
Section 5.19. Not a Foreign Person. Borrower is
not a "foreign person" within the meaning of Sections
1445 and 7701 of the Code (i.e. Borrower is not a non-
resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those
terms are defined in the Code and any regulations
promulgated thereunder).
Section 5.20. Principal Office, Etc. The principal
office, chief executive office and principal place of business of
Borrower, and the place where Borrower maintains its
principal records and books, is and shall remain at
Borrower's address for notice as specified in this
Agreement.
Section 5.21. Inducement to Lender. The
representations and warranties contained in the Loan Documents are
made by Borrower as an inducement to Lender to make the
Loan. Borrower understands that Lender is relying on such
representations and warranties and that each and all
of such representations and warranties shall survive
the execution and delivery of the Loan Documents and
the consummation of the Loan, and any bankruptcy
proceedings involving Borrower or any of its
Affiliates, and shall continue in full force and
effect until the Obligations have been paid and
performed in full.
Section 5.22. No Default. Neither a Default nor
an Event of Default has occurred or is continuing.
Section 5.23. Fiscal Year. The Fiscal Year of
each of AMRESCO, Borrower and every other Subsidiary of
AMRESCO is January 1 through December 31.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
RELATED TO THE MORTGAGE LOANS
Borrower hereby confirms to Lender, with respect
to each Mortgage Loan pledged as Collateral for the
Loan that the following representations and warranties
are and shall be true and correct:
Section 6.1. No Prior Liens. Neither the
Mortgage, the Mortgage Note nor any Mortgage Loan Document related
to such Mortgage Loan have been transferred, assigned
or pledged other than pursuant to the terms of this
Agreement, and Borrower has good and marketable title
to such Mortgage Loan, and is the sole owner and holder
thereof free and clear of any and all liens, claims,
encumbrances, participation interests, pledges, charges,
or security interests of any nature, other than Lender's
Liens.
Section 6.2. Authority. Borrower has full
right and authority to pledge, assign and transfer such Mortgage
Loan to Lender, and no consent or approval of any
Governmental Authority or any other Person is necessary to effect
such pledge, assignment and transfer.
Section 6.3. No Cross-Collateralization; Whole
Loan. Such Mortgage Loan (a) is not cross-
collateralized with mortgaged properties other than
the related Mortgaged Property and/or the Mortgaged
Property(ies) securing one or more additional Mortgage
Loans, the Mortgage Borrower(s) of which are Affiliates
of the Mortgage Borrower for such Mortgage Loan, (b)
contains no equity participation by Borrower and (c)
is a whole loan and not a participation in a loan.
The Mortgaged Property does not serve as collateral
for any indebtedness other than such Mortgage Loan and/or
such additional Mortgage Loan(s).
Section 6.4. Compliance With Lending Laws. Such
Mortgage Loan complied as of the date of origination
with, or is exempt from, applicable state or federal
laws, regulations and other requirements pertaining to
usury. Any and all other requirements of
any federal, state or local law, including,
without limitation, truth-in-lending, real estate settlement
procedures, equal credit opportunity or disclosure laws,
applicable to such Mortgage Loan were complied with as
of the date of origination of such Mortgage Loan.
Section 6.5. Mortgage Lending Practices. The
origination, servicing and collection practices used by
Borrower and Servicer with respect to such Mortgage
Loan have met and currently meet customary standards
utilized by institutional mortgage lenders in their
commercial mortgage origination and servicing business.
Section 6.6. Origination, Underwriting and
Servicing.Such Mortgage Loan was originated and underwritten by
Borrower and is being serviced by Servicer or a sub-
servicer approved by Lender, and Servicer or such
approved sub-servicer has been the sole servicer of
the Mortgage Loan from its origination. With regard to
such Mortgage Loan, the underwriting, origination,
servicing, record-keeping, escrow and collection
practices used by Borrower, Servicer and their
Affiliates, correspondents and/or sub-servicers are and
have been in compliance with all Legal Requirements
and have been consistent with customary practices
utilized by institutional mortgage lenders in the
commercial mortgage loan origination and servicing
business. All Escrowed Funds required to be paid under
the related Mortgage, if any, to the mortgagee have
been or will be deposited into Servicing Accounts in
accordance with Section 3.7(e), and there exist no
material deficiencies in connection therewith for which
customary arrangements for repayment thereof have not
been made.
Section 6.7. Mortgage Loan Submission
Package. (a) Borrower has delivered to Lender a complete Request for
Advance and Mortgage Loan Submission Package related to
such Mortgage Loan as required by Section 4.2, (b) the
information set forth in the Request for Advance and
Mortgage Loan Submission Package with respect to such
Mortgage Loan is true and correct in all material
respects as of the date such Mortgage Loan is
pledged as Collateral, and (c) the conditions set forth
in Section 3.2 have been and remain satisfied with
respect to such Mortgage Loan.
Section 6.8. No Future Advances. The proceeds
of such Mortgage Loan have been fully disbursed and, other
than any applicable Holdback Amount, there is no
requirement for future advances thereunder.
Section 6.9. Due Execution and Delivery;
Enforceability. Each of the related Mortgage Note, Mortgage Loan
Documents and other agreements executed in connection
therewith is genuine, has been duly authorized,
executed and delivered by the parties thereto and is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws
affecting creditors' rights generally, or by general
principles of equity, and there is no offset, defense,
counterclaim or right to rescission with respect to such Mortgage
Note, Mortgage Loan Documents or other agreements.
Section 6.10. Assignment of Mortgage. The
related Collateral Assignment of Notes and Liens and
Transfer of Note and Liens constitute the legal, valid and
binding pledge and assignment of, and grant of a security interest
in, such Mortgage Loan and the related Mortgage Loan Documents
from Borrower to Lender.
Section 6.11. Mortgage as First Lien. The related
Mortgage is a valid and enforceable first lien on the related Mortgaged
Property, which Mortgaged Property is free and clear
of all encumbrances and liens having priority over the
first lien of the Mortgage, except for Permitted
Encumbrances.
Section 6.12. No Modification or Release. None
of the related Mortgage Loan Documents have been waived,
modified, altered, satisfied, canceled or subordinated
in any respect or rescinded by Borrower, Servicer or
any sub-servicer, and the related Mortgaged Property
has not been released from the lien or other encumbrance
of the related Mortgage, nor has the Mortgage Borrower
been released from its obligations under any Mortgage
Loan Document, in whole or in any part, nor has any
guarantor been released from any related guaranty, in
a manner which materially interferes with the rights,
interests, remedies or benefits intended to be
provided by the Mortgage Loan Documents or the use,
enjoyment, value or marketability of the Mortgaged
Property, nor has any instrument been executed that would
effect any such cancellation, subordination, rescission
or release.
Section 6.13. Taxes and Assessments. As of the
closing date of such Mortgage Loan and with respect to any
period thereafter, all Taxes and governmental
assessments that have become due and owing in
respect of, and affect, the related Mortgaged
Property have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been
established.
Section 6.14. Escrowed Funds. All Escrowed
Funds which have been required under the related Mortgage and
Mortgage Loan Documents are in the possession, or
under the control, of Borrower or Servicer, and there
are no deficiencies in connection therewith.
Section 6.15. No Advances. Borrower has not,
directly or indirectly, advanced funds, or received any
advance of funds by a party other than the applicable
Mortgage Borrower, for the payment of any amount
required by the related Mortgage Note or the related
Mortgage.
Section 6.16. Loan-to-Value Ratio. The ratio of
(a) the outstanding principal balance of such Mortgage
Loan, to (b) the value of the related Mortgaged
Property as shown on the related Appraisal does not
exceed 0.75 to 1.00 or, in the case of any Mortgaged
Property which is a "flex-space" industrial building,
0.65 to 1.00.
Section 6.17. Debt Service Coverage Ratio. The
ratio of (a) the monthly Underwriting NOI from the related
Mortgaged Property, to (b) the monthly Mortgage Loan Debt
Service for such Mortgage Loan is equal to or greater
than 1.25 to 1.00.
Section 6.18. No Mechanics Liens. The related
Mortgaged Property is free and clear of any mechanics' and
materialmen's liens or liens in the nature thereof,
and no rights are outstanding that under law could
give rise to any such liens, any of which liens are or
may be prior to, or equal with, the lien of the related
Mortgage, except those which are insured against by the
Title Policy.
Section 6.19. No Protrusions or Encroachments;
Zoning. None of the Improvements which were included for the
purpose of determining the appraised value of the
related Mortgaged Property lies outside of the boundaries
and building restriction lines of such Mortgaged
Property and there are no encroachments onto such
Mortgaged Property which are not insured against by
the Title Policy. The Mortgaged Property complies with all applicable
zoning laws and ordinances.
Section 6.20. Assignment of Rents. As
applicable, the grantor under the related Mortgage is the owner and
holder of the landlord's interest under any lease for use
and occupancy of all or any portion of the related
Mortgaged Property. The related Mortgage provides for
an assignment of all rents under such
leases and the appointment of a receiver for rents upon
the occurrence of a default (as defined in such Mortgage) or
allows the mortgagee to enter into possession to collect the
rents upon the occurrence of such a default. Neither
Borrower nor the Mortgage Borrower has made any
assignments of the landlord's interest in any such
lease or any portion of the rents, additional
rents, charges, issues or profits due and payable or
to become due and payable under any such lease, except
any related assignment of leases, rents and profits given in favor
of Borrower in connection with the origination of such
Mortgage Loan.
Section 6.21. Title Policy. Borrower has received and
has delivered to Borrower the Title Policy with respect
to such Mortgage Loan. No claims have been made under the
Title Policy, and neither Borrower nor any prior holder of
the related Mortgage has done or omitted to do anything
which would impair the coverage of the Title Policy.
Section 6.22. Insurance. The related Mortgaged Property
is adequately insured by a fire and extended perils insurance
policy, providing coverage against loss or damage sustained by
reason of fire, lightning, windstorm, hail, explosion, riot,
riot attending a strike, civil commotion, aircraft,
vehicles and smoke, and against other risks insured
against by persons operating like properties in the
locality of such Mortgaged Property, in an amount not
less than the amount necessary to avoid the operation of any
co-insurance provisions with respect to such Mortgaged Property,
and consistent in amount with Borrower's normal commercial mortgage
lending activities as of the date of underwriting with respect to
similar properties in the same locality. Each individual insurance
policy with respect to such Mortgaged Property, including any flood
insurance policy, in all respects conforms to the
requirements of Section 7.7 and contains a standard
mortgagee clause naming Borrower as loss payee. All
premiums with respect to such insurance policies have been
paid or, if required under the related Mortgage Loan
Documents, sufficient funds have been escrowed for the
payment thereof and neither Borrower nor Servicer have engaged in any
act or omission which would impair the coverage of any such
policies or the benefits of the mortgagee endorsement in
any material respect. Such insurance policies require prior notice to the
insured of termination or cancellation, and no such notice
has been received. The related Mortgage obligates the
related Mortgage Borrower to maintain all such insurance
and, at such Mortgage Borrower's failure to do so,
authorizes the mortgagee to maintain such insurance at the
Mortgage Borrower's cost and expense and to seek
reimbursement therefor from such Mortgage Borrower.
Section 6.23. No Event of Default; No Cross-Default. No
default or event of default (as defined in the related
Mortgage Loan Documents) has occurred and continued beyond
the expiration of any applicable cure period with respect to
such Mortgage Loan, nor has any event occurred which, with
the giving of notice orthe passage of time or both, would constitute
a default or event of default. No Person other than Borrower, as the
holder of the related Mortgage Note, may declare such a
default or accelerate the related indebtedness under any
such Mortgage Loan or related Mortgage Loan Documents. Other
than in connection with the crosscollateralization of one
or more Mortgage Loans with such Mortgage Loan in
accordance with Section 6.3, no default or
event of default under any indebtedness other than such
Mortgage Loan will constitute a default or event of default under such
Mortgage Loan.
Section 6.24. Fee Estate. Except in the case of a ground
lease approved pursuant to Section 4.2(c) as a Pre-Approval
Condition, the related Mortgaged Property consists of a fee
estate in real property and improvements located on the Mortgaged
Property.
Section 6.25. Monthly Payments. The monthly payments on
such Mortgage Loan are due and payable as, and are based upon the
amortization schedule set forth in, the related Mortgage Loan
Submission Package. As of the date such Mortgage Loan is pledged
as Collateral, payments on such Mortgage Loan are not delinquent.
There has been no delinquency of more than thirty (30) days in
any monthly payment, or portion thereof, by the Mortgage Borrower
thereunder since origination.
Section 6.26. No Damage or Condemnation Proceedings. The
related Mortgaged Property is in good repair and is free of
damage and waste which would have a material adverse effect upon
the appraised value or projected net operating income of such
Mortgaged Property, and there is no proceeding pending for the
total or partial condemnation or taking by eminent domain
thereof.
Section 6.27. Rights and Remedies. The related Mortgage
contains customary and enforceable provisions such as to render
the substantive rights and remedies of the holder thereof
adequate for the practical realization against the Mortgaged
Property of the benefits of the security provided thereby,
including, (a) in the case of a Mortgage designated as a deed of
trust, foreclosure by trustee's sale, (b) where permitted by law,
non-judicial foreclosure by power of sale and/or (c) judicial
foreclosure, and there is no relief currently available to the
Mortgage Borrower which would interfere with the right to so
foreclose.
Section 6.28. No Other Security. The related Mortgage Note
is not, and has not been, secured by any collateral except the
lien of the related Mortgage and the security interest of any
applicable related security documents assigned pursuant to the
Collateral Assignment of Notes and Liens and the related Transfer
of Note and Liens.
Section 6.29. Trustee Under Deeds of Trust. In the event
that the related Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are, or will become, payable by
Borrower to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgage
Borrower.
Section 6.30. Environmental Audit. Borrower has obtained
an ESA; and neither Borrower nor Servicer nor, to their
knowledge, the Mortgage Borrower have received notification from
any Governmental Authority pursuant to any Applicable
Environmental Laws, including any such notice regarding hazardous
materials on or from the Mortgaged Property. To the best of
Borrower's knowledge after diligent investigation, all
representations and warranties made in the applicable
Environmental Indemnity are true and correct as of the date such
Mortgage Loan is pledged as Collateral.
Section 6.31. Separate Tax Assessment. The related
Mortgaged Property is, or will be, assessed separate and apart
from any other property for local property tax purposes and the
Mortgage Borrower receives, or shall receive, a tax bill clearly
identifying the property tax owing on such Mortgaged Property.
Section 6.32. Compliance With Laws; Certificate of
Occupancy; Zoning. In the related Mortgage Loan Documents the
related Mortgage Borrower has covenanted, at a minimum, that it
will comply with all Mortgaged Property Legal Requirements a
breach of which would materially and adversely affect the ability
to use the improvements on the Mortgaged Property for the
purposes for which they were designed or intended. At the
origination of such Mortgage Loan, a true and correct copy of a
certificate of occupancy and evidence of compliance with all
zoning ordinances and regulations were obtained by Borrower.
Neither Borrower nor, to Borrower's knowledge, the Mortgage
Borrower has received notification from any Governmental
Authority that the Mortgaged Property does not comply with
applicable zoning and use laws or any other Mortgaged Property
Legal Requirements.
Section 6.33. No Substandard Loans. Such Mortgage Loan has
not been subject to any financial accounting penalty or reserve
requirement by Borrower, Servicer or any of their respective
accountants or any regulatory authority.
Section 6.34. Mortgage Loan Documents. To the best of
Borrower's knowledge after diligent investigation, as of the date
such Mortgage Loan is pledged as Collateral, the related Mortgage
Borrower has fully performed all obligations which are required
to be performed as of such date under the related Mortgage Loan
Documents. Such Mortgage Loan Documents do not contain any
substantive variations from the forms thereof delivered to and
approved by Lender as a condition to the closing of the Loan.
Such Mortgage Loan Documents have not been terminated, modified
or amended by any party thereto, except for written modifications
delivered to Lender prior to or on the date such Mortgage Loan is
pledged as Collateral. If the Mortgage Loan provides that the
interest rate thereon may be adjusted, all of the terms of the
Mortgage Note and the Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the unpaid
principal balance are enforceable, all such adjustments have been
correctly made in accordance with the terms of the related
Mortgage Note and Mortgage and such adjustments will not affect
the priority of the lien of the Mortgage.
Section 6.35. Appraisals. The Appraisal of the related
Mortgaged Property submitted to Borrower has been ordered
pursuant to and conforms with all Legal Requirements applicable
to Lender and the Loan, including but not limited to, all
applicable regulations promulgated under FIRREA.
ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the
Obligations remain unpaid:
Section 7.1. Information From Borrower. Borrower will
deliver, or cause to be delivered, the following items to Lender:
(a) As soon as available and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of
Borrower and AMRESCO, (i) a consolidating and consolidated
balance sheet (including a statement showing contingent
liabilities) of AMRESCO and its Subsidiaries (including Borrower)
as of the end of such Fiscal Year and related statements of
income and sources and uses of cash for such Fiscal Year, and
(ii) a balance sheet (including a statement showing contingent
liabilities) of Borrower and related statements of income and
sources and uses of cash for such Fiscal year, setting forth in
each case in comparative form the figures for the previous Fiscal
Year, together with, in each case, any supporting schedules or
documentation required by Lender and which may be customary in
transactions that, in Lender's opinion, are comparable to the
Loan, all reported by AMRESCO in accordance with GAAP and audited
by Deloitte & Touche (or its successors) or other independent
public accountants reasonably acceptable to Lender.
(b) As soon as available and in any event within
forty-five (45) days after the end of each calendar quarter, (i)
a consolidating and consolidated balance sheet (including a
statement showing contingent liabilities) of AMRESCO and its
Subsidiaries (including Borrower) and related statements of
income and sources and uses of cash as of the end of such quarter
and year-to-date, and (ii) a balance sheet (including a statement
showing contingent liabilities) of Borrower and related
statements of income and sources and uses of cash as of the end
of such quarter and year-to-date, together with, in each case,
any supporting schedules or documentation required by Lender and
which may be customary in transactions that, in Lender's opinion,
are comparable to the Loan. 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), a
certificate (a "Compliance Certificate") of an Authorized Officer
of each of AMRESCO or Borrower, as applicable, setting forth in
reasonable detail the calculations required to establish whether
Borrower and AMRESCO were in compliance with the requirements
of Sections 8.1 through and including Section 8.3, on the date of
such financial statements, and 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 Borrower and results of
AMRESCO's and its Subsidiaries' and Borrower's operations as of
the date of the delivery of such financial statements, subject to
year-end adjustments, if applicable.
(d) 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.
(e) Immediately upon any Authorized Officer of
Borrower or AMRESCO becoming aware of the occurrence of any
Default, a certificate of an Authorized Officer of Borrower or
AMRESCO setting forth the details thereof and the action which
Borrower or AMRESCO is taking or proposes to take with respect
thereto, all in form and substance satisfactory to Lender.
(f) Prompt notification of (i) any change in the
financial condition of AMRESCO, Borrower, Servicer or any other
Subsidiary of AMRESCO which could result in a Material Adverse
Effect, (ii) the occurrence of any acceleration of the maturity
of any indebtedness owing by AMRESCO, Borrower, Servicer or any
other Subsidiary of AMRESCO, or any default under any indenture,
mortgage agreement, contract or other instrument to which
AMRESCO, Borrower, Servicer or any other Subsidiary of AMRESCO is
a party or by which AMRESCO, Borrower, Servicer or any other
Subsidiary of AMRESCO is bound, if such default or acceleration
might have a Material Adverse Effect, or (iii) any event or
circumstance that has caused or could cause any Mortgage Loan to
become subject to mandatory redemption pursuant to Section 3.6.
(g) Promptly upon making any modification to either
the Underwriting Manual or the Underwriting Criteria permitted
under Section 5.4(d), Borrower shall deliver to Lender a true,
correct and complete copy of the modified Underwriting Manual
and/or the modified Underwriting Criteria. In the event of any
inconsistency between the Underwriting Manual and the
Underwriting Criteria, the Underwriting Criteria shall control.
(h) Promptly upon receipt of any notice, statement or
report prepared and/or delivered by or to Borrower or AMRESCO
pursuant to any Hedge Agreement, including, without limitation,
weekly "mark-to-market" reports, monthly reports summarizing the
current market value and market value sensitivity of all assets
and hedges to changes in interest rates, and authorization
letters, Borrower shall deliver a true and correct copy of same
to Lender.
(i) From time to time such additional information
regarding the financial condition or business of AMRESCO,
Borrower, Servicer or any other Subsidiary of AMRESCO or any
Mortgage Borrower as Lender may request, and in form and
substance satisfactory to Lender.
Section 7.2. Interest Rate Protection. Borrower shall
obtain and maintain in effect at all times through the Maturity
Date one or more Hedge Agreements with respect to each
outstanding Mortgage Loan, other than one (a) on which interest
is accruing at a variable rate that fluctuates daily, or (b) for
which Borrower has obtained an irrevocable written commitment to
purchase such Mortgage Loan. All such Hedge Agreements shall be
executed between Borrower and a Person satisfactory to Lender and
shall otherwise be in form and substance satisfactory to Lender.
All such Hedge Agreements and all transactions consummated
thereunder shall be on prudent and appropriate terms under the
circumstances then prevailing. Borrower acknowledges that any
and all Hedge Agreements obtained at any time by Borrower
pursuant to this Section 7.2 have been assigned to Lender
pursuant to Section 3.4.
Section 7.3. Ordering of Appraisals. Borrower will obtain
an Appraisal from an Independent Appraiser with respect to each
Mortgage Loan pursuant to and in conformance with all Legal
Requirements applicable to Lender and the Loan, including,
without limitation, all applicable regulations promulgated under
FIRREA.
Section 7.4. Inspection and Audit of Books and Records.
Borrower, AMRESCO and Servicer shall keep accurate books and
records in accordance with GAAP in which full, true and correct
entries shall be promptly made with respect to the Collateral and
the business and operations of Borrower, AMRESCO and Servicer.
Borrower, AMRESCO and Servicer will permit, and will cause each
sub-servicer of any Mortgage Loan to permit any officer, employee
or agent of Lender to visit and inspect their respective offices,
examine their respective books, records and accounts, take copies
and extracts therefrom, and discuss the affairs, finances and
accounts of Borrower, AMRESCO and Servicer with the respective
officers, accountants and auditors of Borrower, AMRESCO and
Servicer, all at such reasonable times and as often as Lender may
desire, all at the expense of Borrower.
Section 7.5. Inspections and Audits of Mortgage Loan
Files. Lender shall be entitled to conduct or have conducted an
audit, inspection or other examination of all or such portion of
the Mortgage Loans as Lender may deem appropriate in its sole and
absolute discretion, including, without limitation, any Mortgage
Loan Documents related to the Mortgage Loans. In connection with
any such examination, Borrower shall deliver to Lender or give
Lender access to any or all underwriting information prepared by
Borrower related to the Mortgage Loans, all files, records and
reports in Borrower's or Servicer's possession or control related
to the Mortgage Loans, and shall deliver or cause to be delivered
to Lender such additional ESAs, title updates, Appraisals,
surveys, or other matters related to the Mortgage Loans
(including, without limitation, all collateral for the Mortgage
Loans) as Lender shall request. Lender shall be entitled to make
and take away copies of any such items reviewed by Lender.
Borrower shall bear the expense of any such examination.
Section 7.6. Inspection of Mortgaged Property. Borrower
shall permit Lender and their respective agents and
representatives, to enter upon the Mortgaged Property securing
any Mortgage Loan for the purpose of inspection thereof
(including without limitation any environmental inspections or
audits of any Mortgaged Property) at any time, to the same extent
as Borrower is permitted to do so pursuant to the terms and
provisions of the Mortgage Loan Documents. Borrower shall bear
the expense of any such inspection or audit. Any such inspection
or audit, or the procuring of documents and financial and other
information, by or on behalf of Lender shall be for the Lender's
protection only, and shall not constitute any assumption of
responsibility with regard to the condition, construction,
maintenance or operation of any Mortgaged Property nor approval
by Lender of any certification given to Lender, nor relieve
Borrower or any Affiliate of Borrower of any Obligations.
Inspection not followed by notice of Default shall not constitute
a waiver of any Default then existing, and any failure to inspect
shall not constitute a waiver of any of the Lender's rights.
Section 7.7. Maintenance of Insurance. Each of Borrower,
AMRESCO and Servicer will at all times maintain or cause to be
maintained insurance covering their respective risks as are
customarily carried by businesses similarly situated including,
without limitation, "all-risk," comprehensive general public
liability and property damage insurance, and Fidelity Bonds
covering Servicer and each sub-servicer of the Mortgage Loans.
Each all-risk policy shall have loss payable clauses in favor of
Lender, together with a standard mortgagee clause (without
contribution) satisfactory to Lender. Comprehensive general
liability insurance shall name Lender as "additional insured".
All insurance policies shall be issued and maintained by
insurers having a Best's rating of "A-XI" or better or otherwise
selected from a list previously approved by Lender, in amounts,
with deductibles, and in form and substance otherwise
satisfactory to Lender, and shall have a provision giving Lender
at least thirty (30) days' prior written notice of cancellation,
non-renewal or change of coverage. Satisfactory certificates of
insurance and, if requested by Lender, certified copies of all
insurance policies, shall be delivered to Lender prior to the
Closing Date, and corresponding certificates in connection with
each renewal or substitute policy and, if requested by Lender,
certified copies of each renewal or substitute policy shall
thereafter be delivered to Lender with premiums fully paid, at
least ten (10) days before the termination of the policy it
renews or replaces. All premiums on policies required hereunder
shall be paid as they become due and payable. Borrower shall
furnish to Lender upon request at reasonable intervals a
certificate or certificates from the respective insurer(s)
setting forth the nature and extent of all insurance maintained
by Borrower in accordance with the Loan Documents.
Borrower shall comply or cause compliance at all times with
the provisions of each Mortgage Loan Document related to the
issuance and maintenance of insurance covering or applicable to
any Mortgaged Property or any portion thereof.
Section 7.8. Payment of Taxes, Impositions and Claims.
Each of Borrower and AMRESCO 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 part of the
Collateral or any other property or assets of Borrower or AMRESCO
is subject to levy or execution, (ii) each of Borrower and
AMRESCO, as applicable and 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) Borrower has notified Lender of such
circumstances, in detail satisfactory to Lender, and, provided
further, that Borrower or AMRESCO, as applicable, 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 7.9. Compliance with Legal Requirements. Borrower
and AMRESCO shall at all times comply with all Legal Requirements
applicable to Borrower and AMRESCO, unless the failure to so
comply alone or in the aggregate would not have a Material
Adverse Effect.
Section 7.10. Existence, Franchises and Permits. Each of
Borrower, AMRESCO and Servicer shall do or cause to be done at
all times all things necessary to maintain and preserve its
existence under the laws of its jurisdiction of organization, and
its qualification to do business and good standing in each other
state in which such qualification is necessary or advisable, and
shall preserve, protect, renew and extend any and all franchises,
permits, licenses, privileges, concessions and other material
rights and agreements that are or may be applicable from time to
time to it.
Section 7.11. Notice to Lender. Borrower and AMRESCO
shall promptly notify Lender in writing of any of the following
occurrences or events as the same become known to Borrower,
specifying in each case the action Borrower has taken or caused
to be taken, or proposes to take or cause to be taken, with
respect thereto: (a) any material default or violation by
Borrower or the account manager under any Hedge Agreement,
including, without limitation, a failure to make any applicable
margin or premium payment or to perform any other obligation
attendant to transactions or positions in any purchase and sale
of futures contract pursuant to such Hedge Agreement; (b) any
material default or violation by Borrower or AMRESCO under any
Legal Requirement (including, without limitation, any Servicing
Agreement or Hedge Agreement); (c) the occurrence of any
litigation, arbitration or governmental investigation or
proceeding not previously disclosed by Borrower to Lender which
(i) has been instituted against AMRESCO or Borrower, (ii) has
been instituted against any other Subsidiary of AMRESCO and which
is anticipated to have a Material Adverse Effect, (iii) to the
knowledge of Borrower or AMRESCO, has been instituted against any
of the Collateral, any Mortgaged Property or any Mortgage
Borrower, (iv) to the knowledge of Borrower or AMRESCO, is
threatened against AMRESCO or Borrower, (v) to the knowledge of
Borrower or AMRESCO is threatened against any other Subsidiary of
AMRESCO and which is anticipated to have a Material Adverse
Effect, or (vi) to the knowledge of Borrower or AMRESCO is
threatened against any of the Collateral, any Mortgaged Property
or any Mortgage Borrower; (d) the occurrence of any material
development in any occurrence in clauses (b)(i), (iii), (iv) or
(vi) immediately above that has been previously disclosed; (e) if
requested by Lender, the occurrence of any material development
in any occurrence in clauses (b)(ii) or (v) immediately above
that has been previously disclosed; (f) any existing, pending or,
to the best knowledge of Borrower, threatened investigation or
inquiry by any Governmental Authority in connection with any
Applicable Environmental Law related to any Mortgaged Property;
(g) any actual or threatened condemnation or other taking of any
material portion of any Mortgaged Property, whether for a
temporary or permanent use, or any negotiations with respect to
any such taking, or any casualty loss of or substantial damage to
any portion of such Mortgaged Property; (h) any notice received
by Borrower or AMRESCO with respect to the cancellation, material
adverse alteration or non-renewal of any insurance coverage
maintained or required to be maintained with respect to Borrower
or AMRESCO or any Mortgaged Property; (i) the occurrence of any
event or existence of any condition which could result in a
Material Adverse Effect; (j) the occurrence or existence of any
event or circumstance that could cause any Mortgage Loan to be
subject to mandatory redemption pursuant to Section 3.6; or (k)
any notice given by or to Borrower under the terms and provisions
of any of the Servicing Agreements or the Hedge Agreements.
Section 7.12. Covenant Compliance. Each of Borrower and
AMRESCO shall perform and comply with all covenants, obligations
and agreements contained in this Agreement and the other Loan
Documents on its part to be performed. Borrower shall enforce
compliance by Servicer with all obligations and agreements under
each Servicing Agreement to which Servicer is a party.
Section 7.13. 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 Lender may reasonably request and in form,
substance and content reasonably acceptable to Lender.
Section 7.14. Costs and Expenses. Borrower shall pay when
due and shall hold Lender harmless from all costs and expenses in
connection with the Loan (pre- and post-closing), including,
without limitation, (a) all fees for filing or recording the Loan
Documents; (b) all out-of-pocket costs and expenses incurred by
Lender in connection with the Loan, including, without
limitation, loan fees, title, hazard, liability and other
insurance premiums, survey and appraisal fees, fees and
commissions arising out of the actions of Borrower or any
Affiliate of Borrower and lawfully due to brokers, salesmen, and
agents in connection with the Loan or the Collateral, consultant
fees, environmental inspection and audit fees, title endorsement
and recording charges, travel expenses and reasonable fees and
disbursements of legal counsel in connection with any Default or
Event of Default and collection and other enforcement proceedings
resulting therefrom (including, without limitation, those owing
or to become owing in connection with the repossession,
preservation, or foreclosure of any or all of the Collateral
and/or any bankruptcy or other insolvency proceedings), fees of
auditors and consultants incurred in connection therewith and
investigation expenses incurred by Lender in connection
therewith; (c) all fees and expenses of counsel to Lender and
other outside experts and consultants, including but not limited
to accountants, in connection with the negotiation, preparation,
amendment, supplement, restatement, enforcement or defense of the
Loan Documents; (d) all other reasonable costs and expenses
payable to third parties incurred by Lender in connection with
the investigation, consummation, enforcement or defense of the
transactions contemplated by this Agreement; and (e) all other
reasonable costs and expenses payable to third parties incurred
by Lender in connection with its administration and monitoring of
the Loan.
Section 7.15. Additional Documents. Each of Borrower and
AMRESCO shall execute and deliver or cause to be executed and
delivered to Lender upon Lender's request such other and further
instruments or documents as in the judgment of Lender may be
required to better effectuate the transactions contemplated
herein or to conform, create, evidence, perfect, preserve or
maintain Lender's Liens or Lender's rights hereunder or under the
other Loan Documents, and each of Borrower and AMRESCO shall do
all such additional acts, give such assurances and execute such
instruments as Lender may reasonably require to assure to Lender
its rights under this Agreement.
Section 7.16. Defense of Actions. Lender may (but shall
not be obligated to) commence, appear in, or defend any action or
proceeding purporting to affect the Loan, the Collateral, or the
respective rights and obligations of Lender, Borrower and/or its
Affiliates pursuant to this Agreement or the other Loan
Documents. Lender may (but shall not be obligated to) pay all
necessary expenses, including reasonable attorneys' fees and
expenses incurred in connection with such proceedings or actions,
which expenses Borrower agrees to repay to Lender on demand.
Section 7.17. Loan Participations; Pledge. (a) Lender
shall have the right to sell the Obligations or an undivided
ownership or participation in the Obligations to a federally
insured financial institution or a foreign bank licensed to
operate in the U.S. by the Board of Governors of the Federal
Reserve System and to disclose in confidence such information
regarding AMRESCO, Borrower, Servicer or any other Subsidiary of
AMRESCO and/or the Collateral as is necessary to effectuate any
such sale (including, but not limited to, financial information);
provided, however, that (i) Borrower shall be given five (5)
Business Days prior written notice before such information is
provided to a prospective purchaser or purchasers, such notice to
identify all individuals and companies to whom the information is
being provided, (ii) Lender shall retain in the aggregate at
least a controlling interest (as defined in the applicable
participation agreement) in the Obligations, unless otherwise
consented to in writing by Borrower, provided that, Borrower's
consent shall not be required during the continuance of a Default
or Event of Default, and (iii) Lender shall notify Borrower of
such sale within one (1) Business Day thereafter, provided that,
(A) such notification shall not be required during the
continuance of a Default or Event of Default and (B) Lender's
failure to so notify Borrower shall in no way affect or impair
such sale. Borrower and AMRESCO shall execute, acknowledge and
deliver any and all instruments requested by Lender in connection
with such sale.
(b) Pledge to Federal Reserve Banks. Lender may at any
time pledge all or any portion of its interest and rights under
this Agreement (including all or any portion of the Note) to any
of the twelve Federal Reserve Banks organized under 4 of the
Federal Reserve Act, 12 U.S.C. 341.
Section 7.18. Estoppel Certificate. Borrower shall deliver
to Lender from time to time, promptly after a request therefor by
Lender, an estoppel certificate, duly executed and acknowledged
by Borrower and AMRESCO, substantially in the form attached
hereto as Exhibit J; provided that after December 31, 1995,
Borrower shall not be obligated to deliver such a certificate
more than five (5) times in any twelve month period. If any of
the statements in any such estoppel certificate are untrue,
Borrower or AMRESCO, as applicable, shall, alternatively, specify
the reasons therefor.
Section 7.19. Disclaimer of Loan Extension. Borrower
acknowledges and agrees that except as specifically set forth in
Section 2.18, Lender has not made any commitments, either express
or implied, to extend the term of the Loan.
ARTICLE VIII
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the
Obligations remain unpaid:
Section 8.1. Minimum Liquidity. Borrower shall not permit
the sum of its cash and Permitted Investments at any time to be
less than $500,000. AMRESCO shall not permit the sum of its cash
and Permitted Investments at any time to be less than
$10,000,000.
Section 8.2. Total Liabilities to Tangible Net Worth.
AMRESCO shall not permit the ratio of (a) Consolidated Total
Liabilities (excluding, however, any Debt owing by AMRESCO to
Lender pursuant to that certain Investment Loan Agreement dated
January 20, 1995) to (b) Consolidated Tangible Net Worth to
exceed 1.25:1.00 at any time.
Section 8.3. Minimum Tangible Net Worth. Borrower shall
at all times maintain a Tangible Net Worth equal to or exceeding
$3,000,000.
Section 8.4. Limitation on Sale of Properties. Borrower
shall not sell, assign, convey, exchange, lease or otherwise
dispose of any of its properties, rights, assets or business,
whether now owned or hereafter acquired, except for the
conveyance of Mortgage Loans in the ordinary course of business
in connection with disposition of whole Mortgage Loans as
contemplated in Section 3.5.
Section 8.5. Limitation on Debt. Borrower shall not
create, incur, assume or suffer to exist any Debt except for
Permitted Debt.
Section 8.6. Limitations on Liens. Borrower shall not
create, incur, assume or suffer to exist any Lien upon any of its
assets, except for (a) Lender's Liens or any other lien or
security interest in favor of Lender, and (b) Liens in favor of
lenders other than Lender covering assets of Borrower other than
the Mortgage Loans and the Collateral and securing one or more
additional mortgage warehousing lines of credit in the aggregate
amount of up to $25,000,000.
Section 8.7. Consolidations, Mergers, Sales of Assets, and
Maintenance. Borrower shall not (a) consolidate or merge with or
into any other Person without the prior written consent of
Lender, (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, except in connection with a disposition of
whole Mortgage Loans as contemplated in Section 3.5,
(c) terminate, or fail to maintain, its corporate existence or
qualification in the State of Texas, and any other applicable
jurisdiction where the business of Borrower requires such
qualification, 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 8.8. Investments. After the date hereof, Borrower
shall not make, directly or indirectly, any loans, advances,
extensions of credit or capital contributions to, or make any
investment in, or purchase any stock or securities of, or
interests in, any Person, including, without limitation, any
shareholder or Affiliate of Borrower, except for Permitted
Investments.
Section 8.9. Limitation on Distributions. Borrower shall
not make or declare any Distributions after the occurrence of a
Default. Prior to the occurrence of a Default, Borrower shall
not, without the prior written consent of Lender, make any
Distributions which after giving effect thereto would cause
Borrower to be in violation of any negative covenant in this
Article VIII.
Section 8.10. Identity and Place of Business. Borrower
shall not cause or permit any change to be made in its name
unless Borrower shall have notified Lender of such change prior
to the effective date of such change, and shall have first taken
all action required by Lender for the purpose of further
perfecting or protecting Lender's Liens in the Collateral. The
principal place of business and chief executive office of
Borrower and AMRESCO, and the place where Borrower and AMRESCO
keep the books and records concerning the Collateral has been and
will continue to be (unless Borrower notifies Lender of any
change in writing prior to the date of such change) the address
of Borrower set forth in Section 10.2 of this Agreement, or in
the case of books and records concerning the Collateral, the
principal place of business and chief executive office of
Servicer which is 5310 Harvest Hill, Suite 210, Dallas, Texas
75230.
Section 8.11. Limitation on Contingent Liabilities. Other
than Permitted Debt, Borrower shall not create, incur, assume or
suffer to exist any Guarantees, whether arising by contract or
applicable law.
Section 8.12. Transactions with Affiliates. Other than
payment by Borrower of amounts due AMRESCO in connection with a
reasonable allocation of overhead, Borrower shall not engage in
any transaction with any Affiliate of Borrower unless such
transaction is generally as favorable to Borrower or such
Affiliate as could be obtained in an arm's length transaction
with an unaffiliated Person in accordance with prevailing
industry customs and practices.
Section 8.13. Employee Plans.
(a) Borrower and AMRESCO 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. Neither
Borrower nor AMRESCO shall permit or suffer to exist any
circumstances with respect to any Employee Plan that could have a
material adverse effect on AMRESCO, Borrower or any other
Subsidiary of AMRESCO.
(b) With respect to any Pension Plan, none of AMRESCO,
Borrower or any other Subsidiary of AMRESCO 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 AMRESCO, Borrower or any other
Subsidiary of AMRESCO; (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) None of AMRESCO, Borrower or any other Subsidiary
of AMRESCO 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 8.14. Use Violations. Borrower shall not 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, (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 8.15. Exceptions to Covenants. Neither Borrower
nor any Affiliate of 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 8.16. Fiscal Year and Accounting Methods. None of
AMRESCO, Borrower, Servicer or any other Subsidiary of AMRESCO
will change its Fiscal Year or its method of accounting (other
than changes with respect to which the independent public
accountants of AMRESCO, Borrower, Servicer or such other
Subsidiary of AMRESCO have determined are required by GAAP).
Section 8.17. Governmental Regulations. Borrower will not
conduct its business in such a way that it will become subject to
regulation under the Investment Advisers Act of 1940, the
Investment Company Act of 1940, as amended, 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 Borrower to pay when due, any
principal of or interest on the Note, or any fees, charges or any
other amounts payable to Lender hereunder or under the Note or
any other Loan Documents, including, without limitation, the
Commitment Fee;
(b) The failure, refusal or neglect of Borrower or
AMRESCO to observe, perform or comply with any covenant,
agreement or obligation on its part to be observed, performed or
complied with and contained in Section 3.8 or in Article VIII,
other than Sections 8.12, 8.13, and 8.14;
(c) The failure, refusal or neglect of Borrower or
AMRESCO to 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 Borrower or AMRESCO, as applicable, by
Lender or a representative of Lender;
(d) Any representation, warranty, certification or
statement made by Borrower or AMRESCO in this Agreement, by
Servicer in any Servicing Agreement or by Borrower or any other
Person on behalf of any such entities in any Loan Document,
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been untrue in any
material respect when made or deemed to have been made;
(e) The occurrence of any event or condition which
(i) results in the acceleration of the maturity of any Debt of
Borrower or AMRESCO, or (ii) constitutes a default (beyond the
expiration or any applicable notice and cure period if provided
for pursuant to the terms of such Debt) under any Debt of
Borrower or AMRESCO, of which such Person has received written
notice and, in the case of any such default other than a monetary
default, such notice contains a notice of intention to
accelerate;
(f) The filing or commencement by AMRESCO, Borrower
or, if it could have a Material Adverse Effect, any other
Subsidiary of AMRESCO 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 AMRESCO, Borrower or, if it could have a Material
Adverse Effect, any other Subsidiary of AMRESCO 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;
(g) The filing or commencement of an involuntary case
or other proceeding against AMRESCO, Borrower or, if it could
have a Material Adverse Effect, any other Subsidiary of AMRESCO
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 AMRESCO, Borrower or, if it could have a
Material Adverse Effect, any other Subsidiary of AMRESCO under
the federal bankruptcy laws as now or hereafter in effect;
(h) The liquidation, termination or dissolution of
AMRESCO, Borrower or, if it could have a Material Adverse Effect,
any other Subsidiary of AMRESCO;
(i) One or more judgments or orders for the payment of
money aggregating in excess of $500,000 in the case of AMRESCO,
$100,000 in the case of Borrower, or $5,000,000 in the case of
any other Subsidiary of AMRESCO shall be rendered against
AMRESCO, Borrower or such other Subsidiary of AMRESCO and such
judgment or order (i) 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 or (ii) 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 occurrence of any sale, lease, conveyance,
assignment or transfer of all or any part of the Collateral or of
any beneficial interest in Borrower whether by operation of law
or otherwise, other than in connection with a disposition of
whole Mortgage Loans with respect to which Lender has received a
paydown of the Loan as required in Section 3.5, or any other
transaction whereby the Loan is paid down in an amount equal to
the proceeds of the sale, lease, conveyance or transfer;
(k) Lender's Liens with respect to the Collateral, or
any part thereof, shall not constitute first and prior liens
and/or security interests;
(l) The execution, filing or recordation by Borrower
or any Affiliate of Borrower, without the express consent and
joinder of Lender, of any certificate or instrument which has the
effect, or is intended by Borrower or any such Affiliate of
Borrower to have the effect, of limiting the amount of
indebtedness that may be secured by the Collateral, or any
portion thereof, except as may otherwise be required of Borrower
or any such Affiliate of Borrower under applicable law;
(m) The occurrence of any breach, default or event of
default under (i) any Servicing Agreement or (ii) any Hedge
Agreement, including, without limitation, a failure to make any
applicable margin or premium payment or to perform any other
obligation attendant to transactions or positions in any purchase
and sale of futures contract pursuant to such Hedge Agreement; or
(n) If Borrower shall cease to be a wholly-owned
Subsidiary of AMRESCO, or if Borrower shall make any changes in
its basic business (or in the description of its basic business
as set forth in its articles of incorporation), or in any four
(4) of the following officers without the prior written consent
of Lender: Robert H. Lutz, Jr., Robert L. Adair III, Barry L.
Edwards, Ronald B. Kirkland, and Michael N. Maberry.
It is understood and agreed by Borrower that any of the
foregoing "Events of Default" shall constitute an Event of
Default under each of the Loan Documents, 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, Lender, and acting by or through agents, trustees or
otherwise, without notice (including, without limitation, notice
of default, notice of intent to accelerate or of acceleration)
except for any notice that is expressly required herein, and
without demand, presentment, protest or action of any nature
whatsoever all of which are hereby waived, and in addition to any
other provision of this Agreement or any other Loan Document, may
exercise any or all of the following rights, remedies and
recourses:
(a) Declare the unpaid principal balance of the Note, 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 for any notice that is expressly required
by the terms of this Agreement, presentment, protest, demand or
action of any nature whatsoever, each of which is hereby
expressly waived by Borrower, whereupon the same shall become
immediately due and payable. Notwithstanding the foregoing or
anything to the contrary contained herein or in any other Loan
Document, upon the occurrence of an Event of Default described in
Section 9.1(e) or Section 9.1(f), the entire unpaid principal
balance of the Note, and all accrued, unpaid interest thereon
shall automatically be accelerated and immediately be due and
payable in full, without notice (expressly including, without
limitation, 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
Borrower; provided, however, that if accelerated automatically
pursuant to this sentence, the Note and all such indebtedness may
be reinstated at the option of Lender;
(b) Terminate the Loan Commitment;
(c) Take exclusive possession of the Collateral or any part
thereof and of all books, records and accounts relating thereto.
If Borrower and/or any Affiliate of Borrower remains in
possession of all or any part of the Collateral after an Event of
Default occurs and is continuing and without Lender's prior
written consent thereto, Lender may invoke any and all legal
remedies to dispossess Borrower and/or any Affiliate of 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;
(d) Sell or offer for sale the Collateral, or any part
thereof, in such portions, order and parcels as Lender 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 Borrower or any Affiliate of
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, Borrower and each Affiliate of
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 9.11
hereof; and
(f) Exercise any and all other rights, remedies and
recourses granted hereunder or under the other Loan Documents or
otherwise now or hereafter existing in equity, at law, by virtue
of statute or otherwise.
Section 9.3. Separate Sales. The Collateral may be sold
in one or more parcels or blocks and in such manner and order as
Lender, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any
Event of Default shall not be exhausted by any one or more sales.
Section 9.4. Rights of Setoff.
(a) Borrower hereby expressly grants to Lender the right of
setoff, against all deposits and other sums at any time held or
credited by or due from Lender to Borrower as provided in this
Section 9.4. Accordingly, upon the occurrence and during the
continuance of any Default or Event of Default, 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), at
any time held, and other indebtedness at any time owing, by
Lender to or for the credit or the account of Borrower against
any and all of the Obligations now or hereafter existing under
this Agreement, the Note and the other Loan Documents, in such
order and manner as Lender may determine in its sole discretion,
regardless of whether Lender shall have made any demand under
this Agreement or the Note and although such Obligations may be
unmatured. Borrower hereby expressly understands and agrees that
to the maximum extent permitted by law, the funds in any account
maintained with Lender may be set off against the Obligations as
if (solely for purposes of setoff) all the Obligations were owed
to Lender, or as if all such accounts were maintained with
Lender.
(b) In addition to the foregoing, Borrower hereby
authorizes Lender, in Lender's discretion at any time after the
occurrence and during the continuance of an Event of Default, to:
(i) withdraw, collect and receipt for any and all funds on
deposit in or payable on any account of Borrower maintained with
Lender; (ii) endorse, on behalf of the owner of any such account,
the name of such owner upon any checks, drafts or other
instruments payable to such owner evidencing payment on such
account; (iii) surrender or present for notation or withdrawal
the passbook certificate or other instruments or documents issued
in connection with any such account, all such documents and
instruments to be issued to and retained in the possession of
Lender; and (iv) apply the funds in any such account to the
Obligations in the manner provided in this Agreement. Borrower
shall execute and deliver to Lender such documents, instruments,
certificates, agreements and financing statements as Lender shall
request with respect to any account and the funds therein, and
Lender shall be entitled to file of record any such financing
statements.
(c) Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that Lender and any
participant may exercise rights of setoff or counterclaim and
other rights with respect to such participation as fully as if
such participant were a direct creditor of Borrower in the amount
of such participation.
(d) All rights, titles, interests, liens and remedies of
Lender under this Section 9.4 are cumulative of each other and of
every other right, title, interest, lien or remedy which Lender
may otherwise have hereunder or under any of the other Loan
Documents or at law or in equity (including, without limitation,
the rights of setoff of Lender with respect to the funds in any
accounts or under any other contract or other writing for the
enforcement of the assignment and security interest herein), and
the exercise of one or more rights or remedies shall not
prejudice, waive or impair the concurrent or subsequent exercise
of other rights or remedies.
Section 9.5. Remedies Cumulative, Concurrent and
Non-Exclusive. Lender shall have all rights, remedies and
recourses granted in the Loan Documents and available at law or
in equity (including specifically those granted by the UCC in
effect and applicable to the Collateral, or any portion thereof)
and same (a) shall be cumulative and concurrent, (b) may be
pursued separately, successively or concurrently against Borrower
and/or any Affiliate of Borrower, or any others obligated under
the Note or the other Loan Documents, or against any of the
Collateral or against any one or more of them, at the sole
discretion of Lender, (c) may be exercised as often as the
occasion therefor shall arise, it being agreed by 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 9.6. No Conditions Precedent to Exercise Remedies.
Borrower and each 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 Borrower, or of any other Person so
obligated to foreclose Lender's 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 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 Borrower, or such other Person, and in such
event, Borrower, any Affiliate of 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
Lender, and (d) any other act or occurrence, save and except the
complete payment of the Obligations. Borrower waives any right
to require Lender to proceed against any other Person, exhaust
any Collateral, or pursue any other remedy in Lender's power.
All dealings between Borrower, its Affiliates and Lender, whether
or not resulting in the creation of the Obligations, shall
conclusively be presumed to have been had or consummated in
reliance upon this Agreement. Until all the Obligations shall
have been paid in full, Borrower waives any benefit of and any
right to participate in any Collateral or security whatsoever now
or hereafter held by Lender. Borrower authorizes Lender, without
notice or demand and without any reservation of rights against
Borrower or any Affiliate of 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 other Loan
Documents.
Section 9.7. 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 Lender's Liens or their status as first
and prior Liens (except for the Permitted Encumbrances) in and to
any remaining Collateral. For payment and performance of the
Obligations, Lender may resort to any other security therefor
held by a trustee in such order and manner as Lender may elect.
Section 9.8. Waivers. To the full extent permitted by
law, Borrower hereby irrevocably and unconditionally waives and
releases (a) all benefit that might accrue to Borrower or any
Affiliate of 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
election by any trustee or Lender to exercise any right, remedy
or recourse provided for under the Loan Documents or of the
actual exercise of any such right, remedy or recourse, (c) any
right to a marshalling of assets with respect to the Loan or any
of the Collateral or any Debt of Borrower or any Affiliate of
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 9.9. Discontinuance of Proceedings. In case
Lender 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, Lender shall
have the unqualified right to do so and, in such event, Borrower,
each Affiliate of Borrower and Lender 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 Lender shall continue as if
same had never been invoked. No failure or delay by Lender in
exercising any right, power or privilege hereunder or under the
Note 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.
Section 9.10. Power of Attorney.
(a) Borrower hereby irrevocably appoints Lender as the true
and lawful attorney of Borrower with full power of substitution
for, and on behalf of Borrower, and in its name, upon the request
and instruction of Borrower and in any event after the occurrence
and during the continuance of an Event of Default (or prior to
the occurrence of any Event of Default if Lender is acting
pursuant to the provisions of Section 10.10), to take any action
to preserve, maintain, protect or enforce the rights and
interests of Borrower with respect to the Collateral, including,
without limitation, to (i) endorse any Mortgage Loans or assign
or convey any other Collateral to Lender or to any other Person,
(ii) endorse and deliver to any Person any check, instrument or
other paper coming into the actual or constructive possession of
Lender and representing payment made in respect of any Mortgage
Loans or in respect of any other Collateral, (iii) prepare,
complete, execute, deliver and record any assignment or transfer
of any Mortgage Loan to Lender or to any other Person, (iv)
endorse and deliver any promissory note, and do every other thing
necessary or desirable to effect transfer of all or any part of
the Mortgage Loans to Lender or to any other Person; (v) enforce,
cure any default or otherwise act with respect to any leases,
sales contracts, management or marketing contracts, Mortgage Loan
Documents, Servicing Agreements, Hedge Agreements, Loan Documents
or any other agreements pertaining to or affecting any of the
Collateral or any Mortgaged Property, (vi) take all such action
and to execute all such documents as Lender deems necessary or
desirable to operate or preserve or protect any of the Collateral
or any Mortgaged Property, (vii) sue for, demand or collect any
sums owing to Borrower or any Affiliate of Borrower under any
leases, Mortgage Loan Documents or other agreements pertaining to
or affecting any of the Collateral or any Mortgaged Property,
(viii) notify any Mortgage Borrower or other Person party to a
Mortgage Loan Document or any other agreement pertaining to or
affecting any of the Collateral or any Mortgaged Property of
Lender's rights hereunder and under the other Loan Documents,
(ix) commence, prosecute, negotiate, compromise, settle,
discontinue, defend, or otherwise dispose of any action or
proceeding relating to the obligations of any Mortgage Borrower
or other Person party to a Mortgage Loan Document or any other
agreement pertaining to or affecting any of the Collateral or any
Mortgaged Property, including, without limitation, the
institution of foreclosure proceedings under the Mortgage Loan
Documents, and (x) execute on behalf of Borrower and in
Borrower's name any documentation appropriate to effect any of
the foregoing.
(b) The power so vested in Lender under this Section 9.10
is one coupled with an interest and shall be irrevocable, so long
as any of the Obligations remain unpaid. Notwithstanding the
foregoing, Lender 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 Lender's Liens against any
other Person, and Lender, to the extent permitted herein or by
applicable law, may exercise any of the foregoing rights without
incurring any responsibility or liability to Borrower or any
other Person and without in any way affecting the Obligations or
any other obligations of Borrower or any Affiliate of Borrower to
Lender. Borrower shall reimburse Lender upon demand for any
costs and expenses, including, without limitation, reasonable
attorneys' fees and collection costs, that Lender may incur while
acting as the attorney-in-fact of Borrower as provided hereunder,
all of which costs and expenses shall be included in the
Obligations.
(c) This Section 9.10 shall be liberally, not
restrictively, construed so as to give the greatest latitude to
Lender's power, as attorney-in-fact, to collect, sell, and
deliver any of the Mortgage Loans and all other documents
relating thereto. The powers and authorities herein conferred on
Lender may be exercised by Lender through any Person who, at the
time of the execution of a particular instrument, is an officer
of Lender. The power of attorney conferred by this Section 9.10
shall be effective only upon the occurrence of an Event of
Default (or prior to the occurrence of any Event of Default if
Lender is acting pursuant to the provisions of Section 10.10) and
is granted for valuable consideration and is coupled with an
interest and irrevocable so long as the Obligations, or any part
thereof, shall remain unpaid or the Loan Commitment is
outstanding. All Persons dealing with Lender, or any officer
thereof acting pursuant hereto, or any substitute, shall be fully
protected in treating the powers and authorities conferred by
this Section 9.10 as existing and continuing in full force and
effect until advised by Lender that the Obligations have been
fully and finally paid and satisfied and the Loan Commitment has
been terminated.
Section 9.11. Application of Proceeds After Default. All
payments on the Loan received by Lender during the existence of a
Default or an Event of Default (unless otherwise elected by
Lender), 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 Lender's rights
and remedies hereunder or under any of the other Loan Documents,
shall be applied by Lender or the applicable trustee or receiver,
if one is appointed, to the extent that funds are so available
therefrom, in the following order of priority:
(a) First, to the payment of the costs and expenses of
taking possession of the Collateral and holding, using,
repairing, improving or selling the same, including without
limitation (i) reasonable trustee's and receiver's fees, court
costs, attorneys' and accountants' fees, (ii) costs of
advertisement and (iii) the payment of any and all Impositions
and amounts secured by any Liens equal or superior to Lender's
Liens.
(b) Second, to the payment of all amounts and
Obligations, other than the unpaid principal balance of the Note
and accrued unpaid interest thereon, due to Lender under the Loan
Documents, and any advances made by Lender to effect performance
of any unperformed obligations of Borrower or any Affiliate of
Borrower under any of the Loan Documents, together with any
accrued interest thereon if and as provided in the Loan
Documents.
(c) Third, to the payment of any and all accrued and
unpaid interest due on the Loan.
(d) Fourth, to the payment of the unpaid principal
balance of the Note in such order and manner as Lender shall
determine in its sole discretion.
(e) Fifth, to the extent known by Lender and permitted
by law, to the payment of any indebtedness or obligation secured
by Liens against the Collateral which are subordinate to Lender's
Liens.
(f) Sixth, to Borrower, or such other Person entitled
to the same.
Section 9.12. Failure to Give Notice and/or Cure. If any
provision of this Agreement or any other Loan Document provides
for Lender to give to Borrower or any Affiliate of Borrower any
notice and/or cure period regarding a Default, then if Lender
shall fail to give such notice to Borrower or any Affiliate of
Borrower as provided, the sole and exclusive remedy of Borrower
or any Affiliate of Borrower for such failure shall be to seek
appropriate equitable relief to enforce the agreement to give
such notice and to have any acceleration of the maturity of the
Note postponed or revoked and foreclosure proceedings in
connection therewith delayed or terminated pending or upon the
curing of such Default in the manner and during the period of
time permitted by this Agreement or the applicable Loan Document,
if any, and neither Borrower nor any Affiliate of Borrower shall
have any right to damages or any other type of relief against
Lender not herein specifically set forth, all of which damages or
other relief are hereby waived by Borrower. Nothing herein or in
any other Loan Document shall operate or be construed to add on
or make cumulative any cure or grace periods specified in any of
the Loan Documents.
ARTICLE X
MISCELLANEOUS
Section 10.1. Continuing Agreement. This is a continuing
Agreement and all the rights, powers and remedies of Lender
hereunder and all agreements and obligations of Borrower and
Lender hereunder, shall continue to exist until the Obligations
are paid in full.
Section 10.2. 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.
Unless specifically provided to the contrary, all such notices,
requests and other communications may be personally served, sent
by telecopier (in which case receipt must be confirmed in writing
and by telephone), or sent by certified or registered mail or the
express mail service of the United States Postal Service, Federal
Express or other equivalent overnight or expedited delivery
service. Any such notice, request or other communication shall
be deemed given and received (a) if given by personal service,
upon receipt; (b) if sent by telex or telecopier and confirmed in
writing and by telephone, upon receipt; (c) if sent by certified
or registered mail, upon the earlier of (i) actual receipt, or
(ii) two (2) Business Days after deposit in a depository of the
United States Postal Service, postage prepaid, return receipt
requested; (d) if sent by Federal Express, the express mail
service of the United States Postal Service or other equivalent
overnight or expedited delivery service, 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 Borrower or Lender, as the
case may be. In the event any such notice, request or other
communication is sent by two or more of such methods, the same
shall be deemed given and received on the earliest applicable
date as provided in the immediately preceding sentence. For
purposes hereof, the address of the parties to this Agreement
shall be as follows:
Borrower: AMRESCO Capital Corporation
1845 Woodall Rodgers Freeway Suite 1700
Dallas, Texas 75201 Attention: Mike
Maberry Telecopy No. (214) 953-7977
With a copy to: AMRESCO, Inc.
1845 Woodall Rodgers Freeway Suite 1700
Dallas, Texas 75201 Attention: General
Counsel Telecopy No. (214) 953-7757
AMRESCO: AMRESCO, Inc.
1845 Woodall Rodgers Freeway Suite 1700
Dallas, Texas 75201
Attention: Chief Financial Officer Telecopy No. (214) 969-5478
Lender: NationsBank of Texas, N.A.
901 Main Street, 51st Floor
Dallas, Texas 75202
Attention: Ruth Gavlick, Real Estate
Loan Administration
Telecopy No. (214) 508-1571
With a copy to: Jackson & Walker, L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75202
Attention: Michael P. Haggerty, Esq.
Telecopy No. (214) 953-5822
Any party may, by proper written notice hereunder to the other
parties, change the address to which notices shall thereafter be
sent to it. The provisions of this Section 10.2 shall control
over any conflicting contractual notice provisions contained in
the Loan Documents. However, notwithstanding anything to the
contrary implied or expressed in this Section 10.2, the notice
requirements herein (including the method, timing or deemed
giving of any notice) are 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
requirement applicable to foreclosures under a power of sale or
any other matter).
Section 10.3. Indemnification. (a) Borrower shall
indemnify, hold harmless and defend, at Borrower's own cost and
expense, Lender, any Person deemed to control Lender, and each of
their respective directors, officers, agents, attorneys,
employees and Affiliates from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages,
deficiencies, interest, judgments, costs and expenses (including,
without limitation, all court costs and all reasonable fees and
disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding, whether or
not Lender shall be designated a party thereto) of any and every
kind or character, known or unknown, fixed or contingent,
asserted against or incurred at any time and from time to time
(expressly including, without limitation, those arising out of
any of their negligence), arising out of or by reason of any of
the following: (i) all costs and expenses referenced in Section
7.14; (ii) all Taxes imposed by reason of the execution and
delivery of this Agreement or the Note, to the extent Borrower is
responsible therefor pursuant to Section 2.16; (iii) any claim,
investigation, litigation or other proceeding brought or
threatened against Lender including, without limitation, (A) any
claim or proceeding brought by any Mortgage Borrower or any
Affiliate thereof against Borrower based upon any act or omission
by Borrower, (B) any use effected or proposed to be effected by
Borrower of the proceeds of the Loan (excluding, however, in the
case of any use of proceeds consistent with Borrower's
representations, warranties and covenants in this Agreement, any
such proceeding related to any regulatory matter affecting
Lender) and (C) any claim made by any broker or any party or
parties for a brokerage commission, finder's fee or other like
payment in connection with the Loan or any funding of a Mortgage
Loan Advance (to the extent such fee arises out of the actions of
Borrower or any Affiliate of Borrower); (iv) any representation
made by Borrower or any Affiliate of Borrower hereunder or under
any of the other Loan Documents; (v) any failure on the part of
Borrower to perform its obligations under any Servicing Agreement
or Hedge Agreement, or any action taken by Lender pursuant to
Section 3.4(d); or (vi) any acts performed by Lender in the
lawful exercise of its rights and remedies hereunder or under any
of the Loan Documents, including, without limitation, pursuant to
the provisions of this Section 10.3, Section 10.10 or by reason
of any other provision in the Loan Documents.
(b) Notwithstanding the provisions of Section 10.3(a),
nothing contained herein shall be construed as an agreement by
Borrower to indemnify and hold Lender, any Person deemed to
control Lender or any of their respective officers, directors,
employees, agents or Affiliates harmless from or against any
losses, claims, damages, liabilities, costs or expenses arising
out of the gross negligence or willful misconduct of Lender, or
any of their respective officers, directors, employees,
attorneys, agents or Affiliates, if such gross negligence or
willful misconduct directly causes or results in the harm or loss
that would otherwise be indemnified (it being the express
intention of the parties hereto that Lender and its officers,
directors, employees, agents and Affiliates shall be indemnified
from the consequences of its or their negligence).
(c) The provisions of this Section 10.3 are cumulative of
all other provisions in the Loan Documents regarding
indemnification of Lender and payment of costs and expenses by
Borrower. All sums paid by Lender pursuant to this Section 10.3
or such other provision of the Loan Documents, and all other sums
expended by Lender to which it shall be entitled to be
indemnified, together with interest thereon at the interest rate
from time to time in effect with respect to the Note, shall
constitute additions to the Obligations, shall be secured by the
Liens created by the Loan Documents and shall be paid by Borrower
to Lender upon demand.
(d) If a claim by a third party is made against Lender for
which Borrower has indemnified Lender, and if Lender seeks
indemnity from Borrower with respect thereto, then Borrower, at
its option, may assume (with legal counsel acceptable to Lender),
the defense of any lawsuit or other proceeding in connection with
such claim, and may assert any defense of Borrower, Lender;
provided, however, that Lender shall have the right, at their
expense, to participate jointly with Borrower in the defense of
any lawsuit or other proceeding in connection with such claim.
In the event that Borrower elects to undertake the defense of any
such claim, Lender shall cooperate with Borrower to the extent
reasonably possible in regard to all matters relating to such
claim (including, without limitation, corrective actions required
by applicable law, assertion of defenses and the determination,
mitigation, negotiation and settlement of all amounts, costs,
actions, penalties, damages and the like related thereto) so as
to permit Borrower's management of same with regard to the amount
payable by Borrower on account of its indemnity obligations.
Section 10.4. Amendments and Waivers; Consent to Deviation.
(a) Except as otherwise specifically provided in this Agreement,
including, without limitation, Section 10.13, this Agreement and
the other Loan Documents may only be amended by an instrument in
writing executed jointly by Borrower and Lender and supplemented
only by documents delivered or to be delivered in accordance with
the express terms hereof.
(b) Any conflict or ambiguity between the terms and
provisions herein and terms and provisions in any other Loan
Document shall be controlled by the terms and provisions herein.
(c) No course of dealing nor any failure or delay by
Lender, or any of its officers, directors, employees, agents,
representatives, or attorneys with respect to exercising any
Right of Lender under the Loan Documents shall operate as a
waiver thereof, and any waiver will be effective only in the
specific instance and for the specific purpose for which it is
given.
Section 10.5. Survival. All representations, warranties
and covenants made by 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 Lender
and shall survive the delivery to Lender of such Loan Documents
or the extension of the Loan (or any part thereof), regardless of
any investigation made by or on behalf of Lender.
Section 10.6. 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. Borrower confirms that there are no
existing defenses, claims, counterclaims or rights of offset
against 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
Borrower, for itself and on behalf of each Affiliate of Borrower,
hereby expressly releases and discharges Lender and its officers
and representatives, from any and all such claims, known or
unknown. Borrower, for itself and on behalf of each Affiliate of
Borrower, further confirms that Lender has not made any
agreements with, or commitments or representations to, Borrower
or any Affiliate of 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 AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
To the fullest extent applicable, Borrower, for itself and on
behalf of each Affiliate of Borrower, and Lender acknowledge and
agree that this Agreement and each of the other Loan Documents
shall be subject to Section 26.02 of the Texas Business and
Commerce Code.
Section 10.7. Limitation on Interest.
(a) Notwithstanding anything herein or in the other
Loan Documents, expressed or implied, to the contrary, in no
event shall any interest rate charged hereunder or under the Note
or any of the other Loan Documents, or any interest contracted
for, collected or received by Lender, exceed the Maximum Lawful
Rate.
(b) Borrower and Lender acknowledge and agree that
they intend for the Loan to be, and to the fullest extent
possible the Loan shall be, subject to DIDMCA, and the interest
on the Loan shall be calculated in accordance with Section 501 of
DIDMCA, such that there will be no legal limitation on the amount
or rate of interest that Lender may charge on amounts outstanding
under the Loan. Borrower and Lender further agree that if DIDMCA
does not apply to the Loan or any funds advanced hereunder, then
(i) the interest rate shall be limited to the Maximum Lawful Rate
as herein provided and (ii) Borrower's sole remedies for any
violation of any usury limitation shall be those set forth in the
usury savings clauses herein and in the Note.
(c) It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with the
applicable law governing the maximum rate or amount of interest
payable on or in connection with the Note and the Loan. If at
any time a change in the Prime Rate or the Adjusted LIBOR Rate
shall cause the rate of interest on the Loan to be limited to the
Maximum Lawful Rate, the provisions of Section 2.12 shall apply.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under the Note or under any
of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Loan, or if acceleration
of the maturity of the Note, any prepayment by Borrower, or any
other circumstance whatsoever, results in Lender having been paid
any interest in excess of that permitted by applicable law, then
it is the express intent of Borrower and Lender that all excess
amounts theretofore collected by Lender be credited on the
principal balance of the Note (or, if the Note has been or would
thereby be paid in full, refunded to Borrower), and the
provisions of the Note 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 Note does not include
the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Lender does not
intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Lender for
the use, forbearance or detention of the indebtedness evidenced
hereby or by the Note 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. 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 Lender to contract for, charge,
take, reserve or receive a greater amount of interest than under
Texas law. The provisions of this Section 10.7 shall control all
agreements between Borrower and Lender.
Section 10.8. 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 10.9. Successors and Assigns. This Agreement shall
be binding upon, and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that (a)
Borrower shall not, directly or indirectly, assign or transfer,
or attempt to assign or transfer, any of its rights, duties or
obligations under any Loan Documents without the express written
consent of Lender, which consent may be withheld in its sole and
absolute discretion, and (b) Lender may transfer, pledge, assign,
sell any participation in, or otherwise encumber its interest in
the Loan as permitted under this Section 10.9 and Section 7.17.
Section 10.10. Lender's Right To Perform Obligations of
Borrower and Its Affiliates. If Borrower or any Affiliate of
Borrower shall fail, refuse or neglect to make any payment or
perform any act required to be paid or performed by it under the
Loan Documents, then at any time thereafter, and without notice
to or demand upon Borrower or any Affiliate of Borrower
(provided, however, that prior to the occurrence of a Default,
Lender shall give prior written notice to Borrower) and without
waiving or releasing any other right, remedy or recourse Lender
may have because of same, Lender may (but shall not be obligated
to) make such payment or perform such act for the account of and
at the expense of Borrower or any Affiliate of Borrower, and
shall have the right to take all such action with respect to any
Collateral, as it may reasonably deem necessary or appropriate.
If Lender shall elect to pay any sums due with respect to any
Collateral, Lender may do so in reliance on any bill, statement
or assessment procured from the appropriate Governmental
Authority or other issuer thereof without inquiring into the
accuracy or validity thereof. Similarly, in making any payments
to protect the security intended to be created by the Loan
Documents, Lender shall not be bound to inquire into the validity
of any apparent or threatened adverse title, Lien, encumbrance or
claim before making an advance for the purpose of preventing or
removing the same.
Section 10.11. Senior Debt. The indebtedness of Borrower
hereunder and under the Note and all of the Obligations are
intended to be and shall be senior to any other indebtedness of
Borrower secured by a Lien on any portion of the Collateral (the
foregoing shall not in any way imply Lender's consent to any such
subordinate debt or Liens which are not otherwise permitted by
this Agreement). The Note and any amounts advanced to Borrower
thereunder or otherwise 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 Lender.
Section 10.12. Table of Contents and Captions. 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.
Section 10.13. 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 10.14. Loan Documents. All documents, certificates,
instruments and other items required under this Agreement to be
executed and/or delivered to Lender shall be in form and content
satisfactory to Lender.
Section 10.15. No Third Party Beneficiary. This Agreement
is for the sole benefit of Lender and Borrower and is not for the
benefit of any third party.
Section 10.16. Borrower in Control. In no event shall
Lender's rights and interests under the Loan Documents be
construed to give Lender the right to control, or be deemed to
indicate that Lender is in control of, the business, properties,
management functions or operating decisions made by Borrower or
any of its Affiliates.
Section 10.17. No Partnership, etc. The relationship
between Lender and Borrower is solely that of lender and
borrower. Lender has no fiduciary or other special relationship
with Borrower. Nothing contained in the Loan Documents is
intended to create any partnership, joint venture or association
between Borrower and Lender or in any way make Lender a
co-principal with Borrower or any of its Affiliates with respect
to the Loan or any of the Collateral. Any inferences to the
contrary of any of the foregoing are hereby expressly negated.
Section 10.18. Place of Payment; Forum. All indebtedness
which may be owing at any time by Borrower to Lender or any of
them shall be payable at the place designated in the Note or if
no such designation is made, at the address of Lender stated at
the end of this Agreement. Borrower hereby irrevocably submits
generally and unconditionally for itself and in respect of its
property to the non-exclusive jurisdiction of any Texas state
court, or any United States federal court, sitting in the City of
Dallas, Texas, and to the non-exclusive jurisdiction of any state
or United States federal court sitting in the state in which any
of the Collateral is located, over any suit, action or proceeding
arising out of or relating to this Agreement or the Obligations.
The parties hereto hereby agree and consent that, in addition to
any methods of service or process provided for under applicable
law, all service of process in any such suit, action or
proceeding in any Texas state court, or any United States federal
court, sitting in the City of Dallas, Texas, may be made by
certified or registered mail, return receipt requested, directed
to the appropriate party or parties at their respective addresses
stated in Section 10.2, or at a subsequent address of which any
party received actual notice from another party in accordance
with this Agreement, and service so made shall be complete five
(5) days after the same shall have been so mailed.
Section 10.19. Lender's Consent. Except where otherwise
expressly provided herein, in any instance hereunder where the
approval, consent or the exercise of judgment of Lender is
required, the granting or denial of such approval or consent and
the exercise of such judgment shall be within the sole and
absolute discretion of Lender, and Lender shall not, for any
reason or to any extent, be required to grant such approval or
consent or exercise such judgment in any particular manner,
regardless of the reasonableness of either the request or
Lender's judgment. In any instance when the approval or consent
of Lender is contemplated or required by the terms of this
Agreement or any other Loan Document, unless otherwise
specifically provided no such approval or consent shall be deemed
to have been given, and such approval or consent shall be granted
only if and to the extent set forth in a specific writing
intended for that purpose and executed by an authorized
representative of Lender.
Section 10.20. Time of Essence. Time shall be of the
essence in this Agreement with respect to all of Borrower's
obligations hereunder.
Section 10.21. Counterparts. This Agreement and all
amendments hereto, and all the other Loan Documents, may be
executed in any number of identical original counterparts, each
of which when so executed and delivered shall be an original, and
all of which counterparts together shall constitute one and the
same instrument, it being understood and agreed that the
signature pages may be detached from one or more counterparts and
combined with signature pages from any other counterpart in order
that one or more fully executed counterparts may be assembled.
Section 10.22. Renewal, Extension or Rearrangement. All
provisions of this Agreement and of the other Loan Documents
shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part
represent a renewal, extension for any period, increase or
rearrangement of any part of the Obligations originally
represented by the Note.
Section 10.23. APPLICABLE LAW. THIS AGREEMENT, THE NOTE AND
ALL THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CONFLICT OF LAWS RULES OF SUCH STATE, 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.
Section 10.24. ARBITRATION.
(a) ARBITRATION. ANY CONTROVERSY OR DISPUTE BETWEEN
OR AMONG ANY OF THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO
THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, INCLUDING WITHOUT LIMITATION ANY DISPUTE BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF
NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE
AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND
THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR DISPUTE TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(b) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
IN THE CITY OF DALLAS, TEXAS, AND SHALL BE ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR
LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL SIXTY (60) DAYS. WITH RESPECT TO
A CONTROVERSY OR DISPUTE IN WHICH THE AMOUNT AT ISSUE DOES NOT
EXCEED $1,000,000 IN THE AGGREGATE, A SINGLE ARBITRATOR (WHO
SHALL HAVE AUTHORITY TO RENDER A MAXIMUM AWARD OF $1,000,000,
INCLUDING ALL DAMAGES OF ANY KIND AND COSTS, FEES AND THE LIKE)
SHALL BE CHOSEN AND SHALL DECIDE SUCH CONTROVERSY OR DISPUTE.
WITH RESPECT TO A CONTROVERSY OR DISPUTE IN WHICH THE AMOUNT AT
ISSUE EXCEEDS $1,000,000 IN THE AGGREGATE, SUCH CONTROVERSY OR
DISPUTE SHALL BE DECIDED BY A MAJORITY VOTE OF THREE ARBITRATORS.
IN ALL ARBITRATION PROCEEDINGS IN WHICH THE AMOUNT AT ISSUE
EXCEEDS $1,000,000 IN THE AGGREGATE, THE ARBITRATORS SHALL MAKE
SPECIFIC, WRITTEN FINDINGS OF FACT AND CONCLUSIONS OF LAW IN THE
AWARD.
(c) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY LENDER OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF
LENDER (A) TO EXERCISE SELF-HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY OF THE
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF
OR THE APPOINTMENT OF A RECEIVER. LENDER MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSURE UPON THE COLLATERAL, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. AT LENDER'S OPTION, FORECLOSURE UNDER ANY LOAN
DOCUMENT MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING: THE
EXERCISE OF A POWER OF SALE UNDER THE LOAN DOCUMENT OR BY
JUDICIAL SALE UNDER THE LOAN DOCUMENT, OR BY JUDICIAL
FORECLOSURE. NEITHER THE EXERCISE OF SELF-HELP REMEDIES NOR THE
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR DISPUTE
OCCASIONING RESORT TO SUCH REMEDIES.
Section 10.25. JURY TRIAL WAIVER. EACH OF BORROWER, AMRESCO
AND LENDER, FOR ITSELF AND ANY OF ITS AFFILIATES, HEREBY WAIVES
ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OR
RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 10.26. Revolving Loan. Borrower and Lender 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 Loan or the Loan Documents.
Section 10.27. 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.
Section 10.28. Recourse Liability. Borrower shall have full
recourse liability for the payment of the indebtedness evidenced
by the Note and the performance of all obligations on its part to
be performed under this Agreement, the Note and the other Loan
Documents. AMRESCO shall have full recourse liability for the
obligations set forth in Sections 3.6 and 3.8.
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.
BORROWER:
AMRESCO CAPITAL CORPORATION, a Texas corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
AMRESCO:
AMRESCO, INC., a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
LENDER:
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:_____________________________________
Name:___________________________________
Title:__________________________________
