UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0- 8630
AMRESCO, INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-1781257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1845 Woodall Rodgers Fwy, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 953-7700
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
26,868,321 shares of common stock, $.05 par value per share, as of May 1, 1996.
Location of Exhibit Index: Page 13
Page 1
<PAGE>
AMRESCO, INC.
INDEX
Page No.
COVER PAGE 1
INDEX 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets - March 3
31, 1996 and December 31, 1995
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1996 and 1995 4
Consolidated Condensed Statement of
Shareholders' Equity - Three Months Ended 5
March 31, 1996
Consolidated Condensed Statements of Cash
Flows - Three Months Ended March 31, 1996
and 1995 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 12
EXHIBIT INDEX 13
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31, December 31,
1996 1995
___________ ___________
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 18,338 $ 16,139
Temporary investments (Note 2) 33,046 21,942
Accounts receivable, net of reserves of 15,003 20,158
$1,681 and $1,737, respectively
Mortgage loans held for sale (Note 3) 235,594 160,843
Investments:
Loans 149,603 138,180
Partnerships and joint ventures 33,698 34,694
Asset-backed and other securities 65,946 46,187
Real estate 5,884 5,686
Deferred income taxes 12,608 12,184
Premises and equipment, net of accumulated
depreciation of $2,919 and $2,335,
respectively 6,625 5,904
Intangible assets, net of accumulated
amortization of $5,625 and $4,136,
respectively 53,581 51,878
Other assets 14,135 7,918
_________ ________
TOTAL ASSETS $644,061 $521,713
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 10,865 $ 14,124
Accrued employee compensation and benefits 5,442 10,487
Notes payable (Notes 2 and 3) 129,235 127,796
Warehouse loans payable 221,489 153,158
Senior subordinated notes 57,500
Convertible debt 45,000 45,000
Income taxes payable 3,294 2,897
Other liabilities 5,046 7,457
_________ _________
Total liabilities 477,871 360,919
_________ _________
SHAREHOLDERS' EQUITY:
Common stock, $0.05 par value, authorized
50,000,000 shares; 26,805,235 and
26,689,331 shares issued in 1996 and
1995, respectively 1,340 1,334
Capital in excess of par 106,667 106,054
Reductions for employee stock (1,760) (2,238)
Treasury stock,$0.05 par value,24,339 shares (160) (160)
Net unrealized gains (losses) (382) 114
Retained earnings 60,485 55,690
_________ ________
Total shareholders' equity 166,190 160,794
_________ ________
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $644,061 $521,713
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
Page 3
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended
March 31,
1996 1995
_________ _________
<S> <C> <C>
REVENUES:
Asset management and
resolution fees $ 9,223 $ 10,170
Interest and other
investment income 18,172 6,181
Mortgage banking fees 6,605 2,775
Gain on sale of loans and
investments, net 2,008 23
Other revenues 888 1,028
_________ _________
Total revenues 36,896 20,177
_________ _________
EXPENSES:
Personnel 16,500 10,670
General and administrative 6,618 3,199
Depreciation 508 266
Interest 5,167 415
Profit participations 8 291
_________ _________
Total expenses 28,801 14,841
Income before taxes 8,095 5,336
Income tax expense 3,300 2,181
_________ _________
NET INCOME $ 4,795 $ 3,155
========= =========
Weighted average number of
common shares outstanding and
common share equivalents $27,369,390 $24,182,827
Primary earnings per share $0.18 $0.13
Fully-diluted earnings per share $0.17 $0.13
</TABLE>
See notes to consolidated condensed financial statements.
Page 4
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 1996
(Dollars in thousands, except share data)
<CAPTION>
Common Stock
$0.05 Par Value Reductions Net
------------------ Capital for Unrealized
Number in Excess Employee Treasury Gains Retained Shareholders'
Shares Amount of Par Stock Stock (Losses) Earnings Equity
---------- ------ -------- --------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1,1996 26,689,331 $1,334 $106,054 $(2,238) $(160) $114 $55,690 $160,794
Exercise of stock
options 125,184 6 529 535
Cancellation of
common stock
restricted for
unearned stock
compensation (9,280) (79) 79
Amortization of
unearned stock
compensation 399 399
Tax benefits from
employee stock
compensation 163 163
Foreign currency
translation
adjustments 274 274
Unrealized loss on
securities
available for
sale, net (770) (770)
Net income 4,795 4,795
---------- ------ -------- -------- ------ ------ ------- --------
MARCH 31, 1996 26,805,235 $1,340 $106,667 $(1,760) $(160) $(382) $60,485 $166,190
========== ====== ======== ======== ====== ====== ======= ========
</TABLE>
See notes to consolidated condensed financial statements.
Page 5
<PAGE>
<TABLE>
AMRESCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended March 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 4,795 $ 3,155
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 1,997 842
Deferred tax provision (benefit) 95 749
Employee stock compensation 399
Increase (decrease) in cash for changes
in:
Accounts receivable 5,155 10,166
Interest accrued on asset-backed and
other securities (1,375)
Purchase of mortgage loans held for sale,net (74,912)
Proceeds from warehouse loans payable,net 68,331
Other assets (6,681) (226)
Accounts payable (3,259) (992)
Income taxes payable 397 789
Other liabilities (7,182) (15,015)
--------- ----------
Net cash used in operating activities (12,240) (532)
--------- ----------
INVESTING ACTIVITIES:
Purchase of temporary investments, net (11,104)
Purchase of investments (29,877) (21,833)
Collections on investments 19,252 11,095
Purchase of investments available for sale (19,512)
Purchase of premises and equipment (1,229) (525)
--------- ----------
Net cash used in investing activities (42,470) (11,263)
--------- ----------
FINANCING ACTIVITIES:
Proceeds from notes payable and other debt 171,762 28,575
Repayment of notes payable and other debt (115,551) (20,659)
Stock options exercised 535 401
Tax benefit of employee stock compensation 163 402
Payment of dividends (1,180)
Acquisition of treasury stock (71)
--------- ---------
Net cash provided by financing activities 56,909 7,468
Net increase (decrease) in cash and cash
equivalents 2,199 (4,327)
Cash and cash equivalents, beginning of
period 16,139 20,446
---------- ---------
Cash and cash equivalents, end of period $ 18,338 $ 16,119
========== ========
SUPPLEMENTAL DISCLOSURE:
Interest paid $4,276 $641
Income taxes paid 3,327 442
Common stock issued (canceled) for unearned (79) 697
stock compensation
</TABLE>
See notes to consolidated condensed financial statements.
Page 6
<PAGE>
AMRESCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated condensed financial
statements of AMRESCO, INC. and subsidiaries (the "Company") have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three
month period ended March 31, 1996, are not necessarily indicative of
the results that may be expected for the entire fiscal year or any
other interim period. For further information, refer to the
consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995. Certain reclassifications of prior period amounts
have been made to conform to the current period presentation.
Gains on the Securitization and Sale of Mortgage Loans - The
Company purchases residential mortgage loans for the purpose of
securitization and sale. The Company securitizes these loans
primarily in the form of a multi-class security which derives its
monthly principal paydowns from a pool of underlying mortgage loans.
The senior classes of the securitizations are sold, with the residual
and interest-only mortgage securities retained by the Company. The
gains on securitization and sale of mortgage loans represent the net
proceeds and the estimated value of the securities retained over the
basis of the loans sold and the costs of securitization. The fair
value of the securities retained is determined based on market
assumptions of discount rates, prepayment rates, defaults and other
costs, including normal servicing fees.
Interest income on mortgage loans held for sale and retained
interests in securitizations is recorded as earned. Interest income
represents the interest earned on the loans during the warehousing
period (the period prior to their securitization) and the recognition
of interest income on the securities retained after securitization,
which generally is the recognition of the increased time value of the
discounted estimated cash flows.
2. Banking Arrangements
Effective March 5, 1996, the Company's revolving investment loan
agreement with NationsBank of Texas, N.A. (the "Bank") increased from
$35,000,000 to $80,000,000. The loan is secured by the Company's
temporary investments, and matures and is payable in full on April
30, 1998.
3. Subsequent Events
Effective April 25, 1996, the Company entered into an amended
and restated revolving loan agreement with a syndicate of lenders,
led by the Bank, which matures on May 31, 1998, and replaces its
September 29, 1995, revolving loan agreement. The syndicates'
current commitment under the agreement is limited to a total of
$125,000,000. The additional $75,000,000 under the revolving loan
agreement 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,
primarily qualifying investments, under this agreement. There can be
no assurance that such events will occur. The borrowing terms,
including interest, may be selected by the Company and tied to either
the Bank's variable rate (8-1/4% at April 25, 1996), or, for advances
on a term basis up to approximately 180 days, an adjusted LIBOR rate
(6.94% at April 25, 1996 for a term of 90 days). Interest is payable
quarterly and at the end of each advance period. 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 held by the Company.
On April 26, 1996, a wholly-owned subsidiary of the Company
securitized and sold approximately $257,442,000 of residential
mortgage loans held for sale.
Page 7
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
AMRESCO, INC. (the "Company") is engaged primarily in the
business of asset acquisition and resolution, mortgage banking and
institutional real estate investment advising. The Company's
business may be affected by many factors, including real estate and
other asset values, the availability and price of assets 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.
Since the first quarter of 1995, the Company has extended its
business lines to offer a full range of mortgage banking services,
including commercial loan origination and servicing as well as the
development of capital markets activities, increased substantially
the amount it invests in asset portfolios, and developed its
institutional real estate investment advisory business. 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 quarters ended
March 31, 1996 and 1995. 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 condensed financial statements and
notes thereto (dollars in thousands, except per share data).
For the Quarter Ended
March 31,
___________________
1996 1995
_________ _________
Revenues:
Asset acquisition and resolution $20,954 $17,230
Mortgage banking 15,151 2,930
Institutional investment advisory 967
Corporate and other (176) 17
_________ ________
Total revenues 36,896 20,177
Operating expenses:
Asset acquisition and resolution 11,155 8,098
Mortgage banking 10,434 3,075
Institutional investment advisory 816
Corporate and other 6,396 3,668
_________ _________
Total operating expenses 28,801 14,841
Operating profit:
Asset acquisition and resolution 9,799 9,132
Mortgage banking 4,717 (145)
Institutional investment advisory 151
Corporate and other (6,572) (3,651)
Total operating profit 8,095 5,336
Income tax expense 3,300 2,181
________ ________
Net income $4,795 $3,155
======== ========
Weighted average shares outstanding and 27,369,390 24,182,827
equivalents
Primary earnings per share $0.18 $0.13
Fully-diluted earnings per share $0.17 $0.13
Page 8
<PAGE>
Results of Operations
Revenues from the Company's asset acquisition and resolution
activities include fees charged for the management of and interest
and other investment income on portfolios of performing,
non-performing or underperforming commercial, industrial,
agricultural and real estate loans and for the successful resolution
of the assets within such portfolios. The asset base of each
portfolio declines over the life of the portfolio, thus reducing
asset management fees as assets within the portfolio are resolved.
These fees, therefore, 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.
Revenues from the Company's mortgage banking activities include
commercial mortgage banking and residential capital markets revenues.
Commercial mortgage banking revenues 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. Revenues from the Company's residential capital markets
activities consist of interest earned on residential mortgage loans
purchased, gains on the securitization of such loans, and accrued
earnings on securities purchased and retained. 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 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.
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. Mortgage banking
posted a significant 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 a 2.3 million
share offering of common stock sold late in 1995. Fully-diluted
earnings per share from continuing operations for 1995 was $0.17
compared to $0.13 for the first quarter of 1995, a 31% increase.
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 $.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 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 $.8 million increase in other general and administrative
expenses, which increases were partially offset by a $.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.
Mortgage Banking Revenues for the quarter ended March 31,
1996, consisted of $6.6 million in interest and other investment
income, $6.5 million in origination, underwriting and servicing
revenues and $2.1 million in gain on sale and securitization of
residential mortgage loans. Interest and other investment income
increased $6.4 million primarily because 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. Mortgage
banking revenues increased $3.7 million primarily due to the
inclusion of the operations of the commercial loan servicing business
acquired in October 1995, and increases in the loan originations and
servicing volumes of the Company's previously existing mortgage
banking operations. Additionally, the Company realized a $2.1
million gain on the securitization of $275 million in residential
mortgage loans during the first quarter of 1996.
Page 9
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Expenses for the quarter ended March 31, 1996 were comprised of
$6.1 million in personnel expense, $2.3 million in other general and
administrative expense and $2.0 million in interest expense. The
$7.4 million increase in expenses is primarily due to a $3.9 million
increase in personnel expenses, a $1.5 million increase in other
general and administrative expense and a $2.0 million increase in
interest expense. Expenses increased primarily due to the inclusion
of operations of the commercial loan servicing business acquired
during October 1995 and the residential capital markets operations
initiated during August 1995.
Institutional Investment Advisory The Company acquired
substantially all of the assets of Acacia Realty Advisors, Inc. 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 $.8 million were incurred, including $.5 million in
personnel expense and $.3 million in other general and administrative
expenses.
Corporate and Other Net revenues 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 $.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.
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 1993 merger with BEI
Holdings, Inc. 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.
Liquidity and Capital Resources
Cash and cash equivalents totaled $18.3 million at March 31,
1996. Cash flows from operating activities plus principal cash
collections on investments totaled $7.0 million for the first quarter
of 1996, compared to $10.6 million for the same period in 1995. The
increase in cash flows from these activities resulted primarily from
increased investments.
For the Quarter Ended
March 31,
_______________
1996 1995
_____ _____
(dollars in millions)
Cash provided by operations and collections $ 7.0 $10.6
on investments
Cash provided by new capital and borrowings,net 56.2 7.9
Cash used for purchase of investments (49.4) (21.8)
Cash used for purchase of mortgage loans, net (74.9) -
Ratio of core debt to capital (excluding
warehouse debt and investment line) 1.2:1 0.2:1
Ratio of total debt to capital (excluding
investment line) 2.5:1 0.2:1
Interest coverage ratio * 3.0x 15.9x
___________
* Interest coverage ratio means the ratio of earnings before
interest, taxes, depreciation and amortization to cash interest
expense.
The following table shows the components of the Company's
capital structure at March 31, 1996 (dollars in millions):
March 31,1996 % of Total
_____________ ___________
Shareholders' equity $166.2 28%
Mortgage warehouse loans 221.5 38%
Notes payable (excluding investment line) 96.2 16%
Senior convertible debentures 45.0 8%
Senior subordinated debentures 57.5 10%
Page 10
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Total assets increased $122.3 million during the first quarter
of 1996 primarily due to a $74.8 million increase in 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 in 10% senior
subordinated debt.
On February 26, 1996, and as amended April 29, 1996, AMRESCO
Residential Mortgage Corporation, a wholly-owned subsidiary of the
Company, entered into a $250.0 million warehouse line of credit to
finance the acquisition and warehousing of residential mortgage
loans.
On April 25, 1996, the Company replaced its $150.0 million
revolving loan agreement, under which the lenders had a $105.0
million commitment at March 31, 1996, with a $200.0 million revolving
loan agreement. On May 7, 1996, the lenders' commitment under the
$200.0 million revolving loan agreement was limited to $125.0
million, with 37.5% available to fund general corporate expenses and
acquisitions and 62.5% available to fund certain investing
activities. Additionally, a portion of the revolving loan agreement
provides evidence to support a commercial paper issuance by the
Company.
During the next twelve months, the Company intends to pursue
(i) additional investment opportunities by acquiring assets 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 by cash
flows and borrowings under the Company's revolving loan agreement.
As a result, interest expense for the remainder of 1996 is expected
to be higher than interest expense for the corresponding period in
1995.
The Company believes its funds on hand of $18.3 million at
March 31, 1996, its cash flow from operations, its unused borrowing
capacity under its credit lines ($64.4 million at March 31, 1996,
excluding availability under a mortgage warehouse line which has no
stated limit), 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 to some extent by
the availability of capital.
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.
Page 11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits as required by Item 601 of Regulation S-K are set
forth on the Exhibit Index at page 13.
(b) None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
AMRESCO, INC.
Registrant
Date: April 14, 1996
By:/s/ Barry L. Edwards
Barry L. Edwards
Executive Vice President
and Chief Financial Officer
Page 12
<PAGE>
EXHIBIT INDEX
10. (a) First Amended and Restated Revolving Loan
Agreement, dated as of April 25, 1996, among
AMRESCO, INC. and Other Entities Designated
Within as Borrowers and NationsBank of Texas,
N.A. as Agent and NationsBank of Texas, N.A. and
Other Entities Designated Within as Lenders.
10. (b) Stock Appreciation Rights Agreement, dated
February 20, 1996, between AMRESCO, INC. and each
of Mrs. Amy J. Jorgensen and Messers James P.
Cotton, Jr., Gerald E. Eickhoff, John J.
McDonough and Bruce W. Schnitzer.
11. Computation of Per Share Earnings
27. Financial Data Schedule
Page 13
FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
THIS FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT is
entered into as of the 25th day of April, 1996, by and among
AMRESCO, INC., a Delaware corporation, and the entities
designated as "Borrowers" on Schedule I attached hereto (as
modified from time to time), and NationsBank of Texas, N.A., a
national banking association, for itself and as agent, and the
lending institutions designated as "Lenders" on Schedule I hereto
(as modified from time to time).
PRELIMINARY STATEMENT
I. Agents, Lenders and the Borrowers therein named (the
"Original Borrowers") executed that certain Revolving Loan
Agreement (as modified and amended, the "Original Loan
Agreement") dated as of September 29, 1995, wherein the Lenders
agreed to make two revolving credit facilities available to the
Original Borrowers in an aggregate amount not to exceed One
Hundred Seventy-Five Million and No/100 Dollars
($175,000,000.00).
II. The Original Loan Agreement was modified by (a) that certain
First Amendment to Credit Agreement dated as of November 21,
1995, by and between the Original Borrowers and Agent, (b) that
certain Second Amendment to Credit Agreement dated as of
November 21, 1995, by and among the Original Borrowers, certain
additional Borrowers therein named (the "Additional Borrowers"),
Agent and Lenders, (c) that certain Supplement to Schedule I
dated as of March 1, 1996, by and between Agent, the Original
Borrowers, the Additional Borrowers and certain additional
Borrowers therein named, and (d) all documents, instruments and
agreements executed in connection with each of the agreements
mentioned in clauses (a), (b), and (c) above.
III. Borrowers have requested that Agent and Lenders modify,
amend and restate the Original Loan Agreement in order to make
available a revolving credit facility in an aggregate amount not
to exceed Two Hundred Million and No/100 Dollars
($200,000,000.00). Upon and subject to the terms of this
Agreement and each of the other Loan Documents, Agent and Lenders
are willing to modify, amend and restate the Original Loan
Agreement. Accordingly, in consideration of the mutual covenants
contained herein, Borrowers, Agent and Lenders agree as follows:
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions. The following terms, as used
herein, have the following meanings:
Account Debtor means, collectively, the "borrower" and each
other obligor, guarantor or other liable party under any Assigned
Loan.
Acquired Loans means the loans and mortgages included in any
Asset Portfolio acquired by any of the Borrowers, and which have
not been disposed of by any such Borrower.
Adjusted Consolidated Tangible Net Worth means Consolidated
Tangible Net Worth less $125,000,000.
Adjusted LIBOR Rate shall mean on the applicable Effective
Date, with respect to a LIBOR Rate Advance, a rate per annum
equal to the sum of (a) the quotient of (i) the LIBOR Rate on the
applicable Effective Date, divided by (ii) the remainder of 1.00
minus the LIBOR Reserve Requirement, if any, on the applicable
Effective Date, plus (b) the FDIC Percentage in effect on the
applicable Effective Date, together with any additional
impositions, assessments, fees or surcharges that may be imposed
on Agent or any Lender (expressed as a percentage), to the extent
such impositions, assessments, fees or surcharges are not
reflected in the FDIC Percentage or the LIBOR Reserve Requirement
and are generally imposed on banks with capitalization and
supervisory risk factors comparable to Agent, plus (c) the LIBOR
Margin.
Administrative Fee means an aggregate annual fee of Fifty
Thousand and No/100 Dollars ($50,000.00).
Advance means an Advance made by Lenders to any Borrower
under the Credit Facility pursuant to the terms and conditions of
this Agreement.
Affiliate means, as to any Person, any Subsidiary of such
Person, or any Person which, directly or indirectly, controls, is
controlled by, or is under common control with such Person. For
the purposes of this definition, "control" means the possession
of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
Agent means NationsBank, in its capacity as agent for the
Lenders hereunder, or any successor agent pursuant to Section
10.12 or Section 10.13 or any agreement entered into pursuant to
Section 10.16.
Agreement means this First Amended and Restated Revolving
Loan Agreement and all renewals, extensions, modifications,
amendments and rearrangements thereof.
Alternate Currency means British pounds sterling, Canadian
dollars, and the currency of any other foreign country agreed to
by all Lenders from time to time.
Alternate Currency Base Rate means for any Interest Period
for each Alternate Currency Advance, the rate of interest
determined by Agent at which deposits in the applicable Alternate
Currency (except for British pounds sterling) for the relevant
Interest Period are offered based on information presented on the
Telerate Screen as of 11:00 A.M. (London time) on the day which
is two (2) Business Days prior to the first day of such Interest
Period; provided, that if at least two such offered rates appear
on the Telerate Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by Agent) will
be the rate used; provided, further, if (i) the Telerate System
ceases to provide the required quotation, or (ii) with respect to
any Alternate Currency Advance made in British pounds sterling,
such rate shall be the per annum rate of interest determined by
the arithmetic average (rounded upward, if necessary, to the
nearest .01%) of the respective rates per annum at which deposits
in British pounds sterling or such other Alternate Currency would
be offered to each of the Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount
approximately equal to the principal amount in British pounds
sterling or such other Alternate Currency of the related
Alternate Currency Advance of such Reference Bank to which such
Interest Period is to apply and for a period of time comparable
to such Interest Period.
Alternate Currency Loss has the meaning set forth in Section 3.6(e).
Alternate Currency Note has the meaning set forth in Section 3.14.
Alternate Currency Advance means an Advance which is funded in
Alternate Currency and bears interest at the Alternate
Currency Rate.
Alternate Currency Rate shall mean, on the applicable
Effective Date with respect to an Alternate Currency Advance, a
rate per annum equal to the sum of (a) the quotient of (i) the
Alternate Currency Base Rate on the applicable Effective Date,
divided by (ii) the remainder of 1.00 minus the LIBOR Reserve
Requirement, if any, on the applicable Effective Date, plus
(b) the FDIC Percentage in effect on the applicable Effective
Date, together with any additional impositions, assessments, fees
or surcharges that may be imposed on Agent or any Lender
(expressed as a percentage), to the extent such impositions,
assessments, fees or surcharges are not reflected in the FDIC
Percentage or the LIBOR Reserve Requirement and are generally
imposed on banks with capitalization and supervisory risk factors
comparable to Agent, plus (c) the LIBOR Margin.
Alternate Currency Option has the meaning set forth in Section 2.2(c).
Amendment Fee means the fee to be paid by Borrowers to each
Lender on the Closing Date pursuant to a separate letter executed
by Borrowers and each such Lender on or prior to the Closing
Date.
AMRESCO means AMRESCO, INC., a Delaware corporation, that
directly or indirectly owns 100% of the other Borrowers.
Applicable Environmental Laws has the meaning set forth in Section 7.7.
Applicable Lending Office means with respect to each Lender,
such Lender's domestic lending office (as designated by such
Lender) for Variable Rate Advances, and such Lender's Eurodollar
lending office (as designated by such Lender) for LIBOR Rate
Advances and Alternate Currency Advances.
Applicable Rate means at any time, (a) with respect to a
Variable Rate Advance, a rate per annum equal to the Variable
Rate, (b) with respect to a LIBOR Rate Advance, a rate per annum
equal to the LIBOR Rate, and (c) with respect to an Alternate
Currency Advance, a rate per annum equal to the Alternate
Currency Rate.
Approved Subordinated Debt means Debt issued by AMRESCO
which is unsecured and subordinated to payment of the Credit
Facility and the terms of which (including, without limitation,
the subordination provisions thereof) have been approved in
writing by the Required Lenders, and shall include, without
limitation, (a) the Debt evidenced by bonds issued pursuant to
the terms of that certain Indenture dated November 17, 1995,
executed by and between AMRESCO and First Interstate Bank of
Texas, N.A., as Trustee, and (b) the Debt evidenced by notes made
pursuant to the terms of that certain Indenture dated January 15,
1996, executed by and between AMRESCO and Bank One, Columbus,
N.A., as Trustee.
ARCC means AMRESCO Residential Credit Corporation, a
Delaware corporation.
ARMC means AMRESCO Residential Mortgage Corporation, a
Delaware corporation.
ARMC Warehousing Facility means one or more warehouse lines
of credit made to ARMC (and with recourse only to ARMC) from one
or more institutional lenders in order to finance the purchase by
ARMC of various single-family residential real estate loans, as
the same may be renewed, extended, modified, amended or replaced
from time to time.
ARMC Warehousing Loans means the single-family residential
real estate loans funded under the ARMC Warehousing Facility.
Arranger means NationsBanc Capital Markets, Inc.
ARSC means AMRESCO Residential Securities Corporation, a
Delaware corporation.
Asset Portfolio Reports means reports showing various
information concerning each Asset Portfolio which is included as
an Eligible Investment, such report being in form as attached
hereto as Exhibit I.
Asset Portfolios means one or more pools or portfolios of
(a) performing, non-performing or under-performing loans, and/or
(b) real estate or other assets acquired in connection with the
foreclosure, restructure or settlement of non-performing or
under-performing loans, together with all documents, instruments,
certificates and other information related thereto; provided,
however, that the ARMC Warehousing Loans shall not be included in
the term "Asset Portfolios".
Assigned Loans means the Acquired Loans included in the
Asset Portfolios which are Eligible Investments, and which have
not been disposed of by the applicable Borrower as contemplated
and permitted by this Agreement and the other Loan Documents.
Assignment and Acceptance has the meaning set forth in
Section 11.10.
Authorized Officer means, as to any Borrower, or any other
Person, any of its Chairman, Vice-Chairman, President, Executive
Vice President(s), Chief Financial Officer, Chief Accounting
Officer, Treasurer or Assistant Treasurer, who is duly authorized
by the Board of Directors of such Person to execute the Loan
Documents or any other documents or certificates to be executed
by such Person hereunder or in connection with any Advance or
Letter of Credit.
Available Commitment means the aggregate amount which
Borrowers are entitled to borrow under the terms of this
Agreement, which amount shall be the lesser of (a) Two Hundred
Million and No/100 Dollars ($200,000,000.00) (or, as to portions
thereof which are Alternate Currency Advances, the Dollar
Equivalent thereof), or (b) the sum of (i) the aggregate Loan
Commitment Amounts of the Initial Lenders plus (ii) the aggregate
Loan Commitment Amounts of any other Lenders hereafter added as a
Lender to this Agreement (other than through an assignment or
participation of an existing Lender's interest in the Credit
Facility).
Base Rate means, on any date of determination, the greater
of (a) the rate of interest per annum most recently announced by
Agent as its prime rate in effect at its principal office (which,
in the case of NationsBank shall mean its principal office in
Dallas, Texas), automatically fluctuating upward and downward
until and at the time specified in each such announcement without
special notice to any Borrower or any other Person, which prime
rate may not necessarily represent the lowest or best rate
actually charged to a customer and (b) the sum of the Federal
Funds Rate plus .50%.
Borrower Due Diligence Reports means the various written
reports, information and other materials that a Borrower prepared
or assembled and has available at the offices designated in
Section 7.12 hereof containing descriptions and evaluations of
the Acquired Loans and Mortgaged Properties included in a
particular Asset Portfolio, and the applicable Borrower's
assessments and projections regarding same, or other information
regarding such Acquired Loans and the Mortgaged Property,
including copies of purchase agreements, copies of any appraisals
or environmental site assessments, and the "Round Table" books
for each such Asset Portfolio summarizing the applicable
Borrower's due diligence regarding such Acquired Loans and the
Mortgaged Property.
Borrowers means AMRESCO and each of the entities designated
on Schedule I as a "Borrower," as such Schedule I may be
supplemented pursuant to Section 2.4.
Borrowing Base means an amount equal to the lesser of (a)
62.5% of the Available Commitment, or (b) the Net Investment
Value Availability, or (c) the Net Present Value Availability;
provided that the Borrowing Base shall be limited such that the
portion of the Borrowing Base attributable to (A) Wholly-Owned
Real Estate Portfolios shall not exceed 33% of the Wholly-Owned
Non-Real Estate Portfolios and (B) the Foreign Portfolio shall
not exceed 50% of the Domestic Portfolio. In determining the Net
Investment Value Availability, the Net Present Value Availability
or any other calculation required in determining the Borrowing
Base, the Foreign Portfolio and related assets shall be included
based on the Dollar Equivalent.
Borrowing Base Schedule means the schedule which (a) lists
each Eligible Investment and the current Net Investment Value
thereof with any back-up schedule required by Section 7.1(g),
(b) the aggregate Net Investment Values of the Performing
Assigned Loans included in Eligible Investments, (c) designates
the number of months since each such Eligible Investment was
initially acquired by any Borrower, (d) shows the net present
value (discounted at nine percent (9%)) of the Projected Net Cash
Flow from Eligible Investments for each Eligible Investment, (e)
shows the aggregate Net Investment Value and aggregate net
present values of Projected Net Cash Flow related to any Wholly-
Owned Real Estate Portfolios included in the Borrowing Base, (f)
calculates the Borrowing Base and shows how such calculation was
made, and (g) includes a completed Asset Portfolio Report if such
Borrowing Base Schedule is being delivered with Borrowers'
quarterly financial statements, which Borrowing Base Schedule
shall be in substantially the form attached as Schedule I to the
Request for Advance.
Borrowing Percentage means, (a) with respect to Performing
Assigned Loans, 80% and (b) with respect to the Non-Performing
Assigned Loans, the following percentages for the
following time periods:
Time Elapsed Since Initial
Purchase By Any Borrower
of Eligible Investment Percentage
Less than 6 months 80%
Greater than or equal to 6 months, but less than 12 months 70%
Greater than or equal to 12 months, but less than 18 months 60%
Greater than or equal to 18 months, but less than 24 month 25%
Greater than or equal to 24 months 0%
Business Day means (a) for all purposes other than as
covered by clause (b) of this definition, any day of the week,
other than Saturday, Sunday or other day Agent or any Lender is
required or authorized by law or executive order to close, and
(b) with respect to all requests, notices and determinations in
connection with LIBOR Rate Advances and Alternate Currency
Advances, a day which is a Business Day described in clause (a)
of this definition and which is a day other than a day on which
banks are required or authorized to close in the London interbank
market or other city in which an Alternate Currency Advance is to
be paid or advanced.
Change in Control means (a) the acquisition by a person (as
such term is used in Section 13(d) and Section 14(d)(2) of the
Exchange Act) or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act) of the
beneficial ownership of issued and outstanding shares of the
voting stock of AMRESCO, the result of which acquisition is that
such person or such group possess in excess of 50% of the
combined voting power of all the issued and outstanding voting
stock of AMRESCO, or (b) during any period of twelve consecutive
calendar months, individuals who were directors of AMRESCO on the
first day of such period shall cease to constitute a majority of
the Board of Directors of AMRESCO; provided, however, that the
Existing Control Group shall not be deemed to be persons or
members of such acquiring group in determining whether such
direct or indirect beneficial ownership or power has been
acquired by any person or any group.
Closing Date means the effective date of execution of this
Agreement as designated in the first paragraph of this Agreement.
Code means the Internal Revenue Code of 1986, as amended.
Collateral means all property, assets and interests of any
kind securing the Credit Facility (including, without limitation,
all Advances and the Letters of Credit) pursuant to this
Agreement or any of the other Loan Documents, which shall
include, without limitation, all Assigned Loans and all
Commercial Residual Interests and Residential Residual Interests.
Collateral Assignment means, collectively, all collateral
assignments of promissory notes and liens, executed by any
Borrower in favor of Agent, on behalf and for the benefit of
Lenders, as security for the Credit Facility, which collateral
assignment is intended to cover all of the Assigned Loans, and
all renewals, modifications, amendments, supplements and
restatements thereof, including, without limitation, that certain
Collateral Assignment of Promissory Notes and Liens dated as of
the Initial Closing Date, executed by and between the Original
Borrowers and Agent and that certain Collateral Assignment of
Promissory Notes and Liens dated as of March 1, 1996, executed by
and between certain of the Borrowers and Agent, as modified by
that certain First Modification of Collateral Assignment of
Promissory Notes and Liens (herein so called) dated the Closing
Date, executed by and between Borrowers (other than AMRESCO
Jersey Ventures Limited, AMRESCO UK Holdings Limited, AMRESCO UK
Ventures Limited, AMRESCO UK Limited and Old Midland House
Limited) and Agent, substantially in the form attached hereto as
Exhibit B.
Commercial Paper Reserve means a portion of the Credit
Facility to evidence support for commercial paper to be issued by
AMRESCO.
Commercial Residual Interests means any class of
certificates, or other portions of a securities issuance, related
to a commercial mortgage-backed security or similar instrument
held by any Borrower.
Commitment Fee shall mean the non-refundable fee equal to
the product of (a) the applicable percentage in effect as
computed pursuant to Schedule II attached hereto, times (b) the
average daily unused portion of the Available Commitment after
adjustment for the Letter of Credit Exposure.
Compliance Letter means a letter from Deloitte & Touche (or
such other firm approved by the Required Lenders) stating that
such firm has reviewed the calculation of the then current
Borrowing Base and all components of the Borrowing Base and such
calculations are accurate and comply with the requirements of
this Agreement, and containing such other information Agent may
reasonably request, and otherwise being in substantially the form
attached hereto as Exhibit D-1.
Consequential Loss has the meaning set forth in
Section 3.6(d).
Consolidated Capitalization means, as of any date, the sum
of (a) Consolidated Funded Debt plus (b) Consolidated Tangible
Net Worth.
Consolidated EBITDA means, for any period, determined in
accordance with GAAP on a consolidated basis for AMRESCO and its
Subsidiaries, the sum of consolidated net income before taxes and
non-recurring gains or losses, plus depreciation, plus
amortization, plus interest expense, each as deducted in
determining such consolidated net income before taxes.
Consolidated Funded Debt means, as of any date, all Debt
which is evidenced by promissory notes, loan agreements, bonds or
similar instruments, as such amount is required to be shown on
AMRESCO's consolidated financial statements prepared in
accordance with GAAP (including, without limitation, the Credit
Facility, Approved Subordinated Debt and Excluded Subsidiary
Debt), but excludes the Investment Line of Credit, the Warehouse
Line of Credit, the Residential Funding Warehousing Facility and
the ARMC Warehousing Facility.
Consolidated Interest Expense means, for any period, the
interest expense which is required to be shown as such on the
financial statements of AMRESCO and its Subsidiaries, on a
consolidated basis, prepared in accordance with GAAP.
Consolidated Lease Expense means, for any period, the lease
expense under all Operating Leases for AMRESCO and its
Subsidiaries on a consolidated basis.
Consolidated Net Income means, as of the first day of each
calendar quarter, the net income after taxes of AMRESCO and its
Subsidiaries, on a consolidated basis, determined in accordance
with GAAP, for the immediately preceding calendar quarter, which
amount shall be zero if there was a net loss for the immediately
preceding calendar quarter.
Consolidated Tangible Net Worth means, as of any date, (a)
the total shareholder's equity (including capital stock,
additional paid-in capital and retained earnings after deducting
treasury stock) which would appear on a consolidated balance
sheet of AMRESCO and its Subsidiaries prepared as of such date in
accordance with GAAP, less (b) the aggregate book value of
Intangible Assets shown on such balance sheet of such Person,
prepared in accordance with GAAP and less (c) unamortized debt
discount and expenses.
Credit Facility means the credit facility arranged by
Lenders for Borrowers as evidenced by this Agreement.
Credit Period means the period commencing on the date of
this Agreement and ending on the Termination Date.
Custodial Agreement means each custodial, undertaking,
escrow or other similar agreement in form approved by Agent by
and between the Custodian, AMRESCO, for itself and on behalf of
Borrowers, and Agent, whereby Custodian agrees to act as bailee
for the documents evidencing certain of the Assigned Loans, as
any such Custodial Agreement may be amended or supplemented from
time to time, together with any modification, amendment,
replacement or substitution therefor, including, without
limitation, that certain First Modification of Custodial
Agreement (herein so called) dated the Closing Date, executed by
and among the applicable Custodian, AMRESCO, for itself and on
behalf of Borrowers, and Agent, in form approved by Agent.
Custodian means a financial institution or other Person
approved by the Required Lenders to act as a custodian under a
Custodial Agreement. The initial Custodians shall be Fleet
National Bank, a national banking association, and Bank One,
Texas, NA, a national banking association.
Debt of any Person means at any date, without duplication,
(a) all indebtedness, obligations and liabilities of such Person
for borrowed money, (b) all indebtedness, obligations and
liabilities of such Person evidenced by bonds, debentures, notes
or other similar instruments, whether recourse or non-recourse
and whether secured or unsecured, (c) all other indebtedness
(including capitalized lease obligations) of such Person on which
interest charges are customarily paid or accrued, (d) all other
indebtedness and obligations of such Person including, without
limitation, trade payables and obligations under Interest and
Foreign Exchange Hedge Agreements, (e) all obligations for
indebtedness in respect of Guarantees by such Person, (f) the
unfunded or unreimbursed portion of all letters of credit issued
for the account of such Person, and (g) all personal liability of
such Person as a general partner or joint venturer of a
partnership or joint venture for obligations of such partnership
or joint venture of the nature described in (a) through (f)
preceding.
Default means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
Default Rate means the fluctuating per annum rate of
interest equal to the lesser of (a) four percent (4.0%) plus the
Base Rate, or (b) the Maximum Lawful Rate.
Designated Countries means Canada, the United Kingdom and
such additional countries as approved from time to time by the
Required Lenders.
Designated Successor Agent means, at any given time, the
Lender other than Agent which has the largest Loan Percentage;
provided, however, if two or more such Lenders have the same Loan
Percentage at such time, then the Designated Successor Agent
shall be such of those Lenders having the same Loan Percentage
which has the largest net worth; and, provided further, that if
the Required Lenders object to the newly named Designated
Successor Agent, or if any Lender determined to be a Designated
Successor Agent declines to serve as successor Agent, in writing
delivered to the outgoing Agent within seven (7) Business Days
after such Designated Successor Agent is determined, then the
Lender other than Agent or such rejected or declining Designated
Successor Agent which has the next largest Loan Percentage shall
be the Designated Successor Agent. For each such Lender that is
a member of a bank holding company, its net worth shall be deemed
to be the consolidated net worth of its bank holding company.
DIDMCA means the Depositary Institutions Deregulation and
Monetary Control Act of 1980, Public Law 96-221, as amended,
codified at 12 U.S.C. 1735f-7.
Distressed Assets means (a) one or more non-performing or
under-performing loans or (b) real estate or other assets
acquired or received in connection with the foreclosure,
restructure or settlement of any non-performing or under-
performing loans.
Distribution by any Person, means (a) with respect to any
stock issued by such Person or any partnership or joint venture
interest of such person, the retirement, redemption, repurchase,
or other acquisition for value of such stock, partnership or
joint venture interest, (b) the declaration or payment (without
duplication) of any dividend or other distribution, whether
monetary or in kind, on or with respect to any stock, partnership
or joint venture of any Person, and (c) any other payment or
distribution of assets of a similar nature or in respect of an
equity investment.
Dollar Equivalent means the equivalent in Dollars of any
Alternate Currency. For purposes of this Agreement, Dollar
Equivalent shall be determined by using the quoted spot rate at
which NationsBank or any affiliate of NationsBank offers to
exchange Dollars for such Alternate Currency prior to 10:00 a.m.
(Dallas, Texas time) two Business Days prior to the date on which
such equivalent is to be determined pursuant to the provisions of
this Agreement. Agent shall notify each affected Lender of such
determination on such date. The Dollar Equivalent of each
Alternate Currency Advance shall be recalculated hereunder on
each date it is necessary to determine the unused portion of each
Lender's Loan Commitment Amount or any Advances outstanding on
such date.
Dollars and the "$" symbol shall refer to currency of the
United States of America.
Domestic Portfolio means an Asset Portfolio consisting of
Acquired Loans secured by assets or payable by Persons located in
the United States of America and included in the Borrowing Base.
Effective Date has the meaning set forth in Section 2.2(b).
Eligible Assignee means any of (a) a commercial bank
organized under the laws of the United States, or any State
thereof or the District of Columbia; (b) a savings and loan
association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia;
(c) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political
subdivision of any such country, provided that such bank is
acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the
OECD; (d) the central bank of any country which is a member of
the OECD; or (e) an insurance company, pension fund, credit
corporation or other finance company organized under the laws of
any state of the United States; provided, however, that no
institution described in clause (a), (b), (c), (d), or (e) above
shall be an Eligible Assignee unless it has total assets in
excess of $5 billion; and, provided further, that an institution
described in clause (c) or (d) above must maintain a branch or
agency under the laws of the United States.
Eligible Investments are investments in Asset Portfolios
(a) which are wholly-owned by any Borrower, (b) for which Lenders
have a perfected, first priority lien or security interest in the
related Acquired Loans and other assets included in such Asset
Portfolios (except for the net profits interest granted by
AMRESCO New Hampshire, Inc. to Heller Financial, Inc. and
referenced in Section 8.7(f) and except that Lenders may not have
filed a Mortgage received with respect to any or all of the
Mortgaged Properties), and (c) with respect to which Borrowers
have timely delivered all related documents and agreements
required to be delivered hereunder, under the Collateral
Assignment and under the applicable Custodial Agreements.
Employee Plan means at any time an employee benefit plan as
defined in Section 3(3) of ERISA that is now or was previously
maintained, sponsored or contributed to by any Borrower or any
ERISA Affiliate of any Borrower.
ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all regulations
issued pursuant thereto.
ERISA Affiliate means any person that is treated as a single
employer with any Borrower under Section 414 of the Code.
Event of Default has the meaning set forth in Section 9.1.
Exchange Act shall mean the Securities Exchange Act of 1934,
as amended.
Excluded Loans means those Acquired Loans which are secured
by bank stock, time shares, property with significant
environmental clean up requirements (as determined by Agent), any
assets which are located outside of the United States (other than
Designated Countries), or other assets designated by Agent from
time to time in writing to AMRESCO.
Excluded Subsidiaries means, collectively, (a) Whiterock
Investments, Inc., a Delaware corporation, AMRESCO Advisors,
Inc., a Texas corporation, AMRESCO Realty Advisors, Inc., a
Georgia corporation, BEI Asset Managers, Inc., a Texas
corporation, and any other existing or future Subsidiary of any
Borrower which is subject to the Investment Advisors Act of 1940,
as amended, (b) any non-Borrower special purpose Subsidiary which
has been established to acquire loan portfolios and has obtained
Nonrecourse Debt in connection with such acquisitions or
indebtedness where recourse is limited just to such special
purpose Subsidiary, and which does not own Eligible Investments
or any other Collateral included in determining the Borrowing
Base (and which, after the Closing Date, is approved by Agent as
an Excluded Subsidiary), and (c) AMRESCO-MBS I, Inc., a Delaware
corporation, AMRESCO New England, Inc., a Delaware corporation,
AMRESCO Oak Cliff Financial, Inc., a Delaware corporation,
AMRESCO Principal Managers I, Inc., a Delaware corporation, ARSC
and such other Subsidiaries designated by AMRESCO as excluded
subsidiaries and approved by the Required Lenders.
Excluded Subsidiary Debt means Nonrecourse Debt of any
Excluded Subsidiary or Debt of any Excluded Subsidiary where
recourse is limited just to such Excluded Subsidiary, excluding,
however, any liability of an Excluded Subsidiary under Interest
and Foreign Exchange Hedge Agreements.
Existing Control Group shall mean CGW Southeast Partners,
James Cotton and Gerald Eickhoff.
FDIC Percentage shall mean, on any day, the net assessment
rate (expressed as a percentage rounded to the next highest 1/100
of 1%) which is in effect on such day (under the regulations of
the Federal Deposit Insurance Corporation or any successor) for
determining the assessments paid by Agent to the Federal Deposit
Insurance Corporation (or any successor) for insuring
Eurocurrency deposits made in dollars at Agent's principal
offices (which for NationsBank shall be its offices in Dallas,
Texas, or, if applicable, the Applicable Lending Office). Each
determination of said percentage made by Agent shall, in the
absence of manifest error, be binding and conclusive.
Federal Funds Rate means, for any day, the rate per annum
(rounded upwards if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate
quoted to Agent on such day on such transactions from three
Federal funds brokers of recognized standing.
Fiscal Year means any fiscal year of any Borrower commencing
on January 1 and ending on December 31.
Fixed Charge Coverage Ratio means, for any date of
determination, the ratio of (a) the sum of (i) Consolidated
EBITDA plus (ii) Consolidated Lease Expense, both for the
immediately preceding twelve calendar months, to (b) the sum of
(i) Consolidated Interest Expense plus (ii) Consolidated Lease
Expense, both for the immediately preceding twelve calendar
months.
Foreign Portfolio means an Asset Portfolio consisting
primarily of Acquired Loans secured by assets or payable by
Persons located in the Designated Countries and included in the
Borrowing Base.
GAAP means generally accepted accounting principles
consistently applied as in effect at the time of application of
the provisions hereof; provided, however, that wherever in this
Agreement principles of consolidation different from those
required by generally accepted accounting principles are
specified, the principles of consolidation specified in this
Agreement shall govern.
Governmental Authority means any government, any state or
other political subdivision thereof, or any Person exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Guaranty by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership
arrangements, by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain
financial statement conditions, by "comfort letter" or other
similar undertaking of support or otherwise), or (b) entered into
for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of
business.
Initial Closing Date means September 29, 1995.
Impositions means all real estate and personal property
taxes; charges for any easement, license or agreement maintained
for the benefit of any of the real property of any Borrower, or
any part thereof; and all other taxes, charges and assessments
and any interest, costs or penalties with respect thereto,
general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever, which at any time
prior to or after the execution hereof may be assessed, levied or
imposed upon any of the real property of any Borrower, or any
part thereof, or the ownership, use, sale, occupancy or enjoyment
thereof, in each case which, if not timely paid or otherwise
discharged, would materially and adversely affect (a) such
ownership, use, sale, occupancy or enjoyment, or (b) the
financial condition of any Borrower.
Initial Lenders means NationsBank, Bank One, Texas, NA,
First Interstate Bank of Texas, N.A. and Morgan Guaranty Trust
Company of New York.
Intangible Assets of any Person means those assets of such
Person which are (a) deferred assets, other than prepaid
insurance and prepaid taxes, (b) patents, copyrights, trademarks,
tradenames, franchises, goodwill, experimental expenses and other
similar assets which would be classified as intangible assets on
a balance sheet of such Person, prepared in accordance with GAAP,
(c) unamortized discount and expenses, and (d) assets located,
and notes and receivables due from obligors domiciled, outside
the United States of America, other than Permitted Foreign
Assets.
Interest Adjustment Date shall mean the earlier of either
the last day of an Interest Period or the Termination Date.
Interest and Foreign Exchange Hedge Agreements shall mean
any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations
of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-
currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts
and warrants, as the same may be amended or modified and in
effect from time to time, and any and all cancellations, buy
backs, reversals, terminations or assignments of any of the
foregoing.
Interest Coverage Ratio means, for any date of
determination, the ratio of (a) Consolidated EBITDA for the
immediately preceding twelve calendar months to (b) Consolidated
Interest Expense for the immediately preceding twelve calendar
months.
Interest Period shall mean (a) with respect to a LIBOR Rate
Advance, a period selected by AMRESCO of one, two, three, four or
six months, commencing on the Effective Date of any LIBOR Rate
Advance, or (b) with respect to an Alternate Currency Advance, a
period selected by AMRESCO of one, two, three, four or six
months, commencing on the Effective Date of any Alternate
Currency Advance; provided that (i) any Interest Period ending on
a date later than the Termination Date shall be deemed to end on
the Termination Date; (ii) if any Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day, except that if the
next Business Day would fall in the next calendar month, the
Interest Period shall end on the immediately preceding Business
Day; and (iii) any Interest Period that begins on the last day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar
month.
Invested Capital means the amount of Tangible Capital or
other monies which any Borrower has invested in an asset or
entity (whether such investment is made through purchase of
stock, or inter-company loan or other type of distribution or
advance), less any distributions back to, or any payments
received by, the investing Borrower from that asset or entity.
Investment Grade means a Qualified Investment Rating of BBB-
or higher using the rating classification employed by Duff &
Phelps, Inc. or such comparable rating employed by another rating
agency.
Investment Line of Credit means the line of credit to
AMRESCO made by NationsBank, such line of credit being in the
amount of Eighty Million and No/100 Dollars ($80,000,000.00) for
the purchase of liquid short-term investments, as the same may be
renewed, extended, modified, amended or replaced from time to
time.
Issuing Lender means NationsBank in its capacity as issuer
of the Letters of Credit.
Legal Requirements means (a) any and all present and future
judicial decisions, statutes, laws, rulings, rules, orders,
regulations, permits, licenses, certificates, or ordinances of
any Governmental Authority in any way applicable to any Borrower,
(b) the presently or subsequently effective bylaws and articles
of incorporation and any other form of business association
agreement of any Borrower, (c) any and all covenants, conditions
or restrictions applicable to the Collateral or the ownership,
use or occupancy thereof, and (d) any and all leases or contracts
(written or oral) of any nature that relate in any way to any
Collateral, or any portion thereof, or to which any Borrower may
be bound, and in each case which, if violated, would materially
and adversely affect (i) the present or potential ownership, use,
sale, occupancy or possession of the Collateral or any part
thereof, by any Borrower, (ii) the Lenders' Liens or (iii) the
financial condition of any Borrower.
Lenders means each of the financial institutions listed as a
"Lender" on Schedule I attached hereto as the same may be
modified or amended from time to time.
Lenders' Liens means all liens, security interests, charges,
pledges or encumbrances created by the Loan Documents.
Letter of Credit Exposure means the aggregate amount of the
unfunded portion of each Letter of Credit outstanding at any
time.
Letter of Credit Fee has the meaning set forth in
Section 2.3(c).
Letters of Credit means all letters of credit issued by the
Issuing Lender for the account of any Borrower pursuant to this
Agreement.
LIBOR Margin means the applicable margins based on AMRESCO's
Consolidated Funded Debt to Consolidated EBITDA ratio computed as
of the last day of each calendar quarter on a trailing four-
quarter basis or a Qualified Investment Rating (whichever results
in the lowest applicable margin), as determined pursuant to
Schedule II attached hereto.
LIBOR Rate shall mean, with respect to a LIBOR Rate Advance
for the Interest Period applicable thereto, the rate of interest
determined by Agent at which deposits in dollars for the relevant
Interest Period are offered based on information presented on the
Telerate Screen as of 11:00 A.M. (London time) on the day which
is two (2) Business Days prior to the first day of such Interest
Period; provided, that if at least two such offered rates appear
on the Telerate Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by Agent) will
be the rate used; provided, further, that if the Telerate System
ceases to provide LIBOR quotations, such rate shall be the
average rate of interest determined by Agent (rounded upward to
the nearest .01%) at which deposits in Dollars are offered for
the relevant Interest Period by Agent (or its successor) to banks
with combined capital and surplus in excess of $500,000,000 in
the London interbank market as of 11:00 A.M. (London time) on the
applicable Effective Date.
LIBOR Rate Advance shall mean an Advance which bears
interest computed with reference to the LIBOR Rate.
LIBOR Reserve Requirement shall mean, on any day, that
percentage (expressed as a decimal fraction) which is in effect
on such date, as provided by the Federal Reserve System for
determining the maximum reserve requirements generally applicable
to financial institutions regulated by the Federal Reserve Board
comparable in size and type to Agent (including, without
limitation, basic supplemental, marginal and emergency reserves)
under Regulation D with respect to "Eurocurrency liabilities" as
currently defined in Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding (or, if reserves for Eurocurrency
liabilities are not separately stated in such regulations, the
other applicable category of liabilities which includes deposits
by reference to which the interest rate on a LIBOR Rate Advance
or Alternate Currency Advance is determined). Each determination
by Agent of the LIBOR Reserve Requirement, shall, in the absence
of manifest error, be conclusive and binding.
Lien means with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
Loan Commitment Amount means, with respect to each Lender,
the amount indicated as such Lender's Loan Commitment Amount
opposite the name of such Lender in Schedule I, as such amount
(a) may be reduced from time to time, as a result of a reduction
in the Available Commitment as provided in this Agreement, or (b)
may be adjusted from time to time to account for any assignment
of a Lender's interest as provided in Section 11.10.
Loan Documents means this Agreement, the Notes, the Pledge
Agreements, the Letters of Credit, the LOC Applications, the
Collateral Assignment, the Lockbox Agreement, the Security
Agreement, all related financing statements, and all other
agreements, statements, certificates, documents or instruments
evidencing, securing or pertaining to the Credit Facility
(including the Letters of Credit) or otherwise executed and/or
delivered from time to time pursuant to or in connection with
this Agreement, as the same may be modified, amended, renewed,
extended, rearranged, restated or replaced from time to time.
Loan Percentage means, with respect to each Lender, the
percentage indicated as such Lender's Loan Percentage opposite
the name of such Lender on Schedule I, as such percentage may be
adjusted from time to time to account for any assignments of a
Lender's interest as provided in Section 11.10.
LOC Application has the meaning set forth in Section 2.2(d).
Lockbox means a post office box, or collectively post office
boxes, established by Borrowers and Lockbox Agent pursuant to the
provisions of Section 5.7 and the Lockbox Agreement.
Lockbox Account means a cash collateral account or accounts
maintained with Lockbox Agent and styled "(name of particular
Borrower) Lockbox Account for the Benefit and Under the Control
of NationsBank of Texas, N.A., as Agent for Lenders," which
accounts shall be (a) subject to the provisions of Section 5.7.,
and (b) pledged and assigned to Lenders as additional security
for the payment, performance and observance of the Obligations.
Lockbox Agent means NationsBank.
Lockbox Agreement means that certain Lockbox Agreement,
dated as of the Initial Closing Date, executed by and among the
Original Borrowers, Agent and Lockbox Agent, and all amendments,
modifications and replacements thereof, including, without
limitation, as modified by that certain First Modification of
Lockbox Agreement (herein so called) dated the Closing Date,
executed by and between Borrowers, Agent and Lockbox Agent,
substantially in the form attached hereto as Exhibit F.
Margin Regulations mean Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System, as in effect
from time to time.
Margin Stock means "margin stock" as defined in
Regulation U.
Maximum Lawful Rate means the maximum rate (or, if the
context so permits or requires, an amount calculated at such
rate) of interest which, at the time in question would not cause
the interest charged on the Credit Facility at such time to
exceed the maximum amount which Lenders would be allowed to
contract for, charge, take, reserve, or receive under applicable
federal or state law after taking into account, to the extent
required by applicable law, any and all relevant payments, fees
or charges under the Loan Documents. If and to the extent the
laws of the State of Texas are applicable for purposes of
determining the "Maximum Lawful Rate", such term shall mean the
"indicated rate ceiling" from time to time in effect under
Article 5069-1.04, Title 79, Revised Civil Statutes of Texas,
1925, as amended, or, if permitted by applicable law and
effective upon the giving of the notices required by such Article
5069-1.04 (or effective upon any other date otherwise specified
by applicable law), the "quarterly ceiling" or "annualized
ceiling" from time to time in effect under such Article
5069-1.04, whichever Agent shall elect to substitute for the
"indicated rate ceiling," and vice versa, each such substitution
to have the effect provided in such Article 5069-1.04, and Agent
shall be entitled to make such election from time to time and one
or more times and, without notice to any Borrower, to leave any
such substitute rate in effect for subsequent periods in
accordance with subsection (h)(1) of such Article 5069-1.04. If
under federal or state law there is no legal limitation on the
amount or rate of interest that may be charged on amounts
outstanding under the Credit Facility, there shall be no Maximum
Lawful Rate, notwithstanding any reference thereto herein or in
any of the Loan Documents.
Minimum Notice Requirement has the meaning set forth in
Section 3.5.
Mortgage means any deed of trust or mortgage covering a
Mortgaged Property executed by any Borrower, granted to Agent,
for the benefit of the Lenders, to secure repayment of the Credit
Facility and the other Obligations, substantially in the form
approved by Agent, and all renewals, extensions, modifications,
amendments or supplements thereto, and all mortgages or deeds of
trust given in renewal, extension, modification, restatement or
replacement thereof.
Mortgaged Property or Mortgaged Properties means any and all
lots or parcels of land which any Borrower owns on the Closing
Date or which it may hereafter acquire as part of an Asset
Portfolio or any Underlying Real Estate which any Borrower may
hereafter own as a result of a foreclosure or deed-in-lieu of
foreclosure or otherwise, and improvements, fixtures and personal
property located thereon and all other property referenced in and
subject to the Mortgages. The Mortgaged Property is intended to
include all of the above-described real property whether or not a
Mortgage is actually granted or filed.
NationsBank means NationsBank of Texas, N.A., a national
banking association, and its successors.
Net Collections for any calendar month means an amount equal
to (a) any and all cash proceeds received by any Borrower from
its ownership, management and disposition of any and all assets
in any Asset Portfolio, including, without limitation, interest
and principal payments on Acquired Loans from any source, loan
settlement payments, any restructure or commitment or other loan
fees, payments on any judgments or settlement of litigation with
respect to Acquired Loans, proceeds from the sale of Acquired
Loans or Mortgaged Property, income from any Mortgaged Property,
but excluding any escrow deposits paid to any Borrower for tax or
insurance escrows under the Acquired Loans, minus (b) expenses
incurred and paid by any Borrower from, and any normal and
customary expenses reserved or accrued on a monthly basis related
to, its ownership, management and sale of assets in the Asset
Portfolio (including without limitation any advances of committed
principal that any Borrower is legally required to make under any
of the Acquired Loans) (such expenses not to exceed in the
aggregate 10% of the gross collections from such assets); it
being expressly understood and agreed that there shall be no
deduction for any disbursements by any Borrower of any tax or
insurance escrows held for the Acquired Loans.
Net Investment Value means the Net Purchase Price less the
Net Collections actually received by a Borrower or Borrowers as
of the date of determination from the applicable Asset Portfolio
less any write down of the value of the applicable Asset
Portfolio required by GAAP or otherwise made by any Borrower.
Net Investment Value Availability means the applicable
Borrowing Percentage times the Net Investment Value of the
Eligible Investments; provided that the Net Investment Value
Availability attributable to Performing Assigned Loans shall not
exceed the lesser of (i) 12.5% of the Available Commitment, (ii)
$20,000,000.00, or (iii) 25% of the Net Investment Value
Availability attributable to Non-Performing Assigned Loans.
Net Present Value Availability means the quotient of (i) the
net present value (discounted at 9%) of the Projected Net Cash
Flow from Eligible Investments as determined by Borrowers and not
reasonably objected to by Agent (provided, that, with respect to
the Projected Net Cash Flow from any Eligible Investment in which
Heller Financial, Inc. has a profits interest as described in
Section 8.7(f), Borrowers shall include only 75% of the net
present value of such Projected Net Cash Flow for the purposes of
this calculation), divided by (ii) 1.70.
Net Purchase Price means the actual purchase price paid by
the applicable Borrower or Borrowers for an Asset Portfolio,
excluding (a) any costs or adjustments for legal fees, travel,
due diligence expenses or other "soft" costs, and (b) the portion
of the purchase price allocated to Excluded Loans.
Non-Performing Assigned Loan means any Assigned Loan which
is not a Performing Assigned Loan.
Nonrecourse Debt means indebtedness of any Person (a) used
to finance the acquisition of, or refinance the costs of
carrying, assets by such Person which is secured solely by the
assets acquired or refinanced with such financing and (b) with
respect to which or to the portion of which such Person has no
liability for payment other than the assets pledged.
Notes means the amended and restated promissory notes in the
form attached hereto as Exhibit A to be made by Borrowers to each
Lender on the Closing Date pursuant to this Agreement in the
amount of such Lender's Loan Commitment Amount.
Obligations means all present and future indebtedness,
obligations and liabilities, or any part thereof, of any Borrower
now or hereafter existing or arising under or in connection with
this Agreement, the Notes or any other of the Loan Documents
(specifically including, without limitation, the principal amount
outstanding under the Notes), pursuant to the Loan Documents,
together with: (a) all interest accrued thereon; (b) all
reasonable costs, expenses, and attorneys' fees of counsel to
Agent and Lenders (as a group) and of counsel to any Lender
(subject to the limitations set forth in Section 11.4) incurred
in the documentation of any amendments, waivers or extensions of
the Loan Documents or administration, enforcement or collection
thereof (specifically including, without limitation, any of the
foregoing incurred in connection with any bankruptcy or other
insolvency proceedings of any Borrower); (c) the reimbursement
and payment of all sums which might be advanced by Agent or any
Lender to pay or satisfy amounts required to be paid by any
Borrower under this Agreement or under any other Loan Document;
(d) all liability which any Borrower may incur with respect to
any Interest and Foreign Exchange Hedge Agreements between any
Borrower and any Lender; and (e) all costs, charges, reasonable
commissions, reasonable attorneys' fees and expenses owing and to
become owing in connection with the documentation,
administration, enforcement and collection of the foregoing
obligations and indebtedness, and those owing or to become owing
in connection with the repossession, operation, maintenance,
preservation or foreclosure of any or all of the Collateral;
regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several. The
Obligations shall include all renewals, extensions,
modifications, rearrangements and replacements of any of the
above-described obligations and indebtedness.
Operating Lease means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial
Accounting Standards No. 13 dated November, 1976, or otherwise in
accordance with GAAP.
Participation Fee means the nonrefundable participation fee
to be paid by Borrowers on the Closing Date to each of the
Lenders in the amounts shown for each such Lender on Schedule I
attached hereto.
PBGC means the Pension Benefit Guaranty Corporation, or its
successors.
Pension Plan means any Employee Plan that is now or was
previously covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.
Performing Assigned Loan means each Assigned Loan (a) which,
over the immediately preceding 90-day period, has accrued and
been paying interest and principal no less often than quarterly
(and with no less than two such payments having been made) in an
amount which is sufficient to amortize the legal balance of the
Assigned Loan as of the time of its acquisition by a Borrower
(less any payments received and applied to reduce such Assigned
Loan), and interest thereon at a rate not less than the existing
Base Rate, in equal installments over fifteen years, and (b)
which at no time during the immediately preceding 90-day period
has been 30 or more days past due.
Permitted Encumbrances means with respect to any asset in an
Asset Portfolio or any Mortgaged Property:
(a) Liens securing the Notes in favor of the Lenders;
(b) Exceptions affecting title which are shown in a
Title Policy included in Borrowers' files or are described with
respect to a particular Assigned Loan, Mortgaged Property or
parcel of the Underlying Real Estate in the applicable Borrower
Due Diligence Reports;
(c) In the case of any portion of the Mortgaged
Property that is not covered by a Title Policy, minor defects in
title or customary easements, platted building lines, restrictive
covenants, mineral reservations and similar exceptions affecting
title which do not secure the payment of money;
(d) Inchoate statutory or operators' liens securing
obligations for labor, services, materials and supplies furnished
to the Mortgaged Properties, which (i) are not delinquent, or
(ii) are being contested by any Borrower in good faith and for
which such Borrower has obtained a proper payment and performance
bond in the amount of the contested claim;
(e) Mechanics', materialmen's, warehousemen's,
journeymen's and carriers' liens and other similar liens arising
by operation of law or statute in the ordinary course of business
if (i) the underlying claim is not delinquent and did not in any
event cover a billing period not exceeding sixty (60) days, or
(ii) unless the claim giving rise to such lien is being contested
by any Borrower in good faith and for which such Borrower has
obtained a proper payment and performance bond in the amount of
the contested claim; and
(f) Liens for Taxes or Impositions not yet due or not
yet delinquent, or, if delinquent, that are being contested by
any Borrower as permitted by and in accordance with the terms and
conditions set forth in Section 7.5.
Permitted Foreign Assets means only those assets which are
(a) included in an Asset Portfolio acquired by any Borrower
either directly or through investments in Persons who acquire
Asset Portfolios, and (b) located in Canada, Mexico, Australia,
Japan or any country which is a member of the European Economic
Community.
Permitted Investments means (a) time deposits or
certificates of deposit in any Lender or other investments or
securities offered by any Lender (including eurodollar deposits),
(b) obligations backed by the full faith and credit of the United
States of America, (c) commercial paper rated P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation
on the date of acquisition, (d) subject to any limitations
contained in this Agreement, including, without limitation, the
limitations set forth in Section 8.5, participations in any
Interest and Foreign Exchange Hedge Agreements or (e) subject to
any limitations contained in this Agreement, including, without
limitation, the limitations set forth in Section 8.10, (i)
acquisitions of corporate entities, (ii) investments in Related
Investments, (iii) amounts advanced by AMRESCO or AMRESCO Capital
Corporation in connection with Warehouse Line Loans and/or
Residential Funding Loans, (iv) investments in Asset Portfolios,
or Persons acquiring an Asset Portfolio, that will be managed by
a Borrower or an Affiliate of a Borrower, including, without
limitation Eligible Investments, (v) purchases of Residential
Residual Interests located in the United States, (vi) amounts
advanced by ARMC with respect to any ARMC Warehousing Loans
located in the United States, or (vii) Invested Capital in ARMC,
ARCC, bridge loans, non-conventional commercial loans and other
high-yield loans, commercial real estate interests not included
as Assigned Loans, wholly-owned Permitted Foreign Assets not
included in the Borrowing Base, Excluded Subsidiaries and
Commercial Residual Interests not held by an Excluded Subsidiary.
Person means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
Pledge Agreement shall mean the Stock Pledge Agreement or
Stock Pledge Agreements executed by and between the appropriate
Borrowers and Agent, covering all of the issued and outstanding
stock of each Subsidiary of Borrowers which is incorporated in
the United States (other than stock of a Subsidiary identified in
clause (a) of the definition of Excluded Subsidiary or any other
Excluded Subsidiary's stock that has been pledged to another
creditor of such Excluded Subsidiary prior to the Initial Closing
Date) and sixty-five percent (65%) of the stock of each
Subsidiary of Borrowers incorporated outside the United States
and all amendments, modifications and replacements thereof,
including, without limitation, as modified by that certain First
Modification of Pledge Agreement (herein so called) dated the
Closing Date, executed by and between the appropriate Borrowers
and Agent, substantially in the form attached hereto as Exhibit C.
Principal Debt means, at the time of any determination
thereof, the aggregate unpaid principal balance of all Advances.
Projected Net Cash Flow means the net cash flow which
Borrowers reasonably expect to receive from an Asset Portfolio
(excluding net cash flow from Excluded Loans) which has been
determined in a manner consistent with Borrowers' past practices
and not less comprehensive than industry practices, which cash
flow projection has been made or updated not later than six
months from the date when it is to be used under this Agreement.
Purchase Money Lien has the meaning set forth in Section 8.7.
Qualified Investment Rating means the currently effective
rating of the Credit Facility, or any part thereof, at the time
of determination, if any, given by Fitch Investors Services,
Inc., Standard & Poor's Corporation, Moody's Investors Services,
Inc., Duff & Phelps, Inc. or such other rating agency acceptable
to the Required Lenders.
Real Estate Loans means Acquired Loans (a) which have a
purchase price of greater than Two Million Five Hundred Thousand
and No/100 Dollars ($2,500,000.00), (b) which are secured by
land, office buildings, retail centers, hotels/motels,
multi-family properties, or industrial properties, (c) if
improved, which are secured by non-owner occupied facilities, and
(d) where the primary source of repayment is proceeds from the
operation or liquidation of the real estate. A loan must meet
all of the above tests to be deemed a Real Estate Loan.
Reference Banks means the Applicable Lending Office of
NationsBank, First Interstate Bank of Texas, N.A. and Bank One,
Texas, NA, and such substitute bank or banks as may be mutually
agreed to by Borrowers and Agent.
Register has the meaning set forth in Section 11.10 hereof.
Regulation U means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time and
shall include any successor or other regulation or official
interpretation of the Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or
carrying margin stocks that is applicable to member banks of the
Federal Reserve System.
Regulatory Change shall mean the adoption of any applicable
law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority charged with
the administration thereof.
Related Investments means investments in joint ventures, and
direct participations in, and acquisitions of, any right to
manage and/or service assets, which investments are consistent
with the business of Borrowers as described in Section 7.2, and
however such investments are recorded on the financial statements
of any Borrower.
Representatives has the meaning set forth in Section 10.4.
Request for Advance means a written request for an Advance
or a Letter of Credit, substantially in the form attached hereto
as Exhibit D, which shall (a) specify (i) the date of such
Advance or Letter of Credit, which shall be a Business Day, (ii)
which portion, if any, of such Advance is to be a LIBOR Rate
Advance or Variable Rate Advance or an Alternate Currency
Advance, and (iii) the aggregate amount of all outstanding
Advances or Letters of Credit before and after giving effect to
the requested Advance or Letter of Credit, as applicable; and (b)
contain a certification of an Authorized Officer of AMRESCO
(acting for itself and on behalf of any Borrower which will use
the proceeds of such Advance) as of the date of such Advance or
Letter of Credit certifying (i) as to the solvency of Borrowers
(determined in accordance with Section 6.19), (ii) that the
intended use of the proceeds of such Advance or Letter of Credit
does not violate the provisions of this Agreement (including,
without limitation, Sections 2.1, 6.15 and 7.10) or any other
Loan Document, (iii) as to the matters set forth in Section
4.2(b) and (c), in the case of an Advance, or the matters set
forth in Section 4.3(c) and (d), in the case of a Letter of
Credit, and (iv) with respect to an Advance for the purchase of
an Asset Portfolio which is included in the then current
Borrowing Base, that Borrowers possess or will possess on the
funding date of such Advance, the originals of the promissory
notes evidencing the Assigned Loans included in such Asset
Portfolio and will deliver such original promissory notes to a
Custodian on the Business Day following the acquisition of such
Asset Portfolio.
Required Lenders means:
(a) Except as provided in clause (b) or (c) below or
as expressly stated otherwise in this Agreement or in any other
Loan Document, at any time and with respect to any matter
hereunder or relating to the Credit Facility, the Lenders holding
at the time in question a portion of the Credit Facility
(including participations in Letters of Credit) equal to or
greater than fifty-one percent (51%) of the sum of (A) the
aggregate unpaid principal amount of the Notes, plus (B) the
Letter of Credit Exposure, plus (C) the Commercial Paper Reserve
(or, if no Advances or Letters of Credit are outstanding, then
Lenders holding at the time in question fifty-one percent (51%)
of the aggregate Loan Commitment Amounts of all Lenders);
(b) With respect to (i) any alteration of the
Applicable Rate, or (ii) any alteration of the amount of any fees
payable to the Lenders (excluding the Agent in such capacity or
the Arranger) under this Agreement, or (iii) any extension of the
Termination Date of the Credit Facility or the due date of any
installment of principal or interest or any fees on the Credit
Facility, or (iv) the forgiveness of any principal or interest
under the Credit Facility, or (v) any increase in the amount of
the Credit Facility, or (vi) any change in the definition of Loan
Percentage, or (vii) the release of any Lenders' Liens on any
Collateral after the occurrence of a Default, or (viii) the
reinstatement of the Notes and other indebtedness pursuant to the
provisions in Section 9.2(a) hereof, or (ix) any consent of
Lenders required by Section 11.10(a)(i) hereof, or (x) any
alteration of the provisions of this definition of Required
Lenders, all the Lenders; and
(c) With respect to the determination of additional
Designated Countries, the Lenders holding at the time in question
a portion of the Credit Facility (including participations in
Letters of Credit) equal to or greater than seventy-five percent
(75%) of the sum of (A) the aggregate unpaid principal amount of
the Notes, plus (B) the Letter of Credit Exposure, plus (C) the
Commercial Paper Reserve (or, if no Advances or Letters of Credit
are outstanding, then Lenders holding at the time in question
seventy-five percent (75%) of the aggregate Loan Commitment
Amounts of all Lenders).
Residential Asset Portfolio means one or more pools or
portfolios where 100% of the purchase price of such pools or
portfolios is attributable to (a) performing, non-performing or
under-performing loans secured by single family residences or
duplexes, and/or (b) real estate or other assets acquired in
connection with the foreclosure, restructure or settlement of
non-performing or under-performing loans secured by single family
residences or duplexes, together with all documents, instruments,
certificates and other information related thereto.
Residential Funding Loans mean the real estate loans
originally funded under the Residential Funding Warehousing
Facility, and shall include any such loan which is refinanced but
is still held by AMRESCO, AMRESCO Capital Corporation or any
other Subsidiary.
Residential Funding Warehousing Facility means the credit
facility made to AMRESCO Capital Corporation (and with recourse
only to AMRESCO Capital Corporation) evidenced by that certain
Warehousing Credit and Security Agreement (Multi-Family Mortgage
Loans), dated as of August 15, 1995, between AMRESCO Capital
Corporation and Residential Funding Corporation.
Residential Residual Interests means any class of
certificates, or other portion of a securities issuance, related
to a residential mortgage-backed security or similar instrument.
Rights means rights, remedies, powers, privileges and
benefits.
SEC means the federal Securities and Exchange Commission,
and its successors.
Security Agreement means a Security Agreement dated as of
the Initial Closing Date and any other security agreements,
executed by and between the Original Borrowers or other
Borrowers, as applicable, and Agent, and all amendments,
modifications and replacements thereof, including, without
limitation, as modified by that certain First Modification of
Security Agreement (herein so called) dated the Closing Date,
executed by and between Borrowers (other than AMRESCO Jersey
Ventures Limited, AMRESCO UK Holdings Limited, AMRESCO UK
Ventures Limited, AMRESCO UK Limited and Old Midland House
Limited) and Agent, substantially in the form attached hereto as
Exhibit E.
Security Documents means the Collateral Assignment, the
Security Agreement, the Pledge Agreements, the Lockbox Agreement,
all Mortgages and all other documents or instruments granting a
Lien in favor of the Lenders (or Agent for the benefit or on
behalf of the Lenders) as collateral for the Credit Facility, and
all financing statements related thereto, and all modifications,
renewals or extensions thereof and any documents executed in
modification, renewal, extension or replacement thereof.
Senior Consolidated Funded Debt means the Credit Facility
and Excluded Subsidiary Debt.
Standard Industry Practices means such due diligence,
collateral control and collection procedures that are customarily
followed by Persons actively engaged in the business of acquiring
Distressed Assets in a bulk transaction.
Structure Fee means the fee to be paid by AMRESCO to the
Arranger pursuant to a separate letter to be executed by AMRESCO
and Arranger on or before thirty (30) days following the Closing
Date.
Subsidiary means, (a) for any Person other than AMRESCO, any
corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions (including that of a general partner) are at
the time directly or indirectly owned, collectively, by such
Person and any Subsidiaries of such Person, or (b) for AMRESCO,
any corporation wholly-owned by AMRESCO or any other entity of
which 100% of the securities or other ownership interests are at
the time directly or indirectly owned, collectively, by AMRESCO
and any Subsidiaries of AMRESCO. The term Subsidiary shall
include Subsidiaries of Subsidiaries (and so on).
Supplement to Schedule I means an addendum to this
Agreement, the other Loan Documents, Schedule I to the Collateral
Assignment, and Schedule I to the Security Agreement, in form as
attached hereto as Exhibit G and as contemplated by Section 2.4.
Tangible Capital means the amount of equity which a Borrower
has invested in an asset or entity less the value of any
Intangible Assets of such asset or entity.
Taxes means all taxes, assessments, filing or other fees,
levies, imposts, duties, deductions, withholdings, stamp taxes,
interest equalization taxes, capital transaction taxes, foreign
exchange taxes or other charges of any nature whatsoever, from
time to time or at any time imposed by law or any federal, state
or local governmental agency. "Tax" means any one of the
foregoing.
Telerate Screen means the display designated as Screen 3750
(as to Dollars, British pounds sterling and any other applicable
Alternate Currency shown thereon) or Screen 3740 (as to Canadian
dollars) on the Telerate System or such other screen on the
Telerate System as shall display the London interbank offered
rates for deposits in U.S. dollars or the applicable Alternate
Currency quoted by selected banks.
Termination Date means May 31, 1998.
Title Company means a title company or title companies
selected by any Borrower and not disapproved by Agent, together
with any issuing agent that issues all or any part of a Title
Policy.
Title Policy means a Mortgagee or Loan Policy of Title
Insurance issued and underwritten by a Title Company for the
benefit of (a) Agent, on behalf of the Lenders, covering that
portion of the Mortgaged Property therein described and insuring
the lien of the Mortgage which covers such portion of the
Mortgaged Property, or (b) any Borrower insuring a lien on
Underlying Real Estate securing an Assigned Loan.
Transfer of Lien means an absolute assignment of note and
liens (including, without limitation, all mortgages and any other
security for each of the Assigned Loans), executed by any
Borrower to Agent, for the benefit of the Lenders, in the form
attached as Exhibit B to the Collateral Assignment (which
document may also be referred to as an "Assignment of Lien" in
certain states).
UCC means the Uniform Commercial Code in effect under the
laws of the State of Texas, as amended, or, if stated with
reference to another jurisdiction, the Uniform Commercial Code as
adopted in the relevant jurisdiction.
Underlying Real Estate means the real property, together
with all improvements thereon, which secures any of the Assigned
Loans, or any one of such parcels of real property.
Variable Rate means a fluctuating rate of interest equal to
the Base Rate.
Variable Rate Advance shall mean an Advance which will bear
interest computed with reference to the Variable Rate.
Warehouse Line Loans means the real estate loans funded
under the Warehouse Line of Credit, and shall include any such
loan which is refinanced but is still held by AMRESCO, AMRESCO
Capital Corporation or any other Subsidiary.
Warehouse Line of Credit means the line of credit to AMRESCO
Capital Corporation, and guaranteed by AMRESCO, made by
NationsBank, such line of credit being in the original amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00), for the
funding of real estate loans, as the same may be renewed,
extended, modified, amended or replaced from time to time.
Wholly-Owned Non-Real Estate Portfolios means Asset
Portfolios that are 100% owned by any Borrower where less than
50% of the Net Purchase Price is allocated to Real Estate Loans.
Wholly-Owned Real Estate Portfolios means Asset Portfolios
that are 100% owned by any Borrower where more than 50% of the
Net Purchase Price is allocated to Real Estate Loans.
Section 1.2. Singular and Plural of Definitions. Each
term defined in the singular form in Section 1.1 shall mean the
plural thereof when the plural form of such term is used in this
Agreement, and each term defined in the plural form in
Section 1.1 shall mean the singular thereof when the singular
form of such term is used in this Agreement.
Section 1.3. Substantive Definitions. The use of defined
terms herein is for convenience and the wording of defined terms
shall not affect or limit the terms and provisions hereof;
provided, however, that the terms, provisions and agreements set
forth in the definitions contained in Section 1.1 shall be
substantive terms of this Agreement and fully binding on the
parties hereto.
Section 1.4. Money. Unless stipulated otherwise, all
references herein or in any of the Loan Documents to "Dollars,"
"$," "money," "payments" or other similar financial or monetary
terms are references to lawful money of the United States of
America.
Section 1.5. Captions; References. The captions in this
Agreement and in the table of contents hereof are for convenience
of reference only and shall not define, affect or limit any of
the terms or provisions hereof. All references herein to
Articles and Sections are, unless specified otherwise, references
to articles and sections of this Agreement. Unless specifically
indicated otherwise, all references herein to an "Exhibit,"
"Annex" or "Schedule" are references to exhibits, annexes or
schedules attached hereto, all of which are incorporated herein
and made a part hereof for all purposes, the same as if set forth
fully herein, it being understood that if any exhibit, annex or
schedule attached hereto which is to be executed and delivered
contains blanks, the same shall be completed correctly and in
accordance with this Agreement prior to or at the time of the
execution and delivery thereof. The words "herein," "hereof,"
"hereunder" and other similar compounds of the word "here" when
used in this Agreement shall refer to the entire Agreement and
not to any particular provision or section unless specifically
indicated otherwise.
Section 1.6. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE II
COMMITMENT
Section 2.1. Credit Facility Commitment. Each Lender
severally agrees, subject to and upon the terms, covenants and
conditions of this Agreement, to make Advances to any Borrower,
or, with respect to Letters of Credit, to cause the Issuing Bank
to issue Letters of Credit for the account of any Borrower, and
each Borrower shall be entitled to obtain in the manner set forth
in Section 2.2:
(a) Credit Facility Advances. One or more Advances
(i) for general working capital purposes, and (ii) for Permitted
Investments, which, subject to the Loan Documents, Borrower may
borrow, repay, and reborrow under this Agreement; provided, that,
(A) each such Advance must occur on a Business Day and no later
than the Business Day immediately preceding the Termination Date,
(B) each such Advance must be in an amount not less than the
limitations provided in Section 2.2, and (C) on any date of
determination, the outstanding principal balance of the Credit
Facility shall never exceed the lesser of (1) the sum of (a) the
difference between (A) 37.5% times the Available Commitment minus
(B) the sum of the Commercial Paper Reserve plus the Letter of
Credit Exposure plus (b) the Borrowing Base, and (2) an amount
equal to the Available Commitment less the sum of (a) the
Commercial Paper Reserve plus (b) the Letter of Credit Exposure.
(b) Commercial Paper Reserve. In addition, Borrowers
shall be entitled to reserve out of the Credit Facility the
Commercial Paper Reserve; provided, that, (i) if Borrowers are
called on to fund any commercial paper for which Borrowers have
established a Commercial Paper Reserve, Borrowers shall
nonetheless be required to satisfy the terms of the Credit
Facility for obtaining an Advance in such amount; (ii) after
giving effect to such Commercial Paper Reserve, (A) the amount of
all Commercial Paper Reserves plus the Letter of Credit Exposure
must be less than or equal to 37.5% of the Available Commitment
(as the same may be adjusted as herein provided), and (B) the
aggregate Commercial Paper Reserves shall not exceed
$50,000,000.00. Notwithstanding the establishment of Commercial
Paper Reserves, Lenders shall have no obligation to issue Letters
of Credit to support Borrowers' issuance of commercial paper.
(c) Letters of Credit. Letters of Credit issued by
the Issuing Lender for the account of Borrowers for any of the
purposes for which Borrowers can obtain an Advance; provided,
that (i) each such Letter of Credit shall be issued on a Business
Day, (ii) after the issuance of any such Letter of Credit, (A)
the Letter of Credit Exposure plus the Commercial Paper Reserve
must be less than or equal to 37.5% of the Available Commitment
(as the same may be adjusted as herein provided), and (B) the
Letter of Credit Exposure shall not exceed Ten Million and No/100
Dollars ($10,000,000.00), and (iii) each such Letter of Credit
must have an expiration date no later than the Termination Date.
To the extent that funds are ever drawn under any of the Letters
of Credit, each such draw will be paid by the Issuing Lender, and
each of the Lenders will make an Advance in the amount of such
Lender's Loan Percentage of the amount so paid by the Issuing
Lender to reimburse the issuing Lender for such draw.
In no event shall any Lender be required to make any
Advances in excess of such Lender's Loan Percentage of the amount
required to be advanced by the Lenders under the above provisions
of this Section 2.1 or which would cause any Lender to have made
Advances in excess of such Lender's Loan Commitment Amount.
Section 2.2. Method of Borrowing. Subject to the terms
and conditions of this Agreement, each Borrower shall be entitled
to obtain Advances and Letters of Credit from Lenders pursuant to
Section 2.1 in the following manner:
(a) Variable Rate Advances. In the case of any
Variable Rate Advance, AMRESCO (acting for itself or on behalf of
any Borrower), through an Authorized Officer, shall give Agent
prior to 10:00 a.m., Dallas, Texas time, on the date of any such
proposed Advance, an irrevocable written notice of its intention
to borrow or reborrow such Variable Rate Advance hereunder. Such
notice of borrowing shall specify the requested funding date,
which shall be a Business Day, the amount of the proposed
aggregate Variable Rate Advances to be made by Lenders and shall
be accompanied by the documents required to be delivered pursuant
to Article IV. The aggregate amount of Variable Rate Advances to
be made on any funding date shall not be less than One Million
and No/100 Dollars ($1,000,000.00) or greater whole multiples of
One Hundred Thousand and No/100 Dollars ($100,000.00).
(b) LIBOR Rate Advances. In the case of LIBOR Rate
Advances, AMRESCO (acting for itself or on behalf of any
Borrower), through an Authorized Officer, shall give Agent at
least three Business Days' irrevocable written notice of its
intention to borrow or reborrow such advance hereunder. Notice
shall be given to Agent prior to 10:00 a.m., Dallas, Texas time,
in order for such Business Day to count toward the minimum number
of Business Days required. LIBOR Rate Advances shall in all
cases be subject to availability and to Section 3.5 hereof. For
LIBOR Rate Advances, the notice of borrowing shall specify (i)
the requested funding date, which shall be a Business Day, (ii)
the amount of the proposed aggregate LIBOR Rate Advances to be
made by Lenders, (iii) the Interest Period selected by AMRESCO
(provided that no such Interest Period shall extend past the
Termination Date) and (iv) Borrowers' election of the effective
date (which date together with any similar date selected under
clause (c) below is referred to as the "Effective Date") on which
the LIBOR Rate Advances shall begin. The aggregate amount of
LIBOR Rate Advances to be made on any funding date shall not be
less than Five Million and No/100 Dollars ($5,000,000.00) or
greater whole multiples of One Million and No/100 Dollars
($1,000,000.00).
(c) Alternate Currency Option. In the case of any
Alternate Currency Advance, AMRESCO (acting for itself or on
behalf of any Borrower), through an Authorized Officer, shall
give Agent at least three Business Days' irrevocable written
notice of its intention to borrow or reborrow such advance
hereunder (the "Alternate Currency Option"). Notice shall be
given to Agent prior to 10:00 a.m., Dallas, Texas time, in order
for such Business Day to count toward the minimum number of
Business Days required. Alternate Currency Advances shall in all
cases bear interest at the Alternate Currency Rate computed with
respect to the applicable Alternate Currency and be subject to
availability and to Section 3.5 hereof. Such notice of borrowing
shall specify (i) the requested funding date, which shall be a
Business Day, (ii) the Dollar Equivalent of the amount of the
proposed Alternate Currency Advance, (iii) the currency of such
proposed Alternate Currency Advance, (iv) the Interest Period
selected by AMRESCO (provided that no such Interest Period shall
extend past the Termination Date) and (iv) Borrower's election of
the Effective Date on which the Alternate Currency Advance shall
begin. The aggregate amount of Alternate Currency Advances to be
made on any funding date shall not be less than Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00) (in its
Dollar Equivalent), or greater whole multiples of One Million and
No/100 Dollars ($1,000,000.00) (in its Dollar Equivalent).
(d) Notice To Lenders. Agent shall promptly notify
Lenders of each notice received from AMRESCO pursuant to this
Section 2.2. Each Lender shall, not later than noon, Dallas,
Texas time, on the date of any Advance, deliver to Agent, at its
address set forth herein, such Lender's Loan Percentage of such
Advance in immediately available funds in accordance with Agent's
instructions. Prior to 2:00 p.m., Dallas, Texas time, on the
date of any Advance hereunder Agent shall, subject to
satisfaction of the conditions set forth in Article IV, disburse
the amounts made available to Agent by the Lenders by (i)
transferring such amounts by wire transfer pursuant to AMRESCO's
instructions, or (ii) in the absence of such instructions,
crediting such amounts to the account of AMRESCO maintained with
Agent. All Advances shall be made by each Lender according to
its Loan Percentage.
(e) Method of Issuing Letters of Credit. Not less
than three (3) Business Days prior to the requested date of
issuance of any Letter of Credit, AMRESCO (for itself or on
behalf of any Borrower) shall deliver to Agent a Request For
Advance and shall execute and deliver to the Issuing Lender the
customary letter of credit application and agreement used by the
Issuing Lender from time to time (the "LOC Application").
Nothing in this Agreement shall prohibit the Issuing Lender from
modifying the form of LOC Application in effect from time to time
in connection with the issuance of any Letter of Credit, provided
that, such modification does not substantially modify this
Agreement to the detriment of Borrowers. In the event of a
direct conflict between the provisions of the LOC Application and
this Agreement, the provisions of this Agreement shall govern.
In no event shall a Letter of Credit have an expiration date
which is later than the Termination Date. Letters of Credit may
be standby letters of credit only and may be issued on behalf of
any Borrower. Upon satisfaction of the applicable conditions
precedent set forth in Article IV, and subject to the other terms
and conditions of this Agreement, the Issuing Lender shall issue
Letters of Credit for the account of any Borrower within three
(3) Business Days from receipt by the Issuing Lender of the
fully-executed LOC Application (so long as the requested terms of
such Letter of Credit are acceptable to the Issuing Lender in its
reasonable discretion).
Immediately upon the issuance of each Letter of Credit, the
Issuing Lender shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed to have purchased
and received from the Issuing Lender, in each case irrevocably
and without any further action by any party, an undivided
interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of Borrowers under this Agreement
in respect thereof in an amount equal to the product of (x) such
Lender's Loan Percentage times (y) the maximum amount available
to be drawn under such Letter of Credit (assuming compliance with
all conditions to drawing). Subject to the limits referred to
above, Borrowers may request the issuance of Letters of Credit
under this Section 2.2(d), repay any Advances resulting from
drawings thereunder pursuant to this Section 2.2(d) and request
the issuance of additional Letters of Credit under this Section
2.2(d).
The payment by the Issuing Lender of a draft drawn under any
Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Lender of an Advance, which
shall bear interest at the Variable Rate, in the amount of such
draft (but without any requirement for compliance with the
conditions set forth in Article IV hereof). In the event that a
drawing under any Letter of Credit is not reimbursed by Borrowers
by 10:00 a.m. (Dallas time) on the first Business Day after such
drawing, the Issuing Lender shall promptly notify Agent and each
other Lender. Each such Lender shall, on the first Business Day
following such notification, make an Advance, which shall bear
interest at the Variable Rate, and shall be used to repay the
applicable portion of the Issuing Lender's advance with respect
to such Letter of Credit, in an amount equal to the amount of its
participation in such drawing for application to reimburse the
Issuing Lender (but without any requirement for compliance with
the applicable conditions set forth in Article IV hereof) and
shall make available to Agent for the account of the Issuing
Lender, by deposit at Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to
make available to Agent for the account of the Issuing Lender the
amount of such Advance, the Issuing Lender shall be entitled to
recover such amount on demand from such Lender together with
interest thereon at a rate per annum equal to the lesser of
(i) the Maximum Lawful Rate or (ii) the Federal Funds Rate.
Section 2.3. Fees.
(a) Participation Fee. In consideration for the commitment
of each Lender to make Advances upon the terms and conditions set
forth in this Agreement and the reserving of sufficient funds by
each Lender from which to make disbursement of the Advances,
Borrowers shall pay to each such Lender on the Closing Date its
Participation Fee.
(b) Commitment Fee. Throughout the Credit Period,
Borrowers shall pay to Agent for the account of each Lender, such
Lender's Loan Percentage of the Commitment Fee, such fee to be
computed based on the number of actual days elapsed assuming each
calendar year consisted of 360 days, and due and payable
quarterly in arrears, commencing on July 1, 1996, and continuing
on the first day of each calendar quarter thereafter, with a
final payment of such Commitment Fee being due and payable upon
the Termination Date.
(c) Letter of Credit Fees. Borrowers shall pay to Agent
for the account of each Lender a letter of credit fee (the
"Letter of Credit Fee") (which shall be payable quarterly in
arrears, commencing on July 1, 1996, and continuing on the first
day of each calendar quarter thereafter, with a final payment of
such Letter of Credit Fee being due and payable on the
Termination Date) on the average daily amount available for
drawing under all outstanding Letters of Credit at the following
per annum percentages, applicable in the following situations:
Annual
Applicability Percentage
(a) Qualified Investment Rating of 1.5%
below Investment Grade or unrated
(b) Qualified Investment Rating of 1%
Investment Grade or higher
The fee payable in respect of the Letters of Credit shall be
subject to reduction or increase, as set forth in the table
above. Subject to Section 11.8 hereof, such fee shall be
computed on the basis of the actual number of days elapsed. In
addition to the Letter of Credit Fee, Borrowers shall pay to
Agent for the account of the Issuing Lender an issuance fee
(which shall be due and payable on the date of issuance of each
Letter of Credit) in an amount equal to Three Hundred and No/100
Dollars ($300.00).
(d) Structure Fee. In consideration for the
Arranger's efforts in structuring the Credit Facility and
arranging for such Credit Facility, Borrowers agree to execute on
or before thirty (30) days following the Closing Date a letter
reasonably satisfactory to Agent and Arranger concerning the
Structure Fee and to pay to Arranger the Structure Fee in
accordance with such letter.
(e) Administrative Fees. In consideration for Agent's
administration services under the Credit Facility, Borrowers
agree to pay Agent the Administrative Fee in advance in equal
quarterly payments, commencing on July 1, 1996, and continuing on
the first day of each calendar quarter thereafter, until such
time the Notes are paid in full, all Letters of Credit have been
terminated, and Lenders' commitment to make Advances under this
Agreement have been terminated.
(f) Amendment Fee. In consideration for the agreement
of each Lender to modify the terms of the Original Loan Agreement
as set forth herein and in the other Loan Documents, Borrowers
agree to pay to each such Lender the Amendment Fee on the Closing
Date.
Section 2.4. Additional Borrowers. Upon the earlier to
occur of (1) thirty (30) days after the filing of articles of
incorporation, certificates of limited partnership or similar
organizational documents with the appropriate Governmental
Authority of any future Subsidiary of any Borrower or (2) two (2)
Business Days prior to the date that such Subsidiary obtains an
Advance (or the proceeds of any Advance from another Borrower) or
includes any of its assets in the Borrowing Base, Borrowers shall
cause to be delivered to Agent (a) a Supplement to Schedule I
properly executed by such future Subsidiary (other than an
Excluded Subsidiary), (b) a Pledge Agreement and all financing
statements related thereto, properly executed by the appropriate
Borrower pursuant to which all of the outstanding shares of stock
of such future Subsidiary are pledged to Agent (for the benefit
of Lenders), together with the original stock certificates
accompanied by stock powers executed in blank by the appropriate
Borrower evidencing all of such outstanding shares of stock, and
(c) all resolutions, certificates or documents Agent may
reasonably request relating to the formation, existence and good
standing of such future Subsidiary, corporate authority for the
execution and validity of the Loan Documents described in clauses
(a) and (b) immediately above and any other documents and matters
relevant to the formation of such future Subsidiary and its
status as a Borrower hereunder, all in form and substance
satisfactory to Agent, which resolutions, certificates and
documents shall include, without limitation, (i) the articles of
incorporation and bylaws of such future Subsidiary,
(ii) resolutions of the board of directors of such future
Subsidiary authorizing the execution of the Loan Documents
described in clauses (a) and (b) immediately above on behalf of
such future Subsidiary and the granting of all the relevant
Lenders' Liens as security for the Credit Facility and the
Letters of Credit, (iii) certificates of incumbency for the
officers of such future Subsidiary, and (iv) certificates of
corporate existence and good standing issued by the state of
incorporation of such future Subsidiary and from the appropriate
Governmental Authority of each state in which such future
Subsidiary is required by applicable law to be qualified.
ARTICLE III
TERMS OF CREDIT FACILITY
Section 3.1. Notes. The Credit Facility shall be
evidenced by the Notes. Each Lender shall receive an originally
executed Note in an amount equal to such Lender's Loan Commitment
Amount.
Section 3.2. Maturity. All outstanding principal of the
Notes, together with all accrued but unpaid interest and other
amounts owed with respect thereto, shall be due and payable in
full on the Termination Date.
Section 3.3. Interest Rate. Interest on the Advances
shall accrue at a rate per annum equal to the lesser of (a) the
Applicable Rate as selected by Borrower pursuant to this
Agreement, subject, however, to the provisions of Section 11.8,
or (b) the Maximum Lawful Rate; provided, however, if at any time
the Applicable Rate exceeds the Maximum Lawful Rate, resulting in
the charging of interest hereunder to be limited to the Maximum
Lawful Rate, then any subsequent reduction in the Applicable Rate
shall not reduce the rate of interest below the Maximum Lawful
Rate until the total amount of interest accrued on the
indebtedness evidenced hereby equals the amount of interest which
would have accrued on such indebtedness if the Applicable Rate
had at all times been in effect.
Without notice to any Borrower or anyone else, the Variable
Rate and the Maximum Lawful Rate shall each automatically
fluctuate upward and downward as and in the amount by which the
Base Rate and Maximum Lawful Rate, respectively, fluctuate,
subject always to limitations contained in this Agreement. In
addition, the Adjusted LIBOR Rate and the Alternate Currency Rate
shall fluctuate upward and downward as and in the amount by which
the LIBOR Margin fluctuates, subject always to limitations
contained in this Agreement, any such changes in the LIBOR Margin
and, therefore, the Adjusted LIBOR Rate or Alternate Currency
Rate, as applicable, to occur on the Business Day following the
receipt by Agent of the quarterly financial statements and
related officer's certificate required to be delivered by AMRESCO
pursuant to Sections 7.1(b) and (c) hereof.
Section 3.4. Interest Payments. Interest on the Notes,
computed as provided in Section 3.11, shall be due and payable as
it accrues on (a) the first day of each calendar quarter
commencing on July 1, 1996, and continuing on the first day of
each October, January, April and July, thereafter until the
Termination Date, and (b) at the end of each Interest Period as
to any LIBOR Rate Advance or Alternate Currency Advance then
expiring, and on demand after the Termination Date so long as any
principal of any Note remains unpaid.
Section 3.5. Conversion of Advances; Regulatory Change.
(a) Upon at least two (2) Business Days' prior written
notice from AMRESCO to Agent ("Minimum Notice Requirement"),
Borrowers may, on any Interest Adjustment Date (other than the
Termination Date), convert amounts of any LIBOR Rate Advances
into Variable Rate Advances with interest accruing thereon with
reference to the Variable Rate, as provided in Section 3.3 above.
(b) Upon satisfaction by AMRESCO of the Minimum Notice
Requirement, and subject to the conditions provided in this
Agreement or the Notes, Borrowers may, on any date prior to the
Termination Date, convert amounts of not less than Five Million
and No/100 Dollars ($5,000,000.00) in the aggregate on the same
date, or any whole multiple of One Million and No/100 Dollars
($1,000,000.00) in excess thereof of any Variable Rate Advances
into LIBOR Rate Advances with interest accruing thereon with
reference to the Adjusted LIBOR Rate, as provided in Section 3.3
above, for the Interest Period selected in such notice.
Each notice of Adjusted LIBOR Rate election by
Borrowers shall include the information set forth in Section
2.2(b) and is subject to the following conditions: (1) the
Interest Period shall be limited to a period commencing on the
Effective Date and ending on a date one, two, three, four or six
months later elected by AMRESCO in its notice to Agent; (2)
AMRESCO's written notice of an election shall be received by
Agent in time to satisfy the Minimum Notice Requirement; (3) the
last day of the Interest Period will not be subsequent in time to
the Termination Date; (4) in the case of a continuation of a
LIBOR Rate Advance, the Interest Period applicable after such
continuation shall commence on the last day of the preceding
Interest Period; (5) no LIBOR Rate election shall be made if
Agent determines by reason of circumstances affecting the
interbank Eurodollar market that either adequate or reasonable
means do not exist for ascertaining the Adjusted LIBOR Rate for
any Interest Period, or it becomes impracticable for Agent to
obtain funds by purchasing U.S. dollars in the interbank
Eurodollar market, or if Agent or any Lender determines that the
Adjusted LIBOR Rate will not adequately or fairly reflect the
costs to any Lender of maintaining the applicable LIBOR Rate
Advances at such rate, or if as a result of any Regulatory
Change, it shall become unlawful or impossible for Lenders to
maintain any such LIBOR Rate election; (6) there shall never be
more than fifteen (15) LIBOR Rate Advances, in the aggregate, in
effect at any one time hereunder; and (7) no LIBOR Rate election
shall be made after the occurrence and during the continuance of
a Default or Event of Default.
(c) As a condition to each Alternate Currency Advance,
Borrowers shall select an Alternate Currency Rate (based on the
applicable Alternate Currency) to be applicable thereto;
provided, that each such Alternate Currency Advance must be in an
amount of not less than Two Million Five Hundred Thousand and
No/100 Dollars ($2,500,000.00) (in its Dollar Equivalent) in the
aggregate on the same date, or any whole multiple of One Million
and No/100 Dollars ($1,000,000.00) (in its Dollar Equivalent) in
excess thereof; and provided, further, that (1) no Alternate
Currency election shall be made if Agent or any Lender determines
that, as a result of any Regulatory Change, it shall become
unlawful, impracticable or impossible for Lenders to maintain any
such Alternate Currency election; (2) there shall never be more
than five (5) Alternate Currency Advances, in the aggregate, in
effect at any one time hereunder; (3) in no event shall the
Dollar Equivalent amount of the requested Alternate Currency
Advance plus the then current outstanding balance of all previous
Alternate Currency Advances based on the Dollar Equivalent
thereof exceed $50,000,000 in the aggregate; (4) no Alternate
Currency election shall be made after the occurrence and during
the continuance of a Default or Event of Default; and (5) Lenders
shall not be required to make any Alternate Currency Advance if
the applicable Alternate Currency Rate would be limited to the
Maximum Lawful Rate pursuant to Section 3.3. Upon the expiration
of any Interest Period applicable to an Alternate Currency
Advance and provided that no Default has occurred and Borrowers
are entitled to have outstanding such Alternate Currency Advance
under this Agreement, the Alternate Currency Advance shall
continue for an Interest Period having the same duration as the
Interest Period then ended (but not beyond the Termination Date)
unless Borrowers shall, upon three (3) Business Days prior
written notice, elect a different Interest Period. Upon the
occurrence of an Event of Default, Agent may convert all
Alternate Currency Advances into the Dollar Equivalent at the end
of the respective Interest Periods therefor.
(d) To the extent Borrowers have not made an effective
election under and in accordance with subparagraphs (a) or (b)
above (including, without limitation, at the expiration of an
Interest Period), the Applicable Rate shall be the Variable Rate.
If Borrowers have failed to make such election at the end of an
Interest Period, Lenders shall be deemed to have made a Variable
Rate Advance in Dollars and in the amount, and in replacement, of
the LIBOR Rate Advance then maturing. To the extent Borrowers
have not made an effective election under clause (c) above prior
to the expiration of the applicable Interest Period with respect
to Alternate Currency Advances, then Borrowers shall be deemed to
have elected an Interest Period in accordance with the
penultimate sentence of clause (c) above.
(e) If, on or after the Initial Closing Date, any
Regulatory Change shall make it unlawful, impracticable or
impossible for any Lender (or its Eurodollar lending office) to
make, maintain or fund LIBOR Rate Advances or Alternate Currency
Advances and such Lender shall so notify Agent, Agent shall
forthwith give notice thereof to the other Lenders and AMRESCO,
whereupon until such Lender notifies AMRESCO and Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make LIBOR Rate Advances or
Alternate Currency Advances, as the case may be, shall be
suspended. If such Lender shall determine that it may not
lawfully continue to maintain and fund any of its outstanding
LIBOR Rate Advances or Alternate Currency Advances to maturity
and shall so specify in such notice, Borrowers shall immediately
prepay in full the then outstanding principal amount of such
Lender's portion of the LIBOR Rate Advances or Alternate Currency
Advances, as the case may be, together with accrued interest
thereon. Concurrently with prepaying such portion of the LIBOR
Rate Advances or Alternate Currency Advances, as the case may be,
Borrowers shall borrow a Variable Rate Advance and/or an Advance
in Dollars, as the case may be, in an equal principal amount from
such Lender (on which interest and principal shall be payable
contemporaneously with the related LIBOR Rate Advances or
Alternate Currency Advances, as the case may be, of the other
Lenders), and such Lender shall make such Variable Rate Advance
or Advance in Dollars, as the case may be. If a Lender shall be
unable to make, maintain or fund LIBOR Rate Advances or Alternate
Currency Advances as above provided for more than sixty days,
and the other Lenders are not similarly restricted, Borrowers
shall be entitled to designate an Eligible Assignee acceptable to
Agent to purchase the interest of the Lender which is unable to
fund LIBOR Rate Advances or Alternate Currency Advances, as the
case may be, and such Lender shall sell its interest to such
Eligible Assignee within ten Business Days of Borrowers' request.
Any such purchase shall be in accordance with and subject to the
provisions of Section 11.10.
(f) Borrowers shall promptly indemnify (i) Agent and
Lenders against any loss or expense which Agent or Lenders may,
as a consequence of Borrowers' failure to make a payment on the
date such payment is due hereunder, or the payment, prepayment or
conversion of any LIBOR Rate Advances or Alternate Currency
Advances hereunder on a day other than an Interest Adjustment
Date, sustain or incur in liquidating or employing deposits from
third parties acquired to effect, fund or maintain any such LIBOR
Rate Advances or Alternate Currency Advances or any part thereof,
including, without limitation, any Consequential Loss or
Alternate Currency Loss; (ii) Lenders against and reimburse
Lenders for increased costs to Lenders, as a result of any
Regulatory Change, in the maintaining of any LIBOR Rate Advances
or Alternate Currency Advances; Agent shall give AMRESCO written
notice of such costs within ninety (90) days of its or any
Lender's implementation and/or compliance with any such
Regulatory Change, and such costs shall be reimbursed to such
Lender prior to the earlier of (A) the Termination Date or (B)
ten (10) days following written notice thereof from Agent to
AMRESCO; and (iii) Agent and Lenders against any loss which Agent
or Lenders may sustain or incur, as a consequence of Borrowers'
failure to (A) pay any Alternate Currency Advance on the date due
or in the Alternate Currency in which it was made or (B) borrow
Alternate Currency Advances on the date for such borrowing
specified in the relevant Request for Advance, including without
limitation, any loss (1) arising from any change in the value of
Dollars in relation to any such Alternate Currency Advance which
was not paid on the date due between the date such payment was
due and the date of payment, or which was not paid in the
Alternate Currency in which it was made, or (2) incurred in
liquidating or closing out any foreign currency contract
undertaken by such Lender in funding or maintaining such
Alternate Currency Advance, all as determined by such Lender in
its sole discretion. All payments made pursuant to this
paragraph shall be made free and clear, without reduction for, or
account of, any present or future taxes or other levies of any
nature, excluding net income and franchise taxes.
Section 3.6. Payments of Advances; Reduction of Commitment
Amount.
(a) At any time, Borrowers may by notice from AMRESCO to
Agent prior to 10:00 a.m. (Dallas, Texas time) on the date on
which prepayment under this Section 3.6 is to be made,
voluntarily prepay outstanding Advances from time to time and at
any time, in whole or in part, without premium or penalty;
provided, that (i) each such partial payment must be in a minimum
amount of at least One Million and No/100 Dollars ($1,000,000.00)
(or, as to prepayment of portions thereof which are Alternate
Currency Advances, the Dollar Equivalent thereof), and (ii)
Borrowers shall pay any related Consequential Losses or Alternate
Currency Losses within ten days after Agent's demand therefor.
Each such optional prepayment shall be applied ratably in
accordance with Section 3.9 to pay the amounts owed to each
Lender under the Credit Facility.
(b) Borrowers shall make mandatory prepayments of the
principal amount of the Credit Facility from time to time, and at
any time, in an amount equal to (i) the excess, if any, of the
outstanding principal balance of the Credit Facility over the
lesser of (1) the sum of (a) the difference between (A) 37.5%
times the Available Commitment minus (B) the sum of the
Commercial Paper Reserve plus the Letter of Credit Exposure plus
(b) the Borrowing Base, and (2) an amount equal to the Available
Commitment less the sum of (a) the Commercial Paper Reserve plus
(b) the Letter of Credit Exposure, (ii) the proceeds (less
customary and reasonable closing costs) received by any Borrower
after the Closing Date from its issuance of common stock or other
equity or any Approved Subordinated Debt (other than as a result
of the issuance thereof to another Borrower) and (iii) the net
sale proceeds received by any Borrower from the sale of any asset
which has either a value at the time of the sale (as shown on the
books of such Borrower), or an aggregate sales price and all
other consideration for such sale, in excess of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00) (excluding,
however, the proceeds from the sale of an Assigned Loan included
in the Borrowing Base, if, within five Business Days from the
receipt of any Borrower of such sale proceeds, either such
proceeds are used to reduce the outstanding balance of the Credit
Facility or AMRESCO delivers to Agent an updated Borrowing Base
Schedule showing that the aggregate outstanding Advances do not
exceed the Borrowing Base). Borrowers shall pay on demand given
by Agent any Consequential Loss or Alternate Currency Loss
arising as a result of any such mandatory prepayments.
(c) Borrowers may fully or partially reduce the Available
Commitment at any time and from time to time, provided that (i)
notice of such reduction must be received by Agent by 10:00 a.m.
Dallas, Texas, time on the fifth Business Day preceding the
effective date of such reduction, (ii) each such reduction in the
Available Commitment must be in a minimum amount of Ten Million
and No/100 Dollars ($10,000,000.00) or any whole multiple of One
Million and No/100 Dollars ($1,000,000.00) in excess thereof (or,
as to the reduction of portions thereof which are Alternate
Currency Advances, the Dollar Equivalent thereof), (iii) if the
aggregate outstanding principal balance of the Credit Facility
exceeds the Available Commitment as so reduced, Borrowers shall
make a mandatory prepayment on the principal amount of the Credit
Facility in at least the amount of such excess, together with any
Consequential Loss or Alternate Currency Loss arising as a result
thereof, (iv) Borrowers shall not be entitled to reduce the
Available Commitment if upon reduction the difference between (A)
the Available Commitment times 37.5% minus (B) the sum of the
Letter of Credit Exposure plus the Commercial Paper Reserve is
less than zero, (v) Borrowers shall not be entitled to an
increase in the Available Commitment once it has been so reduced,
and (vi) in no event shall Borrowers be entitled to so reduce the
Available Commitment below $20,000,000.00 (or, as to the
reduction of portions thereof which are Alternate Currency
Advances, the Dollar Equivalent thereof), unless Borrowers have
elected to terminate the Available Commitment in full.
(d) If Borrowers shall prepay any LIBOR Rate Advance prior
to the expiration of its applicable Interest Period, a prepayment
fee shall be due to Lenders in an amount equal to the
consequential loss (the "Consequential Loss") incurred by Lenders
as a result of any such prepayment, such Consequential Loss to be
computed as the product of (i) the amount of the sum so prepaid
multiplied by (ii) the difference (but not less than 0.00) of
(A) the 360-day interest yield (as of the applicable Effective
Date and expressed as a decimal) on a Treasury Obligation
selected by Agent and having, as of the applicable Effective
Date, a remaining term until its maturity approximately equal to
the original Interest Period, minus (B) the 360-day interest
yield (as of the Business Day immediately preceding the
prepayment date and expressed as a decimal) on a Treasury
Obligation selected by Agent and having, as of the Business Day
preceding the prepayment date, a remaining term until maturity
approximately equal to the unexpired portion of the Interest
Period, multiplied by (iii) the quotient of (A) the number of
calendar days in the unexpired portion of the Interest Period,
divided by (B) 360. For purposes of computing a prepayment fee,
the Treasury Obligations selected by Agent shall be from among
those included in the over-the-counter quotations supplied to The
Wall Street Journal by the Federal Reserve Bank of New York City
based on transactions of $1,000,000.00 or more. Any prepayment
fee required to be paid by Borrowers pursuant to this Section 3.6
or any other provisions of this Agreement or of the other Loan
Documents in connection with the prepayment of any LIBOR Rate
Advances shall be due and payable whether such prepayment is
being made voluntarily or involuntarily, including, without
limitation, as a result of an acceleration of sums due under
LIBOR Rate Advances or any part thereof due to an Event of
Default.
(e) If Borrowers shall prepay any Alternate Currency
Advance or for whatever reason an Alternate Currency Advance is
converted to Dollars prior to the expiration of its applicable
Interest Period, a prepayment fee shall be due to Lenders for any
loss, cost, liability, or expense (an "Alternate Currency Loss")
which any Lender incurs as a result thereof, including, without
limitation, (i) any loss or reasonable expense sustained or
incurred in liquidating or employing deposits from third Persons
acquired to effect or maintain such Alternate Currency Advance or
any part thereof, (ii) an amount equal to the excess, if any of
(A) its cost of obtaining the funds for the Alternate Currency
Advance being prepaid or converted prior to the expiration of its
applicable Interest Period for the period from the date of such
prepayment or conversion to the last day of the Interest Period
for such Alternate Currency Advance, over (B) the amount of
interest (as reasonably determined by such Lender) that would be
realized by such Lender in re-employing the funds so prepaid or
converted for such Interest Period, (iii) any loss incurred in
liquidating or closing out any foreign currency contract
undertaken by such Lender in funding or maintaining such
Alternate Currency Advance, and (iv) any loss arising from any
change in the value of Dollars in relation to any such Alternate
Currency Advance which was not paid on the date due between the
date such payment was due and the date of payment, or which was
not paid in the Alternate Currency in which it was made, all as
determined by such Lender in its good faith discretion, but
otherwise without penalty. A Lender must request compensation
under this section as promptly as practicable after it obtains
knowledge of the event which entitles it to compensation pursuant
to this section, but in any event within 180 days after it
obtains such knowledge and pursuant to a certificate which sets
forth the amount such Lender is entitled to receive pursuant to
this Section 3.6 and the basis for determining such amount, which
certificate shall be conclusive as to the matters set forth
therein in the absence of manifest error. Any amounts received
by Agent from Borrowers pursuant hereto shall be disbursed by
Agent in immediately available funds to the Lenders requesting
such amounts.
Section 3.7. Schedules on Notes. Each Lender is hereby
authorized to record the date and amount of the initial principal
balance of its Notes and the date and amount of each advance and
repayment of principal on such Notes, and to attach any such
recording as a schedule to the Notes whereupon such schedule
shall constitute a part of such Notes for all purposes. Any such
recording shall constitute prima facie evidence of the accuracy
of the information so recorded; provided that the absence or
inaccuracy of any such schedule or notation thereon shall not
limit or otherwise affect the liability of Borrowers for the
repayment of all amounts outstanding under the Notes together
with interest thereon.
Section 3.8. General Provisions as to Payments. All
payments and indemnities required to be made by Borrowers under
any of the Loan Documents shall be joint and several obligations
of Borrowers. Borrowers shall make each payment of principal and
interest on the Credit Facility and all fees payable hereunder or
under any other Loan Document not later than 12:00 noon (Dallas
time) on the date when due, in Federal or other funds immediately
available in Dallas, Texas, to Agent at Agent's address for
payments set forth in Schedule I. Agent will promptly (and if
such payment is received by Agent by 12:00 noon (Dallas, Texas
time), and otherwise if reasonably possible, on the same Business
Day, and in any event not later than the next Business Day after
receipt of such payment) distribute to each Lender a payment on
the applicable Note, such Lender's pro rata share of each such
payment received by Agent for the account of Lenders. For
purposes of calculating accrued interest on the Credit Facility,
any payment received by Agent as aforesaid by 12:00 noon (Dallas,
Texas time) on any Business Day shall be deemed made on such day;
otherwise, such payment shall be deemed made on the next Business
Day after receipt by Agent. Whenever any payment of principal or
interest on the Credit Facility, or any fees under the Loan
Documents, shall be due on a day which is not a Business Day, the
date for payment thereof shall be extended to the next succeeding
Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
Section 3.9. Application of Payments. All payments made
on the Credit Facility and all proceeds from the sale of any
assets securing the Credit Facility or the exercise of any right
of setoff hereunder shall be ratably paid to each Lender in
accordance with its Loan Percentage, subject to the provisions of
Article X and any provision in the Loan Documents or agreements
among the Lenders providing for the application of such proceeds
against expenses or other amounts. Except as (a) to principal
payments made pursuant to Section 3.6(a), (b) or (c)(iii), (b)
provided in Section 9.10, and (c) otherwise specifically provided
in this Agreement or in any Loan Document, all prepayments on the
Credit Facility shall be applied against accrued but unpaid
interest and then against the principal portion of the Credit
Facility; provided, however, that, unless otherwise designated by
AMRESCO or required by law, prepayments and involuntary payments
received by the holder hereof and applied to principal hereunder
shall be applied first to the Variable Rate Advances in Dollars
(or that portion of LIBOR Rate Advances not subject to a
prepayment penalty), second to the LIBOR Rate Advances in
Dollars, and third to the Alternate Currency Advances.
Section 3.10. Post-Default Interest; Past Due Principal and
Interest. After maturity of the Notes or the occurrence of an
Event of Default, the outstanding principal balance of the Notes
shall, at the option of the Required Lenders, bear interest at
the Default Rate. Any past due principal of and, to the extent
permitted by law, past due interest on the Notes shall bear
interest, payable as it accrues on demand, for each day until
paid at the Default Rate. Such interest shall continue to accrue
at the Default Rate notwithstanding the entry of a judgment with
respect to any of the Obligations or the foreclosure of any of
the Lenders' Liens, except as otherwise provided by applicable
law.
Section 3.11. Computation of Interest and Fees. All
interest payable on the Notes hereunder or the amount of any fees
hereunder shall be computed based on the number of days elapsed
and 360 days per year (or 365 days for Alternate Currency
Advances in British pounds sterling), subject to the provisions
hereof limiting interest to the maximum permitted by applicable
law.
Section 3.12. Capital Adequacy. If any present or future
law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or the
interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required
or expected to be maintained by any Lender or any corporation
controlling such Lender and such Lender reasonably determines
that the amount of capital so required or expected to be
maintained is increased by or based upon the existence of the
Credit Facility or the Letters of Credit, then such Lender may
notify AMRESCO of such fact, and commencing ninety (90) days
following such notice, Borrowers shall pay to such Lender or
Agent (for such Lender) from time to time on demand, as an
additional fee payable hereunder, such amount as Lender shall
determine in good faith and certify in a notice to AMRESCO in
reasonable detail to be an amount that will adequately compensate
such Lender in light of these circumstances for its increased
costs of maintaining such capital. Each Lender shall allocate
such cost increases among its customers in good faith and on an
equitable basis.
Section 3.13. Deposit of Cash Collateral. Upon the
occurrence of any Event of Default, Borrowers shall, on the next
succeeding Business Day, deposit in a segregated, interest
bearing account with Agent such funds as Agent may request, up to
a maximum amount equal to the aggregate existing Letter of Credit
Exposure. Any funds so deposited shall be held by Agent as
security for the Obligations (including the Letters of Credit)
and Borrowers will, in connection therewith, execute and deliver
such assignments and security agreements in form and substance
satisfactory to Agent which Agent may, in its discretion,
require. As drafts or demands for payment are presented under
any Letter of Credit, Borrowers hereby irrevocably direct Agent
to apply such funds to satisfy such drafts or demands. When all
Letters of Credit have expired and the Notes have been repaid in
full (and Lenders have no obligation to make further Advances or
issue Letters of Credit hereunder) or such Event of Default has
been cured to the satisfaction of Agent, Agent shall release to
AMRESCO any remaining funds deposited under this Section 3.13.
Whenever Borrowers are required to make deposits under this
Section 3.13 and fail to do so on the day such deposit is due,
Lenders may make such deposit using any funds of Borrowers then
available to any Lender.
Section 3.14. Alternate Currency Notes. In order to
satisfy various Legal Requirements applicable to certain Foreign
Portfolios or for any other purpose for which Borrowers can
obtain an Alternate Currency Advance (including, without
limitation, Legal Requirements related to the deductibility of
interest on Alternate Currency Advances used to fund the
acquisition of such Foreign Portfolios or for such other
purposes), Borrowers have requested that they be allowed to
separately document the fundings for, or refinancing of, the
acquisition of any such Foreign Portfolios or for such other
purposes. Lenders hereby approve such request subject to Agent
being satisfied that such additional documentation is
appropriate. If approved by Agent, the Borrower or Borrowers
which desire to acquire the applicable Foreign Portfolio or to
make a capital contribution to the Borrower making any such
acquisition or to acquire or invest in any asset or Person for
the purpose for which Borrowers can obtain an Alternate Currency
Advance may each execute and deliver to NationsBank a promissory
note or notes (the "Alternate Currency Note") in an amount equal
to the proceeds to be funded for such acquisition. The terms of
such Alternate Currency Note shall be satisfactory to Agent in
all respects. Agent, on behalf of Lenders, shall then acquire
the Alternate Currency Note from NationsBank, and Borrowers shall
simultaneously with the delivery of the Alternate Currency Note
deliver to Agent a Request For Advance for an Alternate Currency
Advance in an amount sufficient to enable Lenders to acquire the
Alternate Currency Note. Borrowers and NationsBank understand
and agree that NationsBank shall not fund an Alternate Currency
Note until such time that Lenders have funded or are prepared to
simultaneously fund an Alternate Currency Advance to acquire such
Alternate Currency Note. The purchase price for each Alternate
Currency Note shall be equal to the outstanding principal balance
thereof, together will all accrued but unpaid interest thereon,
and, upon such payment, NationsBank shall endorse such Alternate
Currency Note to Agent, on behalf of Lenders, without recourse or
warranty. Payments of principal and interest made on any
Alternate Currency Note shall be applied against the principal
and interest on the Alternate Currency Advance made by Lenders to
acquire such Alternate Currency Note. In addition, upon
repayment by Borrowers of all principal and accrued but unpaid
interest on any Alternate Currency Advance used to acquire an
Alternate Currency Note, than Agent, on behalf of Lenders, shall
return such Alternate Currency Note to the maker thereof marked
"Paid."
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.1. Conditions To Closing. The obligation of
Lenders to fund the first Advance after the Closing Date or the
Issuing Lender to issue any Letter of Credit after the Closing
Date, whichever is first, as provided herein is subject to the
satisfaction of the following conditions and requirements:
(a) receipt by Agent of (i) this Agreement, properly
executed by Borrowers, and (ii) evidence acceptable to Agent that
Borrowers have paid all fees and expenses required to be paid by
Borrowers as of the date of such Advance or issuance;
(b) receipt by each Lender of its Note, properly
executed by Borrowers, together with its Participation Fee and
Amendment Fee;
(c) receipt by Agent of one or more Pledge Agreements
or First Modifications of Pledge Agreement, as appropriate, and
all financing statements related thereto, properly executed by
the appropriate Borrowers, together with the original stock
certificates accompanied by stock powers executed in blank by the
appropriate Borrowers evidencing all of the outstanding shares of
stock of each Subsidiary of Borrowers which is incorporated in
the United States (other than stock of a Subsidiary identified in
clause (a) of the definition of Excluded Subsidiary or any other
Excluded Subsidiary's stock that has been pledged to another
creditor of such Excluded Subsidiary prior to the Initial Closing
Date) and sixty-five percent (65%) of the stock of each
Subsidiary of Borrowers incorporated outside the United States;
(d) receipt by Agent of each First Modification of
Collateral Assignment and all financing statements related
thereto, properly executed by the appropriate Borrowers;
(e) receipt by Agent of the First Modification of
Security Agreement and all financing statements related thereto,
properly executed by the appropriate Borrowers;
(f) receipt by Agent of the First Modification of
Lockbox Agreement and all financing statements related thereto,
properly executed by Borrowers and the Lockbox Agent;
(g) receipt by the Custodians of the original
promissory notes evidencing the Assigned Loans owned by any
Borrower as of the Closing Date, together with allonge
endorsements attached thereto (in form acceptable to Agent)
executed in blank by the appropriate Borrower, and all other
documents required to be delivered to the Custodian pursuant to
the terms of the Custodial Agreement, the Collateral Assignment
or the other Loan Documents (including, without limitation, as
required by Sections 5.2 and 5.3 hereof);
(h) receipt by Agent from each Custodian of the
certificate required to be delivered under its respective
Custodial Agreement to reflect receipt by the Custodian of the
items referenced in (g) above;
(i) receipt by Agent of an opinion of general counsel
for each Borrower, opining as to the due organization and
existence of each Borrower, the enforceability of each of the
Loan Documents and such other matters as Agent may reasonably
request, in form and substance satisfactory to Agent;
(j) receipt by Agent of all resolutions, certificates
or documents it may reasonably request relating to the formation,
existence and good standing of each Borrower on the date hereof,
corporate authority for the execution and validity of this
Agreement and the other Loan Documents, and any other matters
relevant to this Agreement, all in form and substance
satisfactory to Agent, which resolutions, certificates and
documents shall include, without limitation, (i) the articles of
incorporation and bylaws of each Borrower, (ii) resolutions of
the board of directors of each Borrower authorizing the execution
of the Loan Documents on behalf of each such Borrower and the
granting of all the Lenders' Liens as security for the Credit
Facility and the Letters of Credit, (iii) certificates of
incumbency for the officers of each Borrower, and
(iv) certificates of corporate existence and good standing issued
by the state of incorporation of each Borrower and from the
appropriate governmental authority of each state in which each
Borrower is required by applicable law to be qualified;
(k) receipt by Agent of filing officer certificates
(or commercial reports similar thereto, if satisfactory to Agent)
under Section 9-407(2) of the UCC, releases or partial releases
of liens or financing statements, and other evidence satisfactory
to Agent that there are no Liens on any assets of any Borrower
(other than the Original Borrowers), except Permitted
Encumbrances;
(l) satisfaction of all conditions contained in
Section 4.2 if an Advance is being made, or satisfaction of all
conditions contained in Section 4.3 if a Letter of Credit is
being issued;
(m) receipt by Agent of copies of certificates of
insurance for each policy maintained by any Borrower, together
with evidence of payment of all premiums thereon;
(n) receipt by Agent of a power of attorney executed
by Borrowers (other than AMRESCO) to AMRESCO entitling AMRESCO to
take various actions under the Loan Documents in favor of all
Borrowers or any Borrower; and
(o) receipt by Agent and/or Lenders of all other
documents, instruments, certificates and information to be
delivered on or before the Closing Date pursuant to the terms of
this Agreement and the other Loan Documents.
All the documents, instruments, certificates, information,
evidences and opinions referred to in this Section 4.1 shall be
delivered to Agent no later than the Closing Date, and Lenders
shall not be bound by or obligated hereunder until Agent has
received all such items.
Section 4.2. Conditions To All Advances. The obligation
of Lenders to fund any Advance as provided herein is subject to
the satisfaction of the following conditions and requirements:
(a) timely receipt by Agent of a Request For Advance;
(b) immediately before and after giving effect to such
Advance, no Default shall have occurred and be continuing and the
making of such Advance shall not cause a Default;
(c) the representations and warranties contained in
this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such
Advance, except that all representations and warranties that
speak as of a particular date shall only be required on the date
of each such Advance to be true and correct in all material
respects as of the date to which such representation or warranty
speaks and not as of any subsequent date; and
(d) such other information and documentation as Agent
shall reasonably deem necessary or desirable in connection with
the funding of such Advance.
Section 4.3. Conditions to Letters of Credit. The
obligation of the Issuing Lender to issue any Letter of Credit as
provided herein is subject to the satisfaction by Borrowers of
the following conditions and requirements:
(a) timely receipt by the Issuing Lender of a fully
completed LOC Application;
(b) timely receipt by Agent of a Request For Advance;
(c) immediately before and after the issuance of such
Letter of Credit, no Default shall have occurred and be
continuing and the issuance of any Letter of Credit shall not
cause a Default;
(d) the representations and warranties contained in
this Agreement and in the other Loan Documents shall be true in
all material respects on and as of the date of issuance of such
Letter of Credit, except that all representations and warranties
that speak as of a particular date shall only be required on the
date of issuance of each such Letter of Credit to be true and
correct in all material respects as of the date to which such
representation or warranty speaks and not as of any subsequent
date;
(e) timely receipt by Agent (on behalf of the Issuing
Lender) of the issuance fee required to be paid by the Issuing
Lender related to the issuance of such Letter of Credit; and
(f) such other information and documentation as Agent
or the Issuing Lender shall reasonably deem necessary or
desirable in connection with the issuance of such Letter of
Credit.
ARTICLE V
COLLATERAL
Section 5.1. Security. The Credit Facility, the Letters
of Credit, and the Obligations shall all be secured by the liens
and security interests created by the Security Documents and any
and all other Collateral described herein, and all proceeds
thereof, until the particular item of Collateral is released or
until the Letters of Credit have expired and the Credit Facility
and all the Obligations are paid and performed in full (and any
obligation of Lenders to make Advances has been terminated).
Section 5.2. Requirements For Assigned Loans. With
respect to each of the Assigned Loans, Borrower shall deliver to
a Custodian the documents required by the applicable Custodial
Agreement which shall include, without limitation, the following:
(a) Either (i) the original promissory note or notes
evidencing the Assigned Loan properly endorsed showing
endorsements thereof from the original holder thereof, and all
subsequent holders, to a Borrower, together with an endorsement
thereof by such Borrower to Agent, on behalf of Lenders (in form
satisfactory to Agent), which endorsement may be an allonge
endorsement, (ii) with respect to any Assigned Loan where the
original promissory note has been lost, an original lost note
affidavit in form which is sufficient under the UCC or the laws
of any applicable jurisdiction to enable the owner thereof to
maintain an action on the related promissory notes and recover
from any party liable thereon, and properly executed by the
Person which sold such promissory note to the applicable
Borrower, (iii) with respect to any Assigned Loan for which a
Borrower has a participation interest, the original or a copy of
the participation certificate or agreement evidencing the
applicable Borrower's interest in such Assigned Loan, or
(iv) with respect to any Assigned Loan for which a Borrower has a
judgment, an original Assignment of Judgment (as defined in the
Collateral Assignment);
(b) Copies of the mortgage, deed of trust or other
security documents by which a lien or security interest has been
granted to secure the Assigned Loan;
(c) With respect to Domestic Portfolios, an original
Transfer of Liens properly executed and acknowledged by the
appropriate Borrower and, with respect to Foreign Portfolios,
such fixed or floating charges or other evidence of direct or
collateral transfer as Agent may require;
(d) To the extent in the possession of a Borrower or
an Affiliate of a Borrower, a Title Policy and certificate of
hazard and/or liability insurance with respect to any Underlying
Real Estate; and
(e) Such other information related to the Underlying
Real Estate, to the extent in the possession of any Borrower or
an Affiliate of any Borrower, as Agent shall reasonably request.
Section 5.3. Requirements for Mortgaged Properties. With
respect to each of the Mortgaged Properties, the Borrower which
owns such Mortgaged Property shall deliver to a Custodian the
documents required by the applicable Custodial Agreement with
respect thereto which shall include, without limitation, the
following:
(a) A copy of the deed or conveyance instrument by
which the applicable Borrower took title to the Mortgaged
Property;
(b) A Title Policy (which Title Policy may be a
mortgagee policy of title insurance which has converted to an
owner's policy of title insurance after foreclosure), for each
Mortgaged Property with a value in excess of One Hundred Thousand
and No/100 Dollars ($100,000.00) and, unless covered under an
umbrella policy approved by Agent, a certificate of hazard and/or
liability insurance covering the Mortgaged Property;
(c) An original, properly executed and acknowledged
Mortgage, together with a financing statement related thereto;
and
(d) Such other information as Agent shall reasonably
request.
Section 5.4. Recording. The Custodial Agreements shall
provide that the Custodian shall hold the original of each
Mortgage (and related financing statement) and Transfer of Liens
for recording in the appropriate real estate (or UCC, as
appropriate) records if and when (i) a Default occurs, or
(ii) Agent delivers ten (10) days prior written notice to the
Custodians and AMRESCO that the Required Lenders require the
recordation of such Mortgages (and related financing statements)
or Transfers of Liens. After the occurrence of any of the above
events, the Custodians or Agent shall record all Mortgages (and
related financing statements) and Transfers of Liens then held by
the Custodians, and Borrowers shall be required to pay, or
reimburse the Lenders for the payment of, all filing fees,
mortgage and stamp taxes and other expenses incurred by Lenders,
Agent or Custodians in connection with the recordation of the
Mortgages (and related financing statements) and Transfers of
Liens.
Section 5.5. Timing of Deliveries. The items referenced
in Sections 5.2 and 5.3 must be delivered to a Custodian under a
Custodial Agreement within the time periods specified in such
Custodial Agreement, and Borrowers must deliver to Agent a
supplement to the Collateral Assignment covering any Assigned
Loans or Mortgaged Property acquired by any Borrower after the
Initial Closing Date, no later than the earlier to occur of (i) a
Default, (ii) thirty (30) days after the effective date of the
acquisition by the applicable Borrower of such Assigned Loans or
Mortgaged Property, or (iii) the date on which Borrower requests
that such Assigned Loans or Mortgaged Property be included in the
Borrowing Base.
Section 5.6. Agent's Discretion. All requirements for the
Collateral are imposed solely and exclusively for the benefit of
the Lenders but are to be enforced and monitored solely and
exclusively by Agent in accordance with the provisions of the
Loan Documents. No Person (including Borrower or any other
Lender) other than Agent shall have any standing to require
satisfaction of any such requirements. Agent shall be entitled
to require delivery of the items referenced in Section 5.2 and
Section 5.3 at any time and, from time to time (subject to the
limitation contained in Section 5.4), and the failure of Agent to
request any such items at any particular time shall not
constitute a waiver of the Lenders' rights to thereafter require
that such items be delivered.
Section 5.7. Lockbox; Lockbox Account.
(a) Notwithstanding any provision herein or in the
other Loan Documents to the contrary, Borrowers agree that they
have instructed, or will cause instructions to be given to, all
Account Debtors, or contemporaneously with the execution of this
Agreement or within thirty (30) days after the addition of an
Asset Portfolio to the Borrowing Base will instruct, or will
cause instructions to be given to, all Account Debtors, pursuant
to a letter from the appropriate Borrower or the seller of such
Asset Portfolio in form approved by Agent, to mail all payments
and other remittances owing with respect to the Assigned Loans
directly to the Lockbox. Lockbox Agent will have exclusive and
unrestricted access to the Lockbox and will have complete and
exclusive authority to receive, pick up and open all mail
addressed to the Lockbox, whether registered, certified, insured
or otherwise. Borrowers will have no access to or control over
the Lockbox or any checks or monies received in the Lockbox. All
items received and monies collected in connection with the
Assigned Loans will be processed by the Lockbox Agent pursuant to
the terms of the Lockbox Agreement, and in the event any checks
or monies shall be submitted to any Borrower by any Account
Debtor under the Assigned Loans, or shall otherwise come into the
possession of any Borrower, the same shall be deemed held by such
Borrower in trust for Lenders, and such Borrower shall deliver
the same to the Lockbox Agent within three (3) Business Days
after received by such Borrower, endorsed if appropriate, for
deposit into the Lockbox Account.
(b) Prior to the occurrence of a Default, on each
Business Day during the Credit Period, the Lockbox Agent shall,
and Borrowers hereby authorize and instruct the Lockbox Agent to,
withdraw all funds from the Lockbox Account, if any, and deposit
same into AMRESCO's operating account at NationsBank as
designated in writing from time to time by AMRESCO to the Lockbox
Agent. Upon the occurrence of a Default and thereafter, all
amounts in the Lockbox Account shall be disbursed to and applied
by Lockbox Agent and Agent to reduce the outstanding obligations
as provided in Section 9.10.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lenders that:
Section 6.1. Existence and Power of Borrowers. Each
Borrower (a) is a corporation or partnership, as appropriate,
duly created, validly existing and in good standing under the
laws of the state, province or country under which it is
organized, and is or will be qualified and in good standing as a
foreign corporation or partnership, as appropriate, under the
laws of each state where such qualification is necessary for such
Borrower to conduct its business; and (b) has all corporate or
partnership, as appropriate, powers and all governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted and as contemplated to be
conducted, except where the failure to have any such item would
not have a material adverse effect on such Borrower's business
and financial condition.
Section 6.2. Subsidiaries. Other than the Excluded
Subsidiaries, all direct and indirect Subsidiaries of AMRESCO are
Borrowers. All stock of each Subsidiary which is incorporated in
the United States, and sixty-five percent (65%) of the stock of
each Subsidiary incorporated outside the United States, has been
collaterally assigned to Agent (on behalf of Lenders) pursuant to
a Pledge Agreement, other than stock of a Subsidiary identified
in clause (a) of the definition of Excluded Subsidiary or any
other Excluded Subsidiary's stock that has been pledged to
another creditor of such Excluded Subsidiary prior to the Initial
Closing Date. No Borrower is an Excluded Subsidiary.
Section 6.3. Authorization; Contravention. The execution,
delivery and performance of this Agreement, the Notes, the LOC
Applications, the Security Documents and the other Loan Documents
by each Borrower are within each such Borrower's corporate or
partnership, as appropriate, powers have been duly authorized by
all necessary corporate or partnership, as appropriate, action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation, bylaws or
partnership agreement, as appropriate, of any such Borrower or of
any agreement, judgment, injunction, order, decree or other
instrument binding upon any such Borrower or result in the
creation or imposition of any Lien on any asset of any such
Borrower except Liens securing the Notes.
Section 6.4. Enforceable Obligations. This Agreement, the
Notes, the LOC Applications and the other Loan Documents each
constitutes a valid and binding agreement of each Borrower, which
is a party thereto, enforceable in accordance with its terms
except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent transfer or similar laws
affecting creditors rights generally, and (b) the availability of
equitable remedies may be limited by equitable principles of
general applicability.
Section 6.5. Financial Information.
(a) The current financial statements of each Borrower
and all of the other financial reports and information of each
Borrower that have been delivered to Lenders are true and correct
in all material respects as of the date of such current financial
statements and other reports and information.
(b) Except as disclosed in writing to Lenders prior to
the execution and delivery of this Agreement, since December 31,
1995, there has been no material adverse change in the business,
financial position or results of operations of any Borrower; and,
there exists no condition, event or occurrence that, individually
or in the aggregate, could reasonably be expected to result in a
material adverse change in the business, financial position or
results of operations of any Borrower.
Section 6.6. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of any Borrower,
threatened against or affecting, any Borrower before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, financial
position or results of operations of such Borrower or which could
in any manner draw into question the validity of the Loan
Documents.
Section 6.7. ERISA.
(a) Each Employee Plan has been maintained and
administered in substantial compliance with the applicable
requirements of the Code and ERISA. No circumstances exist with
respect to any Employee Plan that could have a material adverse
effect on any Borrower.
(b) With respect to each Pension Plan, (i) no
accumulated funding deficiency (within the meaning of
Section 412(a) of the Code), whether waived or unwaived, exists;
(ii) the present value of accrued benefits (based on the most
recent actuarial valuation prepared for each such plan, if any,
in accordance with ongoing assumptions) does not exceed the
current value of plan assets allocable to such benefits by a
material amount; (iii) no reportable event (within the meaning of
Section 4043 of ERISA) other than purchases and sales of
securities from a plan trustee as reported in the audited
financial statements of such plan has occurred; (iv) no
uncorrected prohibited transactions (within the meaning of
Section 4975 of the Code) exist which could have a material
adverse effect on any Borrower; (v) to the extent such plan is
covered by PBGC, no material liability to the PBGC exists and no
circumstances exist that could reasonably be expected to result
in any such liability; and (vi) no material withdrawal liability
(within the meaning of Section 4201(a) of ERISA) exists and no
circumstances exist that could reasonably be expected to result
in any such liability.
(c) As of the date hereof, no Borrower has any
obligation under any Employee Plan to provide post-employment
health care benefits to any of its current or former employees,
except as may be required by Section 4980B of the Code.
Section 6.8. Taxes and Filing of Tax Returns. Each
Borrower has filed all material tax returns required to have been
filed and has paid all Taxes shown to be due and payable on such
returns, including interest and penalties, and all other Taxes
which are payable by such party, to the extent the same have
become due and payable other than Taxes with respect to which a
failure to pay would not have a material adverse effect on such
Borrower. None of the Borrowers has any knowledge of any
proposed Tax assessment against any Borrower other than customary
ad valorem taxes or other Taxes to become due in the normal
course of business, and all Tax liabilities of each Borrower are
adequately provided for. No income tax liability of any Borrower
has been asserted by the Internal Revenue Service for Taxes in
excess of those already paid, the payment of which would have a
material adverse affect on such Borrower.
Section 6.9. Ownership of Assets. Each Borrower has good
and indefeasible title to all of the Collateral and all other
assets reflected on its most current financial statements
delivered to Lenders. Except for Permitted Encumbrances, there
is no Lien on any property of any Borrower, and the execution,
delivery, performance or observance of the Loan Documents will
not require or result in the creation of any Lien on any such
property. Borrowers have properly granted to Lenders a perfected
security interest in all Assigned Loans and other Collateral and
a valid first lien on all Mortgaged Properties owned by Borrowers
which have not been previously released pursuant to the terms of
the applicable Custodial Agreement (including, without
limitation, all Assigned Loans and Mortgaged Properties included
in the current Borrowing Base). Borrowers have requested as an
accommodation to Borrowers because of the number of Assigned
Loans and for ease of administering the Credit Facility that the
Assigned Loans be endorsed by using an allonge endorsement, and
Borrowers acknowledge that, if an allonge endorsement is so used
in connection with an Assigned Loan, Borrowers intend such
endorsement to be a part of the Assigned Loan as fully as if such
endorsement was made on the instrument itself.
Section 6.10. Business; Compliance. Each Borrower has
performed and abided by all obligations required to be performed
by it under any license, permit, order, authorization, grant,
contract, agreement, or regulation to which it is a party or by
which it or any of its assets are bound and which, if such
Borrower were to fail to perform or abide by, such failure would
have a material adverse effect on the business operations of such
Borrower.
Section 6.11. Licenses, Permits. Each Borrower possesses
such valid franchises, licenses, permits, consents,
authorizations, exemptions and orders of Governmental
Authorities, as are necessary to carry on its business as now
being conducted, other than violations which would not (either
individually or collectively) have a material adverse effect on
the financial condition or operations of such Borrower.
Section 6.12. Compliance with Law. The business and
operations of each Borrower have been and are being conducted in
accordance with all applicable laws, rules and regulations of all
Governmental Authorities, other than violations which would not
(either individually or collectively) have a material adverse
effect on the financial condition or operations of such Borrower.
Section 6.13. Full Disclosure. All information heretofore
furnished by any Borrower (or any other party on any Borrower's
behalf) to Agent and Lenders for purposes of or in connection
with this Agreement or any transaction contemplated hereby is,
and all such information hereafter furnished by any Borrower to
Agent and any Lender will be, true and accurate in every material
respect and shall be, to the best of the knowledge and belief of
the party furnishing such information, without material omission.
Each of the Borrowers has, to the best of its knowledge,
disclosed to Agent in writing any and all facts which might
reasonably be expected to materially and adversely affect the
business, operations, prospects or condition, financial or
otherwise, of any Borrower, or the ability of any Borrower to
perform its obligations under this Agreement or the other Loan
Documents.
Section 6.14. Environmental Matters.
(a) With respect to assets of Borrowers, other than any
Mortgaged Property, and except for conditions, circumstances or
violations that would not, individually or in the aggregate, have
a material adverse effect on the financial condition, operation
or business of any Borrower, none of the Borrowers (i) knows of
any environmental condition or circumstance, such as the presence
of any hazardous substance (as defined in Section 7.7), adversely
affecting the properties or operation of any Borrower, (ii) has
received any report of a violation by any Borrower of any
Applicable Environmental Law, or (iii) knows that any Borrower is
under any obligation to remedy any violation of any Applicable
Environmental Laws.
(b) With respect to the Mortgaged Properties, (i) no
portion of any Mortgaged Property is contaminated by any
substance or material presently identified to be toxic or
hazardous according to any Applicable Environmental Law,
including, without limitation, any asbestos, polychlorinated
biphenyl, radioactive substance, methane, volatile hydrocarbons,
industrial solvents or any other material or substance which has
in the past or could foreseeably at the present time or at any
time in the future cause or constitute a material health, safety
or other environmental hazard to any Person or property, except
as otherwise disclosed in the Borrower Due Diligence Reports or
otherwise disclosed in writing to Agent, (ii) none of the
Borrowers nor, to the knowledge of any Borrower, any other Person
has caused or suffered to occur a discharge, spillage,
uncontrolled loss, seepage or filtration of oil or petroleum or
chemical liquids or solids, liquid or gaseous products or
hazardous waste, or hazardous substance at, upon, under or within
any portion of any Mortgaged Property or any contiguous real
estate which either (A) would be a violation of Applicable
Environmental Law or (B) has not been remediated so as to cure
any violation of Applicable Environmental Law (such remediation
having been accomplished without increasing the potential
environmental liability of any Borrower or Lender), (iii) none of
the Borrowers nor, to the knowledge of any Borrower, any other
Person has been or is involved in operations at or near any
portion of any Mortgaged Property which could lead to the
imposition on any Borrower or any operator of such Mortgaged
Property of liability which could have a material adverse effect
on the financial condition or business operations of any
Borrower, or the creation of a lien on such property, under any
Applicable Environmental Law, (iv) none of the Borrowers nor any
other Person has permitted any tenant or occupant of any portion
of any Mortgaged Property, to engage in any activity that could
lead to the imposition of liability on such tenant or occupant,
any Borrower or any operator of any of such property which could
have a material adverse effect on the financial condition or
business operations of any Borrower, or could lead to the
creation of a lien on such property, under any Applicable
Environmental Law, or (v) to the knowledge of any Borrower, no
part of any Mortgaged Property is contaminated by any substance
or material presently identified to be toxic or hazardous
according to any Applicable Environmental Law, except as
otherwise disclosed in the Borrower Due Diligence Reports or
otherwise described in writing to Agent.
(c) With respect to the Underlying Real Estate, to the
knowledge of any Borrower, no part of any Underlying Real Estate
is contaminated by any substance or material presently identified
to be toxic or hazardous according to any Applicable
Environmental Law, or if any part of any Mortgaged Property or
any Underlying Real Estate is so contaminated the holder of the
related Assigned Loan is not subject to liability resulting from
such contamination because such party is a secured lender, as
opposed to an owner, of such property.
Section 6.15. Purpose of Credit. Each Borrower will use
the proceeds of the Credit Facility for the purposes stated in
Section 2.1(a) hereof. No part of the proceeds of the Credit
Facility will be used, directly or indirectly, for a purpose
which violates any law, rule or regulation. No Borrower will,
directly or indirectly, use any of the proceeds of the Credit
Facility for the purpose of purchasing or carrying, or retiring
any Debt which was originally incurred to purchase or carry, any
"margin stock" as defined in the Margin Regulations, or to
purchase or carry any "security that is publicly-held" within the
meaning of Regulation T of the Board of Governors of the Federal
Reserve System, or otherwise take or permit any action which
would involve a violation of such Margin Regulations or any other
regulation of such Board of Governors. The Credit Facility is
not secured, directly or indirectly, in whole or in part, by
collateral that includes any "margin stock" within the meaning of
the Margin Regulations. No Borrower will engage principally, or
as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "margin
stock" within the meaning of the Margin Regulations.
Section 6.16. Governmental Regulations. No Borrower is
subject to regulation under the Investment Advisers Act of 1940,
as amended. No Borrower is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, any Margin Regulations
or any other law, rule or regulation which regulates the
incurrence of Debt.
Section 6.17. Indebtedness. No Borrower is an obligor on
any Debt other than Debt permitted by Section 8.5. No Borrower
is (nor will any Borrower ever become) an obligor on any Debt of
any Excluded Subsidiary, and none of the assets of any Borrower
have been pledged to secure, or otherwise given as security for,
any Debt of any Excluded Subsidiary.
Section 6.18. Insurance. Each Borrower maintains with
financially sound, responsible and reputable insurance companies
or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized
by the jurisdictions in which it operates) insurance concerning
its properties and business against such casualties and
contingencies and of such types and in such amounts (and with
co-insurance and deductibles) as is customary for the same or
similar businesses.
Section 6.19. Solvency. On a consolidated basis as of the
Closing Date (a) the aggregate fair market value of Borrowers'
assets exceeds their liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise),
(b) Borrowers have sufficient cash flow to enable them to pay
their Debts as they mature, and (c) Borrowers have a reasonable
amount of capital to conduct their respective businesses as
presently contemplated.
Section 6.20. Due Diligence Procedures. The due diligence,
collateral control and collection procedures used by Borrowers
with respect to the Assigned Loans are no less stringent than
Standard Industry Practices. All Borrower Due Diligence Reports
have been prepared or reviewed by a Borrower. The factual
information contained in the Borrower Due Diligence Reports,
including without limitation, regarding title to and the
condition of each Assigned Loan (but not including valuation
amounts and cash flow projections) has not been intentionally
misstated by Borrowers, and, with respect to the Asset Portfolios
taken as a whole, the Borrower Due Diligence Reports accurately
reflected the material facts concerning each of the Assigned
Loans and Mortgaged Properties included in such Asset Portfolios
at the time the Borrower Due Diligence Reports were prepared.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as Lenders'
commitment to make Advances under the Credit Facility remains in
effect, any Letters of Credit remain outstanding or any of the
Obligations remain unpaid:
Section 7.1. Information From AMRESCO. AMRESCO will
deliver, or cause to be delivered, to Agent on behalf of Lenders:
(a) As soon as available and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of
AMRESCO, a consolidated balance sheet of AMRESCO and its
Subsidiaries as of the end of such Fiscal Year and the related
statements of income and cash flow for such Fiscal Year, setting
forth in each case in comparative form the figures for the
previous Fiscal Year, all reported by AMRESCO in accordance with
GAAP and audited by Deloitte & Touche (or its successors) or
other independent public accountants reasonably acceptable to
Agent.
(b) As soon as available and in any event within
forty-five (45) days after the end of each calendar quarter, a
consolidating and consolidated balance sheet and related
statement of income of AMRESCO and its Subsidiaries as of the end
of such quarter and year-to-date, all certified by the chief
financial officer, the chief accounting officer or Treasurer of
AMRESCO as to fairness of presentation and as to whether such
financial statements fairly reflect the financial condition of
AMRESCO and its Subsidiaries as of the date of delivery thereof,
subject to year-end adjustments. Such financial statements shall
be prepared in conformity with GAAP, except that certain
information and note disclosures normally included in annual
financial statements prepared in accordance with GAAP may be
condensed or omitted provided that the disclosures made are
adequate to make the information presented not misleading, and
GAAP shall be applied on a basis consistent with the financial
statements referred to in Section 7.1(a).
(c) Simultaneously with the delivery of each set of
financial statements referred to in Sections 7.1(a) and (b), a
certificate of an Authorized Officer of AMRESCO, (i) setting
forth in reasonable detail the calculations required to establish
whether Borrowers were in compliance with the requirements
of Sections 8.1 through and including Section 8.4, on the date of
such financial statements, and (ii) with respect to only the
financial statements delivered pursuant to Sections 7.1(a) and
(b), stating, to the best of such Authorized Officer's knowledge
and belief, whether or not such financial statements fairly
reflect the financial condition of AMRESCO and its Subsidiaries
and results of AMRESCO's and its Subsidiaries' operations as of
the date of the delivery of such financial statements.
(d) Upon request of Agent from time to time, a
Compliance Letter prepared at Borrowers' expense covering the
then most recent Borrowing Base Schedule.
(e) Promptly after the filing thereof, a true, correct
and complete copy of each Form 10-K and Form 10-Q and each other
report filed by or on behalf of AMRESCO with the SEC.
(f) Immediately upon the occurrence of any Default, a
certificate of an Authorized Officer of AMRESCO setting forth the
details thereof and the action which AMRESCO or any applicable
Borrower is taking or proposes to take with respect thereto.
(g) Within fifteen (15) days after the end of each
calendar month, a current Borrowing Base Schedule, including the
Asset Portfolio Reports and which, every six months, shall
include a detailed listing of each Assigned Loan included in the
Borrowing Base. If Agent disapproves a Borrowing Base Schedule,
the most recent Borrowing Base Schedule (with appropriate
modification to reflect changes in the Borrowing Percentages due
to the passage of time) which has not been disapproved by Agent
shall be deemed to be the effective Borrowing Base Schedule.
AMRESCO shall also deliver a Borrowing Base Schedule with each
Request for Advance if, since the date of the currently effective
Borrowing Base Schedule, Borrowers have (A) sold or otherwise
disposed of either (x) an asset which contributed an amount equal
to or greater than Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00) to the Net Investment Value of its
applicable Asset Portfolio or (y) any Asset Portfolio included in
the currently effective Borrowing Base or (B) desire to include
new Eligible Investments in the Borrowing Base.
(h) Upon Agent's request from time to time, a report
showing the aggregate amount of each Borrower's potential
liability under each secured Interest and Foreign Exchange Hedge
Agreement and how such liability was calculated, together with
evidence satisfactory to Agent that the amount of such potential
liability has been confirmed by the bank counterparty to such
secured Interest and Foreign Exchange Hedge Agreement.
(i) Within forty-five (45) days after the end of each
calendar quarter, a report satisfactory to Agent listing the
Residential Residual Interests owned by AMRESCO or any
Subsidiary, which report shall show, with respect to each such
Residential Residual Interest, the investment balance, date of
purchase, net receipts on assets to date, additional expenditures
which the owner thereof contemplates making, estimated market
value and such other information requested by Agent.
(j) Prompt notification of (i) any material adverse
change in the financial condition of any Borrower, including,
without limitation, the occurrence of any litigation which could
reasonably be expected to have a material adverse effect on any
Borrower, or (ii) the occurrence of any acceleration of the
maturity of any indebtedness owing by any Borrower, or any
default under any indenture, mortgage, agreement, contract or
other instrument to which any Borrower is a party or by which any
Borrower or any properties of any Borrower are bound, if such
default or acceleration might have a material adverse effect upon
the financial condition of any Borrower.
(k) From time to time such additional information
regarding the financial position or business of any Borrower
and/or any of Borrower's Subsidiaries as Agent, at the request of
any Lender, may reasonably request, including, without
limitation, financial projections of any Borrower and information
concerning the insurance being maintained by Borrowers.
Section 7.2. Business of Borrowers. The primary business
of Borrowers is, and Borrowers covenant that it shall remain,
mortgage banking and other similar financial services and the
acquisition, ownership and disposition of Asset Portfolios either
directly or through investments in Persons who acquire, own and
dispose of Asset Portfolios, or other businesses ancillary or
related to such primary business.
Section 7.3. Right of Inspection. Each Borrower will
permit Agent or any Lender, or any officer, employee or agent of
any such party, to visit and inspect any of the assets of any
Borrower, examine the books of record and accounts of any
Borrower (including, without limitation, all Borrower Due
Diligence Reports), take copies and extracts therefrom, and
discuss the affairs, finances and accounts of any Borrower with
the respective officers, accountants and auditors of such
Borrower, all at such reasonable times and as often as Agent or
any Lender may reasonably require, all at the expense of
Borrowers; provided, that, prior to the occurrence of a Default,
each Lender will make no more than two such visits or inspections
in any twelve month period. Each Lender covenants and agrees to
preserve the confidentiality of any financial data concerning any
Borrower, any Subsidiary of any Borrower or related to any
Borrower's, or any Borrower's Subsidiaries' businesses or
operations or any information with respect to which any Borrower
has (a) an obligation of confidentiality to a third party (to the
extent such obligation has been disclosed to such Lender) or
(b) informed such Lender of the confidential nature of the
specific information, except to the extent such Lender is
required to disclose such information pursuant to any applicable
law, rule, regulation or order of any Governmental Authority;
provided that (i) any information contained in any annual report,
or any Form 10-K, Form 10-Q or Form 8-K reports (if any) which
have been delivered to the SEC, or any other annual or quarterly
reports to the stockholders of any Borrower subject to the
reporting requirements of the Securities Exchange Act of 1934, as
amended, proxy material delivered to the stockholders of any
Borrower or any report delivered to the SEC, or any other
information that is in the public domain or has become publicly
known, shall not in any event be deemed confidential, and
(ii) each Lender may make any information received by it
available (A) to a transferee of or participant in any interest
in the Credit Facility or the Notes, provided that such
transferee or participant agrees in writing to be bound by the
provisions of this Section 7.3, (B) to any accountants or other
professionals engaged by such Lender, provided that each such
accountant or professional agrees to be bound by the provisions
of this Section 7.3, or (C) in connection with the enforcement of
any of the Loan Documents or any litigation in connection
therewith.
Section 7.4. Maintenance of Insurance. Each Borrower will
at all times maintain or cause to be maintained insurance
covering its respective risks as are customarily carried by
businesses similarly situated including, without limitation, the
following: (a) workmen's compensation insurance;
(b) comprehensive general public liability and property damage
insurance in respect of all activities in which such Borrower
might incur personal liability for the death or injury of an
employee or third person, or damage to or destruction of
another's property; (c) insurance against loss or damage by fire,
lightning, hail, tornado, explosion and other similar risk; and
(d) comprehensive automobile liability insurance. Each Borrower
shall maintain coverage with respect to the foregoing risks in
such coverage amounts as are customarily carried by businesses
similarly situated.
Section 7.5. Payment of Taxes, Impositions and Claims.
Each Borrower shall pay (a) all Taxes imposed upon it or any of
its assets or with respect to any of its franchises, business,
income or profits, and all Impositions not later than the due
date thereof, or before any material penalty or interest may
accrue thereon and (b) all material claims (including, without
limitation, claims for labor, services, materials and supplies)
for sums which have become due and payable and which by law have
or might become a Lien on any of its assets; provided, however,
payment of Taxes, Impositions or claims shall not be required if
and for so long as (i) the amount, applicability or validity
thereof is currently being contested in good faith by appropriate
action promptly initiated and diligently conducted in accordance
with good business practices and no material part of the property
or assets of any Borrower are subject to levy or execution,
(ii) such Borrower as required in accordance with GAAP, shall
have set aside on its books reserves (segregated to the extent
required by GAAP) deemed by it to be adequate with respect
thereto, and (iii) such Borrower has notified Agent of such
circumstances, in detail satisfactory to Agent, and, provided
further, that such Borrower shall pay any such Tax, Imposition or
claim if such contest is not successful and in any event prior to
the commencement of any action to realize upon or foreclose any
Lien against any part of the Collateral.
Section 7.6. Compliance with Laws and Documents. Each
Borrower shall at all times comply, and cause each of its
Subsidiaries to comply, with all Legal Requirements, the articles
of incorporation and bylaws of such Borrower, and each Borrower's
Subsidiaries and any other agreement to which any Borrower, or
any Subsidiary of any Borrower is a party, unless its failure to
so comply alone or in the aggregate would not have a material
adverse effect on the financial condition or operations of such
Borrower, together with its Subsidiaries taken as a whole.
Section 7.7. Environmental Law Compliance and Indemnity.
Borrowers agree to promptly pay and discharge when due all debts,
claims, liabilities and obligations with respect to any clean-up
measures necessary for any Borrower to comply with Applicable
Environmental Laws affecting any Borrower, provided that, with
respect to any single tract or parcel of real property, any
Borrower shall not be required to take such action if failure to
take such action would not have a material adverse effect on the
financial condition of any Borrower or would, in the reasonable
opinion of Agent, have the potential for creating any liability
or claim against Agent or any of the Lenders. Borrowers hereby
indemnify and agree to defend and hold Agent and each Lender and
its successors and assigns harmless from and against any and all
claims, demands, causes of action, loss, damage, liabilities,
costs and expenses (including reasonable attorneys' fees and
court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by
Agent or any Lender at any time and from time to time including,
without limitation, those asserted or arising subsequent to the
payment or other satisfaction of the Notes and expiration of the
Letters of Credit, by reason of, arising out of or related in any
way to Agent's and Lenders' entering into this Agreement and the
transactions herein contemplated, INCLUDING MATTERS ARISING OUT
OF THE ORDINARY NEGLIGENCE OF AGENT OR ANY LENDER, BUT EXCLUDING
MATTERS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF AGENT OR ANY LENDER. It shall not be a defense to the
covenant of Borrowers to indemnify that the act, omission, event
or circumstance did not constitute a violation of any Applicable
Environmental Law at the time of its existence or occurrence.
The terms "hazardous substance" and "release" shall have the
meanings specified in the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), and the terms "solid waste"
and "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976 ("RCRA"); provided, to the
extent that any other applicable laws of the United States of
America or political subdivision thereof establish a meaning for
"hazardous substance," "release," "solid waste," or "disposed"
which is broader than that specified in either SARA or RCRA, such
broader meaning shall apply. As used in this Agreement,
"Applicable Environmental Law" shall mean and include the
singular, and "Applicable Environmental Laws" shall mean and
include the collective aggregate of the following: Any law,
statute, ordinance, rule, regulation, order or determination of
any governmental authority or any board of fire underwriters (or
other body exercising similar functions), or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any Borrower pertaining to health, safety or the environment,
including, without limitation, all applicable flood disaster laws
and health, safety and environmental laws and regulations
pertaining to health, safety or the environment, including
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Superfund Amendments
and Reauthorization Act of 1986, the Occupational Safety and
Health Act, the Texas Water Code, the Texas Solid Waste Disposal
Act, the Texas Workers' Compensation Laws, and any federal, state
or municipal laws, ordinances, regulations or law which may now
or hereafter require removal of asbestos or other hazardous
wastes from any property of any Borrower or impose any liability
on Agent or any Lender related to asbestos or other hazardous
wastes in any property of any Borrower. The provisions of this
Section 7.7 shall survive the repayment of the Notes and
expiration of the Letters of Credit. In the event of the
transfer of the Notes or any portion thereof, each Lender or any
prior holder of the Notes and any participants shall continue to
be benefitted by this indemnity and agreement with respect to the
period of such holding of the Notes.
Section 7.8. Covenant Compliance. Each Borrower shall
perform and comply with all covenants, obligations and agreements
contained in this Agreement and in the other Loan Documents.
Section 7.9. Quantity and Quality of Documents. All
certificates, opinions, reports and documents to be delivered
from time to time hereunder shall be in such number of
counterparts as Agent may reasonably request and in form
reasonably acceptable to Agent, and counterpart signature pages
to any such documents may be attached to and shall, together with
all counterparts, constitute one and the same document.
Section 7.10. Use of Proceeds. Each Borrower will use the
proceeds of the Credit Facility (including the Letters of Credit)
solely for the purposes represented in this Agreement and shall
not use such proceeds, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, and none of such proceeds will be used
in violation of applicable law (including, without limitation,
the Margin Regulations).
Section 7.11. Additional Documents. Within ten (10)
Business Days after request by Agent, each Borrower shall execute
and deliver or cause to be executed and delivered to Agent upon
Agent's request such other and further instruments, documents or
certificates as in the judgment of Agent may be required to
better effectuate the transactions contemplated herein or to
conform, create, evidence, perfect, preserve or maintain the
Lenders' Liens (including, without limitation, the Lenders' Liens
with respect to the Securities (as defined in the Pledge
Agreement) Commercial Residual Interests and Residential Residual
Interests) or the Lenders' rights hereunder or under the other
Loan Documents, and each Borrower shall do all such additional
acts, give such assurances and execute such instruments as Agent
may reasonably require to vest more completely in and assure to
Lenders their rights under this Agreement.
Section 7.12. Compliance With Due Diligence Standards;
Offices and Files. Borrowers shall at all times comply with
Standard Industry Practices and Borrowers' past procedures
related to due diligence, collateral control, collection and
reporting procedures with respect to all Acquired Loans.
Borrower's chief executive office shall at all times be
maintained at 1845 Woodall Rodgers Freeway, Suite 1700, Dallas,
Texas, and Borrowers' books, records and files related to the
Assigned Loans (including, without limitation, the Borrower Due
Diligence Reports) shall at all times be maintained at Borrowers'
chief executive office or Borrowers' office at either 5310
Harvest Hill, Suite 210, Dallas, Texas, or 10 Dorrance Street,
Providence, Rhode Island, or Two Corporate Park, Suite 100,
Irvine, California 92714, unless in either such instance, AMRESCO
gives Agent thirty (30) days prior written notice of a change in
address; provided, however, that Agent and Lenders hereby
acknowledge that Borrowers have notified them that as of August,
1996, the Borrowers' principal office shall be moved to 700 N.
Pearl Street, Suite 2500, Dallas, Texas 75201. Borrowers shall
maintain all files related to the Assigned Loans in a reasonably
prudent manner.
Section 7.13. Appraisals. Agent may require, and Borrowers
shall deliver to Agent promptly upon request therefor (but no
more than once each twelve month period) with respect to any
given portion of the Mortgaged Property which has a cost in
excess of One Hundred Thousand and No/100 Dollars ($100,000.00)
and for which the Lenders have requested the recordation of a
Mortgage under this Agreement, a new appraisal for such portion
of the Mortgaged Property. If required by applicable
regulations, Agent may order any such appraisal directly, and
Borrowers shall reimburse Agent for the reasonable cost of such
appraisal upon request by Agent. Agent shall provide AMRESCO
with a copy of any such appraisal ordered by Agent. Each such
appraisal shall be in form and substance satisfactory to Agent.
ARTICLE VIII
NEGATIVE COVENANTS
Each Borrower covenants and agrees that without the prior
written consent of the Required Lenders, so long as Lenders'
commitment to make Advances under the Credit Facility remains in
effect, any Letters of Credit remain outstanding or any of the
Obligations remain unpaid:
Section 8.1. Minimum Consolidated Tangible Net Worth.
Borrowers shall not permit Consolidated Tangible Net Worth to be
less than the sum of (a) One Hundred Ten Million and No/100
Dollars ($110,000,000.00) plus (b) fifty percent (50%) of the
cumulative Consolidated Net Income for each calendar quarter
commencing on April 1, 1996, through the quarter ending
immediately prior to, or on, the date as of which compliance with
this covenant is being measured, plus (c) the amount of any
proceeds (less reasonable and customary transaction costs)
received by AMRESCO from the issuance of any additional shares of
stock or other equity instruments.
Section 8.2. Consolidated Funded Debt to Consolidated
Capitalization. Borrowers shall not permit Consolidated Funded
Debt as a percentage of Consolidated Capitalization to be greater
than 72.5% from the Closing Date to June 30, 1997, and 70.0%
after June 30, 1997.
Section 8.3. Coverage Ratios. Borrowers shall not permit
(a) the Fixed Charge Coverage Ratio to be less than 2.25 to 1.00;
and (b) the Interest Coverage Ratio to be less than 2.50 to 1.00.
Section 8.4. Senior Consolidated Funded Debt to
Consolidated EBITDA. As of the last day of any calendar quarter,
Borrowers shall not permit Senior Consolidated Funded Debt to
Consolidated EBITDA (for the immediately preceding four calendar
quarters) to be greater than 3.5 to 1.0 from the Closing Date to
June 30, 1996; 3.25 to 1.0 from July 1, 1996, to September 30,
1996; 3.0 to 1.0 from October 1, 1996, to June 30, 1997; and 2.75
to 1.0 thereafter.
Section 8.5. Limitation on Debt and Foreign Exchange
Exposure. No Borrower shall, and no Borrower shall permit any of
its Subsidiaries to, incur any Debt, except (a) the Credit
Facility (including the Letters of Credit); (b) ARMC, ARSC, ARCC
or an Excluded Subsidiary may have liability under unsecured
Interest and Foreign Exchange Hedge Agreements in an aggregate
notional amount not to exceed $500,000,000, so long as (i) there
is no recourse to AMRESCO or any Subsidiary under any such
Interest and Foreign Exchange Hedge Agreements, other than ARMC,
ARSC, ARCC or an Excluded Subsidiary, (ii) each such Interest and
Foreign Exchange Hedge Agreement has a maturity of no more than
18 months, other than Interest and Foreign Exchange Hedge
Agreements in an aggregate notional amount not to exceed
$100,000,000, which can have a maturity of no more than seven
years, (iii) the purpose of each such Interest and Foreign
Exchange Hedge Agreement is to hedge the Borrowers' interest rate
or foreign exchange or other business risk, and is not
speculative in nature, and (iv) the Borrowers do not deviate from
their current practices and policies related to obtaining
Interest and Foreign Exchange Hedge Agreements; (c) obligations
under secured Interest and Foreign Exchange Hedge Agreements, so
long as the provider of any such Interest and Foreign Exchange
Hedge Agreements is a Lender and such Lender's Liens are
evidenced by the Security Documents; (d) the Investment Line of
Credit, the Warehouse Line of Credit, the Residential Funding
Warehousing Facility, and the ARMC Warehousing Facility;
provided, however, that at no time shall the outstanding
principal balance of the ARMC Warehousing Facility exceed
$500,000,000; (e) Debt of any Borrower owed to any other
Borrower; (f) Debt secured by purchase money security interests
not to exceed $250,000.00 in the aggregate at any time; (g)
Guaranties in connection with Debt otherwise permitted by this
Section 8.5 other than in connection with the Residential Funding
Warehousing Facility or the ARMC Warehousing Facility; (h)
Guaranties in the form of indemnity obligations or typical
repurchase obligations related to the sale by any Borrower of
assets in the ordinary course of its business; (i) Leases of
office space used by any Borrower in the ordinary course of its
business; (j) Debt in respect of current accounts payable
incurred in the ordinary course of any Borrower's business;
(k) Approved Subordinated Debt; provided that no Borrower or
Subsidiary shall make payments on or redeem, or approve by board
of director action or otherwise the payment of any amounts on, or
redemption of, the Approved Subordinated Debt after the
occurrence of a Default or, prior to the occurrence of a Default,
which would exceed the scheduled payments due under the documents
evidencing the Approved Subordinated Debt as approved by the
Required Lenders, such prohibited payments including any payments
made under Article 11 or Article 14 of that certain Indenture
dated as of November 21, 1995, by and between AMRESCO and First
Interstate Bank of Texas, N.A., as Trustee or Article 11 of that
certain Indenture, dated January 15, 1996, by and between AMRESCO
and Bank One, Columbus, N.A., as Trustee; and (l) Excluded
Subsidiary Debt in an aggregate amount not to exceed One Hundred
Million and No/100 Dollars ($100,000,000.00).
Section 8.6. Limitation on Sale of Properties. No
Borrower shall sell, assign, convey, exchange, lease or otherwise
dispose of any of its properties, rights, assets or business,
whether now owned or hereafter acquired, except in the ordinary
course of its business.
Section 8.7. Limitations on Liens. No Borrower shall, and
no Borrower shall permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any of its assets
(including, without limitation, the stock of any Subsidiary
incorporated outside of the United States and not pledged to
Lenders) or to give a negative pledge to any Person with respect
to any of its assets, except for (a) the Lenders' Liens; (b) the
Permitted Encumbrances; (c) with respect to equipment or
inventory, (i) landlord's Liens arising in the ordinary course of
any Borrower's business and (ii) Liens on equipment or supplies
hereafter acquired by any Borrower in the ordinary course of such
Borrower's business to secure the purchase price of such
equipment or supplies and any such Lien existing on such
equipment or supplies at the time of acquisition by such Borrower
(individually, a "Purchase Money Lien"), provided that (1) no
Purchase Money Lien shall cover any property other than the
equipment or supplies so acquired, and (2) the Debt secured by
such Purchase Money Lien shall not exceed one hundred percent
(100%) of the purchase price of such equipment or supplies; (d)
Liens on the Collateral to secure obligations under Interest and
Foreign Exchange Hedge Agreements, so long as the provider of any
such Interest and Foreign Exchange Hedge Agreement is a Lender
and such Liens are evidenced by the Security Documents; (e) Liens
to secure permitted Excluded Subsidiary Debt, provided that
(i) no such Lien shall cover any property other than property
purchased or refinanced with proceeds of permitted Excluded
Subsidiary Debt, and (ii) the Excluded Subsidiary Debt secured by
such Lien shall not exceed one hundred percent (100%) of the
purchase price of such property; (f) the six percent (6%) net
profits interest granted by AMRESCO New Hampshire, Inc. to Heller
Financial, Inc. pursuant to Section 3.6 of that certain Term Loan
Agreement, dated as of December 31, 1993, among AMRESCO New
Hampshire, Inc., AMRESCO Holdings, Inc. and Heller Financial,
Inc.; (g) Liens involuntarily filed against any asset of any
Borrower or Subsidiary, provided, that within fifteen (15) days
after such filing, the applicable Borrower or Subsidiary has
obtained a release of any such Lien or is contesting the filing
of such Lien in good faith and an adequate bond has been obtained
to satisfy in full any claim which such Lien secures; (h) Liens
securing the Investment Line of Credit, the Warehouse Line of
Credit, the Residential Funding Warehousing Facility or the ARMC
Warehousing Facility; and (i) Liens on stock of an Excluded
Subsidiary that was pledged prior to the Initial Closing Date to
a third party creditor of such Excluded Subsidiary, so long as
the pledgor of such Excluded Subsidiary's stock does not pledge
any additional Liens with respect to such Excluded Subsidiary's
stock.
Section 8.8. Limitation on Loans to Shareholders. No
Borrower shall advance any Debt to any Borrower's shareholders
(which prohibition includes, without limitation, the advancing of
funds to the Excluded Subsidiaries), except for Debt advanced to
a shareholder which is also a Borrower, without the prior written
consent of the Required Lenders.
Section 8.9. Consolidations, Mergers, Sales of Assets, and
Maintenance. No Borrower shall, and no Borrower shall permit any
of its Subsidiaries to, (a) consolidate or merge with or into any
other Person except for (i) mergers of any Borrower into another
Borrower or (ii) mergers of any Borrower (other than AMRESCO)
with or into any other Person which also becomes a "Borrower"
under this Agreement and delivers all Loan Documents required by
this Agreement and otherwise complies with Section 5.7, so long
as (A) the tangible net worth (as determined in accordance with
GAAP) of the Person which is being merged with a Borrower does
not exceed Five Million and No/100 Dollars ($5,000,000.00) and
(B) in the case of a consolidation or merger by any Subsidiary of
AMRESCO with another Person, AMRESCO will remain the direct or
indirect owner of all of the outstanding capital stock and other
equity securities of the continuing or surviving corporation,
(b) sell, lease, abandon or otherwise transfer all or any
material part of its assets to any Person, in one or a series of
related transactions, other than the sale of assets singly or in
bulk in the normal course of business, (c) other than in
connection with (i) a consolidation or merger permitted in clause
(a) immediately above or (ii) the dissolution of any Borrower of
which Agent has been notified and the distribution of all of the
assets of such Borrower to another Borrower, terminate, or fail
to maintain, its corporate existence or qualification, as
applicable, in the state of its incorporation and any other
applicable jurisdiction where the business of such Borrower
requires such qualification (provided that nothing herein shall
permit the dissolution of AMRESCO or the failure of AMRESCO to
maintain its corporate existence and qualification to do business
as elsewhere required in this Agreement), or (d) terminate, or
fail to maintain, its good standing and qualification to transact
business in all jurisdictions where the failure to maintain its
good standing or qualification to transact business could have a
material adverse effect on its financial condition or operations.
Section 8.10. Investments. No Borrower shall, and no
Borrower shall permit any of its Subsidiaries to, directly or
indirectly, make any loans, advances, extensions of credit or
capital contributions to, make any investment in, or purchase any
stock or securities of, or interest in, any asset or Person
(including, without limitation, a Subsidiary of any Borrower
unless such Subsidiary has become a "Borrower" under this
Agreement as required hereby), except for Permitted Investments;
provided, that (a) with respect to any acquisition of corporate
entities for which the aggregate purchase price and all the
consideration for such acquisition is in excess of Five Million
and No/100 Dollars ($5,000,000.00), Borrowers must obtain the
prior written consent of the Required Lenders to make such
acquisition; (b) with respect to Related Investments, if the
aggregate amount of any such Related Investment exceeds Ten
Million and No/100 Dollars ($10,000,000.00), AMRESCO shall
provide to Agent all information regarding such Related
Investment as Agent shall request, and Borrowers must obtain the
prior written consent of the Required Lenders and Agent prior to
making such Related Investment; (c) in no event shall the
aggregate Related Investments made by Borrowers during the Credit
Period exceed Thirty-Five Million and No/100 Dollars
($35,000,000.00) (based on Borrowers' costs); (d) in no event
shall the sum of (i) any advances, extensions of credit, or other
investments made by AMRESCO or AMRESCO Capital Corporation in
connection with Warehouse Line Loans or Residential Funding Loans
(excluding, however, any investment in any Warehouse Line Loans
or Residential Funding Loans not covered by clause (ii) below
representing the amount required to be funded by AMRESCO or
AMRESCO Capital Corporation to enable such loans to be initially
funded under the terms of any warehouse facility established to
fund such Warehouse Line Loans or Residential Funding Loans) plus
(ii) the aggregate amount of Warehouse Line Loans and Residential
Funding Loans which continue to be held by AMRESCO, AMRESCO
Capital Corporation or any Subsidiary 360 days (in the case of
Warehouse Line Loans) or 60 days (in the case of Residential
Funding Loans) after the origination thereof, exceed Fifteen
Million and No/100 Dollars ($15,000,000.00); (e) without the
prior written consent of the Required Lenders, no Borrower (other
than ARMC or ARCC) and no Subsidiary (other than ARSC)of a
Borrower shall acquire or invest in any Asset Portfolio if more
than twenty-five percent (25%) of the purchase price of such
Asset Portfolio is attributable to loans secured by single family
residences or duplexes; (f) in no event shall ARMC, ARSC or ARCC
acquire or invest in any asset or Person, other than (i) amounts
advanced by ARMC or ARCC to purchase Residential Residual
Interests located in the United States, (ii) amounts advanced by
ARMC with respect to any ARMC Warehousing Loans located in the
United States or (iii) amounts advanced by ARMC or ARCC to
acquire or invest in any Residential Asset Portfolio located in
the United States; (g) without the prior written consent of the
Required Lenders, no Borrower shall acquire or invest in any
Asset Portfolio if the amount of such investment exceeds
$30,000,000; (h) without the prior written consent of the
Required Lenders, no Borrower shall acquire or invest in any
Acquired Loan which has a purchase price allocation greater than
$7,500,000; and (i) in no event shall (i) the aggregate Invested
Capital in ARMC, ARSC, ARCC, bridge loans, non-conventional
commercial loans and other high-yield loans, commercial real
estate interests not included as Assigned Loans, wholly-owned
Permitted Foreign Assets not included in the Borrowing Base,
Excluded Subsidiaries and Commercial Residual Interests not held
by an Excluded Subsidiary exceed an amount equal to the sum of
(A) Adjusted Consolidated Tangible Net Worth, plus (B) the amount
of Approved Subordinated Debt, or (ii) the aggregate Invested
Capital in ARMC, ARSC and ARCC exceed 75% of the sum of (A)
Adjusted Consolidated Tangible Net Worth, plus (B) the amount of
Approved Subordinated Debt, or (iii) the aggregate Invested
Capital in bridge loans, non-conventional commercial loans and
other high-yield loans, commercial real estate interests not
included as Assigned Loans, wholly-owned Permitted Foreign Assets
not included in the Borrowing Base, Excluded Subsidiaries (other
than ARSC) and Commercial Residual Interests not held by an
Excluded Subsidiary exceed 60% of the sum of (A) Adjusted
Consolidated Tangible Net Worth, plus (B) the amount of Approved
Subordinated Debt.
Section 8.11. Distributions. No Borrower shall make or
declare any Distributions after the occurrence of a Default.
Prior to the occurrence of a Default, (a) AMRESCO shall be
entitled to make Distributions in any Fiscal Year in an amount
not to exceed twenty-five percent (25%) of the net income of
AMRESCO (determined in accordance with GAAP) for such Fiscal Year
on a consolidated basis and (b) each Borrower (other than
AMRESCO) shall be entitled to make Distributions in any Fiscal
Year to another Borrower.
Section 8.12. Limitation on Contingent Liabilities. No
Borrower shall create, incur, assume or suffer to exist any
contingent liabilities, except for Guaranties permitted by
Section 8.5 and litigation claims which do not result in a
violation of Section 9.1(i).
Section 8.13. Transactions with Affiliates. No Borrower
shall engage in any transaction with an Affiliate of any Borrower
unless such transaction is generally as favorable to such
Borrower as could be obtained in an arm's length transaction with
an unaffiliated Person in accordance with prevailing industry
customs and practices.
Section 8.14. Employee Plans.
(a) Each Borrower shall, and shall cause each member
of its Controlled Group (as that term is defined in the Code) to,
maintain and administer any Employee Plan in accordance with the
applicable requirements of the Code and ERISA. No Borrower shall
permit or suffer to exist any circumstances with respect to any
Employee Plan that could have a material adverse effect on such
Borrower.
(b) With respect to any Pension Plan, no Borrower
shall (i) permit any accumulated funding deficiency (within the
meaning of Section 412(a) of the Code), whether waived or
unwaived, to exist; (ii) permit the present value of accrued
benefits (based on the most recent actuarial valuation prepared
for each such plan, if any, in accordance with ongoing actuarial
assumptions) to exceed the current value of plan assets allocable
to such benefits by a material amount; (iii) permit any
reportable event (within the meaning of Section 4043 of ERISA) to
occur, other than purchases and sales of securities from a plan
trustee as reported in the audited financial statements of such
plan; (iv) permit a prohibited transaction (within the meaning of
Section 4975 of the Code) to occur which has or could have a
material adverse effect on any Borrower; (v) incur any material
liability to the PBGC; or (vi) incur any material withdrawal
liability (within the meaning of Section 4201(a) of ERISA).
(c) No Borrower shall incur a material obligation to
provide post-employment health care benefits to any of its
current or former employees, except as may be required by
Section 4980B of the Code or otherwise required by law.
Section 8.15. Use Violations. No Borrower shall use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any of its properties in any manner
which (a) violates any Legal Requirement unless such violation
would not have a material adverse effect on the financial
condition, operations or business of any Borrower, (b) may be
dangerous unless safeguarded as required by law, (c) constitutes
a public or private nuisance, (d) makes void, voidable or
cancelable any insurance then in force with respect thereto or
(e) makes void, voidable, or cancelable any governmental permit.
Section 8.16. Exceptions to Covenants. No Borrower shall
take or permit to be taken any action or fail to take any action
which is permitted by any of the covenants contained in this
Agreement if such action or omission would result in the breach
of any other covenant contained in this Agreement.
Section 8.17. Fiscal Year and Accounting Methods. No
Borrower will change its Fiscal Year or its method of accounting
(other than changes as are concurred with by such Borrower's
independent public accountants as being required by GAAP).
Section 8.18. Governmental Regulations. No Borrower will
conduct its business in such a way that it will become subject to
regulation under the Investment Advisers Act of 1940, as amended.
No Borrower will conduct its business in such a way that it will
become subject to regulation under the Investment Company Act of
1940, as amended, or the Public Utility Holding Company Act of
1935, as amended, or any other laws, rules or regulations which
regulate the incurrence of Debt.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default. The term "Event of
Default" as used in this Agreement, shall mean any one of the
following:
(a) The failure of any Borrower to pay when due any
principal of or interest on the Notes, or any fees, charges or
any other amounts payable to Agent, Arranger, or any Lender
hereunder or under any of the Notes or other Loan Documents,
including, without limitation, the Participation Fees, the
Commitment Fees, the Agent's Administrative Fee, the Structure
Fee and Letter of Credit Fees;
(b) The failure, refusal or neglect of any Borrower to
observe, perform or comply with any covenant or agreement
contained in Article VIII other than Sections 8.13 and 8.14;
(c) The failure, refusal or neglect of any Borrower to
properly observe, perform or comply with any covenant, agreement
or obligation contained in this Agreement, or any of the other
Loan Documents [other than those covered by Sections 9.1(a) and
(b)] and the continuation of such failure, refusal or neglect for
fifteen (15) days after written notice thereof has been given to
AMRESCO by Agent or a representative of Agent;
(d) Any representation, warranty, certification or
statement made by any Borrower (either for itself or for any
other Person) in this Agreement or by any Borrower or any other
Person on behalf of any Borrower in any certificate, financial
statement or other document delivered pursuant to this Agreement
or any other Loan Document shall prove to have been untrue in any
material respect when made or deemed to have been made;
(e) The occurrence of (1) any event or condition which
(i) results in the acceleration of the maturity of any Debt of
any Borrower, or (ii) constitutes a default under any Debt of any
Borrower, provided, that if notice is required to be given under
the documents evidencing or securing such Debt prior to
acceleration thereof, it shall not be an Event of Default
hereunder until Borrower has received written notice of such
default, or (2) a default or event of default under the documents
evidencing or securing the Approved Subordinated Debt or the
payment by any Borrower, or the approval of the board of
directors of any Borrower for the payment, of amounts under the
Approved Subordinated Debt in excess of the regularly scheduled
payments thereunder or which would otherwise cause a violation by
any Borrower of any covenant or condition contained in any of the
Loan Documents;
(f) The filing or commencement by any Borrower or any
Subsidiary of any Borrower of a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or any Borrower or any Subsidiary of any
Borrower shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; provided,
however, that, with respect to any violation of this Section
9.1(f) that pertains to a Subsidiary of any Borrower (which
Subsidiary is not also a Borrower), it shall not be an Event of
Default if such violation does not (i) otherwise result in an
Event of Default or (ii) have a material adverse effect on the
business, financial position or results of operations of any
Borrower;
(g) The filing or commencement of an involuntary case
or other proceeding against Borrower or any Subsidiary of any
Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of sixty (60) days;
or an order for relief shall be entered against any Borrower or
any Subsidiary of any Borrower under the federal bankruptcy laws
as now or hereafter in effect; provided, however, that, with
respect to any violation of this Section 9.1(g) that pertains to
a Subsidiary of any Borrower (which Subsidiary is not also a
Borrower), it shall not be an Event of Default if such violation
does not (i) otherwise result in an Event of Default or (ii) have
a material adverse effect on the business, financial position or
results of operations of any Borrower;
(h) The liquidation or dissolution of any Borrower,
other than any liquidation or dissolution of any Borrower (other
than AMRESCO) permitted by Section 8.9;
(i) One or more judgments or orders for the payment of
money aggregating in excess of $500,000.00 shall be rendered
against any Borrower and/or any Subsidiary of any Borrower and
such judgment or order (A) shall continue unsatisfied and
unstayed (unless bonded with a supersedeas bond at least equal to
such judgment or order) for a period of thirty (30) days, unless
any such Borrower or Subsidiary has obtained an indemnification
of the full amount of such judgment or order by a third party
approved by the Required Lenders [it being acknowledged that an
indemnification from any Lender or the Resolution Trust
Corporation shall be deemed an approved third party for purposes
of this subparagraph (i)] pursuant to a written indemnification
agreement approved by the Required Lenders, or (B) is not fully
paid and satisfied at least ten (10) days prior to the date on
which any of its assets may be lawfully sold to satisfy such
judgment or order;
(j) The Lenders' Liens with respect to the Collateral,
or any part thereof, shall not constitute first and prior liens
and/or security interests; or
(k) There shall occur a Change in Control of AMRESCO.
It is understood and agreed by each Borrower that any of the
foregoing "Events of Default" shall constitute an Event of
Default under each of the Notes, and that such "Events of
Default" are cumulative and in addition to any default or events
of default contained in any of the other Loan Documents, and that
in the event of any discrepancy or inconsistency between any
Event of Default hereunder and any default or event of default
contained in any other Loan Document, the description of the
Event of Default stated herein shall control.
Section 9.2. Remedies. Upon the occurrence of an Event of
Default, Agent, at the direction and election of the Required
Lenders, acting by or through any of its agents, trustees or
other Persons, without notice (unless expressly provided for
herein), demand or presentment (including, without limitation,
notice of default, notice of intent to accelerate or of
acceleration) all of which are hereby waived, and in addition to
any other provision of this Agreement or any other Loan Document,
to exercise any or all of the following rights, remedies and
recourses:
(a) Declare the unpaid principal balance of each of
the Notes, the accrued and unpaid interest thereon and any other
accrued but unpaid portion of the Obligations to be immediately
due and payable, without notice (expressly including, but not
limited to, notice of default, notice of intent to accelerate or
of acceleration), except any notice that is expressly required by
the terms of this Agreement, presentment, protest, demand or
action of any nature whatsoever, each of which hereby is
expressly waived by each of the Borrowers, whereupon the same
shall become immediately due and payable. Notwithstanding the
foregoing or anything to the contrary contained herein or in any
other Loan Document, upon the occurrence of an Event of Default
described in Section 9.1(f) or Section 9.1(g) by any Borrower,
the entire unpaid principal balance of the Notes, and all
accrued, unpaid interest thereon shall automatically be
accelerated and immediately be due and payable in full, without
notice (expressly including, but not limited to, notice of
default, intent to accelerate or of acceleration), presentment,
protest, demand or action of any nature whatsoever, each of which
hereby is expressly waived by each of the Borrowers; provided,
however, that if accelerated automatically pursuant to this
sentence, the Notes and all such indebtedness may be reinstated
at the option and upon the written approval of the Required
Lenders.
(b) Enter upon the Mortgaged Property or any other
Collateral or any part thereof and take exclusive possession
thereof and of all books, records and accounts relating thereto
(including, without limitation, all Borrower Due Diligence
Reports). If any Borrower remains in possession of all or any
part of the Collateral after an Event of Default occurs and is
continuing and without Agent's prior written consent thereto,
Agent may invoke any and all legal remedies to dispossess any
Borrower, including specifically one or more actions for
declaratory or injunctive relief, forcible entry and detainer,
trespass to try title and writ of restriction. Nothing contained
in the foregoing sentence shall, however, be construed to impose
any greater obligation or any prerequisites to acquiring
possession of the Collateral or any part thereof after an Event
of Default occurs than would have existed in the absence of such
sentence.
(c) Hold, lease, manage, operate or otherwise use or
permit the use of the Mortgaged Property, the Assigned Loans and
all other Collateral, or any part thereof, either by itself or by
other Persons, in such manner, for such time and upon such other
terms as Agent may deem to be prudent and reasonable under the
circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with
reference thereto, from time to time, as Agent shall deem
necessary or desirable), and apply all proceeds from the
Mortgaged Property, the Assigned Loans and all other Collateral
in connection therewith in accordance with the provisions of
Section 9.10 hereof.
(d) Sell or offer for sale the Collateral, or any part
thereof, in such portions, order and parcels as Agent may
determine, with or without having first taken possession of same,
in accordance with the provisions of the applicable Loan
Documents and applicable Legal Requirements.
(e) Make application to a court of competent
jurisdiction, as a matter of strict right and, except as
otherwise provided by applicable law, without notice to any
Borrower or without regard to the adequacy of the Collateral for
the payment of the Obligations, for the appointment of a receiver
of the Collateral, or any part thereof, and, to the extent
permitted by applicable law, each Borrower does hereby
irrevocably consent to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain, sell, dispose
and otherwise operate the Collateral, or any part thereof, upon
such terms that may be approved by the court, and shall apply all
proceeds from such operation of the Collateral in accordance with
the provisions of Section 9.10 hereof.
(f) Exercise any and all other rights, remedies and
recourses granted hereunder or under the other Loan Documents or
otherwise now or hereafter existing in equity, at law, by virtue
of statute or otherwise.
Section 9.3. Rights of Set-Off.
(a) In addition to the Lender's Liens, each Borrower
hereby expressly grants to Lenders the right of setoff against
all deposits and other sums at any time held or credited by or
due from any Lender to each Borrower, in accordance with the
provisions of this Section 9.3. The rights of each Lender under
this Section 9.3 are in addition to other rights and remedies
(including, without limitation, other rights of setoff under law
or equity) which such Lender may have under law or by agreement.
(b) Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by
law, at its option, without notice or demand and without
liability, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, excepting,
however, any fiduciary or escrow accounts established by any
Borrower into which only funds of unrelated third-parties are
deposited, and provided that such Borrower has informed such
Lender and Agent of the nature of such accounts) at any time
held, and other indebtedness at any time owing, by any Lender to
or for the credit or the account of any Borrower against any and
all of the Obligations now or hereafter existing under this
Agreement, the Notes and the other Loan Documents, in such order
and manner as such Lender may determine, subject, however, to the
agreements contained in Section 10.14 hereof, regardless of
whether such Lender shall have made any demand under this
Agreement or the Notes and although such obligations may be
unmatured.
(c) Each Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that each Lender and any
holder of a participation in any of the Notes (with the
appropriate consent of such Lender) may exercise rights of setoff
or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were
a direct creditor of such Borrower in the amount of such
participation.
Section 9.4. Remedies Cumulative, Concurrent and
Non-Exclusive. Lenders shall have all rights, remedies and
recourses granted in the Loan Documents, and available at law or
equity and same (a) shall be cumulative and concurrent, (b) may
be pursued separately, successively or concurrently against any
Borrower, or any others obligated under any of the Notes, or
against any one or more of them, at the sole discretion of
Lenders, (c) may be exercised as often as the occasion therefor
shall arise, it being agreed by each Borrower that the exercise
or failure to exercise any of same shall in no event be construed
as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be,
non-exclusive.
Section 9.5. No Conditions Precedent to Exercise Remedies.
Each Borrower and other Person hereafter obligated for payment or
fulfillment of all or any part of the Obligations shall not,
except as otherwise provided by applicable law, be relieved of
such obligation by reason of (a) the failure of a trustee to
comply with any request of any Borrower, or any other Person so
obligated to foreclose the Lenders' Liens or to enforce any
provisions of the Loan Documents, (b) the release, regardless of
consideration, of any Person obligated with respect to the
Obligations, or of the Collateral or any part thereof, or the
addition of any other property to the Collateral, (c) any
agreement or stipulation between any subsequent owner of the
Collateral and Agent or any Lender extending, renewing,
rearranging or in any other way modifying the terms of the Loan
Documents without first having obtained the consent of, given
notice to or paid any consideration to any Borrower, or such
other Person, and in such event, each Borrower and all such other
Persons shall continue to be liable to make payments in
accordance with the terms of any such extension or modification
agreement unless expressly released and discharged in writing by
the Required Lenders, and (d) any other act or occurrence, save
and except the complete payment of the Obligations. Each
Borrower waives any right to require Lenders to proceed against
any other Person, exhaust any Collateral, or pursue any other
remedy in Lenders' power. All dealings between any Borrower and
any Lender, whether or not resulting in the creation of the
Obligations, shall conclusively be presumed to have been had or
consummated upon reliance upon this Agreement. Each Borrower
authorizes Lenders, without notice or demand and without any
reservation of rights against any Borrower and without affecting
liability hereunder or on the Obligations, from time to time, to
(i) renew, extend for any period, accelerate, modify, compromise,
settle, or release the obligation of any other Person that may be
obligated with respect to any or all of the Obligations or
Collateral; (ii) take and hold any other property as collateral,
other than the Collateral, for the payment of any or all of the
Obligations, and exchange, enforce, waive, and release any or all
of the Collateral or other property; and (iii) after the
occurrence of an Event of Default, apply the Collateral or other
property and direct the order or manner of sale thereof in
accordance with the terms of this Agreement and the Security
Documents.
Section 9.6. Release of and Resort to Collateral. The
release or substitution of all or any part of the Collateral,
regardless of consideration, shall not in any way impair, affect,
subordinate, or release the Lenders' Liens or their status as
first and prior Liens in and to any remaining Collateral. For
payment and performance of the Obligations, Lenders may resort to
any other security therefor held by a trustee in such order and
manner as Required Lenders may elect.
Section 9.7. Waivers. To the full extent permitted by
law, each Borrower hereby irrevocably and unconditionally waives
and releases (a) all benefit that might accrue to any Borrower by
virtue of any present or future law exempting the Collateral from
attachment, levy or sale on execution or providing for any
appraisement, evaluation, stay of execution, exemption from civil
process, redemption or extension of time for payment, (b) except
as specifically provided for herein, all notices of any Default
or Event of Default or of any trustee's or Lenders' election to
exercise or his or their actual exercise of any right, remedy or
recourse provided for under the Loan Documents, (c) any right to
a marshalling of assets with respect to the Notes or the Letters
of Credit or any of the Collateral or any Debt of any Borrower,
or a sale in inverse order of alienation and (d) except as
specifically provided for herein, any and all right to receive
demand, grace, notice, presentment for payment, protest, notice
of intention to accelerate the Obligations or notice of
acceleration of the Obligations.
Section 9.8. Discontinuance of Proceedings. In case Agent
shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to
discontinue or abandon same for any reason, Agent shall have the
unqualified right to do so and, in such event, each Borrower and
Lenders shall be restored to their former positions with respect
to the Obligations, the Loan Documents, the Collateral and
otherwise, and the rights, remedies, recourses and powers of
Agent and Lenders shall continue as if same had never been
invoked.
Section 9.9. Power of Attorney. Each Borrower hereby
irrevocably appoints Agent, acting for all the Lenders, as the
true and lawful attorney of such Borrower with full power of
substitution for, and on behalf of such Borrower, and in its
name, upon the request and instruction of Borrower and in any
event after the occurrence of an Event of Default (or prior to
the occurrence of any Event of Default if Agent otherwise
reasonably believes it is necessary to take such action), to take
any action to preserve, maintain, protect or enforce the rights
and interests of such Borrower with respect to the Collateral,
including, without limitation, to (i) endorse any Assigned Loans
to Agent, on behalf of Lenders, or to any other Person,
(ii) enforce, cure any default or otherwise act with respect to
any leases, sales contracts, management or marketing contracts or
any other agreements pertaining to or affecting any of the
Mortgaged Property, (iii) take all such action and to execute all
such documents as Agent deems necessary or desirable to operate
or preserve or protect the Assigned Loans and the collateral
therefor, the Mortgaged Property or any other Collateral, (iv)
sue for, demand or collect any sums owing to any Borrower under
the Assigned Loans or under leases or other agreements affecting
the Mortgaged Property and (v) exercise rights of any Borrower
under any purchase agreement related to any Assigned Loan. The
power so vested in Agent under this Section 9.9 is one coupled
with an interest and shall be irrevocable, except by written
instrument executed jointly by each Borrower and Agent and filed
for record in the Office of the County Clerk of Dallas County,
Texas. Notwithstanding the foregoing, Agent shall be under no
obligation to exercise any of the foregoing rights or take any
action necessary to preserve any right in any asset subject to
the Lenders' Liens against any other Person, and Agent, to the
extent permitted herein or by applicable law, may exercise any of
the foregoing rights without incurring any responsibility or
liability to any Borrower or any other Person and without in any
way affecting the Obligations or any other obligations of any
Borrower to Lenders. Borrowers, jointly and severally, agree to
reimburse Agent and Lenders upon demand for any costs and
expenses, including, without limitation, reasonable attorneys'
fees and collection costs, that Agent or any Lender may incur
while acting as the attorney-in-fact of each Borrower as provided
hereunder (or pursuant to the attorney-in-fact herein created),
all of which costs and expenses shall be included in the
Obligations.
Section 9.10. Application of Proceeds. All payments on the
Notes or the Letters of Credit received by any Lender during the
existence of an Event of Default (unless otherwise elected by
Lenders), and the proceeds of any sale or disposition of, and all
proceeds generated by the holding, leasing, operation or other
use of, the Collateral, or any part thereof, during the existence
of an Event of Default and upon the exercise of Lenders' rights
and remedies hereunder or under any of the other Loan Documents,
shall be applied by Lenders, the applicable trustee or the
receiver, if one is appointed, to the extent that funds are so
available therefrom, as determined by the Required Lenders
(provided that, as among themselves, Lenders agree that any such
proceeds shall be applied as contemplated by Article X hereof).
ARTICLE X
AGENT AND THE LENDERS
Section 10.1. Appointment and Authorization of Agent.
(a) Each Lender hereby irrevocably appoints and authorizes
Agent as its nominee and agent, in its name and on its behalf:
(i) to act as nominee for and on behalf of such Lender in and
under all Loan Documents; (ii) to arrange the means whereby the
funds of the Lenders are to be made available to Borrowers under
the Loan Documents; (iii) to take such action as may be requested
by any Lender under the Loan Documents (when such Lender is
entitled to make such request under the Loan Documents and after
such requesting Lender has obtained the concurrence of such other
Lenders as may be required under the Loan Documents); (iv) to
receive all documents and items to be furnished to Lenders under
the Loan Documents; (v) to promptly distribute to each Lender the
material information, requests, documents and items received from
Borrowers under the Loan Documents; (vi) to promptly distribute
to each Lender such Lender's Loan Percentage of each payment or
prepayment in accordance with the terms of the Loan Documents;
and (vii) to deliver to the appropriate Persons requests,
demands, approvals and consents received from Lenders.
(b) The obligations of Agent hereunder are only those
expressly set forth herein. Each Lender and each Borrower agree
that Agent is not a fiduciary for Lenders or for Borrowers but
simply is acting in the capacity described herein to alleviate
administrative burdens for both Borrowers and Lenders and that
Agent has no duties or responsibilities to Lenders or Borrowers
except those expressly set forth herein. Without limiting the
generality of the foregoing, Agent shall not be required to take
any action or exercise any right or remedy with respect to any
Default or Event of Default, except if requested by the Required
Lenders. Notwithstanding the administrative authority delegated
to Agent, Agent shall not cause or permit any modification of the
Loan Documents or take other action relating to the Credit
Facility specifically requiring the consent or approval of the
Required Lenders without such consent or approval. Action taken
by Agent including, without limitation, any exercise of remedies
or initiation of suit or other legal proceedings made in
accordance with the instructions of the Required Lenders or as
otherwise permitted by this Article X, shall be binding upon each
of the Lenders.
(c) Agent, in its capacity as a Lender, shall have the same
Rights under the Loan Documents as any other Lender and may
exercise the same as though it were not acting as Agent, and any
resignation by Agent hereunder shall not impair or otherwise
affect any Rights which it has or may have in its capacity as an
individual Lender.
(d) Agent may now or hereafter be engaged in one or more
loan, letter of credit, leasing, or other financing transactions
with any Borrower, act as trustee or depositary for any Borrower
or otherwise be engaged in other transactions with any Borrower
and/or its Affiliates (collectively, the "other activities") not
the subject of the Loan Documents. Without limiting the Rights
of Lenders specifically set forth in the Loan Documents, Agent
shall not be responsible to account to Lenders for such other
activities, and no Lender shall have any interest in any other
activities, any present or future guaranties by or for the
account of any Borrower which are not contemplated or included in
the Loan Documents (any present or future offset exercised by
Agent in respect of such other activities), any present or future
property taken as security for any such other activities, or any
property now or hereafter in the possession or control of Agent
which may be or become security for the Obligations by reason of
the general description of indebtedness secured or of property
contained in any other agreements, documents or instruments
related to any such other activities; provided that, if any
payments in respect of such guaranties, such property or the
proceeds thereof or any offset shall be applied to reduction of
the Obligations, then each Lender shall be entitled to share in
such application according to its Loan Percentage thereof.
Section 10.2. Possession of Instruments by Agent. Agent
shall exercise all rights and remedies under the Loan Documents
and take all actions with respect thereto in accordance with the
request or direction of the Required Lenders, or otherwise as and
to the extent provided herein or in the other Loan Documents;
provided, however, that Agent may take such actions in its name
without the joinder of Lenders, and Borrowers and all third
parties shall be entitled to rely on the actions taken by Agent
with respect to the execution by Agent of any and all agreements,
financing statements, affidavits, notices or any other type of
document or instrument pertaining thereto, including, without
limitation, in connection with the exercise of any rights or
remedies of Lenders under the Loan Documents (and specifically
including any foreclosure proceedings under any of the Security
Documents or other legal proceedings), and the same shall be
binding upon all Lenders as to any third party relying on such
actions of Agent. Agent shall also be the named secured party or
beneficiary under the Security Documents and shall take and
maintain possession of all the Security Documents, as agent for
and on behalf of all Lenders, and the grant to Agent of any Lien
under any Security Document shall be for the ratable benefit of
all Lenders.
Section 10.3. Expenses. Each Lender shall pay its Loan
Percentage of any reasonable expenses (including, without
limitation, court costs, reasonable attorneys' fees and other
costs of collection) incurred by Agent in connection with any of
the Loan Documents if Agent does not receive reimbursement
therefor from other sources within thirty (30) days after
incurred; provided that, and subject to the terms and conditions
of Section 11.4, each Lender shall be entitled to receive its
Loan Percentage of any reimbursement for such expenses, or part
thereof, which Agent subsequently receives from such other
sources.
Section 10.4. Delegation of Duties; Reliance; Consultation.
Lenders may perform any of their duties or exercise any of their
Rights under the Loan Documents by or through Agent, and Lenders
and Agent may perform any of their duties or exercise any of
their Rights under the Loan Documents by or through their
respective officers, directors, employees, attorneys, agents, or
other representatives (collectively, "Representatives"). Agent,
Lenders, and their respective Representatives shall (a) be
entitled to rely upon (and shall be protected in relying upon)
any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telecopy, telegram, telex or teletype message,
statement, order or other documents or conversation believed by
any of them to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters,
upon opinion of counsel selected by Agent or such Lender, (b) be
entitled to deem and treat each Lender as the owner and holder of
its Loan Percentage for all purposes until, subject to Section
11.9, written notice of the assignment or transfer thereof shall
have been given to and received by Agent (and, any request,
authorization, consent or approval of any Lender shall be
conclusive and binding on each subsequent holder, assignee, or
transferee of such Lender's Loan Percentage or Participant
therein until such notice is given and received), and (c) not be
deemed to have notice of the occurrence of a Default or an Event
of Default unless notified thereof by another Lender or AMRESCO.
Agent may consult with legal counsel, independent public
accountants, consultants, appraisers and other experts selected
by Agent, and shall not be liable for any action taken or omitted
to be taken by Agent in good faith in accordance with the advice
of such counsel, accountants or experts. Any such counsel,
accountants or other experts shall be engaged to represent and
render services to all Lenders as a group unless otherwise
specified by Agent.
Section 10.5. Limitation of Agent's Liability.
(a) Neither Agent nor any of its Representatives shall be
liable for any action taken or omitted to be taken by it or them
under the Loan Documents in good faith and believed by it or them
to be within the discretion or power conferred upon it or them by
the Loan Documents or be responsible for the consequences of any
error of judgment or negligence, except for gross negligence or
willful misconduct, and neither Agent nor any of its
Representatives has a fiduciary relationship with any Lender by
virtue of the Loan Documents (provided that nothing herein shall
negate the obligation of Agent to account for funds received by
it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Agent shall not be compelled to do
any act under the Loan Documents or to take any action toward the
execution or enforcement of the powers thereby created or to
prosecute or defend any suit in respect of the Loan Documents.
If Agent requests instructions from Lenders with respect to any
act or action (including, but not limited to, any failure to act)
in connection with any Loan Document, Agent shall be entitled
(but shall not be required) to refrain (without incurring any
liability to any Person by so refraining) from such act or action
unless and until it has received such instructions. In no event,
however, shall Agent or any of its Representatives be required to
take any action which it or they reasonably determine could incur
for it or them criminal or civil liability.
(c) Agent shall not be responsible in any manner to any
Lender or any participant of a Lender for, and each Lender
represents and warrants that it has not relied upon Agent in
respect of, (i) the creditworthiness of Borrowers and the risks
involved to such Lender, (ii) the effectiveness, enforceability,
genuineness, validity, or the due execution of any Loan Document,
(iii) any representation, warranty, document, certificate,
report, or statement made therein or furnished thereunder or in
connection therewith, (iv) the existence, priority, or perfection
of any Lien granted or purported to be granted under any Loan
Document, or (v) the observation of or compliance with any of the
terms, covenants, or conditions of any Loan Document on the part
of Borrowers. Each Lender jointly and severally agrees to
indemnify Agent and hold it harmless from and against (but
limited to such Lender's Loan Percentage of) any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses, and reasonable
disbursements of any kind or nature whatsoever (including counsel
fees and disbursements) which may be imposed on, asserted
against, or incurred by Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by Agent
under the Loan Documents (provided that, although Agent shall
have the right to be indemnified for its ordinary negligence,
Agent shall not have the right to be indemnified hereunder for
its own fraud, gross negligence, or willful misconduct).
Section 10.6. Default; Collateral. Upon the occurrence and
continuance of a Default or an Event of Default, Agent shall make
a recommendation to Lenders of any actions to be taken, and each
Lender agrees to promptly confer in order that Lenders can
consider such course of action or any other actions to be taken
for the enforcement of the Rights of Lenders; provided that Agent
shall be entitled (but not obligated) to proceed to take any
actions necessary in its reasonable judgment to preserve Rights,
pending agreement by Lenders on the course of action to be taken.
If the Required Lenders cannot agree on a course of action to be
taken within sixty (60) days following Agent's initial
recommendation, Agent shall thereafter take such action as Agent
deems advisable to enforce the Rights of Lenders. Any action
directed or approved by the Required Lenders, including without
limitation, any exercise of remedies or initiation of suit or
other legal proceedings, shall be binding upon each Lender. In
actions with respect to any property of Borrowers, Agent is
acting for the account of each Lender to the extent of each
Lender's Loan Percentage. Any and all agreements to subordinate
(whether made heretofore or hereafter) other indebtedness or
obligations of Borrowers to the Obligations shall be construed as
being for the benefit of each Lender to the extent of its
respective Loan Percentage. If Agent acquires any security for
the Obligations or any guaranty of the Obligations upon or in
lieu of foreclosure, the same shall be held for the benefit of
each Lender in proportion to such Lender's respective Loan
Percentage.
Lenders agree, among themselves, that unless otherwise
agreed to by Agent and the Required Lenders, all monies collected
or received by Agent in respect of the security of the Credit
Facility, directly or indirectly, shall be applied (a) to the
Administrative Fee and all costs of collection or maintenance of
the Collateral, and then to interest or principal as recommended
by Agent and approved by the Required Lenders, and (b) to the
amounts owed to any Lender under any Interest and Foreign
Exchange Hedge Agreement, only after payment in full of the
outstanding principal and interest under the Credit Facility.
Section 10.7. Lenders' Decision. Lenders agree as among
themselves that any decisions or elections to be made by Lenders
(and not Agent) under this Agreement and the other Loan Documents
shall be made by the Required Lenders, except in the case, if
any, where a specific different number or percentage of Lenders
is expressly required under this Agreement or any other Loan
Documents (use of the terms "Lenders" in any of the Loan
Documents, without an express provision for different voting
rights other than as set forth in the definition of Required
Lenders, does not imply that unanimous consent is thereby
required). Agent may, at its election, request any
determination, vote, consent or approval by Lenders in writing or
orally (by telephone or in person). In addition, if any request
by Agent for Lenders' determination or approval hereunder is made
in writing and such writing contains written notice to Lenders
requesting a response within five Business Days, or longer, from
the date Lenders are deemed to have received notice as herein
provided (and setting forth the actual date of the last day of
the Lender reply period), then Lenders shall use reasonable
efforts to reply within the applicable reply period, provided,
that if any such Lender does not reply within the applicable
reply period, such Lender shall be deemed not to have approved of
or consented to or concurred with such recommendation or
determination.
Section 10.8. Limitation of Liability of Lenders. To the
extent permitted by law, (a) neither Agent nor any Lender or
participant of a Lender shall incur any liability to any other
Lender or participant of a Lender except for acts or omissions in
bad faith, and (b) neither Agent nor any Lender or participant of
a Lender shall incur any liability to Borrowers or any other
Person for any act or omission of any other Lender or any
participant.
Section 10.9. Relationship of Lenders. Nothing herein
shall be construed as creating a partnership or venture among
Agent and Lenders or among Lenders.
Section 10.10. Debtor-Creditor Relationship. Each Lender
has and shall maintain a direct creditor-debtor relationship with
Borrowers and will have direct recourse, singly or in the
aggregate, against Borrowers, subject to the terms and conditions
of the Loan Documents. Notwithstanding the foregoing, any right,
remedy, action, omission or waiver respecting this Agreement, the
Notes, the Security Documents and the other Loan Documents shall
only be exercised, made, taken, or permitted by Agent, acting
upon the direction of the Required Lenders, as the agent for all
Lenders; provided, however, that if the Required Lenders have
elected and directed Agent to institute suit against any Borrower
for payment of any past due amounts under the Notes or any other
Obligations for which Lenders have recourse against any Borrower,
or in the event of any bankruptcy proceedings or other legal
proceedings relating to this Agreement against any Borrower, each
Lender shall be entitled, at its option, to bring or join in such
proceedings in its own name.
Section 10.11. Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement and each of the other Loan Documents
to which it is a party or to which Agent is a party for its
benefit. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement
or with respect to the Credit Facility.
Section 10.12. Removal of Agent. Lenders, acting by written
notice to Agent from and agreed to by all Lenders other than
Agent, may remove for cause the then current Agent, as Agent, and
appoint one of the other Lenders as the successor Agent. Upon
the appointment of a successor Agent, the removed Agent and the
successor Agent shall execute such documents as any Lender may
reasonably request to reflect such appointment of a successor
Agent and shall notify AMRESCO of such change in the Agent. The
successor Agent shall be vested with all rights, powers and
privileges and be bound to all duties, obligations and
responsibilities of Agent in and under this Agreement and the
other Loan Documents; provided, however, that until such time as
AMRESCO is notified in writing signed by both the removed and
successor Agents as to the appointment of the successor Agent,
Borrowers shall be entitled to rely on any decision, approval or
other act by the removed Agent as binding on Lenders, and may pay
to Agent any amounts due or owing by Borrowers under the Loan
Documents.
Section 10.13. Resignation by Agent. An Agent's status as
Agent under this Agreement shall automatically terminate fifteen
(15) days after the closing or liquidation of such Agent or
fifteen (15) days after such Agent is adjudicated insolvent.
Additionally, Agent may resign its position as Agent at any time
by giving at least thirty (30) days written notice thereof to
AMRESCO and the other Lenders. Upon any such occurrence causing
a termination of Agent or the delivery of such notice of
resignation from Agent, the Required Lenders and AMRESCO shall
select a successor Agent. If the Required Lenders and AMRESCO
cannot agree upon the choice of the successor Agent within ten
(10) days after the occurrence causing a termination in the case
of a termination of Agent, or ten (10) days prior to the
effective resignation date set forth in Agent's resignation
notice in the case of a resignation by Agent, then the Designated
Successor Agent shall become the successor Agent. AMRESCO shall
be entitled to participate in the selection of the replacement
Agent only prior to the occurrence of a Default. Upon any such
termination or resignation, (a) the successor Agent shall
automatically be vested with all rights, powers and privileges
and be bound to all duties, obligations and responsibilities of
Agent in and under this Agreement and the other Loan Documents
and shall thereafter be deemed the "Agent" for all purposes under
the Loan Documents and (b) such terminating or resigning Agent
shall act only in a custodial capacity for the holding by it of
any funds theretofore received from Borrowers and any such funds
shall be held in trust for the benefit of Lenders or Borrowers,
as the case may be. Additionally, upon the successor Agent
becoming Agent as provided in this Section 10.13, the terminating
or resigning Agent and the new Agent shall execute such documents
as any Lender may reasonably request to reflect such succession.
All costs incurred in connection with the execution of such
documents shall be paid by Lenders in proportion to each Lender's
Loan Percentage.
Section 10.14. Sharing of Payments and Setoffs. Each Lender
agrees that if it should receive any amount (whether by voluntary
payment, by realization upon any Collateral, by the exercise of
the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents
or otherwise) which is applicable to the payment of the principal
of or interest on the Credit Facility, of a sum which with
respect to the related sum or sums received by the other Lenders
exceeds such Lender's Loan Percentage, then such Lender receiving
such excess payment shall purchase without recourse or warranty
from the other Lenders an interest in the indebtedness of any
Borrower to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount;
provided that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest. This Section 10.14 shall not
impair the right of any Lender to exercise any right of setoff or
counterclaim it may have with respect to any funds in an account
pledged to such Lender to secure only indebtedness other than the
Obligations, and to apply the amount received or subject to such
exercise to the payment of such other indebtedness, it being
expressly agreed by all Lenders, however, that until the
Obligations are paid and satisfied in full, any and all amounts
received by any Lender from offset of any account of any Borrower
that either (a) constitutes Collateral or (b) contains funds
exclusively derived from or related to the Collateral, shall be
applied to the Obligations, and not to any other indebtedness of
any Borrower to such Lender, except in the case of a certificate
of deposit or other designated account (but in no event any
operating account of any Borrower) that is specifically pledged
or assigned to a Lender as security for indebtedness other than
the Obligations.
Section 10.15. Non-Advancing Lenders. In the event that
any Lender shall fail or refuse to advance its Loan Percentage of
any payment or reimbursement by Lenders as required hereunder, or
of any amount to be funded pursuant to Section 10.3, when it is
obligated to do so, Agent shall notify the other Lenders of such
failure, and such remaining Lenders, or any of them, may elect,
at their sole option and discretion (without any obligation
whatsoever to do so), to advance such non-advancing Lender's
portion, pro rata in accordance with the proportion that the Loan
Percentage of each Lender electing to make such advance bears to
the Loan Percentages of all Lenders electing to make such
advance. Upon making any such advance, and notwithstanding
anything to the contrary expressed or implied herein or in the
Notes or any other Loan Document, all subsequent payments made on
the Credit Facility and all proceeds realized from the sale of
any Collateral securing the Credit Facility or from the exercise
of right of setoff or other remedies under this Agreement or the
other Loan Documents, shall be applied, in the manner described
below, only to Lenders other than the non-advancing Lender (and
the non-advancing Lender shall not be entitled to receive the
same), until the amounts advanced by such advancing Lenders on
behalf of the non-advancing Lender (together with the interest
earned thereon pursuant to this Agreement and the Notes), have
been repaid in full. As among Lenders other than the non-
advancing Lender, Lenders that advanced funds on behalf of the
non-advancing Lender shall receive the portion the non-advancing
Lender would have been entitled to receive had it advanced
(together with the interest earned thereon pursuant to this
Agreement and the Notes), to be applied pro rata in accordance
with the amounts advanced by each such advancing Lender, until
the amounts advanced by such Lenders on behalf of the
non-advancing Lender (together with the interest earned thereon
pursuant to this Agreement and the Notes), have been repaid in
full; any Lender that advanced only on its own behalf based on
its Loan Percentage shall be repaid based on such Loan
Percentage. In addition, any Lenders that advance funds on
behalf of a non-advancing Lender pursuant to this Section 10.15
shall (i) receive a proportionate share (based on the amounts so
advanced by such Lenders) of the amount the non-advancing Lender
would have been entitled to receive of any distribution of any
Collateral securing the Credit Facility in the event the same are
distributed among Lenders, and (ii) have a claim against such
non-advancing Lender for the amounts so advanced and shall be
entitled to all rights and remedies at law or in equity to
recover any unpaid amounts. A non-advancing Lender shall not be
entitled to vote on any matters hereunder or related to the
Credit Facility (and its interest shall be excluded for purposes
of determining the requisite percentage or number of Lenders for
a vote) so long as such Lender remains a non-advancing Lender.
Section 10.16. Benefit of Lenders. All terms, conditions
and agreements set forth in this Article X, specifically
including, without limitation, the provisions of Section 10.14
are for the sole and exclusive benefit of Lenders, and neither
Borrowers nor any other Person shall be entitled to rely on or
seek the benefit of such provisions; provided, however, that
Borrowers shall be entitled to rely on any decision, approval or
other act by Agent as binding Lenders.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Continuing Agreement. This is a continuing
Agreement and all the rights, powers and remedies of Lenders
hereunder and all agreements and obligations of Borrowers and
Lenders hereunder, shall continue to exist until all Advances
have been paid in full, the commitment of Lenders to make
Advances hereunder has been terminated, all Letters of Credit
have been terminated and all other Obligations have been paid in
full.
Section 11.2. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telecopy or similar writing), except for
any telephone notices as specifically provided for herein, may be
personally served or sent by telecopier, mail or the express mail
service of the United States Postal Service, Federal Express or
other equivalent overnight or expedited delivery service, and
(a) if given by personal service or telecopier (confirmed by
telephone), it shall be deemed to have been given upon receipt;
(b) if sent by telecopier without telephone confirmation, it
shall be deemed to have been given twenty-four (24) hours after
being given; (c) if sent by mail, it shall be deemed to have been
given upon the earlier of (i) actual receipt, or (ii) three (3)
Business Days after deposit in a depository of the United States
Postal Service, first class mail, postage prepaid; (d) if sent by
Federal Express, the express mail service of the United States
Postal Service or other equivalent overnight or expedited
delivery service, it shall be deemed given upon the earlier of
(i) actual receipt or (ii) twenty-four (24) hours after delivery
to such overnight or expedited delivery service, delivery charges
prepaid, and properly addressed to Agent or the applicable
Borrower or Lender; provided that notices to Agent under Article
III and Article IV shall not be effective until received. For
purposes hereof, the address of the parties to this Agreement
shall be as set forth in Schedule I attached hereto. Any party
may, by proper written notice hereunder to the other parties,
change the address to which notices shall thereafter be sent to
it. Notwithstanding anything to the contrary implied or
expressed herein, the notice requirements herein (including the
method, timing or deemed giving of any notice) is not intended to
and shall not be deemed to increase the number of days or to
modify the method of notice or to otherwise supplement or affect
the requirements for any notice required or sent pursuant to any
Legal Requirement (including, without limitation, any applicable
statutory or law requirement), or otherwise given hereunder, that
is not required under this Agreement or the other Loan Documents.
The provisions of this Section 11.2 shall control over any
conflicting contractual notice provisions contained in the Loan
Documents.
Section 11.3. No Waivers. No failure or delay by Agent or
any Lender in exercising any right, power or privilege hereunder
or under the Notes or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law or in any of the other Loan
Documents.
Section 11.4. Expenses; Documentary Taxes; Indemnification.
Borrowers, jointly and severally, agree to pay (a) all expenses
of Agent and the reasonable fees and disbursements of legal
counsel for Lenders as a group, in coany Borrower to such Lender,
except in the case of a certificate of deposit or other designated account
(but in no event any operating account of any Borrower) that is
specifically pledged or assigned to a Lender as security for indebtedness
other than the Obligations.
Section 11.5. Amendments and Waivers; Consent to Deviation.
Any provision of this Agreement, the Notes or the other Loan
Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrowers,
Agent and Required Lenders.
Section 11.6. Survival. All representations, warranties
and covenants made by any Borrower herein or in any certificate
or other instrument delivered by it or on its behalf under the
Loan Documents shall be considered to have been relied upon by
Lenders and shall survive the delivery to Agent or Lenders of
such Loan Documents or the extension of any of the Notes or the
issuance of any of the Letters of Credit (or any part thereof),
regardless of any investigation made by or on behalf of Agent or
any Lender.
Section 11.7. Prior Understandings; No Defenses; Release;
No Oral Agreements. This Agreement supersedes all other prior
understandings and agreements, whether written or not, between
the parties hereto relating specifically to the transactions
provided for herein. Each Borrower confirms that there are no
existing defenses, claims, counterclaims or rights of offset
against any Lender in connection with the negotiation,
preparation, execution, performance or any other matters related
to this Agreement or any of the other Loan Documents executed as
of the date hereof and any of the transactions contemplated
thereby, and each Borrower hereby expressly releases and
discharges each Lender, and its Representatives, from any and all
such claims, known or unknown. Each Borrower further confirms
that no Lender has made any agreements with, or commitments or
representations to, any Borrower (either in writing or orally)
other than as expressly stated herein or in the other Loan
Documents executed as of the date hereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
To the fullest extent applicable, each Borrower and Lender
acknowledges and agrees that this Agreement and each of the other
Loan Documents shall be subject to Section 26.02 of the Texas
Business and Commerce Code.
Section 11.8. Limitation on Interest. It is expressly
stipulated and agreed to be the intent of Borrowers and Lenders
at all times to comply with the applicable law governing the
maximum rate or amount of interest payable on or in connection
with the Notes, the Credit Facility and the Letters of Credit.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under the Notes or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to any of the Notes or
the Letters of Credit, or if acceleration of the maturity of the
Notes, any prepayment by any Borrower, or any other circumstance
whatsoever, results in any Lender having been paid any interest
in excess of that permitted by applicable law, then it is the
express intent of Borrowers and Lenders that all excess amounts
theretofore collected by Lenders be credited on the principal
balance of the Notes (or, if the Notes have been or would thereby
be paid in full, refunded to Borrowers), and the provisions of
the Notes and the other applicable Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of
any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called
for hereunder and thereunder. The right to accelerate the
maturity of the Notes does not include the right to accelerate
any interest which has not otherwise accrued on the date of such
acceleration, and Lenders do not intend to collect any unearned
interest in the event of acceleration. All sums paid or agreed
to be paid to Lenders for the use, forbearance or detention of
the indebtedness evidenced hereby or by the Notes shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the
Maximum Lawful Rate or maximum amount of interest permitted under
applicable law. The term "applicable law" as used herein shall
mean the laws of the State of Texas, or DIDMCA or any other
applicable United States federal law to the extent that it
permits Lenders to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law. The
provisions of this Section 11.8 shall control all agreements
between Borrowers and Lenders.
Section 11.9. Invalid Provisions. If any provision of the
Loan Documents is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term thereof,
such provision shall be fully severable, the Loan Documents shall
be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and
the remaining provisions thereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the
Loan Documents a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
Section 11.10. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that (i) no Borrower
shall, directly or indirectly, assign or transfer, or attempt to
assign or transfer, any of its rights, duties or obligations
under this Agreement without the express prior written consent of
the Required Lenders, and (ii) Lenders may not assign or transfer
any of their rights or interests in this Agreement, the Notes,
the other Loan Documents or the Credit Facility, other than to an
Affiliate of such Lender, except in accordance with this Section
11.10. Prior to entering into any discussions with any potential
participant or assignee of its interest in the Credit Facility,
the applicable Lender shall obtain AMRESCO's prior consent (if
AMRESCO's consent is required in connection with any assignment
or participation) and shall cause such proposed participant or
assignee to execute a confidentiality agreement to the same
effect as that contained in Section 7.3 hereof.
(b) Each Lender shall have the right, at any time and from
time to time, to assign all or a part of its rights, interests
and obligations under this Agreement and the other Loan Documents
and to sell or transfer to any Person a participation interest in
such Lender's portion of the Credit Facility, subject to and in
accordance with the following provisions:
(i) In the case of a participation, such Lender shall
remain the "Lender" for all purposes under the Loan
Documents (including without limitation any votes, elections
or other decisions of the Lenders hereunder) and shall
remain fully liable for its obligations hereunder, and Agent
shall continue to deal directly and solely with such Lender
under the Loan Documents and shall have no duty or
obligation to deal with any participant in any manner
(including without limitation, delivery of information or
distribution of any funds to any participant).
(ii) AMRESCO and Agent shall have given their prior
written consent for such assignment or participation;
provided that AMRESCO's consent shall not be unreasonably
withheld or delayed, and shall not be required during the
continuance of a Default.
(iii) Any such assignment or participation must be
to an Eligible Assignee and in an amount equal to or in
excess of Five Million and No/100 Dollars ($5,000,000.00),
or, if less, 6% of the aggregate Available Commitment in
effect from time to time.
(c) In addition to the conditions and requirements set
forth in Section 11.10(b), any assignment by any Lender shall be
subject to the following conditions:
(i) Each assignment shall be of a constant, and not a
varying, percentage of all of the assigning Lender's rights
and obligations under this Agreement and the other Loan
Documents.
(ii) The parties to any assignment shall execute and
deliver to Agent, for recording in the Register (as
hereinafter defined), with a copy thereof to AMRESCO, an
Assignment and Acceptance, substantially in the form of
Exhibit H hereto (an "Assignment and Acceptance"), together
with any of the Notes subject to such assignment.
Upon execution of an Assignment and Acceptance, delivery by
the transferor Lender of an executed copy thereof to AMRESCO and
Agent (together with notice that payment of the purchase price,
as hereinafter provided, shall have been made), and payment by
such Purchaser to such transferor Lender of an amount equal to
the purchase price agreed between such transferor Lender and such
Purchaser, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance (which effective
date shall be at least five Business Days after the execution
thereof), (A) the assignee thereunder shall be a party to this
Agreement as a "Lender" hereunder and, to the extent provided in
such Assignment and Acceptance, shall have the rights and
obligations of a Lender hereunder, and (B) the assigning Lender
shall, to the extent provided in such assignment and upon payment
to Agent of the registration fee referred to in Section 11.10(e),
be released from its obligations under this Agreement, except for
the confidentiality agreements contained in Section 7.3, which
shall survive any such assignment, and any such other obligations
which by their nature should survive any such assignment.
(d) By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm to
and agree with each other and the other parties hereto as
follows: (i) other than the representation and warranty that it
is the legal and beneficial owner of the claim, the assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto;
(ii) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of any Borrower or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance
or observance by any Borrower or any other Person primarily or
secondarily liable in respect of any of the Obligations or any of
its Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it
has received a copy of this Agreement, together with copies of
the most recent financial statements delivered to Lenders by each
Borrower and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the assigning
Lender, Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee represents and warrants
that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental
thereto; (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the
terms of this Agreement and the other Loan Documents are required
to be performed by it as a Lender; and (viii) such assignee
represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance.
(e) Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of
Lenders and the Loan Percentages of, and principal amount of the
Credit Facility owing to Lenders from time to time. The entries
in the Register shall be conclusive, in the absence of manifest
error, and Borrowers, Agent and Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available
for inspection by AMRESCO and Lenders at any reasonable time and
from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Lender agrees to pay to Agent a
registration fee in the sum of $3,500.00.
(f) Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each
Note subject to such assignment, Agent shall (i) record the
information contained therein in the Register, and (ii) give
prompt notice thereof to AMRESCO and Lenders (other than the
assigning Lender), and Schedule I shall automatically be deemed
revised to reflect the name, address, Loan Commitment Amount and
Loan Percentage of the new Lender and the deletion of or changed
information for the assigning Lender, and Agent shall deliver to
AMRESCO and Lenders, upon request by AMRESCO or any Lender, an
amended Schedule I reflecting such changes. Within five (5)
Business Days after receipt of such notice, Borrower, at Lenders'
expense, shall execute and deliver to Agent, in exchange for each
surrendered Note, a new Note payable to the order of such
Eligible Assignee in an amount equal to the amount assigned to
such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note payable to the order of the
assigning Lender in an amount equal to the amount retained by it
hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Notes. The surrendered Notes shall be
cancelled and returned to AMRESCO.
(g) Any Lender may at any time pledge all or any portion of
its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve
Banks organized under 4 of the Federal Reserve Act, 12 U.S.C.
1341. No such pledge or the enforcement thereof shall release
the pledgor Lender from its obligations hereunder or under any of
the other Loan Documents.
(h) Notwithstanding anything to the contrary contained
herein, a Lender may not sell or participate any of its interests
for a purchase price which, directly or indirectly, reflects a
discount from face value (i.e., the aggregate outstanding
principal portion of the Credit Facility to be sold or
participated plus accrued and unpaid interest thereon), without
first offering such sale or participation at such discounted
price to the other Lenders on a pro rata basis, in which event
such other Lenders shall have thirty (30) days in which to elect
whether to purchase the interest to be sold.
(i) Any participant or new Lender hereunder shall agree in
writing to keep in confidence any financial information regarding
any Borrower that such Purchaser or Participant may receive as
provided in Section 7.3.
Section 11.11. Senior Debt; Borrower Subordination. The
indebtedness of Borrowers hereunder and under the Notes and all
of the Obligations is intended to be and shall be senior to any
subordinated indebtedness of any Borrower or any other
indebtedness of any Borrower secured by a Lien on any portion of
the Collateral (the foregoing shall not in any way imply Lenders'
consent to any such subordinate debt or Liens which is not
otherwise permitted by this Agreement). The Notes and any other
amounts advanced to or on behalf of any Borrower or any other
Person pursuant to the terms of this Agreement or any other Loan
Document, shall never be in a position subordinate to any Debt of
Borrower owing to any other Person, except with the knowledge and
written consent of Lenders. If any Borrower is now or hereafter
becomes indebted to any other Borrower, (a) such indebtedness and
all interest thereon shall, at all times, be subordinate in all
respects to the Obligations and to all liens, security interests
and rights now or hereafter existing to secure the Obligations;
and (b) any Borrower holding such inter-company indebtedness
shall not be entitled after the occurrence of a Default to
enforce or receive payment, directly or indirectly, of any such
indebtedness until the Obligations have been fully and finally
paid and performed.
Section 11.12. Revolving Loan. Borrowers and Lenders hereby
agree that, except for Section 15.10(b) thereof, the provisions
of Art. 5069-15.01 et seq. of the Revised Civil Statues of Texas,
1925, as amended (regulating certain revolving credit loans and
revolving triparty accounts) shall not govern or in any manner
apply to the Notes, the Letters of Credit or the Loan Documents.
Section 11.13. Construction. The parties hereto
acknowledge and agree that neither this Agreement nor any other
Loan Document shall be construed more favorably in favor of one
than the other based upon which party drafted the same, it being
acknowledged that all parties hereto contributed substantially to
the negotiations and preparation of this Agreement and the other
Loan Documents.
Section 11.14. APPLICABLE LAW. THIS AGREEMENT, THE NOTES
AND ALL THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO
THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE
CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE
REMEDIES, RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT
THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8
OR OTHERWISE.
Section 11.15. Submission To Jurisdiction; Service of
Process.
(a) Any legal action or proceeding with respect to this
Agreement or the Notes or any other Loan Document may be brought
in the courts of the State of Texas or of the United States of
America for the Northern District of Texas, and, by execution and
delivery of this Agreement, each Borrower hereby accepts for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based
on the grounds of forum non conveniens, which any of them may now
or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions.
(b) Each Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such Borrower at its address
provided herein.
(c) Nothing contained in this Section 11.15 shall affect
the right of Agent, any Lender or any holder of a Note to serve
process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Borrower in any
other jurisdiction.
Section 11.16. JURY TRIAL WAIVER. BORROWERS AND LENDERS
EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
MATTER ARISING OR RELATING TO THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
Section 11.17. Counterparts. This Agreement and all
amendments hereto, and all the other Loan Documents may be
executed in any number of original counterparts, each of which
when so executed and delivered shall be an original, and all of
which, collectively, shall constitute one and the same agreement,
it being understood and agreed that the signature pages may be
detached from one or more counterparts and combined with the
signature pages from any other counterpart in order that one or
more fully executed originals may be assembled.
Section 11.18. Inconsistent Provisions. In the event of any
conflict or inconsistency between the terms of this Agreement and
the terms of the other Loan Documents, the terms of this
Agreement shall control.
Section 11.19. Non-Waiver of Rights or Remedies. Except as
otherwise set forth herein, this Agreement shall not be deemed
(a) a waiver of, or consent by Agent or any Lender to any default
or event of default which may exist or hereafter occur under the
Original Loan Agreement or any of the Loan Documents, (b) a
waiver by Agent or any Lender of any of Borrowers' obligations
under the Original Loan Agreement or the Loan Documents, or (c) a
waiver by Agent or any Lender of any rights, offsets, claims, or
other causes of action that Agent or any Lender may have against
any Borrower.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the Closing Date.
BORROWERS:
AMRESCO, INC., a Delaware corporation
By:_________________________________
Thomas J. Andrus,
Treasurer
AMRESCO FINANCIAL I, L.P.
By: AMRESCO Principal Managers II, Inc.,
its general partner
By:_________________________________
Thomas J. Andrus,
Treasurer
AMRESCO NEW ENGLAND II, L.P.
By: AMRESCO Principal Managers II, Inc.,
its general partner
By:__________________________________
Thomas J. Andrus,
Treasurer
AMRESCO NEW HAMPSHIRE, L.P.
By: AMRESCO Principal Managers II, Inc.,
its general partner
By:__________________________________
Thomas J. Andrus,
Treasurer
AMRESCO NEW ENGLAND II, INC.
AMRESCO NEW HAMPSHIRE, INC.
By:_________________________________
Name:_______________________________
Title:________ for each of the above companies
AMRESCO ASSET MARKETING ADVISORS, INC.
AMRESCO ATLANTA INDUSTRIAL, INC.
AMRESCO CANADA INC.
AMRESCO CAPITAL CORPORATION
AMRESCO CONSOLIDATION CORP. f/k/a AMRESCO
MORTGAGE CAPITAL, INC.
AMRESCO EQUITIES CANADA INC.
AMRESCO FINANCIAL I, INC.
AMRESCO FUNDING CORPORATION
AMRESCO INSTITUTIONAL, INC.
AMRESCO MANAGEMENT, INC. f/k/a BEI
MANAGEMENT, INC.
AMRESCO-MBS II, INC.
AMRESCO OVERSEAS, INC. f/k/a AMRESCO
SERVICES, INC.
AMRESCO PRINCIPAL MANAGERS II, INC.
AMRESCO RESIDENTIAL CREDIT CORPORATION
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
AMRESCO RHODE ISLAND, INC.
AMRESCO SERVICES CANADA INC.
AMRESCO VENTURES, INC. f/k/a AMRESCO
GENERAL PARTNERS, INC.
AMRESCO 1994-N2, INC.
ANH, INC.
ASI HOLDINGS, INC. f/k/a AMRESCO
SERVICES, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BEI 1992 - N1, INC.
BEI 1993 - N3, INC.
BEI 1994 - N1, INC.
BEI GOLEMBE FINANCIAL, INC.
BEI INSTITUTIONAL MANAGEMENT, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
BEI REAL ESTATE SERVICES OF CALIFORNIA,
INC.
BEI REAL ESTATE SERVICES OF COLORADO,
INC.
BEI SANJAC, INC.
BEI SOUTHWEST, INC.
BEI VENTURES, INC.
ENT, INC.
ENT GREAT LAKES, INC.
ENT MIDWEST, INC.
ENT NEW JERSEY, INC.
ENT SOUTHERN CALIFORNIA, INC.
GRANITE EQUITIES, INC.
HOLLIDAY FENOGLIO, INC.
LIFETIME HOMES OF NEW JERSEY, INC.
LIFETIME HOMES OF SOUTH CAROLINA, INC.
LIFETIME INVESTMENTS OF NEW JERSEY, INC.
PRESTON HOLLOW ASSET HOLDINGS, INC.
SPINNAKER REALTY CORPORATION
V.N.J. CORPORATION
By:_____________________________________
Thomas J. Andrus, as
Treasurer for each of the
above companies
AMRESCO JERSEY VENTURES LIMITED
AMRESCO UK HOLDINGS LIMITED
AMRESCO UK LIMITED
AMRESCO UK VENTURES LIMITED
OLD MIDLAND HOUSE LIMITED
By:____________________________________
Name:__________________________________
Title: Director for each of the above companies
AGENT:
NATIONSBANK OF TEXAS, N.A.,
a national banking association, as
Agent for Lenders
By:_______________________________
Brian K. Schneider,
Vice President
LENDERS:
NATIONSBANK OF TEXAS, N.A., a
national banking association
By:_______________________________
Brian K. Schneider,
Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, a New York state bank
By:_______________________________
Name:_____________________________
Title:____________________________
BANK ONE, TEXAS, NA,
a national banking association
By:_______________________________
Name:_____________________________
Title:____________________________
FIRST INTERSTATE BANK OF TEXAS,
N.A. a national banking association
By:_______________________________
Name:_____________________________
Title:____________________________
FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
Dated as of
April 25, 1996
among
AMRESCO, INC.
AND THE OTHER ENTITIES DESIGNATED HEREIN
as Borrowers
and
NATIONSBANK OF TEXAS, N.A.
as Agent
and
NATIONSBANK OF TEXAS, N.A.
AND THE OTHER ENTITIES DESIGNATED HEREIN
as Lenders
TABLE OF CONTENTS
ARTICLE I
TERMS DEFINED
Section 1.1. Definitions 1
Section 1.2. Singular and Plural of Definitions 26
Section 1.3. Substantive Definitions 26
Section 1.4. Money 26
Section 1.5. Captions; References 26
Section 1.6. Accounting Terms and Determinations 27
ARTICLE II
COMMITMENT
Section 2.1. Credit Facility Commitment 27
Section 2.2. Method of Borrowing 28
Section 2.3. Fees 30
Section 2.4. Additional Borrowers 31
ARTICLE III
TERMS OF CREDIT FACILITY
Section 3.1. Note 32
Section 3.2. Maturity 32
Section 3.3. Interest Rate 32
Section 3.4. Interest Payments 33
Section 3.5. Conversion of Advances; Regulatory Change 33
Section 3.6.Payments of Advances; Reduction of Commitment Amount 36
Section 3.7. Schedules on Notes 37
Section 3.8. General Provisions as to Payments 37
Section 3.9. Application of Payments 38
Section 3.10.Post-Default Interest; Past Due Principal and Interest 38
Section 3.11. Computation of Interest and Fees 38
Section 3.12. Capital Adequacy 39
Section 3.13. Deposit of Cash Collateral 39
Section 4.1. Conditions To Closing 39
Section 4.2. Conditions To All Advances 41
Section 4.3. Conditions to Letters of Credit 42
ARTICLE V
COLLATERAL
Section 5.1. Security 42
Section 5.2. Requirements For Assigned Loans 43
Section 5.3. Requirements for Mortgaged Properties 43
Section 5.4. Recording 44
Section 5.5. Timing of Deliveries 44
Section 5.6. Agent's Discretion 44
Section 5.7. Lockbox; Lockbox Account 44
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1. Existence and Power of Borrowers 45
Section 6.2. Subsidiaries 45
Section 6.3. Authorization; Contravention 46
Section 6.4. Enforceable Obligations 46
Section 6.5. Financial Information 46
Section 6.6. Litigation 46
Section 6.7. ERISA 47
Section 6.8. Taxes and Filing of Tax Returns 47
Section 6.9. Ownership of Assets 47
Section 6.10. Business; Compliance 48
Section 6.11. Licenses, Permits 48
Section 6.12. Compliance with Law 48
Section 6.13. Full Disclosure 48
Section 6.14. Environmental Matters 48
Section 6.15. Purpose of Credit 49
Section 6.16. Governmental Regulations 50
Section 6.17. Indebtedness 50
Section 6.18. Insurance 50
Section 6.19. Solvency 50
Section 6.20. Due Diligence Procedures 50
ARTICLE VII
AFFIRMATIVE COVENANTS
Section 7.1. Information From AMRESCO 51
Section 7.2. Business of Borrowers 53
Section 7.3. Right of Inspection 53
Section 7.4. Maintenance of Insurance 54
Section 7.5. Payment of Taxes, Impositions and Claims 54
Section 7.6. Compliance with Laws and Documents 54
Section 7.7. Environmental Law Compliance and Indemnity 54
Section 7.8. Covenant Compliance 55
Section 7.9. Quantity and Quality of Documents 56
Section 7.10. Use of Proceeds 56
Section 7.11. Additional Documents 56
Section 7.12.Compliance With Due Diligence Standards; Offices
and Files 56
Section 7.13.Appraisals 57
ARTICLE VIII
NEGATIVE COVENANTS
Section 8.1. Minimum Consolidated Tangible Net Worth 57
Section 8.2.Consolidated Funded Debt to Consolidated Capitalization 57
Section 8.3. Coverage Ratio 57
Section 8.4.Senior Consolidated Funded Debt to Consolidated EBITDA 57
Section 8.5.Limitation on Debt and Foreign Exchange Exposure 58
Section 8.6. Limitation on Sale of Properties 58
Section 8.7. Limitations on Liens 58
Section 8.8. Limitation on Loans to Shareholders 59
Section 8.9.Consolidations,Mergers,Sales of Assets,and Maintenance 59
Section 8.10. Investments 60
Section 8.11. Distributions 61
Section 8.12. Limitation on Contingent Liabilities 61
Section 8.13. Transactions with Affiliates 61
Section 8.14. Employee Plans 61
Section 8.15. Use Violations 62
Section 8.16. Exceptions to Covenants 62
Section 8.17. Fiscal Year and Accounting Methods 62
Section 8.18. Governmental Regulations 62
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default 63
Section 9.2. Remedies 65
Section 9.3. Rights of Set-Off 66
Section 9.4.Remedies Cumulative, Concurrent and Non-Exclusive67
Section 9.5.No Conditions Precedent to Exercise Remedies 67
Section 9.6. Release of and Resort to Collateral 68
Section 9.7. Waivers 68
Section 9.8. Discontinuance of Proceedings 68
Section 9.9. Power of Attorney 68
Section 9.10. Application of Proceeds 69
ARTICLE X
AGENT AND THE LENDERS
Section 10.1. Appointment and Authorization of Agent 69
Section 10.2. Possession of Instruments by Agent 70
Section 10.3. Expenses 71
Section 10.4.Delegation of Duties; Reliance; Consultation 71
Section 10.5. Limitation of Agent's Liability 72
Section 10.6. Default; Collateral 72
Section 10.7. Lenders' Decision 73
Section 10.8. Limitation of Liability of Lenders 73
Section 10.9. Relationship of Lenders 74
Section 10.10. Debtor-Creditor Relationship 74
Section 10.11. Credit Decisions 74
Section 10.12. Removal of Agent 74
Section 10.13. Resignation by Agent 74
Section 10.14. Sharing of Payments and Setoffs. 75
Section 10.15. Non-Advancing Lenders. 76
Section 10.16. Benefit of Lenders 76
ARTICLE XI
MISCELLANEOUS
Section 11.1. Continuing Agreement 77
Section 11.2. Notices 77
Section 11.3. No Waivers 77
Section 11.4.Expenses; Documentary Taxes; Indemnification 78
Section 11.5.Amendments and Waivers; Consent to Deviation 78
Section 11.6. Survival 78
Section 11.7.Prior Understandings; No Defenses; Release; No Oral
Agreements 78
Section 11.8. Limitation on Interest 79
Section 11.9. Invalid Provisions 80
Section 11.10. Successors and Assigns 80
Section 11.11. Senior Debt; Borrower Subordination 83
Section 11.12. Revolving Loan 83
Section 11.13. Construction 84
Section 11.14. APPLICABLE LAW 84
Section 11.15.Submission To Jurisdiction; Service of Process 84
Section 11.16. JURY TRIAL WAIVER 84
Section 11.17. Counterparts 84
Section 11.18. Inconsistent Provisions 85
Section 11.19. Non-Waiver of Rights or Remedies 85
SCHEDULES AND EXHIBITS
SCHEDULE I - LENDERS AND BORROWERS
SCHEDULE II - COMMITMENT FEE PERCENTAGE; LIBOR MARGIN
EXHIBIT A - AMENDED AND RESTATED PROMISSORY NOTE
EXHIBIT B - FIRST MODIFICATION OF COLLATERAL ASSIGNMENT
EXHIBIT C - FIRST MODIFICATION OF PLEDGE AGREEMENT
EXHIBIT D - REQUEST FOR ADVANCE
EXHIBIT D-1 - FORM OF COMPLIANCE LETTER
EXHIBIT E - FIRST MODIFICATION OF SECURITY AGREEMENT
EXHIBIT F - FIRST MODIFICATION OF LOCKBOX AGREEMENT
EXHIBIT G - SUPPLEMENT TO SCHEDULE I
EXHIBIT H - ASSIGNMENT AND ACCEPTANCE
EXHIBIT I - ASSET PORTFOLIO REPORTS
SCHEDULE I
LENDERS AND BORROWERS
I. LENDERS, AGENT AND ARRANGER
A. AGENT:
NationsBank of Texas, N.A.
Commercial Banking Division
901 Main Street, 7th Floor
Dallas, Texas 75202
Attn: Brian Schneider
Fax No.: (214) 508-0388
B. ARRANGER:
NationsBanc Capital Markets, Inc.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attn: Joseph Siegel, Jr.
Fax No.: (214) 508-2881
C. LENDERS:
NationsBank of Texas, N.A.
Commercial Banking Division
901 Main Street, 7th Floor
Dallas, Texas 75202
Attn: Brian Schneider
Fax No.: (214) 508-0388
Bank One, Texas, NA
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: John Arnold
Fax No.: (214) 290-2305
First Interstate Bank of Texas, N.A.
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Steve Stillman
Fax No.: (214) 740-1543
Morgan Guaranty Trust Company of New York
60 Wall Street, 23rd Floor
New York, New York 10260
Attn: James Dwyer
Fax No.: (212) 648-5548
Initial Loan New Loan New Participa-
Commitment Additional Commitment Loan tion Fee
Amount Commitment Amount Percentage Amount
NationsBank $45,000,000 $5,000,000 $50,000,000 40% $20,000
Bank One 25,000,000 10,000,000 35,000,000 28% 25,000
First Interstate 20,000,000 5,000,000 25,000,000 20% 12,500
Morgan Guaranty 15,000,000 -0- 15,000,000 12% -0-
____________ ___________ ____________ ____ _______
Total $105,000,000 $20,000,000 $125,000,000 100% $57,500
II. BORROWERS
AMRESCO, INC.
AMRESCO ASSET MARKETING ADVISORS, INC.
AMRESCO ATLANTA INDUSTRIAL, INC.
AMRESCO CANADA INC.
AMRESCO CAPITAL CORPORATION
AMRESCO CONSOLIDATION CORP. f/k/a
AMRESCO MORTGAGE CAPITAL, INC.
AMRESCO EQUITIES CANADA INC.
AMRESCO FINANCIAL I, INC.
AMRESCO FINANCIAL I, L.P.
AMRESCO FUNDING CORPORATION
AMRESCO INSTITUTIONAL, INC.
AMRESCO JERSEY VENTURES LIMITED
AMRESCO MANAGEMENT, INC. f/k/a BEI MANAGEMENT, INC.
AMRESCO-MBS II, INC.
AMRESCO NEW ENGLAND II, INC.
AMRESCO NEW ENGLAND II, L.P.
AMRESCO NEW HAMPSHIRE, INC.
AMRESCO NEW HAMPSHIRE, L.P.
AMRESCO OVERSEAS, INC. f/k/a AMRESCO SERVICES, INC.
AMRESCO PRINCIPAL MANAGERS II, INC.
AMRESCO RESIDENTIAL CREDIT CORPORATION
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
AMRESCO RHODE ISLAND, INC.
AMRESCO SERVICES CANADA INC.
AMRESCO UK HOLDINGS LIMITED
AMRESCO UK LIMITED
AMRESCO UK VENTURES LIMITED
AMRESCO VENTURES, INC. f/k/a AMRESCO GENERAL PARTNERS, INC.
AMRESCO 1994-N2, INC.
ANH, INC.
ASI HOLDINGS, INC. f/k/a AMRESCO SERVICES, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BEI 1992 - N1, INC.
BEI 1993 - N3, INC.
BEI 1994 - N1, INC.
BEI GOLEMBE FINANCIAL, INC.
BEI INSTITUTIONAL MANAGEMENT, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
BEI REAL ESTATE SERVICES OF CALIFORNIA, INC.
BEI REAL ESTATE SERVICES OF COLORADO, INC.
BEI SANJAC, INC.
BEI SOUTHWEST, INC.
BEI VENTURES, INC.
ENT, INC.
ENT GREAT LAKES, INC.
ENT MIDWEST, INC.
ENT NEW JERSEY, INC.
ENT SOUTHERN CALIFORNIA, INC.
GRANITE EQUITIES, INC.
HOLLIDAY FENOGLIO, INC.
LIFETIME HOMES OF NEW JERSEY, INC.
LIFETIME HOMES OF SOUTH CAROLINA, INC.
LIFETIME INVESTMENTS OF NEW JERSEY, INC.
OLD MIDLAND HOUSE LIMITED
PRESTON HOLLOW ASSET HOLDINGS, INC.
SPINNAKER REALTY CORPORATION
V.N.J. CORPORATION
c/o AMRESCO, INC.
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201-2268
Attn: Treasurer
Fax No.: (214) 953-7825
SCHEDULE II
COMMITMENT FEE PERCENTAGE; LIBOR MARGIN
Qualified Applicable Commitment
Senior Consolidated Funded Investment LIBOR Fee
Debt/Consolidated EBITDA Rating Margin Percentages
Greater than 2.5 to 1.0 BB+ 175.0 b.p. 37.5 b.p.
Less than or equal to 2.5 BBB- 150.0 b.p. 25.0 b.p.
to 1.0, but greater than
1.75 to 1.0
Less than or equal to BBB+ 125.0 b.p. 25.0 b.p.
1.75 to 1.0, but greater
than 1.25 to 1.0
Less than or equal to A- 100.0 b.p. 20.0 b.p.
1.25 to 1.0
Borrowers' Senior Consolidated Funded Debt to Consolidated EBITDA
ratio shall be computed on a trailing four quarter basis. The applicable
LIBOR Margin or Commitment Fee Percentage shall be based on whichever of
the Senior Consolidated Funded Debt to Consolidated EBITDA ratio or
Qualified Investment Rating would produce the lowest LIBOR Margin or
Commitment Fee Percentage. The above Qualified Investment Ratings are
based on the classifications used by Duff & Phelps, Inc., such that, if
another rating agency approved by the Required Lenders is used to rate the
Credit Facility, the comparable classifications used by such other rating
agency shall be substituted for the above Qualified Investment Ratings.
EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$________________ Dallas, Texas April 25, 1996
FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation,
and the other parties executing this Note or hereafter added
hereto as "Maker" (collectively "Makers"), hereby, jointly and
severally, promise to pay to the order of
_____________________________ ("Lender") in care of Agent, at its
banking house in the City of Dallas, Dallas County, Texas, or at
such other address in Dallas County, Texas, given to Makers by
Agent, the principal sum of ____________________________ Dollars
($______________), or so much thereof as may be advanced and
outstanding, together with interest, as hereinafter described.
This Note has been executed and delivered pursuant to the
terms of that certain First Amended and Restated Revolving Loan
Agreement (as the same may be modified, amended, supplemented,
extended or restated from time to time, the "Loan Agreement")
dated the date hereof, executed by and among Makers, Agent and
the Lenders (which includes the payee of this Note) and is one of
the notes defined therein as a "Note", the terms and provisions
of the Loan Agreement related to this Note being incorporated
herein by reference for all purposes. Each capitalized term not
expressly defined herein shall have the meaning given to such
term under the Loan Agreement. The terms of the Loan Agreement
shall govern in the case of any inconsistency between such terms
and the terms hereof.
This Note is secured by the Collateral Assignment, the
Pledge Agreements, the Security Agreement, the Mortgages, the
other Security Documents and all the other Loan Documents, and
all liens and security interests created or evidenced thereby.
Any holder shall be entitled to all benefits and remedies and
security set forth in the Loan Agreement and all the other Loan
Documents. This Note consolidates, renews, extends and replaces
the following in their entirety: (a) Promissory Note (Corporate
Facility) dated November 21, 1995, in the amount of $_____,
executed by Makers, payable to Lender, and (b) Promissory Note
(Portfolio Facility) dated November 21, 1995, in the amount of
$________, executed by Makers, payable to Lender.
1. Interest and Payment.
(a) Maturity. The principal of this Note and all
accrued but unpaid interest hereon shall be due and payable in
full on the Termination Date.
(b) Accrual of Interest. Subject to Paragraph 1(f)
below, interest on this Note shall accrue at a rate per annum
equal to the lesser of (i) at Makers' option, the Variable Rate
or the Adjusted LIBOR Rate, subject, however, to the provisions
of the Loan Agreement, or (ii) the Maximum Lawful Rate; provided,
however, that as to any portion of the outstanding principal
balance hereof that is not subject to an effective election of or
conversion to the Adjusted LIBOR Rate in accordance with the
terms of the Loan Agreement, interest on such portion of this
Note shall accrue interest at the lesser of (i) the Variable Rate
or (ii) the Maximum Lawful Rate. Interest on this Note shall be
calculated at a daily rate equal to 1/360 of the annual
percentage rate which this Note bears, subject to the provisions
hereof limiting interest to the Maximum Lawful Rate. Without
notice to any Maker or any other Person, the Variable Rate and
the Maximum Lawful Rate shall each automatically fluctuate upward
and downward as and in the amount by which the Base Rate and the
Maximum Lawful Rate, respectively, fluctuate, subject always to
limitations contained in this Note and the Loan Agreement.
(c) Agreements Concerning Pricing Election.
Reference should be made to the provisions of Section 3.5 of the
Loan Agreement concerning the terms, manner and agreements
related to the interest rate elections available to Makers under
this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in
Article III of the Loan Agreement, which provides, in part, for
quarterly payments of interest on the first (1st) day of each
calendar quarter, commencing on July 1, 1996, and continuing on
the first (1st) day of each October, January, April and July
during the Credit Period.
(e) Costs Due to Regulatory Changes. Makers shall
indemnify Lender against and reimburse Lender for increased costs
to Lender, as a result of any Regulatory Change, in the
maintaining of any LIBOR Rate Advance or Alternate Currency
Advance. All payments made pursuant to this paragraph shall be
made free and clear, without reduction for, or account of, any
present or future taxes or other levies of any nature, excluding
net income and franchise taxes.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal
balance of this Note shall, at the option of the Required
Lenders, bear interest at the Default Rate. Any past due
principal, and to the extent permitted by law, past due interest
on this Note shall bear interest, payable as it accrues on
demand, for each day until paid at the Default Rate. Such
interest shall continue to accrue at the Default Rate
notwithstanding the entry of a judgment with respect to any of
the Obligations or the foreclosure of any of the Lenders' Liens,
unless otherwise provided by law.
(g) Maximum Lawful Rate Adjustments. If at any time
the Applicable Rate shall be limited to the Maximum Lawful Rate,
any subsequent reductions in the Applicable Rate shall not reduce
the rate of interest on this Note below the Maximum Lawful Rate
until the total amount of interest accrued equals the amount of
interest which would have accrued if the Applicable Rate had at
all times been in effect. In the event that at maturity (stated
or by acceleration), or at the final payment of the Credit
Facility, the total amount of interest paid or accrued on the
Credit Facility is less than the amount of interest which would
have accrued if the Applicable Rate had at all times been in
effect with respect thereto, then at such time, to the extent
permitted by law, Makers shall pay to Agent, for the ratable
benefit of the Lenders, an amount equal to the difference between
(a) the lesser of the amount of interest which would have accrued
if the Applicable Rate had at all times been in effect and the
amount of interest which would have accrued if the Maximum Lawful
Rate had at all times been in effect, and (b) the amount of
interest actually paid on the Credit Facility.
2. Default. The occurrence of a Default or an Event of
Default, under and as defined in the Loan Agreement, shall
constitute, respectively, a Default or an Event of Default under
this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of
an Event of Default, the holder hereof, acting by and through
Agent in accordance with the terms of Articles IX and X of the
Loan Agreement, shall have the right to declare the entire unpaid
principal balance of, and all accrued unpaid interest on, this
Note at once due and payable (and upon such declaration, the same
shall be at once due and payable), to foreclose any and all liens
and security interests securing payment hereof, to offset against
this Note any sum or sums owed by it to Maker, and to exercise
any of its other rights, powers and remedies under this Note,
under the Loan Agreement or any other Loan Document, or at law or
in equity.
(b) No Waiver. Neither the failure by the holder
hereof to exercise, nor delay by the holder hereof in exercising,
the right to accelerate the maturity of this Note or any other
right, power or remedy upon any Default or Event of Default shall
be construed as a waiver of such Default or Event of Default or
as a waiver of the right to exercise any such right, power or
remedy at any time. No single or partial exercise by the holder
hereof of any right, power or remedy shall exhaust the same or
shall preclude any other or further exercise thereof, and every
such right, power or remedy may be exercised at any time and from
time to time. All rights and remedies provided for in this Note
and in any other Loan Document are cumulative of each other and
of any and all other rights and remedies existing at law or in
equity, and the holder hereof shall, in addition to the rights
and remedies provided herein or in any other Loan Document, be
entitled to avail itself of all such other rights and remedies as
may now or hereafter exist at law or in equity for the collection
of the indebtedness owing hereunder, and the resort to any right
or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in equity shall not prevent
the concurrent or subsequent employment of any other appropriate
rights or remedies. Without limiting the generality of the
foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or
which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not (i) constitute a
waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other
right, power or remedy at the time or at any subsequent time, or
nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment
and performance, or a novation in any respect.
4. Usury Savings Provisions.
(a) General Limitation. Notwithstanding anything
herein or in any other Loan Documents, expressed or implied, to
the contrary, in no event shall any interest rate charged
hereunder or under any of the other Loan Documents, or any
interest contracted for, collected or received by Lender or any
holder hereof, exceed the Maximum Lawful Rate.
(b) Intent of Parties. It is expressly stipulated
and agreed to be the intent of Makers and Lender at all times to
comply with the applicable law governing the maximum rate or
amount of interest payable on or in connection with this Note.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to this Note, or if
acceleration of the maturity of this Note, any prepayment by
Makers, or any other circumstance whatsoever, results in Lender
having been paid any interest in excess of that permitted by
applicable law, then it is the express intent of Makers and
Lender that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if this Note
has been or would thereby be paid in full, refunded to Makers),
and the provisions of this Note and the other applicable Loan
Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery
of the fullest amount otherwise called for hereunder and
thereunder. The right to accelerate the maturity of this Note
does not include the right to accelerate any interest which has
not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the
event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the
Maximum Lawful Rate. The term "applicable law" as used herein
shall mean the laws of the State of Texas, or DIDMCA or any other
applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law. The
provisions of this paragraph shall control all agreements between
Makers and Lender.
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on
which such payment is due shall be extended to the next
succeeding Business Day, and such extension of time shall be
included in the computation of the amount of interest then
payable.
(b) Manner of Payment. The manner in which payments
are to be made on this Note shall be governed by the provisions
hereof and the Loan Agreement, including, without limitation,
Article III of the Loan Agreement.
(c) Prepayments. Prepayments may be made, and as
provided in Section 3.6 of the Loan Agreement are required to be
made, on this Note subject to and in accordance with Section 3.6
of the Loan Agreement.
(d) Application of Payments. All payments made on
this Note shall be applied in accordance with Sections 3.6, 3.9
and 9.10 of the Loan Agreement, as applicable. Nothing herein
shall limit or impair any rights of any holder hereof to apply as
provided in the Loan Documents any past due payments, any
proceeds from the disposition of any collateral by foreclosure or
other collections after default. Except to the extent specific
provisions are set forth in this Note or another Loan Document
with respect to application of payments, all payments received by
the holder hereof shall be applied, to the extent thereof, to the
indebtedness owing by Makers to the holder hereof in such order
and manner as the Required Lenders shall deem appropriate, any
instructions from Makers or anyone else to the contrary
notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity
or to collect, enforce or defend this Note or any other Loan
Document in any lawsuit or in any probate, reorganization,
bankruptcy or other proceeding, or if any Maker sues any holder
of this Note in connection with this Note or any other Loan
Document and does not prevail, then Makers agree to pay to each
such holder, in addition to principal and interest, all costs and
expenses incurred by such holder in trying to collect this Note
or in any such suit or proceeding, including reasonable
attorneys' fees.
(f) Waivers and Acknowledgments. Each Maker and all
sureties, endorsers, guarantors and any other party now or
hereafter liable for the payment of this Note in whole or in
part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notice (except only for any notice that is specifically
required by the terms of the Loan Agreement or any other Loan
Document), filing of suit and diligence in collecting this Note
or enforcing any of the security herefor; (ii) agree to any
substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily
liable hereon; (iii) agree that the holder hereof shall not be
required first to institute suit or exhaust its remedies against
any Maker or others liable or to become liable hereon or to
enforce its rights against them or any security herefor; (iv)
consent to any extension or postponement of time of payment of
this Note for any period or periods of time and to any partial
payments, before or after maturity, and to any other indulgences
with respect hereto, without notice thereof to any of them; and
(v) submit (and waive all rights to object) to personal
jurisdiction in the State of Texas, and venue in Dallas County,
Texas, for the enforcement of any and all obligations under the
Loan Documents.
(g) Amendments in Writing. This Note may not be
changed, amended or modified except in a writing expressly
intended for such purpose and executed by the party against whom
enforcement of the change, amendment or modification is sought.
(h) Purpose of Proceeds. The proceeds of this Note
will be used solely for business purposes and not for personal,
family, household or agricultural purposes.
(i) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as
provided in Section 11.2 of the Loan Agreement.
(j) Assignments/Participations. Makers acknowledge
and agree that the holder of this Note may, at any time and from
time to time, assign all or a portion of its interest in the
Credit Facility or transfer to any Person a participation
interest in the Credit Facility, subject to and in accordance
with the terms and conditions of the Loan Agreement, including
Section 11.10 thereof.
(k) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by
or on behalf of Makers shall bind their successors and assigns
and shall be for the benefit of Lender and any holder hereof, and
their successors and assigns, whether so expressed or not,
subject, however, to the provisions of Section 11.10 of the Loan
Agreement.
(l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT
THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION,
PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED
TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED
STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE LOAN
AGREEMENT OR OTHERWISE.
(m) Time of the Essence. Time shall be of the
essence in this Note with respect to all of Makers' obligations
hereunder.
(n) INTEGRATION. THIS NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.
MAKERS:
AMRESCO, INC., a Delaware
corporation
By:__________________________
Thomas J. Andrus,
Treasurer
(VARIOUS MAKERS)
By:__________________________
Name:________________________
Title:_______________________
STOCK APPRECIATION RIGHTS AGREEMENT
This Stock Appreciation Rights Agreement is made and
entered into effective as of February 20, 1996 by and between
AMRESCO, INC., a Delaware corporation (the "Company"), and James
P. Cotton, Jr. (the "Director").
WHEREAS, the Director presently serves as a non-
employee of the Company; and
WHEREAS, the Company wishes to promote the growth and
success of the Company by issuing to the Director stock
appreciation rights with respect to shares of the Company's
common stock, par value $.05 per share ("Common Stock"), subject
to the terms and conditions set forth herein.
NOW THEREFORE, the Company and Director agree as
follows:
1. Grant of Stock Appreciation Rights. The Company
hereby grants to the Director stock appreciation rights with
respect to 5,000 shares of Common Stock (the "Stock Appreciation
Rights") having an Award Value of $13.125 per share (representing
the reported closing sale price per share of the Common Stock on
the NASDAQ National Market on February 16, 1996), all upon the
terms and conditions set forth herein.
2. Vesting of Rights. The Stock Appreciation Rights
are fully vested as of the date hereof.
3. Forfeiture. If the Director is removed as a
director of the Company for "good cause," then the Director shall
forfeit all rights and benefits hereunder and shall have no
further right to convert any Stock Appreciation Rights or to
receive any amount which would become payable if the Stock
Appreciation Rights could be converted after the date of removal.
For purposes hereof, removal of the Director shall be for "good
cause" if the Board of Directors of the Company determines in
good faith that the Director was removed as a director of the
Company primarily because the Director engaged in an act of
dishonesty or moral turpitude (including, but not limited to,
fraud, embezzlement, misappropriation or conviction of a felony).
4. Manner of Conversion.
(a) Conversion. Except as provided in Section 3,
all Stock Appreciation Rights shall automatically be converted
into cash upon the earlier to occur of the following events (such
earlier date being referred to as the "Conversion Date"): (i)
the termination of the Director's service as a director of the
Company for any reason, other than for good cause, or (ii) the
expiration of ten (10) years from the date hereof. Upon such
conversion, the Director shall be entitled to receive an amount
of cash equal to (a) the aggregate Current Market Value
(hereinafter defined) of the shares subject to the Stock
Appreciate Rights, less (b) the aggregate Award Value of the
shares subject to the Stock Appreciation Rights (the "Conversion
Gain").
(b) Payment. When the Stock Appreciation Rights
are converted as set forth in Section 4(a), the Company shall pay
the Conversion Gain to the Director by payment of a lump sum
within thirty (30) days after the Conversion Date. The
Conversion Gain shall be paid by the Company to the Director
subject to such conditions as are deemed advisable by the Company
to permit compliance by the Company with any federal and state
withholding provisions.
(c) Current Market Value. The Current Market
Value per share of the Stock Appreciation Rights as of the
Conversion Date shall be the reported closing sale prices per
share of the Common Stock (as reported on any national securities
exchange on which such stock is then listed or as quoted on the
National Association of Securities Dealers Automated Quotation
System), on the trading day immediately preceding the Conversion
Date. If the stock is not so listed or quoted on the Conversion
Date, the Current Market Value shall be determined in good faith
by the Board of Directors of the Company, excluding the Director.
5. Non-Assignability. The Stock Appreciation Rights,
and any right associated with the Stock Appreciation Rights, are
not assignable or transferable by the Director except by will or
by the laws of descent and distribution.
6. No Rights as Stockholder. The Director shall have
no rights as a stockholder of the Company with respect to any
Stock Appreciation Rights.
7. Capital Adjustments. If at any time while the
Stock Appreciation Rights are outstanding hereunder there shall
be any increase or decrease in the number of issued and
outstanding shares of Common Stock through the declaration of a
stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of shares of Common
Stock, then and in such event appropriate adjustments shall be
made in the number of shares subject to Stock Appreciation Rights
and the Award Value of such shares to the end that the aggregate
Award Value shall remain the same. Except as otherwise expressly
provided herein, the issuance by the Company of shares of its
capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with direct
sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the
Company, with respect to be made in the number of shares subject
to Stock Appreciation Rights or the Award Value. The existence
hereof and the Stock Appreciation Rights awarded hereunder shall
not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stocks ranking prior to or
otherwise affecting the Common Stock or the rights thereof (or
any rights, options or warrants to purchase same), or the
dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character
or otherwise.
8. Special Representations of Director. The Stock
Appreciation Rights are being acquired solely for the Director's
own account, for investment purposes only, and not with a view to
distribution. The Stock Appreciation Rights acquired by the
Director for the interest of any other person and/or for resale
or transfer to others.
9. Notices. Any notice or communication required or
permitted to be given hereunder shall be in writing, and shall be
delivered in person or sent postage prepaid by registered mail or
certified mail, return receipt requested, or by prepaid courier
to the other party at the following addresses:
If the Company: AMRESCO, INC.
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201
ATTN: General Counsel
If to the Director: Mr. James P. Cotton, Jr.
USBA Holdings, Ltd.
Two Concourse Parkway
Suite 650
Atlanta, GA 30328
or such other address as shall be furnished in writing by any
such party, and such notice or communication shall be deemed to
have been given as of the date so delivered or mailed.
10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Texas, excluding any conflicts of laws principles. The parties
hereto stipulate and agree that this Agreement shall be executed
and performed in Dallas County, Texas. In the event that the
litigation should arise concerning the validity or interpretation
of any provision hereof venue over such litigation shall reside
in the proper federal or state district court sitting in Dallas
County, Texas.
11. Tax Requirements. The Company shall, to the
extent permitted by law, have the right to deduct any applicable
taxes from any payment of any kind otherwise due to the Director
hereunder.
12. Miscellaneous. The rights of Director hereunder
with respect to the Company's obligations shall be those, if
applicable, of a general unsecured creditor of the Company.
Except to the extend amended by the terms hereof, the provisions
hereof shall remain in full force and effect for all purposes.
This Agreement may be amended to include such other provisions as
the Board of Directors of the Company deems necessary or
advisable; provided, however, that no such amendment hereto shall
be made except in writing, entered into and executed by the
Company and the Director. This Agreement contains all of the
covenants and agreements, and supersedes any and all other
agreements (whether oral or written), between the Company and the
Director with respect to the Stock Appreciation Rights.
* * * * * *
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer, and the Director, to
evidence his consent and approval of all the terms hereof, has
duly executed this Agreement, all as of February 20, 1996.
AMRESCO, INC.
By: \S\ ROBERT H. LUTZ, JR.
Robert H. Lutz, Jr.
Chairman and Chief Executive Officer
Director:
\S\ JAMES P. COTTON, JR.
James P. Cotton, Jr.
AMRESCO, INC.
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
Three Months Ended
March 31,
1996 1995
___________ ___________
Primary:
Net income $ 4,795,000 $ 3,155,000
Weighted average common shares
outstanding 26,721,444 23,706,900
Net effect of dilutive stock options
based on the Treasury stock method
using average market price 647,946 475,927
___________ __________
Total 27,369,390 24,182,827
=========== ==========
Earnings per share $0.18 $0.13
Fully diluted:
Net income $4,795,000 $3,155,000
Interest expense related to
convertible debentures, net of income
tax expense 576,000
__________ __________
Adjusted net income $5,371,000 $3,155,000
========== ==========
Weighted average common shares
outstanding, assuming conversion of
convertible debentures to 3,600,000
shares of common stock in November
1995 30,321,444 23,706,900
Net effect of dilutive stock options
based on the Treasury stock method
using the higher of average or ending
market price 926,255 531,902
__________ __________
Total 31,247,699 24,238,802
========== ==========
Earnings per share $0.17 $0.13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
AMRESCO, INC. March 31, 1996, 10-Q and is qualified in its entirely by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,338
<SECURITIES> 33,046
<RECEIVABLES> 16,684
<ALLOWANCES> (1,681)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,544
<DEPRECIATION> (2,919)
<TOTAL-ASSETS> 644,061
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,340
<OTHER-SE> 164,850
<TOTAL-LIABILITY-AND-EQUITY> 644,061
<SALES> 0
<TOTAL-REVENUES> 36,896
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 23,634
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,167
<INCOME-PRETAX> 8,095
<INCOME-TAX> 3,300
<INCOME-CONTINUING> 4,795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,795
<EPS-PRIMARY> $0.18
<EPS-DILUTED> $0.17
</TABLE>
