AMRESCO INC, S-3/A, 1996-07-01

AMRESCO INC
S-3/A, 1996-07-01
INVESTMENT ADVICE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1996

REGISTRATION NO. 333-6031

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------------

Pre-Effective Amendment No. 1 to

Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------------

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 FREEWAY
SUITE 1700
DALLAS, TEXAS 75201
(214) 953-7700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

---------------------

L. KEITH BLACKWELL
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
1845 WOODALL RODGERS FREEWAY
SUITE 1700
DALLAS, TEXAS 75201
(214) 953-7700
FAX: (214) 953-7757
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------

Copies to:

MICHAEL M. BOONE PATRICK DELANEY
HAYNES AND BOONE, LLP LINDQUIST & VENNUM P.L.L.P.
SUITE 3100 4200 IDS CENTER
901 MAIN STREET MINNEAPOLIS, MINNESOTA 55402
DALLAS, TEXAS 75202-3789 (612) 371-3211
(214) 651-5000 FAX: (612) 371-3207
FAX: (214) 651-5940

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/

---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************

Subject to completion, dated July 1, 1996

PROSPECTUS SUPPLEMENT
dated , 1996
to Prospectus dated July 1, 1996

$50,000,000

[AMRESCO LOGO]

SENIOR NOTES, SERIES 1996-A DUE 1999

The Senior Notes, Series 1996-A due 1999 (the "Notes") being offered hereby (the
"Offering") are unsecured senior obligations of AMRESCO, INC. (the "Company").
Interest on the Notes is payable on the 15th day of each month or, if any such
day is not a business day, the next succeeding business day (each, an "Interest
Payment Date"), at the rate of % per annum beginning September 15, 1996. The
Notes mature on July 1, 1999 and are not redeemable prior to maturity. The Notes
will rank pari passu in right of payment with all existing and future
unsubordinated indebtedness of the Company, but will be effectively subordinated
to the rights of holders of secured unsubordinated indebtedness of the Company
to the extent of the value of the collateral securing such indebtedness. The
Notes will rank senior to all unsecured subordinated indebtedness of the
Company. At March 31, 1996, there was outstanding approximately $350.7 million
of unsubordinated indebtedness for money borrowed of the Company and its
subsidiaries (including $251.7 million of which indebtedness was nonrecourse to
the Company and its subsidiaries), all of which was secured indebtedness, and
$24.7 million of general unsecured trade indebtedness and other liabilities of
the Company and its subsidiaries. Under the most restrictive leverage covenant
applicable to the Company from previously contracted indebtedness, at March 31,
1996 the Company could have incurred up to approximately $79.5 million of
additional Senior Recourse Debt, which may be secured. There is no limit on the
amount of trade indebtedness the Company may incur. The Company is principally a
holding company whose primary assets consist of shares of common stock issued to
the Company by its subsidiaries. The Notes will not be guaranteed by the
Company's subsidiaries. Accordingly, any right of the Company to receive assets
of its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Notes to participate in those assets) will be
effectively subordinated to the claims of creditors of such subsidiaries as
proceeds from any such liquidation or reorganization will first be applied to
satisfy obligations of such subsidiaries owing to creditors of such subsidiaries
before such proceeds may be available for distribution to the Company. The
Company has made application to list the Notes on the New York Stock Exchange.
See "Description of the Notes."

This Prospectus Supplement is qualified in its entirety by reference to the more
detailed information and the consolidated financial statements of the Company,
including the notes thereto, appearing or incorporated by reference herein or in
the accompanying Prospectus and to the Senior Notes Indenture dated as of July
1, 1996, between the Company and Comerica Bank, as trustee (the "Trustee"), with
respect to the Senior Debt Securities, including the Officers' Certificate and
Company Order dated as of , 1996, establishing the terms of the Notes
(collectively, the "Note Indenture"). All capitalized terms used in this
Prospectus Supplement are defined as set forth elsewhere herein, in the
accompanying Prospectus or in the Note Indenture. All references in this
Prospectus Supplement to the "Prospectus" are to the Company's Prospectus dated
July 1, 1996, accompanying this Prospectus Supplement.

SEE "RISK FACTORS" BEGINNING ON PAGE S-10 OF THIS PROSPECTUS SUPPLEMENT AND ON
PAGE 5 OF THE PROSPECTUS FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE NOTES OFFERED HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
====================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Note................................... % % %
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Total...................................... $ $ $
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</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting offering expenses payable by the Company estimated at
$ .

The Notes are offered by the several Underwriters subject to prior sale when, as
and if delivered to and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. It is expected that delivery of the Notes
will be made at the offices of Piper Jaffray Inc. in Minneapolis, Minnesota on
or about , 1996. The Notes will be issued initially as book-entry
notes in the form of one fully registered global security deposited with or on
behalf of The Depository Trust Company or its nominees ("DTC"). The Notes will
not generally be issuable in definitive certificated form to any person other
than DTC.

PIPER JAFFRAY INC.
J.C. BRADFORD & CO.
MORGAN KEEGAN & COMPANY, INC.
<PAGE> 3

[AMRESCO LOGO]

[AMRESCO MAP]

The Company intends to furnish holders of the Notes with (i) annual reports
containing audited financial statements and (ii) quarterly reports for each of
the first three quarters of each fiscal year, which will contain unaudited
summary financial information.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE
NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL ON THE NEW YORK STOCK
EXCHANGE. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

S-2
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SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere or
incorporated by reference in this Prospectus Supplement and in the accompanying
Prospectus dated July 1, 1996 (the "Prospectus"). Certain terms used in this
Prospectus Supplement are defined in the "Glossary" included in the Prospectus.
Certain terms used in connection with the Notes are defined herein under
"Description of the Notes -- Certain Definitions" and in the Prospectus under
"Description of Securities -- Debt Securities -- Certain Definitions."

THE COMPANY

General. The Company is a leading specialty financial services company
engaged in Asset Portfolio acquisition and resolution, commercial mortgage
banking, residential mortgage securitization and institutional investment
advisory services. The Asset Portfolio acquisition and resolution business
involves acquiring at a substantial discount to Face Value and managing and
resolving Asset Portfolios to maximize cash recoveries. The Company manages and
resolves Asset Portfolios acquired by the Company alone, acquired by the Company
with co-investors and owned by third parties. The commercial mortgage banking
business involves the origination, underwriting, placement, sale and servicing
of commercial real estate mortgages. The residential capital markets business
purchases, warehouses and securitizes portfolios of residential mortgages of
borrowers who do not qualify for conventional loans. The Company's institutional
investment advisory subsidiary provides real estate investment advice to various
institutional investors (primarily pension funds).

History. The Company is the product of the December 1993 merger of two
Asset Portfolio management and resolution service companies: BEI and Holdings.
Holdings was the former Asset Portfolio management and resolution unit of
NationsBank of Texas, which was created in 1988 in connection with the
acquisition by NationsBank Corporation from the FDIC of certain assets and
liabilities of the failed First RepublicBank bank group. BEI, a publicly-held
company that was in the real estate and asset management services businesses,
began providing asset management and resolution services to the RTC in 1990. The
BEI Merger created one of the largest Asset Portfolio management and resolution
service companies in the United States. Since 1987, the Company and its
predecessors have managed over $30.0 billion (Face Value) of Asset Portfolios.

Business Strategy. The Company's original business of managing and
resolving Asset Portfolios for third parties developed as a result of the
takeover of failed thrifts and banks by the federal government's deposit
insurance agencies in the late 1980s. Due to the substantial volume of
under-performing and non-performing loans and foreclosed assets (much of it
commercial real estate loans and properties) and a lack of sufficient internal
staffing, the RTC and FDIC turned to private contractors such as the Company to
assist in the management and resolution of Asset Portfolios. Although the need
of government agencies for Asset Portfolio management and resolution services
has declined substantially in recent years, the Company believes that a
permanent market for Asset Portfolio acquisition, management and resolution
services has developed within the private sector.

In early 1994, the Company made the strategic decision to diversify its
business lines and to reduce its dependence on asset management and resolution
contracts with governmental agencies and certain other entities. As a result,
the Company has shifted its strategic focus in order to take advantage of
business opportunities in those specialty finance markets that capitalize on the
Company's competitive strengths and reputation. The key elements of this
strategy include:

- increasing the amount that the Company invests for its own account in
Asset Portfolios;

- continuing to provide high quality management and resolution services to
co-investors and other third-party owners of Asset Portfolios;

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S-3
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- expanding its presence in the mortgage banking market through greater
market penetration and by increasing its participation in the market for
securitization of commercial and residential real estate mortgages; and

- developing its institutional real estate investment advisory business to
complement the Company's existing business lines.

ASSET ACQUISITION AND RESOLUTION

General. The Company manages and resolves Asset Portfolios acquired at a
substantial discount to Face Value by the Company alone and by the Company with
co-investors. The Company also manages and resolves Asset Portfolios owned by
third parties. Asset Portfolios generally include secured loans of varying
qualities and collateral types. The majority of the loans in the Asset
Portfolios in which the Company invests are in payment default at the time of
acquisition. Although some Asset Portfolios include foreclosed real estate and
other collateral, the Company generally seeks Asset Portfolios that do not
include such assets. The Company's policy is to not refinance or renew purchased
loans. Some Asset Portfolio loans are loans for which resolution is tied
primarily to the real estate securing the loan. Other loans, however, are
collateralized business loans, the resolution of which may be based either on
cash flow of a business or on real estate and other collateral securing the
loan. Collateralized business loans acquired by the Company generally have
smaller Face Values and often are more quickly resolved than more traditional
real estate loans. The Company intends to increase its investment in
collateralized business loans.

Asset Portfolio Investment. The Company invests in Asset Portfolios by
purchasing them alone or with co-investors. The Face Values of Asset Portfolios
acquired solely by the Company have ranged between approximately $0.5 million
and approximately $96.8 million, whereas Asset Portfolios owned by it with co-
investors have ranged up to approximately $426.8 million. The Company generally
funds its share of any investment with a combination of borrowings under its
existing credit lines and internal cash flow. Future Asset Portfolio purchases
will depend on the availability of Asset Portfolios offered for sale, the
availability of capital and the Company's ability to submit successful offers to
purchase Asset Portfolios. As a result, Asset Portfolio purchases may vary
significantly from quarter to quarter. At March 31, 1996, the Face Value of the
Company's total investment in wholly-owned Asset Portfolios aggregated
approximately $385.0 million, which was composed of approximately $298.9 million
(77.6%) of collateralized business loans, approximately $17.0 million (4.4%) of
real estate loans, approximately $66.8 million (17.4%) of asset-backed
securities and approximately $2.3 million (0.6%) of real estate.

Asset Management and Resolution Services. The Company provides asset
management and resolution services to third parties pursuant to contracts with
owners of Asset Portfolios (including partnerships, joint ventures and other
groups in which the Company is a co-investor). Management of Asset Portfolios
includes loan resolution and providing routine accounting services, monitoring
collections of interest and principal (if any), confirming (or advancing)
insurance premium and tax payments due on collateral and generally overseeing
and managing, if necessary, collateral condition and performance.

COMMERCIAL MORTGAGE BANKING

General. The Company performs a wide range of commercial mortgage banking
services, including originating, underwriting, placing, selling and servicing
commercial real estate loans through its Holliday Fenoglio and ACC mortgage
banking units.

Commercial Mortgage Banking Business. Holliday Fenoglio primarily serves
commercial real estate developers and owners by originating commercial real
estate loans through its own commission-based mortgage bankers in its offices
located in Atlanta, Boca Raton, Buffalo, Dallas, Houston, New York City and
Orlando. The loans originated by Holliday Fenoglio generally are funded by
institutional lenders, principally insurance companies, and by Conduit
Purchasers, with Holliday Fenoglio retaining the Primary Servicer rights

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S-4
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on more than a quarter of such loans. The Company believes that Holliday
Fenoglio's relationship and credibility with its institutional lender network
provide the Company with a competitive advantage in the commercial mortgage
banking industry.

ACC, which originated and underwrote approximately $447.1 million of
commercial real estate mortgages during 1995, and $64.2 million during the first
quarter of 1996, is a mortgage banker that originates and underwrites commercial
real estate loans that are funded primarily by Conduit Purchasers. ACC,
therefore, makes certain representations and warranties concerning the loans it
originates. These representations cover title to the property, lien priority,
environmental reviews and certain other matters. ACC targets mortgage loans for
commercial real estate properties suitable for sale to Conduit Purchasers
accumulating loans for securitization programs. ACC serves its market directly
through ACC's offices located in Dallas, Miami, Washington, D.C. and
Winston-Salem, as well as through a network of approximately 42 independent
mortgage brokers located throughout the United States. ACC is an approved Fannie
Mae DUS lender, which ACC believes makes it a more competitive loan originator
and underwriter of multi-family mortgages. ACC is also an approved lender in the
Freddie Mac multi-family sales/servicer program in the states of Florida, North
Carolina and South Carolina. Through March 31, 1996, approximately 28.0% of the
loans underwritten by ACC were originated by Holliday Fenoglio, with Holliday
Fenoglio and ACC each receiving fees for their respective services.

Commercial Loan Servicing Business. The Company serves as a Primary
Servicer for whole loans and as a Master/Full Servicer for securitized pools of
commercial mortgages through its AMRESCO Services unit. At March 31, 1996, the
Company acted as servicer with respect to approximately $10.4 billion of loans.
The dominant users of loan servicers are mortgage-backed bond trusts and similar
securitized asset-backed loan portfolios made up of numerous passive investors.
The revenue stream from servicing contracts on commercial mortgages is
relatively predictable as prepayment penalties in commercial mortgages
discourage early loan payoffs, a risk that is more significant to servicers of
residential mortgage portfolios.

RESIDENTIAL CAPITAL MARKETS

The Company purchases (in bulk from independent originators), warehouses
and securitizes portfolios of residential mortgages of borrowers who do not
qualify for conventional loans or whose borrowing needs are not met by
traditional residential mortgage lenders. Such borrowers may not satisfy the
more rigid underwriting standards of the traditional residential mortgage
lending market for a number of reasons, such as blemished credit histories (from
past loan delinquencies or bankruptcy), inability to provide income verification
data or lack of established credit history. The Company believes that this
market is underserved by traditional lenders. Therefore, there is less
competition in this market and interest rates are higher than on mortgage loans
for more credit-worthy borrowers. The Company believes that the higher interest
rates offered by this market are attractive even after discounting for the
greater credit risk associated with such borrowers. During 1996 through the date
of this Prospectus Supplement, the Company has securitized approximately $800.0
million in residential mortgages.

INSTITUTIONAL INVESTMENT ADVISORY

The Company provides real estate investment advice to various institutional
investors (primarily pension funds) seeking to invest a portion of their funds
in real estate. Although the Company is paid acquisition and disposition fees by
some of its clients, its principal form of revenue from this activity is asset
management fees, which are based on the cash flow of the investments under
management or are negotiated at the time of the client's investment in a
property.

The Company is a Delaware corporation. The Company's principal executive
offices are located at 1845 Woodall Rodgers Freeway, Suite 1700, Dallas, Texas
75201 and its telephone number at that address is (214) 953-7700.

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THE OFFERING

Issuer........................... AMRESCO, INC.

Securities offered............... $50,000,000 aggregate principal amount of
Senior Notes, Series 1996-A due 1999.

Denomination..................... $1,000 and any integral multiple thereof.

Registration..................... The Notes will be issued in registered
book-entry form. The Notes will not
generally be issuable in definitive
certificated form to any person other than
DTC.

Maturity......................... July 1, 1999.

Sinking fund..................... None.

Interest rate.................... Interest will accrue at the rate of %
per annum commencing on the date of
original issuance.

Interest payment dates........... Interest is payable monthly on the 15th day
of each month or, if such day is not a
business day, the next succeeding business
day beginning September 15, 1996. The first
interest payment will represent interest
from the date of issuance of the Notes
through September 14, 1996.

Redemption....................... The Notes are not redeemable prior to
maturity.

Structural subordination......... The Notes are unsecured senior obligations
of the Company. The Notes rank pari passu
in right of payment with all unsubordinated
indebtedness of the Company, but will be
effectively subordinated to the rights of
holders of secured unsubordinated
indebtedness of the Company to the extent
of the value of the collateral securing
such indebtedness. At March 31, 1996, there
was outstanding approximately $350.7
million of unsubordinated indebtedness for
money borrowed of the Company and its
subsidiaries (including $251.7 million of
which was nonrecourse to the Company and
its subsidiaries), all of which was secured
indebtedness, and $24.7 million of general
unsecured trade indebtedness and other
liabilities of the Company and its
subsidiaries. The Notes rank senior to all
unsecured subordinated indebtedness of the
Company. The Company is principally a
holding company whose primary assets
consist of its equity ownership position in
its subsidiaries. Any right of the Company
to receive assets of its subsidiaries upon
their liquidation or reorganization (and
the consequent right of the holders of the
Notes to participate in those assets) will
be effectively subordinated to the claims
of creditors of such subsidiaries as
proceeds from any such liquidation or
reorganization will first be applied to
satisfy obligations of such subsidiaries
owing to creditors of such subsidiaries
before such proceeds may be available for
distribution to the Company. See "Risk
Factors -- Structural Subordination of
Notes."

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S-6
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Limited rights of acceleration
or repurchase.................. Payment of principal on the Notes may be
accelerated upon the occurrence of Events
of Default (as defined) only upon the
action of the Trustee or the holders of at
least 25% in aggregate principal amount of
outstanding Notes, and such acceleration
may be rescinded by the holders of a
majority of the aggregate principal amount
of the outstanding Notes if all Events of
Default are remedied and all payments due
are made before a judgment or decree for
payment of money due is obtained. See
"Description of Debt Securities -- Events
of Default" in the Prospectus.

Limited covenants................ The Notes do not have the benefit of
extensive financial covenants. The Note
Indenture imposes certain limited
restrictions on the ability of the Company
to, among other things, create or incur
Senior Debt or pay dividends or make
certain other restricted payments. See
"Risk Factors -- Limited Covenants; Absence
of Sinking Fund" and "Description of the
Notes -- Covenants" in this Prospectus
Supplement and "Description of
Securities -- Debt Securities -- Covenants"
in the Prospectus.

Absence of security.............. The Notes are unsecured obligations of the
Company, without collateral security of any
kind.

Listing.......................... The Company has made application to list
the Notes on the New York Stock Exchange.

Trustee.......................... Comerica Bank.

Use of proceeds.................. The net proceeds from the sale of the Notes
offered hereby will be used to reduce the
Company's outstanding borrowings under the
Revolving Loan Agreement. After application
of the net proceeds, approximately $
million would have been available as of
June 28, 1996 for borrowing under the
Revolving Loan Agreement for general
corporate purposes, which may include
funding investments in Asset Portfolios,
funding the capital requirements of the
Company's commercial mortgage banking and
residential mortgage securitization
business lines, acquiring new businesses or
making strategic investments in companies
that complement the Company's business
lines and strategies. See "Use of
Proceeds."

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S-7
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SUMMARY FINANCIAL AND OTHER DATA

The summary data presented below under the captions "Summary Income
Statement" and "Summary Balance Sheet Data" for and as of the end of each of the
fiscal years in the three-year period ended December 31, 1995 are derived from
the consolidated financial statements of the Company audited by Deloitte &
Touche LLP, which are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "1995 Form 10-K") and incorporated by
reference in the Prospectus. In the opinion of management of the Company, the
data presented for the three months ended March 31, 1996 and 1995, which are
derived from the Company's unaudited consolidated financial statements, reflect
all adjustments (consisting of normal recurring adjustments) necessary for a
fair presentation of the financial position and results of operations for such
periods. Results for the three months ended March 31, 1996 are not necessarily
indicative of results for the entire fiscal year.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------
1996 1995 1995 1994(1) 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY INCOME STATEMENT:
Revenues:
Asset management and resolution
fees............................ $ 9,223 $ 10,170 $ 41,295 $ 93,764 $ 118,552
Interest and other investment
income.......................... 18,172 6,181 40,105 14,215 3,440
Mortgage banking fees.............. 6,605 2,775 24,382 6,176 --
Gain on sale of loans and
investments, net................ 2,008 23 1,382 839 --
Other revenues..................... 888 1,028 3,322 14,797 409
---------- ---------- ---------- ---------- ----------
Total revenues............. 36,896 20,177 110,486 129,791 122,401
Operating expenses................... 23,634 14,426 73,307 92,337 77,970
---------- ---------- ---------- ---------- ----------
Operating income..................... 13,262 5,751 37,179 37,454 44,431
Interest expense..................... 5,167 415 6,921 1,768 754
---------- ---------- ---------- ---------- ----------
Income from continuing operations
before taxes....................... 8,095 5,336 30,258 35,686 43,677
Income tax expense................... 3,300 2,181 11,593 14,753 17,371
---------- ---------- ---------- ---------- ----------
Income from continuing operations.... 4,795 3,155 18,665 20,933 26,306
Gain (loss) from discontinued
operations......................... -- -- 2,425 (2,185) (2,088)
---------- ---------- ---------- ---------- ----------
Net income........................... $ 4,795 $ 3,155 $ 21,090 $ 18,748 $ 24,218
========== ========== ========== ========== ==========
Primary earnings per share from
continuing operations.............. $ 0.18 $ 0.13 $ 0.76 $ 0.88 $ 2.33
Fully diluted earnings per share from
continuing operations.............. 0.17 0.13 0.75 0.88 2.33
Primary earnings per share........... 0.18 0.13 0.86 0.79 2.15
Fully-diluted earnings per share..... 0.17 0.13 0.85 0.79 2.15
Weighted average number of common
shares outstanding and common share
equivalents........................ 27,369,390 24,182,827 24,654,321 23,679,239 11,288,688
</TABLE>

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<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF DECEMBER 31,
------------------------- ---------------------------------------
1996 1995 1995 1994 1993
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
SUMMARY BALANCE SHEET DATA:
Cash and cash equivalents...... $ 18,338 $ 16,119 $ 16,139 $ 20,446 $ 43,442
Investments:
Loans........................ 149,603 38,708 138,180 32,631 33,795
Partnerships and joint
ventures.................. 33,698 25,379 34,694 22,491 2,503
Asset-backed securities and
other securities.......... 65,946 3,481 46,187 3,481 --
Real estate.................. 5,884 11,233 5,686 14,054 2,504
Total assets................... 644,061 167,745 521,713 172,340 163,653
Notes payable.................. 99,046 10,000 89,442 15,500 22,113
Warehouse loan payable......... 221,489 -- 153,158 -- --
Nonrecourse debt............... 30,189 14,375 38,354 959 6,000
Senior subordinated debt....... 57,500 -- -- -- --
Convertible subordinated
debt......................... 45,000 -- 45,000 -- --
Total indebtedness............. 453,224 24,375 325,954 16,459 28,113
Shareholders' equity........... 166,190 116,332 160,794 113,586 91,699
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------
1996 1995 1995 1994(1) 1993
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OTHER DATA:
Ratio of earnings to fixed
charges(2)................... 2.5x 13.9x 5.4x 21.2x 58.9x
EBITDA(3)...................... $ 15,259 $ 6,593 $ 41,513 $ 43,177 $ 45,668
Interest coverage ratio(4)..... 3.0x 15.9x 6.0x 24.4x 60.6x
Face Value of assets under
management (at period end)... $ 3,575,700 $2,826,800 $3,693,900 $3,031,800 $5,754,400
Commercial mortgage loans
originated:
Face Value................... $ 518,300 $ 226,550 $2,573,400 $ 610,000 --
Number of loans.............. 76 38 444 106 --
Commercial mortgage loans
serviced (at period end):
Face Value................... $10,418,986 $2,728,118 $9,919,596 $2,555,000 --
Number of loans.............. 6,999 770 7,226 592 --
</TABLE>

- ---------------

(1) Summary Income Statement and Other Data for the fiscal years ended December
31, 1995 and 1994 reflect data for Holliday Fenoglio beginning August 1,
1994 and EQ Services effective October 27, 1995, the effective dates of the
acquisitions by the Company.

(2) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of operating income before income taxes and fixed charges. Fixed
charges consist of interest expense.

(3) EBITDA is calculated as operating income (excluding gain (loss) from
discontinued operations) before interest, income taxes, depreciation and
amortization. The Company has included information concerning EBITDA because
EBITDA is one measure of an issuer's historical ability to service its
indebtedness. EBITDA should not be considered as an alternative to, or more
meaningful than, net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity.

(4) Interest coverage ratio means the ratio of EBITDA to cash interest expense.

- --------------------------------------------------------------------------------

S-9
<PAGE> 11

RISK FACTORS

Investors should carefully consider the following matters and the matters
set forth under "Risk Factors" in the Prospectus in connection with an
investment in the Notes in addition to the other information contained or
incorporated by reference in this Prospectus Supplement or in the accompanying
Prospectus. Information contained or incorporated by reference in this
Prospectus Supplement or in the accompanying Prospectus may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, which can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The following matters and certain other factors noted
throughout this Prospectus Supplement and the Prospectus, and any exhibits and
attachments to this Prospectus Supplement and the Prospectus, constitute
cautionary statements identifying important factors with respect to any such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements.

STRUCTURAL SUBORDINATION OF NOTES

The Notes are unsecured senior general obligations of the Company. Payment
of the principal of and interest on the Notes will rank pari passu in right of
payment with all existing and future unsubordinated indebtedness of the Company,
but will be effectively subordinated to the rights of holders of secured
unsubordinated indebtedness of the Company to the extent of the value of the
collateral securing such indebtedness. At March 31, 1996, there was outstanding
approximately $350.7 million of unsubordinated indebtedness for money borrowed
of the Company and its subsidiaries (including $251.7 million of which
indebtedness was nonrecourse to the Company and its subsidiaries), all of which
was secured, and $24.7 million of general unsecured trade indebtedness and other
liabilities of the Company and its subsidiaries. The Company may incur
additional Senior Debt, which may be secured. Under the most restrictive
leverage covenant applicable to the Company from previously contracted
indebtedness, at March 31, 1996 the Company could have incurred up to
approximately $79.5 of additional Senior Recourse Debt. The Company intends to
incur additional indebtedness in the future as it executes its business
strategy.

The Company's operations are conducted principally through its wholly-owned
subsidiaries. Since the Company is a holding company, its primary assets consist
of its equity ownership position in its wholly-owned subsidiaries. Accordingly,
the Company will be dependent upon the cash flow of, and receipt of dividends or
advances from, its subsidiaries in order to meet its debt obligations, including
the Company's obligations under the Notes. Inasmuch as the Notes are obligations
of the parent company only, the Company's subsidiaries are not obligated or
required to pay any amounts pursuant to the Notes or to make funds available
therefor in the form of dividends or advances to the Company. None of the
Company's subsidiaries will guarantee the payment of the Notes. Accordingly, the
claims of holders of the Notes effectively will be subordinated to the prior
claims of holders of preferred stock, if any, and creditors, including trade
creditors, of the Company's subsidiaries.

FINANCIAL LEVERAGE

Following the Offering, the Company and its subsidiaries will have
substantial indebtedness and, as a result, significant debt service obligations.
As of March 31, 1996, the Company and its subsidiaries had outstanding
approximately $453.2 million aggregate amount of indebtedness for money
borrowed, representing approximately 73.2% of their total consolidated
capitalization. See "Use of Proceeds" and "Capitalization."

Increasing the degree to which the Company is leveraged as a result of the
sale of the Notes and any future incurrences of indebtedness by the Company
could have important consequences to purchasers of the Notes, including: (i)
limiting the Company's ability to obtain necessary additional financing to fund
future working capital requirements, Asset Portfolio investments, capital
expenditures, acquisitions or other general corporate requirements; (ii)
requiring a significant portion of the Company's cash flow from operations to be
dedicated to debt service requirements, thereby reducing the funds available for
operations and future business opportunities; (iii) requiring all of the
indebtedness incurred under the Revolving Loan Agreement to be repaid prior to
the time any principal payments are required on the Notes, thereby potentially
impairing the

S-10
<PAGE> 12

Company's ability to make payments on the Notes and (iv) increasing the
Company's vulnerability to adverse economic and industry conditions. The Company
may incur additional indebtedness in the future, although its ability to do so
will be restricted by the Note Indenture and the Credit Agreements. The ability
of the Company to make scheduled payments under its present and future
indebtedness, or to refinance such indebtedness, will depend on, among other
things, the future operating performance of the Company, changes in interest
rates, general economic conditions and the perception in the capital markets of
the Company's business, results of operations, leverage, financial condition and
business prospects. Each of these factors is to a large extent subject to
economic, financial, competitive and other factors beyond the Company's control.

The Credit Agreements contain numerous financial and operating covenants
that limit the discretion of the Company's management with respect to certain
business matters. These covenants place significant restrictions on, among other
things, the ability of the Company to make certain payments and investments and
to sell or otherwise dispose of assets and merge or consolidate with other
entities. The Credit Agreements also require the Company to meet certain
financial ratios and tests. A failure to comply with the obligations contained
in the Credit Agreements could result in an event of default under any of the
Credit Agreements, the Senior Subordinated Notes Indenture, the Convertible
Subordinated Debenture Indenture or the Notes Indenture, which could permit
acceleration of the related indebtedness and acceleration of indebtedness under
other instruments that may contain cross-acceleration or cross-default
provisions. See "Description of Other Indebtedness."

The Company anticipates that it will be necessary to refinance all or a
portion of the principal amount of the Notes at maturity. However, there can be
no assurance that the Company will be able to refinance the Notes at that time.

LACK OF SECURITY FOR THE NOTES

The Notes will not be secured by any of the Company's assets. The Revolving
Loan Agreement is secured by substantially all of the assets of the Company not
pledged under other credit facilities, including stock of a majority of the
Company's subsidiaries. If the Company becomes insolvent or is liquidated, or if
payment under the Revolving Loan Agreement is accelerated, the lenders under the
Revolving Loan Agreement would be entitled to exercise the remedies available to
a secured lender under applicable law and pursuant to the Revolving Loan
Agreement. Accordingly, such lenders will have a prior claim with respect to
such assets and subsidiary capital stock.

LIMITED COVENANTS; ABSENCE OF SINKING FUND

The holders of the Notes do not have the benefit of extensive covenants.
The covenants in the Note Indenture are not designed to protect holders of the
Notes in the event of a material adverse change in the Company's financial
condition or results of operations. These covenants impose only limited
restrictions on the ability of the Company to, among other things, create or
incur Senior Debt, pay dividends or make certain other restricted payments. The
Note Indenture does not contain covenants specifically designed to protect
holders of the Notes in the event of a highly leveraged transaction involving
the Company. In addition, the Notes will not have the benefit of sinking fund
payments by the Company. See "Description of the Notes -- Covenants" in this
Prospectus Supplement and "Description of Securities -- Debt
Securities -- Covenants" in the Prospectus.

LIMITED MARKET FOR THE NOTES

The Notes are not currently listed on any securities exchange or authorized
for quotation on any quotation system. The Company has made application to list
the Notes on the New York Stock Exchange. No assurance can be given that an
active trading market for the Notes will develop. If a trading market for the
Notes were to develop, the Notes may trade at a discount from their initial
offering price, depending on prevailing interest rates, the Company's operating
results, the market for similar securities and other factors.

S-11
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes offered hereby
(after deducting underwriting discounts and estimated expenses of the Offering)
will be approximately $ million.

The Company intends to use the net proceeds to reduce the Company's
outstanding borrowings under the Revolving Loan Agreement (which had an
outstanding balance of approximately $63.2 million as of June 28, 1996). For the
year ended December 31, 1995, the weighted average interest rate on indebtedness
incurred under the Company's bank credit agreement (which was replaced on
September 29, 1995 by the Revolving Loan Agreement) was 8.30% per annum. At May
31, 1996, the weighted average interest rate on indebtedness incurred under the
Revolving Loan Agreement was 7.11%. The indebtedness under the predecessor
credit agreement and the Revolving Loan Agreement was incurred primarily in
connection with investments in Asset Portfolios, certain corporate acquisitions
and other general corporate purposes. After application of the net proceeds to
the Company of the Offering, $ million would have been available as of June
28, 1996 for reborrowing under the Revolving Loan Agreement to be used for
general corporate purposes, which may include funding investments in Asset
Portfolios, funding the capital requirements of the Company's commercial
mortgage banking and residential mortgage securitization business lines,
acquiring new businesses or making strategic investments in entities that
complement the Company's business lines and strategies. The Company has no
understandings or agreements in respect of any material acquisition. See
"Description of Other Indebtedness -- Revolving Loan Agreement."

S-12
<PAGE> 14

CAPITALIZATION

The following table presents the capitalization of the Company at March 31,
1996, and as adjusted to reflect the application of the estimated net proceeds
from the sale of the Notes offered hereby as described under "Use of Proceeds."
This table should be read in conjunction with the Company's Consolidated
Financial Statements and the notes thereto included in the Company's 1995 Form
10-K and the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996 (the "March 31, 1996 Form 10-Q"), both of which are incorporated in the
Prospectus by reference, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" included
elsewhere in this Prospectus Supplement.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt(1):
Notes payable....................................................... $ 99,046 $
Warehouse loans payable............................................. 221,489 221,489
Nonrecourse debt.................................................... 30,189 30,189
Notes............................................................... -- 50,000
Senior Subordinated Notes........................................... 57,500 57,500
Convertible Subordinated Debentures................................. 45,000 45,000
-------- --------
Total debt.................................................. 453,224
Shareholders' equity:
Common Stock, par value $0.05 per share; 50,000,000 authorized
shares and 26,805,235 issued shares(2)........................... 1,340 1,340
Capital in excess of par............................................ 106,667 106,667
Reductions for employee stock....................................... (1,760) (1,760)
Treasury stock, 24,339 shares....................................... (160) (160)
Net unrealized gains (losses)....................................... (382) (382)
Retained earnings................................................... 60,485 60,485
-------- --------
Total shareholders' equity.................................. 166,190 166,190
-------- --------
Total capitalization........................................ $619,414 $
======== ========
</TABLE>

- ---------------

(1) See "Description of Other Indebtedness" and Note 5 of Notes to Consolidated
Financial Statements included in the 1995 Form 10-K.

(2) Does not include an aggregate of 2,114,440 shares of Common Stock reserved
for issuance upon the exercise of outstanding stock options, 3,600,000
shares reserved for issuance upon conversion of the Convertible
Subordinated Debentures and 1,687,678 shares available for future grants of
options and shares of restricted stock under the Company's Stock Option and
Award Plan. Since March 31, 1996 through June 28, 1996, options for an
aggregate of 39,200 shares have been exercised and no shares of restricted
stock have been issued under the Company's Stock Option and Award Plan. See
Note 11 of Notes to Consolidated Financial Statements included in the 1995
Form 10-K.

S-13
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company is engaged primarily in the business of Asset Portfolio
acquisition and resolution, commercial mortgage banking, residential mortgage
securitization and institutional investment advisory services. The Company's
business may be affected by many factors, including real estate and other asset
values, the availability and price of Asset Portfolios and commercial and
residential mortgages to be purchased, the level of and fluctuations in interest
rates, changes in the securitization market and competition. In addition, the
Company's operations require continued access to short and long term sources of
financing.

On December 31, 1993, AMRESCO, INC., formerly BEI, merged with Holdings.
The merger was accounted for as a "reverse acquisition" whereby Holdings was
deemed to have acquired BEI for financial reporting purposes. However, BEI,
renamed AMRESCO, INC., remains the continuing legal entity and registrant for
Commission filing purposes. Consistent with the reverse acquisition accounting
treatment, the historical financial statements of AMRESCO, INC. presented for
the year ended December 31, 1993 are the consolidated financial statements of
Holdings and differ from the consolidated financial statements of BEI as
previously reported. The results of operations of BEI have been included in the
Company's financial statements from the date of acquisition.

In 1994, the Company concluded all of its significant asset management
relationships with government agencies and financial institutions and began to
shift its focus toward investment activities and the development of new lines of
financial service businesses. Since the BEI Merger, the Company has extended its
business lines to offer a full range of mortgage banking services, including the
development of capital markets activities, increased substantially the amount it
invests in Asset Portfolios, developed its institutional investment advisory
business and disposed of certain non-core business lines. These significant
changes in the composition of the Company's business are reflected in the
Company's results of operations and may limit the comparability of the Company's
results from period to period.

The following discussion and analysis presents the significant changes in
financial condition and results of continuing operations of the Company by
primary business lines for the three months ended March 31, 1996 and 1995 and
for the years ended December 31, 1995, 1994 and 1993. The results of operations
of acquired businesses are included in the Consolidated Financial Statements
from the date of acquisition. This discussion should be read in conjunction with
the Consolidated Financial Statements and notes thereto included in the March
31, 1996 Form 10-Q and 1995 Form 10-K, both of which are incorporated by
reference in the Prospectus.

S-14
<PAGE> 16

The following is a summary of the Company's results of operations for the
three months ended March 31, 1996 and 1995 and for the years ended December 31,
1995, 1994 and 1993.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues:
Asset acquisition and resolution... $ 20,954 $ 17,230 $ 81,144 $ 110,637 $ 122,944
Commercial mortgage banking........ 9,375 2,930 26,573 6,460 --
Residential capital markets........ 5,776 -- 2,307 -- --
Institutional investment
advisory........................ 967 -- 452 -- --
Corporate and other................ (176) 17 10 12,694 (543)
---------- ---------- ---------- ---------- ----------
Total revenues............. 36,896 20,177 110,486 129,791 122,401
---------- ---------- ---------- ---------- ----------
Operating expenses:
Asset acquisition and resolution... 11,155 8,098 37,691 52,741 51,678
Commercial mortgage banking........ 8,134 3,075 20,550 6,237 --
Residential capital markets........ 2,300 -- 1,694 -- --
Institutional investment
advisory........................ 816 -- 444 -- --
Corporate and other................ 6,396 3,668 19,849 35,127 27,046
---------- ---------- ---------- ---------- ----------
Total operating expenses... 28,801 14,841 80,228 94,105 78,724
---------- ---------- ---------- ---------- ----------
Operating profit:
Asset acquisition and resolution... 9,799 9,132 43,453 57,896 71,266
Commercial mortgage banking........ 1,241 (145) 6,023 223 --
Residential capital markets........ 3,476 -- 613 -- --
Institutional investment
advisory........................ 151 -- 8 -- --
Corporate and other................ (6,572) (3,651) (19,839) (22,433) (27,589)
---------- ---------- ---------- ---------- ----------
Total operating profit..... 8,095 5,336 30,258 35,686 43,677
---------- ---------- ---------- ---------- ----------
Income tax expense................... 3,300 2,181 11,593 14,753 17,371
---------- ---------- ---------- ---------- ----------
Income from continuing operations.... 4,795 3,155 18,665 20,933 26,306
Gain (Loss) from discontinued
operations......................... -- -- 2,425 (2,185) (2,088)
---------- ---------- ---------- ---------- ----------
Net income........................... $ 4,795 $ 3,155 $ 21,090 $ 18,748 $ 24,218
========== ========== ========== ========== ==========
Weighted average common shares
outstanding and common share
equivalents........................ 27,369,390 24,182,827 24,654,321 23,679,239 11,288,688
Primary earnings per share from
continuing operations.............. $ 0.18 $ 0.13 $ 0.76 $ 0.88 $ 2.33
Fully-diluted earnings per share from
continuing operations.............. 0.17 0.13 0.75 0.88 2.33
Primary earnings per share........... 0.18 0.13 0.86 0.79 2.15
Fully-diluted earnings per share..... 0.17 0.13 0.85 0.79 2.15
</TABLE>

RESULTS OF OPERATIONS

Revenues from the Company's asset management and resolution activities
primarily consist of fees charged for the management of Asset Portfolios
comprised of performing, non-performing or underperforming commercial,
industrial, agricultural and real estate loans and for the successful resolution
of the assets within such Asset Portfolios. The asset base of each Asset
Portfolio declines over the life of the Asset Portfolio, thus reducing asset
management fees as assets within the Asset Portfolio are resolved. These fees
are subject to fluctuation based on the consideration received, timing of the
sale or collection of the managed assets and the attainment of specified
earnings levels on behalf of investors or investment partners. Certain direct
costs

S-15
<PAGE> 17

incurred, primarily through 1994, in the management of assets for the FDIC were
paid by the Company and billed to the FDIC.

The original cost of an investment in Asset Portfolios is allocated to
individual assets within that Asset Portfolio based on their relative fair value
to the total purchase price. The difference between gross estimated cash flows
from loans and asset-backed and other securities and its present value is
accrued using the level yield method. The Company accounts for its investments
in partnerships and joint ventures using the equity method which generally
results in the pass-through of its pro rata share of earnings as if it had a
direct investment in the underlying loans. Loans, partnerships and joint
ventures, and real estate are carried at the lower of cost or estimated fair
value. The Company's investments in asset-backed and other securities are
classified as available for sale and are carried at estimated fair value
determined by discounting estimated cash flows at current market rates. Any
unrealized gains (losses) on asset-backed and other securities are excluded from
earnings and reported as a separate component of shareholders' equity, net of
tax effects.

Revenues from the Company's commercial mortgage banking activities are
earned from the origination and underwriting of commercial real estate mortgage
loans, the placement of such loans with permanent investors and the 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.

Revenues from the Company's residential capital markets activities consist
of interest earned on residential mortgage loans purchased, gains on the
securitization and sale of such loans and accrued earnings on certificates
purchased or retained from securitization trusts. The gains on securitization
and sale of mortgage loans represent the amount by which the proceeds received
(including the estimated value of any certificates retained) exceed the basis of
the loans sold and the cost of securitization. When loans are securitized and
sold, the certificates retained are valued at the discounted present value of
the cash flow expected to be realized over the anticipated average life of the
loans sold less future estimated credit losses and normal servicing and other
fees relating to the loans sold. The discounted present value of such
certificates is computed using management's assumptions of market discount rates
(currently approximately 20%), prepayment rates, default rates and other costs.

Revenues from the Company's institutional investment advisory business are
earned from providing real estate investment advisory services, including
acquisition, portfolio/asset management and disposition services, to
institutional and corporate investors.

Other revenues consist of consulting revenues earned on due diligence,
gains on sales of other assets and other miscellaneous income. Additionally,
1994 included a $10.0 million conclusion fee on a management contract with a
financial institution.

In December 1994, the Company elected to dispose of the operations of its
data processing and home banking subsidiary. The loss from such discontinued
operations totaled approximately $2.2 million and $2.1 million for the years
ended December 31, 1994 and 1993, respectively. The subsidiary was sold on June
16, 1995 for a net gain of $2.4 million, or $0.10 per share.

QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995

The Company reported 1996 first quarter revenues of $36.9 million, an 83%
increase from the same period in 1995. Operating profit also increased 52% over
the same period in 1995 primarily due to the inclusion of residential capital
markets operations initiated in September 1995. Commercial mortgage banking
posted an increase in operating profit, and asset acquisition and resolution
operating profit rose 7%. Weighted average shares outstanding and equivalents at
March 31, 1996 increased 13% over March 31, 1995, primarily due to the issuance
of 2,300,000 shares of common stock in late 1995. Fully-diluted earnings per
share from continuing operations for the first quarter of 1996 was $0.17,
compared to $0.13 for the first quarter of 1995, a 31% increase.

S-16
<PAGE> 18

Asset Acquisition and Resolution. Revenues for the first quarter of 1996
were comprised of $8.3 million in asset management and resolution fees, $12.2
million in interest and other investment income and $0.5 million in other
revenues, primarily consulting revenues. The $3.7 million, or 22%, increase in
revenues from the same period of 1995 was comprised of a $6.0 million increase
in interest and other investment income due to an increase in aggregate
investments of $137.3 million from March 31, 1995, which increase was offset in
part by a $1.9 million decrease in asset management and resolution fees due to
the conclusion of significant government contracts during early 1995 and a shift
from primarily managing and investing in partnerships and joint ventures to
investing in wholly-owned Asset Portfolios.

Expenses for the quarter ended March 31, 1996 were comprised of $5.4
million in personnel costs, $2.0 million in other general and administrative
expenses and $3.8 million in interest expense. The $3.1 million, or 38%,
increase in expenses over the same period in 1995 was primarily due to a $2.6
million increase in interest expense and a $0.8 million increase in other
general and administrative expenses, which increases were partially offset by a
$0.3 million decrease in profit participation expenses. The increase in interest
expense was due to the financing incurred for a $137.3 million increase in
aggregate investments at March 31, 1996 as compared to March 31, 1995.

Commercial Mortgage Banking. Revenues for the quarter ended March 31, 1996
consisted of $2.9 million in interest and other investment income and $6.5
million in origination, underwriting and servicing revenues. Interest and other
investment income increased $2.7 million and origination, underwriting and
servicing fees increased $3.7 million primarily due to the inclusion of the
operations of the commercial loan servicing business acquired in September 1995
and increases in the loan originations and servicing volumes of the Company's
previously existing commercial mortgage banking operations.

Expenses for the quarter ended March 31, 1996 were comprised of $5.8
million in personnel expense, $1.9 million in other general and administrative
expense and $0.4 million in interest expense. The $5.1 million increase in
expenses is primarily due to a $3.5 million increase in personnel expenses, a
$1.2 million increase in other general and administrative expense and a $0.4
million increase in interest expense. Expenses increased primarily due to the
inclusion of operations of the commercial loan servicing business acquired
during October 1995.

Residential Capital Markets. The Company initiated the operation of the
residential capital markets business in September 1995. Revenues for the quarter
ended March 31, 1996 consisted of $3.7 million in interest and other investment
income and $2.1 million gain on securitization and sale of residential mortgage
loans. Interest and other investment income primarily consists of interest
earned on mortgage loans held for sale which totaled $235.6 million at March 31,
1996, compared to no such loans held at March 31, 1995. The $2.1 million gain
was realized on the securitization and sale of $275.0 million in residential
mortgage loans during the first quarter of 1996.

Expenses for the quarter ended March 31, 1996 were comprised of $1.6
million in interest expense, $0.4 million in other general and administrative
expense and $0.3 million in personnel expense. The $1.6 million interest expense
relates to borrowings under warehouse loans payable which funded the acquisition
of the mortgage loans held for sale.

Institutional Investment Advisory. The Company acquired substantially all
of the assets of Acacia in November 1995. First quarter 1996 revenues of $1.0
million were earned in conjunction with providing real estate investment
advisory services to institutional and corporate investors, including
acquisition, portfolio/asset management and disposition services. Expenses of
$0.8 million were incurred, including $0.5 million in personnel expense and $0.3
million in other general and administrative expenses.

Corporate and Other. Net revenues in this category for the quarters ended
March 31, 1996 and 1995 were nominal. Expenses for the quarter ended March 31,
1996 were $6.4 million, compared to $3.7 million during the same period in 1995,
a 74% increase. The $2.7 million increase was primarily due to $0.9 million of
intangible amortization related to businesses acquired late in 1995 as well as a
$1.6 million increase in personnel costs and other overhead related to expanded
operations since the first quarter of 1995.

S-17
<PAGE> 19

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

The Company reported 1995 revenues of $110.5 million, a 15% decrease from
1994. Operating profit also decreased 15% over the same period. Revenues and
operating profit in 1994 included $10.0 million and $6.0 million, respectively,
related to the conclusion of an asset management contract. After adjustment for
this one-time conclusion fee, 1995 revenues decreased 8% while operating profits
increased 2%. Commercial mortgage banking posted a significant increase in
operating profit, while asset acquisition and resolution operating profit fell
25%. Fully-diluted earnings per share from continuing operations for 1995 was
$0.75 compared to $0.73 for 1994 after elimination of the one-time contract
conclusion fee in 1994, a 3% increase.

Asset Acquisition and Resolution. Revenues for 1995 were comprised of $20.6
million in asset management fees, $19.5 million in resolution fees, $36.9
million in interest and other investment income and $4.1 million in other
revenues, primarily consulting revenues and gains on sales of investments. The
$29.5 million, or 27%, decrease in revenues from 1994 was comprised of a $21.2
million decrease in management fees and a $32.4 million decrease in resolution
fees due to the conclusion of significant institutional and government contracts
during 1994 and early 1995. These declines were partially offset by a $23.0
million increase in interest and other investment income due to an increase in
aggregate investments of $138.6 million from December 31, 1994 and a $1.1
million increase in other revenues.

Expenses for the year ended December 31, 1995 were comprised of $21.1
million in personnel costs, $5.0 million in other general and administrative
expenses, $9.5 million in interest and $2.1 million in profit participation
expenses. The $15.1 million, or 29%, decrease in expenses was primarily due to
an $18.5 million decrease in personnel expenses and a $5.8 million decrease in
other general and administrative expenses, which decreases were partially offset
by a $7.2 million increase in interest expense and a $2.0 million increase in
profit participation expenses. Personnel and other general and administrative
expenses decreased as significant institutional and government contracts
concluded during 1994, including a related $3.7 million reduction in estimate of
accounts receivable bad debt reserve and other accrued expenses related to
certain concluding asset management contracts. The increase in interest expense
was due to the financing incurred for a $138.6 million increase in aggregate
investments at December 31, 1995 compared to December 31, 1994. The increase in
profit participation expense is primarily due to the $4.0 million received
related to certain expired RTC contracts, approximately 40% of which is due to a
joint venture partner.

Commercial Mortgage Banking. Revenues for the year ended December 31, 1995
consisted of $24.4 million in origination, underwriting and servicing revenues,
$2.1 million in interest and other investment income and $0.1 million in other
income. Interest and other investment income increased $1.9 million and mortgage
banking revenues increased $18.2 million primarily due to the inclusion for an
entire year of the operations of Holliday Fenoglio, which was purchased in
August 1994, commencement of ACC's underwriting activities in the fourth quarter
of 1994 and the inclusion of securitized commercial loan servicing contracts
acquired from EQS in the fourth quarter of 1995.

Expenses for the year ended December 31, 1995 were comprised of $16.1
million in personnel expense, $4.1 million in other general and administrative
expense, and $0.3 million in interest expense. The $14.3 million increase is
primarily due to a $11.2 million increase in personnel expenses, a $2.8 million
increase in other general and administrative expense and a $0.3 million increase
in interest expense. Expenses increased due to the inclusion of operations of
Holliday Fenoglio, ACC and the contracts acquired from EQS.

Residential Capital Markets. The Company initiated the operations of the
residential capital markets business in September 1995. Revenues for the year
ended December 31, 1995 consisted of $2.3 million in interest and other
investment income. Interest and other investment income primarily consists of
interest earned on mortgage loans held for sale which totaled $142.7 million at
December 31, 1995.

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<PAGE> 20

Expenses for the year ended December 31, 1995 were comprised of $1.1
million in interest expense, $0.4 million in personnel expense and $0.2 million
in other general and administrative expenses. The $1.1 million interest expense
relates to borrowings under warehouse loans payable which funded the acquisition
of mortgage loans held for sale.

Institutional Investment Advisory. After the Acacia Acquisition in November
1995, revenues of $0.5 million were earned as the result of providing real
estate investment advisory services to institutional and corporate investors,
including acquisition, portfolio/asset management and disposition services.
Expenses of $0.4 million were incurred, including $0.2 million in personnel
expense and $0.2 million in other general and administrative expenses.

Corporate and Other. Revenues for the year ended December 31, 1995 were
nominal, compared to $12.7 million in 1994. The $12.7 million decrease in
revenues was primarily due to the $10.0 million conclusion fee on a significant
institutional asset management contract terminated in 1994 and $3.8 million
relating to the inclusion in 1994 of operations and sale of a subsidiary
acquired with BEI for the period prior to its sale in the first quarter of 1994.

Expenses for the year ended December 31, 1995 were $19.8 million, compared
to $35.1 million during 1994, a 44% decrease. The $15.3 million decrease was
primarily due to the inclusion of $6.0 million of expenses in 1994 related to
the conclusion of a significant institutional asset management contract as well
as reduced incentive compensation and severance costs.

Income Taxes. The Company must have future taxable income to realize
recorded deferred tax assets, including net operating loss carryforward tax
benefits obtained in the BEI Merger. Certain of these benefits expire beginning
in 1998 and are subject to annual utilization limitations. Management believes
that recorded deferred tax assets will be realized in the normal course of
business. The decrease in the effective income tax rate for the year ended
December 31, 1995 was primarily due to permanent tax differences related to
mortgages sold by a partnership in which the Company owns an interest for which
the acquired tax basis exceeded the book basis.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

The Company reported 1994 revenues of $129.8 million, a 6% increase from
1993, while operating profit decreased 18% over the same period. 1994 revenues
and operating profit included $10.0 million and $6.0 million, respectively,
related to the early conclusion of an asset management contract. The operations
of BEI are included from the date of acquisition, December 31, 1993. The
Company's commercial mortgage banking operations were initiated during 1994 with
the acquisition of Holliday Fenoglio in August 1994 and the commencement of
business by ACC during the fourth quarter of 1994. Additionally, during 1994,
the focus of the asset acquisition and resolution business began changing from
managing assets for institutional and governmental entities to the direct
ownership of Asset Portfolios acquired from non-governmental sellers and the
management of Asset Portfolios for private third parties.

Asset Acquisition and Resolution. Revenues for the year ended December 31,
1994 included $41.8 million in management fees, $52.0 million in resolution
fees, $13.9 million in interest and other investment income and $2.9 million in
other revenues. Management fees decreased $8.9 million and resolution fees
declined $15.9 million during 1994 principally due to only eight months of
operations under a significant institutional asset management contract, as well
as reduced revenues from the government sector contracts as the contracts
continued to conclude. These declines were offset by a $9.7 million increase in
interest and investment income and gains on sales of assets and other revenues
of $2.8 million.

Expenses of $52.7 million for the year ended December 31, 1994 included
$39.6 million in personnel expenses, $10.7 million in other general and
administrative expenses, $2.3 million in interest expense and $0.1 million in
profit participations. The $1.1 million increase over the same period of 1993
was primarily due to a $6.6 million increase in other general and administrative
expenses and a $1.2 million increase in interest expense, which increases were
partially offset by a $3.8 million decline in personnel expenses and a $2.9
million decrease in profit participations. The increase in other general and
administrative expenses was

S-19
<PAGE> 21

primarily due to the inclusion of BEI operations in 1994. The increase in
interest expense was due to the incurrence of debt to facilitate increased
investments. The decrease in personnel expense was primarily related to a
reduction in the number of personnel due to the conclusion of
personnel-intensive institutional and government asset management contracts. The
decrease in profit participations of $3.0 million was primarily due to the
modification of an asset management contract effective April 1 1993 that
effected an exchange of profit participation in the Company's income before
taxes for a rebate of fees.

Commercial Mortgage Banking. Revenues of $6.4 million and expenses of $6.2
million were due to the acquisition of Holliday Fenoglio and the commencement of
business by ACC during 1994. Revenues in 1994 consisted of $0.2 million in
interest income and $6.2 million in commercial mortgage banking revenues,
primarily origination, underwriting and servicing revenues. Expenses in 1994
consisted of $4.9 million in personnel expenses and $1.3 million in other
general and administrative expenses.

Corporate and Other. Other revenues for the year ended December 31, 1994
were $12.7 million, compared to a loss of $0.5 million in 1993. The $13.2
million increase in revenues was primarily due to the $10.0 million conclusion
fee on an institutional asset management contract and the $3.8 million in
revenue relating to the inclusion in 1994 of operations and sale of a subsidiary
acquired with BEI for the period prior to its sale in the first quarter of 1994.
Expenses for the year ended December 31, 1994 increased $8.1 million over 1993
to $35.1 million primarily due to the inclusion of $6.0 million of expenses
related to the conclusion of an institutional asset management contract in 1994.

Pro Forma Income Summary. Pro forma combined revenues for 1994 totaled
$139.3 million compared to $168.4 million for 1993, assuming the BEI Merger and
the Holliday Fenoglio acquisition had been consummated as of January 1, 1993.
The $29.1 million, or 17%, decrease was primarily due to a decrease in BEI
revenues of $15.3 million and a decrease in Holdings revenues of $13.8 million.
The decline in revenues was primarily related to the conclusion of certain asset
management contracts during 1994 and the sale of certain Company subsidiaries in
the first quarter of 1994. Pro forma income from continuing operations for 1994
totaled $21.8 million compared to $28.0 million for 1993, after removing the
impact of merger expenses, net gain on sales of subsidiaries and discontinued
operations, for a decrease of $6.2 million, or 22%. Earnings per share from
continuing operations were $0.91 for 1994, compared to $1.23 for the previous
year, a decrease of $0.32, or 26%.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $18.3 million and $16.1 million at March
31, 1996 and December 31, 1995, respectively. Cash flows from operating
activities plus principal cash collections on investments totaled $7.0 million
for the three months ended March 31, 1996 and $77.9 million for 1995. The
increase in cash flows from these activities resulted primarily from increased
investments. Cash for investing, originating and underwriting loans, acquiring
loans for securitization, general operating expenses and business acquisitions
is primarily obtained through cash flow and borrowings under credit facilities,
including advances on the corporate and portfolio credit lines, mortgage
warehouse lines, nonrecourse debt, subordinated indebtedness, retained earnings
and cash flow from owned investments.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- -----------------
1996 1995 1995 1994
------ ------ ------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Cash provided by operations and collections on
investments............................................. $ 7.0 $ 10.6 $ 77.9 $ 69.8
Net cash provided by (used for) new capital and
borrowings,............................................. 56.2 7.9 334.6 (11.7)
Cash used for purchase of investments..................... (49.4) (21.8) (221.8) (62.6)
Net cash used for mortgage loans held for sale............ (74.9) -- (160.8) --
Cash used for purchase of subsidiaries.................... -- -- (22.3) (17.8)
Interest coverage ratio(1)................................ 3.0x 15.9x 6.0x 24.4x
</TABLE>

- ---------------

(1) Interest coverage ratio means the ratio of earnings before interest, taxes,
depreciation and amortization to cash interest expense.

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<PAGE> 22

During 1995, the Company replaced its $75.0 million revolving loan
agreement with a $150.0 million revolving loan agreement, entered into a $27.5
million nonrecourse debt agreement, issued $45.0 million of Convertible
Subordinated Debentures with net proceeds of approximately $43.0 million, issued
2,300,000 shares of Common Stock with net proceeds of approximately $25.1
million and obtained several mortgage warehouse lines of credit to facilitate
the origination, underwriting, funding and purchase of mortgage loans.
Additionally, in February 1996, the Company issued $57.5 million of Senior
Subordinated Notes with net proceeds of approximately $54.9 million. In April
1996, the Company amended and restated its revolving credit facility with
NationsBank of Texas, as more fully described below. The net proceeds from these
debt and stock offerings were used to purchase investments and mortgage loans
held for sale, and to temporarily reduce borrowings under the Revolving Loan
Agreement.

The following table shows the components of the Company's capital structure
as of March 31, 1996 and as of December 31, 1995:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 % OF TOTAL 1995 % OF TOTAL
--------- ---------- ------------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Shareholders' equity............................. $ 166.2 28.3% $160.8 34.6%
Mortgage warehouse loans......................... 221.5 37.8 153.2 33.0
Notes payable (excluding investment line(1))..... 96.2 16.4 105.9 22.8
Senior Subordinated Notes........................ 57.5 9.8 -- --
Subordinated Convertible Debentures.............. 45.0 7.7 45.0 9.6
</TABLE>

- ---------------

(1) The investment line under which $33.0 million and $21.9 million was
outstanding as of March 31, 1996 and December 31, 1995, respectively, is
used solely to acquire short term investments of high grade government
securities that secure the loan.

Total assets increased $349.4 million during 1995 primarily due to an
increase in investments of $152.1 million and an increase in mortgage loans,
primarily residential mortgages, held for sale of $160.8 million. These
increases were financed by increased borrowings of $309.5 million and a $47.2
million increase in shareholders' equity. Also, during 1995, the Company made
acquisitions to develop its new commercial loan servicing business and its
institutional investment advisory business. These acquisitions resulted in a
$21.2 million increase in intangible assets.

Total assets increased $122.3 million during the first quarter of 1996
primarily due to a $74.8 million increase in residential mortgage loans held for
sale, a $30.4 million increase in investments and an $11.1 million increase in
temporary investments. These increases were financed by increased borrowings of
$127.3 million, including the February 1996 issuance of $57.5 million of Senior
Subordinated Notes.

At June 28, 1996, the lenders' commitment under the $200.0 million
Revolving Loan Agreement was limited to a total of $185.0 million, with a
maximum borrowing base availability of $88.1 million. The additional $15.0
million would become available to the Company upon the participation by
additional financial institutions and upon an increase in the Company's
borrowing base under this facility. The interest rate may be selected by the
Company and tied to either the NationsBank of Texas' variable rate (8.25>% at
March 31, 1996) or, for advances on a term basis up to approximately 180 days, a
rate equal to an adjusted LIBOR rate (6.87% at March 31, 1996 for a term of 30
days), or an adjusted currency rate (7.33>% at June 28, 1996). At March 31,
1996, there was a balance of $13.0 million at 8.25% and $53.0 million at 6.87%
for a total of $66.0 million outstanding. The total balance outstanding at June
28, 1996 was $63.2 million. The Revolving Loan Agreement is secured by
substantially all of the assets of the Company not pledged under other credit
facilities, including stock of a majority of the Company's subsidiaries. The
Revolving Loan Agreement requires the Company to meet certain financial tests,
including minimum consolidated tangible net worth, maximum consolidated funded
debt to consolidated capitalization ratio, minimum fixed charge coverage ratio,
minimum interest coverage ratio, maximum consolidated funded debt to
consolidated earnings before interest, taxes, depreciation and amortization
("EBITDA") ratio and maximum corporate facility outstanding to consolidated
EBITDA ratio. The Revolving Loan Agreement contains covenants that, among other
things,

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<PAGE> 23

will limit the incurrence of additional indebtedness, investments, asset sales,
loans to shareholders, dividends, transactions with affiliates, acquisitions,
mergers and consolidations, liens and encumbrances and other matters customarily
restricted in such agreements. The Revolving Loan Agreement matures on May 31,
1998.

During July 1995, two wholly-owned subsidiaries of the Company jointly
entered into a nonrecourse loan agreement for $27.5 million to support
wholly-owned Asset Portfolio purchases. This nonrecourse facility is secured by
all wholly-owned Asset Portfolios purchased with borrowings under this debt and
bears interest at the financing company's reference rate plus 1.5% or LIBOR plus
3%. There was a balance outstanding at March 31, 1996, of $13.3 million under
this nonrecourse loan agreement, bearing interest at 8.35% per annum. This
facility matures on July 31, 1998.

On April 28, 1995, ACC entered into a $25.0 million warehouse line of
credit agreement with NationsBank of Texas (the "NationsBank Warehouse
Facility") to support its commercial mortgage origination and underwriting
activities. This facility has since been amended twice effective September 30,
1995 and April 29, 1996, respectively. This facility is secured by loans
originated through borrowings under this facility and bears interest at either
the prime rate announced from time to time by NationsBank of Texas or an
Adjusted LIBOR Rate (as defined in the facility) plus 1.65% or 2.0% based upon
certain enumerated factors. The Company is a guarantor of certain of ACC's
obligations under this facility. A total of $2.8 million bearing interest at
7.31% per annum was outstanding at March 31, 1996. The NationsBank Warehouse
Facility matures on January 25, 1997.

On August 15, 1995, ACC entered into a warehouse line of credit agreement
with Residential Funding Corporation (the "RFC Warehouse Facility") to
facilitate multi-family mortgage loan underwriting and origination. This
facility was amended on May 1, 1996 and was supplemented by letter dated May 2,
1996. This facility is secured by the loans originated through borrowings under
this facility and the stated interest rate for this line is an adjusted 30-day
LIBOR rate plus 3.0% or less as determined solely by the lender (7.37% at March
31, 1996). At March 31, 1996, an advance of $3.5 million was outstanding. Each
borrowing under the RFC Warehouse Facility is generally due 60 to 80 days after
funding.

On September 7, 1995, the Company entered into an interest rate swap
agreement to hedge a portion of its 30-day LIBOR floating rate debt. The swap
agreement has a notional amount of $25.0 million and requires payment of
interest by the Company at a fixed rate of 5.8% and receipt of interest by the
Company at a floating rate equal to 30-day LIBOR.

Effective November 1, 1995, ARMC entered into a $100.0 million warehouse
line of credit (the "Prudential Warehouse Facility"), increased to $150.0
million on November 30, 1995, with Prudential Securities Realty Funding
Corporation to finance the acquisition and warehousing of residential mortgage
loans. This facility was secured by the loans purchased through borrowings under
this facility and held for sale. The stated interest rate for this line was
LIBOR (as defined in the facility) plus 0.88% (which can be adjusted
retroactively under certain circumstances to LIBOR plus 2.4%). At December 31,
1995, $135.6 million was outstanding under this facility. On January 26, 1996,
the mortgages purchased with borrowings under this facility were securitized,
such borrowings were repaid in their entirety and the facility was terminated.
On February 23, 1996, ARMC and Prudential Securities Realty Funding Corporation
entered into a $220.0 million warehouse line of credit (which was amended on
March 22, 1996) to finance the continued acquisition and warehousing of
residential mortgage loans on substantially similar terms as the prior facility.
On June 20, 1996, the mortgages purchased with borrowings under this facility
were securitized, such borrowings were repaid in their entirety and the facility
was terminated.

On November 27, 1995, the Company completed the sale of $45.0 million
principal amount of Convertible Subordinated Debentures bearing interest at 8.0%
per annum and maturing on December 15, 2005. The net proceeds (approximately
$43.0 million) were used to repay indebtedness under the predecessor to the
Revolving Loan Agreement.

On December 13, 1995, the Company completed a public offering of 2,000,000
shares of Common Stock. An additional 300,000 shares of Common Stock were sold
on December 19, 1995, upon exercise of the

S-22
<PAGE> 24

underwriters' overallotment option. The aggregate net proceeds to the Company
(approximately $25.1 million) were used to repay indebtedness under the
predecessor to the Revolving Loan Agreement.

On December 19, 1995, a wholly-owned subsidiary of the Company entered into
a Global Master Repurchase Agreement to support the purchase of certain
commercial mortgage pass-through certificates. A total of $16.9 million was
outstanding under this facility at March 31, 1996. This facility bears interest
at a rate of 30 day LIBOR plus 1.4% (6.78% at March 31, 1996). This facility is
secured by the Company's investments in certain asset-backed securities. This
facility matures on December 18, 1996.

On February 2, 1996, the Company completed the sale of $57.5 million
principal amount of Senior Subordinated Notes bearing interest at 10.0% per
annum and maturing on January 15, 2003. The net proceeds (approximately $54.9
million) were used to repay indebtedness under the predecessor to the Revolving
Loan Agreement.

Effective February 26, 1996, ARMC entered into another warehouse facility
with Prudential (the "1996 Prudential Warehouse Facility"). The 1996 Prudential
Warehouse Facility is currently a $400.0 million credit facility used to finance
the acquisition and warehousing of certain residential mortgage loans. At June
28, 1996, a total of $43.6 million was outstanding under the 1996 Prudential
Warehouse Facility bearing interest at 6.35% per annum. The 1996 Prudential
Warehouse Facility is secured by all residential mortgage loans acquired using
funds obtained under this facility.

Pursuant to a Commitment Letter dated May 29, 1996, CS First Boston
Mortgage Capital Corp. agreed to provide ARMC with a repurchase facility in an
amount not to exceed $500.0 million (the "Repurchase Facility"), which
supplements, forms a part of and is subject to a Global Master Repurchase
Agreement dated May 28, 1996, to finance the acquisition and warehousing of
certain residential mortgage loans. As of June 28, 1996, $133.5 million was
outstanding under the Repurchase Facility.

In 1996, the Company intends to pursue (i) additional investment
opportunities by acquiring Asset Portfolios, both for its own account and as an
investor with various capital partners who acquire such investments, (ii)
acquisitions of new businesses and (iii) expansion of current businesses. The
funds for such acquisitions and investments are anticipated to be provided in
1996 by cash flows and borrowings under the Company's Revolving Loan Agreement
and the proceeds of this Offering. As a result, interest expense in 1996 is
expected to be higher than interest expense in 1995.

The Company believes its funds on hand of $18.3 million at March 31, 1996,
cash flow from operations, its unused borrowing capacity under its credit lines
($64.4 million at March 31, 1996, excluding availability under
lender-discretionary mortgage warehouse lines), the net proceeds of this
Offering and its continuing ability to obtain financing 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 by the availability of capital.

IMPACT OF NEW ACCOUNTING STANDARDS

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," issued by the Financial Accounting Standards
Board, which is effective for fiscal years beginning after December 15, 1995,
requires that an employer's financial statements include certain disclosures
about stock-based employee compensation arrangements regardless of the method
used to account for them. The Company continues to measure compensation costs
using APB Opinion No. 25, "Accounting for Stock Issued to Employees," and will
therefore include pro forma disclosures in the notes to the financial statements
for all awards granted after December 31, 1994. The Company will disclose the
pro forma net income and pro forma earnings per share as if the fair value based
accounting methods in SFAS No. 123 had been used to account for stock-based
compensation cost in future financial statement presentations.

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<PAGE> 25

INFLATION

The Company has generally been able to offset cost increases with increases
in revenues. Accordingly, management does not believe that inflation has had a
material effect on its results of operations to date. However, there can be no
assurance that the Company's business will not be adversely affected by
inflation in the future.

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<PAGE> 26

BUSINESS

GENERAL

The Company is a leading specialty financial services company engaged in
Asset Portfolio acquisition and resolution, commercial mortgage banking,
residential mortgage securitization and institutional investment advisory
services. The Asset Portfolio acquisition and resolution business involves
acquiring at a substantial discount to Face Value and managing and resolving
Asset Portfolios to maximize cash recoveries. The Company manages and resolves
Asset Portfolios acquired by the Company alone, acquired by the Company with
co-investors and owned by third parties. The commercial mortgage banking
business involves the origination, underwriting, placement, sale and servicing
of commercial real estate mortgages. The residential capital markets business
purchases, warehouses and securitizes portfolios of residential mortgages of
borrowers who do not qualify for conventional loans. The Company's institutional
investment advisory subsidiary provides real estate investment advice to various
institutional investors (primarily pension funds).

BACKGROUND

History. The Company is the product of the December 1993 merger of two
Asset Portfolio management and resolution service companies: BEI and Holdings.
Holdings was the former Asset Portfolio management and resolution unit of
NationsBank of Texas, which was created in 1988 in connection with the
acquisition by NationsBank Corporation from the FDIC of certain assets and
liabilities of the failed First RepublicBank. BEI, a publicly-held company that
was in the real estate and asset management services businesses, began providing
asset management and resolution services to the RTC in 1990. The BEI Merger
created one of the largest Asset Portfolio management and resolution service
companies in the United States. Since 1987, the Company and its predecessors
have managed over $30.0 billion (Face Value) of Asset Portfolios.

In early 1994, the Company made the strategic decision to diversify its
business lines and to reduce the Company's dependence on asset management and
resolution contracts with governmental agencies and certain other entities. As a
result, the Company has shifted its strategic focus in order to take advantage
of business opportunities in the specialty finance markets that capitalize on
the Company's competitive strengths and reputation. The key elements of this
strategy include:

- increasing the amount that the Company invests for its own account in
Asset Portfolios;

- continuing to provide high quality management and resolution services to
co-investors and other third-party owners of Asset Portfolios;

- developing its new real estate pension advisory business to complement
the Company's existing business lines.

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<PAGE> 27

ASSET ACQUISITION AND RESOLUTION BUSINESS

General. The Company manages and resolves Asset Portfolios acquired at a
substantial discount to Face Value by the Company alone and by the Company with
co-investors. The Company also manages and resolves Asset Portfolios owned by
third parties. Management of Asset Portfolios includes resolving loans and
providing routine accounting services, monitoring collections of interest and
principal (if any), confirming (or advancing) insurance premiums and tax
payments due on collateral and generally overseeing and managing, if necessary,
collateral condition and performance. Asset Portfolios generally include secured
loans of varying qualities and collateral types. The Company estimates that
typically approximately 85% of the loans in the Asset Portfolios in which the
Company invests are in payment default at the time of acquisition. Although some
Asset Portfolios include foreclosed real estate and other collateral, the
Company generally seeks Asset Portfolios that do not include such assets. The
Company's policy is to not refinance or renew purchased loans. Some Asset
Portfolio loans are loans for which resolution is tied primarily to the real
estate securing the loan. Other loans, however, are collateralized business
loans, the resolution of which may be based either on cash flow of a business or
on real estate and other collateral securing the loan. Collateralized business
loans generally have smaller Face Values and often are more quickly resolved
than more traditional real estate loans. The Company intends to increase its
investment in collateralized business loans.

The Company obtains information on available Asset Portfolios from many
sources. Repeat business and referrals from Asset Portfolio sellers with whom
the Company previously has transacted business are an important and frequent
source of Asset Portfolios. The Company has developed relationships in which it
is a preferred Asset Portfolio purchaser from certain sellers. The Company
believes that it receives many Asset Portfolio solicitations that result
primarily from the Company's reputation as an active portfolio purchaser. Other
important sources of business include referrals from co-investors who seek the
Company's participation in Asset Portfolio purchases, focused contacts initiated
by senior management, public advertising of Asset Portfolios for sale and the
Company's nationwide presence.

Although the need for asset management and resolution services by
governmental agencies has substantially declined in recent years, the Company
believes that a permanent market for Asset Portfolio acquisition, management and
resolution services has emerged within the private sector. The Company believes
that many financial institutions now recognize that it is advantageous to use
outside contractors to manage and resolve Asset Portfolios for a variety of
reasons, including a desire to reduce overhead costs, inadequate staffing to
handle large volumes of Asset Portfolios or a need to avoid management and
personnel distractions with the intensive and time-consuming job of resolving
Asset Portfolios. These financial institutions include multi-national, money
center, super-regional and regional banking institutions in the United States,
Canada and Europe, as well as insurance companies in the United States.
Moreover, financial institutions have embraced the concept of packaging and
selling Asset Portfolios to investors as a means of disposing of non-performing
and under-performing loans and improving the financial institution's balance
sheet. Consolidations within the banking industry have reinforced this trend.
Insurance companies, which historically have avoided outsourcing Asset Portfolio
management or selling Asset Portfolios, also are emerging as sellers of Asset
Portfolios due in part to the implementation of risk-based capital rules for
insurance companies. Additionally, there is a market for management and
resolution services for delinquent or non-performing loans within performing
securitized loan pools. The Company believes that the significant volume of
annual performing loan securitizations makes this an attractive market in which
to participate.

The Company believes that opportunities for the acquisition, management and
resolution of Asset Portfolios are becoming increasingly evident in certain
international markets and that lenders in these markets are adopting many of the
Asset Portfolio management and resolution outsourcing techniques currently
utilized in the United States. Accordingly, the Company has opened offices in
Toronto (August 1994) and London (October 1995) in order to take advantage of
opportunities in Canada, the United Kingdom and certain other Western European
nations. The Company had $292.2 million (US$ Face Value) in Canadian Asset
Portfolios and $35.3 million (US$ Face Value) in United Kingdom Asset Portfolios
under management as of March 31, 1996.

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<PAGE> 28

Because of the significant decline in Asset Portfolio management and
resolution services required by governmental agencies and the trend toward
outright sales of Asset Portfolios, the Company shifted its strategic focus to
becoming an active Asset Portfolio investor for its own account and a
co-investor with other Asset Portfolio buyers. The Company believes that as a
direct investor in Asset Portfolios it has a significant competitive advantage
relative to the Company's competitors in the management and resolution business.
Moreover, the Company believes that direct investment permits the Company to
take advantage of the profit opportunities of Asset Portfolio investing. The
Company believes that it can gain market share in the Asset Portfolio
acquisition, management and resolution business due to its financial strength,
experience in managing and resolving Asset Portfolios, national reputation and
strategic relationships with sellers and purchasers of Asset Portfolios,
including financial institutions, large corporate buyers, investment banking
firms and sophisticated private investors.

For the three months ended March 31, 1996 and the year ended December 31,
1995, $21.0 million (56.8%) and $81.1 million (73.4%), respectively, of the
Company's gross revenues were attributable to its Asset Portfolio acquisition
and resolution business. The following table reflects the ownership composition
of the Asset Portfolios (based on their Face Value) under management by the
Company as of the dates indicated and further reflects the decline in the
management of Asset Portfolios for governmental agencies and the increase in the
Company's investment in Asset Portfolios since December 31, 1993. Certain
reclassifications of prior period amounts have been conformed to the current
year presentation.

<TABLE>
<CAPTION>
AS OF AS OF AS OF AS OF
MARCH 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------- --------------------- --------------------- ---------------------
AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL
-------- ---------- -------- ---------- -------- ---------- -------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wholly-owned by the Company(1).... $ 385.0 10.8% $ 354.3 9.6% $ 140.4 4.6% $ 90.4 1.6%
Owned by the Company with
co-investors(2)................. 1,427.3 39.9 1,558.1 42.2 1,675.9 55.3 392.4 6.8
Owned by third parties:
Special Servicing............... 772.6 21.6 738.3 20.0 315.0 10.4 268.8 4.7
Government and other owners..... 990.8 27.7 1,043.2 28.2 900.5 29.7 5,002.8 86.9
-------- ----- -------- ----- -------- ----- -------- -----
Total under management.... $3,575.7 100.0% $3,693.9 100.0% $3,031.8 100.0% $5,754.4 100.0%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>

- ---------------

(1) Includes $66.8 million, $66.8 million, $13.9 million and $0.0, respectively,
of asset-backed securities, and $2.3 million, $1.7 million, $0.6 million and
$0.0 million of real estate, respectively, as of March 31, 1996 and as of
December 31, 1995, 1994 and 1993.

(2) Includes the securitized Asset Portfolios managed by the Company in which
the Company has invested, which aggregated $713.3 million, $775.3 million,
$973.8 million and $354.3 million, respectively, as of March 31, 1996 and as
of December 31, 1995, 1994 and 1993.

The following table reflects, by ownership category, the number of Asset
Portfolios managed by the Company as of March 31, 1996 and the number of assets
included in such portfolios:

<TABLE>
<CAPTION>
NUMBER OF ASSET NUMBER OF
PORTFOLIOS ASSETS
--------------- ---------
<S> <C> <C>
Wholly-owned by the Company................................ 38 1,122
Owned by the Company with co-investors..................... 29 1,361
Owned by third parties:
Special Servicing........................................ 14 943
Government and other owners.............................. 11 1,949
--
-----
Total under management........................... 92 5,375
== =====
</TABLE>

S-27
<PAGE> 29

The following table reflects the Company's investment (at carrying value)
in Asset Portfolios as of the dates indicated below:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF MARCH 31, --------------------------
1996 1995 1994 1993
--------------- ------ ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Wholly-owned by the Company(1).............. $ 183.6 $173.2 $34.4 $33.8
Owned by the Company with co-investors(2)... 33.3 34.3 33.7 2.5
------- ------ ----- -----
Total............................. $ 216.9 $207.5 $68.1 $36.3
======== ====== ===== =====
</TABLE>

- ---------------

(1) Includes $32.6 million, $33.9 million, $3.5 million and $0.0 million,
respectively, of asset-backed securities, and $2.4 million, $0.5 million,
$0.0 million and $0.0 million of real estate, respectively, as of March 31,
1996 and as of December 31, 1995, 1994 and 1993.

(2) Includes the securitized Asset Portfolios managed by the Company in which
the Company has invested, which aggregated $8.4 million, $8.9 million, $7.9
million and $1.7 million, respectively, as of March 31, 1996 and as of
December 31, 1995, 1994 and 1993.

Asset Portfolio Investment. The Company invests in Asset Portfolios by
purchasing them alone or with co-investors. As of March 31, 1996, the Company's
weighted average investment in all Asset Portfolios in which it was a
co-investor was 6.0% of the aggregate purchase price of such Asset Portfolios.
The Company generally funds its share of any investment with a combination of
borrowings under its existing credit lines and internal cash flow. Future Asset
Portfolio purchases will depend on the availability of Asset Portfolios offered
for sale, the availability of capital and the Company's ability to submit
successful offers to purchase Asset Portfolios. As a result, Asset Portfolio
purchases may vary significantly from quarter to quarter. The following table
reflects the Company's total purchases (at cost) of Asset Portfolios by fiscal
quarter over the past nine quarters:

<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
-------------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
1996 1995 1995 1995 1995 1994 1994 1994 1994
--------- ------------ ------------- -------- --------- ------------ ------------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wholly-owned by the
Company(1)....... $24,548 $ 76,749 $45,987 $ 62,499 $15,539 $ 21,014 $ -- $ 6,941 $ 6,761
Owned by the
Company with
co-investors(2)... 581 5,452 325 8,480 6,294 7,900 11,306 8,948 5,125
------- ------- ------- ------- ------- ------- ------- ------- -------
Total...... $25,129 $ 82,201 $46,312 $ 70,979 $21,833 $ 28,914 $11,306 $ 15,889 $11,886
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

- ---------------

(1) Includes $27,520, $13,248, $2,875 and $3,497 in the quarters ended December
31, 1995, September 30, 1995, June 30, 1995 and June 30, 1994,
respectively, for purchases of asset-backed securities, but does not
include any real estate assets.

(2) Includes $4,000, $1,601 and $2,000 of investments in securitized mortgage
pools purchased in the quarters ended December 31, 1994, June 30, 1994 and
March 31, 1994, respectively.

Prior to making an offer to purchase an Asset Portfolio, the Company
conducts an extensive investigation and evaluation of the individual loans
generally comprising 100% of the aggregate Face Value of all the loans therein,
except in rare instances where an unusually large number of assets are being
purchased. This examination typically consists of analyzing the information made
available by the Asset Portfolio seller (generally, the respective credit and
collateral files for the loans), reviewing other relevant material that may be
available (including tax and judgment records), and analyzing the underlying
collateral (including conducting site inspections, obtaining value opinions from
third parties and consulting with any of the Company's asset managers who have
experience with the local market for such assets). The Company also reviews
information on the local economy and real estate markets in the area in which
the loan collateral is located. Because of its broad, nationwide experience in
managing assets, the Company often is able to draw on

S-28
<PAGE> 30

its asset management experience in the specific market in which an asset is
located. Unlike the original lender, the Company values Asset Portfolio loans
based on the present value of estimated total cash flow from resolution, with
the expectation that the loans will be resolved prior to scheduled maturity. The
Company's policy is to not refinance or renew purchased loans or grant new
credit.

Asset Portfolio evaluations are conducted almost exclusively by the
Company's employees who specialize in analysis of non-performing and
under-performing loans, often with further specialization based on geographic or
collateral-specific factors. Most of these employees have previously served the
Company (and some continue to serve) as asset managers with responsibility for
resolving such loans. Their asset management experience aids these individuals,
working together in teams, in making informed judgments about the status of each
loan and the underlying collateral, the probable cash flows from the loan, the
likely resolution of the loan and the time and expense required for such
resolution. The Company's personnel document these evaluations in standardized
Company formats.

Upon completion of evaluation forms, the Company compiles a database of
information about the loans in the Asset Portfolio. The primary focus of the
database is the anticipated recovery amount, timing and cost of the resolution
of the Asset Portfolio. Using its proprietary modeling system and loan
information database, the Company then determines the amount it will offer. The
offer is structured to achieve certain minimum rates of return. As of March 31,
1996, the Company had paid an average purchase price of 54% of the aggregate
Face Value on all of its Asset Portfolios.

When an Asset Portfolio is acquired (whether for the Company's own account
or with co-investors), the Company assumes the management of the loans therein.
Management includes responsibility both for servicing and for resolving such
loans. The Company's asset managers are given the supporting due diligence
information and projections relating to each newly-acquired loan for which the
manager assumes management responsibility. Because asset managers are actively
involved in the Asset Portfolio evaluation process, it is not unusual for an
asset manager to be given management responsibility for the specific loans that
the asset manager assisted in evaluating in the due diligence or pricing
processes. The Company believes that by combining the resolution and evaluation
activities it achieves efficiency in loan resolution and accuracy in loan
evaluations.

Asset resolutions are typically accomplished through (i) negotiating with
debtors a discounted payoff, which may be accomplished through a refinancing by
the obligor with a lender other than the Company, or (ii) foreclosure and sale
of the collateral. The Company generally seeks consensual resolution of each
loan, having found that a negotiated resolution usually maximizes the Company's
or investor's rate of return. Historically, the Company has resolved the
majority of the assets within an Asset Portfolio within 18 months. The goal of
the Company's asset resolution process is to maximize in a timely manner cash
recovery on each loan in an Asset Portfolio.

In evaluating Asset Portfolios, the Company takes into account
concentrations of collateral located in specific regions of the United States,
Canada and the United Kingdom. As of March 31, 1996, the geographic dispersion
of each primary asset securing the loans in the Asset Portfolios in which the
Company had invested (whether for its own account or with co-investors) was as
follows:

<TABLE>
<CAPTION>
FACE VALUE % OF TOTAL NUMBER OF ASSETS % OF TOTAL
---------- ---------- ---------------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Northeast................................ $ 483.2 26.7% 1,147 46.2%
West..................................... 709.3 39.1 520 20.9
Southwest................................ 188.9 10.4 291 11.7
Midwest.................................. 79.7 4.4 92 3.7
Southeast................................ 292.0 16.1 304 12.3
-------- ----- ----- -----
United States subtotal................. 1,753.1 96.7 2,354 94.8
Canada................................... 23.9 1.3 82 3.3
United Kingdom........................... 35.3 2.0 47 1.9
-------- ----- ----- -----
Total.......................... $1,812.3 100.0% 2,483 100.0%
======== ===== ===== =====
</TABLE>

S-29
<PAGE> 31

The Company invests in both Asset Portfolios composed of collateralized
business loans and in Asset Portfolios composed of real estate collateralized
loans. Asset Portfolios purchased by the Company alone have tended to be
primarily composed of collateralized business loans, because many such Asset
Portfolios are within the size range generally sought by the Company. Asset
Portfolios composed primarily of real estate loans typically are larger and the
Company's investments in such portfolios usually are made with co-investors. At
March 31, 1996, the Face Value of the Company's total investment in wholly-owned
Asset Portfolios aggregated approximately $385.0 million, which was composed of
approximately $298.9 million (77.6%) of collateralized business loans,
approximately $17.0 million (4.4%) of real estate loans, approximately $66.8
million (17.4%) of asset-backed securities and approximately $2.3 million (0.6%)
of real estate.

In addition, as of March 31, 1996, the Asset Portfolios in which the
Company had invested (whether for its own account or with co-investors) included
approximately 2,500 individual assets. The Company has found that the market for
smaller portfolios is less competitive, because larger Asset Portfolio buyers
often elect not to consider these portfolios. In a recent industry trend, some
Asset Portfolio sellers are soliciting bids on portfolios consisting of small
groups of loans.

The Company also purchases unrated portions of collateralized commercial
mortgage bonds (typically comprised of problem loans to which the Company can
apply its resolution expertise). The Company believes that acceptance of this
risk is similar to its Asset Portfolio acquisition business, and that the risk
is acceptable because the Company has significant expertise in understanding
loan valuations and will manage the loan resolutions.

Asset Management and Resolution Services. The Company provides asset
management and resolution services to third parties pursuant to contracts with
owners of Asset Portfolios (including partnerships, joint ventures and other
groups in which the Company is a co-investor). Management of Asset Portfolios
includes loan resolution and providing routine accounting services, monitoring
collections of interest and principal (if any), confirming (or advancing)
insurance premium and tax payments due on collateral, and generally overseeing
and managing, if necessary, collateral condition and performance.

Asset management and resolution contracts relating to Asset Portfolios
managed by the Company for third parties have a finite duration, typically three
to five years, and, at March 31, 1996, covered Asset Portfolios with an
aggregate Face Value of approximately $1.8 billion. These contracts generally
provide for the payment of (i) a fixed annual management fee (generally between
50 and 75 basis points based on the Face Value or original purchase price of the
loans) with revenues declining as assets under management decrease, (ii) a
resolution fee (generally between 50 and 150 basis points based on the net cash
collections on loans and assets) and (iii) a negotiated incentive fee for the
successful resolution of loans or assets which is earned after a predetermined
rate of return for the portfolio owner or co-investor is achieved.

As part of its third-party asset management and resolution business, the
Company aggressively pursues contracts to serve as the designated Special
Servicer for pools of securitized commercial mortgages. After a loan within a
securitized pool of performing loans becomes delinquent or non-performing, the
Master Servicer or Primary Servicer of the pool will contractually transfer
responsibility for resolution of that loan to the pool's designated Special
Servicer. Special Servicers earn an annual fee (typically approximately 50 basis
points of the Face Value of the delinquent or non-performing loans subject to
Special Servicing), plus a 75 to 100 basis points resolution fee based on the
total cash flow from resolution of each such loan as it is received. As of March
31, 1996, the Company was the designated Special Servicer for securitized pools
holding over $5.9 billion (Face Value) of loans, $772.6 million (Face Value) of
which had been assigned to the Company for resolution in its capacity as Special
Servicer. The Company believes that its willingness to purchase participating
interests in the delinquent or non-performing portion of a securitized portfolio
provides the Company a significant competitive advantage in pursuing Master/Full
and Special Servicer contracts.

COMMERCIAL MORTGAGE BANKING BUSINESS

General. The Company performs a wide range of commercial mortgage banking
services, including originating, underwriting, placement, selling and servicing
commercial real estate loans through its Holliday

S-30
<PAGE> 32

Fenoglio, ACC and AMRESCO Services commercial mortgage banking units. For the
year ended December 31, 1995 and the three month period ended March 31, 1996,
$26.6 million (24.1%) and $9.4 million (25.4%), respectively, of the Company's
gross revenues were attributable to the Company's commercial mortgage banking
business.

The Company believes that the commercial real estate mortgage banking
business offers significant growth opportunities. There are an estimated $1.0
trillion of commercial real estate mortgages outstanding within the United
States and the Company estimates that $125.0 billion to $150.0 billion in
commercial real estate mortgages are refinanced each year in addition to
mortgage financing of new construction. Originations of loans for new
construction projects are cyclical and are influenced by various factors
including interest rates, general economic conditions and demand patterns in
individual real estate markets. The commercial mortgage banking industry is
fragmented, composed primarily of small local or regional firms. The Company
anticipates that expensive technological demands, increasingly standardized
underwriting requirements, more demanding borrowers and lenders and the
emergence of a market for securitized commercial real estate mortgage pools will
likely push the commercial mortgage banking industry toward greater
consolidation. The Company believes that well-capitalized, full service,
nationwide mortgage banking firms offering a variety of mortgage banking and
loan management services will emerge from this consolidation. The Company's
objective is to improve its position as a major nationwide full service mortgage
banker to the commercial real estate industry. The Company intends to achieve
this goal through the internal development of its commercial mortgage banking
group and through strategic acquisitions of commercial mortgage bankers which
either serve key real estate markets in the United States or provide niche or
specialized services that enhance the Company's product line.

Commercial Mortgage Banking Business. As a leading full service commercial
mortgage broker and banker with offices in key markets throughout the United
States, the Company provides a wide range of real estate capital markets
services to owners and developers of the full range of commercial real estate
properties. The typical consumers of commercial real estate mortgage banking
services are both real estate developers and owners (as borrowers) and
investor/lenders (as funding sources). Due to the more specialized nature of
commercial mortgage lending and the smaller universe of lenders serving this
market (in each case relative to the residential mortgage market), borrowers
rely on commercial mortgage brokers and bankers to find competitive lenders, and
these lenders (particularly insurance companies and pension plans, which do not
generally have origination staffs located in multiple branches) rely on mortgage
brokers and bankers to source potential borrowers. Lenders generally include
banks, pension funds and insurance companies. In originating loans, Holliday
Fenoglio and ACC each work closely with both the borrower and potential lenders
from the time a loan prospect is first contacted, through the application and
proposal process and throughout the documentation of the loan to final funding.
Holliday Fenoglio and ACC each typically perform extensive due diligence and
market analysis for the lenders in this process.

Holliday Fenoglio was one of the largest commercial mortgage bankers in the
United States in 1995 (based on origination volume) and primarily serves
commercial real estate developers and owners by originating commercial real
estate loans. Holliday Fenoglio principally targets developers and owners of
higher-quality commercial and multi-family real estate properties. Holliday
Fenoglio services prospective borrowers through its own commission-based
mortgage bankers in its offices located in Atlanta, Boca Raton, Buffalo, Dallas,
Houston, New York City and Orlando. The loans originated by Holliday Fenoglio
generally are funded by institutional lenders, primarily insurance companies,
and by Conduit Purchasers, with Holliday Fenoglio retaining the Primary Servicer
rights on approximately 28% of such loans. The Company believes that Holliday
Fenoglio's relationship and credibility with its institutional lender network
provide the Company a competitive advantage in the commercial mortgage banking
industry.

ACC, which originated approximately $447.1 million of mortgages during
1995, and $64.2 million of mortgages during the three months ended March 31,
1996, is a mortgage banker that originates and underwrites commercial real
estate loans that are funded primarily by Conduit Purchasers such as insurance
companies. ACC, therefore, makes certain representations and warranties
concerning the loans it originates. These representations cover title to the
property, lien priority, environmental reviews and certain other matters. ACC
targets mortgage loans for commercial real estate properties that are suitable
for sale to Conduit

S-31
<PAGE> 33

Purchasers accumulating loans for securitization programs. ACC serves its market
directly through ACC's offices located in Dallas, Miami, Washington, D.C. and
Winston-Salem as well as through a network of approximately 42 independent
mortgage brokers located throughout the United States. Through March 31, 1996,
approximately 28.0% of the loans underwritten by ACC were originated by Holliday
Fenoglio, with Holliday Fenoglio and ACC each receiving fees for their
respective services.

The Company believes that it has certain additional significant advantages
in the commercial mortgage banking marketplace. First, through its relationships
with certain institutional investors, the Company is able to underwrite and sell
commercial mortgage loans, particularly in instances where the borrower needs
relatively quick access to funding for a particular project. Through a warehouse
credit facility arranged in early 1995, the Company is able to underwrite and
fund a loan and hold that loan for resale to a buyer. Second, because of the
Company's extensive experience in real estate markets, the Company believes it
can carefully evaluate the risks of such underwriting transactions in order to
minimize financial exposure to the Company in underwriting and/or warehousing a
loan.

In July 1995, ACC acquired CKSRS, whose primary business is the
origination, sale to Freddie Mac and servicing of multi-family apartment
mortgages in the state of Florida. Through CKSRS, the Company became a member of
the Freddie Mac multi-family seller/servicer program in Florida. Through this
acquisition, the Company will obtain access to a significant source of funding
for multi-family mortgages. The Company has expanded its Freddie Mac
authorization to operate in the states of North Carolina and South Carolina and
intends to expand in other states.

In January 1996, ACC was approved by Fannie Mae to participate in its
Delegated Underwriting and Servicing ("DUS") program. An approved DUS lender is
delegated the authority to approve, commit and close loans for multi-family
mortgages on a national basis with the assurance that Fannie Mae will purchase
the loans. In contrast to a "prior approval" lender, DUS lenders do not need to
obtain the approval of Fannie Mae prior to making the loan. In return for the
delegated authority to make loans and the subsequent purchase of such loans by
Fannie Mae, DUS lenders must maintain a significant capital base, and retain a
certain level of credit risk on the loans they make. The DUS lender takes first
loss risk up to 5% of the loan amount, and above 5% Fannie Mae and the DUS
lender share the loss, with the DUS lender's maximum loss capped at 20% of the
loan amount.

ACC is one of only 27 currently approved DUS lenders. While all DUS lenders
operate on a national basis, the Company believes that ten such lenders account
for the majority of DUS volume. The Company believes that ACC, as one of the few
DUS lenders, has certain competitive advantages in the multi-family mortgage
origination business. These advantages include the competitive pricing afforded
by Fannie Mae's position as the largest purchaser of housing related mortgages
in the nation and the ability to commit and close mortgages without the delay
and the accompanying market risks of such delay for an approval process by the
mortgage purchaser. For these reasons, the Company expects Freddie Mac and
Fannie Mae loan originations to become a significant part of its commercial
mortgage banking activities. Holliday Fenoglio is expected to be a significant
source of such loan originations.

The Company generally earns a fee of between 50 and 100 basis points of the
loan amount for originated or underwritten loans, plus certain additional
processing fees. From time to time, the Company also originates non-traditional
financing involving hybrid forms of debt, equity participations and other
creative financing structures. Fees for equity or joint venture structures are
typically higher.

S-32
<PAGE> 34

The table that follows reflects the loan origination activity and loan
origination and underwriting fee revenue for three months ended March 31, 1996
and the year ended December 31, 1995, respectively:

<TABLE>
<CAPTION>
FOR THE YEAR
FOR THE QUARTER ENDED ENDED
MARCH 31, 1996 DECEMBER 31, 1995
--------------------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Originations:
Dollar volume..................................... $ 518.3 $ 2,573.4
Number of loans................................... 76 444
Origination and underwriting fees earned............ $ 4.1 $ 20.6
Number of offices................................... 11 11
</TABLE>

After the evaluation of a loan prospect and the project financing needs,
and depending upon the type of property involved and its location, the Company
approaches institutional lenders that the Company believes would be interested
in funding the loan. The Company has established relationships with over 200
institutional lenders that include insurance companies, pension plans and
Conduit Purchasers. In 1995, the Company placed 444 loans with over 79 different
lenders. Forty-three institutional lenders have retained the Company as their
respective exclusive or semi-exclusive loan originator in selected cities and
regions.

Commercial Loan Servicing Business. The Company serves as a Primary
Servicer for whole loans and as a Master/Full Servicer for securitized pools of
commercial mortgages through its AMRESCO Services unit. At March 31, 1996, the
Company acted as servicer with respect to approximately $10.4 billion of loans.
See "-- Asset Acquisition and Resolution Business -- Asset Management and
Resolution Services." The dominant users of commercial loan servicers are
mortgage-backed bond trusts and similar securitized asset-backed loan portfolios
made up of numerous passive investors. Other lenders often contract with the
originating mortgage banker or other third-party servicer to manage collection,
accounting and other activities with respect to the loan. The revenue stream
from servicing contracts on commercial mortgages is relatively predictable as
prepayment penalties in commercial mortgages discourage early loan payoffs, a
risk that is more significant to servicers of residential mortgage portfolios.

Primary Servicing involves collecting monthly mortgage payments,
maintaining escrow accounts for the payment of ad valorem taxes and insurance
premiums on behalf of borrowers, remitting payments of principal and interest
promptly to investors in the underlying mortgages, reporting to those investors
on financial transactions related to such mortgages and generally administering
the loans. The Primary Servicer also must cause properties to be inspected
periodically, determine the adequacy of insurance coverage on each property,
monitor delinquent accounts for payment and, in cases of extreme delinquency,
institute and complete either appropriate forbearance arrangements or
foreclosure proceedings on behalf of investors. Primary Servicer rates are
determined by a bidding and negotiating process. At March 31, 1996, the Face
Value of the Company's Primary Servicing portfolio totaled approximately $3.1
billion.

Master Servicing involves providing administrative and reporting services
to securitized pools of mortgage-backed securities. Typically, mortgages
underlying mortgage-backed securities are serviced by a number of Primary
Servicers. Under most master servicing arrangements, the Primary Servicers
retain principal responsibility for administering the mortgage loans and the
Master Servicer acts as an intermediary in overseeing the work of the Primary
Servicers, monitoring their compliance with the issuer's standards and
consolidating their respective periodic accounting reports for transmission to
the issuer of the related securities. The Company occasionally is designated as
the Full Servicer for a pool of mortgages, in which case the Company acts as
Master, Primary and Special Servicer for the pool. Master/Full Servicers are
typically paid fees based on the Face Value of loans under management, and the
compensation is determined by a bidding and negotiating process. At March 31,
1996, the Face Value of the Company's Master/Full Servicing portfolio totaled
approximately $7.3 billion. The average life of these securitized pools is
expected to be approximately eight years.

The market for servicing performing loan pools constitutes a much larger
potential market than the market for servicing non-performing and
under-performing assets. The Company believes that by gaining access to these
pools in a servicer capacity, opportunities exist for the Company to originate
loan refinancings

S-33
<PAGE> 35

as outstanding loans mature. In addition, the Company's ability to also act as
Special Servicer is a competitive advantage. The Company, therefore, has
targeted the market for performing loan management services as a growth area for
the Company. The Company has previously participated in this market as a Primary
Servicer of commercial real estate loans for loans originated by the Company's
mortgage banking unit and for loans owned by investor clients.

Special Situation Lending. The Company has teamed with a major Wall Street
investment bank to provide bridge financing to commercial real estate and
business borrowers for short-term financing or in situations where conventional
financing is unavailable. The Company will consider financing for asset
acquisitions and special use projects, "bridge" financing, bankruptcy and
post-bankruptcy financing, financings to accommodate discounted payoffs, debt
restructurings and "turnaround" situations, acquisitions of Asset Portfolios and
the acquisition of creditor positions in litigation or bankruptcy cases. These
loans are generally collateral-based, including commercial real estate,
machinery and equipment. Typically these loans have a term of six to 36 months
and provide higher interest rate opportunities than conventional loans. Through
March 31, 1996, the Company had arranged $45.7 million of such loans with the
Company funding $5.7 million of such loans and the investment bank funding the
balance.

RESIDENTIAL CAPITAL MARKETS

Through AMRESCO Residential, the Company purchases (in bulk from
independent originators), warehouses and securitizes or resells portfolios of
residential mortgages of borrowers who do not qualify for conventional loans or
whose borrowing needs are not met by traditional residential mortgage lenders.
The Company does not originate or service the loans contained in these
portfolios. Such borrowers may not satisfy the more rigid underwriting standards
of the traditional residential mortgage lending market for a number of reasons,
such as blemished credit histories (from past loan delinquencies or bankruptcy),
inability to provide income verification data or lack of established credit
history. The Company believes that this market is underserved by traditional
lenders. Therefore, there is less competition in this market and interest rates
are higher than on mortgage loans for more credit-worthy borrowers. The Company
believes that the higher interest rates offered by this market are attractive
even after discounting for the greater credit risk associated with such
borrowers. During 1996 through the date of this Supplemental Prospectus, AMRESCO
Residential has securitized approximately $800.0 million of mortgage portfolios.

To lead the Company's entry into this market, the Company hired an
experienced team of individuals from a major national consumer finance company.
This group managed their former employer's residential mortgage securitization
business. This group has estimated that between 1991 and 1995, it managed the
acquisition of over $2.0 billion of mortgage assets.

The Company pools the loans it purchases to create asset-backed securities
which it sells on a quarterly or more frequent basis, depending on the
availability of loans, profitability and other relevant factors. Securitization
is used by companies as a cost-competitive source of capital compared to
traditional corporate debt financing alternatives. The Company seeks to utilize
securitization structures that minimize the Company's capital requirements,
while still providing income to the Company. For example, the Company may sell
certificates for senior interests in a securitization, but retain subordinated
or interest-only certificates. The Company then would have limited capital at
risk, but would retain a portion of the cash flow from the securitization. The
Company also may seek to place bundled residential mortgages through private
securitization transactions such as joint ventures with insurance companies and
pension funds. The Company utilizes the net proceeds from securitizations to
purchase additional residential mortgages and to pay down outstanding warehouse
facilities. The Company, through AMRESCO Residential, uses warehouse facilities
with financial institutions to finance its purchase of loans on a short-term
basis pending securitization. At May 31, 1996, the Company had an aggregate
borrowing capacity of $775 million under two primary warehouse facilities of
which $453.6 million was available. See "Description of Other Indebtedness."

In its securitizations, the Company transfers residential mortgages to
newly-formed securitization trusts, which issue one or more classes of
asset-backed securities. The asset-backed securities are simultaneously sold to
investors (except for certain subordinated classes of securities which may be
retained by the Company and

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which are included in "Asset Backed and Other Securities" in the Company's
Consolidated Financial Statements included in the Company's 1995 Form 10-K and
incorporated by reference in the Prospectus). Each month, collections of
principal and interest on the residential mortgages are used by the trustee to
pay the holders of the related asset-backed securities, to build
overcollateralization by using excess interest to pay down principal on the
securities and to pay expenses, with any remaining cash flows paid to the
Company.

The Company arranges for credit enhancement to achieve a desired credit
rating on the asset-backed securities issued. The credit enhancement generally
involves four primary components: (i) a financial guaranty insurance policy;
(ii) servicer advances of scheduled interest and principal on delinquent loans;
(iii) overcollateralization of the securities and (iv) use of excess interest
spread to absorb losses.

The financial guarantee insurance policies used to date have been issued by
Financial Security Assurance, Inc. ("FSA") and MBIA Insurance Corporation
("MBIA"), which insure payments of principal and interest due on rated
asset-backed securities. Both FSA and MBIA and their respective subsidiaries
principally insure publicly and privately offered, asset-backed, collateralized
and municipal securities. The Company typically retains the unrated, uninsured
asset-backed securities.

The Company uses third party servicers in its securitizations that are
required to advance to the securitization trust each month scheduled principal
and interest due on delinquent loans. The Company limits it servicer selection
to those companies sufficiently capitalized to meet these advance obligations.
The advancement of scheduled principal and interest contributes to the timely
payment of principal and interest on the securities.

A significant portion of the credit enhancement for the securities results
from the use of interest collected on the loans that exceeds the sum of the
interest payable to the holders of the asset-backed securities, the monthly
servicing fees and other amounts (in total, the excess spread) to pay down the
principal on the asset-backed securities. Use of the excess spread in this
manner causes the security principal balance to decline more quickly than the
principal balance of the underlying collateral, thus causing
overcollateralization. This overcollateralization provides not only additional
principal protection to the bondholders, but also a higher level of assets
earning interest relative to the level of senior securities on which interest
must be paid. Initial and ongoing target levels of overcollateralization must be
achieved and maintained on each securitization.

Once target levels of overcollateralization are achieved, the excess spread
is used on a monthly basis to absorb any losses and maintain ongoing target
overcollateralization levels. If the excess spread is insufficient to absorb
losses in a given period, a draw is required under the financial guarantee
insurance policy. Excess spread in future periods must be used to repay any such
draws. Excess spread after these obligations are met are passed through the
securitization trust to the Company.

Each insured securitization trust has certain portfolio performance tests
relating to levels of delinquency, defaults and net losses on the loans in such
trust. If any of these levels are exceeded, the amount required to be used for
additional overcollateralization and not passed through to the Company may be
increased.

INSTITUTIONAL INVESTMENT ADVISORY SERVICES

The Company believes that a market exists for quality real estate advisory
services to pension plans and other institutional investors in commercial real
estate. The Company believes that through the targeted hiring of high quality
personnel with proven track records and the purchase of advisory contracts from
other advisors, the Company can become a major provider of real estate advisory
services to institutional real estate investors, such as pension plans. The
Company's acquisition of substantially all of the advisory contracts and the
hiring of pension advisory personnel of Acacia was the first step in the
implementation of this strategy. The Company principally provides investment
advice to various institutional investors (primarily pension funds) seeking to
invest a portion of their funds in real estate. The investors establish certain
investment parameters with the Company (e.g., amount of funds available for
investment, type of property, geographic mix, form of investment (loan,
partnership, direct ownership), target rate of return and investment term). The
Company then seeks investment opportunities it believes meet the investors'
parameters. The investors exercise varying degrees of control over the Company's
investment decisions. Depending on the amount of discretion granted

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<PAGE> 37

by the client, the Company also will make a recommendation, or the final
decision, concerning whether to sell a particular property and will direct the
work necessary to complete the sale. Although the Company is paid acquisition
and disposition fees by some of its clients, its principal source of revenue is
asset management fees, which are based on the cash flow of the investments under
management or are negotiated at the time of the client's investment in a
property.

COMPETITION

The Company's competition varies by business line and geographic market.
Generally, competition within each of the business lines within which the
Company competes is fragmented, with national, local and regional competitors,
none of which dominates a particular business line. Certain of the Company's
competitors within each of its business lines are larger and have greater
financial resources than the Company.

The Company believes that its ability to acquire Asset Portfolios for its
own account will be important to its future growth. Recently, the Company has
been encountering increasing competition in the market for Asset Portfolios
which could cause the Company to experience decreasing profit margins in this
business line in order to remain a competitive bidder for Asset Portfolios.
Asset Portfolio acquisitions also require significant capital. Certain of the
Company's larger, national competitors have access to greater financial
resources and lower costs of capital.

The Company also encounters significant competition in its other business
lines. The commercial mortgage banking business is highly fragmented with
certain large national competitors and significant localized competition. In
addition, within the commercial loan origination and residential mortgage
securitization business access to, and the cost of, capital are critical to the
Company's ability to compete. The Company must compete with numerous
competitors, many of which have superior access to capital sources and can
arrange or obtain lower cost capital for customers.

LEGAL PROCEEDINGS

The Company is involved from time to time in various legal proceedings
arising in the ordinary course of business. In connection with the Company's
loan servicing, asset management and resolution activities, the Company is
indemnified to varying degrees by the party on whose behalf the Company is
acting. The Company also maintains insurance that management believes is
adequate for the Company's operations. None of the legal proceedings in which
the Company is currently involved, either individually or in the aggregate (and
after consideration of available indemnities and insurance), is expected to have
a material adverse effect on the Company's business or financial condition.

EMPLOYEES

At March 31, 1996, the Company and its subsidiaries employed 812 persons.
338 persons were employed in the Company's asset management and resolution
group, 311 in the Company's commercial real estate mortgage banking and services
group, 11 in its residential capital markets, 23 in its pension advisory
services business and 129 in general administration. The Company believes that
its employee relations are generally good.

PROPERTIES

The Company leases approximately 65,000 square feet in the Woodall Rodgers
Tower in Dallas, Texas for its centralized corporate functions including
executive, business development and marketing, accounting, legal, human
resources and support. The lease provides for annual rent of $693,000. The
Company has exercised its right to terminate this lease in August 1996. The
Company also leases approximately 197,000 square feet of space for an operations
office and branch offices pursuant to leases with varying terms.

The Company has entered into a lease covering approximately 125,000 square
feet in the North Tower of the Plaza of the Americas, Dallas, Texas. This lease
has an initial termination date of October 31, 2006 and has an initial annual
base rent of approximately $1.5 million. The Company plans to consolidate
substantially all of its Dallas, Texas operations in such space commencing in
August 1996.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages and a brief account of the business
experience of each person who is a director or executive officer of the Company.

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME (AGE) OCCUPATION DURING THE PAST FIVE YEARS
- ------------------------- ------------------------------------------------------------------
<S> <C>
Robert L. Adair III Mr. Adair serves as director, President and Chief Operating
(52) Officer of the Company (since December 1993). Mr. Adair previously
served as Executive Vice President and director of BEI (1989 to
December 1993). His term as a director expires in 1997.
L. Keith Blackwell Mr. Blackwell serves as Vice President (since February 1996),
(55) General Counsel and Secretary (since January 1994) of the Company
and previously served as General Counsel and Secretary of Holdings
(December 1993). Mr. Blackwell previously was an investor and
consultant (May 1992 to December 1993) and served as Executive
Vice President, General Counsel and Secretary of First Gibraltar
Bank, FSB, a Federal savings bank (December 1988 to May 1992).
James P. Cotton, Jr. Mr. Cotton serves as a director of the Company (since December
(57) 1993). His term expires in 1998. Mr. Cotton previously served as
Chairman of the Board of BEI (1986 to December 1993). Mr. Cotton
also serves as Chairman of the Board and Chairman of the Executive
Committee of USBA Holdings, Ltd., a provider of products and
services to financial institutions (since 1990).
Richard L. Cravey Mr. Cravey serves as a director of the Company. His term expires
(51) in 1999. Mr. Cravey previously served in the following positions:
Chairman of the Board and Chief Executive Officer of the Company
(December 1993 to May 1994) and Chairman of the Board of Holdings
(1992 to December 1993). Mr. Cravey also holds the following
positions: Founder and Managing Director of Cravey, Green & Wahlen
Incorporated, a private risk capital investment firm (since 1985),
its investment management affiliate, CGW Southeast Management
Company (since 1991) and its affiliates, CGW Southeast I, Inc.
(the general partner of CGW Southeast Partners I, L.P.) and CGW
Southeast II, Inc. (the general partner of CGW Southeast Partners
II, L.P.) (since 1991); Director of Commercial Bancorp of Georgia
(since 1988); and Director of Cameron Ashley Inc., a national
distributor of home building products (since 1994).
Barry L. Edwards Mr. Edwards serves as Executive Vice President and Chief Financial
(49) Officer of the Company (since November 1994). Mr. Edwards
previously served as Vice President and Treasurer of Liberty
Corporation, an insurance holding company (1979 to November 1994).
Gerald E. Eickhoff Mr. Eickhoff serves as a director of the Company. His term expires
(49) in 1999. Mr. Eickhoff also is a private investor (since December
1993). He previously served as President, Chief Executive Officer
and director of BEI (1986 to December 1993).
Harold E. Holliday, Jr. Mr. Holliday serves as President -- Commercial Mortgage Banking of
(48) the Company (since February 1996). He previously served as
Chairman of the Board and Chief Executive Officer of Holliday
Fenoglio (August 1994 to February 1996). Mr. Holliday previously
served as President of Holliday, Fenoglio, Dockerty & Gibson,
Inc., a mortgage banking company (for more than five years prior
to August 1994).
Amy J. Jorgensen Ms. Jorgensen serves as a director of the Company. Her term
(43) expires in 1998. Ms. Jorgensen also serves as Managing Director of
Greenbriar Associates LLC, which provides advice and executes
transactions relating to real estate assets and companies (since
1995). Ms. Jorgensen previously served as President of The
Jorgensen Company, a consultant for real estate strategy and
finance (April 1992 to September 1995) and as Managing Director in
the Real Estate Department of Morgan Stanley & Co. Incorporated
(1986 to February 1992).
</TABLE>

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<PAGE> 39

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME (AGE) OCCUPATION DURING THE PAST FIVE YEARS
- ------------------------- ------------------------------------------------------------------
<S> <C>
1999.Michael N. Maberry Mr. Maberry serves as President of ACC (since April 1994). Mr.
(53) Maberry previously was a Shareholder of the law firm of Winstead,
Sechrest & Minick P.C. (April 1989 to April 1994).
John J. McDonough Mr. McDonough serves as a director of the Company. His term
(60) expires in 1997. Mr. McDonough also serves or has served in the
following positions: President and Chief Executive Officer of
McDonough Capital Company LLC, a company through which Mr.
McDonough conducts personal and family investments (since February
1995); Chairman of the Board of SoftNet Systems, Inc., a company
that develops, markets, installs and services information and
document management systems (since June 1995); Vice Chairman and
Chief Executive Officer (1993 to February 1995) of DENTSPLY
International, Inc., a manufacturer of dental supplies, dental
equipment and medical x-ray products; Chairman of the Board (1992
to 1993), Director (1983 to 1992), Chief Executive Officer (1983
to 1993) and President (1983 to 1991) of GENDEX Corporation, a
manufacturer of dental equipment and medical x-ray products, which
merged with DENTSPLY in June 1993; Director (since 1992) of Newell
Co., a New York Stock Exchange-listed manufacturer of products for
the do-it-yourself hardware and housewares market; and Director of
AmNet Systems, Inc., a company that develops, markets and installs
electronic information and document management for the health care
industry (since 1995).
Scott J. Reading Mr. Reading serves as President of AMRESCO Residential (since
(52) August 1995). Mr. Reading previously served as Managing Director
of Household Financial Services, Inc., a division of Household
International, Inc., a diversified financial services company
(June 1991 to August 1995).
Bruce W. Schnitzer Mr. Schnitzer serves as a director of the Company. His term
(52) expires in 1997. Mr. Schnitzer previously served as Vice Chairman
of the Board of BEI (1986 to December 1993). Mr. Schnitzer also
serves as Chairman of Wand Partners Inc., a private investment
firm (since 1987); Director of Life Partners Group, Inc., a life
insurance holding company (since 1990); Director of Penncorp
Financial Group, Inc. (since 1990); Director of Chartwell Re
Corporation (since 1992); Director of Nestor, Inc. (since 1994)
and Director of New London Capital PLC (since 1993).
Edwin A. Wahlen, Jr. Mr. Wahlen serves as a director of the Company (since May 1996).
(48) His term as director expires in 1998. Mr. Wahlen also holds the
following positions: Founder and Managing Director of Cravey,
Green & Wahlen Incorporated, a private risk capital investment
firm (since 1985), its investment management affiliate, CGW
Southeast Management Company (since 1991) and its affiliates, CGW
Southeast I, Inc. (the general partner of CGW Southeast Partners
I, L.P.) and CGW Southeast II, Inc. (the general partner of CGW
Southeast Partners II, L.P.) (since 1991).
</TABLE>

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<PAGE> 40

DESCRIPTION OF THE NOTES

The Notes are to be issued under an Indenture (the "Senior Indenture"),
dated as of July 1, 1996 between the Company and Comerica Bank, as trustee (the
"Trustee"), and pursuant to an Officers' Certificate and Company Order dated as
of , 1996, establishing the terms of the Notes (the "Company Order")
(the Senior Indenture, as supplemented by the Company Order, is sometimes
referred to herein as the "Note Indenture"), the form of which Senior Indenture
is filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the Prospectus are a part. The following description of the
particular terms of the Notes offered hereby supplements, and to the extent
inconsistent therewith or contradictory thereto, modifies the description of the
general terms and provisions of the Senior Debt Securities set forth in the
accompanying Prospectus under the caption "Description of Securities -- Debt
Securities," to which description reference is hereby made.

GENERAL

The Notes offered by this Prospectus Supplement will be limited to $50.0
million aggregate principal amount. The Notes will be issued in fully registered
form only, without coupons, in denominations of $1,000 and any integral multiple
thereof. Interest on the Notes will accrue from the date of original issuance
and will be payable on the 15th day of each month, or if any such day is not a
business day, on the next succeeding business day (each an "Interest Payment
Date"), beginning on the Interest Payment Date specified on the cover page of
this Prospectus Supplement. The Notes will bear interest at the rate set forth
on the cover page of this Prospectus Supplement and will be payable to the
person in whose name the Note is registered at close of business on the 10th day
of the month (whether or not a business day) in which such payment is to be
made. The Notes will mature on July 1, 1999, and may not be redeemed at the
option of the Company prior to that time. Except as set forth below under
"-- Conditional Repayment Option," the Company is not required to make mandatory
redemption or sinking fund payments with respect to the Notes. See
"-- Conditional Repayment Option."

Principal and interest will be payable at an office or agency to be
maintained by the Company in New York, New York and Detroit, Michigan except
that, at the option of the Company, interest may be paid by check mailed to the
person entitled thereto. The Notes may be presented for registration of transfer
or exchange at an office or agency to be maintained by the Company in New York,
New York and Detroit, Michigan. The Notes will not be secured by the assets of
the Company or any of its subsidiaries or Affiliates or otherwise. In addition,
the rights of the Company to participate in any distribution of assets of any
subsidiary, including Holliday Fenoglio, ACC, AMRESCO Advisors, Inc. and AMRESCO
Residential, upon its liquidation or reorganization or otherwise (and thus the
ability of the holders of the Notes to benefit indirectly from such
distribution) are subject to the prior claims of creditors of the subsidiary.

So long as the Company is a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Company will furnish to
holders of the Notes annual reports of the Company containing audited
consolidated financial statements and interim reports with unaudited
consolidated summary financial data on a quarterly basis. If the Company ceases
to be a reporting company under the Exchange Act, the Company will furnish to
holders of the Notes annual audited consolidated financial statements and
quarterly unaudited consolidated summary financial statements.

CONDITIONAL REPAYMENT OPTION

The Note Indenture provides that each holder shall have the right to
require the Company to repurchase the Notes at a purchase price equal to 100% of
the principal amount, plus accrued and unpaid interest, upon the occurrence of
any event requiring that the Company repurchase, or make an offer to repurchase,
any Subordinated Debt or Senior Debt other than the Notes. In the event such a
requirement is effected with respect to Subordinated Debt, the holders of the
Notes requiring the Company to repurchase Notes must be paid in full prior to
any payment to the holders of Subordinated Debt. In the event such a requirement
is effected with respect to Senior Debt, the holders of the Notes requiring the
Company to repurchase Notes must be paid concurrently with the holders of the
pari passu Senior Debt. The Convertible Subordinated

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<PAGE> 41

Debenture Indenture contains such a repurchase requirement (i) in the event of
any Fundamental Change (as defined in the Convertible Subordinated Debenture
Indenture) or (ii) if the Company's Net Worth (as defined in the Convertible
Subordinated Debenture Indenture) at the end of each of any two consecutive
fiscal quarters is less than the Minimum Net Worth (defined in the Convertible
Subordinated Debenture Indenture as approximately $141.0 million plus the net
proceeds to the Company from any offering of Common Stock by the Company
subsequent to the date thereof). See "Description of Other
Indebtedness -- Convertible Subordinated Debentures."

COVENANTS

The following covenants will be applicable to the Notes, but are not
applicable to other series of Senior Debt Securities or Subordinated Debt
Securities unless specifically made applicable thereto. Except as set forth
under "-- Conditional Repayment Option," the Note Indenture does not contain
provisions that permit the holders of the Notes to require that the Company
repurchase or redeem such securities in the event of a takeover,
recapitalization or similar restructuring, nor does the Note Indenture contain
covenants specifically designed to protect holders of the Notes in the event of
a highly-leveraged transaction involving the Company.

Restrictions on Additional Senior Recourse Debt. The Note Indenture limits
the amount of Senior Recourse Debt of the Company on a consolidated basis. The
Company may not create, incur, assume, guarantee or otherwise be liable for any
Senior Recourse Debt if, immediately after giving effect thereto, the aggregate
amount of Senior Recourse Debt outstanding would exceed 450% of the Company's
Consolidated Net Worth. See "-- Certain Definitions Applicable to the Notes." As
of March 31, 1996, the Company's Consolidated Net Worth was approximately $166.2
million. As of March 31, 1996, and after giving effect to the sale of $50.0
million principal amount of the Notes offered hereby, the Company could have
incurred approximately $ million of additional Senior Recourse Debt under
this covenant.

Restrictions on Dividends, Redemptions and Other Payments. The Note
Indenture provides that the Company cannot (i) declare or pay any dividend,
either in cash or property, on any shares of its capital stock (except dividends
or other distributions payable solely in shares of capital stock of the
Company), (ii) purchase, redeem or retire any shares of its capital stock or any
warrants, rights or options to purchase or acquire any shares of its capital
stock or (iii) make any other payment or distribution, either directly or
indirectly through any subsidiary, in respect of its capital stock (such
dividends, purchases, redemptions, retirements, payments and distributions being
herein collectively called "Restricted Payments") if, after giving effect
thereto,

(1) an Event of Default (as defined in the Note Indenture) would have
occurred; or

(2) (A) the sum of (i) such Restricted Payments plus (ii) the
aggregate amount of all Restricted Payments made during the period after
December 31, 1995 would exceed (B) the sum of (i) $10 million plus (ii) 50%
of the Company's Consolidated Net Income for each fiscal year commencing
subsequent to December 31, 1995 (with 100% reduction for a loss in any
fiscal year), plus (iii) the cumulative net proceeds received by the
Company from the issuance or sale after December 31, 1995 of capital stock
of the Company (including in such proceeds, the face amount of
indebtedness, including the Convertible Subordinated Debentures, that has
been converted to Common Stock after December 31, 1995).

Notwithstanding the foregoing, the Company may make a previously-declared
Restricted Payment if the declaration of such Restricted Payment was permitted
when made. The amount of any Restricted Payment payable in property shall be
deemed to be the fair market value of such property as determined by the Board
of Directors of the Company.

Limitations on Restricting Subsidiary Dividends. The Note Indenture
provides that neither the Company nor its subsidiaries may create or otherwise
cause to become effective any consensual encumbrance or restriction of any kind
on the ability of any subsidiary of the Company to (i) pay dividends or make any
other distribution on its capital stock, (ii) pay any debt owed to the Company
or any other subsidiary of the Company or (iii) make loans, advances or capital
contributions to the Company or any other subsidiary of the Company except in
certain specified circumstances.

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<PAGE> 42

Limitation on Transactions With Affiliates. Neither the Company nor any of
its Material Subsidiaries may enter into any transactions with any Affiliate on
terms and conditions less favorable to the Company or such Material Subsidiary,
as the case may be, than would be available at such time in a comparable
transaction in arm's length dealings with an unrelated person as determined by
the Company's Board of Directors. These provisions do not apply to Restricted
Payments otherwise permitted under the Note Indenture, fees and compensation
paid to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any subsidiary, as determined by the Company's
Board of Directors or its senior management in the exercise of their reasonable
business judgment or payments for goods and services purchased in the ordinary
course of business on an arm's length basis.

CERTAIN DEFINITIONS

In addition to those terms already defined in the Senior Indenture, the
following additional terms shall have the meanings given below when used in
connection with the Notes.

"Consolidated Net Worth" is defined as the excess, as determined in
accordance with generally accepted accounting principles, after appropriate
deduction for minority interests in the net worth of consolidated subsidiaries,
of the Company's assets over its liabilities.

"Funded Debt" is defined as any of the following obligations of the Company
or any subsidiary which by its terms matures at or is extendable or renewable at
the sole option of the obligor without requiring the consent of the obligee to a
date more than 360 days after the date of the creation or incurrence of such
obligation: (i) any obligations, contingent or otherwise, for borrowed money or
for the deferred purchase price of property, assets, securities or services
(including, without limitation, any interest accruing subsequent to an event of
default); (ii) all obligations (including the Notes) evidenced by bonds, notes,
debentures or similar instruments; (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), except any such obligation that constitutes a trade payable
and an accrued liability arising in the ordinary course of business, if and to
the extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet prepared in accordance with generally accepted accounting
principles; (iv) all Capital Lease Obligations; (v) liabilities of the Company
actually due and payable under banker's acceptances or letters of credit; (vi)
all indebtedness of the type referred to in clause (i), (ii), (iii), (iv) or (v)
above secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien upon or security
interest in property of the Company or any subsidiary (including, without
limitation, accounts and contract rights), even though the Company or any
Subsidiary has not assumed or become liable for the payment of such
indebtedness; and (vii) any guarantee or endorsement (other than for collection
or deposit in the ordinary course of business) or discount with recourse of, or
other agreement, contingent or otherwise, to purchase, repurchase or otherwise
acquire, to supply or advance funds or become liable with respect to, any
indebtedness or any obligation of the type referred to in any of the foregoing
clauses (i) through (vi), regardless of whether such obligation would appear on
a balance sheet.

"Material Subsidiaries" is defined to include Holliday Fenoglio, AMRESCO
Management, Inc., AMRESCO Residential, AMRESCO Advisors, Inc., ACC, AMRESCO New
England, Inc., Oak Cliff Financial, Inc. and any other subsidiary of the Company
whose assets or revenues comprise at least five percent of the assets or
revenues of the Company and its subsidiaries on a consolidated basis as of the
end of, or for the, Company's most recently completed fiscal quarter, as
determined from time to time.

"Senior Debt" is defined as any Funded Debt, whether outstanding on the
date of execution of the Note Indenture or thereafter created or incurred,
unless it is provided in the appropriate instrument that such Funded Debt is
subordinated to any other Funded Debt (including the Notes).

"Senior Recourse Debt" is defined as Senior Debt minus any Funded Debt of
the Company or any of its subsidiaries that is (A)(i) specifically advanced to
finance the acquisition of assets classified on the Company's balance sheet as
"assets held for sale" and (ii) either (a) secured only by the assets to which
such indebtedness relates without recourse to the Company or any of its
subsidiaries or (b) issued under a loan

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<PAGE> 43

agreement that requires each advance to be repaid upon sale of the assets to
which such advance relates within no more than one year from the date of such
advance or (B) advanced to a subsidiary or group of subsidiaries formed for the
sole purpose of acquiring or holding a portfolio of assets (i) against which a
loan is obtained that is made without recourse to, and with no
cross-collateralization against the assets of, the Company or any other
subsidiary of the Company and (ii) upon complete or partial liquidation of which
the loan must be correspondingly completely or partially repaid, as the case may
be.

"Subordinated Debt" is defined as all Funded Debt except Senior Debt.

BOOK-ENTRY

The Notes will be issued initially as book-entry notes in the form of one
fully registered global security which will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York, as depositary ("DTC"), and
registered in the name of DTC's nominee. Beneficial interests in the Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described in the accompanying
Prospectus, Notes in definitive certificated form will not be issued.

CONCERNING THE TRUSTEE

Comerica Bank is Trustee under the Note Indenture and is also the Note
Registrar. Comerica Bank-Texas, an affiliate of Comerica Bank, is a lender under
the Revolving Loan Agreement.

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DESCRIPTION OF OTHER INDEBTEDNESS

The following summaries of the principal terms of the various credit
facilities, the Senior Subordinated Note Indenture and the Convertible
Subordinated Debenture Indenture do not purport to be complete and are subject
to the detailed provisions of, and qualified in their entirety by reference to,
such agreements. The Company will provide without charge to each person to whom
a copy of this Prospectus Supplement is delivered, upon the written or oral
request of such person, a copy of any agreement described in this section. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.

REVOLVING LOAN AGREEMENT

General. Effective April 25, 1996, the Company and certain of its
subsidiaries entered into the First Amended and Restated Revolving Loan
Agreement with NationsBank of Texas, as agent (the "Agent"), and NationsBank of
Texas and other lending institutions party thereto, as lenders (collectively,
the "Banks"), which replaced the Company's previous revolving line of credit
with NationsBank of Texas as agent bank. A total of $63.2 million was
outstanding under this facility at June 28, 1996. At June 28, 1996, the Company
had outstanding $1.2 million in face amount of letters of credit pursuant to
such facility.

The Revolving Loan Agreement has a maximum borrowing base of $200.0
million. At June 28, 1996, the Banks' maximum commitment under the Revolving
Loan Agreement was limited to an aggregate of $185.0 million, subject to
borrowing base limitations. The additional $15.0 million would become available
to the Company upon the participation by additional financial institutions in
the syndicate for the loan and upon an increase in the Company's borrowing base
under this agreement. There can be no assurance that such events will occur. The
borrowing base is determined from time to time based upon a formula applied to
performing loans, non-performing loans and other investments and assets of the
Company. The borrowing base for June 1996 was set at $88.1 million. Advances
under the Revolving Loan Agreement may be used for (i) general working capital
purposes, (ii) acquisitions of equity interests in other persons, (iii) certain
permitted investments, (iv) other business needs approved by the Banks, (v)
acquisitions of Asset Portfolios, (vi) acquisitions of entities for the purpose
of resolving Asset Portfolios owned by such entities, and (vii) other lending
activities conducted by the Company. There are also sublimits of $10.0 million
for letters of credit and $50.0 million for a commercial paper program. The
facility permits the Company to make draws denominated in foreign currencies to
facilitate the Company's foreign Asset Portfolio management and investment
activities.

Ranking. Indebtedness under the Revolving Loan Agreement constitutes Senior
Debt.

Security. Indebtedness under the Revolving Loan Agreement is secured by
substantially all the assets of the Company not pledged under other facilities,
including stock of a majority of the Company's subsidiaries.

Interest. Indebtedness under the Revolving Loan Agreement generally bears
interest at a rate based (at the Company's option) upon the lesser of (i) the
Variable Rate (defined as the greater of the Agent's prime rate, as announced
from time to time, and the Federal Funds Rate (as defined in the Revolving Loan
Agreement) plus .50%) or (ii) the Adjusted LIBOR Rate (as defined in the
Revolving Loan Agreement). All advances funded in foreign currencies bear
interest at the Alternate Currency Rate (as defined in the Revolving Loan
Agreement).

Maturity. The Revolving Loan Agreement will mature on May 31, 1998.

Fees. The Company paid to the Banks, upon execution and delivery of the
Revolving Loan Agreement, an aggregate participation fee equal to $177,500. The
Company also will be required to pay to the Banks a commitment fee of 25 basis
points per annum, payable in arrears on a quarterly basis, on the committed
undrawn amount of the Revolving Loan Agreement. In addition, the Company will be
required to pay to the Agent (for the account of each Bank) certain fees in
respect of letters of credit issued under the Revolving Loan Agreement. The
Company also will pay to the Agent, or an affiliate thereof, certain other fees
for the Agent's role in structuring and administering the Revolving Loan
Agreement.

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Conditions to Funding Extensions of Credit. The obligation of the Banks to
make loans or extend letters of credit will be subject to the satisfaction of
certain customary conditions, including, without limitation, the absence of any
default under the Revolving Loan Agreement and all representations and
warranties under the Revolving Loan Agreement being true and correct in all
material respects.

Covenants. The Revolving Loan Agreement requires the Company to meet
certain financial tests, including minimum consolidated tangible net worth,
maximum consolidated funded debt to consolidated capitalization ratio, minimum
fixed charge coverage ratio, minimum interest coverage ratio and maximum senior
consolidated funded debt to consolidated EBITDA ratio. The Revolving Loan
Agreement contains covenants that, among other things, will limit the incurrence
of additional indebtedness, investments, asset sales, loans to stockholders,
dividends, transactions with affiliates, acquisitions, mergers and
consolidations, liens and encumbrances and other matters customarily restricted
in such agreements. The Revolving Loan Agreement also contains additional
covenants that require the Company to maintain its properties and those of its
subsidiaries (including corporate franchises), together with insurance thereon,
to provide certain information to the Agent, including financial statements,
notices and reports, to permit inspections of the books and records of the
Company and its subsidiaries by the Agent, to comply with applicable laws,
including environmental laws and ERISA and to pay taxes.

Events of Default. The Revolving Loan Agreement contains customary events
of default, including payment defaults, covenant defaults (subject to certain
cure periods), breaches of representations and warranties, cross-defaults to
certain other indebtedness, certain events of bankruptcy and insolvency,
judgment defaults in excess of $500,000, failure of any guaranty or security
agreement supporting the Revolving Loan Agreement to be in full force and effect
and change of control of the Company.

Indemnification. Under the Revolving Loan Agreement, the Company has agreed
to indemnify the Agent and the Banks from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without limitation,
reasonable fees and disbursements of counsel for Agent and the Banks) that may
be incurred by Agent or any Bank relating to or arising out of the Revolving
Loan Agreement, provided that the Company is not liable for any such
liabilities, losses, damages, costs or expenses resulting from such indemnified
party's own gross negligence or willful misconduct. In addition, the Company has
agreed to indemnify the Agent and the Banks against any and all present and
future claims related to tax payments (excluding income taxes of the Agent and
any Bank) in connection with the loans made under the Revolving Loan Agreement.

ACC WAREHOUSE FACILITIES

NATIONSBANK

General. On April 28, 1995, ACC entered into the $25.0 million NationsBank
Warehouse Facility, which ACC uses to finance the origination and warehousing of
certain mortgage loans. See "Business -- Commercial Mortgage Banking Business."
The NationsBank Warehouse Facility has been amended twice, effective September
30, 1995 and April 29, 1996, respectively. The Company has guaranteed certain of
ACC's obligations under the NationsBank Warehouse Facility. A total of $9.0
million and $2.8 million was outstanding under the NationsBank Warehouse
Facility at December 31, 1995 and March 31, 1996, respectively.

Ranking. Indebtedness under the NationsBank Warehouse Facility constitutes
Senior Debt.

Security. ACC's indebtedness under the NationsBank Warehouse Facility is
secured by all mortgage loans originated by ACC using funds obtained under the
NationsBank Warehouse Facility and related collection accounts.

Interest. Indebtedness under the NationsBank Warehouse Facility generally
bears interest at a rate based (at ACC's option) upon either (i) the prime rate
established by NationsBank of Texas, as announced from time to time or (ii) the
Adjusted LIBOR Rate (as defined in the NationsBank Warehouse Facility) plus
1.65% or 2% based upon certain enumerated factors.

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<PAGE> 46

Maturity. The original maturity date of the NationsBank Warehouse Facility
is January 25, 1997, subject to certain limitations and short extensions. Under
certain circumstances, ACC may extend the maturity date to January 25, 1998.

Conditions to Extensions of Credit. The obligation of NationsBank of Texas
to make loans to ACC under the NationsBank Warehouse Facility is subject to
certain customary conditions including, without limitation, the delivery of
certain documents, instruments and applications by ACC, approval by NationsBank
of Texas of the mortgage loan to be originated by ACC, the absence of any
default under the NationsBank Warehouse Facility and all representations and
warranties under the NationsBank Warehouse Facility being true and correct.

Covenants. The NationsBank Warehouse Facility requires ACC to meet certain
financial tests, including minimum liquidity and minimum tangible net worth. The
NationsBank Warehouse Facility also contains covenants that, among other things,
limit the incurrence of additional indebtedness, investments, asset sales,
distributions, transactions with affiliates, mergers and consolidations, liens
and encumbrances and other matters customarily restricted in such agreements.
The NationsBank Warehouse Facility also contains additional covenants that
require ACC to provide certain information to NationsBank of Texas, including
financial statements, notices and reports, to permit inspections of the books
and records of the Company and its subsidiaries by NationsBank of Texas and to
comply with applicable laws and to pay taxes.

Events of Default. The NationsBank Warehouse Facility contains customary
events of default, including payment defaults, covenant defaults, breaches of
representations and warranties, cross-defaults to certain other indebtedness,
certain events of bankruptcy and insolvency, judgment defaults in excess of
certain amounts, failure of any guarantee or security agreement supporting the
NationsBank Warehouse Facility to be in full force and effect, a change in
control of ACC, changes in the basic business of ACC and changes in the
individuals holding certain offices with ACC.

Indemnification. Under the NationsBank Warehouse Facility, ACC has agreed
to indemnify NationsBank of Texas and certain related parties from and against
any and all losses, liabilities, claims, damages, deficiencies, interest,
judgments, costs and expenses (including, without limitation, reasonable fees
and disbursements of counsel for NationsBank of Texas) that arise out of certain
matters described in the NationsBank Warehouse Facility, provided that ACC is
not liable for such matters resulting from the gross negligence or willful
misconduct of an indemnitee thereunder.

RESIDENTIAL FUNDING CORPORATION

General. On August 15, 1995, ACC entered into the RFC Warehouse Facility,
which ACC uses to facilitate the underwriting and origination of multi-family
mortgage loans to be purchased by Freddie Mac. The RFC Warehouse Facility was
amended on May 1, 1996 and was supplemented by letter dated May 2, 1996. A total
of $8.6 million and $3.5 million was outstanding under the RFC Warehouse
Facility at December 31, 1995 and March 31, 1996, respectively. The RFC
Warehouse Facility is non-recourse to the Company.

Ranking. Indebtedness under the RFC Warehouse Facility constitutes Senior
Debt.

Security. ACC's indebtedness under the RFC Warehouse Facility is secured by
all mortgage loans originated by ACC using funds obtained under the RFC
Warehouse Facility.

Interest. Indebtedness under the RFC Warehouse Facility generally bears
interest at a rate based upon LIBOR (as defined in the RFC Warehouse Facility)
plus 3.0%. However, pursuant to the supplemental letter, the Lender in its sole
discretion may lower the per annum rate of interest. The RFC Warehouse Facility
currently bears interest at a rate of LIBOR plus 1.25%.

Maturity. The stated maturity date will be provided in a note related to
each borrowing under the RFC Warehouse Facility and is expected to be
approximately 60 to 80 days from the date of each such borrowing.

Conditions to Extensions of Credit. The obligation of Residential Funding
Corporation to make loans to ACC under the RFC Warehouse Facility is subject to
certain customary conditions including, without

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<PAGE> 47

limitation, the delivery of certain documents, instruments and applications by
ACC, approval by Residential Funding Corporation of the mortgage loans to be
originated by ACC, the absence of any default under the RFC Warehouse Facility,
and all representations and warranties under the RFC Warehouse Facility being
true and correct.

Covenants. The RFC Warehouse Facility requires ACC to meet certain
financial tests, including a maximum ratio of debt to tangible net worth,
minimum tangible net worth and minimum Servicing Portfolio (as defined in the
RFC Warehouse Facility). The RFC Warehouse Facility also contains covenants
that, among other things, limit ACC's ability to liquidate, dissolve,
consolidate or merge or sell any substantial part of its assets, or acquire any
substantial part of the assets of another business. The RFC Warehouse Facility
also contains additional covenants that require ACC to provide certain
information to Residential Funding Corporation, including financial statements,
notices and reports, permit inspections of the books and records of ACC by
Residential Funding Corporation and to comply with applicable laws and to pay
taxes.

Events of Default. The RFC Warehouse Facility contains customary events of
default, including payment defaults (subject to certain cure periods), breaches
of covenants or representations and warranties, cross-defaults to certain other
indebtedness, certain events of bankruptcy and insolvency (including of the
Company) and judgment defaults in excess of certain amounts.

Indemnification. Under the RFC Warehouse Facility, ACC has agreed to
indemnify Residential Funding Corporation and certain related parties from and
against any and all losses, liabilities, claims, damages, deficiencies,
interest, judgments, costs and expenses (including, without limitation,
reasonable fees and disbursements of counsel for Residential Funding
Corporation) that arise out of certain matters described in the RFC Warehouse
Facility, provided that ACC is not liable for such matters resulting from the
gross negligence or willful misconduct of an indemnitee thereunder.

ARMC WAREHOUSE FACILITY

General. Effective February 26, 1996, ARMC entered into the Prudential
Warehouse Facility. The Prudential Warehouse Facility is currently a $400.0
million credit facility that ARMC uses to finance the acquisition and
warehousing of certain residential mortgage loans. See "Business -- Residential
Mortgage Securitization." A total of $43.6 million was outstanding under the
Prudential Warehouse Facility at June 28, 1996. The Prudential Warehouse
Facility is non-recourse to the Company and its subsidiaries.

Ranking. Indebtedness under the ARMC Warehouse Facility constitutes Senior
Debt.

Security. ARMC's indebtedness under the Prudential Warehouse Facility is
secured by all residential mortgage loans acquired by ARMC using funds obtained
under the Prudential Warehouse Facility.

Interest. Indebtedness under the Prudential Warehouse Facility generally
bears interest at a rate based upon LIBOR (as defined in the Prudential
Warehouse Facility) plus 0.85%; if Prudential Securities, Inc. is not the
underwriter on the eventual securitization of the mortgage loans securing this
warehouse facility, the interest rate may be increased to LIBOR plus 2.4%
applicable retroactively.

Maturity. The stated maturity date for the Prudential Warehouse Facility is
the earlier of (i) October 31, 1996 or (ii) the date on which the loans
collateralizing the Prudential Warehouse Facility are securitized; provided that
if the securitization includes a pre-funding account, a portion of the
Prudential Warehouse Facility equal to the pre-funding account balance shall
remain outstanding during the related funding period.

Conditions to Extensions of Credit. The obligation of Prudential Securities
Realty Funding Corporation to make loans to ARMC under the Prudential Warehouse
Facility is subject to certain customary conditions, including, without
limitation, the delivery of certain documents, instruments and applications by
ARMC, approval by Prudential Securities Realty Funding Corporation of the
mortgage loan pool to be acquired by ARMC, the absence of any default under the
Prudential Warehouse Facility, and all representations and warranties under the
Prudential Warehouse Facility being true and correct.

Covenants. The Prudential Warehouse Facility requires ARMC to meet certain
financial tests, including minimum tangible equity capital and a maximum
leverage ratio. The Prudential Warehouse Facility also

S-46
<PAGE> 48

contains covenants that, among other things, require ARMC to provide certain
information to Prudential Securities Realty Funding Corporation, including
financial statements and other reports regarding the mortgage loans, to maintain
adequate insurance, and to comply with the applicable laws.

Events of Default. The Prudential Warehouse Facility contains customary
events of default, including payment default, breaches of covenants or
representations and warranties, certain events of bankruptcy and insolvency
(including of the Company) and material adverse changes in the financial
condition of ARMC or the Company.

Indemnification. Under the Prudential Warehouse Facility, ARMC has agreed
to indemnify Prudential Securities Realty Funding Corporation against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
relate to or arise out of the Prudential Warehouse Facility, provided that ARMC
is not liable for such matters resulting from the negligence or willful
misconduct of Prudential.

ARMC REPURCHASE FACILITY

General. Pursuant to a Commitment Letter dated May 29, 1996, CS First
Boston Mortgage Capital Corp. ("CSFB") agreed to provide ARMC with a repurchase
facility in an amount not to exceed $500 million (the "Repurchase Facility"),
which supplements, forms a part of and is subject to a Global Master Repurchase
Agreement dated May 28, 1996 (the "Global Agreement"), to finance the
acquisition and warehousing of residential mortgage loans. As of June 28, 1996,
$133.5 million was outstanding under the Repurchase Facility.

Ranking. Indebtedness under the ARMC Repurchase Facility constitutes Senior
Debt.

Security. Indebtedness under the Repurchase Facility will be secured by a
first priority security interest in the mortgage loans acquired with funds
advanced under the Repurchase Facility.

Interest. Indebtedness under the Repurchase Facility will bear interest at
a rate determined with respect to each repurchase transaction.

Repurchase Date. The repurchase date will be determined by each repurchase
transaction.

Covenants. The Repurchase Facility requires ARMC to meet certain financial
tests, including minimum tangible net worth. The Repurchase Facility also
contains covenants that, among other things, limit ARMC's ability to create or
suffer to exist new debt and to liquidate, dissolve, consolidate or merge or
sell any substantial part of its assets, or acquire any substantial part of the
assets of another business. The Repurchase Facility also contains additional
covenants that require ARMC to provide certain information to CSFB, including
financial statements, notices and reports.

Events of Default. The Global Agreement contains certain events of default,
including, among others, the failure to transfer Purchased Securities upon the
applicable Repurchase Date, payment defaults, failure to maintain a minimum
margin on the value of the underlying loans, insolvency and breaches of
representations and warranties.

AMBS REPURCHASE TRANSACTION

General. On December 19, 1995, AMRESCO MBS I, INC., a wholly-owned
subsidiary of the Company ("AMBS"), entered into a Repurchase Transaction (the
"AMBS Repurchase Transaction") which supplements, forms part of and is subject
to a Global Master Repurchase Agreement (the "AMBS Repurchase Agreement") with
Nomura Grand Cayman, Ltd. ("Nomura") to support the purchase on margin of
certain commercial mortgage pass-through certificates (the "AMBS Purchased
Securities"). As of December 31, 1995 and March 31, 1996, $20.6 million and
$16.9 million was outstanding, respectively, under the AMBS Repurchase
Transaction.

Ranking. Indebtedness under the AMBS Repurchase Transaction constitutes
Senior Debt.

Security. Indebtedness under the AMBS Repurchase Transaction is secured by
a first priority security interest in the AMBS Purchased Securities.

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Interest. Indebtedness under the AMBS Repurchase Transaction bears interest
at a rate of 30 day LIBOR plus 1.40%.

Repurchase Date. The repurchase date for the AMBS Repurchase Transaction is
December 18, 1996, with a six month extension at the option of Nomura.

Events of Acceleration. Upon the occurrence of (i) a material adverse
impact on (A) the creditworthiness of AMBS, (B) the ability of AMBS to perform
its obligations under the AMBS Repurchase Agreement, (C) the marketability or
value of the AMBS Purchased Securities or (D) the economic, political or
financial stability of the issuing or domicile country or (ii) governmental
changes in taxation or exchange controls which affect the AMBS Purchased
Securities or relevant financial markets, Nomura may immediately accelerate the
repurchase date.

Events of Default. The AMBS Repurchase Transaction contains certain events
of default, including, among others, payment defaults, failure to maintain a
minimum margin, insolvency, breaches of representations and warranties,
suspension from a securities exchange or association, failure to maintain a
first priority security interest in the AMBS Purchased Securities, judgment
defaults in excess of $1.0 million and cross-defaults in excess of certain
amounts.

SENIOR SUBORDINATED NOTES

General. On February 2, 1996, the Company entered into the Senior
Subordinated Note Indenture with BankOne, Columbus, N.A., as trustee. Pursuant
to the terms of the Senior Subordinated Note Indenture, an aggregate of $57.5
million of Senior Subordinated Notes were issued. All of the net proceeds from
the sale of the Senior Subordinated Notes were applied to pay down indebtedness
under the Company's Revolving Loan Agreement.

Ranking. Indebtedness under the Senior Subordinated Note Indenture does not
constitute Senior Debt and will be subordinated to the Notes.

Security. Indebtedness under the Senior Subordinated Note Indenture is
unsecured.

Interest. The Senior Subordinated Notes bear interest at a rate of 10% per
annum.

Maturity. The Senior Subordinated Notes will mature on January 15, 2003.

Certain Rights to Require Repurchase of Senior Subordinated Notes. The
Senior Subordinated Note Indenture provides that each holder shall have the
right to require the Company to repurchase the Senior Subordinated Notes at a
purchase price equal to 100% of the principal amount plus accrued and unpaid
interest, upon the occurrence of any event requiring the Company to repurchase,
or make an offer to repurchase, any Subordinated Debt other than the Senior
Subordinated Notes, including (i) in the event of any Fundamental Change (as
defined in the Convertible Subordinated Debenture Indenture), or (ii) if the
Company fails to maintain certain minimum net worth. In addition, upon the death
of any holder of Notes, the Company will redeem, at par plus accrued interest,
such holder's Notes upon request up to $30,000 in principal amount per holder
per year subject to an aggregate limit for all holders of $300,000 in principal
amount in any twelve month period.

Optional Redemption. The Senior Subordinated Notes are not redeemable prior
to January 15, 2001. Thereafter, the Senior Subordinated Notes will be
redeemable, at the Company's option, in whole or in part, at 100% of the
principal amount thereof plus accrued interest.

Covenants. The Senior Subordinated Note Indenture contains covenants
limiting dividends and redemptions, limiting restrictions on subsidiary
dividends and requiring that certain conditions be met prior to any
consolidation, merger or sale of the assets of the Company.

Events of Default. The Senior Subordinated Note Indenture contains certain
customary events of default, including payment defaults, covenant defaults
(subject to certain cure periods), defaults of certain other indebtedness,
certain events of bankruptcy and insolvency and judgment defaults in excess of
$1 million.

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CONVERTIBLE SUBORDINATED DEBENTURES

General. On November 27, 1995, the Company entered into the Convertible
Subordinated Debenture Indenture with Wells Fargo Bank (Texas) National
Association (formerly First Interstate Bank of Texas, National Association), as
trustee. Pursuant to the terms of the Convertible Subordinated Debenture
Indenture, an aggregate of $45.0 million of Convertible Subordinated Debentures
were issued. All of the net proceeds from the sale of the Convertible
Subordinated Debentures were applied to pay down indebtedness under the
Company's Revolving Loan Agreement.

Ranking. Indebtedness under the Convertible Subordinated Debenture
Indenture does not constitute Senior Debt and will be subordinated to the Notes.

Security. Indebtedness under the Convertible Subordinated Debenture
Indenture is unsecured.

Interest. The Convertible Subordinated Debentures bear interest at the rate
of 8% per annum.

Maturity. The Convertible Subordinated Debentures will mature on December
15, 2005.

Conversion Rights. The Convertible Subordinated Debentures are convertible
into Common Stock at the option of holders thereof at any time and from time to
time prior to and including maturity. The initial conversion price is $12.50 per
share, subject to adjustment in certain events.

Certain Rights to Require Repurchase of Convertible Subordinated
Debentures. In the event of any Fundamental Change (as described below)
affecting the Company which constitutes a Repurchase Event (as described below)
occurring after the date of issuance of the Convertible Subordinated Debentures
and on or prior to maturity, each holder of Convertible Subordinated Debentures
will have the right, at the holder's option, to require the Company to
repurchase all or any part of the holder's Convertible Subordinated Debentures
at a price (the "Repurchase Price") equal to 101% of the principal amount
thereof, together with accrued and unpaid interest to the repurchase date.

The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitute the right to
receive consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock which is (or, upon consummation of or immediately following such
transaction or event, will be) listed on a national securities exchange or
approved for quotation on the Nasdaq Stock Market or any similar system of
automated dissemination of quotations of securities prices. For purposes of the
definition of a "Fundamental Change," (i) "substantially all of the Common
Stock" shall mean at least 85% of the Common Stock outstanding immediately prior
to the transaction or event giving rise to a Fundamental Change and (ii)
consideration shall be "substantially all common stock" if at least 80% of the
fair value (as determined in good faith by the Board of Directors) of the total
consideration is attributable to common stock. A Fundamental Change would not
include an acquisition of Common Stock by any person or group so long as it does
not result in termination of such listing or approval for quotation.

A "Repurchase Event" shall have occurred if a Fundamental Change shall have
occurred unless (i) the current market price of the Common Stock is at least
equal to the conversion price of the Convertible Subordinated Debentures in
effect immediately preceding the time of such Fundamental Change or (ii) the
consideration in the transaction or event giving rise to such Fundamental Change
to the holders of Common Stock consists of cash, securities that are, or
immediately upon issuance will be, listed on a national securities exchange or
quoted on the Nasdaq National Market (or any similar system of automated
dissemination of quotations of securities prices), or a combination of cash and
such securities, and the aggregate fair market value of such consideration
(which, in the case of such securities, shall be equal to the average of the
daily closing prices of such securities during the 10 consecutive trading days
commencing with the sixth trading day following consummation of such transaction
or event) is at least 105% of the conversion price of the Convertible
Subordinated Debentures in effect on the date immediately preceding the closing
date of such transaction or event.

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<PAGE> 51

Optional Redemption. The Convertible Subordinated Debentures are not
redeemable prior to December 15, 1996. Thereafter the Convertible Subordinated
Debentures will be redeemable, at the Company's option, in whole and not in
part, at various redemption prices (expressed as a percentage of principal
amount). The Convertible Subordinated Debentures may not be redeemed, however,
after December 15, 1996, and prior to December 15, 1998, unless, for twenty
consecutive trading days ending on the day immediately preceding the fifth day
prior to notice of redemption, the Closing Price (as defined) equals or exceeds
145% of the conversion price.

Covenants. The Convertible Subordinated Debenture Indenture contains
covenants limiting dividends and redemptions, limiting restrictions on
subsidiary dividends and requiring that certain conditions be met prior to any
consolidation, merger or sale of assets of the Company.

In addition, the Convertible Subordinated Debenture Indenture provides that
if the Company's Net Worth (as defined below) at the end of each of any two
consecutive fiscal quarters (the last day of such second fiscal quarter being
referred to as the "Acceleration Date"), respectively, is less than the Minimum
Net Worth (as defined below), then the Company shall make an irrevocable,
unconditional offer to all holders (an "Offer") to acquire, on a pro rata basis,
on or before the last day of the next following fiscal quarter or, if the
Acceleration Date is the last day of the Company's fiscal year, the 45th day
after the last day of the next following fiscal quarter (the "Accelerated
Payment Date"), $20.0 million aggregate principal amount of Convertible
Subordinated Debentures (or if less than such amount of Convertible Subordinated
Debentures are then outstanding, all of the Convertible Subordinated Debentures
outstanding at the time) at a purchase price equal to 100% of the principal
amount, plus accrued and unpaid interest, if any, to and including such
Accelerated Payment Date, which amounts or portion thereof upon acceptance of
such Offer by tender shall thereupon become due and payable.

"Minimum Net Worth" means approximately $141.0 million plus the net
proceeds to the Company from any other offering of Common Stock by the Company
subsequent to the date of this Prospectus Supplement. "Net Worth" of the Company
as of any date means the amount of equity of the holders of capital stock of the
Company which would appear on the balance sheet of the Company as of such date,
determined in accordance with generally accepted accounting principles.

Events of Defaults. The Convertible Subordinated Debenture Indenture
contains certain customary events of default, including payment defaults,
covenant defaults (subject to certain cure periods), defaults of certain other
indebtedness, certain events of bankruptcy and insolvency and judgment defaults
in excess of $1.0 million.

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UNDERWRITING

Subject to the terms and conditions of the Purchase Agreement (the
"Purchase Agreement") among the Company and Piper Jaffray Inc., J.C. Bradford &
Co. and Morgan Keegan & Company, Inc. (collectively, the "Underwriters") and to
the receipt of certain legal opinions and other closing conditions contemplated
thereby, the Underwriters have severally agreed to purchase from the Company the
respective principal amount of the Notes set forth opposite their names below.

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Piper Jaffray Inc..................................
J.C. Bradford & Co.................................
Morgan Keegan & Company, Inc.......................
------------
Total.................................... $ 50,000,000
============
</TABLE>

The nature of the obligations of the Underwriters is such that if any of
the Notes are purchased, all of them must be purchased.

The Underwriters have advised the Company that they propose to offer the
Notes to the public at the Price to Public and to selected dealers at such price
less a concession of not more than % of the principal amount of the Notes.
The Underwriters may allow, and such dealers may re-allow, concessions not in
excess of % of the principal amount of the Notes to certain other brokers
and dealers. After the initial public offering of the Notes, the Price to Public
and other selling terms may be changed by the Underwriters.

The Purchase Agreement provides that the obligations of the Underwriters to
purchase the Notes are subject to certain conditions precedent. The Purchase
Agreement also provides that the Company will indemnify the Underwriters and
their controlling persons against certain liabilities and expenses, including
liabilities under the Securities Act, or contribute to payments the Underwriters
may be required to make in respect thereof.

The Company has made application to list the Notes on the New York Stock
Exchange under the symbol "AMMB99." However, there can be no assurance that an
active trading market in the Notes will develop or that the Notes will not trade
at a discount to their principal amount.

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<PAGE> 53

$250,000,000

[AMRESCO LOGO]

COMMON STOCK, PREFERRED STOCK, DEBT SECURITIES,
SECURITIES WARRANTS AND UNITS

---------------------

AMRESCO, INC. (the "Company") may offer from time to time, together or
separately, (i) shares of its common stock, par value $0.05 per share (the
"Common Stock"), (ii) shares of its preferred stock, par value $1.00 per share
(the "Preferred Stock"), (iii) its unsecured debt securities, which may be
either senior (the "Senior Debt Securities") or subordinated (the "Subordinated
Debt Securities" and, together with the Senior Debt Securities, the "Debt
Securities") and (iv) warrants (collectively, the "Securities Warrants") to
purchase Debt Securities (the "Debt Securities Warrants"), Preferred Stock (the
"Preferred Stock Warrants") or Common Stock (the "Common Stock Warrants"), in
amounts, at prices and on terms to be determined at the time of the offering
thereof. The Common Stock, Preferred Stock, Debt Securities and Securities
Warrants (collectively, the "Securities") may be offered independently or
together in any combination ("Units") for sale directly to purchasers or through
dealers, underwriters or agents to be designated. The Subordinated Debt
Securities and Preferred Stock may be convertible or exchangeable into other
series of Debt Securities, Preferred Stock or Common Stock. The Securities
offered pursuant to this Prospectus may be issued in one or more series or
issuances the aggregate offering price of which will not exceed $250.0 million
(or the equivalent thereof if the Debt Securities are denominated in one or more
foreign currencies of foreign currency units).

The specific terms of the Securities in respect of which this Prospectus is
being delivered (the "Offered Securities") will be set forth in an accompanying
supplement to this Prospectus (each, a "Prospectus Supplement"), including,
where applicable, (i) in the case of Common Stock, the aggregate number of
shares offered and by whom offered, (ii) in the case of the Preferred Stock, the
specific designation, the aggregate number of shares offered, the dividend rate
(or method of calculation thereof), the dividend period and dividend payment
dates, whether such dividends will be cumulative or noncumulative, the
liquidation preference, voting rights, if any, any terms for optional or
mandatory redemption, any terms for conversion or exchange into other series of
Debt Securities or Common Stock and any other special terms, (iii) in the case
of Debt Securities, the specific designation, aggregate principal amount,
ranking as Senior Debt Securities or Subordinated Debt Securities, authorized
denominations, maturity, any premium, rate or method of calculation of interest,
if any, and dates for payment thereof, any terms for optional or mandatory
redemption, any sinking fund provisions, any terms for conversion or exchange
into other series of Debt Securities, Preferred Stock or Common Stock and any
other special terms, (iv) the terms of any Securities Warrants offered,
including where applicable, the exercise price, detachability, duration and
other specific terms not described in this Prospectus and (v) the initial public
offering price and the net proceeds to the Company from and other specific terms
relating to the Offered Securities.

The Senior Debt Securities will rank pari passu in right of payment with all
unsubordinated indebtedness of the Company, but, except to the extent such
Senior Debt Securities are secured by collateral, will be effectively
subordinated to the rights of holders of secured unsubordinated indebtedness of
the Company to the extent of the value of the collateral securing such
indebtedness. The Senior Debt Securities will rank senior to all unsecured
subordinated indebtedness of the Company. The Subordinated Debt Securities will
be subordinate in right of payment to all existing and future Senior Debt (as
defined herein) of the Company, including any Senior Debt Securities.

This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.

FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON
PAGE 5 HEREIN AND "RISK FACTORS" IN THE PROSPECTUS SUPPLEMENT ACCOMPANYING THIS
PROSPECTUS.

---------------------

The Company may sell the Securities (i) through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale, (ii) through agents
designated from time to time or (iii) directly. The names of any underwriters or
agents of the Company involved in the sale of the Securities, the public
offering price or purchase price thereof, any applicable commissions or
discounts, any other terms of the offering of such Securities and the net
proceeds to the Company from such sale will be set forth in the applicable
Prospectus Supplement. See "Plan of Distribution" for possible indemnification
arrangements for agents, dealers and underwriters.

---------------------

The date of this Prospectus is July 1, 1996

<PAGE> 54

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information can be inspected and copied at the public
reference facilities that the Commission maintains at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of these
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at the principal offices of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Company's Common Stock is quoted on the Nasdaq
National Market and such reports, proxy statements and other information may be
inspected at the National Association of Securities Dealers, Inc., 1735 K.
Street N.W., Washington, D.C. 20006. The Company's 10% Senior Subordinated Notes
due 2003 are listed for trading on the New York Stock Exchange. Reports and
other information concerning the Company can be inspected at the offices of such
Exchange, 20 Broad Street, New York, New York 10005.

The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. Statements made in the
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description, and each such statement shall be deemed
qualified in its entirety by such reference.

Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars," or "U.S.$").

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus: (i) Annual Report on Form 10-K for the year ended December 31,
1995, (ii) Current Report on Form 8-K dated February 2, 1996 and (iii) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed superseded or modified for purposes of this Prospectus to the extent that
a statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Company, 1845 Woodall Rodgers Freeway, Suite 1700,
Dallas, Texas 75201, Attention: L. Keith Blackwell, Vice President, General
Counsel and Secretary. Telephone requests may be directed to L. Keith Blackwell,
Vice President, General Counsel and Secretary of the Company, at (214) 953-7700.

2
<PAGE> 55

THE COMPANY

Certain terms used in this Prospectus are defined in the "Glossary"
included herein. Certain terms used in connection with the Debt Securities are
defined under the caption "Description of Securities -- Debt
Securities -- Certain Definitions."

HISTORY

The Company is the product of the December 1993 merger of two Asset
Portfolio management and resolution service companies: BEI and Holdings.
Holdings was the former Asset Portfolio management and resolution unit of
NationsBank of Texas, which unit was created in 1988 in connection with the
acquisition by NationsBank Corporation from the FDIC of certain assets and
liabilities of the failed First RepublicBank. BEI, a publicly-held company that
was in the real estate and asset management services businesses, began providing
asset management and resolution services to the RTC in 1990. The BEI Merger
created one of the largest Asset Portfolio management and resolution service
companies in the United States. Since 1987, the Company and its predecessors
have managed over $30.0 billion (Face Value) of Asset Portfolios.

ASSET ACQUISITION AND RESOLUTION

The Company manages and resolves Asset Portfolios acquired at a substantial
discount to Face Value by the Company alone and by the Company with
co-investors. The Company also manages and resolves Asset Portfolios owned by
third parties. Management of Asset Portfolios includes resolving loans and
providing routine accounting services, monitoring collections of interest and
principal (if any), confirming (or advancing) insurance premium and tax payments
due on collateral and generally overseeing and managing, if necessary,
collateral condition and performance. Asset Portfolios generally include secured
loans of varying qualities and collateral types. The majority of the loans in
the Asset Portfolios in which the Company invests are in payment default at the
time of acquisition. Although some Asset Portfolios include foreclosed real
estate and other collateral, the Company generally seeks Asset Portfolios that
do not include such assets. The Company's policy is to not refinance or renew
purchased loans.

COMMERCIAL MORTGAGE BANKING

The Company performs a wide range of commercial mortgage banking services,
including originating, underwriting, placing, selling and servicing commercial
real estate loans through its Holliday Fenoglio and ACC mortgage banking units.
The Company also engages in the commercial loan servicing business, serving as a
Primary Servicer for whole loans and as a Master/Full Servicer for securitized
pools of commercial mortgages through its AMRESCO Services unit.

Holliday Fenoglio primarily serves commercial real estate developers and
owners by originating commercial real estate loans through its own
commission-based mortgage bankers. The loans originated by Holliday Fenoglio
generally are funded by institutional lenders, principally insurance companies,
and by Conduit Purchasers, with Holliday Fenoglio retaining the Primary Servicer
rights on more than a quarter of such loans.

3
<PAGE> 56

ACC is a mortgage banker that originates and underwrites commercial real
estate loans that are funded primarily by Conduit Purchasers. ACC targets
mortgage loans for commercial real estate properties suitable for sale to
Conduit Purchasers accumulating loans for securitization programs. ACC serves
its market directly through branch offices, as well as through a network of
independent mortgage brokers. ACC is an approved Fannie Mae DUS lender, which
ACC believes makes it a more competitive loan originator and underwriter of
multi-family mortgages. ACC is also an approved lender in the Freddie Mac
multi-family sales/servicer program in the states of Florida, North Carolina and
South Carolina.

RESIDENTIAL CAPITAL MARKETS

The Company purchases (in bulk from independent originators), warehouses
and securitizes portfolios of residential mortgages of borrowers who do not
qualify for conventional loans and whose borrowing needs are not met by
traditional residential mortgage lenders. Such borrowers may not satisfy the
more rigid underwriting standards of the traditional residential mortgage
lending market for a number of reasons, such as blemished credit histories (from
past loan delinquencies or bankruptcy), inability to provide income verification
data or lack of established credit history. The Company believes that this
market is underserved by traditional lenders. Therefore, there is less
competition in this market and interest rates are higher than on mortgage loans
for more credit-worthy borrowers.

INSTITUTIONAL INVESTMENT ADVISORY

The Company provides real estate investment advice to various institutional
investors (primarily pension funds). Although the Company is paid acquisition
and disposition fees by some of its clients, its principal form of revenue from
this activity is asset management fees, which are based on the cash flow of the
investments under management or are negotiated at the time of the client's
investment in a property.

4
<PAGE> 57

RISK FACTORS

Investors should carefully consider the following matters and the matters
set forth under "Risk Factors" in the Prospectus Supplement accompanying this
Prospectus in connection with an investment in the Securities, in addition to
the other information contained or incorporated by reference in this Prospectus
or in the accompanying Prospectus Supplement. Information contained or
incorporated by reference in this Prospectus or in the accompanying Prospectus
Supplement may contain "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. The following matters and certain
other factors noted throughout this Prospectus and any Prospectus Supplement
accompanying this Prospectus, as well as any exhibits and attachments to this
Prospectus and such Prospectus Supplement, constitute cautionary statements
identifying important factors with respect to any such forward-looking
statements, including certain risks and uncertainties that could cause actual
results to differ materially from those reflected in such forward-looking
statements.

UNCERTAIN NATURE OF THE ASSET ACQUISITION AND RESOLUTION BUSINESS

The outsourcing of the management and resolution of Asset Portfolios has
grown rapidly since the late 1980s; accordingly, the Asset Portfolio acquisition
and resolution business is relatively young and still evolving. This business is
affected by long-term cycles in the general economy. In addition, the volume of
domestic Asset Portfolios available for purchase by investors or management by
third party servicers such as the Company has generally declined since 1993. The
Company cannot predict what will be a normal annual volume of Asset Portfolios
to be sold or outsourced for management and resolution. Moreover, there cannot
be any assurance that Asset Portfolio purchasers/owners for whom the Company
provides Asset Portfolio management services will not build their own management
and resolution staffs and reduce or eliminate their outsourcing of these
services. In addition, increased competition for Asset Portfolios will continue
to impact the Company's ability to invest in Asset Portfolios and to obtain
management and resolution contracts from third party buyers. As a result of
these factors, it is difficult to predict the long-term future of this business.
See "-- Competition."

DIVERSIFICATION IN BUSINESS LINES AND MANAGEMENT OF GROWTH

In early 1994, the Company made the strategic decision to diversify its
business lines and to reduce the Company's dependence on asset management and
resolution contracts with governmental agencies and certain other entities. The
Company has substantially increased its investments in Asset Portfolios. The
Company also pursues private sector Asset Portfolio management contracts,
generally through co-investing in Asset Portfolios. Since 1993, the Company has
also entered the commercial mortgage banking, residential capital markets and
institutional investment advisory businesses through a combination of
acquisitions and the internal start-up of new business lines.

As a result, the Company must simultaneously manage (i) a significant
change in its customer mix, (ii) the investment of the Company's own capital in
Asset Portfolios and its commercial mortgage banking and residential capital
markets business lines and (iii) the development of other new business lines in
which the Company has not previously participated. All of these activities will
require the investment of additional capital and the significant involvement of
senior management to achieve a successful outcome. There is no assurance that
the Company will successfully execute this strategic transition.

The rapid entry of the Company into new business lines has resulted in
increased demands on the Company's personnel and systems. The Company must
successfully continue its assimilation of multiple acquired businesses with
differing cultures, systems and managements. The Company's ability to support,
manage and control continued growth is dependent upon, among other things, its
ability to hire, train, supervise and manage its workforce and to continue to
develop the skills necessary for the Company to compete successfully in its new
business lines. There can be no assurance that the Company will successfully
meet all of these challenges.

5
<PAGE> 58

GENERAL ECONOMIC CONDITIONS

Periods of economic slowdown or recession, rising interest rates or
declining demand for real estate may adversely affect certain segments of the
Company's business. Although such economic conditions may increase the number of
non-performing loans available for sale to or for management by the Company,
such conditions could adversely affect the resolution of Asset Portfolios held
by the Company for its own account or managed for others, lead to a decline in
prices or demand for collateral underlying Asset Portfolios or, in the case of
Asset Portfolios held for the Company's own account, increase the cost of
capital invested by the Company and the length of time that capital is invested
in a particular Asset Portfolio, thereby negatively impacting the rate of return
realized from such Asset Portfolio. Economic downturns and rising interest rates
also may reduce the number of loan originations by the Company's commercial
mortgage banking business and negatively impact its commercial and residential
mortgage securitization activity.

NEED FOR ADDITIONAL FINANCING

The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain additional indebtedness and equity
capital. Other than as described in this Prospectus or any accompanying
Prospectus Supplement, the Company has no commitments for additional borrowings
or sales of equity capital and there can be no assurance that the Company will
be successful in consummating any such future financing transactions on terms
satisfactory to the Company, if at all. Factors which could affect the Company's
access to the capital markets, or the costs of such capital, include changes in
interest rates, general economic conditions and the perception in the capital
markets of the Company's business, results of operations, leverage, financial
condition and business prospects. Each of these factors is to a large extent
subject to economic, financial, competitive and other factors beyond the
Company's control. In addition, covenants under the Company's current and future
debt securities and credit facilities may significantly restrict the Company's
ability to incur additional indebtedness and to issue Preferred Stock. The
Company's ability to repay its outstanding indebtedness, including the Debt
Securities, at maturity may depend on its ability to refinance such
indebtedness, which could be adversely affected if the Company does not have
access to the capital markets for the sale of additional debt or equity
securities through public offerings or private placements on terms reasonably
satisfactory to the Company.

The Company's commercial and residential mortgage securitization businesses
depend upon warehouse facilities with financial institutions or institutional
lenders to finance the Company's purchase of loans on a short-term basis pending
sale or securitization. Implementation of the Company's growth strategy requires
continued availability of warehouse facilities and may require increases in the
capacity of warehouse facilities. There can be no assurance that such financing
will be available on terms reasonably satisfactory to the Company. The inability
of the Company to arrange additional warehouse facilities or to extend or
replace existing facilities when they expire would have a material adverse
effect on the Company's business, financial condition and results of operations
and on the Company's outstanding securities.

SIGNIFICANCE OF SECURITIZATION

The Company currently believes that it will become increasingly dependent
upon its ability to securitize mortgage loans by pooling and subsequently
selling them in the secondary market in order to generate revenues, earnings and
cash flows. Accordingly, adverse changes in the secondary mortgage market could
impair the Company's ability to originate, purchase and sell mortgage loans on a
favorable or timely basis. Any such impairment could have a material adverse
effect upon the Company's business and results of operations. The Company
endeavors to effect public securitizations of its loans on at least a quarterly
basis. However, market and other considerations, including the conformity of
loans to insurance company and rating agency requirements, could affect the
timing of such transactions. Any delay in the sale of loans beyond a quarter end
would delay any expected gain on sale beyond the given quarter and adversely
affect the Company's reported earnings for such quarter.

6
<PAGE> 59

IMPORTANCE OF CREDIT ENHANCEMENT

In order to gain access to the secondary market for residential
mortgage-backed securities, the Company may rely on monoline insurance companies
to provide, in exchange for premiums, a guarantee on outstanding senior
interests in the related securitization trusts to enable it to obtain a
"AAA/Aaa" rating for such interests. Any unwillingness of monoline insurance
companies to guarantee the senior interests in the Company's loan pools could
have a material adverse effect on the Company's financial position and results
of operations.

ASSET PERFORMANCE ASSUMPTIONS

The Company's business, financial condition, results of operations and
liquidity depend, to a material extent, on the performance of loans owned
directly or backing securities purchased and sold by the Company. The carrying
value of the Company's principal assets has been determined in part using
estimates of future cash flows based on assumptions concerning future default
and prepayment rates that are consistent with the Company's historical
experience and market conditions and present value discount rates that the
Company believes would be requested by an unrelated purchaser of an identical
stream of estimated cash flows. Management believes that the Company's estimates
of cash flows are reasonable at the time such estimates are made. However, the
actual rates of default and/or prepayment on such assets may exceed those
estimated and consequently may adversely affect anticipated future cash flows
and results of operations. The Company periodically reviews its prepayment and
loss assumptions in relation to current performance of the loans and market
conditions and, if necessary, provides for the impairment of the respective
asset. The Company's business, financial condition and results of operations
could be materially adversely affected by such adjustments in the future. No
assurance can be given that loan losses and prepayments will not exceed the
Company's estimates or that such assets could be sold at their stated value on
the balance sheet, if at all.

RETAINED RISKS OF LOANS SOLD OR SECURITIZED

In connection with the Company's sale of certain loans or securities, the
Company retains certain risks of loss associated with unrated or higher default
risk loans or assets. In addition, the Company must also make certain
representations and warranties concerning loans originated by the Company and
sold to Conduit Purchasers or Fannie Mae. These representations cover such
matters as title to the property, lien priority, environmental reviews and
certain other matters. In connection with its residential capital markets
business, the Company also makes various representations with respect to the
loans that it pools and securitizes. The Company's representations rely in part
on similar representations made by the originators of such loans to the Company.
The Company would have a claim against the originator in the event of a breach
of any of these representations made by the originators, however, the Company's
ability to recover on any such claim is dependent on the financial condition of
the originator. There can be no assurance that the Company will not experience a
material loss in respect of any of these contingencies.

RESIDENTIAL MORTGAGE MARKET CONDITIONS

Periods of economic slowdown or recession, whether general, regional or
industry-related, may increase the risk of default on residential mortgage loans
and may have an adverse effect on the Company's business, financial condition
and results of operations. Such periods also may be accompanied by decreased
consumer demand for residential mortgages, resulting in declining values of
homes securing outstanding loans, thereby weakening collateral coverage and
increasing the possibility of losses in the event of default. Significant
increases in homes for sale during recessionary economic periods may depress the
prices at which foreclosed homes may be sold or delay the timing of such sales.
There can be no assurance that the housing markets will be adequate for the sale
of foreclosed homes and any material deterioration of such markets could reduce
recoveries from the sale of repossession inventory.

7
<PAGE> 60

INTEREST RATES

Since certain of the Company's borrowings, including borrowings under the
Revolving Loan Agreement, are at variable rates of interest, the Company may be
impacted by increases in interest rates. In addition, the value of its
interest-earning assets and liabilities may be directly affected by the level of
and fluctuations in interest rates. The Company monitors the interest rate
environment and employs prefunding or other hedging strategies designed to
mitigate the impact of changes in interest rates. However, there can be no
assurance that the profitability of the Company would not be adversely affected
during any period of changes in interest rates. A significant decline in
interest rates could result in increased prepayment of outstanding loans.

FOREIGN OPERATIONS

The Company's asset management and resolution business has entered into,
and intends to continue to enter into, contracts to purchase and to manage and
resolve Asset Portfolios located in Canada and Western Europe and may in the
future expand into other foreign countries. Foreign operations are subject to
various special risks, including currency exchange rate fluctuations (which the
Company intends to mitigate with currency hedging arrangements as available and
economical) and exchange controls. Changes in foreign exchange rates may have an
adverse effect on the Company's financial condition and results of operations.
In addition, earnings of foreign operations are subject to foreign income taxes
that reduce cash flow available to meet debt service requirements and other
obligations of the Company, which may be payable even if the Company has no
earnings on a consolidated basis.

RISKS OF HEDGING TRANSACTIONS

The Company has in the past and may in the future enter into interest rate
or foreign currency financial instruments used for hedging purposes. While
intended to reduce the effects of volatility in interest rate or foreign
currency price movements, such transactions could cause the Company to recognize
losses depending on the terms of the instrument and the interest rate or foreign
currency price movement. See Note 14 of Notes to Consolidated Financial
Statements included in Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 and incorporated by reference herein.

COMPETITION

The Asset Portfolio management and resolution and other financial services
industries in which the Company operates are highly competitive. Some of the
Company's principal competitors in certain business lines are substantially
larger and better capitalized than the Company. Because of these resources,
these companies may be better able than the Company to obtain new customers, to
acquire Asset Portfolios, to pursue new business opportunities or to survive
periods of industry consolidation.

The Company believes that its ability to acquire Asset Portfolios for its
own account will be important to its future growth. Acquisitions of Asset
Portfolios are often based on competitive bidding, where there are dangers of
bidding too low (which generates no business), as well as of bidding too high
(which could win the Asset Portfolio at an economically unattractive price). In
addition, the increasing competition in this business line could cause the
Company to experience decreasing profit margins in its Asset Portfolio business
in order to remain a competitive bidder for Asset Portfolios.

The Company also encounters significant competition in its other business
lines. The commercial mortgage banking business is highly fragmented with
certain large national competitors and significant localized competition. In
addition, within the commercial loan origination and residential mortgage
securitization business, access to and the cost of capital are critical to the
Company's ability to compete. The Company must compete with numerous
competitors, many of whom have superior access to capital sources and can
arrange or obtain lower cost capital for customers.

8
<PAGE> 61

USE OF PROCEEDS

The net proceeds from the sale of the Offered Securities, together with
internally generated funds, will be used (i) to repay, redeem or repurchase
outstanding indebtedness of the Company, (ii) for general operations of the
Company, including acquisitions, investments, capital expenditures and working
capital requirements and (iii) for such other purposes as may be specified in
the related Prospectus Supplement.

RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth the Company's and its predecessors'
consolidated ratios of earnings to fixed charges and earnings to combined fixed
charges and Preferred Stock dividends for each of the three months ended March
31, 1996 and 1995 and the years ended December 31, 1995, 1994, 1993, 1992 and
1991 on an historical basis.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------- ------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)....... 2.5 x 13.9x 5.4 x 21.2x 58.9x (2) (2)
Ratio of earnings to combined fixed charges
and Preferred Stock dividends(3).......... 2.5 x 13.9x 5.4 x 21.2x 58.9x (2) (2)
</TABLE>

- ---------------

(1) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of operating income before income taxes and fixed charges. Fixed
charges consist of interest expense and amortization of debt issuance costs.

(2) The Company or its predecessors had no or nominal interest expense in 1991
and 1992 and it was not meaningful, therefore, to calculate these ratios for
the years ended December 31, 1992 and 1991.

(3) The Company did not have any Preferred Stock outstanding during any of these
periods.

9
<PAGE> 62

DESCRIPTION OF SECURITIES

The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms of the Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
may apply to the Securities so offered will be described in the Prospectus
Supplement relating to such Securities.

The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.05 per share, and 5,000,000 shares of Preferred Stock, par value $1.00
per share. As of June 1, 1996, the Company had issued and outstanding 26,847,282
shares of Common Stock and no shares of Preferred Stock. As of such date, there
were approximately 3,000 holders of record of the outstanding shares of Common
Stock.

The following summary of the Company's Common Stock and Preferred Stock is
qualified in its entirety by reference to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation"), its Amended
and Restated Bylaws (the "Bylaws"), and the Delaware General Corporation Law, as
amended (the "DGCL").

COMMON STOCK

General. Subject to such preferential rights as may be granted by the Board
of Directors in connection with any issuances of Preferred Stock, holders of
shares of Common Stock are entitled to receive such dividends as may be declared
by the Board of Directors in its discretion from funds legally available
therefor. From October 1993 through October 1995, the Company paid a quarterly
dividend of $0.05 per share on shares of Common Stock. In October 1995, the
Company announced that it would discontinue its policy of paying cash dividends.
The Board of Directors determined to retain all earnings to support anticipated
growth in the current operations of the Company and to finance future expansion.
The Company's Revolving Loan Agreement, the Senior Subordinated Notes Indenture
and the Convertible Subordinated Debenture Indenture restrict the payment of
cash dividends unless certain earnings tests are satisfied. Additional
restrictions on the payment of cash dividends may be imposed in connection with
future issuances of Preferred Stock and indebtedness by the Company, including
issuances of Debt Securities and Preferred Stock contemplated by this
Prospectus. Further declarations and payments of cash dividends, if any, will
also be determined in light of then-current conditions, including the Company's
earnings, operations, capital requirements, liquidity, financial condition,
restrictions in financing agreements and other factors deemed relevant by the
Board of Directors. Upon the liquidation, dissolution or winding up of the
Company, after payment of creditors, the remaining net assets of the Company
will be distributed pro rata to the holders of Common Stock, subject to any
liquidation preference of the holders of Preferred Stock. There are no
preemptive rights, conversion rights, or redemption or sinking fund provisions
with respect to the shares of Common Stock. All of the outstanding shares of
Common Stock are duly and validly authorized and issued, fully paid and
non-assessable.

Voting Rights. Holders of Common Stock are entitled to one vote per share
of Common Stock held of record on all such matters submitted to a vote of the
stockholders. Holders of the shares of Common Stock do not have cumulative
voting rights. As a result, the holders of a majority of the outstanding shares
of Common Stock voting for the election of directors can elect all the
directors, and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any persons to the Board of Directors.

Delaware Law and Certain Corporate Provisions. The Company is subject to
the provisions of Section 203 of the DGCL. In general, this statute prohibits a
publicly-held Delaware corporation from engaging, under certain circumstances,
in a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person becomes an
interested stockholder, unless either (i) prior to the date at which the
stockholder became an interested stockholder the Board of Directors approved
either the business combination or the transaction in which the person becomes
an interested stockholder, (ii) the stockholder acquires more than 85% of the
outstanding voting stock of the corporation (excluding shares held by directors
who are officers or held in certain employee stock plans) upon consummation of
the transaction in which the stockholder becomes an interested stockholder or
(iii) the business combination is approved by the Board of Directors and by
two-thirds of the outstanding voting stock of the corporation (excluding shares
held by the interested stockholder) at a meeting of the stockholders (and

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not by written consent) held on or subsequent to the date on which the person
became an "interested stockholder" of the business combination. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
is an affiliate or associate of the corporation and, together with affiliates
and associates, at any time within the prior three years did own) 15% or more of
the corporation's voting stock. Section 203 defines a "business combination" to
include, without limitation, mergers, consolidations, stock sales and asset
based transactions and other transactions resulting in a financial benefit to
the interested stockholder.

The Company's Certificate of Incorporation and Bylaws contain a number of
provisions relating to corporate governance and to the rights of stockholders.
Certain of these provisions may be deemed to have a potential "anti-takeover"
effect in that such provisions may delay, defer or prevent a change of control
of the Company. These provisions include (i) the classification of the Board of
Directors into three classes, each class serving for staggered three-year terms;
(ii) the authority of the Board of Directors to determine the size of the Board
of Directors, subject to certain minimums and maximums; (iii) the authority of
certain members of the Board of Directors to fill vacancies on the Board of
Directors; (iv) a requirement that special meetings of stockholders may be
called only by the Board of Directors, the Chairman of the Board or holders of
at least one-tenth of all the shares entitled to vote at the meeting; (v) the
elimination of stockholder action by written consent; (vi) the authority of the
Board of Directors to issue series of Preferred Stock with such voting rights
and other powers as the Board of Directors may determine; (vii) the requirement
that the Article in the Certificate of Incorporation creating the staggered
board may only be amended by the vote of at least 66 2/3% of the voting
securities of the Company; (viii) the prohibition on amending or rescinding,
before December 31, 1996, the Article in the Certificate of Incorporation
related to the filling of vacancies on the Board of Directors; and (ix) a
requirement that any business combination between the Company and a beneficial
owner of more than five percent of any class of an equity security of the
Company must be approved by the holders of a majority of the Company's
securities, excluding those securities held by such beneficial owner, voted at a
meeting called for the purpose of approving such business combination.

Indemnification and Limited Liability. The Company's Certificate of
Incorporation and Bylaws require the Company to indemnify the directors and
officers of the Company to the fullest extent permitted by law. In addition, as
permitted by the DGCL, the Company's Certificate of Incorporation and Bylaws
provide that no director of the Company will be personally liable to the Company
or its stockholders for monetary damages for such director's breach of duty as a
director. This limitation of liability does not relieve directors from liability
for (i) any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) any liability under
Section 174 of the DGCL for unlawful distributions or (iv) any transaction from
which the director derived an improper personal benefit. This provision of the
Certificate of Incorporation will limit the remedies available to a stockholder
who is dissatisfied with a decision of the Board of Directors protected by this
provision, and such stockholder's only remedy in that circumstance may be to
bring a suit to prevent the action of the Board of Directors. In many
situations, this remedy may not be effective, including instances when
stockholders are not aware of a transaction or an event prior to action of the
Board of Directors in respect of such transaction or event.

Subject to certain limitations, the Company's officers and directors are
insured against losses arising from claims made against them for wrongful acts
which they may become obligated to pay or for which the Company may be required
to indemnify them.

Registration Rights. The Company has entered into an agreement granting
registration rights (the "Registration Rights Agreement") with certain holders
of Common Stock. Pursuant to the Registration Rights Agreement, these holders
may exercise demand or "piggyback" registration rights with respect to shares of
Common Stock held by them. The Company is obligated to register stock on only
two occasions pursuant to the demand registration rights. The Registration
Rights Agreement has a term of three years (ending on December 31, 1996) for
demand registration rights and five years (ending on December 31, 1998) for
"piggyback" registration rights. These registration rights are subject to
certain conditions and limitations, including the right of underwriters to
restrict the number of shares offered in a registration.

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Other Matters. The Common Stock is listed on Nasdaq National Market under
the symbol "AMMB." Sun Trust Bank, Atlanta, Georgia, is the transfer agent and
registrar for the Common Stock.

PREFERRED STOCK

The description of certain provisions of the Preferred Stock set forth
below and in any Prospectus Supplement does not purport to be complete and is
subject to and qualified in its entirety by reference to the Company's
Certificate of Incorporation, and the Certificate of Designation relating to
each series of Preferred Stock, which will be filed with the Secretary of State
of Delaware and the Commission in connection with the offering of such series of
Preferred Stock.

General. The Board of Directors may, without approval of the Company's
stockholders, establish series of Preferred Stock having such voting powers, and
such designations, preferences and relative, participating, optional and other
special rights, and qualifications, limitations or restrictions thereof, as the
Board of Directors may determine.

The Preferred Stock will have the dividend, liquidation and voting rights
set forth below unless otherwise provided in the Prospectus Supplement relating
to a particular series of Preferred Stock. Reference is made to the Prospectus
Supplement relating to the particular series of Preferred Stock offered thereby
for specific terms, including: (i) the designation and stated value per share of
such Preferred Stock and the number of shares offered; (ii) the amount of
liquidation preference per share; (iii) the price at which such Preferred Stock
will be issued; (iv) the dividend rate (or method of calculation), the dates on
which dividends will be payable, whether such dividends will be cumulative or
noncumulative and, if cumulative, the dates from which dividends will accrue;
(v) any redemption or sinking fund provisions; (vi) any terms by which such
series of Preferred Stock may be convertible into or exchanged for Common Stock
or Debt Securities; and (vii) any additional or other rights, preferences,
privileges, limitations and restrictions relating to such series of Preferred
Stock.

The Preferred Stock will be issued in one or more series. The holders of
Preferred Stock will have no preemptive rights. Preferred Stock will be fully
paid and nonassessable upon issuance against full payment of the purchase price
therefor. Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Preferred Stock, each series of Preferred Stock will, with
respect to dividend rights and rights on liquidation, dissolution and winding up
of the Company, rank prior to the Common Stock (the "Junior Stock") and on a
parity with each other series of Preferred Stock (the "Parity Stock").

Dividend Rights. Holders of the Preferred Stock of each series will be
entitled to receive when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefor, cash dividends at such rates
and on such dates as are set forth in the Prospectus Supplement relating to such
series of Preferred Stock. Such rate may be fixed or variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
books of the Company on such record dates as will be fixed by the Board of
Directors of the Company. Dividends on any series of the Preferred Stock may be
cumulative or noncumulative, as provided in the Prospectus Supplement relating
thereto. If the Board of Directors of the Company fails to declare a dividend
payable on a dividend payment date on any series of Preferred Stock for which
dividends are noncumulative, then the right to receive a dividend in respect of
the dividend period ending on such dividend payment date will be lost, and the
Company will have no obligation to pay the dividend accrued for that period,
whether or not dividends are declared for any future period. Dividends on shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date set forth in the applicable Prospectus Supplement.

The Preferred Stock of each series will include customary provisions (i)
restricting the payment of dividends or the making of other distributions on, or
the redemption, purchase or other acquisition of, Junior Stock unless full
dividends, including in the case of cumulative Preferred Stock, accruals, if
any, in respect of prior dividend periods, on the shares of such series of
Preferred Stock have been paid and (ii) providing for the pro rata payment of
dividends on such series and other Parity Stock when dividends have not been
paid in full upon such series and other Parity Stock.

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Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Stock will be entitled to receive out of assets of the
Company available for distribution to stockholders, before any distribution of
assets is made to holders of Junior Stock, liquidating distributions in the
amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock plus an amount equal to accrued and unpaid dividends. If, upon
any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any Parity Stock are not paid in full, the holders of the Preferred Stock of
such series and of such Parity Stock will share ratably in any such distribution
of assets of the Company in proration to the full respective preferential
amounts (which may include accumulated dividends) to which they are entitled.
After payment of the full amount of the liquidating distribution to which they
are entitled, the holders of such series of Preferred Stock will have no right
or claim to any of the remaining assets of the Company. Neither the sale of all
or a portion of the Company's assets nor the merger or consolidation of the
Company into or with any other corporation shall be deemed to be a dissolution,
liquidation or winding up, voluntarily or involuntarily, of the Company.

Voting Rights. Except as indicated below or in the Prospectus Supplement
relating to a particular series of the Preferred Stock, or except as expressly
required by the DGCL, the holders of the Preferred Stock will not be entitled to
vote. In the event the Company issues shares of a series of the Preferred Stock,
unless otherwise indicated in the Prospectus Supplement relating to such series,
each share will be entitled to one vote on matters on which holders of such
series are entitled to vote. In the case of any series of Preferred Stock having
one vote per share on matters on which holders of such series are entitled to
vote, the voting power of such series, on matters on which holders of such
series and holders of any other series of Preferred Stock are entitled to vote
as a single class, will depend on the number of shares in such series, not the
aggregate stated value, liquidation preference or initial offering price of the
shares of such series of the Preferred Stock.

DEBT SECURITIES

The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. Particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general and specific provisions may apply to the Debt Securities so offered will
be described in the Prospectus Supplement relating to such Debt Securities. The
Debt Securities may be issued either separately, or together with, or upon
conversion of or in exchange for, other Securities.

The Senior Debt Securities and the Subordinated Debt Securities will be
issued under the indentures (the "Senior Indenture" and the "Subordinated
Indenture," respectively) between the Company and the Trustee named in the
applicable Prospectus Supplement. The forms of Senior Indenture and Subordinated
Indenture (collectively, the "Indentures") have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. The following brief
summary of certain provisions of the Indentures does not purport to be complete
and is subject to, and is qualified in its entirety by reference to all of the
provisions of, the Indentures, and is further qualified by any description
contained in the applicable Prospectus Supplement or Prospectus Supplements.
Certain terms capitalized and not otherwise defined herein are defined in the
Indentures. Wherever particular sections or defined terms of the Indentures are
referred to, such sections or defined terms are incorporated herein by
reference.

General. The Debt Securities may be issued from time to time in one or more
series. The terms of each series of Debt Securities, including without
limitation any restrictive covenants with respect thereto, will be established
by or pursuant to a resolution of the Board of Directors of the Company and set
forth or determined in the manner provided in an Officers' Certificate or by a
supplemental indenture. The particular terms of the Debt Securities offered
pursuant to any Prospectus Supplement or Prospectus Supplements will be
described in such Prospectus Supplement or Prospectus Supplements.

The amount of Debt Securities offered by this Prospectus will be limited to
the amount of Securities set forth on the cover of this Prospectus that have not
been otherwise issued or reserved for issuance. The Indentures will not limit
the aggregate principal amount of Debt Securities that may be issued thereunder.

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The Senior Debt Securities will rank pari passu in right of payment with
all unsubordinated indebtedness of the Company, but, except to the extent such
Senior Debt Securities are secured by collateral, will be effectively
subordinated to the rights of holders of secured unsubordinated indebtedness of
the Company to the extent of the value of the collateral securing such
indebtedness. The Senior Debt Securities will rank senior to all unsecured
subordinated indebtedness of the Company. The Subordinated Debt Securities will
be unsecured and will be subordinated in right of payment to all existing and
future Senior Debt of the Company, including the Senior Debt Securities, as
described under "Subordination of Subordinated Debt Securities."

The applicable Prospectus Supplement will indicate the form, registered or
bearer, and denominations in which Debt Securities of any series may be issued.
Debt Securities may be issuable in the form of one or more Global Securities, as
described below under "Global Securities." The Debt Securities (other than those
issued in the form of a Global Security) are exchangeable or transferable
without charge therefor, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
and require the holders to furnish appropriate endorsements and transfer
documents. (Indenture Section 305)

Debt Securities may be issued as original issue discount securities to be
sold at a substantial discount below their principal amount. Special federal
income tax and other considerations applicable thereto and special federal tax
and other considerations applicable to any Debt Securities which are denominated
in a currency other than U.S. dollars will be described in the Prospectus
Supplement or Prospectus Supplements relating thereto.

Principal of and any premium and interest on the Debt Securities will be
payable, and the transfer of the Debt Securities will be registrable at the
office or agency maintained for such purpose. Interest on any Debt Security that
is payable will be paid to the Person in whose name that Debt Security is
registered in the Security Register. In addition, payment of interest may be
made at the option of the Company by check mailed to the address of the Person
entitled thereto as it appears on the Security Register or by wire transfer to
an account maintained by the Person entitled to such interest. (Indenture
Sections 301 and 307)

The applicable Prospectus Supplement or Prospectus Supplements will
describe the terms of the Debt Securities offered thereby, including the
following: (i) the title of the offered Debt Securities and whether the offered
Debt Securities are Senior Debt Securities or Subordinated Debt Securities; (ii)
any limit on the aggregate principal amount of the offered Debt Securities;
(iii) the Person to whom any interest on the offered Debt Securities will be
payable, if other than the Person in whose name they are registered on the
regular record date for such interest; (iv) the date or dates, or the method by
which such date or dates are determined or extended, on which the principal or
installments of principal and premium, if any, of the offered Debt Securities is
or are payable; (v) the rate or rates (which may be fixed or variable) at which
the offered Debt Securities will bear interest, if any, or the method by which
such rate or rates shall be determined, the date from which any such interest
will accrue, the dates on which such interest on the offered Debt Securities
will be payable and the regular record dates therefor, the circumstances, if
any, in which the Company may defer interest payments and the basis for
calculating interest if other than a 360-day year of twelve 30-day months; (vi)
the place or places where the principal of and premium, if any, and interest on
the offered Debt Securities will be payable and the offered Debt Securities may
be surrendered for registration of transfer or exchange if other than those
provided for in the Senior Indenture or the Subordinated Indenture; (vii) if
applicable, the period or periods within which, the price or prices at which and
the terms and conditions upon which the offered Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (viii) the obligation, if
any, of the Company to redeem or purchase Debt Securities of the series pursuant
to any sinking fund or analogous provisions or at the option of a holder thereof
and the period or periods within which, the price or prices at which and the
terms and conditions upon which Debt Securities of the series shall be redeemed
or purchased in whole or in part pursuant to such obligation; (ix) whether the
Debt Securities of the series will be convertible into shares of Common Stock
and/or exchangeable for other securities, and if so, the terms and conditions
upon which such Debt Securities will be so convertible or exchangeable and any
deletions from or modifications or additions to the applicable Indenture to
permit or to facilitate the issuance of such convertible or exchangeable Debt
Securities or the administration thereof; (x) the identity of each Security
Registrar and Paying Agent if other than or in addition to the Trustee; (xi) if
the amount of principal

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of or any premium or interest on the offered Debt Securities may be determined
by reference to an index or pursuant to a formula, the manner in which such
amounts shall be determined; (xii) the applicability of, and any addition to or
change in the covenants and definitions set forth in the applicable Indenture;
(xiii) the denominations in which any offered Debt Securities will be issuable,
if other than denominations of $1,000 or any amount in excess thereof which is
an integral multiple of $1,000; (xiv) if other than U.S. dollars the currency or
currencies for the payment of principal of and any premium and interest on the
offered Debt Securities and the manner of determining the U.S. dollar equivalent
of the principal amount thereof for purposes of the definition of "outstanding"
and, if the principal of or any premium or interest on the offered Debt
Securities is to be payable, at the election of the Company or the holder
thereof, in one or more currencies other than that or those in which the offered
Debt Securities are stated to be payable, the currency, currencies or currency
units in which payment of the principal of and any premium and interest on such
offered Debt Securities of such series as to which such election is made shall
be payable, and the periods within which and the terms and conditions upon which
such election is to be made; (xv) any other event or events of default
applicable with respect to the offered Debt Securities in addition to or in lieu
of those described below under "Events of Default" and any change in the right
of the Trustee or the holders to declare the principal of or any premium or
interest on the offered Debt Securities due and payable; (xvi) if less than the
principal amount thereof, the portion of the principal payable upon acceleration
of such Debt Securities following an Event of Default; (xvii) whether such Debt
Securities are to be issued in whole or in part in the form of one or more
Global Securities and, if so, the identity of the depositary for such Global
Security or Securities, and any circumstances under which any such Global
Security may be exchanged for Debt Securities registered in the name of, and any
transfer of such Global Security may be registered to, a Person other than such
depositary or its nominee, if other than those described in the applicable
Indenture (see "Global Securities"); (xviii) if applicable, that the offered
Debt Securities, in whole or in any specified part, are not defeasible; and
(xix) any other terms of the offered Debt Securities not inconsistent with the
provisions of the applicable Indenture. (Indenture Section 301)

If the purchase price of any Debt Securities is payable in a currency other
than U.S. dollars or if principal of or premium, if any, or interest, if any, on
any of the Debt Securities is payable in any currency other than U.S. dollars,
the specific terms and other information with respect to such Debt Securities
and such foreign currency, including any material foreign currency risks, will
be specified in the Prospectus Supplement or Prospectus Supplements relating
thereto.

Under the Indentures, the terms of the Debt Securities of any series may
differ, and the Company, without the consent of the holders of the Debt
Securities of any series, may reopen a previous series of Debt Securities and
issue additional Debt Securities of such series or establish additional terms of
such series.

Redemption. Except as set forth in the Prospectus Supplement with respect
to any offered Debt Securities or series thereof, the Company is not required to
make mandatory redemption or sinking fund payments with respect to the Debt
Securities. The Prospectus Supplement relating to any offered Debt Securities or
series thereof will specify the provisions, if any, regarding sinking fund
provisions related to such Debt Securities or series thereof. The Indentures
provide that the Company may deliver outstanding Debt Securities of like tenor
of a series (other than any previously called for redemption) and may apply as a
credit Debt Securities of like tenor of a series which have been redeemed either
at the election of the Company pursuant to the terms of such Debt Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Debt Securities, in each case in satisfaction of all or any
part of any sinking fund payment with respect to the Debt Securities of like
tenor of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series. (Indenture Sections 1202
and 1203)

The Indentures provide that, if less than all of the Debt Securities of any
series are to be redeemed at any time, selection of Debt Securities for
redemption will be made by the Trustee by such method as the Trustee shall deem
fair and appropriate, and portions of the Debt Securities selected for
redemption shall be in amounts equal to the minimum authorized denomination for
Debt Securities of like tenor of that series or any integral multiple thereof of
principal amount of Debt Securities of such series of a denomination larger than
the minimum authorized denomination for Debt Securities of that series. Notices
of redemption shall be

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mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each Holder of Debt Securities to be redeemed at its
registered address. If any Debt Security is to be redeemed in part only, the
notice of redemption that relates to such Debt Security shall state the portion
of the principal amount thereof to be redeemed. A new Debt Security in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Debt Security. On and after the
redemption date, interest ceases to accrue on Debt Securities or portions of
them called for redemption. (Indenture Sections 1103, 1104, 1106 and 1107)

Repurchase at the Option of Holders. Except as set forth in the Prospectus
Supplement with respect to any offered Debt Securities or any series thereof,
the Indentures do not contain provisions that permit the Holders of the Debt
Securities to require that the Company repurchase or redeem the Debt Securities
in the event of a sale of assets or a takeover, recapitalization or similar
restructuring, nor does the Indenture contain covenants specifically designed to
protect holders in the event of a highly leveraged transaction involving the
Company.

Covenants. The Indentures contain certain covenants relating to the Company
and its operations, including covenants requiring the Company to (i) punctually
pay interest and principal of Debt Securities, (ii) maintain of an office or
agency in each place of payment in respect of the Debt Securities, (iii) hold in
trust money for payment of interest or principal on Debt Securities, (iv)
preserve the corporate existence, rights and franchises of the Company and its
Material Subsidiaries (as defined in the Indentures), (v) generally maintain its
properties and trademarks and to comply with applicable statutes, laws,
ordinances and regulations, (vi) maintain adequate insurance, (vii) timely pay
or discharge material tax obligations and claims for labor, material and
supplies, which, if unpaid, might become a lien upon the property of the Company
or any Subsidiary, (viii) keep proper books of record and account and (ix)
provide to the Trustee quarterly statements of compliance with the Indentures
and notice of any event which after notice or lapse of time or both would become
an Event of Default or the occurrence of any Repurchase Event. Certain of these
covenants are subject to various exceptions and qualifications as set forth in
the Indentures.

Certain additional covenants in respect of the Company may be set forth in
the Prospectus Supplement accompanying this Prospectus.

Consolidation, Merger or Transfer. The Indentures provide that the Company
may not consolidate with, merge with, or transfer all or substantially all of
its assets to another entity where the Company is not the surviving corporation
unless (i) such other entity assumes the Company's obligations under the
applicable Indenture and (ii), after giving effect thereto, no event shall have
occurred and be continuing which, after notice or lapse of time, would become an
Event of Default. (Indenture Section 801)

Events of Default. The Indentures provide that each of the following
constitutes an Event of Default with respect to the Debt Securities of any
series issued pursuant to the Indentures: (i) failure to pay the principal on
the Debt Securities of that series when due; (ii) failure for 30 consecutive
days (for Debt Securities that pay interest less frequently than monthly) or 10
consecutive days (for Debt Securities that pay interest monthly) to pay when due
any interest on the Debt Securities of that series; (iii) failure to deposit any
sinking fund payment, when and as due, in respect of the Debt Securities of that
series; (iv) failure to perform, or a breach of, any covenant or warranty set
forth in the Indenture for 30 consecutive days after receipt of written notice
from the Trustee or Holders of at least 25% in principal amount of the
outstanding Debt Securities specifying the default and requiring the Company to
remedy such default; (v) an event of default as defined in any indenture or
instrument under which the Company or any Material Subsidiary shall have
Outstanding at least $1.0 million aggregate principal amount of indebtedness
shall have happened and resulted in acceleration of such indebtedness and such
default shall not have been cured or waived and such acceleration shall not have
been rescinded or annulled for a period of 30 consecutive days, (vi) certain
events of insolvency, receivership or reorganization of the Company or any
Material Subsidiary and (vii) entry of a final judgment, decree or order against
the Company or any Material Subsidiary for the payment of money in excess of
$5.0 million and such judgment, decree or order continues unsatisfied for 30
consecutive days without a stay of execution. (Indenture Section 501)

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If any Event of Default occurs and is continuing with respect to any series
of Debt Securities, the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Debt Securities of such series may
declare the unpaid principal amount (or, if any of the Debt Securities of that
series are Original Issue Discount Debt Securities, such lesser portion of the
principal amount of such Debt Securities as may be specified in the terms
thereof), premium, if any, and any accrued and unpaid interest on all the Debt
Securities of such series to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Material Subsidiary
of the Company, all principal, premium, if any and interest on outstanding Debt
Securities will become due and payable without further action or notice. Holders
of the Debt Securities may not enforce the respective Indentures or the Debt
Securities except as provided in the Indentures. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Debt
Securities of any series may direct the Trustee in its exercise of any trust or
power with respect to such series of Debt Securities. The Trustee may withhold
from Holders of the Debt Securities of any series notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment on
any Debt Security of any series or in the payment of any sinking fund
installment with respect to such series) if it in good faith determines that
withholding notice is in their interest. (Indenture Sections 502, 507, 512 and
602)

The Holders of a majority in aggregate principal amount of the Debt
Securities of any series then outstanding by notice to the Trustee may on behalf
of the Holders of all of the Debt Securities of such series waive any existing
Default or Event of Default with respect to such series of Debt Securities and
its consequences under the applicable Indenture except a continuing Default or
Event of Default with respect to such series in the payment of interest on, or
the principal of, or premium, if any, on the Debt Securities of such series.
(Indenture Section 513)

The Holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. (Indenture Section 512) The Indentures
provide that in case an Event of Default shall occur and be continuing, the
Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent person in the conduct of such person's own affairs. Subject to
such provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture unless the Trustee receives reasonable
security or indemnity against any loss, liability or expense. (Indenture
Sections 601 and 603)

The Company is required to deliver to the Trustee quarterly a statement
regarding compliance with the Indentures, and the Company is required upon
becoming aware of any Default or Event of Default with respect to a series of
Debt Securities due to any event of default under any other indenture or
instrument to deliver to the Trustee a statement specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto. (Indenture Section 703)

Defeasance Provisions. The Company will be discharged from any and all
obligations in respect of the Debt Securities of any series (except for certain
obligations to register the transfer or exchange of Debt Securities, to replace
destroyed, stolen, lost or mutilated Debt Securities, to maintain paying
agencies and to hold moneys for payment in trust) on the 91st day after the date
of deposit with the Trustee, in trust, of money, U.S. Government Obligations
which through the payment of interest and principal thereof in accordance with
their terms will provide money, or a combination thereof, in an amount
sufficient to pay any installment of principal of (and premium, if any) and
interest on and any mandatory sinking fund payments in respect of the Debt
Securities of such series on the dates on which such payments are due and
payable in accordance with the terms of the applicable Indenture and such Debt
Securities. Any such discharge is also subject to certain other conditions,
including the limitation that such discharge may only occur if there has been a
change in applicable federal law, or the Company has delivered to the Trustee an
Opinion of Counsel to the effect that such a discharge will not cause the
holders of such series of Debt Securities to recognize income, gain or loss for
federal income tax purposes and that such holders will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case had such deposit, defeasance and discharge not
occurred, and that such discharge will not cause any outstanding Debt Securities
then listed on any securities exchange to be de-listed as a result thereof.
(Indenture Section 403)

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The Company may omit to comply with certain restrictive covenants with
respect to the Debt Securities of any series. If the Company elects not to
comply with any term, provision or condition in any such covenant, the Company
must deposit with the Trustee money, U.S. Government Obligations which through
the payment of interest and principal thereof in accordance with their terms
will provide money, or a combination thereof, in an amount sufficient to pay any
installment of principal of (and premium, if any) and interest on and any
mandatory sinking fund payments in respect of the Debt Securities of such series
on the dates on which such payments are due and payable in accordance with the
terms of the applicable Indenture and such Debt Securities. Any such covenant
defeasance is also subject to certain other conditions, including the delivery
to the Trustee of an opinion of counsel to the effect that the deposit and
related covenant defeasance will not cause the holders of the Debt Securities to
recognize income, gain or loss for federal income tax purposes and that such
holders will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case had such deposit and
defeasance not occurred. (Indenture Section 1009)

In the event the Company omits compliance with certain covenants of the
Indenture and the Debt Securities issued pursuant thereto are declared due and
payable because of the occurrence of any event of default, although the amount
of money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Debt Securities at the time of their stated
maturity, it may not be sufficient to pay amounts due on the Debt Securities at
the time of the acceleration resulting from such event of default. In such
event, the Company shall remain liable for all such payments.

Subordination of Subordinated Debt Securities. The Subordinated Debt
Securities will be subordinate and subject in right of payment, to the extent
and in the manner set forth in the Subordinated Indenture, to the prior payment
in full of all Senior Debt. Upon any distribution to creditors in a liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets and liabilities or any bankruptcy, insolvency or
similar proceeding involving the Company, the holders of Senior Debt will be
entitled to receive payment in full in cash of all Obligations (as defined in
the Subordinated Indenture) due on or to become due on or in respect of all
Senior Debt, before the holders of Subordinated Debt Securities are entitled to
receive any payment or distribution of any kind, whether in cash, property or
securities, by set off or otherwise on account of the principal of (and premium,
if any) or interest on the Subordinated Debt Securities or on account of any
purchase, redemption or other acquisition of Subordinated Debt Securities by the
Company, any Subsidiary of the Company, the Trustee or any Paying Agent or on
account of any other obligation of the Company in respect of any Subordinated
Debt Securities (excluding (i) shares of stock or securities of the Company or
another corporation provided for by a plan of reorganization or readjustment
that are subordinated in right of payment to all then outstanding Senior Debt to
substantially the same extent as, or to a greater extent than, the Subordinated
Debt Securities are so subordinated and (ii) payments of assets from any
defeasance trust which have been on deposit for 90 consecutive days without the
occurrence of blockage of payment on any such series of Subordinated Debt
Securities as described below) ("Securities Payments"). Until the Senior Debt is
paid in full, any Securities Payment to which the holders of Subordinated Debt
Securities or the Trustee for their benefit would be entitled, will be paid or
delivered by the Company or any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, directly to
the holders of Senior Debt or their representative or representatives or the
trustee or trustees under any indenture pursuant to which any instruments
evidencing, any Senior Debt may have been issued. (Subordinated Indenture
Sections 1301 and 1302)

The Subordinated Indenture contains certain standstill provisions, which
provide that no payments of principal of, or interest on, the Subordinated Debt
Securities may be made and no Subordinated Debt Securities may be accelerated if
at the time thereof the Trustee has received a written notice (a "Default
Notice") from the holder or holders of not less than 51% in principal amount of
the outstanding Senior Debt or any agent therefor (a "Senior Agent") specifying
that an event of default (a "Senior Event of Default") under any Senior Debt has
occurred. Such standstill will remain in effect until the first to occur of the
following: (i) the Senior Event of Default is cured, (ii) the Senior Event of
Default is waived by the holders of such Senior Debt or the Senior Agent or
(iii) the expiration of 180 days after the date the Default Notice is

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received by the Trustee if the maturity of such Senior Debt has not been
accelerated at such time. Any such standstill will not prevent the occurrence of
an "Event of Default" under the Subordinated Indenture.

In the event that the Trustee receives any Securities Payment prohibited by
the subordination provisions of the Subordinated Indenture, such payment will be
held by the Trustee in trust for the benefit of, and will immediately be paid
over upon written request to, the holders of Senior Debt or their representative
or representatives, or the trustee or trustees under any applicable indenture
for application to the payment of Senior Debt. (Subordinated Indenture Section
1304) Such subordination will not prevent the occurrence of any event of default
in respect of the Subordinated Debt Securities.

By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Debt may receive more, ratably, and holders of the
Subordinated Debt Securities having a claim pursuant to such securities may
receive less, ratably, than the other creditors of the Company. There may also
be interruption of scheduled interest and principal payments resulting from
events of default on Senior Debt.

Modification and Waiver. Modifications and amendments of the respective
Indentures may be made by the Company and the Trustee with the consent of the
holders of not less than a majority in aggregate principal amount of the
outstanding Debt Securities of all series affected by such modification or
amendment (voting as one class); provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Debt
Security affected thereby, (i) change the stated maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, reduce the
principal amount of, or premium or interest on, any Debt Security, reduce the
amount of principal of an Original Issue Discount Debt Security due and payable
upon acceleration of the maturity thereof, change the place of payment where or
coin or currency in which the principal of, or any premium or interest on, any
Debt Security is payable, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any Debt Security,
(ii) reduce the percentage in principal amount of outstanding Debt Securities of
any series, the consent of the holders of which is required for modification or
amendment of the Senior Indenture or for waiver of compliance with certain
provisions of the Senior Indenture or for waiver of certain defaults or (iii)
modify any of the various sections relating to above-described provisions.
(Indenture Section 902)

The holders of not less than a majority in aggregate principal amount of
the outstanding Debt Securities of each series may, on behalf of the holders of
all Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
(Indenture Section 1011) The holders of not less than a majority in aggregate
principal amount of the Outstanding Debt Securities of each series may, on
behalf of the holders of all Debt Securities of that series, waive any past
default under the Indenture with respect to Debt Securities of that series,
except a default (i) in the payment of principal of, or any premium or interest
on, any Debt Security of such series when due (other than amounts due and
payable solely upon acceleration), or (ii) in respect of a covenant or provision
of the Indenture which cannot be modified or amended without the consent of the
holder of each outstanding Debt Security of such series affected. (Indenture
Section 513) The definition of "Senior Debt" in the Subordinated Indenture may
not be amended or modified in a manner adverse to the holders of then
outstanding Senior Debt without the consent of the holders of all Senior Debt
affected thereby. (Subordinated Indenture Section 908)

The Indentures provide that, in determining whether the holders of the
requisite principal amount of the outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or whether a quorum is present at a meeting of holders of Debt Securities, (i)
the principal amount of an Original Issue Discount Debt Security that will be
deemed to be outstanding will be the amount of the principal thereof that would
be due and payable as of the date of such determination upon acceleration of the
maturity thereof to such date and (ii) the principal amount of a Debt Security
denominated in a foreign currency or currency unit that will be deemed to be
outstanding will be the United States dollar equivalent, determined as of the
date of original issuance of such Debt Security, of the principal amount of such
Debt Security (or, in the case of an Original Issue Discount Debt Security, the
United States dollar equivalent, determined as of the date of original issuance
of such Debt Security, of the amount determined as provided in (i) above).
(Indenture Section 101)

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Global Securities. The following description will apply to any series of
Debt Securities issued, in whole or in part, in the form of a Global Security or
Global Securities deposited with, or on behalf of, The Depository Trust Company
("DTC") (each such Debt Security represented by a Global Security, being herein
referred to as a "Book-Entry Security").

Upon initial issuance, all Book-Entry Securities of the same series and
bearing interest, if any, at the same rate or pursuant to the same formula and
having the same date of issuance, redemption provisions, if any, repayment
provisions, if any, stated maturity and other terms will be represented by a
single Global Security. Each Global Security representing Book-Entry Securities
will be deposited with, or on behalf of, DTC and will be registered in the name
of DTC or a nominee of DTC. Unless otherwise specified in the applicable
Prospectus Supplement, all Book-Entry Securities will be denominated in U.S.
dollars.

Upon the issuance of a Global Security, DTC will credit accounts held with
it with the respective principal or face amounts of the Book-Entry Securities
represented by such Global Security. The accounts to be credited shall be
designated initially by the Agent through which the Debt Security was sold or,
to the extent that such Debt Securities are offered and sold directly, by the
Company. Ownership of beneficial interests in a Global Security will be limited
to institutions that have accounts with DTC ("participants") and to persons that
may hold interests through such participants. Ownership of beneficial interests
by participants in a Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by DTC for
such Global Security. Ownership of beneficial interests in such Global Security
by persons that hold through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant.

Payment of principal of, premium, if any, and interest, if any, on
Book-Entry Securities represented by any such Global Security will be made to
DTC or its nominee, as the case may be, as the sole registered holder of the
Book-Entry Securities represented thereby for all purposes under the Indentures.
None of the Company, the Trustee, the Paying Agent or any agent of the Company
or the Trustee will have a responsibility or liability for any aspect of DTC's
records relating to or payments made on account of beneficial ownership
interests in a Global Security representing any Book-Entry Securities or any
other aspect of the relationship between DTC and its participants or the
relationship between such participants and the owners of beneficial interests in
a Global Security owning through such participants or for maintaining,
supervising or reviewing any of DTC's records relating to such beneficial
ownership interests.

The Company has been advised by DTC that upon receipt of any payment of
principal of, premium, if any, or interest, if any, on any such Global Security,
DTC will immediately credit, on its book-entry registration and transfer system,
the accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of DTC. Payments by participants to owners of beneficial
interests in a Global Security held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held by such participants for customer accounts registered in "street
name," and will be the sole responsibility of such participants.

No Global Security may be transferred except as a whole by a nominee of DTC
to DTC or to another nominee of DTC, or by DTC or any such nominee to a
successor of DTC or a nominee of such successor.

A Global Security representing Book-Entry Securities is exchangeable for
certificated Debt Securities of the same series and bearing interest, if any, at
the same rate or pursuant to the same formula, having the same date of issuance,
redemption provisions, if any, repayment provisions, if any, stated maturity and
other terms and of differing authorized denominations aggregating a like amount,
if any, if (i) DTC notifies the Company that it is unwilling or unable to
continue as depositary for such Global Security or if at any time DTC ceases to
be a clearing agent registered under the Exchange Act, (ii) the Company, in its
sole discretion, determines that such Global Security shall be exchangeable for
certificated Debt Securities or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Book-Entry Securities. Such
certificated Debt Securities shall be registered in the names of the owners of
the beneficial interests in such Global Security as provided by DTC's relevant
participants (as identified by DTC).

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Owners of beneficial interests in a Global Security will not be considered
the registered holders thereof for any purpose under the applicable Indenture
and no Global Security representing Book-Entry Securities shall be exchangeable
or transferrable. Accordingly, each person owning a beneficial interest in such
a Global Security must rely on the procedures of DTC and, if such person is not
a participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a registered holder under the
applicable Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.

DTC, as the registered holder of each Global Security, may appoint agents
and otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a
registered holder is entitled to give or take under the applicable Indenture.
The Company understands that under existing industry practices, in the event
that the Company requests any action of registered holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
which a registered holder is entitled to give or take under such Indenture. DTC
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.

DTC has advised the Company that DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered under the Exchange
Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks (which may include the Trustee), trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.

Certain Definitions. Set forth below are certain defined terms used in the
Indentures. Reference is made to the Indentures for a full disclosure of all
such terms, as well as any other capitalized terms used herein for which no
definition is provided. (Indenture Section 101)

"Funded Debt" means any of the following obligations of the Company or any
Subsidiary which by its terms matures at or is extendable or renewable at the
sole option of the obligor without requiring the consent of the obligee to a
date more than 360 days after the date of the creation or incurrence of such
obligation: (i) any obligations, contingent or otherwise, for borrowed money or
for the deferred purchase price of property, assets, securities or services
(including, without limitation, any interest accruing subsequent to an event of
default), (ii) all obligations (including the Debt Securities) evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), except any such obligation that
constitutes a trade payable and an accrued liability arising in the ordinary
course of business, if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet prepared in accordance with generally
accepted accounting principles, (iv) all Capital Lease Obligations, (v)
liabilities of the Company actually due and payable under banker's acceptances
or letters of credit, (vi) all indebtedness of the type referred to in clause
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
indebtedness has an existing right, content or otherwise, to be secured by) any
lien upon or security interest in property of the Company or any Subsidiary
(including, without limitation, accounts and contract rights), even though the
Company or any Subsidiary has not assumed or become liable for the payment of
such indebtedness and (vii) any guarantee or endorsement (other than for
collection or deposit in the ordinary course of business) or discount with
recourse of, or other agreement, contingent or otherwise, to purchase,
repurchase, or otherwise acquire, to supply, or advance funds or become liable
with

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respect to, any indebtedness or any obligation of the type referred to in any of
the foregoing clauses (i) through (vi), regardless of whether such obligation
would appear on a balance sheet.

"Junior Indebtedness" means all Funded Debt except Senior Debt.

"Material Subsidiary" means Holliday Fenoglio, Inc., AMRESCO Management,
Inc., AMRESCO Residential Mortgage Corporation, AMRESCO Advisors, Inc., AMRESCO
Residential Credit Corporation, AMRESCO Capital Corporation, AMRESCO New
England, Inc., Oak Cliff Financial, Inc. and any other Subsidiary whose assets
or revenues comprise at least five percent (5%) of the assets or revenues of the
Company and the Subsidiaries on a consolidated basis as of the end of, or for
the, Company's most recently completed fiscal quarter, as determined from time
to time.

"Original Issue Discount Security" means any Debt Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the maturity thereof pursuant to the terms of
the applicable Indenture.

"Senior Debt" means any Funded Debt whether outstanding on the date of
execution of the Indenture or thereafter created or incurred, unless it is
provided in the appropriate instrument that such Funded Debt is subordinated to
any other Funded Debt.

"Subsidiary," means, with respect to any Person, (i) any Corporation of
which at the time of determination more than 50% of the shares of Voting Stock
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).

"U.S. Government Obligations" means direct obligations of the United States
of America, or any Person controlled or supervised by and acting as an agency or
instrumentality of such government, in each case where the payment or payments
thereunder are unconditionally guaranteed as a full faith and credit obligation
by such government and which are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depository receipt issued by
a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such U.S. Government Obligation held by such custodian for
the account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of interest on or principal of or other amount with respect to the U.S.
Government Obligation evidenced by such depository receipt.

SECURITIES WARRANTS

The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with other Securities offered by any Prospectus
Supplement and may be attached to or separate from such other Securities. Each
series of Securities Warrants will be issued under a separate warrant agreement
(a "Securities Warrant Agreement") to be entered into between the Company and a
bank or trust company as Securities Warrant Agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrant Certificates and will not
assume any obligation or relationship of agency or trust for or with any holders
of Securities Warrant Certificates or beneficial owners of Securities Warrants.
Copies of the forms of Securities Warrant Agreements, including the forms of
Securities Warrant Certificates representing the Securities Warrants, will be
filed or incorporated by reference as exhibits to the Registration Statement to
which this Prospectus pertains. The following summaries of certain provisions of
the forms of Securities Warrant Agreements and Securities Warrant Certificates
do not purport to be complete and are subject to and are qualified in their
entirety by reference to all the provisions of the Securities Warrant Agreements
and the Securities Warrant Certificates.

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<PAGE> 75

General. If Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants, including, in
the case of Securities Warrants for the purchase of Debt Securities, the
following where applicable: (i) the offering price; (ii) the currencies in which
such Securities Warrants are being offered; (iii) the designation, aggregate
principal amount, currencies, denominations and terms of the series of Debt
Securities purchasable upon exercise of such Securities Warrants: (iv) the
designation and terms of any series of Securities with which such Securities
Warrants are being offered and the number of such Securities Warrants being
offered with each such Security; (v) the date on and after which such Securities
Warrants and the related series of Securities will be transferable separately;
(vi) the principal amount of the series of Debt Securities purchasable upon
exercise of each such Securities Warrant and the price at which and currencies
in which such principal amount of Debt Securities of such series may be
purchased upon such exercise; (vii) the date on which the right to exercise such
Securities Warrants shall commence and the date (the "Expiration Date") on which
such right shall expire; (viii) whether the Securities Warrants will be issued
in registered or bearer form; (ix) a discussion of any material United States
federal income tax consequences; and (x) any other terms of such Securities
Warrants.

In the case of Securities Warrants for the purchase of Preferred Stock or
Common Stock. the applicable Prospectus Supplement will describe the terms of
such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants and, in the case of Securities Warrants for Preferred
Stock, the designation, aggregate number and terms of the series of Preferred
Stock purchasable upon exercise of such Securities Warrants; (iii) the
designation and terms of the series of Securities with which such Securities
Warrants are being offered and the number of such Securities Warrants being
offered with each such Security; (iv) the date on and after which such
Securities Warrants and the related series of Securities will be transferable
separately; (v) the shares of Preferred Stock or Common Stock purchasable upon
exercise of each such Securities Warrant and the price at which such shares of
Preferred Stock or Common Stock may be purchased upon each exercise; (vi) the
date on which the right to exercise such Securities Warrants shall commence and
the expiration date thereof; (vii) a discussion of any material United States
federal income tax consequences; and (viii) any other terms of such Securities
Warrants. Securities Warrants for the purchase of Preferred Stock or Common
Stock will be offered and exercisable for U.S. dollars only and will be in
registered form only.

Securities Warrant Certificates may be exchanged for new Securities Warrant
Certificates of different denominations, may (if in registered form) be
presented for registration of transfer and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of, premium,
if any, or interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the applicable Indenture. Prior to the
exercise of any Securities Warrants to purchase Preferred Stock or Common Stock,
holders of such Securities Warrants will not have any rights of holders of the
Preferred Stock or Common Stock purchasable upon such exercise, including the
right to receive payment of dividends, if any, on the Preferred Stock or Common
Stock purchasable upon such exercise or to exercise any applicable right to
vote.

Exercise of Securities Warrants. Each Securities Warrant will entitle the
holder thereof to purchase such principal amount of Debt Securities or shares of
Preferred Stock or Common Stock, as the case may be, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become void.

Securities Warrants may be exercised by delivering to the Securities
Warrant Agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Stock or Common
Stock, as the case may be, purchasable upon such exercise together with certain
information set forth on the reverse side of the Securities Warrant Certificate.
Securities Warrants will be deemed to have been exercised upon receipt of
payment of the exercise price, subject to the receipt of the Securities Warrant
Certificate evidencing such Securities Warrants. Upon receipt of such payment
and the

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Securities Warrant Certificate properly completed and duly executed at the
corporate trust office of the Securities Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, issue and deliver the Debt Securities, Preferred Stock or Common
Stock, as the case may be, purchasable upon exercise. If fewer than all of the
Securities Warrants represented by such Securities Warrant Certificate are
exercised. a new Securities Warrant Certificate will be issued for the remaining
amount of Securities Warrants.

Amendments and Supplements to Securities Warrant Agreement. The Securities
Warrant Agreements may be amended or supplemented without the consent of the
holders of the Securities Warrants issued thereunder to effect changes that are
not inconsistent with the provisions of the Securities Warrants and that do not
adversely affect the interests of the holders of the Securities Warrants.

Common Stock Warrant Adjustments. The exercise price of, and the number of
shares of Common Stock covered by, a Common Stock Warrant are subject to
adjustment in certain events, including (i) the issuance of capital stock as a
dividend or distribution on the Common Stock; (ii) subdivisions and combinations
of the Common Stock; (iii) the issuance to all holders of Common Stock of
certain rights or warrants entitling them to subscribe for or purchase Common
Stock within 45 days after the date fixed for the determination of the
stockholders entitled to receive such rights or warrants, at less than the
current market price (as defined in the Warrant Agreement for such series of
Common Stock Warrants) and (iv) the distribution to all holders of Common Stock
of evidences of indebtedness or assets of the Company (excluding certain cash
dividends and distributions described below) or rights or warrants (excluding
those referred to above). In the event that the Company shall distribute any
rights or warrants to acquire capital stock pursuant to clause (iv) above (the
"Capital Stock Rights") pursuant to which separate certificates representing
such Capital Stock Rights will be distributed subsequent to the initial
distribution of such Capital Stock Rights (whether or not such distribution
shall have occurred prior to the date of the issuance of a series of Common
Stock Warrants), such subsequent distribution shall be deemed to be the
distribution of such Capital Stock Rights; provided that the Company may, in
lieu of making any adjustment in the exercise price of and the number of shares
of Common Stock covered by a Common Stock Warrant upon a distribution of
separate certificates representing such Capital Stock Rights. make proper
provision so that each holder of such a Common Stock Warrant who exercises such
Common Stock Warrant (or any portion thereof) (a) before the record date for
such distribution of separate certificates shall be entitled to receive upon
such exercise shares of Common Stock issued with Capital Stock Rights and (b)
after such record date and prior to the expiration, redemption or termination of
such Capital Stock Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, the same
number of such Capital Stock Rights as would a holder of the number of shares of
Common Stock that such Common Stock Warrant so exercised would have entitled the
holder thereof to acquire in accordance with the terms and provisions applicable
to the Capital Stock Rights if such Common Stock Warrant was exercised
immediately prior to the record date for such distribution. Common Stock owned
by or held for the account of the Company or any majority owned Subsidiary shall
not be deemed outstanding for the purpose of any adjustment.

No adjustment in the exercise price of and the number of shares of Common
Stock covered by a Common Stock Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless such adjustment would require a change of at
least 1% in the exercise price then in effect; provided that any such adjustment
not so made will be carried forward and taken into account in any subsequent
adjustment; and provided further that any such adjustment not so made shall be
made no later than three years after the occurrence of the event requiring such
adjustment to be made or carried forward. Except as stated above, the exercise
price of and the number of shares of Common Stock covered by a Common Stock
Warrant will not be adjusted for the issuance of Common Stock or any securities
convertible into or exchangeable for Common Stock, or securities carrying the
right to purchase any of the foregoing.

In the case of (i) a reclassification of or change to the Common Stock,
other than changes in par value, (ii) a consolidation or merger involving the
Company, other than where the Company is the continuing corporation and
reclassification or change, as described in (i) above, is involved or (iii) a
sale or conveyance to another corporation of the property and assets of the
Company as an entirety or substantially as an entirety,

24
<PAGE> 77

the holders of the Common Stock Warrants then outstanding will be entitled
thereafter to convert such Common Stock Warrants into the kind and amount of
shares of stock and other securities or property which they would have received
upon such reclassification, change, consolidation, merger, sale or conveyance
had such Common Stock Warrants been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance.

25
<PAGE> 78

PLAN OF DISTRIBUTION

The Company may offer and sell the Offered Securities in one or more of the
following ways: (i) through underwriters or dealers, (ii) through agents or
(iii) directly to one or more purchasers. The Prospectus Supplement with respect
to a particular offering of a series of Offered Securities will set forth the
terms of the offering of such Offered Securities, including the name or names of
any underwriters or agents with whom the Company has entered into arrangements
with respect to the sale of such Offered Securities, the public offering or
purchase price of such Offered Securities and the proceeds to the Company from
such sales and any underwriting discounts, agency fees or commissions and other
items constituting underwriters' compensation, the initial public offering
price, any discounts or concessions to be allowed or re-allowed or paid to
dealers and any securities exchange, if any, on which such Offered Securities
may be listed. Dealer trading may take place in certain of the Offered
Securities, including Offered Securities not listed on any securities exchange.

If underwriters are involved in the offer and sale of Offered Securities,
the Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Offered Securities may be
offered to the public either through underwriting syndicates represented by
managing underwriters, or by underwriters without a syndicate, all of which
underwriters in either case will be designated in the applicable Prospectus
Supplement. Unless otherwise set forth in the applicable Prospectus Supplement,
under the terms of the underwriting agreement, the obligations of the
underwriters to purchase Offered Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
the Offered Securities if any are purchased. Any initial public offering price
and any discounts or concessions or re-allowed or paid to dealers may be changed
from time to time.

Offered Securities may be offered and sold directly by the Company or
through agents designated by the Company from time to time. Any agent involved
in the offer or sale of the Offered Securities with respect to which this
Prospectus is delivered will be named in, and any commissions payable by the
Company to such agent will be set forth in or calculable from, the applicable
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.

If so indicated in the applicable Prospectus Supplement, the Company may
authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase the Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Delayed Delivery Contracts") providing for payment and
delivery on the date or dates stated in the Prospectus Supplement. Each Delayed
Delivery Contract will be for an amount of the Offered Securities not less than
and, unless the Company otherwise agrees, the aggregate amount of the Offered
Securities sold pursuant to Delayed Delivery Contracts shall be not more than
the respective minimum and maximum amounts stated in the Prospectus Supplement.
Institutions with which Delayed Delivery Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies and educational and charitable institutions, but shall in
all cases be subject to the approval of the Company in its sole discretion. The
obligations of the purchaser under any Delayed Delivery Contract to pay for and
take delivery of the Offered Securities will not be subject to any conditions
except that (i) the purchase of the Offered Securities by such institution shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which such institution is subject and (ii) any related sale of the Offered
Securities to underwriters shall have occurred. A commission set forth in the
Prospectus Supplement will be paid to underwriters soliciting purchases of the
Offered Securities pursuant to Delayed Delivery Contracts accepted by the
Company. The underwriters will not have any responsibility in respect of the
validity or performance of Delayed Delivery Contracts.

The Debt Securities, the Preferred Stock and the Securities Warrants will
be new issues of securities with no established trading market. Any underwriters
to whom Offered Securities are sold by the Company for public offering and sale
may make a market in such Offered Securities, but such underwriters will not be

26
<PAGE> 79

obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any Offered Securities.

Any underwriter, dealer or agent participating in the distribution of the
Offered Securities may be deemed to be an underwriter, as that term is defined
in the Securities Act, of the Offered Securities so offered and sold and any
discounts or commissions received by it from the Company and any profit realized
by it on the sale or resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act.

Under agreements entered into with the Company, underwriters, dealers and
agents may be entitled to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters or agents may be required to
make in respect thereof.

Underwriters, dealers and agents also may be customers of, engage in
transactions with, or perform other services for the Company in the ordinary
course of business.

LEGAL MATTERS

The validity of the shares of Common Stock, the Preferred Stock, the Debt
Securities and Securities Warrants offered hereby will be passed upon for the
Company by L. Keith Blackwell, General Counsel of the Company. Certain legal
matters will be passed upon for the Company by Haynes and Boone, LLP, Dallas,
Texas.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference
and has been so incorporated in reliance upon their authority as experts in
accounting and auditing.

27
<PAGE> 80

GLOSSARY

The following are certain defined terms which may be used in this
Prospectus and any accompanying Prospectus Supplement:

"ACACIA" means Acacia Realty Advisors, Inc.

"ACACIA ACQUISITION" means the acquisition by the Company of the assets
comprising the real estate pension advisory business of Acacia Realty Advisors,
Inc.

"ACC" means AMRESCO Capital Corporation, a subsidiary of the Company.

"AMRESCO RESIDENTIAL" means, collectively, ARMC and AMRESCO Residential
Credit Corporation, subsidiaries of the Company.

"ARMC" means AMRESCO Residential Mortgage Corporation, a subsidiary of the
Company.

"ASSET PORTFOLIO" means a pool or portfolio of performing, non-performing
or underperforming commercial, industrial, agricultural and/or real estate
loans.

"BEI" means BEI Holdings, Ltd.

"BEI MERGER" means the merger of Holdings with and into a subsidiary of BEI
on December 31, 1993.

"CKSRS" means CKSRS Housing Group, Ltd., a Florida limited partnership.

"COMPANY" means, unless otherwise stated in this Prospectus or unless the
context otherwise requires, the Company and each of its subsidiaries.

"CONDUIT PURCHASERS" means investment bankers and other financial
intermediaries who purchase or otherwise accumulate pools or portfolios of loans
having common features (e.g., real estate mortgages, etc.), with the intent of
securitizing such loan assets and selling them to a trust that obtains its funds
by selling ownership interests in the trust to public or private investors.

"CONVERTIBLE SUBORDINATED DEBENTURES" means the Company's 8% Convertible
Subordinated Debentures due 2005.

"CONVERTIBLE SUBORDINATED DEBENTURE INDENTURE" means that certain Indenture
dated November 27, 1995, as amended, governing the Convertible Subordinated
Debentures.

"CREDIT AGREEMENTS" means the Revolving Loan Agreement and the Warehouse
Agreements.

"CREDIT ENHANCEMENT" means the method by which a seller of asset-backed
securities achieves a higher credit rating with respect to such securities than
the credit rating of the assets collateralizing such securities. Credit
enhancement is often achieved through the use of financial guaranty insurance
policies.

"DTC" means The Depository Trust Company or its nominees.

"DUS" means the Delegated Underwriting and Servicing program established by
Fannie Mae that permits a DUS approved lender to commit and close loans for
multi-family mortgages for resale to Fannie Mae without Fannie Mae's prior
approval of such loans.

"EQS" means, collectively, EQ Services, Inc. and Equitable Real Estate
Investment Management, Inc.

"EQS ACQUISITION" means the acquisition by the Company of the third-party
securitized, commercial mortgage loan Master Servicer and Special Servicer
business of EQS.

"FACE VALUE" means, with respect to any loan or Asset Portfolio, the
aggregate unpaid principal balance of a loan or loans.

"FANNIE MAE" means the Federal National Mortgage Association.

"FDIC" means the Federal Deposit Insurance Corporation.

"FREDDIE MAC" means the Federal Home Loan Mortgage Corporation.

28
<PAGE> 81

"FULL SERVICER" means an entity which serves as Primary Servicer, Master
Servicer and Special Servicer on an Asset Portfolio.

"HOLDINGS" means AMRESCO Holdings, Inc.

"HOLLIDAY FENOGLIO" means Holliday Fenoglio, Inc., a subsidiary of the
Company.

"MASTER SERVICER" means an entity which provides administrative services
with respect to securitized pools of mortgage-backed securities.

"NATIONSBANK CONTRACT" means the asset management contract, as amended,
originally dated July 1, 1992, among the Company, NationsBank Corporation and
certain of its bank subsidiaries.

"NATIONSBANK OF TEXAS" means NationsBank of Texas, N.A.

"PRIMARY SERVICER" means an entity which provides various administrative
services with respect to loans such as collecting monthly mortgage payments,
maintaining escrow accounts for the payment of ad valorem taxes and insurance
premiums on behalf of borrowers, remitting payments of principal and interest
promptly to investors in mortgages or the Master Servicer of a pool and
reporting to those investors or the Master Servicer on financial transactions
related to such mortgages.

"REVOLVING LOAN AGREEMENT" means the First Amended and Restated Revolving
Loan Agreement dated as of April 25, 1996 and as subsequently amended, among the
Company, NationsBank of Texas, as Agent, and the Banks which are parties thereto
from time to time.

"RTC" means the Resolution Trust Corporation.

"SECURITIZATION" and "SECURITIZED" mean a transaction in which loans
originated or purchased by an entity are sold to special purpose entities
organized for the purpose of issuing asset-backed securities.

"SENIOR SUBORDINATED NOTES" means the Company's 10% Senior Subordinated
Notes due 2003.

"SENIOR SUBORDINATED NOTES INDENTURE" means the Indenture dated February 2,
1996, governing the Senior Subordinated Notes.

"SPECIAL SERVICER" means an entity which provides asset management and
resolution services with respect to non-performing or under-performing loans
within a pool of performing loans and/or mortgages.

"WAREHOUSE" means a type of lending arrangement whereby loans funded or
purchased and held for sale are financed by financial institutions or
institutional lenders on a short-term basis and secured by the underlying loans.

"WAREHOUSE AGREEMENTS" mean all warehouse loan facilities entered into by
the Company from time to time.

29
<PAGE> 82

No dealer, salesperson or other person has been authorized by the Company to
give any information or to make any representations other than those contained
or incorporated by reference in this Prospectus Supplement or the Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or the Underwriters. Neither this
Prospectus Supplement nor the Prospectus constitutes an offer to sell or a
solicitation of an offer to buy any securities other than the securities
described in this Prospectus Supplement or an offer to sell or the solicitation
of an offer to buy the securities described in this Prospectus Supplement in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus Supplement or the Prospectus nor any sale made
hereunder or thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date of such information.

---------------------

TABLE OF CONTENTS

Prospectus Supplement

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... S-3
Summary Financial and Other Data...... S-8
Risk Factors.......................... S-10
Use of Proceeds....................... S-12
Capitalization........................ S-13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... S-14
Business.............................. S-25
Management............................ S-37
Description of the Notes.............. S-39
Description of Other Indebtedness..... S-43
Underwriting.......................... S-51
Prospectus
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 9
Ratios of Earnings to Fixed Charges
and Earnings to Fixed Charges and
Preferred Stock Dividends........... 9
Description of Securities............. 10
Plan of Distribution.................. 26
Legal Matters......................... 27
Experts............................... 27
Glossary.............................. 28
</TABLE>

$50,000,000

[AMRESCO LOGO]

Senior Notes,
Series 1996-A due 1999

--------------------------------
PROSPECTUS SUPPLEMENT
to Prospectus dated July 1, 1996
--------------------------------

PIPER JAFFRAY INC.

J.C. BRADFORD & CO.

MORGAN KEEGAN & COMPANY, INC.

, 1996
<PAGE> 83

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 86,207
Printing Expenses......................................................... 20,000
Accounting Fees and Expenses.............................................. 10,000
Legal Fees and Expenses................................................... 25,000
Blue Sky Fees and Expenses................................................ 10,000
Indenture Trustees Fees and Expenses...................................... 10,000
Fees of Transfer Agent and Registrar...................................... 1,000
Miscellaneous Expenses.................................................... 7,793
--------
Total........................................................... $170,000
========
</TABLE>

All of the above expenses except the Securities and Exchange Commission
registration fee are estimated and include only those fees and expenses
associated with preparing this Registration Statement. All of such expenses will
be borne by the Company.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Amended and Restated Certificate of Incorporation (the
"Certificate") and the Company's Amended and Restated Bylaws (the "Bylaws")
provide that the Company shall indemnify, to the full extent permitted by law,
any person against liabilities arising from their service as directors,
officers, employees or agents of the Company. Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.

Section 145 further provides that indemnification provided for by Section
145 shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled, and that the corporation is empowered to purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.

The Certificate and the Bylaws provide that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or

II-1
<PAGE> 84

omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this provision related to director's liability shall
not adversely affect any right or protection of a director of the Company
existing immediately prior to such repeal or modification. Further, if the DGCL
shall be repealed or modified, the elimination of liability of a director
provided in the Certificate and the Bylaws shall be to the fullest extent
permitted by the DGCL as so amended.

Pursuant to Registration Rights Agreements with certain stockholders of the
Company, the Company has agreed to indemnify such stockholders against certain
liabilities, including liabilities under the Securities Act or otherwise. For
the undertaking with respect to indemnification, see Item 17 herein.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Purchase Agreement for Debt Securities.
1.2* -- Form of Underwriting Agreement for Preferred Stock.
1.3* -- Form of Underwriting Agreement for Common Stock.
4.1 -- Specimen Common Stock Certificate of the Registrant, incorporated by
reference to Exhibit 4.4 to the Registrant's Registration Statement
on Form S-3 (No. 33-63683).
4.2 -- Senior Indenture.
4.3 -- Subordinated Indenture.
4.4* -- Form of Certificate of Designation for Preferred Stock.
4.5* -- Specimen Preferred Stock Certificate.
4.6* -- Form of Warrant Agreement.
4.7* -- Specimen Warrant Certificate (included in Exhibit 4.8).
5.1 -- Opinion of L. Keith Blackwell, General Counsel of the Company,
regarding legality of securities being registered.
12.1** -- Statement of Computation of Ratio of Earnings to Fixed Charges.
12.2** -- Statement of Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends.
23.1 -- Consent of L. Keith Blackwell, contained in the opinion filed as
Exhibit 5.1.
23.2 -- Consent of Deloitte & Touche LLP.
24.1** -- Powers of Attorney.
25.1 -- Statement of Eligibility of Senior Trustee on Form T-1.
25.2* -- Statement of Eligibility of Subordinated Trustee on Form T-1.
</TABLE>

- ---------------

* To be filed.

** Previously filed.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or

II-2
<PAGE> 85

in the aggregate, represent a fundamental change in the information set
forth in the registration statement (notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total value
of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement).

(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.

(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and

(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration

II-3
<PAGE> 86

Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act of 1939, as amended (the "Act"),
in accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.

II-4
<PAGE> 87

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on the 1st day of July, 1996.

AMRESCO, INC.

By: /s/ L. KEITH BLACKWELL
------------------------------------
L. Keith Blackwell
Vice President, General Counsel and
Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to its Registration Statement has been signed by
the following persons in the capacities and on the 1st day of July, 1996:

<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<C> <S>
/s/ ROBERT H. LUTZ, JR.* Chairman of the Board and
- -------------------------------------------- Chief Executive Officer
Robert H. Lutz, Jr.
/s/ ROBERT L. ADAIR III* Director, President and
- -------------------------------------------- Chief Operating Officer
Robert L. Adair III
/s/ BARRY L. EDWARDS* Executive Vice President and
- -------------------------------------------- Chief Financial Officer
Barry L. Edwards (Principal Financial Officer)
/s/ JAMES P. COTTON, JR.* Director
- --------------------------------------------
James P. Cotton, Jr.
Director
- --------------------------------------------
Richard L. Cravey
/s/ GERALD E. EICKHOFF* Director
- --------------------------------------------
Gerald E. Eickhoff
Director
- --------------------------------------------
Edwin A. Wahlen, Jr.
/s/ AMY J. JORGENSEN* Director
- --------------------------------------------
Amy J. Jorgensen
Director
- --------------------------------------------
John J. McDonough
/s/ BRUCE W. SCHNITZER* Director
- --------------------------------------------
Bruce W. Schnitzer
/s/ RONALD B. KIRKLAND* Vice President and Chief
- -------------------------------------------- Accounting Officer
Ronald B. Kirkland (Principal Accounting Officer)
</TABLE>

- ---------------

* L. Keith Blackwell, by signing his name hereto, does sign and execute this
Pre-Effective Amendment No. 1 to its Registration Statement on behalf of each
of the above-named officers and directors of the Registrant on this 1st day of
July, 1996, pursuant to powers of attorneys executed on behalf of each of such
officers and directors, and previously filed with the Securities and Exchange
Commission.

By: /s/ L. KEITH BLACKWELL
- ------------------------------------
L. Keith Blackwell
Attorney-in-Fact

II-5
<PAGE> 88

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. EXHIBIT PAGE
- -------------------- ------------------------------------------------------------ ------------
<C> <S> <C>
1.1 -- Form of Purchase Agreement for Debt Securities.
1.2* -- Form of Underwriting Agreement for Preferred Stock.
1.3* -- Form of Underwriting Agreement for Common Stock.
4.1 -- Specimen Common Stock Certificate of the Registrant,
Incorporated by reference to Exhibit 4.4 to the
Registrant's Registration Statement on Form S-3 (No.
33-63683).
4.2 -- Senior Indenture.
4.3 -- Subordinated Indenture.
4.4* -- Form of Certificate of Designation for Preferred Stock.
4.5* -- Specimen Preferred Stock Certificate.
4.6* -- Form of Warrant Agreement.
4.7* -- Specimen Warrant Certificate (included in Exhibit 4.8).
5.1 -- Opinion of L. Keith Blackwell, General Counsel of the
Company, regarding legality of securities being
registered.
12.1** -- Statement of Computation of Ratio of Earnings to Fixed
Charges.
12.2** -- Statement of Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends.
23.1 -- Consent of L. Keith Blackwell, contained in the opinion
filed as Exhibit 5.1.
23.2 -- Consent of Deloitte & Touche LLP.
24.1** -- Powers of Attorney.
25.1 -- Statement of Eligibility of Senior Trustee on Form T-1.
25.2* -- Statement of Eligibility of Subordinated Trustee on Form
T-1.
</TABLE>

- ---------------

* To be filed.

** Previously filed.

<PAGE> 1

DRAFT 6/28/96

[Title of Debt Securities]

AMRESCO, INC.

PURCHASE AGREEMENT

___________, 19__

To the Representatives
named in Schedule I
hereto of the Underwriters
named in Schedule II hereto

Ladies and Gentlemen:

AMRESCO, INC., a Delaware corporation (the "Company"), proposes to
issue and sell to the underwriters named in Schedule II hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its securities identified in
Schedule I hereto (the "Initial Securities"). Such Initial Securities are to be
sold to each Underwriter, acting severally and not jointly, in such amounts as
are listed in Schedule II opposite the name of each Underwriter. The Company
also grants to the Underwriters, severally and not jointly, the option
described in Section 2(c) to purchase up to _________ principal amount of
additional securities to be issued under the Indenture (the "Option Securities"
and, together with the Initial Securities, the "Securities") to cover over-
allotments. The Securities are more fully described in the Final Prospectus
referred to

<PAGE> 2

below. If the firm or firms listed in Schedule II hereto include only the firm
or firms listed in Schedule I hereto, then the terms "Underwriters" and
"Representatives", as used herein, each shall be deemed to refer to such firm
or firms. The Securities shall be issued under an indenture, dated as of
____________ (the "Base Indenture"), between the Company and
______________________ as trustee (the "Trustee"), as amended and supplemented
by an Officer's Certificate and Company Order dated as of _______________, the
("Company Order"), establishing the terms of the Securities. The Base
Indenture, as amended and supplemented by the Company Order, is sometimes
referred to herein as the "Indenture."

The Company hereby confirms its agreement with respect to the sale of
the Securities to the Underwriters.

1. Registration Statement and Prospectus. A registration
statement on Form S-3 (File No. 333- 6031) with respect to the Company's Debt
Securities, Preferred Stock, Common Stock, Securities Warrants and Units (each
as defined in the Prospectus (as defined below) and collectively referred to
hereafter as the "Other Securities"), including a preliminary form of
prospectus, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations ("Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission; Amendment No. 1 to such Registration Statement, including a
preliminary form of prospectus supplement with respect to the Securities, also
have been so prepared and filed; and one or more other amendments to such
registration statement also has been, or will be, so prepared and filed.
Copies of such registration statement and amendments and each related
preliminary prospectus and prospectus supplement have been delivered to the
Underwriters.

The Company has elected to rely upon Rule 430A of the Rules and
Regulations and, accordingly, will prepare and file a prospectus (or a term
sheet meeting the requirements of Rule 434) pursuant to Rule 424(b) that
discloses the information previously omitted from the Prospectus (as defined
below) in reliance upon Rule 430A. Such registration statement (including all
schedules and exhibits thereto, but excluding Form T-1) as amended at the time
it was declared effective by the Commission and, in the event of any amendment
thereto after the effective date and prior to the Closing Date (as hereafter
defined), such registration statement as so amended (but only from and after
the effectiveness of such statement), including the information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rules 430A(b) and 434(d) of the Rules and Regulations, is hereafter called
the "Registration Statement." The prospectus included in the Registration
Statement (including any prospectus supplement relating to the Securities) at
the time it was declared effective by the Commission is hereafter called the
"Prospectus," except that if any prospectus (including any term sheet meeting
the requirements of Rule 434 of the Rules and Regulations provided by the
Company for use with a prospectus subject to completion within the meaning of
Rule 434 in order to meet the requirements of Section 10(a) of the Rules and
Regulations) filed by the Company with the Commission pursuant to Rule 424(b)
(and Rule 434, if applicable) of the Rules and Regulations or any other such
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed

2
<PAGE> 3

by the Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or otherwise) differs from the prospectus on file at the time the
Registration Statement was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations) from and after the
time such prospectus is filed with the Commission or transmitted to the
Commission for filing pursuant to such Rule 424(b) (and Rule 434, if
applicable) or from and after the time it is first provided to the Underwriters
by the Company for such use. The term "Preliminary Prospectus" as used herein
means any preliminary prospectus included in the Registration Statement
(including any prospectus supplement relating to the Securities) prior to the
time it became effective under the Act and any preliminary prospectus
(including any prospectus supplement relating to the Securities) subject to
completion as described in Rule 430A or 434 of the Rules and Regulations. Any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, the Prospectus and the Preliminary Prospectus
shall be deemed to refer to and include the filing of any document under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Agreement, or the issue date of the Prospectus or any Preliminary
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.

2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters as
follows:

(a) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission or the
securities authority of any state or other jurisdiction in which the
Securities are to be offered and sold and each Preliminary Prospectus,
at the time of filing thereof, did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
foregoing shall not apply to statements in or omissions from any
Preliminary Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in the
Preliminary Prospectus as supplemented to relate to the Securities.

(b) As of the time the Registration Statement (or any
post-effective amendment thereto) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of
the Prospectus (or any supplement to the Prospectus (including any
term sheet meeting the requirements of Rule 434)) and at the Closing
Date, (i) the Registration Statement and Prospectus (in each case, as
so amended and/or supplemented) conformed or will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement (as so amended and/or
supplemented) did not or will not include an untrue statement of a
material fact or omit to state a material fact

3
<PAGE> 4

required to be stated therein or necessary to make the statements
therein not misleading, and (iii) the Prospectus (as so amended and/or
supplemented) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are or were made, not misleading; except
that the foregoing clauses (i), (ii) and (iii) shall not apply to
statements in or omissions from any such document in reliance upon,
and in conformity with, written information furnished to the Company
by any Underwriter specifically for use in the preparation thereof.
The Registration Statement has been declared effective by the
Commission; no stop order suspending the effectiveness of the
Registration Statement has been issued; and no proceeding for that
purpose has been initiated or, to the Company's knowledge, threatened
by the Commission.

(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, or any amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation
and warranty shall not apply to the Statement of Eligibility and
Qualification of the Trustee on Form T-1 filed as an Exhibit to the
Registration Statement or to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter by the
Representatives expressly for use in the Prospectus as supplemented to
relate to the Securities.

(d) The Indenture conforms, and any amendments or
supplements thereto will conform, in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules and regulations of the
Commission thereunder.

4
<PAGE> 5

(e) The consolidated financial statements of the Company,
together with the related Securities thereto, set forth or
incorporated by reference in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act and
fairly present the financial condition of the Company and its
Subsidiaries (as hereinafter defined) or its predecessor or acquired
businesses, as the case may be, as of the dates indicated and the
results of operations and changes in cash flows for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved
(except as otherwise stated therein), and the independent public
accountants whose reports are contained therein are independent public
accountants as required by the Act, the Exchange Act and the Rules and
Regulations. The financial statement schedules, if any, included in
the Registration Statement or incorporated by reference therein, or in
any post-effective amendment thereto, and the other financial and
statistical information included in the Prospectus in all material
respects present fairly and on a basis consistent with the books and
records of the Company the information stated therein. The terms
"Subsidiary" and "Material Subsidiary" shall have the meanings
assigned thereto in the Indenture.

(f) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws and subject as to
enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the
enforcement of creditors' rights generally and to general equitable
principles.

(g) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture and the Securities. The Indenture has been duly and validly
authorized by the Company and, when the Indenture has been executed
and delivered, will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to
general equitable principles. The Securities sold hereunder have been
duly and validly authorized by the Company and, when the Securities
have been executed and authenticated in the manner set forth in the
Indenture and issued, sold, and delivered in the manner set forth in
the Prospectus, will be the valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms and the terms of the Indenture, subject, as to

5
<PAGE> 6

enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws affecting the enforcement of creditors' rights
generally and to general equitable principles. The Indenture will have
been duly qualified under the Trust Indenture Act upon effectiveness
of the Registration Statement. The Indenture will be substantially in
the form filed as an exhibit to the Registration Statement (other than
as to terms included in the Company Order). The Indenture and the
Securities conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.

(h) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of capital stock have been duly authorized, validly
issued and are fully paid and non-assessable. The outstanding
securities of the Company described in the Registration Statement and
Prospectus conform to such descriptions. All offers and sales of the
Company's capital stock, 8% Convertible Subordinated Debentures due
2005 or 10% Senior Subordinated Notes due 2003 prior to the date
hereof were at all relevant times duly registered under the Act or
exempt from the registration requirements of the Act and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue
Sky laws. None of the issued shares of capital stock of the Company or
its predecessors or any of its Subsidiaries has been issued or is
owned or held in violation of any pre-emptive rights of shareholders,
and no preemptive rights or similar rights of any security holders of
the Company exist with respect to the Securities. The Company has no
agreement with any security holder as to which the Company has not
obtained waiver which gives such security holder the right to require
the Company to register under the Act any securities of any nature
owned or held by such person in connection with the transactions
contemplated by this Agreement.

(i) Immediately after the sale of the Securities by the
Company hereunder, the aggregate amount of Securities which shall have
been issued and sold by the Company hereunder and of any of the Other
Securities that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of securities
registered under the Registration Statement.

(j) The execution, delivery and performance of this
Agreement, the Indenture and the Securities, the issuance and delivery
of the Securities, and the consummation of the transactions herein and
therein contemplated will not conflict with, or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, (ii) any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which
either the Company or any Subsidiary is bound or to which any of their
respective property is subject, (iii) the Company's or any
Subsidiary's charter or by-laws, or (iv) any order, rule, regulation
or decree of any court or governmental agency or body having
jurisdiction over the Company, any Subsidiary or any of their
respective properties, which breach, violation or default

6
<PAGE> 7
reasonably could or might be expected, individually or in the
aggregate with other such breaches, violations or defaults, to result
in a material adverse effect on the financial condition, results of
operations or business of the Company and its Subsidiaries, taken as a
whole. Other than those already obtained or waivers from which have
been obtained, no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required by
the Company or any Subsidiary for the execution, delivery and
performance of this Agreement, the Indenture or the Securities or for
the consummation of the transactions contemplated hereby and thereby,
including the issuance, sale and delivery of the Securities by the
Company, except such as may be required under the Act, the Trust
Indenture Act or state securities or blue sky laws.

(k) Neither the Company nor any Subsidiary is (i) in
violation of its respective certificate of incorporation or charter or
its respective by-laws or other organizational documents, (ii) in
default (nor has an event occurred which with notice or passage of
time or both would constitute such a default) under any bond,
indenture, mortgage, deed of trust, note, loan or credit agreement or
other material agreement or instrument to which any of them is a party
or by which any of them or any of their properties or assets may be
bound or affected, (iii) in violation of any order of any court,
arbitrator or governmental body or (iv) except as disclosed in the
Registration Statement and the Prospectus, in violation of or has
violated any franchise, grant, authorization, license, permit,
judgment, decree, order, statute, rule or regulation, which, in the
case of clauses (i)-(iv) of this sentence, would (individually or in
the aggregate) (x) adversely affect the legality, validity or
enforceability of this Agreement, the Indenture or the Securities, or
any document related hereto or thereto or (y) have a material adverse
effect on the financial condition, results of operations or business
of the Company and the Subsidiaries, taken as a whole, or (z)
materially impair the Company's ability to perform fully on a timely
basis any obligations which it has under this Agreement, the Indenture
or the Securities. The Company or the Subsidiaries hold, and are
operating in compliance with, all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the conduct of their
respective businesses, except where any such failure to hold or comply
will not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. The descriptions in the Registration
Statement and the Prospectus of statutes, legal and governmental
proceedings or contracts and other documents are accurate in all
material respects and fairly present the information required to be
shown; and there are no statutes or legal or governmental proceedings
required to be described in the Registration Statement or the
Prospectus that are not described as required.

(l) Each of the Company and the Material Subsidiaries has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation with
full corporate power and authority to own or lease its properties and
conduct its business as currently being carried on and as described in
the Registration Statement and Prospectus; and is duly qualified to do
business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases real

7
<PAGE> 8
property of a nature, or transacts business of a type, that would make
such qualification necessary and in which the failure to so qualify
would have a material adverse effect on the financial condition,
results of operations or business of the Company and the Subsidiaries,
taken as a whole. Each of the Company and the Subsidiaries is in
compliance with the rules, regulations or other lawful directives
established by each regulatory authority having jurisdiction over the
Company's or the Subsidiary's respective business, conduct and
affairs, including without limitation the timely and accurate filing
of all reports, statements, documents, registrations, filings or
submissions required to be filed by it with any such regulatory
authority, where the failure to comply with such rules, regulations or
other lawful directives reasonably could or might be expected to
result in a material adverse effect on the financial condition,
results of operations or business of the Company and its Subsidiaries,
taken as a whole.

(m) Except as disclosed in the Registration Statement and
the Prospectus, there is no action, suit, investigation or proceeding,
governmental or otherwise, pending or overtly threatened, to which the
Company or any Subsidiary is or may be a party or of which the
business or property of the Company or any Subsidiary is or may be the
subject which, in each case, is material to the Company and the
Subsidiaries, taken as a whole, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance of the
Securities or any of the other transactions contemplated hereby or by
the Indenture, or which questions the legality or validity of any such
transactions or which seeks to recover damages or obtain other relief
in connection with any of such transactions; and there is no contract
or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement which is not described or filed as
required.

(n) All of the outstanding capital stock of each
Subsidiary has been duly authorized, validly issued and is fully paid
and non-assessable, and except as otherwise noted in the Prospectus,
is owned directly or indirectly by the Company free and clear of any
security interest, claim, lien or other encumbrance.

(o) The Company and its Subsidiaries have good and
marketable title in fee simple to all real property, if any, and good
title to all personal property owned by them, in each case free and
clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed in
the Prospectus or such as do not materially and adversely affect the
value of those properties which individually or in the aggregate are
material to the Company and its Subsidiaries taken as a whole and do
not interfere with the use made or proposed to be made of such
property by the Company or any one of its Subsidiaries, as the case
may be; and any real property and buildings held under lease by the
Company or any of its Subsidiaries are held under valid, subsisting
and enforceable leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use made
or proposed to be made of such property and buildings by the Company
or such Subsidiary.

8
<PAGE> 9
(p) The Company and each of its Subsidiaries have filed
all necessary foreign, federal, state and local income and franchise
tax returns and, other than taxes the Company or its Subsidiaries are
contesting in good faith and for which the Company has established
adequate reserves, have paid all taxes shown as due thereon. Except as
is otherwise expressly stated in the Registration Statement or
Prospectus, the Company has no knowledge of any tax deficiency which
might be asserted against it which would materially and adversely
affect the financial condition, results of operations or business of
the Company and its Subsidiaries, taken as a whole.

(q) Since the date of the most recent audited financial
statements included or incorporated by reference in the Prospectus,
neither the Company nor any of the Subsidiaries has sustained any loss
or interference with its business, which loss or interference was
material to the Company and its Subsidiaries, taken as a whole, from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, other than as disclosed in or contemplated by the
Prospectus.

(r) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) neither
the Company nor any of the Subsidiaries has incurred any liabilities
or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are
material to the Company and the Subsidiaries taken as a whole, (ii)
the Company has not purchased any of its outstanding capital stock or
declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock, (iii) there has not been any change in the
capital stock (except as a result of shares issued upon exercise of
stock options pursuant to existing stock option plans of the Company
and the Subsidiaries, upon conversion of the Company's 8% Convertible
Subordinated Debentures and upon issuances of shares of restricted
stock pursuant to the Company's Stock Option and Award Plan),
long-term debt or, otherwise than in the ordinary course of business
consistent with past practice, short-term debt of the Company or any
of the Subsidiaries and (iv) there has not been any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the financial condition, results of operations
or business of the Company and the Subsidiaries taken as a whole, in
each case other than as disclosed in or contemplated by the
Prospectus.

(s) Neither the Company nor any of its officers,
directors or affiliates has taken, directly or indirectly, any action
designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale of the Securities.

(t) Neither the Company nor any of the Subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any such Subsidiary has, directly
or indirectly (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political
activity, (ii) made any

9
<PAGE> 10
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds, (iii) violated any provisions of the Foreign
Corrupt Practices Act of 1977, as amended, or (iv) made any bride,
rebate, payoff, influence payment, kick back or other unlawful
payment.

(u) To the Company's knowledge, the operations of the
Company and its Subsidiaries with respect to any real property
currently leased or owned or by any means controlled by the Company or
any Subsidiary (the "Real Property") are in compliance with all
federal, state and local laws, ordinances, rules and regulations
relating to occupational health and safety and the environment
(collectively "Laws"), except where the failure to so comply would not
have a material adverse effect on the Company's business or results of
operations, and the Company and its Subsidiaries have all licenses,
permits and authorizations necessary to operate under all Laws and are
in compliance with all terms and conditions of such licenses, permits
and authorizations, except where such failure would not have a
material adverse effect on the Company's and its Subsidiaries'
business or results of operations taken as a whole; neither the
Company nor any Subsidiary has authorized, conducted or has knowledge
of the generation, transportation, storage, use, treatment, disposal
or release of any hazardous substance, hazardous waste, hazardous
material, hazardous constituent, toxic substance, pollutant,
contaminate, petroleum product, natural gas, liquefied gas or
synthetic gas defined in or regulated under any environmental law on,
in or under any Real Property in violation of any Laws, except where
such violation would not have a material adverse effect on the
Company's business or results of operations; and there is no material
pending or threatened claim, litigation or any administrative agency
proceeding, nor has the Company or any Subsidiary received any written
or oral notice from any governmental entity or third party that (i)
alleges a violation of any Laws by the Company or any Subsidiary; (ii)
alleges the Company or any Subsidiary is a liable party under the
Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Section 9601 et seq. or any state superfund law; (iii)
alleges possible contamination of the environment by the Company or
any Subsidiary or (iv) alleges possible contamination of the Real
Property, except as to each of the above, for any violations,
liability or contamination that would not have a material adverse
effect on the Company's and its Subsidiaries' business or results of
operations taken as a whole.

(v) The Company and its Subsidiaries own or have the
right to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
trade secrets, proprietary or other confidential information and
intangible properties and assets (collectively "Intangibles")
necessary to their respective businesses as presently conducted or as
the Prospectus indicates the Company or such Subsidiary proposes to
conduct; to the Company's knowledge, neither the Company nor any
Subsidiary has infringed or is infringing, and neither the Company nor
any Subsidiary has received notice of infringement with respect to,
asserted Intangibles of others; and, to the Company's knowledge, there
is no infringement by others of Intangibles of the Company or any of
its Subsidiaries which would have a material adverse effect on the
Company and its Subsidiaries taken as a whole.

10
<PAGE> 11
(w) The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
business in which they are engaged by similarly situated companies;
and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a comparable cost, except as disclosed in the Prospectus.

(x) Each of the Company and its Subsidiaries makes and
keeps accurate books, records and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of its assets and maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general
and specific authorization, (ii) transactions are recorded as
necessary to permit preparation of the Company's consolidated
financial statements in accordance with generally accepted accounting
principles and to maintain accountability for the assets of the
Company, (iii) access to the assets of the Company and each of its
Subsidiaries is permitted only in accordance with management's general
and specific authorization and (iv) the recorded accountability for
assets of the Company and each of its Subsidiaries is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

(y) No Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distributions on such Subsidiary's capital stock, from repaying
to the Company any loans or advances to such Subsidiary or from
transferring any of such Subsidiary's property or assets to the
Company or any other Subsidiary, except as disclosed in the
Prospectus.

(z) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in any manner that would cause it to become an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940.

(aa) The Company's common stock, par value $0.05 per share
(the "Common Stock") is registered pursuant to Section 12(g) of the
Exchange Act and is qualified as a Nasdaq National Market security of
The Nasdaq Stock Market, Inc. The Company has taken no action designed
to terminate, or likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act or
qualification of the Common Stock on the Nasdaq National Market, nor
has the Company received any notification that the Commission or The
Nasdaq Stock Market, Inc. is contemplating terminating such
registration or qualification.

(bb) The Company has not distributed and will not
distribute any prospectus or other offering material in connection
with the offering and sale of the Securities other than any
Preliminary Prospectus or the Prospectus or other materials permitted
by the Act to be

11
<PAGE> 12

distributed by the Company; provided, however, that materials used in
the "road show" with the express approval of the Underwriters but not
otherwise delivered to prospective purchasers of the Securities shall
not be deemed, for the purposes of this paragraph 2(y), to be
distributed by the Company.

(cc) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92- 198, laws of Florida).
Neither the Company nor any Subsidiary does any business, directly or
indirectly, with the government of Cuba or, to the Company's
knowledge, with any person or entity located in Cuba.

(dd) The conditions for use of a Registration Statement on
Form S-3 set forth in the General Instructions to Form S-3 have been
satisfied with respect to the Company and the transactions
contemplated by this Agreement and the Registration Statement.

(ee) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.

(ff) Other than as contemplated herein, the Company has
not incurred any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.

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<PAGE> 13
3. Purchase, Sale and Delivery of Securities.

(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to issue and sell the Securities
to the Underwriters, and the Underwriters agree to purchase, at the
purchase price set forth in Schedule I hereto, the respective principal
amounts of Securities set forth opposite each Underwriter's name in
Schedule II hereto, except that, if Schedule I hereto provides for the
sale of Initial Securities pursuant to delayed delivery arrangements,
the respective principal amounts of Initial Securities to be purchased
by the Underwriters shall be set forth in Schedule II hereto, less the
respective amounts of Contract Securities determined as provided
below. Securities to be purchased by the Underwriters are herein
sometimes called the "Underwriters' Securities" and Securities to be
purchased pursuant to Delayed Delivery Contracts as hereinafter
provided are herein called "Contract Securities."

If so provided in Schedule I hereto, the Underwriters are
authorized to solicit offers to purchase Initial Securities from the
Company pursuant to delayed delivery contracts ("Delayed Delivery
Contracts"), substantially in the form of Schedule III hereto but with
such changes therein as the Company may authorize or approve. The
Underwriters will endeavor to make such arrangements and, as
compensation therefor, the Company will pay to the Representatives,
for the account of the Underwriters, on the Closing Date, the
percentage set forth in Schedule I hereto, of the principal amount of
the Initial Securities for which Delayed Delivery Contracts are made.
Delayed Delivery Contracts are to be with institutional investors,
including commercial and savings banks, insurance companies, pension
funds, investment companies and educational and charitable
institutions. The Company will make Delayed Delivery Contracts in all
cases where sales of Contract Securities arranged by the Underwriters
have been approved by the Company but, except as the Company may
otherwise agree, each such Delayed Delivery Contract must be for not
less than the minimum principal amount of Initial Securities set forth
in Schedule I hereto and the aggregate principal amount of Contract
Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any
responsibility in respect of the validity or performance of Delayed
Delivery Contracts. The principal amount of Initial Securities to be
purchased by each Underwriter as set forth in Schedule II hereto shall
be reduced by an amount of Contract Securities as the principal amount
of Securities set forth opposite the name of such Underwriter bears to
the aggregate principal amount set forth in Schedule II hereto, except
to the extent that you determine that such reduction shall be
otherwise than in such proportion and so advise the Company in
writing; provided, however, that the total principal amount of Initial
Securities to be purchased by the

13
<PAGE> 14

Underwriters shall be the aggregate principal amount set forth in
Schedule II hereto, less the aggregate principal amount of Contract
Securities.

The obligation of each Underwriter to the Company shall be to
purchase from the Company that principal amount of Securities set
forth opposite the name of such Underwriter in Schedule II hereof. In
making this Agreement, each Underwriter is contracting severally and
not jointly. Except as provided in paragraph (b) of this Section 3 and
in Section 8 hereof, the agreement of each Underwriter is to purchase
only its respective principal amount of Securities as specified in
Schedule II.

(b) In addition, on the basis of the representations and
warranties contained herein, and subject to the terms and conditions
set forth herein, the Company grants an option to the Underwriters,
severally and not jointly, to purchase up to an additional ________
principal amount of Option Securities to be issued under the Indenture
as provided above for the Initial Securities. The option hereby
granted will expire 30 days after the date hereof, and may be
exercised, in whole or in part (but not more than once), only for the
purpose of covering over-allotments upon notice by the Representatives
to the Company setting forth the number of Option Securities as to
which the several Underwriters are exercising the option, and the time
and date of payment and delivery thereof. Such time and date of
Delivery (the "Date of Delivery") shall be determined by the
Representatives but shall not be later than three full business days
after the exercise of such option and not in any event prior to the
Closing Date. If the option is exercised as to all or any portion of
the Option Securities, the Option Securities as to which the option is
exercised shall be purchased by the Underwriters severally and not
jointly, in proportion to, as nearly as practicable, their respective
Initial Securities underwriting obligations as set forth on Schedule
II.

(c) The Underwriters' Initial Securities will be
delivered by the Company to the Representatives for each Underwriter's
account against payment of the purchase price therefor by wire
transfer of same day funds to the account designated by the Company,
at such location as designated in Schedule I hereto or may otherwise be
mutually acceptable, at 9:00 a.m., local time at the closing location,
on the third (or, if the Securities are priced, as contemplated by
Rule 15c6-1(c) promulgated pursuant to the Exchange Act, after 4:30
p.m. Washington, D.C. time on the date of this Agreement, the fourth)
full business day following the date hereof, or at such other time and
date as the Representatives and the Company determine pursuant to Rule
15c6- 1(a) promulgated pursuant to the Exchange Act, such time and
date of delivery being herein referred to as the "Closing Date."
Delivery of the Securities shall be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by
the Representatives or in such other manner as the Representatives and
the Company shall agree.

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<PAGE> 15

The Underwriters' Option Securities will be delivered by the
Company to the Representatives for each Underwriter's account against
payment of the purchase price therefor by wire transfer of same day
funds to the account designated by the Company, such location as
designated in Schedule I hereto or may otherwise be mutually
acceptable, at 9:00 a.m., local time at the closing location, on the
Date of Delivery. Delivery of the Securities shall be made by credit
through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives or in such other manner as
the Representatives and the Company shall agree.

(d) It is understood that each Underwriter may (but shall
not be obligated to) make payment to the Company on behalf of another
Underwriter for the Securities to be purchased by such Underwriter.
Nothing herein contained shall constitute any of the Underwriters an
unincorporated association or partner with the Company or with each
other.

(e) The Underwriters propose to make a public offering of
the Underwriters' Securities directly to the public (which may include
selected dealers and special purchasers) as soon as the Underwriters
deem practicable after the Registration Statement becomes effective,
at the initial public offering price as set forth on the cover page of
the Prospectus, subject to the terms and conditions of this Agreement
and in accordance with the Prospectus. Such concessions from the
public offering price may be allowed to selected dealers and other
members of the National Association of Securities Dealers, Inc. as the
Underwriters may determine, and the Underwriters will furnish the
Company with such information about the distribution arrangements as
may be necessary for inclusion in the Registration Statement. It is
understood that the public offering price of Underwriters' Securities
and concessions may vary after the initial public offering.

4. Covenants. The Company covenants and agrees with the
Underwriters as follows:

(a) The Company will use its best efforts to cause any
post-effective amendments to the Registration Statement to become
effective as promptly as possible; the Company will notify the
Representatives promptly of the time when any post-effective amendment
to the Registration Statement has become effective or any supplement
to the Prospectus (including any term sheet with the meaning of Rule
434 of the Rules and Regulations) has been filed and of any request by
the Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information. If the Company
has elected to rely on Rule 430A of the Rules and Regulations, the
Company will prepare and file a Prospectus (or term sheet within the
meaning of Rule 434 of the Rules and Regulations) containing the
information omitted therefrom pursuant to Rule 430A of the Rules and
Regulations with the Commission within the time period required by,
and otherwise in accordance with the provisions of, Rules 424(b), 430A
and 434, if applicable, of the Rules and Regulations. The Company will
prepare and file with the Commission, promptly upon the request of any
Underwriter, any amendments or supplements to the Registration
Statement or Prospectus (including any term sheet within the meaning
of Rule 434 of the Rules and Regulations) that, in the reasonable
opinion of such Underwriter, may be necessary or advisable in
connection with the distribution of the Securities by the
Underwriters; and the Company will not file, at any time from the date
hereof to the Closing Date, any amendment or supplement to the
Registration Statement or Prospectus (including any term sheet within
the meaning of Rule 434 of the Rules and Regulations) or any document
incorporated by reference therein (other than any supplement to the
Prospectus relating solely to Other

15
<PAGE> 16
Securities) to which any Underwriter shall reasonably object by notice
to the Company after having been furnished a copy a reasonable time
prior to the filing.

(b) The Company will advise the Representatives, promptly
after it shall receive notice or obtain knowledge thereof, of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding
for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.

(c) Within the time during which a prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and
Regulations) relating to the Securities is required to be delivered
under the Act, the Company will comply as far as it is able with all
requirements imposed upon it by the Act, as now and hereafter amended,
and by the Rules and Regulations, as from time to time in force, so
far as necessary to permit the continuance of sales of or dealings in
the Securities as contemplated by the provisions hereof and the
Prospectus. If during such period any event occurs as a result of
which the Prospectus would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the
Act, the Company will promptly notify the Underwriters and will amend
the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to correct such statement or omission or
effect such compliance.

(d) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as
the Underwriters may reasonably designate and to continue such
qualifications in effect so long as required for the distribution of
the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute
a general consent to service of process in any state. In each
jurisdiction in which the Securities shall have been qualified as
above provided, the Company will make and file such statements and
reports as may be identified as requiring post- sale filings in any
blue sky memoranda delivered in connection with the offer and sale of
the Securities contemplated hereby or as otherwise reasonably
requested by the Underwriters or officials of such jurisdictions.

(e) The Company will furnish to you copies of the
Registration Statement (two of which will be manually signed and will
include all exhibits), the Indenture, each Preliminary Prospectus, the
Prospectus, and all amendments and supplements (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) to
such documents, in each case as soon as available and in such
quantities as each Underwriter may from time to time
reasonably request.

16
<PAGE> 17

(f) During a period of five years commencing with the
date hereof, the Company will furnish to each Underwriter who may so
request in writing, copies, without charge, of (i) all periodic and
special reports furnished to the securities holders of the Company and
(ii) all information, documents and reports filed with the Commission
or national securities exchange under the Exchange Act. So long as any
Securities remain outstanding, the Company will file promptly all
reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act.

(g) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration
Statement that shall satisfy the provisions of Section 11(a) of the
Act and Rule 158 of the Rules and Regulations.

(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented
from becoming effective under the provisions of Section 9(a) hereof or
is terminated, will pay or cause to be paid (i) all expenses
(including transfer taxes allocated to the respective transferees)
incurred in connection with the delivery to the Underwriters of the
Securities, (ii) all expenses and fees (including, without limitation,
fees and expenses of the Company's accountants and counsel but, except
as otherwise provided below, not including fees and expenses of the
Underwriters' counsel) in connection with the preparation, printing,
filing, delivery, and shipping of the Registration Statement
(including the financial statements therein and all amendments,
schedules and exhibits thereto), the Securities, the Indenture, each
Preliminary Prospectus, the Prospectus, and any amendment thereof or
supplement thereto, and underwriting documents, including Blue Sky
Memoranda, (iii) all filing fees and reasonable fees and disbursements
of the Underwriters' counsel incurred in connection with the
qualification of the Securities for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of
the states and other jurisdictions which the Underwriters shall
designate in accordance with Section 4(d) hereof, (iv) the fees and
expenses of the Trustee and counsel for the Trustee, (v) the filing
fees incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities,
(vi) listing fees, if any, (vii) fees or expenses, if any, of
Underwriters' counsel incurred in connection with investigating the
legality of an investment in the Securities by certain purchasers in
certain jurisdictions and the preparation of memoranda relating
thereto, (viii) any fees charged by security rating services for
rating the Securities, and (ix) all other reasonable costs and
expenses incident to the performance of its obligations hereunder that
are not otherwise specifically provided for herein. If the sale of the
Securities provided for herein is not consummated by reason of action
by the Company

17
<PAGE> 18
pursuant to Section 9(a) hereof which prevents this Agreement from
becoming effective, or by reason of any failure, refusal or inability
on the part of the Company to perform any material agreement on its
part to be performed, or because any other material condition of the
Underwriters' obligations hereunder required to be fulfilled by the
Company is not fulfilled, the Company will reimburse the several
Underwriters for all reasonable out-of-pocket disbursements (including
fees and disbursements of counsel) incurred by the Underwriters in
connection with their investigation, preparing to market and marketing
the Securities or in contemplation of performing their obligations
hereunder. The Company shall not in any event be liable to any of the
Underwriters for loss of anticipated profits from the transactions
covered by this Agreement.

(i) The Company will apply the net proceeds from the sale
of the Securities to be sold by it hereunder for the purposes set
forth in the Prospectus.

(j) The Company has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.

(k) For so long as the delivery of a prospectus is
required in connection with the offering, sale and distribution of the
Securities, the Company will file on a timely basis such registration
statements and other filings and take such other action as is required
pursuant to the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder.

(l) So long as any of the Securities are outstanding, the
Company will furnish to each of you, upon request, the reports
required to be filed with the Trustee pursuant to the Indenture,
concurrently with such filing.

(m) Upon written request of the Representatives, the
Company will use its best efforts to cause the Securities to be listed
on the New York Stock Exchange, Inc. upon issuance of the Securities
and will use its best efforts to cause the Securities to be so listed
as long as the Securities remain outstanding.

(n) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the
distribution of the Securities by the Underwriters if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba. Such information will be provided within 90
days after the commencement thereof or after a change occurs with
respect to previously reported information.

5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at the Closing Date (as if made at the

18
<PAGE> 19
Closing Date), of and compliance with all representations, warranties and
agreements of the Company contained herein, to the performance by the Company
of its obligations hereunder and to the following additional conditions:

(a) The Registration Statement shall have become
effective not later than 5:00 p.m., Dallas time, on the date of this
Agreement, or at such later time and date as the Representatives shall
approve and all filings required by Rules 424, 430A and 434 of the
Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereof shall have been issued; no proceedings for the
issuance of such an order shall have been initiated or threatened; and
any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the Underwriters' satisfaction.

(b) No Underwriter shall have advised the Company that
the Registration Statement or the Prospectus, or any amendment thereof
or supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), contains an untrue statement
of fact which in the reasonable opinion of any Underwriter, is
material, or omits to state a fact which, in the reasonable opinion of
any Underwriter, is material and is required to be stated therein or
necessary to make the statements therein not misleading.

(c) Except as contemplated in the Registration Statement
and the Prospectus, and except for the issuance of any of the Other
Securities, subsequent to the date as of which information is given in
the Prospectus, neither the Company nor any Subsidiary shall have
incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the
ordinary course of business, or declared or paid any dividends or made
any distribution of any kind with respect to its capital stock; and
there shall not have been any change in the capital stock (other than
capital stock issued upon exercise of outstanding stock options or
upon conversion of convertible debentures), or any material change in
the short- term or long-term debt of the Company, or any issuance of
options, warrants, convertible securities or other rights to purchase
the capital stock of the Company or any Subsidiary, or any material
adverse change, or any development involving a prospective material
adverse change, in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or
results of operations of the Company and the Subsidiaries, considered
as a whole, that, in your judgment, makes it impractical or
inadvisable to offer or deliver the Securities on the terms and in the
manner contemplated in the Prospectus.

(d) On the Closing Date, there shall have been furnished
to the Underwriters, the opinion of Haynes and Boone, L.L.P., counsel
for the Company, dated the Closing Date and addressed to the
Underwriters, to the effect that:

19
<PAGE> 20
(i) The Company has all requisite corporate power
to execute, deliver and perform this Agreement. This Agreement
has been duly authorized by all requisite corporate action
necessary on behalf of the Company, duly executed and
delivered by the Company and is enforceable against the
Company, subject to the General Qualifications.

(ii) The Company has all requisite corporate power
to execute, deliver and perform its obligations under the
Indenture. The Indenture has been duly authorized by all
requisite corporate action necessary on behalf of the Company,
has been duly executed and delivered by the Company and is
enforceable against the Company, subject to the General
Qualifications. The Securities being delivered on the Closing
Date have been duly authorized, and, when executed,
authenticated, issued and delivered in accordance with the
terms of the Indenture, will be enforceable against the
Company, subject to the General Qualifications. The Indenture
and the form of Certificate representing the Securities
conform in all material respects, as to legal matters, to the
descriptions thereof contained in the Registration Statement
and the Prospectus. The Indenture complies in all material
respects with the Trust Indenture Act. If such listing was
requested by the Representatives, the Securities have been
listed for trading on the New York Stock Exchange, Inc.

(iii) The execution and delivery by the Company of,
and performance of its obligations in, this Agreement, the
Indenture and the Securities being delivered on the Closing
Date do not (a) violate the Company's or any Material
Subsidiary's Constituent Documents, (b) breach, or result in a
default under, any existing obligation of the Company (or, as
applicable, the Material Subsidiaries) under the written
contracts listed on an exhibit to such opinion, or (c) violate
applicable provisions of statutory law or regulation. Except
for permits and similar authorizations required under the Act,
the Trust Indenture Act and the securities or Blue Sky laws of
certain jurisdictions and except for permits and
authorizations which have been obtained and registrations
which have been effected, no consent, approval, authorization,
registration or order of, or filing with, any court or
governmental agency or body is required in connection with the
sale of the Securities by the Company.

(iv) The Company's authorized, issued and
outstanding capital stock is as disclosed in the Prospectus.
All of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable. To such counsel's Actual Knowledge, except as
disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any
person granting such person the right to require the Company
to file a registration statement under the Act with respect to
any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the Registration Statement for the Securities (or any such
right has been effectively waived) and to such counsel's
Actual Knowledge, none of the issued shares of capital stock
of the Company, its predecessors or any Material Subsidiary

20
<PAGE> 21

has been issued in violation of any preemptive rights of
shareholders, and no person or entity, including any holder of
outstanding shares of capital stock of the Company has any
preemptive or, to such counsel's Actual Knowledge, other
similar rights to subscribe for any of the Securities. All of
the shares of capital stock of each Material Subsidiary have
been duly authorized and validly issued, are fully paid and
non-assessable, and to such counsel's Actual Knowledge are
owned of record by the Company and the Company has not
received notice of any adverse claim, except for security
interests in a majority of the present and future capital
stock of all the Material Subsidiaries granted by the Company
pursuant to the First Amended and Restated Revolving Loan
Agreement dated as of April 25, 1996, as amended, among the
Company, NationsBank of Texas, N.A. as agent and the banks
which are parties thereto from time to time.

(v) To such counsel's Actual Knowledge, the
Company is not named as a party to any pending or overtly
threatened litigation, arbitration, claim or proceeding that
is material to the Company and its Subsidiaries taken as a
whole, except as disclosed on the Company's most recent
Defensive Litigation/Counterclaim Report and all attachments
thereto. The statements contained in the Prospectus under the
captions ["Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources," "Description of Securities", "Description of the
Notes" and "Description of Other Indebtedness,"] insofar as
they purport to summarize the provisions of statutes, legal
and governmental proceedings or contracts or other documents
are materially accurate and fairly present in all material
respects the information required to be shown.

(vi) The Registration Statement is effective under
the Act and the Indenture has been qualified under the Trust
Indenture Act. Any required filing of the Prospectus pursuant
to Rule 424(b) of the Rules and Regulations has been made in
the manner and within the time period required by such Rule.
To such counsel's Actual Knowledge, no stop order suspending
the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted
or threatened by the Commission.

(vii) Each of the Company and the Material
Subsidiaries has been duly incorporated and is existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation with full corporate power to own
or lease its properties and conduct its business as described
in the Registration Statement and Prospectus.

(viii) The Registration Statement and the Prospectus
(including the documents incorporated by reference therein)
and each amendment or supplement thereto (other than the
financial statements and related schedules therein and other
than the Form T-1, as to each of which such counsel need
express no opinion), as of their respective effective or issue
dates, complied as to form in all material respects

21
<PAGE> 22
with the requirements of the Act, the Rules and Regulations,
the Exchange Act and the rules and regulations promulgated
thereunder.

(ix) The Company is not, and immediately after the
applicable Closing Date will not be, required to be registered
under the Investment Company Act of 1940, as amended, as an
"investment company," and, to the Actual Knowledge of such
counsel, is not a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of
1940, as amended.

Such counsel shall also advise the Underwriters that although
they do not assume any responsibility for, and cannot guarantee the
accuracy, completeness or fairness of, the statements contained in the
Registration Statement or the Prospectus, on the basis of the
information such counsel developed during the course of preparing the
Registration Statement and the Prospectus, which involved attending
conferences with officers of the Company, the Company's accountants
and other parties and a review of documents specifically referred to
or incorporated by reference in the Registration Statement and
Prospectus (although such documents incorporated by reference were
prepared and filed by the Company without, in certain cases, such
counsel's participation), and as a result of such counsel's
participation in such conferences and review of such documents, but
otherwise without independent check or verification except as
specified, such counsel has no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, or
any further amendment thereto upon filing thereof (but excluding the
financial statements and supporting schedules and other financial or
statistical information or other scheduled data included or
incorporated by reference therein and the Form T-1, as to each of
which such counsel need express no comment), contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any further amendment
or supplement thereto (but excluding the financial statements and
supporting schedules and other financial or statistical information or
other scheduled data included or incorporated by reference therein and
the Form T-1, as to each of which such counsel need express no
comment) contained or contains an untrue statement of a material fact
or omits or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances in which they
were made, not misleading.

(e) On the Closing Date, there shall have been furnished
to the Underwriters, the opinion of L. Keith Blackwell, Esq., General
Counsel for the Company, dated the Closing Date and addressed to the
Underwriters, to the effect that

(i) the Company is duly qualified to transact
business as a foreign corporation and in good standing under
the laws of each other jurisdiction in which it owns or leases
material property, or conducts material business, so as to
require such qualification, except where the failure to so
qualify would not have a material adverse effect on the
financial position of the Company and its Subsidiaries, taken
as a whole.

(ii) Each of the United States and Canadian
Subsidiaries of the Company is duly qualified to transact
business as a foreign corporation and is in good standing

22
<PAGE> 23
under the laws of each other United States and Canadian
jurisdiction in which it owns or leases material property, or
conducts material business, so as to require such
qualification, except where the failure to so qualify would
not have a material adverse effect on the financial position
of the Company and its Subsidiaries, taken as a whole.

(iii) Each sale of the Company's capital stock, its
8% Convertible Subordinated Debentures due 2005 or its 10%
Senior Subordinated Securities due 2003 during the period from
December 13, 1992 through the Closing Date was, at the time of
each sale, registered or exempt from the registration
requirements of the Act and applicable state securities or
Blue Sky laws.

(iv) To such counsel's Actual Knowledge, neither
the Company nor any of the Subsidiaries has (a) breached or
otherwise violated any existing obligation of the Company
under any court order that names the Company as a party or (b)
violated applicable provisions of statutory law or regulation,
in either case where any such breach or violation would have a
material adverse effect on the financial position of the
Company and its Subsidiaries, taken as a whole.

(v) To such counsel's Actual Knowledge, (a) the
Company has not violated its Certificate of Incorporation or
Bylaws and (b) neither the Company nor any of the Material
Subsidiaries has breached or otherwise violated any existing
obligation under any material agreement to which the Company
or any Material Subsidiary is a party, in either case where
such breach or violation would have a material adverse effect
on the financial position of the Company and its Subsidiaries,
taken as a whole.

(vi) Except as disclosed in the Registration
Statement and the Prospectus, such counsel knows of no action,
suit, investigation or proceeding, governmental or otherwise,
pending or overtly threatened against the Company or any
Subsidiary, or involving the business or properties of the
Company or any Subsidiary with respect to the issuance and
sale of the Securities pursuant to this Agreement and the
Indenture or which is required to be described in the
Registration Statement or Prospectus that is not disclosed as
required. The agreements, contracts and exhibits and
amendments thereto filed by the Company under the Exchange Act
to date constitute all of the material contracts to which the
Company or any of its Subsidiaries is a party which could be,
but are not, breached or violated in connection with the
execution and delivery by the Company of, and performance of
its obligations in, this Agreement, the Indenture and the
Securities and the consummation of the transactions herein and
therein contemplated. Such counsel does not know of any
contracts or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which are not
described or filed as required. The descriptions contained in
the Registration Statement and Prospectus of contracts and
other documents are accurate and fairly present the
information required to be shown. The statements contained in
the Registration Statement or the Prospectus to the extent
such statements relate to

23
<PAGE> 24
matters of law, descriptions of statutes, legal or
governmental proceedings, regulatory matters or other legal
matters or conclusions of law, fairly summarize such matters.

(f) On the Closing Date, there shall have been furnished
to the Underwriters, such opinion or opinions from
___________________________, counsel for the Underwriters, dated the
Closing Date and addressed to the Underwriters, with respect to the
formation of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and other related matters as
the Underwriters reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to
pass upon such matters.

(g) On the Closing Date the Underwriters shall have
received letters from Deloitte & Touche, LLP, dated the Closing Date
and addressed to the Underwriters, confirming that they are
independent public accountants within the meaning of the Act and are
in compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, and stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of such letter), the conclusions and findings of said firm with
respect to the financial information and other matters covered by its
letter delivered to the Underwriters concurrently with the execution
of this Agreement, and the effect of the letter so to be delivered on
the Closing Date shall be to confirm the conclusions and findings set
forth in such prior letter.

(h) On the Closing Date, there shall have been furnished
to the Underwriters a certificate, dated the Closing Date and
addressed to the Underwriters, signed by the Chief Executive Officer
and by the Chief Financial Officer of the Company, to the effect that:

(i) The representations and warranties of the
Company in this Agreement are true and correct, in all material
respects, as if made at and as of the Closing Date, and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Closing Date;

(ii) To the best of their knowledge, no stop order
or other order suspending the effectiveness of the Registration
Statement or any amendment thereof or the qualification of the
Securities for offering or sale has been issued, and, to the
best of their knowledge, no proceeding for that purpose has
been instituted or is contemplated by the Commission or any
state or regulatory body; and

(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and
any amendments thereof or supplements thereto (including any
term sheet within the meaning of Rule 434 of the Rules and
Regulations), and (A) such documents contain all statements
and information required to be included therein, the
Registration Statement, or any amendment thereof, does not
contain any untrue statement of a material fact or omit to
state any material fact

24
<PAGE> 25
required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as
amended or supplemented, does not include any untrue statement
of material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, (B) since the
effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented prospectus which has not been so set forth, (C)
except as disclosed in the Prospectus, subsequent to the
respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company
nor any Subsidiary has incurred any material liabilities or
obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business,
or declared or paid any dividends or made any distribution of
any kind with respect to its capital stock, and except as
disclosed in the Prospectus, there has not been any change in
the capital stock, or any material change in the short-term or
long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital
stock of the Company or any Subsidiary, or any material
adverse change, or any development involving a prospective
material adverse change, in the general affairs, condition
(financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company
and the Subsidiaries, considered as a whole, and (D) except as
stated in the Registration Statement and the Prospectus, there
is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to
which the Company or any Subsidiary is a party before or by
any court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse change
in the condition (financial or otherwise), business, prospects
or results of operations of the Company and the Subsidiaries,
considered as a whole.

(i) The Company shall have furnished to the Underwriters
and their counsel such additional documents, certificates and evidence
as the Underwriters or their counsel may have reasonably requested.

(j) The Company shall have accepted Delayed Delivery
Contracts in any case where sales of Contract Securities arranged by
the Underwriters have been approved by the Company.

All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are
reasonably satisfactory in form and substance to the Underwriters and
counsel for the Underwriters. The Company will furnish the
Underwriters with such conformed copies of such opinions,
certificates, letters and other documents as the Underwriters shall
reasonably request.

6. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may

25
<PAGE> 26

become subject, under the Act or otherwise (including in settlement of
any litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or incorporated therein
by reference, including the information deemed to be a part of the
Registration Statement at the time of effectiveness pursuant to Rules
430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or
any such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by the Underwriters
specifically for use in the preparation thereof; provided further,
however, that the Company shall not be liable to any Underwriter in
respect of any untrue statement or alleged untrue statement contained
in, or omission or alleged omission from, any Preliminary Prospectus
to the extent that (i) the Prospectus did not contain such untrue
statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage, liability or action, (ii) the
Prospectus was not sent or given to the purchaser of the Securities in
question at or prior to the time at which the written confirmation of
the sale of Securities was sent or given to such person, and (iii) the
failure to deliver such Prospectus was not the result of the Company's
non-compliance with its obligations under Section 4(e) hereof.

(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any such amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such Underwriter, specifically
for use in the preparation thereof, and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss,
claim, damage, liability or action.

26
<PAGE> 27
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
the indemnifying party from any liability that it may have to any
indemnified party otherwise than under such subsection or unless and
to the extent that the indemnifying party is substantially prejudiced
thereby. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
the indemnifying party's election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, that if, in the sole judgment of the Underwriters, it is
advisable for the Underwriters to be represented as a group by
separate counsel, the Underwriters shall have the right to employ a
single counsel to represent all Underwriters who may be subject to a
liability arising from any claim in respect of which indemnity may be
sought by the Underwriters under paragraph (a) of this Section 6, in
which event the reasonable fees and expenses of such separate counsel
shall be borne by the indemnifying party or parties and remitted to
the Underwriters for payment to such counsel as such fees and expenses
are incurred. An indemnifying party shall not be obligated under any
settlement agreement relating to any action under this Section 6 to
which it has not agreed in writing.

(d) If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as
a result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and
the parties' relevant intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the

27
<PAGE> 28
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined by
pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in
the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending against any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.

(e) The obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 6
shall be in addition to any liability that the respective Underwriters
may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who,
with his consent, is named in the Registration Statement as about to
become a director of the Company), to each officer of the Company who
has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.

7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.

8. Substitution of Underwriters.

(a) If any Underwriter or Underwriters shall fail to take
up and pay for the aggregate principal amount of Securities agreed by
such Underwriter or Underwriters to be purchased hereunder, upon
tender of such Securities in accordance with the terms hereof, and the
principal amount of Securities not purchased does not in either case
aggregate more than 10% of the aggregate principal amount of
Securities set forth in Schedule I hereto, the remaining Underwriters
shall be obligated, severally, in proportion to the respective
principal amount of Securities which they are obligated to purchase

28
<PAGE> 29

hereunder, to take up and pay for the principal amount of Securities
that the withdrawing or defaulting Underwriter or Underwriters agreed
but failed to purchase.

(b) If any Underwriter or Underwriters shall fail to take
up and pay for the aggregate principal amount of Securities agreed by
such Underwriter or Underwriters to be purchased hereunder, upon
tender of such Securities in accordance with the terms hereof, and the
principal amount of Securities not purchased aggregates more than 10%
of the aggregate principal amount of Securities set forth in Schedule
I hereto, and arrangements for the purchase of such Firm Securities by
other persons reasonably satisfactory to the Company are not made
within 36 hours thereafter, this Agreement shall terminate. In the
event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section
4(h) and Section 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some material
reason permitted under this Agreement, to purchase the aggregate
principal amount of Securities agreed by such Underwriter to be
purchased hereunder) be under any liability to the Company (except to
the extent provided in Section 6 hereof). Nothing contained herein
shall relieve a defaulting Underwriter from liability for its default.

If Securities to which a default relates are to be purchased
by non-defaulting Underwriters or by any other party or parties, the
non-defaulting Underwriters or the Company shall have the right to
postpone the Closing Date for not more than seven business days in
order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements,
may be effected. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 8.

9. Effective Date of this Agreement and Termination.

(a) This Agreement shall become effective at 10:00 a.m.,
Dallas time, on the first business day following the date hereof, or
at such earlier time after the effective date of the Registration
Statement as the Underwriters in their discretion shall first release
the Securities for sale to the public. For the purpose of this
Section, the Securities shall be deemed to have been released for sale
to the public upon release by the Underwriters of the publication of a
newspaper advertisement relating thereto or upon release by the
Underwriters of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter
specified before the time this Agreement becomes effective, the
Underwriters or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except
that the provisions of Section 4(h) and Section 6 hereof shall at all
times be effective.

(b) The Underwriters shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any time
at or prior to the First Closing Date, and the option referred to in
Section 3(b), if exercised, may be canceled at any time prior to the
First Closing Date, if (i) the Company shall have failed, refused or
been unable, at or prior to the Closing Date, to perform any agreement
on its part to be performed hereunder, (ii) any other condition of the
Underwriters' obligations hereunder is not fulfilled, (iii) trading on
the New York Stock Exchange or the American Stock Exchange shall have
been wholly

29
<PAGE> 30

suspended, (iv) minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been
required, on the New York Stock Exchange or the American Stock
Exchange, by such Exchange or by order of the Commission or any other
governmental authority having jurisdiction, (v) a banking moratorium
shall have been declared by Federal, New York or Texas authorities, or
(vi) there has occurred any material adverse change in the financial
markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United States is involved, a
declaration of war by Congress, any other substantial national or
international calamity or any other event or occurrence of a similar
character shall have occurred since the execution of this Agreement
that, in the Underwriters' judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment
for the Securities. Any such termination shall be without liability of
any party to any other party except that the provisions of Section
4(h) and Section 6 hereof shall at all times be effective.

(c) If the Underwriters elect to prevent this Agreement
from becoming effective or to terminate this Agreement as provided in
this Section, the Company shall be notified promptly by the
Underwriters by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, the
Underwriters shall be notified by the Company by telephone or
telegram, confirmed by letter.

10. Information Furnished by Underwriters. The statements set
forth in the last paragraph of the cover page and under the caption
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitute
the written information furnished by or on behalf of the Underwriters referred
to in Section 2 and Section 6 hereof.

11. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Representatives, shall be mailed, telegraphed or delivered to the
Representatives at the address specified in Schedule I hereto with a copy to
[counsel] ; if to the Company, shall be mailed, telegraphed or delivered to it
at 1845 Woodall Rodgers Freeway, Dallas, Texas 75201 Attention: Chief Executive
Officer, with a copy to Michael M. Boone, Esq., Haynes and Boone, LLP, 3100
NationsBank Plaza, 901 Main Street, Dallas, Texas 75202. All notices given by
telegram shall be promptly confirmed by letter. Any party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.

12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal
or equitable

30
<PAGE> 31
remedy or claim under or in respect of this Agreement or any provision herein
contained. The term "successors and assigns" as herein used shall not include
any purchaser, as such purchaser, of any of the Securities from any of the
Underwriters.

13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of _________.

31
<PAGE> 32
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the
Company and the Underwriters in accordance with its terms.

Very truly yours,

AMRESCO, INC.

By
------------------------------------

Its
------------------------------------

CONFIRMED
as of the date first
above mentioned

By: [Name of Representatives]

By
----------------------------------
Managing Director
Acting on behalf of itself
and the other Underwriters, if
any, named in Schedule II to
the foregoing Agreement

32
<PAGE> 33

SCHEDULE I

Purchase Agreement dated _______________, 199_.

Registration Statement No. 333-________.

Representatives:

Address of Representatives:

Title, Purchase Price and Description of Securities:

Title:

Principal amount:

Purchase price (include type of funds and accrued interest or
amortization, if applicable): _____%; in federal (same day) funds, by
certified or official bank check or checks or wire transfer to an
account previously designed to the Representatives by the Company.

Sinking fund provisions:

Redemption provisions:

Other provisions:

Closing Date, Time and Location: ____________, Dallas time, Office of
___________________________.

Listing:

Delayed Delivery Arrangements:

<PAGE> 34

SCHEDULE II

Principal Amount of
Initial Securities
Underwriters to be Purchased

<PAGE> 35

SCHEDULE III

Delayed Delivery Contract

____________, 199_

[Insert name and address
of lead Representative]

Dear Sirs:

The undersigned hereby agrees to purchase from AMRESCO, INC. (the
"Company"), and the Company agrees to sell to the undersigned, on ____________,
199_, (the "Delivery Date"), ______________ $________ principal amount of the
Company's ________ (the "Securities") offered by the Company's Final Prospectus
dated ___________, 199_, receipt of a copy of which is hereby acknowledged, at
a purchase price of ___% of the principal amount thereof, plus accrued
interest, if any, thereon from ____________, 199_, to the date of payment and
delivery, and on the further terms and conditions set forth in this contract.

Payment for the Securities to be purchased by the undersigned shall be
made on or before 11:00 a.m. New York City time on the Delivery Date to or upon
the order of the Company in New York Clearing House (next day) funds, at your
office or at such other place as shall be agreed between the Company and the
undersigned upon delivery to the undersigned of the Securities in definitive
fully registered form and in such authorized denominations and registered in
such names as the undersigned may request by written or telegraphic
communication addressed to the Company not less than three full business days
prior to the Delivery Date. If no request is received, the Securities will be
registered in the name of the undersigned and issued in a denomination equal to
the aggregate principal amount of Securities to be purchased by the undersigned
on the Delivery Date.

The obligation of the undersigned to take delivery of and make payment
for Securities on the Delivery Date, and the obligation of the Company to sell
and deliver Securities on the Delivery Date, and the obligation of the Company
to sell and deliver Securities on the Delivery Date, shall be subject to the
conditions (and neither party shall incur any liability by reason of the
failure thereof) that (1) the purchase of Securities to be made by the
undersigned, which purchase the undersigned represents is not prohibited on the
date hereof, shall not on the Delivery Date be prohibited under the laws of the
jurisdiction to which the undersigned is subject, and (2) the Company, on or
before the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such principal amount of the Securities as is to be sold to
them pursuant to the Purchase Agreement referred to in the Final Prospectus
mentioned above. Promptly after completion of such sale to the Underwriters,
the Company will mail or deliver to the undersigned at its address set forth
below notice to such effect, accompanied by a copy of the opinion of counsel
for the Company delivered to the Underwriters in connection therewith. The
obligation of the undersigned to take delivery of and make payment for the
Securities, and the obligation of the Company to cause the Securities to be
sold and delivered,

<PAGE> 36

shall not be effected by the failure of any purchaser to take delivery of and
make payment for the Securities pursuant to other contracts similar to this
contract.

This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.

It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on the first come, first served basis. If this contract
is acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.

This agreement shall be governed by and construed in accordance with
the internal laws of the State of ____________ without giving effect to
principles of conflict of laws.

Very truly yours,

------------------------------------------
(Name of Purchaser)

By:
---------------------------------------
(Signature and Title of Officer)

------------------------------------------
(Address)

Accepted:

AMRESCO, INC.

By:
---------------------------------
(Authorized Signature)

<PAGE> 1

EXHIBIT 4.2

- --------------------------------------------------------------------------------

AMRESCO, INC.

AS ISSUER

COMERICA BANK

AS TRUSTEE

____________________

SENIOR NOTES
____________________

INDENTURE

DATED AS OF JULY 1, 1996

- --------------------------------------------------------------------------------
<PAGE> 2
AMRESCO, INC.

Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of July 1, 1996

<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- ----------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701, 701(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701(c)
Section 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>

Note: This reconciliation and tie shall not, for any purpose,
be deemed to be part of the Indenture.

i
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 107. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 203. Form of Legend for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 305. Registration, Registration of Transfer and Exchange ;
Paying Agent and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 26
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 311. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 403. Defeasance and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>

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<TABLE>
<S> <C> <C>
ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 502. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE SIX THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 604. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 610. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 50
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE
AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 701. Preservation of Information; Communications to
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 702. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>

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<TABLE>
<S> <C>
SECTION 703. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 801. Company May Consolidate, Etc. Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 901. Supplemental Indentures Without Consent of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 902. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 58
SECTION 907. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

ARTICLE TEN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1004. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1005. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1006. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1007. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1008. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1009. Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1010. Statement by Officers as to Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1011. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1012. Exceptions to Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

ARTICLE ELEVEN REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>

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<TABLE>
<S> <C> <C>
ARTICLE THIRTEEN REPURCHASE OF SECURITIES AT OPTION OF
HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1301. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1302. Notice of Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1303. Deposit of Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1304. Securities Payable on Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1305. Securities Repurchased in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

ARTICLE FOURTEEN CORPORATE OBLIGATION ONLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1401. Indenture and Securities Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>

v
<PAGE> 7

INDENTURE, dated as of July 1, 1996 between AMRESCO, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having executive offices located at 1845 Woodall
Rodgers Freeway, Suite 1700, Dallas, Texas 75201, and Comerica Bank, a Michigan
banking corporation, as Trustee (herein called the "Trustee"), having its
principal office at 411 West Lafayette, Detroit, Michigan 48226.

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as herein provided.

All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder that are required to be part of this
Indenture and, to the extent applicable, shall be governed by such provisions.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof (including holders from time to time of the Securities of any
series held through a Holder which is a Depositary (as defined herein)), as
follows:

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions.

For all purposes hereof, except as otherwise expressly provided or
unless the context otherwise requires:

(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;

(3) any gender used herein shall be deemed and construed
to include correlative words of the masculine, feminine or neuter
gender;

(4) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP and, except
as otherwise herein expressly provided, GAAP with respect to any
computation required or permitted hereunder shall mean GAAP at the
date of such computation;

(5) the words "herein", "hereof' and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and

(6) the word "or" is always used inclusively (for
example, the phrase "A or B or both," not "either A or B but not
both").

Certain terms, used principally in Article Six, are defined in that
Article.

"Act", when used with respect to any Holder, has the meaning specified
in Section 104.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.

"Board of Directors" means either the board of directors of the
Company or any duly authorized (generally or in any particular respect)
committee appointed by that board.

"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification. Where any provision hereof refers to action to be taken pursuant
to a Board Resolution (including establishment of any series of the Securities
and the forms and terms thereof), such action may be taken by any committee,
officer or employee of the Company authorized to take such action (generally or
in any particular respect) by a Board Resolution.

"Business Day", when used with respect to any Place of Payment or
other location, means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not

2
<PAGE> 9
a day on which banking institutions generally in that Place of Payment or other
location are authorized or obligated by law or executive order to close, unless
otherwise specified in a form of Security.

"Capital Lease Obligation" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property, which obligations are
required to be classified and accounted for as capital lease obligations on the
balance sheet of such Person under GAAP, and the amount of such obligations at
the time any determination thereof is to be made for purposes hereof shall be
the amount of the liability in respect of a capital lease that would at such
time be required to be capitalized on a balance sheet in accordance with GAAP.

"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.

"Company" means the Person named as the "Company" in the first
paragraph hereof until a successor corporation shall have become such pursuant
to the applicable provisions hereof, and thereafter "Company" shall mean such
successor corporation, and any other obligor upon the Securities.

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, its Chief Executive Officer, its Chief
Operating Officer, its Chief Financial Officer, a Vice President, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, or
by any other officer of the Company authorized to sign by Board Resolution, and
delivered to the Trustee.

"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which at the date of original execution hereof is 411 West
Lafayette, Detroit, Michigan 48226.

"Corporation" includes corporations, associations, companies, joint
stock companies, limited liability companies or business trusts.

"Credit Enhancement Facility" means any document, instrument or
agreement entered into by any Person for the purpose of providing credit
support for Securitization Transactions and Warehouse Facilities.

"Defaulted Interest" has the meaning specified in Section 307.

"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the clearing

3
<PAGE> 10
agency registered under the Exchange Act, specified for that purpose as
contemplated by Section 301 or any successor clearing agency registered under
the Exchange Act as contemplated by Section 305, and if at any time there is
more than one such Person, "Depositary" as used with respect to the Securities
of any series shall mean the Depositary with respect to the Securities of such
series.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Funded Debt" means any of the following obligations of the Company or
any Subsidiary which by its terms matures at or is extendable or renewable at
the sole option of the obligor without requiring the consent of the obligee to
a date more than 360 days after the date of the creation or incurrence of such
obligation: (i) any obligations, contingent or otherwise, for borrowed money or
for the deferred purchase price of property, assets, securities or services
(including, without limitation, any interest accruing subsequent to an event of
default), (ii) all obligations (including the Debt Securities) evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), except any such
obligation that constitutes a trade payable and an accrued liability arising in
the ordinary course of business, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet prepared in
accordance with generally accepted accounting principles, (iv) all Capital
Lease Obligations, (v) liabilities of the Company actually due and payable
under banker's acceptances or letters of credit, (vi) all indebtedness of the
type referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or
for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien upon or security interest in property of
the Company or any Subsidiary (including, without limitation, accounts and
contract rights), even though the Company or any Subsidiary has not assumed or
become liable for the payment of such indebtedness and (vii) any guarantee or
endorsement (other than for collection or deposit in the ordinary course of
business) or discount with recourse of, or other agreement, contingent or
otherwise, to purchase, repurchase, or otherwise acquire, to supply, or advance
funds or become liable with respect to, any indebtedness or any obligation of
the type referred to in any of the foregoing clauses (i) through (vi),
regardless of whether such obligation would appear on a balance sheet.

"GAAP" means generally accepted accounting principles in the United
States of America set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and

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<PAGE> 11
pronouncements of the Financial Accounting Standards Board in effect from time
to time.

"Global Security" means a Security bearing the legend specified in
Section 203 evidencing all or part of a series of Securities, issued to the
Depositary for such series or its nominee, and registered in the name of such
Depositary or nominee.

"Holder" means a Person in whose name a Security is registered in the
Security Register.

"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument due to the appointment of
one or more separate Trustees for any one or more separate series of Securities
pursuant to Section 610(f), "Indenture" shall mean, with respect to such series
of Securities for which any such Person is Trustee, this instrument as
originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of particular series
of Securities for which such Person is Trustee established as contemplated by
Section 301, exclusive, however, of any provisions or terms which relate solely
to other series of Securities for which such Person is not Trustee, regardless
of when such terms or provisions were adopted, and exclusive of any provisions
or terms adopted by means of one or more indentures supplemental hereto
executed and delivered after such Person had become such Trustee but to which
such Person, as such Trustee, was not a party.

"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.

"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

"Material Subsidiary" means Holliday Fenoglio, Inc., AMRESCO
Management, Inc., AMRESCO Residential Mortgage Corporation, AMRESCO Advisors,
Inc., AMRESCO Residential Credit Corporation, AMRESCO Capital Corporation,
AMRESCO New England, Inc., Oak Cliff Financial, Inc. and any other Subsidiary
whose assets or revenues comprise at least five percent (5%) of the assets or
revenues of the Company and the Subsidiaries on a consolidated basis as of the
end of, or for the, Company's most recently completed fiscal quarter, as
determined from time to time.

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<PAGE> 12

"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, notice of option to elect
repayment or otherwise.

"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President, the Chief Executive
Officer or a Vice President of the Company, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, that
complies with Section 314(e) of the Trust Indenture Act and is delivered to the
Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company or other counsel who shall be reasonably
acceptable to the Trustee, that complies with Section 314(e) of the Trust
Indenture Act.

"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
hereunder, except:

(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

(ii) Securities or any portion thereof for whose payment
or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made;

(iii) any Security with respect to which the Company has
effected defeasance pursuant to clauses (1)(B)) and (3) of Section
401; and

(iv) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant hereto, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;

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<PAGE> 13

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Securities, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units that shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined in the
manner provided as contemplated by Section 301 as of the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined as of
the date of original issuance of such Security, of the amount determined as
provided in (i) above) of such Security as determined by the Company pursuant
to Section 301, and (iii) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making any such
determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
actually knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) and/or interest on any Securities on behalf
of the Company.

"Periodic Offering" means an offering of Securities of a series from
time to time the specific terms of which Securities, including without
limitation the rate or rates of interest (or formula for determining the rate
or rates of interest), if any, thereon, the Stated Maturity or Maturities
thereof and the redemption provisions, if any, with respect thereto, are to be
determined by the Company or its agents upon the issuance of such Securities.

"Person" means any individual, Corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.

"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and/or interest on the Securities of that series are payable.

"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security, and, for the purposes of this definition, any Security

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<PAGE> 14
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Redemption Date", when used with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption pursuant
hereto.

"Redemption Price", when used with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed pursuant
hereto plus premium, if any, and accrued interest.

"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee assigned by it to administer its corporate trust
matters.

"Repurchase Date", when used with respect to any Security or portion
thereof to be repurchased, means the date fixed for such repurchase pursuant
hereto.

"Repurchase Price", when used with respect to any Security or portion
thereof to be repurchased, means the price at which it is to be repurchased
pursuant hereto plus premium, if any, and accrued interest.

"Securities" has the meaning stated in the first recital hereof and
more particularly means any Securities authenticated and delivered hereunder;
provided, however, that if at any time there is more than one Person acting as
Trustee hereunder, "Securities" with respect hereof as to which such Person is
Trustee shall have the meaning stated in the first recital hereof and shall
more particularly mean Securities authenticated and delivered hereunder,
exclusive, however, of Securities of any series as to which such Person is not
Trustee.

"Securitization Transaction" means a public or private transfer of
installment sales contracts, loans, leases or other receivables by which the
Company directly or indirectly securities a pool of specified installment sales
contracts, loans, leases or other receivables.

"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.

"Senior Debt" means the principal amount of, and interest on and all
other amounts due on or in connection with (1) Funded Debt whether outstanding
on the date of execution of the Indenture or thereafter created or incurred,
unless it is provided in the appropriate instrument that such Funded Debt is
subordinated to any other Funded Debt and (2) renewals, extensions and
refundings of any such indebtedness.

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<PAGE> 15
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

"Subsidiary" means, with respect to any Person, (i) any Corporation of
which at the time of determination more than 50% of the shares of Voting Stock
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).

"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.

"Trustee" means the Person named as the "Trustee" in the first
paragraph hereof until a successor Trustee shall have become such pursuant to
the applicable provisions hereof, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.

"U.S. Government Obligations" means direct obligations of the United
States of America, or any Person controlled or supervised by and acting as an
agency or instrumentality of such government, in each case where the payment or
payments thereunder are unconditionally guaranteed as a full faith and credit
obligation by such government and which are not callable or redeemable at the
option of the issuer or issuers thereof, and shall also include a depository
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
or other amount with respect to any such U.S. Government Obligation held by
such custodian for the account of the holder of a depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of interest on or principal of or other
amount with respect to the U.S. Government Obligation evidenced by such
depository receipt.

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<PAGE> 16
"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".

"Voting Stock", when used with respect to a Corporation, means stock
of the class or classes having general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of such Corporation (irrespective of whether at the time stock or
securities of any other class or classes shall have or might have voting power
by reason of the happening of any contingency).

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take
any action under any provision hereof, the Company shall furnish to the
Trustee, if so requested by the Trustee, an Officers' Certificate stating that
all conditions precedent, if any, provided for herein relating to the proposed
action have been complied with and, if so requested by the Trustee, an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for herein shall include:

(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion whether such
covenant or condition has been complied with; and

(4) a statement whether, in the opinion of each such
individual, such condition or covenant has been complied with.

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<PAGE> 17
SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

Any certificate or opinion of any officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate, opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel or
representation of counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous. Any
certificate or opinion of counsel may be stated to be based on the certificates
or opinions of other counsel, in which event it shall be accompanied by a copy
of such other certificates or opinions.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments hereunder or any Security, they may, but need not, be consolidated
and form one instrument.

SECTION 104. Acts of Holders.

(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided hereby to be given or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders (including Persons who hold their
Securities through a Holder which is a Depositary) in person or by an agent
duly appointed in writing, and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose hereof and (subject to Section 601) conclusive in favor of the
Trustee and the Company and any agent of the Trustee or the Company, if made in
the manner provided in this Section.

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<PAGE> 18

Without limiting the generality of the foregoing, a Holder, including
a Depositary that is a Holder of a Global Security, may make, give or take, by
a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted hereby to be made, given or taken by the Holders, and a Depositary
that is a Holder of a Global Security may provide its proxy or proxies to the
beneficial owners of interests in any such Global Security through such
Depositary's standing instructions and customary practices.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient and in accordance with such reasonable rules as the Trustee
may determine, provided that, in any instance, the Trustee may require further
proof with respect to any matter referred to in this Section.

(c) The ownership, principal amount and serial numbers of
Securities held by any Person, and the date of commencement and the date of the
termination of holding the same, shall be proved conclusively by the Security
Register.

(d) The Company may fix any day as the record date for the purpose
of determining the Holders (including Persons who hold Securities through a
Holder which is a Depositary) of Securities of any series entitled to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action, or to vote on any action, authorized or permitted to be given or
taken by Holders of Securities of such series. If not set by the Company prior
to the first solicitation of a Holder of Securities of such series made by any
Person in respect of any such action, or, in the case of any such vote, prior
to such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation or vote, as
the case may be. With regard to any record date for action to be taken by the
Holders (including Persons who hold Securities through a Holder which is a
Depositary) of one or more series of Securities, only the Holders of Securities
of such series on such date (or their duly designated proxies) shall be
entitled to give or take, or vote on, the relevant action.

With regard to any action that may be given or taken hereunder only by
Holders (including Persons who hold their Securities through a Holder which is
a Depositary) of a requisite principal amount of Outstanding Securities of any
series (or their duly appointed agents) and for which a record date is set
pursuant to this subsection (d), the Company may, at its option, set an
expiration date after which no such action purported to be given or taken by
any Holder shall be effective hereunder unless given or taken on or prior to
such expiration date by Holders (including Persons who hold Securities through
a Holder which is a Depositary) of the requisite principal amount of
Outstanding Securities of such series on such record date (or their duly
appointed agents). On or prior to any expiration date set pursuant to this
subsection (d), the Company may, on one or more occasions at its option, extend
such date to any later date. Nothing in this subsection (d) shall prevent any
Holder

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<PAGE> 19
(or any duly appointed agent thereof, from giving or taking, after any
expiration date, any action identical to, or, at any time, contrary to or
different from any action given or taken, or purported to have been given and
taken, hereunder by a Holder on or prior to such date, in which event the
Company may set a record date in respect hereof pursuant to this subsection
(d).

Notwithstanding the foregoing, upon receipt by the Trustee, with
respect to Securities of any series, of (i) any Notice of Default pursuant to
Section 501, (ii) any declaration or acceleration, or any rescission and
annulment of any such declaration, pursuant to Section 502, or (iii) any
direction given pursuant to Section 512 (any such notice, declaration,
rescission and annulment, or direction being referred to herein as a
"Direction"), a record date shall automatically and without any other action by
any Person be set for the purpose of determining the Holders (including Persons
who hold Securities through a Holder which is a Depositary) of Outstanding
Securities of such series entitled to join in such Direction, which record date
shall be the close of business on the day the Trustee receives such Direction.
The Holders (including Persons who hold Securities through a Holder which is a
Depositary) of Outstanding Securities of such series on such record date (or
their duly appointed agents), and only such Persons, shall be entitled to join
in such Direction, whether or not such Holders remain Holders after such record
date; provided that, unless such Direction shall have become effective by
virtue of Holders (including Persons who hold Securities through a Holder which
is a Depositary) of the requisite principal amount of Outstanding Securities of
such series on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such Direction
shall automatically and without any action by any Person be canceled and be of
no further effect. Nothing in this paragraph shall prevent a Holder (or duly
appointed agent thereof) from giving, before or after the expiration of such
90-day period, a Direction contrary to or different from, or, after the
expiration of such period, identical to, a Direction that has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date in respect thereof shall be set pursuant to this subsection (d).

(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.

SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted hereby to be made
upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if

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<PAGE> 20
made, given, furnished or filed in writing to or with a Responsible
Officer of the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Department, or

(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, or sent by facsimile and U.S. mail, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
(Attention: Chief Financial Officer) or at any other address
previously furnished in writing to the Trustee by the Company.

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder
(including Persons who hold Securities through a Holder which is a Depositary
if the name and address of such beneficial holder has been provided in writing
to the Person required to give such notice prior to the date such notice is
given) affected by such event, at such Holder's address as it appears in the
Security Register or as provided in writing by the Depositary, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice mailed to the Holder in the manner
herein prescribed shall be conclusively deemed to have been received by such
Holder three days after deposit with the U.S. Mail, whether or not such Holder
actually receives such notice. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made by or with the approval of the
Trustee shall constitute a sufficient notification for every purpose hereunder.

Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted hereunder shall be in the English
language.

SECTION 107. Compliance with Trust Indenture Act.

This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act that are required to be part hereof. If any
provision hereof

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<PAGE> 21

limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required under such Act to be a part of and govern this Indenture, the
provision of the Trust Indenture Act shall control. If any provision hereof
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply hereto as
so modified or to be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 109. Successors and Assigns.

All covenants and agreements herein by the Company or the Trustee
shall bind its successors and assigns, whether so expressed or not.

SECTION 110. Separability Clause.

In case any provision herein or in the Securities shall be invalid,
illegal or unenforceable, either wholly or partially, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and such provisions shall be given effect to the fullest
extent permitted by law.

SECTION 111. Benefits of Indenture.

Nothing herein or in the Securities, express or implied, shall give to
any Person, other than the parties hereto, any Authenticating Agent, any Paying
Agent, any Securities Registrar, and their successors hereunder and the Holders
(including Persons who hold Securities through a Holder which is a Depositary),
any benefit or any legal or equitable right, remedy or claim hereunder.

SECTION 112. Governing Law.

This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of Texas.

SECTION 113. Legal Holidays.

Except as may be otherwise specified with respect to any particular
Securities, in any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision hereof or of the Securities)
payment of interest or principal (and premium, if any) need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, provided
that no

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<PAGE> 22
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.

ARTICLE TWO
SECURITY FORMS

SECTION 201. Forms Generally.

The Securities of each series, including Global Securities
representing Securities of such series, shall be in the form established,
without the approval of any Holders or the Trustee, by or pursuant to a Board
Resolution in accordance with Section 301 or by one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted hereby, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.

The definitive Securities may be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.

SECTION 202. Form of Trustee's Certificate of Authentication.

The Trustee's certificate of authentication shall be in substantially
the following form:

This is one of the Securities of the series designated therein and
issued pursuant to the within-mentioned Indenture.

________________________________________
_________________, as Trustee

By______________________________________
Authorized Signature

SECTION 203. Form of Legend for Global Securities.

Any Global Security authenticated and delivered hereunder shall, in
addition to the provisions established by or pursuant to a Board Resolution or
in one or more indentures supplemental hereto in accordance with Section 201,
bear a legend in substantially the following form or such similar form as may
be required by the Depositary:

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"Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New
York, New York) to the issuer or to its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein."

ARTICLE THREE
THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be
authenticated and delivered hereunder is unlimited.

The Securities may be issued in one or more series. There shall be
established, without the approval of any Holders or the Trustee, by or pursuant
to authority granted by one or more Board Resolutions, and, subject to Section
303, there shall be set forth in an Officers' Certificate, or established in
one or more indentures supplemental hereto, prior to the initial issuance of
Securities of any series, all or any of the following, as applicable:

(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from Securities of any
other series);

(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
hereunder (except for Securities authenticated and delivered upon
registration of transfer of, or in lieu of, other Securities of the
series pursuant to Sections 304, 305, 306, 906 or 1107 and except for
any Securities which, pursuant to Section 303, are deemed never to
have been authenticated and delivered hereunder) and the absence of
such limitation shall mean that the Company may issue from time to
time additional securities of such series without limitation as to
aggregate principal amount;

(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;

(4) the date or dates, or the method by which such date
or dates are determined or extended, on which the principal or
installments of principal and premium, if any, of the Securities of
the series is or are payable;

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(5) the rate or rates (which may be fixed or variable) at
which the Securities of the series shall bear interest, if any, or the
method by which such rate or rates shall be determined, the date or
dates from which such interest shall accrue, the Interest Payment
Dates on which such interest shall be payable, the Regular Record Date
for the interest payable on any Interest Payment Date and the
circumstances, if any in which the Company may defer interest payments
and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;

(6) the place or places, if any, where the principal of
(and premium, if any) and interest on Securities of the series shall
be payable, any Securities of the series may be surrendered for
registration of transfer or exchange and notices and demands to or
upon the Company with respect to the Securities of the series and this
Indenture may be served, other than or in addition to the Corporate
Trust Office of the Trustee;

(7) if applicable, the period or periods within which,
the price or prices at which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Company;

(8) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;

(9) whether the Securities of the series will be
convertible into shares of capital stock and/or exchangeable for other
securities, and if so, the terms and conditions upon which such
Securities will be so convertible or exchangeable, and any deletions
from or modifications or additions hereto to permit or to facilitate
the issuance of such convertible or exchangeable Securities or the
administration thereof;

(10) the identity of each Security Registrar and Paying
Agent, if other than or in addition to the Trustee;

(11) if the amount of principal of, or any premium or
interest on, any Securities of the series may be determined by
reference to an index or pursuant to a formula, the manner in which
such amounts shall be determined;

(12) the applicability of, and any addition to or change
in, the covenants and definitions currently set forth herein;

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(13) if other than denominations of $1,000 or any amount
in excess thereof which is an integral multiple of $1,000, the
denominations in which Securities of the series shall be issuable;

(14) if other than the currency of the United States of
America, the currency, currencies, currency units or composite
currencies in which payment of the principal of and any premium and
interest on any Securities of the series shall be payable and the
manner of determining the U.S. dollar equivalent of the principal
amount thereof for purposes of the definition of "Outstanding" in
Section 101, and, if the principal of or any premium or interest on
any Securities of the series is to be payable, at the election of the
Company or a Holder thereof, in one or more currencies or currency
units other than that or those in which the Securities are stated to
be payable, the currency, currencies or currency units in which
payment of the principal of and any premium and interest on Securities
of such series as to which such election is made shall be payable, and
the periods within which and the terms and conditions upon which such
election is to be made;

(15) any other event or events of default applicable with
respect to Securities of the series in addition to or in lieu of those
provided in Section 501 and any change in the right of the Trustee or
the Holders to declare the principal of or any premium or interest on
such Securities due and payable;

(16) if less than the principal amount thereof, the
portion of the principal amount of Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;

(17) whether the Securities of the series shall be issued
in whole or in part in the form of one or more Global Securities and,
if so, (a) the Depositary with respect to such Global Security or
Securities and (b) the circumstances under which any such Global
Security may be exchanged for Securities registered in the name of,
and any transfer of such Global Security may be registered to, a
Person other than such Depositary or its nominee, if other than as set
forth in Section 305;

(18) if applicable, that the Securities of the series, in
whole or any specified part, shall not be defeasible pursuant to
Section 403 and, if other than by a Company Order, the manner in which
any election by the Company to defease such Securities shall be
evidenced; and

(19) any other terms of the series (which terms shall not
be inconsistent with the provisions hereof, except as permitted by
Section 901(5)).

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and, subject to Section 303, set forth, or determined in the manner provided,
in the Officers' Certificate referred to above or in any such indenture
supplemental hereto. All Securities of any one series need not be issued at the
same time. Unless otherwise provided, Securities of a single series may have
different terms, and a series may be reopened, without the consent of the
Holders of Securities of such series, for issuance of additional Securities of
such series.

If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

With respect to Securities of a series offered in a Periodic Offering,
such Board Resolution and Officers' Certificate or supplemental indenture may
provide general terms or parameters for Securities of such series and provide
either that the specific terms of particular Securities of such series shall be
specified in a Company Order or that such terms shall be determined by the
Company or its agents in accordance with other procedures specified in a
Company Order as contemplated by the third paragraph of Section 303.

SECTION 302. Denominations.

Unless otherwise provided in the applicable Officers' Certificate or
supplemental indenture, the Securities of each series shall be issued in
registered form without coupons in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with respect
to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000.

SECTION 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its
Chairman of the Board, one of its Vice Chairman of the Board, its President,
its Chief Executive Officer, its Chief Operating Officer, its Chief Financial
Officer, its Treasurer or one of its Vice Presidents, and under its corporate
seal affixed thereto or reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery
hereof, the Company may deliver Securities of any series executed by the
Company to the

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Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, or, in the case of Securities
offered in a Periodic Offering, from time to time in accordance with such other
procedures (including, without limitation, the receipt by the Trustee of
electronic instructions from the Company or its duly authorized agents,
promptly confirmed in writing by the Company) acceptable to the Trustee as may
be specified from time to time by a Company Order for establishing the specific
terms of particular Securities being so offered, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or forms or terms of the Securities of the series have been established by
or pursuant to one or more Board Resolutions as permitted by Sections 201 and
301, in authenticating such Securities and accepting the additional
responsibilities hereunder in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon

(a) an Opinion of Counsel stating:

(1) that the form or forms of such Securities have been
established in conformity with the provisions hereof;

(2) that the terms of such Securities have been
established in conformity with the provisions hereof;

(3) that authentication and delivery of such Securities
and the execution and delivery of the supplemental indenture, if any,
by the Trustee will not violate the terms hereof;

(4) that the Company has the corporate power to issue,
and has duly authorized, such Securities;

(5) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer and other laws of general
applicability relating to or affecting the enforcement of creditors'
rights and to general equity principles, provided that such Opinion of
Counsel need not express an opinion as to whether a court in the
United States would render a money judgment in a currency other than
that of the United States; and

(6) that the issuance of such Securities will not
contravene the certificate of incorporation or bylaws of the Company
or result in any violation of any of the terms or provisions of any
law or regulation or of any indenture, mortgage or other agreement
known to such Counsel by which the Company

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or its assets is bound, the violation of which would have a material
adverse effect on the Company and its subsidiaries taken as a whole;

(b) an executed supplemental indenture, if any;

(d) an Officers' Certificate;

provided, however, that, with respect to Securities of a series offered in a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel in connection only with the first authentication of each form of
Securities of such series and that the opinions described in clauses (a)(2) and
(a)(5) above may state, respectively, that

(2) if the terms of such Securities are to be established
pursuant to a Company Order or pursuant to such procedures as may be
specified from time to time by a Company Order, all as contemplated by
a Board Resolution or action taken pursuant thereto, such terms will
have been duly authorized by the Company and established in conformity
with the provisions hereof; and

(5) that such Securities, when executed by the Company,
completed, authenticated and delivered by the Trustee in accordance
herewith, and issued and delivered by the Company and paid for, all in
accordance with any agreement of the Company relating to the offering,
issuance and sale of such Securities, will be duly issued hereunder
and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting generally the enforcement of creditors'
rights and to general principles of equity.

With respect to Securities of a series offered in a Periodic Offering,
the Trustee may rely conclusively, as to the authorization by the Company of
any of such Securities, the form or forms and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of
Counsel, Company Order and other documents delivered pursuant to Sections 201
and 301 and this Section, as applicable, in connection with the first
authentication of a form of Securities of such series and it shall not be
necessary for the Company to deliver such Opinion of Counsel and other
documents (except as may be required by the specified other procedures, if any,
referred to above) at or prior to the time of authentication of each Security
of such series unless and until the Trustee receives actual notice that such
Opinion of Counsel or other documents have been superseded or revoked, and may
assume compliance with any conditions specified in such Opinion of Counsel
(other than any conditions to be performed by the Trustee). If such form or
forms or terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant hereto
will affect the Trustee's

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own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit hereunder or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Security shall be
conclusive evidence and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits hereof.

Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 309, for all purposes hereof such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits hereof.

SECTION 304. Temporary Securities.

Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers of the Company executing such Securities may
determine, as conclusively evidenced by their execution of such Securities. In
the case of Securities of any series, such temporary Securities may be in the
form of Global Securities.

If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable, subject to Section
305, for definitive Securities of like tenor of such series upon surrender of
the temporary Securities of such series at the office or agency of the Company
in a Place of Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of definitive Securities of the
same series and of like tenor and of any authorized denominations. Unless
otherwise provided in or pursuant hereto, until so exchanged the temporary
Securities of any series shall in all respects be entitled to the same benefits
hereunder as definitive Securities of such series and tenor.

SECTION 305. Registration, Registration of Transfer and Exchange; Paying
Agent and Place of Payment.

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The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" of each series of Securities for the
purpose of registering Securities and transfers of Securities as herein
provided at the Corporate Trust Office.

Upon surrender for registration of transfer of any Security of any
series at the office or agency of the Company in any Place of Payment for such
series, the Company shall execute and the Trustee shall authenticate and
deliver (in the name of the designated transferee or transferees) one or more
new Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor and bearing a number not
contemporaneously outstanding.

At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and tenor, upon surrender of the Securities
to be exchanged at the office or agency of the Company in any Place of Payment
for such series. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits hereunder as the Securities surrendered
upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or such Holder's attorney duly authorized in writing, said
authorization to accompany such presentment or surrender.

No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

The Company may but shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 calendar days before the day of the mailing of a
notice of redemption of Securities of that series selected for redemption under
Section 1103 and ending at the close of business on the day of such mailing,
(ii) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part, or (iii) to register the

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transfer of or exchange any certificated Securities during a period beginning
five days before the date of Maturity with respect to such Security and ending
on such date of Maturity.

Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, no Global Security shall be exchangeable pursuant
to this Section 305 for Securities registered in the name of, and no transfer
of a Global Security of any series may be registered to, any Person other than
the Depositary for such Security or its nominee, unless (i) such Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or the Company determines that the Depositary is
unable to continue as Depositary and the Company thereafter fails to appoint a
successor Depositary, (ii) the Company provides for such exchange or
registration of transfer pursuant to Section 301, (iii) the Company executes
and delivers to the Trustee a Company Order that such Global Security shall be
so exchangeable and the transfer thereof so registrable or (iv) there shall
have occurred and be continuing an Event of Default with respect to the
Securities of such series which entitles the Holders of such Securities to
accelerate the maturity thereof. Upon the occurrence in respect of any Global
Security of any series of any one or more of the conditions specified in
clauses (i), (ii), (iii) or (iv) of the preceding sentence or such other
conditions as may be specified as contemplated by Section 301 for such series,
such Global Security may be exchanged for certificated Securities not bearing
the legend specified in Section 203 and registered in the names of such Persons
as may be specified by the Depositary (including Persons other than the
Depositary or its nominees).

Notwithstanding any other provision hereof, a Global Security may not
be transferred except as a whole by the Depositary for such Global Security to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary.

The Company shall maintain an office or agency where Securities of any
series may be presented for payment ("Paying Agent"). The Company may appoint
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent without notice
to any Holder. The Company shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent.

The Company initially appoints the Trustee to act as Paying Agent with
respect to the Securities. The Corporate Trust Office of the Trustee shall
initially be deemed a Place of Payment. The Company may designate in a Company
Order additional Places of Payment for Securities of any series.

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<PAGE> 32

The Company shall require each Paying Agent, including the Trustee
(who shall be deemed to have agreed by its execution of this Indenture), to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee (unless the Paying Agent is the Trustee, in which case
it shall hold in trust for the Holders) all money held by the Paying Agent for
the payment of principal, premium, if any, or interest, on the Securities, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as sole Paying Agent for the Securities.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security, including a Global Security, is surrendered
to the Trustee or the Company, together with such security, bond or indemnity
as may be required by the Trustee or the Company to save each of them and any
agent of either of them harmless, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security, including a
new Global Security if the mutilated Security was a Global Security, of the
same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, including a Global Security if the destroyed, lost or stolen Security
was a Global Security, and (ii) such security or indemnity as may be required
by them to save each of them and any agent of either of them harmless, then, in
the absence of actual notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser (or any equivalent person under any
applicable statute, rule or regulation or interpretation then in effect), the
Company shall execute and upon its written request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security, including a Global Security if the destroyed, lost or
stolen Security was a Global Security, of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental

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<PAGE> 33
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee), if any, connected therewith.

Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder. A new
Security shall have such legends as appeared on the destroyed, lost or stolen
Security unless the Company determines otherwise.

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered in the Security Register at the close of business on
the Regular Record Date for such Interest Payment Date.

Any interest on any Security of any series which is payable but is not
punctually paid or duly provided for on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:

(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed
payment, such money when so deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee

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of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of
such series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).

(2) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.

At the option of the Company, interest on any Security may be paid (i)
by mailing a check to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer to an
account maintained by the Person entitled thereto as specified in the Security
Register, the cost of such wire transfer to be borne by the Company.

Subject to the foregoing provisions of this Section, each Security
delivered hereunder upon registration of transfer of, or in exchange for, or in
lieu of, any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.

SECTION 308. Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer or
exchange, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered in the Security
Register as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Sections 305 and 307)
interest on such Security and for all other purposes whatsoever, whether or not
any payment with respect to such Security shall be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

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may be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the owner of such Global Security or any Security represented
thereby for all purposes whatsoever. Notwithstanding the foregoing, with
respect to any Global Security, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by a Depositary
as Holder of such Global Security, or impair, as between a Depositary and the
owners of beneficial interests in such Global Security, the operation of
customary practices governing the exercise of the rights of the Depositary (or
its nominees) as Holder of such Global Security. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

SECTION 309. Cancellation.

All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted hereby. The Trustee is hereby
directed by the Company to destroy the canceled Securities held by the Trustee,
and the Trustee shall provide the Company with a certificate of a Responsible
Officer certifying as to the destruction of such Securities.

SECTION 310. Computation of Interest.

Except as otherwise specified pursuant to Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months and no interest will accrue
with respect to the 31st day of any month. Interest shall be payable through
and excluding any Interest Payment Date and interest shall be payable through
and including any Redemption Date or other principal payment date.

SECTION 311. Maximum Interest Rate.

Regardless of any provision contained in any Security or this
Indenture, no Holder shall be entitled to receive, collect or apply as interest
on any Security any amount in excess of the maximum rate permitted by
applicable law, and, in the event that any Holder ever receives, collects, or
applies as interest any such excess, the amount that would be excessive
interest shall be deemed to be a partial prepayment

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of principal and treated hereunder as such; and, if the principal amount of any
Security is paid in full, any remaining excess shall forthwith be paid to the
Company.

ARTICLE FOUR
SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further
effect with respect to any series of Securities specified in a Company Request
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge hereof, when

(1) either

(A) all Securities of such series theretofore
authenticated and delivered (other than (i) Securities which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

(B) all Securities of such series not theretofore
delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their
Stated Maturity within one year, or

(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the
Company,

and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount of money (in the
currency in which such Securities are payable) and/or (if such
Securities are payable in U.S. dollars) U.S. Government
Obligations which through the payment of interest and
principal in accordance with their terms, without
consideration of any reinvestment thereof, will provide not
later than the opening of business on the due dates of any
payment of principal (and premium, if any) and interest with
respect thereto, or a combination thereof, in an amount

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sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest
to the date of such deposit (in the case of Securities which
have become due and payable) or to the respective Stated
Maturity or Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company, and

(3) the Company has delivered to the Trustee a
certificate of a nationally-recognized firm of certified public
accountants certifying as to the sufficiency of the amounts deposited
pursuant to subclause (B) of clause (1) of this Section for payment of
the principal (and premium, if any) and interest on the dates such
payments are due, and an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture with
respect to the Securities of such series have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture with
respect to a series of Securities, the obligations of the Company and the
Trustee to the Holders of Securities of other series not so satisfied and
discharged, the obligations of the Company to the Trustee under Section 607,
the obligations of the Trustee to any Authenticating Agent under Section 614,
and, if money and/or U.S. Government Obligations shall have been deposited with
the Trustee pursuant to Subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003, shall survive.

SECTION 402. Application of Trust Money.

Subject to provisions of the last paragraph of Section 1003, all money
and/or U.S. Government Obligations deposited with the Trustee pursuant to
Section 401 and all money received by the Trustee in respect of U.S. Government
Obligations deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities of
each series and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has or U.S.
Government Obligations have been deposited with or received by the Trustee; but
such money and/or U.S. Government Obligations need not be segregated from other
funds of the Trustee except to the extent required by law.

SECTION 403. Defeasance and Discharge of Indenture.

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series on the 91st day after the date of the deposit referred to in
subparagraph (d) of this Section, and the provisions hereof, as it relates to
such Outstanding Securities, shall no longer be in effect (and the Trustee, at
the request and expense of the Company, shall execute proper instruments
acknowledging the same), except as to:

(a) the rights of Holders of Securities of such series to
receive, from the trust funds described in subparagraph (d) of this
Section, (i) payment of the principal of (and premium, if any) or
interest on the Outstanding Securities of such series on the Stated
Maturity of such principal or installment of principal or interest and
(ii) the benefit of any mandatory sinking fund payments applicable to
the Securities of such series on the day on which such payments are
due and payable in accordance with the terms hereof and such
Securities;

(b) the Company's obligations with respect to such
Securities under Sections 305, 306, 1002 and 1003; and

provided that, the following conditions shall have been satisfied:

(d) The Company has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 609) as trust funds in the trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series, (i) U.S. Dollars in an
amount, or (ii) U.S. Government Obligations which through the payment
of interest and principal in respect thereof in accordance with their
terms will provide not later than one day before the due date of any
payment referred to in clause (A) or (B) of this subparagraph (d) U.S.
Dollars in an amount or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge (A) the principal of
(and premium, if any) and each installment of principal of (and
premium, if any) and interest on the Outstanding Securities of such
series on the Stated Maturity of such principal or installment of
principal and interest and (B) any mandatory sinking fund or analogous
payments applicable to the Securities of such series on the day on
which such payments are due and payable in accordance with the terms
hereof and of such Securities;

(e) such deposit shall not cause the Trustee with respect
to the Securities of such series to have a conflicting interest as
defined in Section 608 and for purposes of the Trust Indenture Act
with respect to such Securities;

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(f) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it
is bound;

(g) such provision would not cause any Outstanding
Securities of such series then listed on the New York Stock Exchange
or other securities exchange to be delisted as a result thereof;

(h) no Event of Default or event which with notice or
lapse of time would become an Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after
such date;

(i) the Company has delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax
purposes as a result of such deposits, defeasance and discharge and
will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred; and

(j) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the defeasance contemplated by this
Section have been complied with.

ARTICLE FIVE
REMEDIES

SECTION 501. Events of Default.

"Event of Default", wherever used herein with respect to Securities of
any series, and unless otherwise provided with respect to Securities of any
series pursuant to Section 301, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(1) default in the payment of any interest upon any
Security of such series when it becomes due and payable, and
continuance of such default for a period of 30 consecutive days (for
Securities of any series the interest on which is payable less
frequently than monthly) or for a period of 10 consecutive days (for
Securities of any series the interest on which is payable monthly);

(2) default in the payment of the principal of (or
premium, if any, on) any Security of such series when due and payable;

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(3) default in the deposit of any sinking fund payment in
respect of any Security of such series, when and as due by the terms
of a Security of such series;

(4) default in the performance, or breach, of any
covenant or warranty of the Company herein or the Securities of such
series (other than a covenant or warranty a default in the performance
or breach of which is elsewhere in this Section specifically dealt
with or which has expressly been included herein solely for the
benefit of a series of one or more Securities other than such series),
and continuance of such default or breach for a period of 30
consecutive days after written notice thereof has been received by the
Company from the Trustee or by the Company and the Trustee from the
Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of such series, specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder;

(5) the occurrence of an event of default, as defined in
any indenture or instrument under which the Company or any Material
Subsidiary shall have Outstanding at least $1,000,000 aggregate
principal amount of indebtedness, shall happen and be continuing and
such indebtedness shall, as a result thereof, have been accelerated (or
comparable event shall have occurred) so that the same shall have
become due and payable prior to the date on which the same would
otherwise have become due and payable and such acceleration has been in
effect without rescission or annulment for a period of 30 consecutive
days; provided, however, that if such event of default under such
indenture or instrument shall be remedied or cured by the Company or
waived by the holders of such indebtedness, or if such acceleration
under such indenture or instrument shall have been rescinded or
annulled by the holders of such indebtedness, then, unless the
Securities of such series shall have been accelerated as provided
herein, the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived
without further action upon the part of either the Trustee or any
Holders of the Securities of any series;

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Material Subsidiary or of any substantial part of the property of the
Company or any Material Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any Material Subsidiary,
and in the case of either clause (A) or clause (B) the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days;

(7) the commencement by the Company or any Material
Subsidiary of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any Material
Subsidiary to the entry of a decree or order for relief in respect of
the Company or any Material Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against the Company
or any Material Subsidiary, or the filing by the Company or any
Material Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or
the consent by the Company or any Material Subsidiary to the filing of
such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Material Subsidiary or of
any substantial part of the property of the Company or any Material
Subsidiary, or the making by the Company or any Material Subsidiary of
an assignment for the benefit of creditors, or the admission by the
Company or any Material Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company or any Material Subsidiary in furtherance of any
such action;

(8) a final judgment, judicial decree or order for the
payment of money in excess of $5,000,000 shall be rendered against the
Company or any Material Subsidiary, and such judgment, decree or order
shall have remained unpaid, unvacated, unbonded or unstayed for a
period of 30 consecutive days; or

(9) any other Event of Default provided with respect to
Securities of such series pursuant to Section 301.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default with respect to Outstanding Securities of any
series occurs and is continuing, then and in every such case the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of such series may declare the principal amount (or, if any of the
Securities of such series are Original Issue Discount Securities, such lesser
portion of the principal amount of such Securities as may be specified in the
terms thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
portion thereof) shall become immediately due and payable; provided that in the
case of an Event of Default described in Section

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501(6) or (7), the principal amount of all Securities (or specified portion
thereof) shall become due and payable immediately, without any notice to the
Company or the Trustee.

Upon payment of such principal amount (and premium, if any), such
interest and interest on overdue principal and overdue interest to the extent
prescribed therefor in the Securities of such series (to the extent payment of
such interest is legally enforceable), all of the Company's obligations in
respect of the payment of principal and interest on the Securities of such
series shall terminate.

At any time after such a declaration of acceleration with respect to
Outstanding Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if

(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay

(A) all overdue interest on all Securities of
such series,

(B) the principal of (and premium, if any, on)
any Securities of such series which have become due otherwise
than by such declaration of acceleration and interest thereon
at the rate or rates prescribed therefor in such Securities,

(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and

(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section
607; and

(2) all Events of Default with respect to Securities of
such series, other than the non-payment of the principal of Securities
of such series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

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SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on any
Security of any series when such interest becomes due and payable and
such default continues for a period of 30 consecutive days (for
Securities of any series the interest on which is payable less
frequently than monthly) or for a period of 10 days (for Securities of
any series the interest on which is payable monthly), or

(2) default is made in the payment of the principal of
(or premium, if any, on) any Security of any series at the Maturity
thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Security, the whole amount then due and payable on such
Security for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest at the rate
or rates prescribed therefor in such Security, and, in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

If the Company fails to pay the money it is required to pay the
Trustee pursuant to the preceding paragraph forthwith upon the demand of the
Trustee, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and collect the money adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.

If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement herein or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.

The rights and remedies under this Section 503 are in addition to the
other rights and remedies available under this Article 5 or otherwise legally
available.

SECTION 504. Trustee May File Proofs of Claim.

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In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities of any series or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities of any series shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,

(i) to file and prove a claim for the whole amount of
principal (and premium, if any) or such portion of the principal
amount of any series of Original Issue Discount Securities as may be
specified in the terms of such series and interest owing and unpaid in
respect of the Securities of such series and to file such other papers
or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under
Section 607) and of the Holders allowed in such judicial proceeding,
and

(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
607.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
of any series or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims hereunder or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and for any
other amounts due the Trustee under

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Section 607, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.

SECTION 506. Application of Money Collected.

Any money collected by the Trustee with respect to any series of
Securities pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities of such series and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under
Section 607; and

SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities of
such series in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and

THIRD: The balance, if any, to the Person or Persons entitled
thereto.

SECTION 507. Limitation on Suits.

No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect hereto, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless

(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of such series;

(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities of such series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders have furnished to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

(4) the Trustee, for 60 days after its receipt of such
notice, request and furnishing of indemnity, has failed to institute
any such proceeding; and

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(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities of
such series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
hereof to affect, disturb or prejudice the rights of any other of such Holders,
or to obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right hereunder, except in the manner herein provided
and for the equal and ratable benefit of all of such Holders.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.

Notwithstanding any other provision herein, the Holder of any Security
shall have the right, which is absolute and unconditional, to receive payment
of the principal of (and premium, if any) and (subject to Section 307) interest
on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date, or, in the
case of a repurchase right at the option of the Holder, if any, on the
repurchase date specified pursuant to Section 301) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy hereunder and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

SECTION 511. Delay or Omission Not Waiver.

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No delay or omission of the Trustee or of any Holder of Securities of
any series to exercise any right or remedy accruing upon any Event of Default
with respect to such series shall impair any such right or remedy or constitute
a waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

SECTION 512. Control by Holders.

The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that

(1) such direction shall not be in conflict with any rule
of law or with this Indenture,

(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and

(3) subject to Section 601, the Trustee need not take any
action which might be unjustly prejudicial to the rights of the other
Holders of Securities not joining in such action.

SECTION 513. Waiver of Past Defaults.

The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series may, on behalf of the Holders of
all the Securities of such series, waive any past default hereunder with
respect to such series and its consequences, except a default

(1) in the payment of the principal of (or premium, if
any) or interest on any Security of such series when due (other than
amounts due and payable solely upon acceleration pursuant to Section
502), unless theretofore paid in full and cured in accordance with the
terms hereof, or

(2) in respect of a covenant or provision hereof which
under Section 902 cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose hereof; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

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SECTION 514. Undertaking for Costs.

All parties hereto agree, and each Holder of any Security by such
Holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy hereunder, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 25% in principal amount of the Outstanding Securities of the affected
series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the Stated Maturity or Maturities expressed in such Security (or, in
the case of redemption, on or after the Redemption Date or, in the case of a
repurchase right at the option of the Holder, if any, on the repurchase date
specified pursuant to Section 301).

SECTION 515. Waiver of Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance hereof; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

ARTICLE SIX
THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

(a) With respect to Securities of any series, except during the
continuance of an Event of Default with respect to that series only,

(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and

(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the

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opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements hereof; but in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements hereof.

(b) With respect to Securities of any series, in case an Event of
Default has occurred and is continuing with respect to that series only, the
Trustee shall exercise such of the rights and powers vested in it hereby, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.

(c) No provision hereof shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;

(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent
facts;

(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith with respect
to any series of Securities in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding
Securities of such series, relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to said Securities, provided such direction
shall not be in conflict with any rule of law or with this Indenture;
and

(4) no provision hereof shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.

(d) Whether or not therein expressly so provided, every provision
hereof relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

SECTION 602. Notice of Defaults.

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Within 90 days after the occurrence of any Event of Default hereunder
with respect to the Securities of any series, the Trustee shall transmit by
mail to all Holders of Securities of such series, as their names and addresses
appear in the Security Register, notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; provided however,
that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Security of such series or in the payment
of any sinking fund installment with respect to Securities of such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities of
such series; and provided, further, that in the case of any default of the
character specified in Section 501(4) with respect to Securities of such
series, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Securities of such series.

SECTION 603. Certain Rights of Trustee.

Subject to the provisions of Section 601 and Sections 315(a) through
315(d) of the Trust Indenture Act:

(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, other evidence of Indebtedness
or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;

(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order or as otherwise expressly provided herein and any resolution of
the Board of Directors may be sufficiently evidenced by a Board
Resolution;

(c) whenever in the administration hereof the Trustee
shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate
or Opinion of Counsel;

(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;

(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it hereby at the request or
direction of any of the

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<PAGE> 51

Holders of Securities of any series pursuant hereto, unless such
Holders shall have furnished the Trustee reasonable security or
indemnity against the costs, fees, expenses and liabilities which
might be incurred by it, including reasonable fees of counsel, in
complying with such request or direction;

(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon, note, other
evidence of indebtedness or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine, during business hours and upon reasonable notice,
the books, records and premises of the Company pertaining to the
Securities, personally or by agent or attorney;

(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and

(h) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it hereby.

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities of each series,
except the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency hereof or of the Securities
of any series, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture and any supplemental indenture, to
authenticate such Securities and to perform its obligations hereunder and such
Securities. The Trustee or any Authenticating Agent shall not be accountable
for the use or application by the Company of Securities of any series or the
proceeds thereof.

SECTION 605. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.

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SECTION 606. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law and shall be held
uninvested. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.

SECTION 607. Compensation and Reimbursement.

(a) The Company agrees

(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision hereof (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to the Trustee's negligence, bad faith or willful
misconduct; and

(3) to indemnify the Trustee and its agents for, and to
hold them harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on its part,
arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending themselves against any claim or liability in connection with
the exercise or performance of any of their powers or duties
hereunder.

(b) As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of and interest
on the Securities of any series. "Trustee" for the purposes of this Section
includes any predecessor Trustee, but negligence, bad faith or willful
misconduct of any Trustee shall not be attributable to any other Trustee.

(c) When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6) or (7), the
expenses and the compensation for such services are intended to constitute
expenses of administration under any bankruptcy law.

SECTION 608. Disqualification; Conflicting Interests.

The provisions of TIA Section 310(b) shall apply to the Trustee.

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SECTION 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be
eligible to act under TIA Section 310(a)(1) and whose parent shall have a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal, state or District of Columbia authority. If such
Corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article. Neither the Company, nor any Person directly or indirectly
controlling, controlled by or under common control with the Company, shall act
as Trustee hereunder.

SECTION 610. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company specifying its intention to resign, the applicable series affected by
such resignation, the reason therefor and the date upon which such resignation
shall become effective. Notwithstanding the foregoing, unless the reason for
such resignation is a conflict pursuant to Section 608, the Trustee must resign
with respect to all Securities if the Trustee resigns with respect to any
series of Securities. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company.

(d) The Trustee may be removed with respect to any or all series
of Securities at any time upon 30 days notice by filing with it an instrument
in writing signed on behalf of the Company by a duly authorized officer of the
Company specifying such removal and the date on which it is to become
effective.

(e) If at any time:

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(1) the Trustee shall fail to comply with Section 310(b)
of the TIA after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months,

(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or

(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to any one or more series of Securities or all Securities
or (ii), subject to Section 514, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to such series of Securities and the
appointment of a successor Trustee or Trustees.

(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, then any Holder who has been
a bona fide Holder of a Security of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

(g) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a

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successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties hereunder of the retiring Trustee; but, on
the request of the Company or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee and (3) shall add to or change any of the
provisions hereof as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held

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by such retiring Trustee hereunder with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates.
Whenever there is a successor Trustee with respect to one or more (but less
than all) series of securities issued pursuant hereto, the terms "Indenture"
and "Securities" shall have the meanings specified in the provisos to the
respective definitions of those terms in Section 101 which contemplate such
situation.

(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) and (b) of this Section, as the case may be.

(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any Corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
in case any of the Securities shall not have been authenticated by the Trustee
then in office, any successor by merger, conversion or consolidation to such
Trustee may authenticate such Securities either in the name of such predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities
or in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.

SECTION 613. Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA Section 311(a). A Trustee which has
resigned or been removed is subject to TIA Section 311(a) to the extent
indicated therein.

SECTION 614. Appointment of Authenticating Agent.

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At any time when any of the Securities remain Outstanding the Trustee,
with the concurrence of the Company, may appoint an Authenticating Agent or
Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series, and Securities so authenticated shall be entitled to the benefits
hereof and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made herein to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a Corporation organized and doing business
under the laws of the United States of America, any state thereof or the
District of Columbia authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by federal, state or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such Corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating

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Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to reimbursement for such payments subject to Section
607.

If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:

This is one of the Securities of the series designated herein and
issued pursuant to the within-mentioned Indenture.

-------------------------------------------
as Trustee

By
-----------------------------------------
Authorized Signature

-------------------------------------------
as Authenticating Agent

By
-----------------------------------------
Authorized Signature

ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of such series of
Securities received by the Trustee in its capacity as Security Registrar.

(b) The rights of Holders of any series of Securities to
communicate with other Holders of such series with respect to their rights
hereunder or under such Securities, and the corresponding rights and privileges
of the Trustee, shall be as provided by TIA Section 312(b).

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<PAGE> 59
any such information as to the names and addresses of the Holders in accordance
with Section 312 of the TIA, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the TIA.

SECTION 702. Reports by Trustee.

Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit by mail to all Holders of Securities of all series as
provided in TIA Section 313(c) a brief report dated as of such May 15 if
required by TIA Section 313(a). The Trustee shall transmit the reports required
by TIA Section 313(b). Reports pursuant to this Section shall be transmitted in
the manner and to the Persons required by TIA Sections 313(c) and (d). A copy
of each such report shall, at the time of such transmission to Holders, be
filed by the Trustee with each stock exchange upon which any Securities are
listed, with the Commission and with the Company. The Company will notify the
Trustee when any series of Securities is listed on any stock exchange.

SECTION 703. Reports by Company.

The Company, pursuant to TIA Section 314(a), shall:

(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act ; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations; provided that notwithstanding the requirements of such rules and
regulations, so long as any Security is Outstanding the Company shall file with
the Trustee at a minimum (a) as soon as practicable, but in any event no more
than ninety (90) days, after the end of each fiscal year, copies of a balance
sheet and statements of income and retained earnings of the Company as of the
end of and for such fiscal year, audited by a nationally recognized firm of
independent certified public accountants, and (b) as soon as practicable, but
in any event no more than forty-five (45) days, after the end of each quarterly
fiscal period, except for the last quarterly fiscal period in each fiscal year,
a summary statement (which need not be audited) of income and retained earnings
of the Company for such period;

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(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants hereof as may be required from time
to time by such rules and regulations;

(3) transmit by mail to all Holders of all series of Securities,
as their names and addresses appear in the Security Register, such summaries of
any information, documents and reports as may be required by rules and
regulations prescribed from time to time by the Commission; provided that
notwithstanding the requirements of such rules and regulations, so long as any
Security is Outstanding the Company shall transmit to the Holders of
Securities, within thirty (30) days after the filing thereof with the Trustee,
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, the information, documents and other reports required to be
filed by the Company pursuant to paragraph (1) of this Section; provided
further that in lieu of any Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, the Company may transmit an annual or quarterly report,
respectively, containing financial statements and an undertaking to transmit
such Form 10-K or Form 10-Q, as the case may be, to any Holder upon request;
and

(4) furnish to the Trustee the Officers' Certificates required by
Section 1010.

The Trustee has no duty to review the financial or other reports
described in paragraphs (1) and (2) of this Section for purposes of determining
compliance with this or any other provision hereof.

ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person unless:

(1) the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Corporation, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Securities and the
performance

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or observance of every covenant hereof on the part of the Company to
be performed or observed;

(2) immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing; and

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture, comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.

For purposes of this Section and Section 802, a conveyance, transfer, sale or
lease of the properties and assets of the Company "substantially as an
entirety" shall mean a conveyance, transfer or lease of properties and assets
of the Company representing 80% or more of the fair value (as determined in
good faith by the Board of Directors) of all the Company's properties and
assets on the date of such conveyance, transfer, sale or lease.

SECTION 802. Successor Substituted.

Upon any consolidation of the Company with, or merger by the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety to any Person in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company hereunder with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease to another person, the predecessor Person shall be
released from all obligations and covenants hereunder and the Securities.

ARTICLE NINE
SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities;

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(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of one or more specified series) or to
surrender any right or power herein conferred upon the Company;

(3) to add any additional Events of Default (and if such
Events of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series);

(4) to add to or change any of the provisions hereof to
such extent as shall be necessary to permit or facilitate the issuance
of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities of any series in certificated or
uncertificated form;

(5) to add to, change or eliminate any of the provisions
hereof in respect of one or more series of Securities, provided that
any, such addition, change or elimination (i) shall neither (A) apply
to any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor (B) modify the rights of the Holder of any such Security with
respect to such provision or (ii) shall become effective only when
there is no such Security Outstanding;

(6) to secure the Securities of any series, provided that
such security does not cause the Trustee with respect to the
Securities of that series to have a conflicting interest as defined in
Section 608 and for purposes of the TIA with respect to the Securities
of any series;

(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301;

(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions hereof as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611(b); or

(9) to cure any ambiguity or defect in or to correct or
supplement any provision herein which may be defective or inconsistent
with any other provision herein or any Security of any series, or to
make any other provisions with respect to matters or questions arising
hereunder, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.

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SECTION 902. Supplemental Indentures With Consent of Holders.

With the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series at the time
Outstanding affected by such supplemental indenture (voting as one class), by
Act of said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions hereof or of
modifying in any manner the rights of the Holders of Securities of each series
hereunder; provided however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Security affected thereby,

(1) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any such affected
Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof,
or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which,
any such Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption or repayment, on or after the Redemption Date or any
repayment date),

(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any modifications or amendments hereto with respect to
such series or to the terms and conditions of such series or to
approve a supplemental indenture with respect to such series, or the
consent of whose Holders is required for any waiver with respect to
such series of compliance with certain provisions hereof or certain
defaults hereunder and their consequences provided for herein, or

(3) modify any of the provisions of this Section 902,
Section 513 or 1011, except to increase any such percentage or to
provide that certain other provisions hereof cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; provided however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to "the Trustee" and concomitant changes in this
Section 902 and Section 1009, or the deletion of this proviso, in
accordance with the requirements of Sections 611(b) and 901(8).

A supplemental indenture which changes or eliminates any covenant or other
provision hereof which has expressly been included solely for the benefit of
one or more particular series of Securities, or which modifies the rights of
the Holders of Securities of such series with respect to such covenant or other
provision, shall be

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deemed not to affect the rights hereunder of the Holders of Securities of any
other series.

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created hereby, the Trustee shall be entitled to receive, and
(subject to Section 601 hereof) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted hereby. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities hereunder or otherwise.

SECTION 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part hereof for all purposes; and every Holder of
Securities of the series affected thereby theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby to the extent
provided therein.

SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in a form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

SECTION 907. Notice of Supplemental Indentures

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Security so affected, pursuant to Section 106, setting forth in general terms
the substance of such supplemental indenture.

ARTICLE TEN
COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of such series in accordance with the
terms of such Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of such series may be presented
or surrendered for payment, where Securities of such series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of such series and this Indenture
may be served. The Company hereby initially designates the Corporate Trust
Office of the Trustee as its office or agency for each of the foregoing
purposes. The Company will give prompt written notice to the Trustee of the
location and any change in the location of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

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which such series of Securities is payable sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its failure so to act.

Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
(and premium, if any) or interest on any Securities of such series, deposit
with a Paying Agent a sum of money sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its failure so to act.

The Company will cause each Paying Agent for any series of Securities
other than the Trustee or the Company to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:

(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities of such
series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Holders or otherwise disposed of as
herein provided;

(2) give the Trustee notice of any Event of Default by
the Company (or any other obligor upon the Securities of such series)
in the making of any payment of principal (and premium, if any) or
interest on the Securities of such series; and

(3) during the continuance of any such Event of Default
by the Company, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the
satisfaction and discharge hereof or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same terms as those upon which such sums were held by the Company or such
Paying Agent, and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest shall have become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all

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liability of the Company as trustee thereof, shall thereupon cease.

SECTION 1004. Existence.

Subject to Article Eight, the Company will do or cause to be done all
things reasonably necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises of the
Company and its Material Subsidiaries; provided, however, that the Company
shall not be required to preserve any such right or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Material Subsidiaries and
that the loss thereof will not have a material adverse effect on the business
or financial condition of the Company and its Subsidiaries, taken as a whole.

SECTION 1005. Maintenance of Properties.

The Company will:

(1) cause its properties and the properties of its Material
Subsidiaries (other than properties obtained by the Company or any
Material Subsidiary through foreclosure or other resolution of any
loan) used or useful in the conduct of the business of the Company and
its Material Subsidiaries to be maintained and kept in good condition,
repair and working order and supplied with all necessary facilities
and equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the foregoing shall
not prevent the Company or a Material Subsidiary from discontinuing
the operation and maintenance of any of its properties if such
discontinuance is, in the judgment of the Company, desirable in the
conduct of its business and will not have a material adverse effect on
the business or financial condition of the Company and its
Subsidiaries, taken as a whole;

(2) take all appropriate steps to preserve, protect and
maintain the trademarks, trade names, copyrights, licenses and permits
used in the conduct of the business of the Company and its Material
Subsidiaries; provided, however, that the foregoing shall not prevent
the Company or a Material Subsidiary from selling, abandoning or
otherwise disposing of any such trademark, trade name, copyright,
license or permit if such sale, abandonment or disposition is, in the
judgment of the Company, desirable in the conduct of its business and
will not have a material adverse effect on the business or financial
condition of the Company and its Subsidiaries, taken as a whole; and

(3) The Company and each of its Material Subsidiaries shall
comply with all statutes, laws, ordinances, or government rules and
regulations to

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which it is subject, noncompliance with which would materially
adversely affect the business or financial condition of the Company
and its Subsidiaries, taken as a whole.

SECTION 1006. Insurance.

The Company shall carry and maintain, and cause each of its
Subsidiaries to carry and maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by similarly-situated companies engaged in similar
operations and owning similar properties in similar geographic areas in which
the Company or such Subsidiary operates, provided that such insurance is
generally available at commercially reasonable rates, and further provided that
the Company may self-insure, or insure through captive insurers or insurance
cooperatives to the extent consistent with prudent business practices. Such
insurance shall be in such amounts, contain such terms, be in such forms and be
for such periods as are customary for such similarly-situated companies in the
Company's industry or insurance markets reasonably accessible by the Company.
The Company will provide and will cause each Subsidiary to provide such
information and documents reasonably requested by the Trustee from time to time
with respect to the Company's provision for insurance. The obligations
evidenced by this covenant shall be interpreted to reflect changes in insurance
practices related to the method in which insurance risks are covered in the
North American and European markets or in any other market in which the Company
or its Subsidiaries, as the case may be, reasonably places coverage.

SECTION 1007. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary
or upon the income, profits or property of the Company or any Subsidiary and
(2) all material lawful claims for labor, material and supplies which, if
unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which disputed amounts adequate reserves
have been established in accordance with GAAP.

SECTION 1008. Books and Records.

The Company shall, and shall cause each Material Subsidiary to, at all
times keep proper books of record and account in which proper entries shall be
made in accordance with GAAP and, to the extent applicable, regulatory
accounting principles.

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SECTION 1009. Defeasance of Certain Obligations.

The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers'
Certificate or indenture supplemental hereto provided pursuant to Section 301.
The Company may omit to comply with any term, provision or condition set forth
in Article Ten and Section 301(12) and any such omission with respect to
Article Ten and to Section 301(12) shall not be an Event of Default, in each
case with respect to the Securities of that series, provided that the following
conditions have been satisfied:

(1) with reference to this Section 1009, the Company has
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 609 ) as trust
funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of that
series, (i) money in an amount, (ii) U.S. Government Obligations which
through the payment of interest and principal in respect thereof in
accordance with their terms will provide not later than one day before
the due date of any payment referred to in clause (A) or (B) of this
subparagraph (1) money in an amount or (iii) a combination thereof,
sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge (A) the
principal of (and premium, if any) and each installment of principal
(and premium, if any) and interest on the Outstanding Securities on
the Stated Maturity of such principal or installments of principal and
interest and (B) any mandatory sinking fund payments or analogous
payments applicable to the Securities of such series on the day on
which such payments are due and payable in accordance with the terms
hereof and of such Securities;

(2) such deposit shall not cause the Trustee with respect
to the Securities of that series to have a conflicting interest as
defined in Section 608 and for purposes of the Trust Indenture Act
with respect to the Securities of any series;

(3) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or material instrument to which the Company is a party or by
which it is bound;

(4) no Event of Default or event which with notice or
lapse of time would become an Event of Default with respect to the
Securities of that series shall have occurred and be continuing on the
date of such deposit;

(5) the Company has delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same
amount and in the same manner and at the same

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times as would have been the case if such deposit and defeasance had
not occurred; and

(6) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the defeasance
contemplated in this Section 1009 have been complied with.

SECTION 1010. Statement by Officers as to Default.

(1) The Company will deliver to the Trustee, within 45
days after the end of each calendar quarter, an Officers' Certificate,
stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of
the terms, provisions and conditions hereof (other than a term,
provision or condition specifically dealt with in Clause (2) of this
Section 1011) and, if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.

(2) The Company will deliver to the Trustee, within five
days after any officer eligible hereunder to sign an Officers'
Certificate becomes aware of the occurrence thereof, written notice of
any event which after notice or lapse of time or both would become an
Event of Default pursuant to Clause (5) of Section 501.

SECTION 1011. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Article Ten and Section 301(12),
inclusive, with respect to the Securities of any series if before the time for
such compliance the Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.

The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to waive any such term,
provision or condition. If a record date is fixed for such purpose, the Holders
on such record date or their duly designated proxies, and only such Persons,
shall be entitled to waive any such term, provision or condition hereunder,
whether or not such Holders remain Holders after such record date; provided
that unless the Holders of not less than a majority in principal amount of the
Outstanding Securities of such series shall have waived such term, provision or
condition prior to the date which is 90 days after such

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record date, any such waiver previously given shall automatically and without
further action by any Holder be canceled and of no further effect.

SECTION 1012. Exceptions to Covenants.

The Company shall not, and shall not permit any Subsidiary to, take or
permit to be taken any action or fail to take any action which is permitted by
any of the covenants contained herein if such action or omission would result
in the breach of any other covenant contained herein.

ARTICLE ELEVEN
REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.

SECTION 1102. Election to Redeem; Notice to Trustee.

The election of the Company to redeem Securities of any series shall
be evidenced by an Officers' Certificate. The Company shall, at least 45 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of

(1) such Redemption Date,

(2) the Redemption Price,

(3) if the Securities of such series have different terms
and less than all of the Securities of such series are to be redeemed,
the terms of the Securities to be redeemed,

(4) whether the redemption is pursuant to a mandatory or
optional sinking fund, or both, if such is the case, and

(5) if less than all the Securities of such series with
identical terms are to be redeemed, the principal amount of such
Securities to be redeemed.

In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere herein, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

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If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not less
than 30 nor more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of like tenor of such series not previously called
for redemption, by lot or by such other method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of like
tenor of that series or any integral multiple thereof of the principal amount
of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series).

The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

For all purposes hereof, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case
of any Securities redeemed or to be redeemed only in part, to the portion of
the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104. Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at each such Holder's
address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities of like
tenor of any series are to be redeemed, the identification (and, in
the case of partial redemption, the principal amounts) of the
particular Securities to be redeemed,

(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,

(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is
the case.

Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Trustee in the name and at the expense of the

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Company, unless the Company notifies the Trustee of its intention to give such
notice directly to each Holder.

SECTION 1105. Deposit of Redemption Price.

On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in immediately available funds sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Regular Record Dates according to
their terms and the provisions of Section 307.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

SECTION 1107. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment for such series (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of the same
series and of like tenor, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered. To the
extent a series of Securities represented by a Global Security is to be
redeemed only in part, a notation of such redemption shall be made by the
Trustee in the schedule of exchanges on the Global Security.

67
<PAGE> 74

ARTICLE TWELVE
SINKING FUNDS

SECTION 1201. Applicability of Article.

The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

The Company (1) may deliver Outstanding Securities of like tenor of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of like tenor of a series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of like tenor of such
series required to be made pursuant to the terms of such Securities as provided
for by the terms of such series; provided that such Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. Such Securities shall be first
applied to the sinking fund payment next due and any excess shall be applied to
the following sinking fund payments in the order they are due.

SECTION 1203. Redemption of Securities for Sinking Fund.

Not less than 60 days prior to each sinking fund payment date for
Securities of like tenor of a series, the Company will deliver to the Trustee
an Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for such Securities pursuant to the terms of such Securities, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of like tenor of that series pursuant to Section 1202 and, at the
time of delivery of such Officers' Certificate, will also deliver to the
Trustee any Securities to be so delivered. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
1103 and cause notice of the redemption thereof to be given in the name of and
at

68
<PAGE> 75
the expense of the Company in the manner provided in Section 1104. Such notice
having been duly given. the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.

ARTICLE THIRTEEN
REPURCHASE OF SECURITIES AT OPTION OF HOLDERS

SECTION 1301. Applicability of Article.

Securities of any series which are repurchasable before their Stated
Maturity at the option of the Holders shall be repurchasable in accordance with
their terms and (except as otherwise specified pursuant to Section 301 for
Securities of any series) in accordance with this Article.

SECTION 1302. Notice of Repurchase Date.

Notice of any Repurchase Date with respect to Securities of any series
shall, unless otherwise specified by the terms of such Securities, be given by
the Company not less than 45 nor more than 60 days prior to such Repurchase
Date to each Holder of Securities of such series subject to repurchase in
accordance with Section 105.

The notice as to Repurchase Date shall state:

(1) the Repurchase Date;

(2) the Repurchase Price;

(3) the place or places where such Securities are to be
surrendered for payment of the Repurchase Price and the date by which
such Securities must be so surrendered in order to be repurchased;

(4) a description of the procedure which a Holder must
follow to exercise a repurchase right; and

(5) that exercise of the option to elect repurchase is
irrevocable.

No failure of the Company to give the foregoing notice shall limit any Holder's
right to exercise a repurchase right.

SECTION 1303. Deposit of Repurchase Price.

On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Repurchase Price of and (unless the Repurchase Date
shall be an Interest Payment Date) accrued interest, if any, on all of the
Securities of such series which are to be repurchased on that date.

69
<PAGE> 76
SECTION 1304. Securities Payable on Repurchase Date.

The form of option to elect repurchase having been delivered as
specified in the form of Security for such series as provided in Article Two,
the Securities of such series so to be repurchased shall, on the Repurchase
Date, become due and payable at the Repurchase Price applicable thereto and
from and after such date (unless the Company shall default in the payment of
the Repurchase Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for repurchase in accordance with
said notice, such Security shall be paid by the Company at the Repurchase Price
together with accrued interest to the Repurchase Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to such
Repurchase Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Regular and Special Record Dates according to their terms and the
provisions of Section 307.

If any such Security shall not be paid upon surrender thereof for
repurchase, the principal (and premium, if any) shall, until paid, bear
interest from the Repurchase Date at the rate prescribed therefor in such
Security.

SECTION 1305. Securities Repurchased in Part.

Any Security which by its terms may be repurchased in part at the
option of the Holder and which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like
tenor of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered. To the extent a series of Securities
represented by a Global Security is to be repurchased in part only, a notation
of such redemption shall be made by the Trustee in the schedule of exchanges on
the Global Security.

ARTICLE FOURTEEN
CORPORATE OBLIGATION ONLY

SECTION 1401. Indenture and Securities Solely Corporate Obligations.

70
<PAGE> 77
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or penalty or by any legal or equitable
proceeding or otherwise, all such liability, whether at common law, in equity,
by any constitution, statute or otherwise, of incorporators, stockholders,
employees, officers or directors being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration of the issuance of the Securities.

* * *

71
<PAGE> 78
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the day and year first above written.

AMRESCO, INC.,
as Issuer

By:
-----------------------------------------
Robert H. Lutz, Jr.
Chairman and Chief Executive Officer

Attest:

- ---------------------------------
Name:
----------------------------
Title:
----------------------------

Comerica Bank,
as Trustee

By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------

Attest:

- ---------------------------------
Name:
----------------------------
Title:
----------------------------

<PAGE> 1
EXHIBIT 4.3

- --------------------------------------------------------------------------------

AMRESCO, INC.

AS ISSUER

------------------

AS TRUSTEE

------------------

SUBORDINATED NOTES

------------------

INDENTURE

DATED AS OF _________________, 199__

- --------------------------------------------------------------------------------
<PAGE> 2
AMRESCO, INC.

Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of ______________, 199__

<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
--------------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . 701, 701(a)
(b) . . . . . . . . . . . . . . . . . . . . 701(b)
(c) . . . . . . . . . . . . . . . . . . . . 701(c)
Section 313 . . . . . . . . . . . . . . . . . . . . 702
Section 314(a) . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . 514
Section 316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 508
317(a)(1) . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . 107
</TABLE>

Note: This reconciliation and tie shall not, for any purpose,
be deemed to be part of the Indenture.

i
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . 10
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . 11
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . 13
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . 14
SECTION 107. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . 15
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . 15
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . . . . 16
SECTION 203. Form of Legend for Global Securities . . . . . . . . . . . . . . . 16

ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . 17
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . 20
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 305. Registration, Registration of Transfer and Exchange;
Paying Agent and Place of Payment . . . . . . . . . . . . . . . . 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . 26
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . 27
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 311. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . 30
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . 30
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . 31
SECTION 403. Defeasance and Discharge of Indenture . . . . . . . . . . . . . . . 31
</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 502. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . 36
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . 37
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . 38
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . 40
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . 42

ARTICLE SIX THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . 42
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . 44
SECTION 604. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . 45
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . 46
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . 46
SECTION 610. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . 48
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . 50
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . 50

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . 52
SECTION 701. Preservation of Information; Communications to
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 702. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 703. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . 54
SECTION 801. Company May Consolidate, Etc. Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 901. Supplemental Indentures Without Consent of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 902. Supplemental Indentures With Consent of Holders . . . . . . . . . . 56
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . 57
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . 58
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . 58
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . 58
SECTION 907. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . 58
SECTION 908. Supplemental Indentures With Consent of
Holders of Senior Debt . . . . . . . . . . . . . . . . . . . . . 58

ARTICLE TEN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . 58
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . 59
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . . . 59
SECTION 1004. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1005. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . 61
SECTION 1006. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1007. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . 62
SECTION 1008. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1009. Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . 62
SECTION 1010. Statement by Officers as to Default. . . . . . . . . . . . . . . . 63
SECTION 1011. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . 64
SECTION 1012. Exceptions to Covenants. . . . . . . . . . . . . . . . . . . . . . 64

ARTICLE ELEVEN REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . 65
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . 65
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . 66
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . 67
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . 67

ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . 68
</TABLE>

iv
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE THIRTEEN SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1301. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1302. Distribution on Dissolution, Liquidation and
Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1303. No Payment When Senior Debt in Default . . . . . . . . . . . . . . 70
SECTION 1304. Payment to Holders of Senior Debt . . . . . . . . . . . . . . . . . 71
SECTION 1305. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1306. Payment on Securities Permitted . . . . . . . . . . . . . . . . . . 72
SECTION 1307. Authorization of Holders to Trustee to Effect
Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 1308. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . 73
SECTION 1309. Trustee as Holder of Senior Debt . . . . . . . . . . . . . . . . . 73
SECTION 1310. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1311. No Fiduciary Duty by Trustee to Holders of
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1312. Paying Agent Treated as Trustee . . . . . . . . . . . . . . . . . . 74
SECTION 1313. Exclusive Power . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1314. Notices to Holders of Senior Debt. . . . . . . . . . . . . . . . . 75
SECTION 1315. Rights of Holders of Senior Debt Not Impaired . . . . . . . . . . . 75

ARTICLE FOURTEEN REPURCHASE OF SECURITIES AT OPTION OF HOLDERS . . . . . . . . . . . 75
SECTION 1401. Applicability of Article . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1402. Notice of Repurchase Date . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1403. Deposit of Repurchase Price . . . . . . . . . . . . . . . . . . . . 76
SECTION 1404. Securities Payable on Repurchase Date . . . . . . . . . . . . . . . 76
SECTION 1405. Securities Repurchased in Part . . . . . . . . . . . . . . . . . . 76

ARTICLE FIFTEEN CORPORATE OBLIGATION ONLY . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 1501. Indenture and Securities Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>

v
<PAGE> 7
INDENTURE, dated as of _____________, 199__ between AMRESCO, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having executive offices located at 1845 Woodall
Rodgers Freeway, Suite 1700, Dallas, Texas 75201, and ______________________, a
_________________________, as Trustee (herein called the "Trustee"), having its
principal office at ______________________________________________.

RECITALS OF THE COMPANY

All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions.

For all purposes hereof, except as otherwise expressly provided or
unless the context otherwise requires:

(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;

(2) all other terms used herein which are defined in the
Trust Indenture Act or by Commission rule or regulation under the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
<PAGE> 8
(3) any gender used herein shall be deemed and construed
to include correlative words of the masculine, feminine or neuter
gender;

(5) the words "herein", "hereof' and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and

(6) the word "or" is always used inclusively (for
example, the phrase "A or B or both," not "either A or B but not
both").

Certain terms, used principally in Article Six, are defined in that
Article.

"Act", when used with respect to any Holder, has the meaning specified
in Section 104.

"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.

"Board of Directors" means either the board of directors of the
Company or any duly authorized (generally or in any particular respect)
committee appointed by that board.

"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification. Where any provision hereof refers to action to be taken
pursuant to a Board Resolution (including establishment of any series of the
Securities and the forms and terms thereof), such action may be taken by any
committee, officer or employee of the Company authorized to take such action
(generally or in any particular respect) by a Board Resolution.

"Business Day", when used with respect to any Place of Payment or
other location, means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not

"Corporation" includes corporations, associations, companies, joint
stock companies, limited liability companies or business trusts.

"Default Notice" has the meaning specified in Section 1303.

"Defaulted Interest" has the meaning specified in Section 307.

3
<PAGE> 10
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the clearing agency registered under the Exchange Act, specified
for that purpose as contemplated by Section 301 or any successor clearing
agency registered under the Exchange Act as contemplated by Section 305, and if
at any time there is more than one such Person, "Depositary" as used with
respect to the Securities of any series shall mean the Depositary with respect
to the Securities of such series.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exclusive Power" has the meaning specified in Section 1313.

"Funded Debt" means any of the following obligations of the Company or
any Subsidiary which by its terms matures at or is extendable or renewable at
the sole option of the obligor without requiring the consent of the obligee to
a date more than 360 days after the date of the creation or incurrence of such
obligation: (i) any obligations, contingent or otherwise, for borrowed money or
for the deferred purchase price of property, assets, securities or services
(including, without limitation, any interest accruing subsequent to an event of
default), (ii) all obligations (including the Debt Securities) evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), except any such
obligation that constitutes a trade payable and an accrued liability arising in
the ordinary course of business, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet prepared in
accordance with generally accepted accounting principles, (iv) all Capital
Lease Obligations, (v) liabilities of the Company actually due and payable
under banker's acceptances or letters of credit, (vi) all indebtedness of the
type referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or
for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien upon or security interest in property of
the Company or any Subsidiary (including, without limitation, accounts and
contract rights), even though the Company or any Subsidiary has not assumed or
become liable for the payment of such indebtedness and (vii) any guarantee or
endorsement (other than for collection or deposit in the ordinary course of
business) or discount with recourse of, or other agreement, contingent or
otherwise, to purchase, repurchase, or otherwise acquire, to supply, or advance
funds or become liable with respect to, any indebtedness or any obligation of
the type referred to in any of the foregoing clauses (i) through (vi),
regardless of whether such obligation would appear on a balance sheet.

4
<PAGE> 11
pronouncements of the Financial Accounting Standards Board in effect from time
to time.

"Holder" means a Person in whose name a Security is registered in the
Security Register.

"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.

"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

"Junior Indebtedness" means all Funded Debt except Senior Debt.

"Material Subsidiary" means Holliday Fenoglio, Inc., AMRESCO
Management, Inc., AMRESCO Residential Mortgage Corporation, AMRESCO Advisors,
Inc., AMRESCO Residential Credit Corporation, AMRESCO Capital Corporation,
AMRESCO New England, Inc., Oak Cliff Financial, Inc. and any other Subsidiary
whose assets or revenues comprise at least five percent (5%) of the assets or
revenues of the Company and the Subsidiaries on a consolidated basis as of the
end of, or for the, Company's most recently completed fiscal quarter, as
determined from time to time.

5
<PAGE> 12
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, notice of option to elect
repayment or otherwise.

"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
hereunder, except:

(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

(iii) any Security with respect to which the Company has
effected defeasance pursuant to clauses (1)(B)) and (3) of Section
401; and

6
<PAGE> 13
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Securities, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units that shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined in the
manner provided as contemplated by Section 301 as of the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined as of
the date of original issuance of such Security, of the amount determined as
provided in (i) above) of such Security as determined by the Company pursuant
to Section 301, and (iii) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making any such
determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
actually knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) and/or interest on any Securities on behalf
of the Company.

"Proceeding" has the meaning specified in Section 1302.

"Redemption Date", when used with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption pursuant
hereto.

"Redemption Price", when used with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed pursuant
hereto plus premium, if any, and accrued interest.

"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee assigned by it to administer its corporate trust
matters.

"Repurchase Date", when used with respect to any Security or portion
thereof to be repurchased, means the date fixed for such repurchase pursuant
hereto.

"Securities Payment" has the meaning specified in Section 1302.

"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.

"Senior Agent" has the meaning specified in Section 1302.

8
<PAGE> 15
"Senior Debt" means the principal amount of, and interest on and all
other amounts due on or in connection with (1) Funded Debt whether outstanding
on the date of execution hereof or thereafter created or incurred, unless it is
provided in the appropriate instrument that such Funded Debt is subordinated to
any other Funded Debt and (2) renewals, extensions and refundings of any such
indebtedness and (2) renewals, extensions and refundings of any such
indebtedness.

"Senior Event of Default" has the meaning specified in Section 1303.

"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.

9
<PAGE> 16
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment of
interest on or principal of or other amount with respect to the U.S. Government
Obligation evidenced by such depository receipt.

"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".

SECTION 102. Compliance Certificates and Opinions.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for herein shall include:

(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

10
<PAGE> 17
(4) a statement whether, in the opinion of each such
individual, such condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee.

SECTION 104. Acts of Holders.

11
<PAGE> 18
the Company and any agent of the Trustee or the Company, if made in the manner
provided in this Section.

12
<PAGE> 19
subsection (d), the Company may, on one or more occasions at its option, extend
such date to any later date. Nothing in this subsection (d) shall prevent any
Holder (or any duly appointed agent thereof, from giving or taking, after any
expiration date, any action identical to, or, at any time, contrary to or
different from any action given or taken, or purported to have been given and
taken, hereunder by a Holder on or prior to such date, in which event the
Company may set a record date in respect hereof pursuant to this subsection
(d).

SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted hereby to be made
upon, given or furnished to, or filed with,

13
<PAGE> 20
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing to
or with a Responsible Officer of the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Department, or

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder
(including Persons who hold Securities through a Holder which is a Depositary
if the name and address of such beneficial holder has been provided in writing
to the Person required to give such notice prior to the date such notice is
given) affected by such event, at such Holder's address as it appears in the
Security Register or as provided in writing by the Depositary, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice mailed to the Holder in the manner
herein prescribed shall be conclusively deemed to have been received by such
Holder three days after deposit with the U.S. Mail, whether or not such Holder
actually receives such notice. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted hereunder shall be in the English
language.

14
<PAGE> 21
SECTION 107. Compliance with Trust Indenture Act.

This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act that are required to be part hereof. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the provision of the Trust Indenture Act shall control. If any
provision hereof modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply hereto as so modified or to be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 109. Successors and Assigns.

All covenants and agreements herein by the Company or the Trustee
shall bind its successors and assigns, whether so expressed or not.

SECTION 110. Separability Clause.

SECTION 111. Benefits of Indenture.

SECTION 112. Governing Law.

This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of Texas.

SECTION 113. Legal Holidays.

15
<PAGE> 22
or principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be.

ARTICLE TWO
SECURITY FORMS

SECTION 201. Forms Generally.

SECTION 202. Form of Trustee's Certificate of Authentication.

The Trustee's certificate of authentication shall be in substantially
the following form:

This is one of the Securities of the series designated therein and
issued pursuant to the within-mentioned Indenture.

, as
---------------------------------------
Trustee

By
-----------------------------------------
Authorized Signature

SECTION 203. Form of Legend for Global Securities.

16
<PAGE> 23
substantially the following form or such similar form as may be required by the
Depositary:

"Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New
York, New York) to the issuer or to its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein."

ARTICLE THREE
THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be
authenticated and delivered hereunder is unlimited.

(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from Securities of any
other series);

17
<PAGE> 24
(4) the date or dates, or the method by which such date
or dates are determined or extended, on which the principal or
installments of principal and premium, if any, of the Securities of
the series is or are payable;

(5) the rate or rates (which may be fixed or variable) at
which the Securities of the series shall bear interest, if any, or the
method by which such rate or rates shall be determined, the date or
dates from which such interest shall accrue, the Interest Payment
Dates on which such interest shall be payable, the Regular Record Date
for the interest payable on any Interest Payment Date and the
circumstances, if any in which the Company may defer interest payments
and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;

(10) the identity of each Security Registrar and Paying
Agent, if other than or in addition to the Trustee;

18
<PAGE> 25
(12) the applicability of, and any addition to or change
in, the covenants and definitions currently set forth herein;

(13) if other than denominations of $1,000 or any amount
in excess thereof which is an integral multiple of $1,000, the
denominations in which Securities of the series shall be issuable;

(19) the extent of any subordination to other indebtedness
of the Company; and

19
<PAGE> 26
(20) any other terms of the series (which terms shall not
be inconsistent with the provisions hereof, except as permitted by
Section 901(5)).

All Securities of any one series (other than Securities offered in a
Periodic Offering) shall be substantially identical except as to denomination
and except as may otherwise be provided by or pursuant to the Board Resolution
referred to above and, subject to Section 303, set forth, or determined in the
manner provided, in the Officers' Certificate referred to above or in any such
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time. Unless otherwise provided, Securities of a single
series may have different terms, and a series may be reopened, without the
consent of the Holders of Securities of such series, for issuance of additional
Securities of such series.

SECTION 302. Denominations.

Unless otherwise provided in the applicable Officers' Certificate or
supplemental indenture, the Securities of each series shall be issued in
registered form without coupons in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000.

SECTION 303. Execution, Authentication, Delivery and Dating.

Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,

20
<PAGE> 27
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery
hereof, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, or, in the case of
Securities offered in a Periodic Offering, from time to time in accordance with
such other procedures (including, without limitation, the receipt by the
Trustee of electronic instructions from the Company or its duly authorized
agents, promptly confirmed in writing by the Company) acceptable to the Trustee
as may be specified from time to time by a Company Order for establishing the
specific terms of particular Securities being so offered, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or forms or terms of the Securities of the series have
been established by or pursuant to one or more Board Resolutions as permitted
by Sections 201 and 301, in authenticating such Securities and accepting the
additional responsibilities hereunder in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon

(a) an Opinion of Counsel stating:

(1) that the form or forms of such Securities have been
established in conformity with the provisions hereof;

(2) that the terms of such Securities have been
established in conformity with the provisions hereof;

(3) that authentication and delivery of such Securities
and the execution and delivery of the supplemental indenture, if any,
by the Trustee will not violate the terms hereof;

(4) that the Company has the corporate power to issue,
and has duly authorized, such Securities;

21
<PAGE> 28
(6) that the issuance of such Securities will not
contravene the certificate of incorporation or bylaws of the Company
or result in any violation of any of the terms or provisions of any
law or regulation or of any indenture, mortgage or other agreement
known to such Counsel by which the Company or its assets is bound, the
violation of which would have a material adverse effect on the Company
and its subsidiaries taken as a whole;

(b) an executed supplemental indenture, if any;

(d) an Officers' Certificate;

22
<PAGE> 29
than any conditions to be performed by the Trustee). If such form or forms or
terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant hereto
will affect the Trustee's own rights, duties or immunities under the Securities
and this Indenture or otherwise in a manner which is not reasonably acceptable
to the Trustee.

Each Security shall be dated the date of its authentication.

SECTION 304. Temporary Securities.

23
<PAGE> 30
SECTION 305. Registration, Registration of Transfer and Exchange; Paying
Agent and Place of Payment.

The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" of each series of Securities for the
purpose of registering Securities and transfers of Securities as herein
provided at the Corporate Trust Office.

24
<PAGE> 31
close of business on the day of such mailing, (ii) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part, or (iii) to
register the transfer of or exchange any certificated Securities during a
period beginning five days before the date of Maturity with respect to such
Security and ending on such date of Maturity.

The Company shall maintain an office or agency where Securities of any
series may be presented for payment ("Paying Agent"). The Company may appoint
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Paying Agent, the Trustee shall
act as such. The Company or any of its Subsidiaries may act as Paying Agent.

The Company initially appoints the Trustee to act as Paying Agent with
respect to the Securities. The Corporate Trust Office of the Trustee shall
initially be deemed a Place of Payment. The Company may designate in a Company
order additional Places of Payment for Securities of any series.

25
<PAGE> 32
The Company shall require each Paying Agent, including the Trustee
(who shall be deemed to have agreed by its execution of this Indenture), to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee (unless the Paying Agent is the Trustee, in which case
it shall hold in trust for the Holders) all money held by the Paying Agent for
the payment of principal, premium, if any, or interest, on the Securities, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as sole Paying Agent for the Securities.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee), if any, connected
therewith.

26
<PAGE> 33
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder. A new
Security shall have such legends as appeared on the destroyed, lost or stolen
Security unless the Company determines otherwise.

SECTION 307. Payment of Interest; Interest Rights Preserved.

(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed
payment, such money when so deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted

27
<PAGE> 34
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such
series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).

SECTION 308. Persons Deemed Owners.

No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary (or its nominees) shall have any rights hereunder
with respect to such Global Security or any Security represented thereby, and
such Depositary may be treated by the Company, the Trustee, and any agent of
the Company or the Trustee as the owner of such Global Security or any Security
represented thereby for all purposes whatsoever. Notwithstanding the
foregoing, with respect to any Global Security, nothing herein shall prevent
the Company, the Trustee, or any agent of the

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<PAGE> 35
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by a Depositary as Holder of such Global
Security, or impair, as between a Depositary and the owners of beneficial
interests in such Global Security, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominees) as
Holder of such Global Security. None of the Company, the Trustee or any Paying
Agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

SECTION 309. Cancellation.

SECTION 310. Computation of Interest.

SECTION 311. Maximum Interest Rate.

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ARTICLE FOUR
SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

(1) either

(B) all Securities of such series not theretofore
delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their
Stated Maturity within one year, or

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<PAGE> 37
(in the case of Securities which have become due and payable)
or to the respective Stated Maturity or Redemption Date, as
the case may be;

(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company, and

SECTION 402. Application of Trust Money.

SECTION 403. Defeasance and Discharge of Indenture.

If principal of and any premium and interest on Securities of any
series are denominated and payable in U.S. Dollars, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the
Outstanding Securities of such series on the 91st day after the date of the
deposit referred to in subparagraph (d) of this Section, and the provisions
hereof, as it relates to such Outstanding Securities,

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<PAGE> 38
shall no longer be in effect (and the Trustee, at the request and expense of
the Company, shall execute proper instruments acknowledging the same), except
as to:

(b) the Company's obligations with respect to such
Securities under Sections 305, 306, 1002 and 1003; and

provided that, the following conditions shall have been satisfied:

(f) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it
is bound;

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<PAGE> 39
(g) such provision would not cause any Outstanding
Securities of such series then listed on the New York Stock Exchange
or other securities exchange to be delisted as a result thereof;

ARTICLE FIVE
REMEDIES

SECTION 501. Events of Default.

(2) default in the payment of the principal of (or
premium, if any, on) any Security of such series when due and payable;

(3) default in the deposit of any sinking fund payment in
respect of any Security of such series, when and as due by the terms
of a Security of such series;

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<PAGE> 40
(4) default in the performance, or breach, of any
covenant or warranty of the Company herein or the Securities of such
series (other than a covenant or warranty a default in the performance
or breach of which is elsewhere in this Section specifically dealt
with or which has expressly been included herein solely for the
benefit of a series of one or more Securities other than such series),
and continuance of such default or breach for a period of 30
consecutive days after written notice thereof has been received by the
Company from the Trustee or by the Company and the Trustee from the
Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of such series, specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder;

(6) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
or any Material Subsidiary in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging the Company or
any Material Subsidiary a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any
Material Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Material
Subsidiary or of any substantial part of the property of the Company
or any Material Subsidiary, or ordering the winding up or liquidation
of the affairs of the Company or any Material Subsidiary, and in the
case of either clause (A) or clause (B) the continuance of any such
decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days;

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<PAGE> 41
(7) the commencement by the Company or any Material
Subsidiary of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any Material
Subsidiary to the entry of a decree or order for relief in respect of
the Company or any Material Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against the Company
or any Material Subsidiary, or the filing by the Company or any
Material Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or
the consent by the Company or any Material Subsidiary to the filing of
such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Material Subsidiary or of
any substantial part of the property of the Company or any Material
Subsidiary, or the making by the Company or any Material Subsidiary of
an assignment for the benefit of creditors, or the admission by the
Company or any Material Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company or any Material Subsidiary in furtherance of any
such action;

(9) any other Event of Default provided with respect to
Securities of such series pursuant to Section 301.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

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<PAGE> 42
Upon payment of such principal amount (and premium, if any), such
interest and interest on overdue principal and overdue interest to the extent
prescribed therefor in the Securities of such series (to the extent payment of
such interest is legally enforceable), all of the Company's obligations in
respect of the payment of principal and interest on the Securities of such
series shall terminate.

(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay

(A) all overdue interest on all Securities of
such series,

(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.

The Company covenants that if

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<PAGE> 43
interest on which is payable less frequently than monthly) or for a
period of 10 days (for Securities of any series the interest on which
is payable monthly), or

(2) default is made in the payment of the principal of
(or premium, if any, on) any Security of any series at the Maturity
thereof,

The rights and remedies under this Section 503 are in addition to the
other rights and remedies available under this Article 5 or otherwise legally
available.

SECTION 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities of any series or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities of any series shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,

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<PAGE> 44
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) or such portion of the principal
amount of any series of Original Issue Discount Securities as may be
specified in the terms of such series and interest owing and unpaid in
respect of the Securities of such series and to file such other papers
or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under
Section 607) and of the Holders allowed in such judicial proceeding,
and

(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

SECTION 506. Application of Money Collected.

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<PAGE> 45
FIRST: To the payment of all amounts due the Trustee under
Section 607; and

THIRD: The balance, if any, to the Person or Persons entitled
thereto.

SECTION 507. Limitation on Suits.

(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of such series;

(3) such Holder or Holders have furnished to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

(4) the Trustee, for 60 days after its receipt of such
notice, request and furnishing of indemnity, has failed to institute
any such proceeding; and

(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities of
such series;

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<PAGE> 46
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.

SECTION 509. Restoration of Rights and Remedies.

SECTION 510. Rights and Remedies Cumulative.

SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of Securities of
any series to exercise any right or remedy accruing upon any Event of Default
with respect to such series shall impair any such right or remedy or constitute
a waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

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<PAGE> 47
SECTION 512. Control by Holders.

(1) such direction shall not be in conflict with any rule
of law or with this Indenture,

(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and

(3) subject to Section 601, the Trustee need not take any
action which might be unjustly prejudicial to the rights of the other
Holders of Securities not joining in such action.

SECTION 513. Waiver of Past Defaults.

(2) in respect of a covenant or provision hereof which
under Section 902 cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.

SECTION 514. Undertaking for Costs.

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<PAGE> 48
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; provided, however, that the provisions of this Section
shall not apply to any suit instituted by the Company, to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 25% in principal amount of the Outstanding
Securities of the affected series, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of (or premium, if any) or
interest on any Security on or after the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on or after the
Redemption Date or, in the case of a repurchase right at the option of the
Holder, if any, on the repurchase date specified pursuant to Section 301).

SECTION 515. Waiver of Stay or Extension Laws.

ARTICLE SIX
THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

(a) With respect to Securities of any series, except during the
continuance of an Event of Default with respect to that series only,

(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
hereof; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements hereof.

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<PAGE> 49
and skill in their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.

(c) No provision hereof shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;

SECTION 602. Notice of Defaults.

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<PAGE> 50
series; and provided, further, that in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.

SECTION 603. Certain Rights of Trustee.

Subject to the provisions of Section 601 and Sections 315(a) through
315(d) of the Trust Indenture Act:

(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it hereby at the request or
direction of any of the Holders of Securities of any series pursuant
hereto, unless such Holders shall have furnished the Trustee
reasonable security or indemnity against the costs, fees, expenses and
liabilities which might be incurred by it, including reasonable fees
of counsel, in complying with such request or direction;

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<PAGE> 51
to make such further inquiry or investigation, it shall be entitled to
examine, during business hours and upon reasonable notice, the books,
records and premises of the Company pertaining to the Securities,
personally or by agent or attorney;

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

SECTION 605. May Hold Securities.

SECTION 606. Money Held in Trust.

SECTION 607. Compensation and Reimbursement.

(a) The Company agrees

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<PAGE> 52
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

SECTION 608. Disqualification; Conflicting Interests.

The provisions of TIA Section 310(b) shall apply to the Trustee.

SECTION 609. Corporate Trustee Required; Eligibility.

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<PAGE> 53
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article. Neither the Company, nor any
Person directly or indirectly controlling, controlled by or under common
control with the Company, shall act as Trustee hereunder.

SECTION 610. Resignation and Removal; Appointment of Successor.

(e) If at any time:

(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or

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<PAGE> 54
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,

(g) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid,
to all Holders of Securities of such series as their names and addresses appear
in the Security Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

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<PAGE> 55
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties hereunder of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.

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(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

SECTION 613. Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA Section 311(a). A Trustee which has
resigned or been removed is subject to TIA Section 311(a) to the extent
indicated therein.

SECTION 614. Appointment of Authenticating Agent.

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States of America, any state thereof or the District of Columbia authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal, state or District of Columbia authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

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This is one of the Securities of the series designated herein and
issued pursuant to the within-mentioned Indenture.

----------------------------------------
as Trustee

By
--------------------------------------
Authorized Signature

----------------------------------------
as Authenticating Agent

By
--------------------------------------
Authorized Signature

ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Preservation of Information; Communications to Holders.

(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 312 of the TIA, regardless of the source
from which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the TIA.

SECTION 702. Reports by Trustee.

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to this Section shall be transmitted in the manner and to the Persons required
by TIA Sections 313(c) and (d). A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when any series of Securities is
listed on any stock exchange.

SECTION 703. Reports by Company.

The Company, pursuant to TIA Section 314(a), shall:

(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations; provided that notwithstanding the requirements of such rules and
regulations, so long as any Security is Outstanding the Company shall file with
the Trustee at a minimum (a) as soon as practicable, but in any event no more
than ninety (90) days, after the end of each fiscal year, copies of a balance
sheet and statements of income and retained earnings of the Company as of the
end of and for such fiscal year, audited by a nationally recognized firm of
independent certified public accountants, and (b) as soon as practicable, but
in any event no more than forty-five (45) days, after the end of each quarterly
fiscal period, except for the last quarterly fiscal period in each fiscal year,
a summary statement (which need not be audited) of income and retained earnings
of the Company for such period;

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filed by the Company pursuant to paragraph (1) of this Section; provided
further that in lieu of any Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, the Company may transmit an annual or quarterly report,
respectively, containing financial statements and an undertaking to transmit
such Form 10-K ro Form 10-Q, as the case may be, to any Holder upon request;
and

(4) furnish to the Trustee the Officers' Certificates required by
Section 1010.

The Trustee has no duty to review the financial or other reports
described in paragraphs (1) and (2) of this Section for purposes of determining
compliance with this or any other provision hereof.

ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person unless:

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80% or more of the fair value (as determined in good faith by the Board of
Directors) of all the Company's properties and assets on the date of such
conveyance, transfer, sale or lease.

SECTION 802. Successor Substituted.

ARTICLE NINE
SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities;

(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of one or more specified series) or to
surrender any right or power herein conferred upon the Company;

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(5) to add to, change or eliminate any of the provisions
hereof in respect of one or more series of Securities, provided that
any, such addition, change or elimination (i) shall neither (A) apply
to any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor (B) modify the rights of the Holder of any such Security with
respect to such provision or (ii) shall become effective only when
there is no such Security Outstanding;

(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301;

SECTION 902. Supplemental Indentures With Consent of Holders.

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declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or
currency in which, any such Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption or repayment, on or after the
Redemption Date or any repayment date),

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created hereby, the Trustee shall be entitled to receive, and
(subject to Section 601 hereof) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted hereby. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities hereunder or otherwise.

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SECTION 904. Effect of Supplemental Indentures.

SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in a form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.

SECTION 907. Notice of Supplemental Indentures

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provision of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security so
affected, pursuant to Section 106, setting forth in general terms the substance
of such supplemental indenture.

SECTION 908. Supplemental Indentures With Consent of Holders of Senior
Debt.

Without the consent of the holders of all Senior Debt affected
thereby, the Company and the Trustee shall not have the power to enter into an
indenture or indentures supplemental hereto for the purpose of amending or
modifying the definition of "Senior Debt" herein in a manner adverse to the
holders of such affected Senior Debt.

ARTICLE TEN
COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and

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interest on the Securities of such series in accordance with the terms of such
Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum in the currency in which such series of Securities is payable
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its failure so to act.

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<PAGE> 66
The Company will cause each Paying Agent for any series of Securities
other than the Trustee or the Company to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:

(3) during the continuance of any such Event of Default
by the Company, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent.

SECTION 1004. Existence.

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material adverse effect on the business or financial condition of the Company
and its Subsidiaries, taken as a whole.

SECTION 1005. Maintenance of Properties.

The Company will:

(1) cause its properties and the properties of its
Material Subsidiaries (other than properties obtained by the Company
or any Material Subsidiary through foreclosure or other resolution of
any loan) used or useful in the conduct of the business of the Company
and its Material Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary
facilities and equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that the
foregoing shall not prevent the Company or a Material Subsidiary from
discontinuing the operation and maintenance of any of its properties
if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business and will not have a material adverse
effect on the business or financial condition of the Company and its
Subsidiaries, taken as a whole;

(3) The Company and each of its Material Subsidiaries
shall comply with all statutes, laws, ordinances, or government rules
and regulations to which it is subject, noncompliance with which would
materially adversely affect the business or financial condition of the
Company and its Subsidiaries, taken as a whole.

SECTION 1006. Insurance.

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commercially reasonable rates, and further provided that the Company may
self-insure, or insure through captive insurers or insurance cooperatives to
the extent consistent with prudent business practices. Such insurance shall be
in such amounts, contain such terms, be in such forms and be for such periods
as are customary for such similarly-situated companies in the Company's
industry or insurance markets reasonably accessible by the Company. The
Company will provide and will cause each Subsidiary to provide such information
and documents reasonably requested by the Trustee from time to time with
respect to the Company's provision for insurance. The obligations evidenced by
this covenant shall be interpreted to reflect changes in insurance practices
related to the method in which insurance risks are covered in the North
American and European markets or in any other market in which the Company or
its Subsidiaries, as the case may be, reasonably places coverage.

SECTION 1007. Payment of Taxes and Other Claims.

SECTION 1008. Books and Records.

SECTION 1009. Defeasance of Certain Obligations.

The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers'
Certificate or indenture supplemental hereto provided pursuant to Section 301.
The Company may omit to comply with any term, provision or condition set forth
in Article Ten and Section 301(12) and any such omission with respect Article
Ten and to Section 301(12) shall not be an Event of Default, in each case with
respect to the Securities of that series, provided that the following
conditions have been satisfied:

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the Securities of that series, (i) money in an amount, (ii) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide not later than one day before the due date of any payment
referred to in clause (A) or (B) of this subparagraph (1) money in an
amount or (iii) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge (A) the principal of (and premium, if any) and each
installment of principal (and premium, if any) and interest on the
Outstanding Securities on the Stated Maturity of such principal or
installments of principal and interest and (B) any mandatory sinking
fund payments or analogous payments applicable to the Securities of
such series on the day on which such payments are due and payable in
accordance with the terms hereof and of such Securities;

SECTION 1010. Statement by Officers as to Default.

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Clause (2) of this Section 1011) and, if the Company shall be in
default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.

SECTION 1011. Waiver of Certain Covenants.

The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to waive any such term,
provision or condition. If a record date is fixed for such purpose, the
Holders on such record date or their duly designated proxies, and only such
Persons, shall be entitled to waive any such term, provision or condition
hereunder, whether or not such Holders remain Holders after such record date;
provided that unless the Holders of not less than a majority in principal
amount of the Outstanding Securities of such series shall have waived such
term, provision or condition prior to the date which is 90 days after such
record date, any such waiver previously given shall automatically and without
further action by any Holder be canceled and of no further effect.

SECTION 1012. Exceptions to Covenants.

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ARTICLE ELEVEN
REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

SECTION 1102. Election to Redeem; Notice to Trustee.

(1) such Redemption Date,

(2) the Redemption Price,

(3) if the Securities of such series have different terms
and less than all of the Securities of such series are to be redeemed,
the terms of the Securities to be redeemed,

(4) whether the redemption is pursuant to a mandatory or
optional sinking fund, or both, if such is the case, and

(5) if less than all the Securities of such series with
identical terms are to be redeemed, the principal amount of such
Securities to be redeemed.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not less
than nor more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of like tenor of such series not previously called
for redemption, by lot or by such other method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of like
tenor of that series or any integral multiple thereof of the principal amount
of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series).

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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

SECTION 1104. Notice of Redemption.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is
the case.

Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Trustee in the name and at the expense of the
Company, unless the Company notifies the Trustee of its intention to give such
notice directly to each Holder.

SECTION 1105. Deposit of Redemption Price.

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if the Redemption Date shall be an Interest Payment Date) accrued interest on,
all the Securities which are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

SECTION 1107. Securities Redeemed in Part.

ARTICLE TWELVE
SINKING FUNDS

SECTION 1201. Applicability of Article.

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The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

The Company (1) may deliver Outstanding Securities of like tenor of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of like tenor of a series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of like tenor of such
series required to be made pursuant to the terms of such Securities as provided
for by the terms of such series; provided that such Securities have not been
previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. Such Securities
shall be first applied to the sinking fund payment next due and any excess
shall be applied to the following sinking fund payments in the order they are
due.

SECTION 1203. Redemption of Securities for Sinking Fund.

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ARTICLE THIRTEEN
SUBORDINATION

SECTION 1301. Agreement to Subordinate.

The Company covenants and agrees, and each Holder of Securities of
each series, by such Holder's acceptance thereof, likewise covenants and
agrees, and for purposes of Section 508 consents, that the indebtedness
represented by the Securities of each series and the payment of the principal
thereof, premium, if any, sinking fund requirements therefor and interest
thereon shall be subordinate and subject in right of payment, to the extent and
in the manner hereinafter set forth, to the prior payment in full in cash or
cash equivalents of all Senior Debt.

SECTION 1302. Distribution on Dissolution, Liquidation and Reorganization.

Upon any payment or distribution to creditors of the Company in a
liquidation, dissolution or winding up of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its properties, or upon an assignment for the benefit of creditors
or any other marshaling of the assets and liabilities of the Company (each such
event, if any, herein sometimes referred to as a "Proceeding"):

(a) all Senior Debt shall first be paid in full in cash
or cash equivalents before any payment or distribution of any kind or
character, whether in cash, property or securities, by set off or
otherwise (including any payment or distribution which may be payable
or deliverable by reason of the payment of any Junior Indebtedness),
on account of the principal of (and premium, if any) or interest on
any Securities or on account of any purchase, redemption, retirement
or other acquisition of Securities by the Company, any Subsidiary of
the Company, the Trustee or any Paying Agent or on account of any
other obligation of the Company in respect of any Securities (all such
payments, distributions, purchases, redemptions, retirements and
acquisitions, whether or not in connection with a Proceeding, herein
referred to, individually and collectively, as a "Securities
Payment"), or before the Holders of the Securities shall be entitled
to retain any assets so paid or distributed in respect thereof; and

(b) until the Senior Debt is paid in full in cash or cash
equivalents (as provided in subsection (a) above), any Securities
Payment to which the Holders of the Securities or the Trustee for
their benefit would be entitled except for the provisions of this
Section 1302, shall be paid or delivered by the Company or any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution directly to the holders of
Senior Debt or the representative or representatives of all such
holders or the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Debt may have been issued
(any such representative or trustee being referred to as a "Senior
Agent"), as their respective interests may appear.

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<PAGE> 76
For purposes of this Article Thirteen only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not include (i) a payment or distribution of stock or securities of the
Company as reorganized or readjusted provided for by a plan of reorganization
or readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law
or of any other corporation provided for by such plan of reorganization or
readjustment which stock or securities are subordinated in right of payment to
all then outstanding Senior Debt to the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article; or (ii)
any deposit, or payment made therefrom, pursuant to Article Four or Section
1009, with respect to any series of Securities; provided that, in the case of
any such payment from a defeasance trust, the assets deposited in trust to fund
such payment have been so deposited for any period of at least 90 consecutive
days without the occurrence of a blockage of payment on such series of
Securities pursuant to this Section 1302 or Section 1303. The consolidation of
the Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article Eight shall
not be deemed a Proceeding for the purposes of this Section if the Person
formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer such properties and assets as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight.

SECTION 1303. No Payment When Senior Debt in Default.

From and after the receipt by the Trustee of a written notice (the
"Default Notice") from the holder or holders of not less than 51% in principal
amount of the outstanding Senior Debt or any Senior Agent specifying that an
event of default under any Senior Debt (a "Senior Event of Default") has
occurred, the Company may not make any Securities Payment to the Holders of
Securities and neither the Trustee nor the Holders of not less than 25% in
principal amount of the Outstanding Securities may accelerate the maturity of
such Securities as provided in Section 502, until the first to occur of the
following:

(a) such Senior Event of Default is cured, or

(b) such Senior Event of Default is waived by the holders of such
Senior Debt or a Senior Agent, or

(c) the expiration of 180 days after the date the Default Notice is
received by the Trustee, if the maturity of such Senior Debt has not been
accelerated at such time.

Upon payment in full of the Senior Debt, payment of principal and interest may
be made to the Holders of Securities.

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SECTION 1304. Payment to Holders of Senior Debt.

Subject to the provisions of Section 1306, in the event that,
notwithstanding the provisions of Section 1302 or Section 1303, any Securities
Payment shall be received by the Trustee on behalf of the Holders of the
Securities (i) from the Company in violation of such provisions or (ii) from
any other Person under such circumstances that such payment would, if made
directly by the Company, be in violation of such provisions, such payment or
distribution shall be held by the Trustee in trust for the benefit of, and
shall immediately be paid over by the Trustee, upon written request by a Person
entitled to give notice on behalf of such Senior Debt as specified in Section
1310, to the holders of Senior Debt or a Senior Agent, for application to the
payment of Senior Debt.

Upon any payment or distribution of assets or securities of the
Company referred to in Sections 1302 and 1303, the Trustee and the Holders of
the Securities shall be entitled to rely upon any order or decree of a court of
competent jurisdiction, or upon any certificate of any liquidating trustee or
agent or other similar Person making any payment or distribution to the Trustee
or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
the Senior Debt, the amount thereof or payment thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Thirteen. In the event that the Trustee determines, in good faith,
that further evidence is required with respect to the right of any Person as a
holder of Senior Debt to participate in any payment or distribution referred to
in Sections 1302 and 1303, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, as to the extent to which such Person is
entitled to participation in such payment or distribution, and as to other
facts pertinent to the rights of such Person under Sections 1302 and 1303, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.

SECTION 1305. Subrogation.

Subject to the payment in full in cash or cash equivalents of all
Senior Debt at the time outstanding, the Holders of the Securities shall be
subrogated to the rights of each holder of Senior Debt (to the extent of the
payments or distributions made to such holder pursuant to the provisions of
Sections 1302, 1303 and 1304) to receive payments or distributions of cash,
assets or securities of the Company applicable to the Senior Debt until the
Securities shall be paid in full. No payments or distributions to holders of
Senior Debt of cash, assets or securities of the Company to which Holders of
Securities would be entitled except for the provisions of this Article
Thirteen, and no payment over pursuant to the provisions of this Article
Thirteen to holders of such Senior Debt by the Holders of Securities shall, as
among the Company, its creditors other than the holders of Senior Debt, and the
Holders of the Securities, be deemed to be a payment by the Company on account
of the Senior Debt, it being understood that the provisions of this Article
Thirteen are intended

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solely for the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Debt, on the other
hand, and nothing contained in this Article Thirteen or elsewhere herein, or in
the Securities, is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Debt, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of, premium, if any, and
interest on the Securities, as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Debt, nor shall anything herein or therein prevent the
Trustee or the Holder of any Securities from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Article Thirteen of the holders of Senior Debt in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.

Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purpose of ascertaining the persons entitled to participate
in such payment or distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
paid or distributed thereon and all other facts pertinent thereto or to this
Article.

SECTION 1306. Payment on Securities Permitted.

Nothing contained in this Article Thirteen or elsewhere in this
Indenture, or in any of the Securities, shall affect the obligation of the
Company to make, or prevent the Company from making, payment of the principal
of, sinking fund, if any, premium, if any, or interest on the Securities, at
any time, except under the conditions described in Section 1303 and except
during the pendency of any Proceeding within the meaning of Section 1302.
Nothing contained in this Article Thirteen or elsewhere herein, or in any of
the Securities, shall prevent the application by the Trustee of any moneys
deposited with it hereunder for the purpose, to the payment of or on account of
the principal of, sinking fund, if any, or premium, if any, or interest on the
Securities, unless the Trustee shall have received written notice, directed to
it at its Corporate Trust Office as provided in Section 1310.

SECTION 1307. Authorization of Holders to Trustee to Effect Subordination.

Each Holder of Securities, by such Holder's acceptance thereof,
authorizes and directs the Trustee in such Holder's behalf to take such action
as may be necessary or appropriate to effectuate, as between the Holders of the
Securities and the holders

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of Senior Debt, the subordination provided in this Article Thirteen and
appoints the Trustee such Holder's attorney-in- fact for any and all such
purposes.

SECTION 1308. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act by any such holder, or by any noncompliance by the Company
with terms, provisions and covenants hereof, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.

Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do
any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding;
(ii) permit the Company to borrow, repay and then reborrow any or all of the
Senior Debt; (iii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iv) release any Person
liable in any manner for the collection of Senior Debt; (v) exercise or refrain
from exercising any rights against the Company and any other Person; and (vi)
apply any sums received by them to Senior Debt.

SECTION 1309. Trustee as Holder of Senior Debt.

The Trustee shall be entitled to all the rights set forth in this
Article Thirteen in respect of any Senior Debt at any time held by it, to the
same extent as any other holder of Senior Debt, and nothing in Section 613 or
elsewhere herein shall deprive or be construed to deprive the Trustee of its
rights as such holder.

Nothing in this Article Thirteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.

SECTION 1310. Notices to Trustee.

The Company shall give written notice to the Trustee of any fact known
to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, but failure to give such notice shall not
affect the subordination of the Securities to the extent herein provided if
notice is otherwise given as hereinafter provided in this Section 1310.
Notwithstanding the provisions of this Article or any other provision hereof,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any

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payment to or by the Trustee in respect of the Securities, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company, any holder of Senior Debt or any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601, shall be entitled in all respects to
assume that no such facts exist. Any notice required or permitted to be given
to the Trustee by a holder of Senior Debt or a trustee, fiduciary or transfer
agent therefor shall be in writing and shall be sufficient for every purpose
hereunder if in writing and either (i) sent via facsimile to the Trustee, the
receipt of which shall be confirmed via telephone, or (ii) mailed, first class
postage prepaid, or sent overnight carrier, to the Trustee addressed to it at
the address of its principal office specified in the first paragraph hereof or
at any other address furnished in writing to such holder of the Senior Debt by
the Trustee. Notwithstanding anything else contained herein, no notice,
request or other communication to or with the Trustee shall be deemed given
unless received by a Responsible Officer at the Trustee's principal corporate
trust office.

SECTION 1311. No Fiduciary Duty by Trustee to Holders of Senior Debt.

The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if it shall
in good faith mistakenly pay over or distribute to Holders of Securities or the
Company or any other Person moneys or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article Thirteen or otherwise.

SECTION 1312. Paying Agent Treated as Trustee.

In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article Thirteen shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article Thirteen in place of the Trustee.

SECTION 1313. Exclusive Power.

The Holders of the Securities and the Trustee acknowledge that the
Holders of Senior Debt and the Holders of Securities, respectively, are
entitled to exercise certain rights and powers with respect to the Company from
time to time, whether before or after an occurrence of an Event of Default and
the exercise of any such right or power by one creditor may preclude the
exercise of a similar right or power by one or more other creditors (any such
right or power being herein called an "Exclusive Power"). To the extent that
any Holder or Holders of Senior Debt or any Senior Agent actually exercises any
Exclusive Power, then the Trustee and the Holders of Securities agree to
refrain from exercising any substantially similar Exclusive Power to the extent
necessary to permit the Holders of Senior Debt to benefit from their actions.

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SECTION 1314. Notices to Holders of Senior Debt.

Notices to Holders of Senior Debt shall be made to each Holder of
Senior Debt, or if Holders of Senior Debt have appointed a Senior Agent, then
to such Senior Agent, and shall made be made in the manor specified in the
document evidencing such Holder's Senior Debt if such a manner is so specified
therein.

SECTION 1315. Rights of Holders of Senior Debt Not Impaired.

No right of any present or future Holder of any Senior Debt to enforce
the subordination provided for in this Article shall at any time or any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any non-compliance by the Company with the terms, provisions and
covenants hereof, regardless of any knowledge thereof any such Holder may have
or be otherwise charged with.

ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT OPTION OF HOLDERS

SECTION 1401. Applicability of Article.

SECTION 1402. Notice of Repurchase Date.

The notice as to Repurchase Date shall state:

(1) the Repurchase Date;

(2) the Repurchase Price;

(3) the place or places where such Securities are to be
surrendered for payment of the Repurchase Price and the date by which
such Securities must be so surrendered in order to be repurchased;

(4) a description of the procedure which a Holder must
follow to exercise a repurchase right; and

(5) that exercise of the option to elect repurchase is
irrevocable.

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No failure of the Company to give the foregoing notice shall limit any Holder's
right to exercise a repurchase right.

SECTION 1403. Deposit of Repurchase Price.

SECTION 1404. Securities Payable on Repurchase Date.

The form of option to elect repurchase having been delivered as
specified in the form of Security for such series as provided in Article Two,
the Securities of such series so to be repurchased shall, on the Repurchase
Date, become due and payable at the Repurchase Price applicable thereto and
from and after such date (unless the Company shall default in the payment of
the Repurchase Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for repurchase in accordance
with said notice, such Security shall be paid by the Company at the Repurchase
Price together with accrued interest to the Repurchase Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to such
Repurchase Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Regular and Special Record Dates according to their terms and the
provisions of Section 307.

SECTION 1405. Securities Repurchased in Part.

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only, a notation of such redemption shall be made by the Trustee in the
schedule of exchanges on the Global Security.

ARTICLE FIFTEEN
CORPORATE OBLIGATION ONLY

SECTION 1501. Indenture and Securities Solely Corporate Obligations.

No recourse under or upon any obligation, covenant or agreement
contained herein, any indenture supplement, or in any Security, because of any
Indebtedness evidenced thereby, shall be had against any incorporator, or
against any past, present or future stockholder, employee, officer or director,
as such, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
penalty or by any legal or equitable proceeding or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, employees, officers or directors
being expressly waived and released by the acceptance of the Securities by the
Holders thereof and as part of the consideration of the issuance of the
Securities.

* * *

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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the day and year first above written.

AMRESCO, INC.,
as Issuer

By:
-----------------------------------------
Robert H. Lutz, Jr.
Chairman and Chief Executive Officer

Attest:

- ----------------------------------
Name:
-----------------------------
Title:
----------------------------

,
-------------------------------------------
as Trustee

By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------

Attest:

- ----------------------------------
Name:
-----------------------------
Title:
----------------------------

<PAGE> 1

EXHIBIT 5.1

[AMRESCO LETTERHEAD]

AMRESCO, INC.
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201

Re: Registration Statement on Form S-3 of $250,000,000 aggregate
initial offering price of Securities

Ladies and Gentlemen:

I am general counsel of AMRESCO, INC., a Delaware corporation (the
"Company"), and have acted as such in connection with a Registration Statement
on From S-3 (the "Registration Statement") relating to the sale by the Company
from time to time of (i) its unsecured debt securities, which may be either
senior debt securities (the "Senior Debt Securities") or subordinated debt
securities (the "Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities"); (ii) shares of its preferred stock,
$1.00 par value per share (the "Preferred Stock"), in one or more series; (iii)
shares of its common stock, par value $0.05 per share (the "Common Stock"); and
(iv) warrants (collectively, the "Securities Warrants") to purchase Debt
Securities (the "Debt Securities Warrants"), Preferred Stock (the "Preferred
Stock Warrants") or shares of Common Stock (the "Common Stock Warrants"), for
an aggregate initial public offering price of up to $250,000,000 (or the
equivalent in foreign currencies, currency units or composite currencies (each,
a "Currency"). The Debt Securities, Preferred Stock, Common Stock and
Securities Warrants are herein collectively referred to as the "Securities."

I have examined such documents, records and matters of law as I have
deemed necessary for the purposes of this opinion. In rendering the following
opinions, I have relied as to certain factual matters upon certificates of
officers of the Company and public officials, and I have not independently
checked or verified the accuracy of the statements contained therein.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them by the Registration Statement.

Based on the foregoing and having due regard for such legal
consideration as I deem relevant, I am of the opinion that:

1. When (a) the Debt Securities have been duly established by the
applicable Indentures (including, without limitation, the adoption by the Board
of Directors of the Company of a resolution duly authorizing the issuance and
delivery of the Debt Securities) duly authenticated by the trustee and duly
executed and delivered on behalf of the Company against payment therefor in
accordance with the terms and provisions of the applicable Indenture and as
contemplated by the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), (b) when the Registration Statement and any required
post-
<PAGE> 2
AMRESCO, Inc.
Page 2

effective amendment thereto and any and all Prospectus Supplement(s) required
by applicable laws have all become effective under the Securities Act, (c)
assuming that the terms of the Debt Securities and the Indentures as executed
and delivered are as described in the Registration Statement, the Prospectus
and the related Prospectus Supplement(s) and (d) assuming that the Debt
Securities are then issued and sold as contemplated in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), the Debt
Securities will be constituted valid and legally binding obligations of the
Company, enforceable against the Company in accordance with the terms of the
Debt Securities.

2. When (a) the Securities Warrants have been duly executed and
delivered (including, without limitation, the adoption by the Board of
Directors of the Company of a resolution duly authorizing the issuance and
delivery of the Securities Warrants), and issued and sold in the form and in
the manner contemplated in the Registration Statement, the Prospectus and the
related Prospectus Supplement(s), (b) when the Registration Statement and any
required post-effective amendment thereto and any and all Prospectus
Supplement(s) required by applicable law have all become effective under the
Securities Act, (c) assuming that the terms of the Securities Warrants as
executed and delivered are as described in the Registration Statement, the
Prospectus and the related Prospectus Supplement(s), and (d) assuming that the
Securities Warrants are then issued and sold as contemplated in the
Registration Statement, the Prospectus and the related Prospectus
Supplement(s), the Securities Warrants will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms.

3. The Company has the authority pursuant to its Certificate of
Incorporation, as amended, to issue up to 5,000,000 shares of Preferred Stock.
When a series of Preferred Stock has been duly established in accordance with
the terms of the Certificate of Incorporation and applicable law, and upon
adoption by the Board of Directors of the Company of a resolution in form and
content as required by applicable law and upon issuance and delivery of and
payment for such shares in the manner contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s) and by such
resolution, such shares of such series of Preferred Stock (including any
Preferred Stock duly issued (i) upon the exercise of any Securities Warrants
exercisable for Preferred Stock or (ii) upon the exchange or conversion of Debt
Securities that are exchangeable or convertible into Preferred Stock) will be
validly issued, fully paid and nonassessable.

4. The Company has the authority pursuant to its Certificate of
Incorporation, as amended, to issue up to 50,000,000 shares of Common Stock.
Upon adoption by the Board of Directors of the Company of a resolution in form
and content as required by applicable law and upon issuance and delivery of and
payment for such shares in the manner contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s) and by such
resolution, such shares of Common Stock (including any Common Stock duly issued
(i) upon the exchange or conversion of any shares of Preferred Stock that are
exchangeable or convertible into Common Stock or (ii) upon the exercise of any
Securities Warrants exercisable for Common Stock or (iii) upon the exchange or
conversion of Debt Securities that
<PAGE> 3
AMRESCO, Inc.
Page 3

are exchangeable or convertible into Common Stock) will be validly issued,
fully paid and nonassessable.

The opinions set forth above are subject to the following
qualifications and exceptions:

(a) My opinions are subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar law of general application affecting creditors' rights, (ii)
provisions of applicable law pertaining to the voidability of
preferential or fraudulent transfers and conveyances and (iii) the
fact that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may
be brought. In addition, certain other provisions of the Securities
may be unenforceable in whole or in part under the laws (including
judicial decisions) of the State of Texas or the United States of
America; provided, however, that the inclusion of any such provisions
and any limitations imposed by such laws on the enforceability of the
Securities will not affect the validity or enforceability as a whole
of any of the Securities and will not prevent the holders thereof from
the ultimate realization of the practical rights and benefits afforded
by such Securities, except for the economic consequences of any
judicial, administrative or other procedural delay which may result
from the application of any such law.

(b) My opinions are subject to the effect of general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing, and other
similar doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at
law).

(c) In rendering the opinions set forth above, I have
assumed that, at the time of the authentication and delivery of a
series of Securities, the resolutions of the Board of Directors
referred to above will not have been modified or rescinded, there will
not have occurred any change in the law affecting the authorization,
execution, delivery, validity or enforceability of the Securities, the
Registration Statement will have been declared effective by the
Commission and will continue to be effective, none of the particular
terms of a series of Securities will violate any applicable law and
neither the issuance and sale thereof nor the compliance by the
Company with the terms thereof will result in a violation of any
agreement or instrument then binding upon the Company or any order of
any court or governmental body having jurisdiction over the Company.

(d) As of the date of this opinion, a judgment for money
in an action based on a Debt Security denominated in a foreign
currency or currency unit in a federal or State court in the United
States ordinarily would be enforced in the United States only in
United States dollars. The date used to determine the rate of
conversion into United States dollars of the Currency in which a
particular Debt Security is denominated will depend upon various
factors, including which court renders the judgment.
<PAGE> 4
AMRESCO, Inc.
Page 4

My opinions expressed above are limited to the laws of the State of
Texas, the Delaware General Corporation Law and the federal laws of the United
States of America.

I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement and to
reference me under the caption "Legal Matters" in the Prospectus constituting a
part of the Registration Statement.

Dated: June 28, 1996

Very truly yours,

/s/ L. KEITH BLACKWELL

L. Keith Blackwell
Vice President, General Counsel and
Secretary

<PAGE> 1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Pre-Effective Amendment
No. 1 to Registration Statement No. 333-6031 of AMRESCO, INC. on Form S-3 of
our report dated February 6, 1996, appearing in the Annual Report on Form 10-K
of AMRESCO, INC. for the year ended December 31, 1995 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of such
Registration Statement.

/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
June 28, 1996
Dallas, Texas

<PAGE> 1
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459

-----------------------------

FORM T-1

Statement of Eligibility under the Trust
Indenture Act of 1939 of a Corporation
Designated to Act as Trustee

Check if an Application to determine eligibility of a Trustee pursuant to
Section 305(b)(2) x
-----

-----------------------------

COMERICA BANK
(Exact name of trustee as specified in its charter)

MICHIGAN 38-0477375
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)

ONE DETROIT CENTER 48226
DETROIT, MICHIGAN (Zip Code)
(Address of principal executive offices)

-----------------------------

AMRESCO, INC.
(Exact name of Obligor as specified in its charter)

DELAWARE 59-1781257
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)

1845 WOODALL RODGERS FREEWAY, SUITE 1700 75201
DALLAS, TEXAS (Zip Code)
(Address of principal executive offices)

-----------------------------

SENIOR NOTES
(Title of indenture securities)

================================================================================
<PAGE> 2
GENERAL

ITEM 1. GENERAL INFORMATION

Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

State of Michigan Financial Institutions Bureau, Lansing,
Michigan;

Federal Deposit Insurance Corporation, Washington, D.C.;

Board of Governors of the Federal Reserve System, Washington,
D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the Obligor is an affiliate of the Trustee, describe each such
affiliation.

None.

ITEM 16. LIST OF EXHIBITS

List below all exhibits filed as a part of this statement of eligibility.
Exhibits identified in parenthesis below are incorporated herein by
reference.

EXHIBIT 1. A copy of the Articles of Incorporation of the Trustee
as now in effect. (Exhibit 1 to Form T-1 filed as Exhibit 26 to
Form S-3 filed by ANR Pipeline Company on September 23, 1993
Registration No. 33-50375)

EXHIBIT 2. A copy of the certificate of authority of the Trustee
to commence business, if not contained in the Articles of
Incorporation. (Exhibit 2 to Form T-1 filed as Exhibit 26 to Form
S-3 filed by ANR Pipeline Company on September 23, 1993
Registration No 33-50375)

EXHIBIT 3. Not applicable.

EXHIBIT 4. A copy of the existing By-Laws of the Trustee, or
instruments corresponding thereto.

EXHIBIT 5. Not applicable.

EXHIBIT 6. The consent of the Trustee, required by Section 321(b)
of the Act.
<PAGE> 3
EXHIBIT 7. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its supervising or
examining authority.

EXHIBIT 8. Not Applicable.

EXHIBIT 9. Not Applicable.

---------------------------------------

NOTE

In accordance with General Instruction B, since the Obligor is not in
default on any securities issued under indentures under which the applicant is
trustee, responses to Items 3 through 15 have not been provided.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Comerica Bank, a Michigan banking corporation, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Detroit and the State of Michigan
on the 13th day of June, 1996.

COMERICA BANK

By: /s/ MARILYN KARAM
---------------------------------
Marilyn A. Karam
Vice President
<PAGE> 4
EXHIBIT 4

AS AMENDED ON
MAY 28, 1996

AMENDED AND RESTATED

BYLAWS

OF COMERICA BANK

ARTICLE I

MEETINGS OF SHAREHOLDERS

A. ANNUAL MEETING OF SHAREHOLDERS.

1. DATE. The regular date of the annual meeting of
shareholders shall be the fourth Tuesday in May of each year. However, the
Board of Directors of the Bank, pursuant to notice to shareholders, may
establish an alternate date for such meeting.

2. PLACE. Annual meetings of shareholders shall be held at
the main office of the Bank or at such other place within or without the State
of Michigan as is established by the Board of Directors of the Bank.

3. NOTICE. The Secretary of the Board of Directors of the
Bank shall give notice of the time and place of the annual meeting of
shareholders by mailing a written notice, postage pre-paid, to each shareholder
of record at the last known address of the shareholder as it appears on the
shareholder list of the Bank. Notice shall be mailed by the Secretary at least
10 days prior to the regular date of the meeting, except, if the meeting is to
be held on a date other than the regular date, notice of the alternate date for
the annual meeting shall be given at least 30 days prior to the meeting. Any
shareholder may waive the requirement that notice of a meeting of shareholders
be sent to him.

4. PRESIDING OFFICER. The Chairman of the Board of Directors
or, in the absence of the Chairman, the President shall preside at the annual
meeting of shareholders. In the absence of the Chairman and the President, the
shareholders may elect a Chairman pro tem to preside at the meeting.

B. SPECIAL MEETINGS OF SHAREHOLDERS.

1. PURPOSE. A special meeting of the shareholders of the Bank
may be called for any purpose by the Board of Directors of the Bank or by the
holders of shares possessing at least 25% of the voting power of the
outstanding shares of stock of the Bank.

1
<PAGE> 5
2. DATE. A special meeting of shareholders of the Bank may be
held on any date established by the Board of Directors of the Bank or by the
holders of shares possessing at least 25% of the voting power of the
outstanding shares of stock of the Bank.

3. PLACE. Special meetings of shareholders shall be held at
the main office of the Bank or at such other place within or without the State
of Michigan as is established by the Board of Directors of the Bank.

4. NOTICE. The Secretary of the Board of Directors of the
Bank shall give notice of the time, place and purpose of each special meeting
of shareholders by mailing a written notice, postage pre-paid, to each
shareholder of record at the last known address of the shareholder as it
appears on the shareholder list of the Bank. Notice shall be mailed by the
Secretary at least 10 days prior to the special meeting. Any shareholder may
waive the requirement that notice of a meeting of shareholders be sent to him.

5. PRESIDING OFFICER. The Chairman of the Board of Directors
or the President shall preside at all special meetings of shareholders. In the
absence of the Chairman and the Vice Chairman, the shareholders may elect a
Chairman pro tem to preside at the meeting.

C. CONSENT OF SHAREHOLDERS IN LIEU OF ANNUAL OR SPECIAL MEETING.
Unless otherwise provided in the Articles of Incorporation or by law,
any action which may be taken at the annual or any special meeting of
shareholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those shareholders who did not
consent in writing.

D. APPROVAL OF MATTERS AT SHAREHOLDER MEETINGS.

1. QUORUM. A quorum shall be required for the transaction of
business at any annual or special meeting of shareholders of the Bank. A quorum
shall exist if the holders of shares of stock of the Bank representing a
majority of the voting power of the outstanding shares of stock of the Bank are
represented in person or by proxy at any annual or special meeting of
shareholders of the Bank.

2. MAJORITY VOTE. A vote by holders of shares of stock
possessing a majority of the voting power of shares represented in person or by
proxy at any annual or special meeting-of shareholders of the Bank at which a
quorum is present shall be required for the approval of any matter or proposal.

2
<PAGE> 6
E. ADJOURNMENTS OF MEETINGS. Any annual or special meeting of the
shareholders of the Bank which has been duly called may be adjourned pursuant
to a vote in favor of such adjournment by holders of shares of stock possessing
a majority of the voting power of shares represented at such meeting in person
or by proxy whether or not a quorum is present at the meeting at which the
adjournment vote is taken. No notice shall be required to continue any such
adjourned meeting other than an announcement at the meeting at which the
adjournment vote is taken. Any business may be transacted at the continuation
of an adjourned meeting which could have been transacted at the meeting
originally scheduled provided a quorum is present at the continuation of the
adjourned meeting.

F. ONE VOTE PER SHARE. Each shareholder of the Bank shall be
entitled to one vote for each share of stock of the Bank with respect to which
he is the shareholder of record. Each such shareholder may cast his vote(s) at
any duly constituted annual or special meeting of shareholders of the Bank at
which a quorum is present in person, or, subject to the requirements of these
Bylaws, by proxy in writing signed by the shareholder or his representative.

G. VOTING BY PROXY. No share of stock of the Bank may be voted by
proxy unless a written instrument designating an attorney-in-fact for the
shareholder, and executed by the shareholder or his legal representative, is
delivered to the office of the Secretary of the Board of Directors of the Bank
at least 24 hours before the commencement of the meeting at which the vote is
to be cast. The attorney-in-fact so designated may vote the shares with respect
to which he has received authorization notwithstanding the death or insanity of
the shareholder, or revocation of the authority of the attorney-in-fact,
subsequent to delivery of the instrument of designation to the Secretary unless
the Secretary shall have received written notice of the death or insanity of
the shareholder, or of revocation of the authority of the attorney-in-fact, at
least 24 hours before the commencement of the meeting at which the vote is to
be cast, or unless the shareholder or his legal representative is present at
such meeting and, after being recognized by the Chairman of the meeting,
announces at the meeting that the authority of the attorney-in-fact has been
revoked.

ARTICLE II

DIRECTORS OF THE BANK

A. MANAGEMENT BY BOARD OF DIRECTORS. The affairs of the Bank shall
be managed by a Board of Directors.

B. AUTHORITY OF THE BOARD OF DIRECTORS. The Board of Directors shall
have all of the powers conferred by law.

C. SIZE OF BOARD. The number of directors which shall comprise the
Board shall be determined at the annual meeting of shareholders prior to
election of individuals as directors for the ensuing year; provided, however,
that the Board shall at all times be comprised of not less than 10 nor more
than 25 individuals. In the absence of a motion made and carried at any annual
meeting

3
<PAGE> 7
of shareholders to increase or decrease the size of the Board, the Board shall
consist of the same number of directors determined by the most recent
shareholder vote on the matter.

D. ELECTION OF DIRECTORS. Individuals shall be elected to the Board
at the annual meeting of shareholders of the Bank; provided, however, that the
shareholders may elect up to two fewer individuals as directors than the number
of individuals established to comprise the full Board for any particular year,
and if two or fewer director positions are not filled pursuant to vote of
shareholders, the resulting unfilled directorships shall be considered as
vacancies and may be filled thereafter by the Board of Directors of the Bank.

E. TERM OF OFFICE. Each director shall be elected for a one-year
term or, if appointed by the Board, for a term ending on the date of the
expiration of the terms of the directors who were elected by the shareholders;
provided, however, that any individual elected or appointed to the Board shall
hold office for the duration of his term or until such later date as his
successor is elected and qualifies.

F. VACANCIES. The Board of Directors of the Bank may fill any
vacancy which occurs in the Board for the current year by reason of death,
resignation or otherwise.

G. REGULAR MEETINGS OF THE BOARD.

1. TIME AND PLACE. Regular meetings of the Board of Directors
of the Bank shall be held at least six times each calendar year at the times
and places within or without the State of Michigan as the Board may determine
from time to time by resolution.

2. NOTICE. No notice of any regular meeting of the Board of
Directors shall be required other than the recording of the resolution
specifying the time and place of the meeting in the minutes of the meeting at
which the resolution is adopted.

3. QUORUM. A quorum of directors shall be required for the
transaction of business at any regular or special meeting of the Board of
Directors of the Bank. A majority of the Board of Directors shall constitute a
quorum.

4. MAJORITY VOTE REQUIRED. Each director shall be entitled to
one vote. A vote by a majority of the directors present at any regular or
special meeting of the Board of Directors at which a quorum is present shall be
required for the approval of any matter or proposal at any such meeting.

5. PRESIDING OFFICER. The Board of Directors shall appoint a
Chairman who shall preside at all meetings of the Board of Directors. The
President shall preside at meetings of the Board of Directors in the Chairman's
absence.

6. MINUTES OF MEETING. The Board of Directors shall appoint a
Secretary, who need not be a member of the Board, to take minutes at any
regular meeting of the Board of Directors. If the Secretary is not present at
any such meeting, the Board shall elect a

4
<PAGE> 8
Secretary pro tem to take minutes at the meeting. The Secretary, or Secretary
pro tem, as the case may be, shall record the actions and proceedings at each
regular meeting of the Board of Directors as minutes of the meeting and shall
maintain such minutes in a minute book of proceedings of regular meetings of
the Board of Directors of the Bank. Minutes of each such meeting shall be
signed by the presiding officer and secretary of each meeting.

H. SPECIAL MEETINGS OF THE BOARD. Special meetings of the Board of
Directors of the Bank may be held at any time and at any place within or without
the State of Michigan upon the call of the Chairman of the Board of Directors or
upon the call of at least five directors. Notice of special meetings shall state
the purpose of the meeting, and shall be given to each director in person, by
facsimile transmission ("fax"), by telephone, by overnight delivery service, or
by U.S. first class mail addressed to his usual place of business or to his
residence. Personal notice or notice by fax or telephone shall be given not
later than the day before the meeting. Notice by overnight delivery service must
be sent not later than the second day before the meeting. Notice by U.S. first
class mail must be sent not later than the fifth day before the meeting.
Attendance of a director at a special meeting shall constitute a waiver of
notice of such meeting, except when the director attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. The provisions of these Bylaws relating to quorum, majority vote,
presiding officer and recording of minutes that are applicable to regular
meetings of the Board shall also be applicable to special meetings of the Board
of Directors of the Bank.

I. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, members of the
Board of Directors or any Committee designated by the Board may participate in a
meeting of the Board or Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.

ARTICLE III

COMMITTEES OF THE BOARD OF DIRECTORS

A. EXECUTIVE COMMITTEE. There shall be an Executive Committee of the
Board of Directors of the Bank comprised of the following individuals: (i) the
Chairman of the Board of Directors of the Bank; (ii) the President of the Bank;
and (iii) at least five other members of the Board of Directors of the Bank.
The Board of Directors of the Bank shall appoint individuals to such Executive
Committee pursuant to a resolution adopted by majority vote of the entire
Board.

If any member of the Executive Committee is unable to serve as a member
of the Committee, the Board of Directors of the Bank may appoint an alternate
member to the Committee to serve in place of such member during the period he
is unable to serve as a member of the Committee. If any member of the Executive
Committee is unable to serve, and the Board has not appointed an alternate

5
<PAGE> 9
member to serve in his place, the Chairman of the Board of Directors may
appoint any member of the Board of Directors who is not already a member of the
Executive Committee as his substitute.

1. TERM OF APPOINTMENT OF MEMBERS. The Chairman of the Board
of Directors and the President of the Bank shall be permanent members of the
Executive Committee. The term of any other member of the Executive Committee
shall be determined by the Board.

2. AUTHORITY AND RESPONSIBILITY OF THE EXECUTIVE COMMITTEE.
The Executive Committee shall have and shall be required to exercise, insofar
as is permitted by law, the authority, powers and duties of the Board of
Directors of the Bank between meetings of the Board of Directors.

3. MEETINGS OF THE EXECUTIVE COMMITTEE.

(a) Time and Place. The Executive Committee shall meet
at such times as the Board of Directors of the Bank may direct, and at
such other times as the Chairman of the Board of Directors or Executive
Committee may deem necessary. Meetings may be held at any place
designated by the Board, the Chairman or the Executive Committee.

(b) Quorum. A quorum shall be required for the
transaction of business at any meeting of the Executive Committee. A
majority of the members of the Executive Committee or their alternates
or substitutes shall constitute a quorum.

(c) Presiding Officer. The Board of Directors shall
appoint a Chairman of the Executive Committee who shall be a member of
the Board of Directors of the Bank. The Chairman of the Executive
Committee shall preside at meetings of the Executive Committee.

(d) Minutes of Meetings. The Executive Committee shall
appoint a Secretary to take minutes at meetings of the Executive
Committee. If the Secretary of the Executive Committee is absent from
any meeting, the Executive Committee shall appoint a Secretary pro tem
to serve as secretary at any meeting of the Executive Committee. The
individual appointed as Secretary or Secretary pro tem of the Executive
Committee need not be a member of the Committee. The Secretary or
Secretary pro tem shall record all proceedings at meetings of the
Executive Committee in a minute book. Such minutes shall be signed by
the presiding officer, and by the Secretary or Secretary pro tem of the
Executive Committee.

(e) Reports To The Board. The Executive Committee shall
make reports to the Board of Directors of the Bank at its regular
meetings.

(f) Compensation. Members of the Executive Committee
who are not officers of the Bank shall receive such compensation as
shall be determined by the Board of Directors of the Bank from time to
time.

6
<PAGE> 10
B. TRUST AND INVESTMENT COMMITTEE. There shall be a Trust and
Investment Committee of the Board of Directors of the Bank (the "Trust
Committee") comprised of the following individuals: (i) the Chairman of the
Board of Directors of the Bank; (ii) the President of the Bank; and (iii) such
other directors and/or officers of the Bank as the Board of Directors may
determine. The Board of Directors of the Bank shall appoint individuals to such
Trust Committee pursuant to a resolution adopted by majority vote of the entire
Board.

If any member of the Trust Committee is unable to serve as a member of
the Committee, the Board of Directors of the Bank may appoint an alternate
member to the Committee to serve in place of such member during the period he
is unable to serve as a member of the Committee. If any member of the Trust
Committee is unable to serve, and the Board has not appointed an alternate
member to serve in his place, the Chairman of the Board of Directors may
appoint any member of the Board of Directors who is not already a member of the
Trust Committee as his substitute.

1. TERM OF APPOINTMENT OF MEMBERS. The Chairman of the Board
of Directors and the President of the Bank shall be permanent members of the
Trust Committee. The term of any other member of the Trust Committee shall be
determined by the Board.

2. AUTHORITY OF THE TRUST COMMITTEE. The Trust Committee
shall have and shall be required to exercise such powers and duties as may be
conferred upon it from time to time by the Board of Directors of the Bank.

3. MEETINGS OF THE TRUST COMMITTEE.

(a) Time and Place. The Trust Committee shall meet at
such times as the Board of Directors of the Bank may direct, and at such
other times as the Chairman of the Board of Directors or Trust Committee
may determine. Meetings may be held at any place designated by the
Board, the Chairman or the Trust Committee.

(b) Quorum. A quorum shall be required for the
transaction of business at any meeting of the Trust Committee. A
majority of the members of the Trust Committee or their alternates or
substitutes shall constitute a quorum.

(c) Presiding Officer. The Board of Directors shall
appoint a Chairman of the Trust Committee who shall be a member of the
Board of Directors of the Bank. The Chairman of the Trust Committee
shall preside at meetings of the Trust Committee.

(d) Minutes of Meetings. The Trust Committee shall
appoint a Secretary to take minutes at meetings of the Trust Committee.
If the Secretary of the Trust Committee is absent from any meeting, the
Trust Committee shall appoint a Secretary pro tem to serve as secretary
at any meeting of the Trust Committee. The individual appointed as
Secretary or Secretary pro tem of the Trust Committee need not be a
member of the Committee. The Secretary or Secretary pro tem shall record
all proceedings at meetings of the Trust Committee in a minute book.
Such minutes shall be signed by the presiding officer, and by the
Secretary or Secretary pro tem of the Trust Committee.

7
<PAGE> 11
(e) Reports To The Board. The Trust Committee shall
make reports to the Board of Directors at its regular meetings.

(f) Compensation. Members of the Trust Committee who
are not officers of the Bank shall receive such compensation as shall be
determined by the Board of Directors of the Bank from time to time.

C. OTHER COMMITTEES. The Board of Directors may, from time to time,
pursuant to resolution adopted by majority vote of the entire Board, establish
such other committees as it deems appropriate. Any such committee shall be
comprised of such members, shall have such authority and shall conduct its
activities in such manner as is provided in the resolution which establishes
the committee, or, in the absence of specific guidelines in such resolution, in
substantial conformity with the provisions hereof relating to the Executive
Committee and the Trust Committee. In addition, the members of any such
committee shall receive such compensation as the Board determines from time to
time.

ARTICLE IV

OFFICERS OF THE BANK

A. APPOINTMENT. The Board of Directors of the Bank shall appoint
officers of the Bank from time to time.

B. TITLES. The titles of the officers of the Bank may be as follows:
(i) a Chairman of the Board of Directors; (ii) up to three Vice Chairmen of the
Board of Directors; (iii) a Chief Executive Officer; (iv) a President; (v) a
Chief Operating Officer; (vi) one or more Executive Vice Presidents; (vii) one
or more Senior Vice Presidents; (viii) one or more First Vice Presidents; (ix)
one or more Vice Presidents; (x) one or more Assistant Vice Presidents; (xi) a
Cashier; and (xii) such other titles as the Board of Directors of the Bank may
determine from time to time. Individuals appointed as Chairman and Vice
Chairmen of the Board of Directors, Chief Executive Officer and President must
be members of the Board of Directors of the Bank.

C. COMPENSATION. The compensation of any officer of the Bank whose
title is that of Executive Vice President or above must be approved by the
Board of Directors of the Bank.

D. AUTHORITY AND RESPONSIBILITY. Officers of the Bank shall have
such authority and responsibilities as are prescribed by law, set forth in
these Bylaws or delegated to them by the Board or the Chairman of the Board. In
addition, the officers hereinafter named shall have the specific authority and
responsibilities set forth below.

1. CHIEF EXECUTIVE OFFICER:

(a) He shall be responsible to the Board of Directors
for the general management and direction of the Bank;

8
<PAGE> 12
(b) He shall establish the authority and duties of all
other officers of the Bank, except to the extent such authority and
duties are prescribed by law, by the Board of Directors or set forth in
these Bylaws;

(c) He shall fix the compensation within the limits
approved by the Board of Directors for each officer classification,
except that of the Chairman and Vice Chairmen of the Board of Directors,
the President or any officer whose rank is Executive Vice President or
above;

(d) He shall hire, or approve the hiring, establish the
duties and fix the compensation of all non-officer employees of the
Bank; provided, however, that he may delegate these responsibilities to
any officer or committee of the Bank; and

(e) He may terminate any non-officer employee at his
discretion with or without notice.

2. CHIEF OPERATING OFFICER: He shall report to the Chief
Executive Officer and possess such executive authority and responsibilities as
the Chief Executive Officer or the Board of Directors may delegate to him. He
shall also possess the authorities and responsibilities of the Chief Executive
Officer if the Chief Executive Officer is absent or becomes disabled.

E. TERM OF OFFICE. Officers shall be appointed for an indefinite
term, and may be terminated at any time by the Board of Directors of the Bank.
The salary of any officer who is terminated by the Board shall cease as of the
date of his termination of office.

F. COMMITTEE MEMBERSHIP. The Chief Executive Officer and Chief
Operating Officer of the Bank shall be ex-officio members of all committees of
the Board of Directors of the Bank.

ARTICLE V

INDEMNIFICATION AND INSURANCE

A. THIRD PARTY SUITS. To the fullest extent permitted by applicable
law and regulation, the Bank shall indemnify any person who was or is a party
or is threatened to be made a party to a threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal, other than an action by or in the
right of the Bank, by reason of the fact that he or she is or was a director,
officer or employee of the Bank or is or was serving, at the request of the
Bank, as a director, officer, partner, trustee, employee, or agent of another
bank or national banking association, foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, judgments, penalties, fines,
and amounts paid in settlement actually and reasonably incurred by him or her
in connection with the action, suit, or proceeding if the person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of

9
<PAGE> 13
the Bank or its shareholders, and with respect to any criminal action or
proceeding, if the person had no reasonable cause to believe his or her conduct
was unlawful. Any person who is or was an agent of the Bank may be indemnified
to the same extent as provided above. In addition, in the event any such
action, suit or proceeding is threatened or instituted against a spouse to whom
a director or officer is legally married at the time such director or officer
is covered under the indemnification provided herein which action, suit or
proceeding arises solely out of his or her status as the spouse of a director
or officer, including, without limitation, an action, suit or proceeding that
seeks damages recoverable from marital community property of the director or
officer and his or her spouse, property owned jointly by them or property
purported to have been transferred from the director or officer to his or her
spouse, then the spouse of the director or officer shall be indemnified to the
same extent as provided above. The termination of any action, suit or
proceeding by judgment, order, settlement, or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner that he or she
reasonably believed to be in or not opposed to the best interests of the Bank
or its shareholders, and with respect to a criminal action or proceeding, raise
any inference that the individual had reasonable cause to believe that his or
her conduct was unlawful.

B. DIRECT AND DERIVATIVE SUITS. To the fullest extent permitted by
applicable law and regulation, the Bank shall indemnify any person who was or
is a party to or is threatened to be made a party to any threatened, pending,
or completed action or suit by or in the right of the Bank to procure a
judgment in its favor by reason of the fact that he or she is or was a
director, officer or employee of the Bank, or is or was serving, at the request
of the Bank, as a director, officer, partner, trustee, employee, or agent of
another bank or national banking association, foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, whether for profit or
not, against expenses, including actual and reasonable attorneys' fees and
amounts paid in settlement incurred by the person in connection with the action
or suit if the person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Bank or its
shareholders. However, indemnification shall not be made for a claim, issue or
matter in which the person has been found liable to the Bank unless and only to
the extent that the court in which the action or suit was brought has
determined upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnification for the expenses which the court considers proper.
Any person who is or was an agent of the Bank may be indemnified to the same
extent as provided above. In addition, in the event any such action or suit is
threatened or instituted against a spouse to whom a director or officer is
legally married at the time such director or officer is covered under the
indemnification provided herein which action or suit arises solely out of his
or her status as the spouse of a director or officer, including, without
limitation, an action or suit that seeks damages recoverable from marital
community property of the director or officer and his or her spouse, property
owned jointly by them or property purported to have been transferred from the
director or officer to his or her spouse, then the spouse of the director or
officer shall be indemnified to the same extent as provided above.

C. EFFECT OF SUCCESSFUL DEFENSE OF SUIT. To the extent that a
director, officer, spouse of a director or officer, employee, or agent of the
Bank has been successful on the merits or otherwise in defense of an action,
suit or proceeding described in paragraphs A and B of this Section, or in
defense of any claim, issue or matter in the action, suit, or proceeding, he or
she

10
<PAGE> 14
shall be indemnified against expenses, including actual and reasonable
attorneys' fees, incurred by such person in connection with the action, suit,
or proceeding and any action, suit, or proceeding brought to enforce the
mandatory indemnification provided in this paragraph.

D. REQUIREMENT THAT STANDARD OF CONDUCT BE MET. Any indemnification
under paragraphs A or B, unless ordered by a court, shall be made by the Bank
only as authorized in the specific case upon a determination that
indemnification of the director, officer, spouse of the director or officer,
employee, or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the respective paragraph. Such
determination shall be made in any of the following ways: (1) by a majority
vote of a quorum of the Board consisting of directors who were not parties to
the action, suit or proceeding; (2) if the quorum described in subdivision (1)
is not obtainable, then by a majority vote of a committee of directors who are
not parties to the action, which committee shall consist of not less than 2
disinterested directors; (3) by independent legal counsel in a written opinion;
or (4) by the shareholders.

E. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under paragraphs A or B for a portion of expenses, including
attorneys' fees, judgments, penalties, fines, and amounts paid in settlement,
but not for the total amount of the expenses, the Bank may indemnify the person
for the portion of the expenses, judgments, penalties, fines, or amounts paid
in settlement for which the person is entitled to be indemnified.

F. ADVANCEMENT OF EXPENSES CONDITIONED ON RECEIPT OF UNDERTAKING.
Expenses incurred in defending a civil or criminal action, suit, or proceeding
described in paragraph A or B may be paid by the Bank in advance of the final
disposition of the action, suit, or proceeding upon receipt of an undertaking
by or on behalf of the director, officer, spouse, employee, or agent to repay
the expenses if it is ultimately determined that the person is not entitled to
be indemnified by the Bank. The undertaking shall be by unlimited general
obligation of the person on whose behalf advances are made but need not be
secured.

G. NON-EXCLUSIVITY OF BYLAW INDEMNIFICATION. The indemnification or
advancement of expenses provided by or granted under paragraphs A through F of
this Article shall not be deemed exclusive of other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
Bank's articles of incorporation, these Bylaws, or a contractual agreement with
the Bank. However, the total amount of expenses advanced or indemnified from
all sources combined shall not exceed the amount of actual expenses incurred by
the person seeking indemnification or advancement of expenses. The
indemnification provided for in paragraphs A through F above shall continue as
to a person who ceases to be a director, officer, employee, or agent, and, with
respect to any spouse of a director or officer, shall continue following the
time the director or officer ceases to be a director or officer even if the
marriage of the individuals terminates prior to the end of the period of
coverage, and shall inure to the benefit of the heirs, executors, and
administrators of the person.

H. INSURANCE AND FUNDING OF INDEMNIFICATION COMMITMENT. The Bank may
purchase and maintain insurance to fund its indemnification obligations and to
otherwise protect its directors, officers, spouses of directors and officers,
and employees, including

11
<PAGE> 15
insurance issued by an affiliated insurer and insurance for which premiums may
be adjusted retroactively, in whole or in part, based upon claims experience,
or similar arrangements. The Bank may also create a trust fund or other form of
funded arrangement on behalf of any person who is or was a director, officer,
spouse of a director or officer, employee, or agent of the Bank, or is or was
serving, at the request of the Bank, as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise, whether for profit or not, against
any liability asserted against him or her and incurred by him or her in any
capacity or arising out of his or her status in that capacity, whether or not
the Bank has the power to indemnify him or her against the liability under
paragraphs A through G above.

I. MEANING OF TERM "BANK." For purposes of this Article, the term
"Bank" includes all constituent banks and national banking associations
absorbed in a consolidation or merger and the resulting or surviving bank, so
that a person who is or was a director, officer, spouse of a director or
officer, employee or agent of the constituent bank or national banking
association or is or was serving at the request of the constituent bank or
national banking association as a director, officer, partner, trustee, employee
or agent of another bank, national banking association, foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise, whether
for profit or not, shall stand in the same position with respect to the
resulting or surviving bank as he or she would if he or she had served the
resulting or surviving bank in the same capacity.

J. MEANING OF OTHER TERMS. For purposes of this Article, the term
"other enterprise" shall include employee benefit plans; the term "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and the term "serving at the request of the Bank" shall include
any service as a director, officer, employee, or agent of the Bank which
imposes duties on, or involves services by, the director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be considered to have acted in a manner not
opposed to the best interests of the Bank or its shareholders as referred to in
paragraphs A or B above.

ARTICLE VI

SHARES OF STOCK

A. CERTIFICATES. Each shareholder of the Bank shall be entitled to
receive a certificate evidencing his ownership of shares of stock of the Bank.
Such certificate shall be issued in such form as may be prescribed from time to
time by the Board of Directors, and in accordance with all legal requirements.

B. TRANSFERABILITY OF SHARES. Shares of stock of the Bank shall be
transferable upon the surrender by the owner or his legal representative of the
certificate evidencing the shares, properly endorsed. Transfers of shares of
the Bank shall not be suspended.

C. RECORD DATE. The Board of Directors of the Bank may fix a record
date for the determination of the shareholders entitled to receive notice of
any meeting of shareholders and to vote

12
<PAGE> 16
thereat, to receive payment of any dividend or allotment of rights, or to
exercise rights in respect of any change, conversion, or exchange of shares of
stock; provided, however, that such record date shall not be more than 40 days
prior to (i) the original date fixed for any such meeting, (ii) the date fixed
for the payment of such dividend or allotment of rights, or (iii) the date when
any such change or conversion or exchange of capital stock shall go into
effect.

D. LOST CERTIFICATES. If a certificate for shares of stock of the
Bank is lost or destroyed, the shareholder may obtain a new certificate as
provided by law, or the Cashier, in his discretion, may direct the issuance of
a new certificate in lieu of the certificate alleged to have been lost or
destroyed upon receipt from the person requesting a new certificate of an
affidavit setting forth the facts and circumstances of such loss or
destruction, and a bond in such sum and with surety or sureties as the Cashier
may deem sufficient to indemnify the Bank against any claim that may be made
against the Bank by reason of the issuance of a new certificate. The
requirement of the posting of an indemnity bond may be waived by the Board of
Directors or by the Executive Committee of the Board of Directors of the Bank.

ARTICLE VII

EXECUTION OF INSTRUMENTS
ON BEHALF OF BANK

A. BY INDIVIDUALS WHO ARE SPECIFICALLY DESIGNATED. Except as may be
otherwise provided by law, the Board of Directors or the Executive Committee of
the Board of Directors of the Bank may designate by name or office the person
or persons who shall have authority to execute in the name of the Bank any
instrument or class of instruments.

B. IN THE ABSENCE OF SPECIFIC DESIGNATION. In the absence of
specific designation by the Board or Executive Committee of individuals who may
sign any instrument or class of instruments, instruments may be executed in the
name of the Bank by the Chairman of the Board of Directors, the Chief Executive
Officer, the President, the Chief Operating Officer, any Executive Vice
President, any Senior Vice President, the Cashier, any First Vice President,
any Vice President, or any Assistant Cashier.

ARTICLE VIII

AMENDMENTS TO BYLAWS

The Board of Directors may amend these Bylaws in any respect to the
extent permitted by law at any meeting held after notice that an amendment to
the Bylaws will be proposed.

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<PAGE> 17
ARTICLE IX

MISCELLANEOUS PROVISIONS

A. SEAL. The seal of the Bank shall be in such form as the Board of
Directors may adopt, the counterpart dies of which shall be in the charge of
the Cashier of the Bank and such other officers as the Chairman of the Board of
Directors may direct in writing.

B. CONFIDENTIALITY OF TRANSACTIONS. Transactions between Bank
personnel and depositors and customers of the Bank shall be confidential.

C. RECEIPT OF DEPOSITS. The Bank shall receive deposits on such
terms as are provided by law, or as may be specified from time to time by the
Board of Directors of the Bank.

D. HOURS OF BUSINESS. The Board of Directors of the Bank shall be
authorized to determine the hours during which the Bank will be open to the
public to transact business.

E. PURPOSE AND CONSTRUCTION. The purpose of these Bylaws is to
facilitate the administration and regulate the affairs of the Bank. Further,
the provisions of these Bylaws are intended to be in accordance with applicable
laws, and shall be so interpreted. If it is determined that any provision of
these Bylaws is contrary to any law, such provision shall not be given effect
and any matter affected shall be resolved in a manner which is consistent with
the applicable law(s). In addition, nothing in these Bylaws is intended to
limit any rights, powers or authorities conferred on the Bank by statutes or
other laws, and any statute or other legal authority may be relied upon to take
any action whether or not the subject matter is addressed herein.

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<PAGE> 18
EXHIBIT 6

CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939 in connection with the proposed issue by AMRESCO, Inc. of its Senior
Notes Series 1996-A Due 1999, Comerica Bank hereby consents that reports of
examinations of federal, state, territorial or district authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.

COMERICA BANK

By: /s/ MARILYN KARAM
----------------------------------
Marilyn A. Karam
Vice President

Dated: June 13, 1996
<PAGE> 19
EXHIBIT 7

<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Comerica Bank Call Date: 03/31/96 ST-BK: 26-0047 FFIEC 031
Address: 411 W. Lafayette, Mail Code 3419 Page RC-1
City, State Zip: Detroit, MI 48226-3419
FDIC Certificate No: 00983
</TABLE>

Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1996

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.

Schedule RC - Balance Sheet

<TABLE>
<CAPTION>
C400 <-
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 962,691 1.a
b. Interest bearing balances(2).......................................................... 0071 741 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 4,986,131 2.b
3. Federal funds sold and securiites purchased under agreements to resell in domestic offices
of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds sold.................................................................... 0276 1,007,410 3.a
b. Securities purchased under agreements to resell....................................... 0277 50,544 3.b
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 19,791,299 4.a
b. LESS: Allowance for loan and lease losses......................RCFD 3123 265,391 4.b
c. LESS: Allocated transfer risk reserve..........................RCFD 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b
and 4.c).............................................................................. 2125 19,525,908 4.d
5. Trading assets (from Schedule RC-D)........................................................ 3545 6,678 5.
6. Premises and fixed assets (including capitalized leases)................................... 2145 236,548 6.
7. Other real estate owned (from Schedule RC-M)............................................... 2150 20,076 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding............................... 2155 66,414 9.
10. Intangible assets (from Schedule RC-M)..................................................... 2143 59,338 10.
11. Other assets (from Schedule RC-F).......................................................... 2160 701,236 11.
12. Total assets (sum of items 1 through 11)................................................... 2170 27,533,715 12.
---- ----------
</TABLE>

- ---------------
(1) Includes cash items in process of collection and unposted debits.

(2) Includes time certificates of deposit not held for trading.

11
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Comerica Bank Call Date: 03/31/96 ST-BK: 26-0047 FFIEC 031
Address: 411 W. Lafayette, Mail Code 3419 Page RC-2
City, State Zip: Detroit, MI 48226-3419
FDIC Certificate No: 00983
</TABLE>

Schedule RC -- Continued

<TABLE>
<CAPTION>
Dollar Amounts in Thousands Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
Deposits:
13. a. In domestic offices (sum of totals of columns A and C from Schedule RC-E.... RCON 2200 15,159,839 13.a
(1) Noninterest-bearing(1).............................RCON 6631 3,584,417 13.a.(1)
(2) Interest-bearing...................................RCON 6636 11,575,422 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule
RC-E, part II).............................................................. RCFN 2200 1,074,973 13.b
(1) Noninterest-bearing................................RCFN 6631 7,865 13.b(1)
(2) Interest-bearing...................................RCFN 6636 1,067,108 13.b(2)
14. Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and if its Edge and Agreement subsidiaries, and in
IBFs:
a. Federal funds purchased..................................................... RCFD 0278 2,777,816 14.a
b. Securities sold under agreements to repurchase.............................. RCFD 0279 7,226 14.b
15. a. Demand notes issued to the U.S. Treasury.................................... RCON 2840 753,480 15.a
b. Trading liabilities (from Schedule RC-D).................................... RCFD 3548 6,862 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less............................... RCFD 2332 3,816,941 16.a
b. With a remaining maturity of more than one year............................. RCFD 2333 1,152,869 16.b
17. Mortgage indebtedness and obligations under capitalized leases................. RCFD 2910 0 17.
18. Bank's liability on acceptances executed and outstanding....................... RCFD 2920 66,414 18.
19. Subordinated notes and debentures.............................................. RCFD 3200 543,885 19.
20. Other liabilities (from Schedule RC-G)......................................... RCFD 2930 294,446 20.
21. Total liabilities (sum of items 13 through 20)................................. RCFD 2948 25,654,751 21.
22. Limited-life preferred stock and related surplus............................... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. RCFD 3838 0 23.
24. Common stock................................................................... RCFD 3230 58,527 24.
25. Surplus (exclude all surplus related to preferred stock)....................... RCFD 3839 638,078 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 1,206,927 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 (24,568) 26.b
27. Cumulative foreign currency translation adjustments............................ RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27).............................. RCFD 3210 1,878,964 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of
items 21, 22 and 28)........................................................... RCFD 3300 27,533,715 29.

MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank Number
by independent external auditors as of any date during 1995.................... RCFD 6724 2 M.1

1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>

- ---------------

(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.