<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1998
REGISTRATION NO. 333-57635
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMRESCO, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 59-1781257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 NORTH PEARL STREET L. KEITH BLACKWELL
SUITE 2400, LB 342 SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
DALLAS, TEXAS 75201 700 NORTH PEARL STREET
(214) 953-7700 SUITE 2400, LB 342
(Address, including zip code, and telephone number, including DALLAS, TEXAS 75201
area code, of registrant's principal executive offices) (214) 953-7700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
ALLEN B. LEVITHAN
LOWENSTEIN SANDLER PC
65 LIVINGSTON AVENUE
ROSELAND, NEW JERSEY 07068
(973) 597-2500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: From time to time after the effective date of
this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED (1) SHARE (2) PRICE (3) FEE (4)
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Common Stock, par value
$0.05 per share . . . . . . . . . . . . . 1,293,701 shares $28.06 $39,959,935 $11,789
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(1) The shares of Common Stock being registered hereby are issuable upon
conversion of the Registrant's Convertible Promissory Notes to be issued on
July 17, 1998 (the "Notes"). Pursuant to Rule 416, the Registration
Statement also covers such indeterminate additional shares of Common Stock
as may be issuable on the conversion of the Notes as a result of any future
adjustments in the conversion price in accordance with the terms of the
Notes.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) for the additional 113,480 shares of Common Stock that were
not included in the Registrant's original filing of this Registration
Statement. The proposed maximum offering price per share for the original
1,180,221 shares covered by this Registration Statement, estimated solely
for purposes of calculating the registration fee pursuant to Rule 457(c),
was $31.16.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c). The sum of $39,959,935 results from the assumption that the
1,180,221 shares of Common Stock included in the Registrant's original
filing of this Registration Statement will be offered at $31.16 (see note
2), and that the additional 113,480 shares of Common Stock included in this
Pre-Effective Amendment No. 1 to the Registration Statement will be offered
at $28.06 (see note 2).
(4) Consists of $940 relating to the additional 113,480 shares of Common Stock
included in this Pre-Effective Amendment No. 1 to the Registration
Statement, and $10,849 relating to the 1,180,221 shares of Common Stock
included in the Registrant's original filing of this Registration
Statement, which was paid at the time of such filing.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
AMRESCO, INC.
1,293,701 SHARES OF COMMON STOCK
The shares of Common Stock, $0.05 par value per share (the "Common
Stock"), of AMRESCO, INC. (the "Company") covered by this Prospectus are shares
which may be offered and sold (the "Offering"), from time to time, by certain
stockholders of the Company (including trusts, limited partnerships or other
limited liability entities to which one or more current stockholders of the
Company may transfer all or some of their shares of Common Stock) (collectively,
the "Selling Stockholders"). See "Selling Stockholders." All of the shares
covered hereby will be sold only by the Selling Stockholders. This Prospectus
does not purport to cover the initial issuance by the Company of the shares of
Common Stock, but only the reoffer and resale of such shares by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
the shares of Common Stock by the Selling Stockholders.
The Selling Stockholders may from time to time sell the shares of
Common Stock covered by this Prospectus to or through one or more underwriters,
and may also sell shares of Common Stock directly to other purchasers or through
agents, on the Nasdaq National Market in ordinary brokerage transactions, in
negotiated transactions, or otherwise, at market prices prevailing at the time
of sale, at prices related to the then prevailing market price or at negotiated
prices. See "Plan of Distribution."
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "AMMB."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is July 17, 1998
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
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Available Information.................................................2
Incorporation of Certain Documents by Reference.......................3
The Company...........................................................4
Risk Factors..........................................................7
Forward-looking Statements...........................................13
Recent Developments..................................................13
Use of Proceeds......................................................15
Selling Stockholders.................................................16
Description of Capital Stock.........................................17
Plan of Distribution.................................................21
Legal Matters........................................................21
Experts ............................................................21
Certain Definitions..................................................22
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
with the Exchange Act, the Company files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "Commission"). The reports, proxy statements and other information can be
inspected and copied at the public reference facilities that the Commission
maintains at the Public Reference Room, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048, and Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Copies of these materials can be obtained at prescribed
rates from the Public Reference Section of the Commission at the principal
offices of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Such
documents may also be obtained at the website maintained by the Commission
(http://www.sec.gov). Information on the operation of the Commission's Public
Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The
Company's Common Stock is quoted on the Nasdaq National Market and such reports,
proxy and information statements and other information may be inspected at the
National Association of Securities Dealers, Inc., 1735 K. Street N.W.,
Washington, D.C. 20006. The Company's 10% Senior Subordinated Notes due 2003,
8.75% Senior Notes due 1999 and 10% Senior Subordinated Notes due 2004 are
listed for trading on the New York Stock Exchange. Reports, proxy and
information statements and other information concerning the Company can be
inspected at the offices of such Exchange, 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
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Statement as permitted by the rules and regulations of the Commission.
Statements made in the Prospectus concerning the contents of any documents
referred to herein are not necessarily complete. With respect to each such
document filed with the Commission as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description, and each such
statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus: (i) Annual Report on Form 10-K for the year ended December 31,
1997 (filed March 27, 1998; File No. 001-11599), (ii) Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 (filed May 5, 1998; File No.
001-11599) and (iii) the description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A dated May 28, 1997 (filed May
30, 1997; File No. 000-08630).
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus shall
be deemed to be incorporated by reference herein. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed superseded or modified for purposes of this Prospectus to the extent that
a statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference herein (other than exhibits to such documents which are not
specifically incorporated by reference in such documents). Written requests for
such copies should be directed to the Company, 700 North Pearl Street, Suite
2400, LB 342, Dallas, Texas 75201, Attention: L. Keith Blackwell, Senior Vice
President, General Counsel and Secretary. Telephone requests may be directed to
L. Keith Blackwell, Senior Vice President, General Counsel and Secretary of the
Company, at (214) 953-7700.
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THE COMPANY
GENERAL
The Company is a leading diversified financial services company
specializing in real estate lending, commercial finance and the acquisition,
resolution and servicing of nonperforming and underperforming commercial loans.
The Company began operations in 1987 providing asset management and resolution
services to governmental agencies, financial institutions and others relating to
nonperforming and underperforming loans. In early 1994, the Company made the
decision to diversify its business lines and build "franchise" business units
that could use the Company's core real estate management and lending expertise
to pursue growth in markets that were being underserved by traditional lenders.
Since that time, the Company has entered the commercial mortgage banking,
residential mortgage banking, commercial finance and loan servicing businesses
and oriented its asset management activities towards direct investments in asset
portfolios and the special servicing of large portfolios of asset-backed
securities.
As a result of the Company's diversification efforts, the Company
currently operates in the following four different business lines: asset
management, commercial mortgage banking, residential mortgage banking and
commercial finance. The Company's revenues principally consist of interest and
other investment income (including interest on loans held for sale and from
retained interests in securitizations), fees from asset management activities
and from the origination, underwriting and servicing of loans and revenues
derived from the gain on sale of loans and investments. The Company funds these
operations with its credit lines (including warehouse lines of credit) and with
the proceeds received from securitizations.
The Company is a Delaware corporation. The Company's principal
executive offices are located at and its mailing address is 700 North Pearl
Street, Suite 2400, Dallas, Texas 75201, and its telephone number at that
address is (214) 953-7700.
ASSET MANAGEMENT
The Company acquires, manages and resolves portfolios of real estate
loans and other assets acquired at a discount and provides special servicing for
nonperforming and underperforming loans in commercial mortgage-backed bond
trusts and similar securitized commercial asset-backed loan portfolios.
The Company is the product of the December 1993 merger of two asset
management and resolution companies, BEI Holdings, Inc. and the former asset
management and resolution unit of NationsBank of Texas, N.A. The 1993 merger
created one of the leading asset management and resolution service companies in
the United States. The Company and its predecessors have managed over $35.0
billion (Face Value) of asset portfolios since 1987. A majority of these assets
have been located in the United States, with the remainder located primarily in
Canada and Western Europe. The Company has recently begun to open additional
offices outside the United States and seek opportunities for asset management
and investments in other international markets. See "Recent Developments AMRESCO
Mexico."
As a special servicer, the Company receives an annual fee (typically,
approximately 50 basis points of the Face Value of the delinquent or
nonperforming loan being serviced), plus a 50 to 200 basis points fee based on
the total cash flow from resolution of each loan as it is received. The Company
has received a "strong" rating from Standard & Poor's Ratings Service, a
division of McGraw-Hill Companies ("Standard & Poor's"), the highest rating
given by that rating agency for special servicers such as the Company as of the
date of this Prospectus. The Company is also rated "superior" by Fitch Investors
Services, L.P. ("Fitch") as a special servicer.
COMMERCIAL MORTGAGE BANKING
General. The Company performs a wide range of commercial mortgage
banking services, including originating, underwriting, placing, selling,
securitizing and servicing commercial real estate loans, through its
subsidiaries Holliday Fenoglio Fowler, AMRESCO Capital and AMRESCO Services.
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Real Estate Capital Markets. Holliday Fenoglio Fowler, a commercial
mortgage banker, primarily serves commercial real estate developers and owners
by arranging commercial real estate loans and acting as a broker on commercial
real estate sales through its own commission-based mortgage bankers. The loans
arranged by Holliday Fenoglio Fowler generally are funded by institutional
lenders, principally insurance companies, and by AMRESCO Capital and other
Conduit Purchasers.
Commercial Real Estate Lending. AMRESCO Capital originates,
underwrites, warehouses and securitizes commercial real estate loans. AMRESCO
Capital serves its market directly through branch offices, as well as through a
network of independent mortgage brokers and commercial mortgage bankers,
including Holliday Fenoglio Fowler. AMRESCO Capital is approved by Fannie Mae to
participate in its DUS program, which AMRESCO Capital believes makes it a more
competitive loan originator and underwriter of multifamily mortgages. AMRESCO
Capital is also an approved lender in the Freddie Mac Program Plus(R)
multifamily seller/servicer program in the states of Florida, New York, North
Carolina and South Carolina.
Commercial Loan Servicing. AMRESCO Services is a servicer for
securitized pools of commercial mortgages and whole loans. The dominant users of
commercial loan servicers are commercial mortgage-backed bond trusts and other
owners of commercial real estate loans, including lenders accumulating loans for
securitization or sale that contract for servicing on an interim basis.
Historically, the revenue stream from servicing contracts on commercial
mortgages has been relatively predictable due in part to prepayment penalties in
commercial mortgages that tend to discourage early loan payoffs. AMRESCO
Services is currently rated "above average" as a master servicer and "strong" as
a primary servicer by Standard & Poor's, which are the highest ratings given by
that rating agency to master servicers and primary servicers as of the date of
this Prospectus. AMRESCO Services is also rated "acceptable" by Fitch as a
master and primary servicer.
RESIDENTIAL MORTGAGE BANKING
Through AMRESCO Residential, the Company originates, acquires,
warehouses, services and securitizes conventional, nonconforming residential
mortgage loans.
The Company targets borrowers having credit profiles that preclude
their loans from being sold in the secondary markets to government agencies.
Such credit profiles may include consumer or mortgage loan delinquencies, high
debt-to-income ratios, previous bankruptcy or inability to provide income
documentation. Borrowers in the Company's targeted market typically have
significant equity in their homes and may be charged higher interest rates for
loans than more creditworthy borrowers. The Company believes that the higher
interest rates and the more favorable loan-to-value characteristics of this
market mitigate the greater credit risk associated with such borrowers and make
this an attractive market for the Company.
The Company obtains residential mortgage loans through portfolio
acquisitions, correspondent lending, wholesale broker operations and various
retail channels, including telemarketing, direct mail and retain branches. The
Company has adopted a diversification strategy to reduce its reliance on
portfolio acquisitions through the development of multiple product channels.
The Company has performed delinquency management and related servicing
functions for certain asset portfolios it acquired in October 1996 and for loans
originated by the Company after October 1, 1997 or acquired by it on a servicing
released basis. In addition, the Company is in the process of developing the
appropriate infrastructure and systems to support a broader array of customer
intensive servicing functions, including general customer relations, which the
Company believes will provide the opportunity to manage and improve the
performance of its residential mortgage loan portfolios by mitigating credit
losses and prepayment risk through direct involvement with borrowers. The
Company will continue to utilize recognized third party providers for
standardized, systems intensive servicing functions, such as payment processing
and tax, insurance and investor reporting.
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COMMERCIAL FINANCE
In 1996, the Company organized the Commercial Finance Group to provide
financing to commercial borrowers in various targeted lending markets. The
Commercial Finance Group focuses on (i) loans to franchisees of nationally
recognized restaurant, hospitality and service organizations, (ii) special
situation mid-to-high yield lending, with an emphasis on the real estate and
communications industries, and (iii) single family residential construction
lending. Loans originated by the franchise lending operation are sold to third
parties, principally through securitization, while the real estate,
communications and single family residential construction loans are generally
retained for the Company's own portfolio. Other ancillary products, services and
investments provided by the Commercial Finance Group include equipment leasing,
small business lending and loan servicing.
On June 1, 1998, the Company entered into the IFC/Telecapital Asset
Purchase Agreement for the acquisition of substantially all of the assets of IFC
and Telecapital. IFC is a lender to small businesses under a United States Small
Business Administration program. Telecapital is a lender to independent pay
phone operators. For a discussion of the IFC/Telecapital Acquisition, see
"Recent Developments - IFC/Telecapital Acquisition."
RECENT DEVELOPMENT
On July 14, 1998, the Company entered into a definitive agreement to
acquire Mortgage Investors Corporation ("MIC"), a residential mortgage company.
MIC is a retail loan originator and is the largest producer of VA streamlined
re-financed loans in the United States. The completion of the acquisition is
subject to normal closing conditions and requirements. Upon completion of the
acquisition, the activities of MIC will become the Company's fifth line of
business. See "Recent Developments - MIC Acquisition" and "Risk Factors - Risks
Associated with Rapid Growth and Entry in New Business."
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RISK FACTORS
Investors should carefully consider the following matters in connection
with an investment in the Common Stock, in addition to the other information
contained or incorporated by reference in this Prospectus.
RISKS ASSOCIATED WITH RAPID GROWTH AND ENTRY IN NEW BUSINESS
In early 1994, the Company made the strategic decision to diversify its
business lines. The Company has entered the commercial mortgage banking,
residential mortgage banking and commercial finance businesses through a
combination of acquisitions and the internal start-up of new business lines.
These businesses recently have contributed a substantial portion of the
Company's operating profit and the Company expects they will continue to
contribute a substantial portion of its revenue and operating income for the
foreseeable future. The Company has also increased its investments in asset
portfolios. The rapid entry of the Company into these business lines has
resulted in increased demands on the Company's personnel and systems. As part of
its business strategy, the Company intends to acquire additional businesses
which complement the Company's core capabilities in financial services. In this
respect, the Company has entered into a definitive agreement to acquire a new
business line. See "The Company Recent Development" and "Recent Developments -
MIC Acquisition." The Company must successfully continue its assimilation of
multiple acquired businesses with differing markets, customer bases, financial
products, systems and managements. An inability to assimilate acquired
businesses could have an adverse effect on the Company's financial condition and
results of operations. The Company's ability to support, manage and control
continued growth is dependent upon, among other things, its ability to hire,
train, supervise and manage its workforce and to continue to develop the skills
necessary for the Company to compete successfully in its new business lines.
There can be no assurance that the Company will successfully meet all of these
challenges.
NEED FOR ADDITIONAL FINANCING
General. The Company's ability to execute its business strategy depends
to a significant degree on its ability to obtain additional indebtedness and
equity capital. The Company has no commitments for additional borrowings or
sales of equity capital and there can be no assurance that the Company will be
successful in consummating any such future financing transactions on terms
satisfactory to the Company, if at all. Factors which could affect the Company's
access to the capital markets, or the costs of such capital, include changes in
interest rates, general economic conditions and the perception in the capital
markets of the Company's business, results of operations, leverage, financial
condition and business prospects. Each of these factors is to a large extent
subject to economic, financial and competitive factors beyond the Company's
control. In addition, covenants under the Company's current and future debt
securities and credit facilities may significantly restrict the Company's
ability to incur additional indebtedness and to issue Preferred Stock. The
Company's ability to repay its outstanding indebtedness at maturity may depend
on its ability to refinance such indebtedness, which could be adversely affected
if the Company does not have access to the capital markets for the sale of
additional debt or equity securities through public offerings or private
placements on terms reasonably satisfactory to the Company.
Dependence on Warehouse Financing. The Company's residential mortgage
banking, commercial mortgage banking and commercial finance securitization
businesses depend upon warehouse facilities with financial institutions or
institutional lenders to finance the Company's origination and purchase of loans
on a short-term basis pending sale or securitization. Implementation of the
Company's growth strategy requires continued availability of warehouse
facilities and may require increases in the capacity of warehouse facilities.
There can be no assurance that such financing will be available on terms
reasonably satisfactory to the Company. The inability of the Company to arrange
additional warehouse facilities or to extend or replace existing facilities when
they expire would have a material adverse effect on the Company's business,
financial condition and results of operations and on the Company's outstanding
securities.
RISKS OF SECURITIZATION
Significance of Securitization. The Company currently believes that it
will become increasingly dependent upon its ability to securitize mortgage loans
and other loans by pooling and subsequently selling them in the secondary
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market in order to generate revenues, earnings and cash flows. Accordingly,
adverse changes in the secondary market for such loans could impair the
Company's ability to originate, purchase and sell mortgage loans on a favorable
or timely basis. Any such impairment could have a material adverse effect upon
the Company's business and results of operations. The Company endeavors to
effect a securitization of its residential mortgage loans on at least a
quarterly basis and its commercial mortgage and commercial finance loans on at
least a semi-annual basis. However, market and other considerations, including
the conformity of loans to insurance company and rating agency requirements,
could affect the timing of such transactions. Any delay in the sale of loans
beyond the reporting period in which such sale is anticipated to occur would
delay any expected gain on sale and adversely affect the Company's reported
earnings for reporting period.
Investment in Subordinated Certificates. The Company invests in
Subordinated Certificates created in securitizations completed by the Company or
purchased from third parties. At March 31, 1998, the Company's aggregate
investment in Subordinated Certificates was approximately $306.9 million based
on the estimated fair value of Subordinated Certificates at that time. The
Subordinated Certificates entitle the holder to the excess of the interest and
principal paid by borrowers on the loans pooled in the securitization over the
interest and principal passed through to other investors in the securities
created in the securitization transaction, less the normal servicing and other
fees and credit losses realized. The estimated fair value of the Subordinated
Certificates is computed using prepayment, default and interest rate assumptions
that the Company believes market participants would use for similar instruments
at the time of sale. These assumptions may not reflect actual future results.
Accordingly, no assurance can be given that these securities could in fact be
sold or recovered at their stated values on the balance sheet, if at all.
Contingent Risks. Although the Company sells substantially all the
mortgage loans and other loans which it originates or purchases, the Company
retains some degree of credit risk on substantially all loans sold. During the
period of time that loans are held pending sale, the Company is subject to the
various business risks associated with the lending business, including the risk
of borrower default, the risk of foreclosure and the risk that a rapid increase
in interest rates would result in a decline in the value of loans to potential
purchasers. The documents governing the Company's securitization program require
the Company to establish deposit accounts or build over-collateralization levels
through retention of distributions otherwise payable to the holders of the
Subordinated Certificates. Such amounts serve as credit enhancement for the
related trust and are therefore available to fund losses realized on loans held
by such trust. In addition, documents governing the Company's securitization
program require the Company to commit to repurchase or replace loans which do
not conform to the representations and warranties made by the Company at the
time of sale.
Retained Risks of Securitized Loans. The Company makes various
representations with respect to the loans that it pools and securitizes. The
Company's representations rely in part on similar representations made by the
originators of such loans when they were purchased by the Company. In the event
of a breach of its representations, the Company may be required to repurchase or
replace the related loan using its own funds. While the Company may have a claim
against the originator in the event of a breach of any of these representations
made by the originators, the Company's ability to recover on any such claim will
be dependent on the financial condition of the originator. There can be no
assurance that the Company will not experience a material loss in respect of any
of these contingencies.
Importance of Credit Enhancement. To market residential
mortgage-backed, commercial mortgage-backed and commercial loan-backed
securities, the Company has in the past used various means of credit enhancement
to obtain a "AAA/Aaa" rating for such securities. In its residential
mortgage-backed and commercial loan-backed securitizations, the Company has
relied to a significant extent on monoline insurance companies to provide such
credit enhancement. Any unwillingness of monoline insurance companies to
guarantee the senior interests in the Company's loan pools could have a material
adverse effect on the Company's financial position and results of operations.
RISKS RELATED TO SUB-PRIME LOANS
The sub-prime loan market is comprised of credit-impaired borrowers who
generally have significant equity in their homes and whose borrowing needs are
not currently met by traditional financial institutions. Loans made to such
borrowers may entail a higher risk of delinquency and higher losses than loans
made to more creditworthy
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borrowers. While the Company believes that the underwriting criteria and
collection methods it employs enable it to reduce the higher risks inherent in
loans made to credit-impaired borrowers, no assurance can be given that such
criteria or methods will afford adequate protection against higher
delinquencies, foreclosures or losses than anticipated and, as a result, the
Company's financial condition or results of operation could be adversely
affected.
SERVICING RISKS; BORROWER DELINQUENCIES AND CLAIMS
When borrowers are delinquent in making monthly payments on commercial
mortgage loans serviced by the Company, the Company is required to advance
interest payments with respect to such delinquent loans to the extent that the
Company deems such advances ultimately recoverable. These advances require
funding from the Company's capital resources but have priority of repayment from
collections or recoveries on the loans in the related pool in the succeeding
month. In the ordinary course of its business, the Company is subject to claims
made against it by borrowers and private investors arising from, among other
things, losses that are claimed to have been incurred as a result of alleged
breaches of fiduciary obligations, misrepresentations, errors and omissions of
employees and officers of the Company (including its appraisers), incomplete
documentation and failures by the Company to comply with various laws and
regulations applicable to its business. The Company believes that liability with
respect to any currently asserted claims or legal actions is not likely to be
material to the Company's consolidated financial position or results of
operations; however, any claims asserted in the future may result in legal
expenses or liabilities which could have a material adverse effect on the
Company's financial position and results of operations.
As a participant in the Fannie Mae DUS program, the Company must accept
a first loss risk on loans originated by the Company. In addition, the Company
must also make certain representations and warranties concerning loans
originated by the Company and sold to Conduit Purchasers or Fannie Mae. These
representations cover such matters as title to the property, lien priority,
environmental reviews and certain other matters.
ASSET PERFORMANCE ASSUMPTIONS
The Company's business, financial condition, results of operations and
liquidity depend, to a material extent, on the performance of loans owned
directly or backing securities purchased and sold by the Company. The carrying
value of the Company's asset portfolios, Subordinated Certificates and certain
other assets have been determined in part using estimates of future cash flows
based on assumptions concerning future default and prepayment rates that are
consistent with the Company's historical experience and market conditions and
present value discount rates that the Company believes would be requested by an
unrelated purchaser of an identical stream of estimated cash flows. Management
believes that the Company's estimates of cash flows were reasonable at the time
such estimates were made. However, the actual rates of default and/or prepayment
on such assets may exceed those estimated and consequently may adversely affect
the carrying values of such assets, anticipated future cash flows, results of
operations and reported earnings. The Company periodically reviews its loss and
prepayment assumptions in relation to current performance of the loans and
market conditions and, if necessary, provides for the impairment of the
respective asset. The Company's business, financial condition and results of
operations could be materially adversely affected by such adjustments in the
future. No assurance can be given that loan losses and prepayments will not
exceed the Company's estimates or that such assets could be sold at their stated
value on the balance sheet, if at all.
INTEREST RATES
The value of the Company's interest-earning assets and liabilities may
be directly affected by the level of and fluctuations in interest rates. For
example, a decline in interest rates could result in increased prepayment of
outstanding loans, which could affect the carrying value of the Subordinated
Certificates held by the Company. In addition, since certain of the Company's
borrowings, including borrowings under the Revolving Loan Agreement, are at
variable rates of interest, the Company may be impacted by increases in interest
rates. The Company monitors the interest rate environment and employs prefunding
or other hedging strategies designed to mitigate the impact of changes in
interest rates. However, there can be no assurance that the profitability of the
Company would not be adversely affected during any period of changes in interest
rates.
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<PAGE> 11
A substantial and sustained increase in interest rates could adversely
affect the ability of the Company to originate loans and could reduce the gains
recognized by the Company upon their securitization and sale. A significant
decline in interest rates could decrease the size of the Company's residential
Subordinated Certificates by increasing the level of loan prepayments.
Fluctuating interest rates also may affect the net interest income earned by the
Company resulting from the difference between the yield to the Company on
mortgage loans held pending sale and the interest paid by the Company for funds
borrowed under the Company's warehouse credit facilities or otherwise. In
addition, inverse or flattened interest yield curves could have an adverse
impact on the earnings of the Company because the loans pooled and sold by the
Company have long-term rates while the senior interest in the related trusts are
priced on the basis of intermediate rates.
RISKS OF HEDGING TRANSACTIONS
The Company has in the past and may in the future enter into interest
rate or foreign currency financial instruments used for hedging purposes. While
intended to reduce the effects of volatility in interest rate or foreign
currency price movements, such transactions could cause the Company to recognize
losses depending on the terms of the instrument and the interest rate or foreign
currency price movements.
FOREIGN OPERATIONS; CURRENCY RISKS
The Company's asset management and resolution business has entered
into, and intends to continue to enter into, contracts to purchase and to manage
and resolve asset portfolios located in Canada, Mexico and Western Europe and
may in the future expand into other foreign countries. Foreign operations are
subject to various special risks, including currency translation risks and
currency exchange rate fluctuations (which the Company intends to mitigate with
currency hedging arrangements as available and economical) and exchange
controls. Changes in foreign exchange rates may have an adverse effect on the
Company's financial condition and results of operations. In addition, earnings
of foreign operations are subject to foreign income taxes that reduce cash flow
available to meet debt service requirements and other obligations of the
Company, which may be payable even if the Company has no earnings on a
consolidated basis.
CYCLICALITY OF AND COMPETITION IN THE ASSET MANAGEMENT BUSINESS
The asset management business is affected by long-term cycles in the
general economy. In addition, the volume of domestic asset portfolios available
for purchase by investors or management by third party servicers such as the
Company has generally declined since 1993 as large pools of distressed assets
acquired by governmental agencies in the 1980's and early 1990's have been
resolved or sold. The Company cannot predict what will be a normal annual volume
of asset portfolios to be sold or outsourced for management and resolution.
Moreover, future asset portfolio purchases will depend on the availability of
asset portfolios offered for sale, the availability of capital and the Company's
ability to submit successful bids to purchase asset portfolios. The acquisition
of asset portfolios has become highly competitive in the United States. This may
require the Company to acquire asset portfolios at higher prices thereby
lowering profit margins on the resolutions of such asset portfolios. Under
certain circumstances, the Company may choose not to bid for asset portfolios
which it believes cannot be acquired at attractive prices. As a result of all
the above factors, asset portfolio purchases may vary significantly from quarter
to quarter.
GENERAL ECONOMIC CONDITIONS
Periods of economic slowdown or recession, rising interest rates or
declining demand for real estate may adversely affect certain segments of the
Company's business. Although such economic conditions may increase the number of
nonperforming loans available for sale to or for management by the Company, such
conditions could adversely affect the resolution of asset portfolios held by the
Company for its own account or managed for others, lead to a decline in prices
or demand for collateral underlying asset portfolios or, in the case of asset
portfolios held for the Company's own account, increase the cost of capital
invested by the Company and the length of time that capital is invested in a
particular asset portfolio, thereby negatively impacting the rate of return
realized from such asset portfolio. Economic downturns and rising interest rates
also may reduce the number of loan originations by the
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<PAGE> 12
Company's residential mortgage banking, commercial mortgage banking and
commercial finance businesses and negatively impact its securitization activity.
In addition, periods of economic slowdown or recession, whether
general, regional or industry-related, may increase the risk of default on
mortgage loans and other loans and may have an adverse effect on the Company's
business, financial condition and results of operations. Such periods also may
be accompanied by decreased consumer demand for residential mortgages, resulting
in declining values of homes securing outstanding loans, thereby weakening
collateral coverage and increasing the possibility of losses in the event of
default. Significant increases in homes for sale during recessionary economic
periods may depress the prices at which foreclosed homes may be sold or delay
the timing of such sales. There can be no assurance that the housing markets
will be adequate for the sale of foreclosed homes and any material deterioration
of such markets could reduce recoveries from the sale of collateral.
GOVERNMENT REGULATION
The operations of the Company are subject to regulation by federal,
state and local government authorities, as well as to various laws and judicial
and administrative decisions, that impose requirements and restrictions
affecting, among other things, the Company's loan originations, credit
activities, maximum interest rates, finance and other charges, disclosures to
customers, the terms of secured transactions, collection, repossession and
claims handling procedures, multiple qualification and licensing requirements
for doing business in various jurisdictions, and other trade practices. Although
the Company believes that it is in compliance in all material respects with
applicable local, state and federal laws, rules and regulations, there can be no
assurance that more restrictive laws, rules or regulations will not be adopted
in the future that could make compliance more difficult or expensive, restrict
the Company's ability to originate, purchase or sell loans, further limit or
restrict the amount of interest and other charges earned on loans originated or
purchased by the Company, further limit or restrict the terms of loan
agreements, or otherwise adversely affect the business or prospects of the
Company. There are also, among other risks, uncertainties concerning the
business practice of paying back points to residential mortgage brokers.
COMPETITION
General. The Company's competition varies by business line and
geographic market. Generally, competition within each of the business lines in
which the Company competes is fragmented, with national, local and regional
competitors, none of which dominates a particular business line. Certain of the
Company's competitors within each of its business lines are larger and have
greater financial resources than the Company.
Asset Management. The Asset Management business is a nationwide (and
increasingly international) business with numerous financially strong and
experienced competitors. The Company believes that its ability to acquire asset
portfolios for its own account will be important to its future growth. Recently,
the Company has encountered increased competition in the market for asset
portfolios which could cause the Company to experience decreasing profit margins
in this business line in order to remain a competitive bidder for asset
portfolios. In addition, declining profit margins presented by current bidding
opportunities has caused the Company to redeploy its capital in more profitable
product lines. Asset portfolio acquisitions also require significant capital.
The Company's competitors in the Asset Management business include Lennar Corp.,
Archon (an affiliate of Goldman, Sachs & Co.), J.E. Roberts Companies, GMAC and
First City Financial Corp.
Commercial Mortgage Banking. The Company's commercial mortgage banking
business consists of real estate capital markets, commercial real estate lending
and commercial loan servicing business lines. In each of these business lines,
the Company competes on a nationwide basis. The real estate capital markets and
commercial real estate lending businesses are fragmented, composed primarily of
small local or regional firms. The Company believes that the commercial mortgage
banking industry is moving toward greater consolidation and that well
capitalized, full service, nationwide mortgage banking firms will emerge from
this consolidation. The Company's objective is to improve its position as a
major nationwide full service mortgage banker to the commercial real estate
industry. The Company's competitors in the commercial mortgage banking business
include Nomura Asset Capital Corporation, GMAC (commercial real estate finance),
L.J. Melody & Co. and Washington Mortgage Corporation.
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<PAGE> 13
The commercial loan servicing business is highly competitive. Distinct
markets have developed for the servicing of performing loan pools,
under-performing loan pools and non-performing loan pools. The Company has
focused its commercial loan servicing business on the market for performing loan
pools, the servicing market that management believes has the greatest potential
for growth. The Company's competitors in the commercial loan servicing business
include GMAC Commercial Mortgage Corporation, Midland Loan Services, L.P., G.E.
Capital Asset Management and First Union Bank.
Residential Mortgage Banking. The Company recently has encountered
increased competition in the market for conventional, nonconforming residential
mortgage loans as more originators and Conduit Purchasers enter this market.
This could impact origination and acquisition volume and profit margins. Certain
of the Company's larger, national competitors have access to greater financial
resources and lower costs of capital. The Company's competitors in the
residential mortgage banking business include the Associates, United Companies
Financial, The Money Store (an affiliate of First Union Bank) and Conti Mortgage
Corp.
Commercial Finance. The markets in which the Commercial Finance Group
operates are highly competitive and are characterized by competitive factors
that vary based upon product and geographic region. The Commercial Finance
Group's competitors include captive and independent diversified finance
companies, specialty finance companies (including specialty franchise finance
companies), commercial banks, thrift institutions, asset-based lenders, real
estate investment trusts and leasing companies. Many of the competitors of the
Commercial Finance Group are large companies that have substantial capital,
technological and marketing resources, and some of these companies may have
lower costs of capital than is available to the Commercial Finance Group.
ANTI-TAKEOVER CONSIDERATIONS
The Company's Restated Certificate of Incorporation, as amended, and
Amended and Restated Bylaws include a number of provisions that may have the
effect of encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with the Company's Board of Directors
rather than pursue non-negotiated takeover attempts. These provisions include a
staggered Board of Directors, authorized "blank check" preferred stock, super
majority voting requirements on certain matters and prohibitions against certain
business combinations. The Indentures governing the Senior Subordinated Notes
and Senior Notes require the Company to repurchase all outstanding Senior
Subordinated Notes and Senior Notes in the event of certain change of control
transactions. In addition, on May 28, 1997, the Company adopted a Stockholders
Rights Plan pursuant to which rights were distributed to stockholders of record
as of June 9, 1997. The Stockholders Rights Plan provides, among other things,
that if a person (or group of affiliated or associated persons) acquires (or ten
(10) days after the commencement of a tender offer to acquire) "beneficial
ownership" of 15% or more of the outstanding shares of Common Stock, the rights
previously distributed to stockholders, other than those owned by such acquiring
person or group, will become exercisable. Under the Stockholders Rights Plan,
the acquisition of 15% or more of the outstanding Common Stock or the completion
of the tender offer will entitle the holder to purchase shares of Common Stock
having a market value equal to twice the purchase price of the right. These
anti-takeover provisions could have the effect of discouraging or making more
difficult a merger, tender offer, other business combination or proxy contest,
even if such event would be favorable to the interests of the stockholders. See
"Description of Capital Stock - Delaware Law and Certain Corporate Provisions."
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process date fields containing a
two-digit year is commonly referred to as the "Year 2000 Compliance" issue. As
the year 2000 approaches, such systems may be unable to accurately process
certain date-based information.
The Company has reviewed its computer systems in order to evaluate
necessary modifications for Year 2000 Compliance. The Company does not
anticipate any material difficulties in achieving Year 2000 Compliance with
respect to the Company's computer systems. Furthermore, the Company does not
anticipate that it will incur material expenditures in connection with any
modifications necessary to achieve Year 2000 Compliance. In addition, the
Company has communicated with others with whom it does significant business to
determine their Year 2000
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<PAGE> 14
Compliance status and the extent to which the Company could be affected by any
third party Year 2000 Compliance issues. However, there can be no assurance that
the systems of other companies on which the Company's systems rely will be
timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have a
material adverse effect on the Company.
The anticipated costs and timeliness of completion of Year 2000
modifications are based on management's best estimates, which were derived using
numerous assumptions relating to future events, including, without limitation,
the continued availability of certain resources and third party modification
plans. However, there can be no assurance that the estimates and assumptions
will prove to be accurate.
FORWARD-LOOKING STATEMENTS
This Prospectus may contain or incorporate by reference forward-looking
statements. The factors identified under "Risk Factors" are important factors
(but not necessarily all important factors) that could cause actual results to
differ materially from those expressed in any forward-looking statement made by,
or on behalf of, the Company (or its subsidiaries).
Where any such forward-looking statement includes a statement of the
assumptions or bases underlying such forward-looking statement, the Company
cautions that, while such assumptions or bases are believed to be reasonable and
are made in good faith, assumed facts or bases almost always vary from actual
results, and the differences between assumed facts or bases and actual results
can be material, depending upon the circumstances. Where, in any forwardlooking
statement, the Company (or its subsidiaries), or its management, express an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the statement of expectation or belief will result or
be achieved or accomplished. The words "believe", "expect", "estimate",
"project" and "anticipate" and similar expressions identify forward-looking
statements.
RECENT DEVELOPMENTS
OFFERING OF COMMON STOCK
On February 23, 1998, the Company completed a public offering of
4,500,000 shares of Common Stock. Subsequently, an additional 675,000 shares of
Common Stock were sold as a result of the exercise of an over-allotment option
granted to the underwriters in respect of the Common Stock offering. The Common
Stock was registered pursuant to the Company's $500 million shelf registration
statement, which was declared effective by the Commission on August 20, 1997.
The Common Stock offering was made concurrently with the offering of $290
million aggregate principal amount of 97/8% Senior Subordinated Notes due 2005
described below. The net proceeds from the offering were used to reduce the
Company's borrowings under the Revolving Loan Agreement, the Builders Warehouse
Facility and certain other credit lines.
OFFERINGS OF 97/8% SENIOR SUBORDINATED NOTES DUE 2005
On February 23, 1998, the Company completed a public offering of $290
million aggregate principal amount of 97/8% Senior Subordinated Notes due 2005.
The 97/8% Senior Subordinated Notes due 2005 were registered pursuant to the
Company's $500 million shelf registration statement, which was declared
effective by the Commission on August 20, 1997. The offering of the 97/8% Senior
Subordinated Notes due 2005 was made concurrently with the offering of Common
Stock described above. The net proceeds from the offering were used to reduce
the Company's outstanding borrowings under the Revolving Loan Agreement, the
Builders Warehouse Facility and certain other credit lines.
On March 5, 1998, the Company completed a public offering of $40
million aggregate principal amount of 97/8% Senior Subordinated Notes due 2005.
The 97/8% Senior Subordinated Notes due 2005 were registered pursuant
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<PAGE> 15
to the Company's $500 million shelf registration statement, which was declared
effective by the Commission on August 20, 1997. The net proceeds from the
offering were used for general corporate purposes.
The 97/8% Senior Subordinated Notes due 2005 mature on March 15, 2005,
and are redeemable at the option of the Company, in whole or in part, at any
time on or after March 15, 2002, initially at 104.938% of their principal
amount, plus accrued interest, declining ratably to 100% of their principal
amount, plus accrued interest, on or after March 15, 2004. Interest on the 97/8%
Senior Subordinated Notes due 2005 is payable semi-annually on March 15 and
September 15 of each year, at the rate of 97/8% per annum. The 97/8% Senior
Subordinated Notes due 2005 are not secured.
AMRESCO MEXICO
On March 18, 1998, the Company announced the formation of AMRESCO
Mexico, a joint venture with Banco Bilbao Vizcaya for asset acquisitions and
loan management throughout Mexico. In June 1998, AMRESCO Mexico became a
servicer of a 3.02 billion-peso portfolio of nonperforming and subperforming
Mexican loans originated by the former Banco del Oriente, S.A. AMRESCO Mexico
paid 80 million pesos (approximately $9 million) for this asset management
engagement, pursuant to which AMRESCO Mexico will receive a management fee and a
participation in a portion of the overall portfolio recoveries.
PNS REALTY TRANSACTION
Effective April 30, 1998, the Company acquired the commercial mortgage
banking business of PNS Realty Partners, L.P., PNS Realty Partners/Kentucky
L.L.C., PNS Realty Partners/Indiana L.P. and PNS Realty Partners Multifamily for
$8,334,758 in cash and Common Stock, plus up to an additional $5,650,000 in cash
and Common Stock over a three-year period in the event certain performance goals
are met or exceeded during the fiscal years 1998, 1999 and 2000.
OFFERING OF AMRESCO CAPITAL TRUST
On May 7, 1998, the initial public offering of 10,350,000 common shares
of beneficial interest, par value $.01 per share, of AMRESCO Capital Trust (the
"REIT") was completed. The REIT is a newly organized Texas real estate
investment trust formed to take advantage of certain mid- to high-yield lending
and investment opportunities in real estate related assets, including various
types of commercial mortgage loans, mortgage-backed securities and commercial
real properties. The REIT's operations are managed by AMREIT Managers, L.P. (the
"Manager"), an affiliate of the Company. The Manager has entered into a
management agreement with the REIT, pursuant to which the Manager (i) is
generally responsible for administering the day-to-day operations of the REIT
and (ii) will receive a fee for providing such services. Additionally, the
Company and its affiliates own approximately 15% of the outstanding equity
interests in the REIT.
MIC ACQUISITION
On July 14, 1998, the Company entered into a definitive agreement to
acquire Mortgage Investors Corporation ("MIC"). MIC is a Florida-based
residential mortgage banking company. MIC conducts retail loan originations,
originating conforming loans through a network of approximately 30 retail
branches throughout the United States. MIC is also the largest producer of VA
streamlined re-financed loans (otherwise known as interest rate reduction
refinance loans) in the United States. MIC immediately sells all VA loans and
servicing rights to third parties in order to realize immediate cash profits and
reduce accumulation risk. Pursuant to the agreement, the Company will acquire
MIC for an initial payment of up to $70 million, at least 82% of which will be
paid in the form of the Company's Common Stock. Additionally, the Company will
pay an annual earnout over a three-year period, the total of which will not
exceed $105 million. The completion of the acquisition is subject to normal
closing conditions and requirements and is expected to close by the end of
August 1998. Upon completion of the acquisition, the activities currently
conducted by MIC will become the Company's fifth line of business. See "The
Company - Recent Development" and "Risk Factors - Risks Associated with Rapid
Growth and Entry in New Business."
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<PAGE> 16
IFC/TELECAPITAL ACQUISITION
Pursuant to the IFC/Telecapital Asset Purchase Agreement, the Company
and two of its wholly-owned subsidiaries agreed to purchase substantially all of
the assets of IFC and Telecapital. IFC is primarily in the business of
originating and servicing loans under certain loan programs of the United States
Small Business Administration, and selling interests in such loans through
securitization and otherwise. Telecapital is primarily in the business of
originating, acquiring and servicing loans to the independent pay phone industry
and providing other incidental financing and servicing. At the closing of the
IFC/Telecapital Acquisition, which is expected to occur on July 17, 1998, the
Company is to deliver (a) to IFC (i) $33,834,585 in cash and (ii) the IFC Note
in the principal amount of $27,685,509, which IFC Note, in accordance with its
terms, initially will be convertible into 1,002,644 shares of Common Stock, and
(b) to Telecapital (i) $9,819,544 in cash and (ii) the Telecapital Note in the
principal amount of $8,036,837, which Telecapital Note, in accordance with its
terms, initially will be convertible into 291,057 shares of Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders.
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<PAGE> 17
SELLING STOCKHOLDERS
This Prospectus covers offers from time to time by each Selling
Stockholder (after such person becomes a holder of Common Stock) of the Common
Stock owned by such person. The Selling Stockholders will hold shares of Common
Stock issued upon the conversion of the Notes. The Notes will be issued in a
private placement upon the closing of the IFC/Telecapital Acquisition. See
"Recent Developments - IFC/Telecapital Acquisition." The Notes are convertible
at the option of the Company or the applicable Selling Stockholder at any time
on or after the effective date of the Registration Statement. Each Note is
initially convertible at the option of the Company or the applicable Selling
Stockholder into the number of shares of Common Stock which results from
dividing the principal amount plus accrued interest thereon by $27.6125.
Accordingly, assuming no interest has accrued on the Notes, the Notes would be
convertible into an aggregate of 1,293,701 shares of Common Stock. The
registration of the shares of Common Stock offered for resale hereby is pursuant
to the Registration Agreement, dated effective as of June 11, 1998, by and among
the Company, IFC and Telecapital (the "Registration Agreement"). Pursuant to the
Registration Agreement, the Company and the Selling Stockholders agreed to
indemnify each other against certain civil liabilities under the Securities Act.
See "Description of Capital Stock - Registration Agreement" for a more complete
description of the Registration Agreement.
Upon a conversion of the Notes, IFC and Telecapital may distribute some
or all of the shares of Common Stock received in the conversion to their
executive officers, members or partners who are "accredited investors" (as
defined pursuant to Regulation D under the Securities Act) and, if such members
or partners are limited liability companies, partnerships or corporations
themselves, such shares may be distributed to their respective members, partners
or stockholders who are accredited investors. Accredited investors receiving
shares of Common Stock in such a distribution may sell such shares pursuant to
the Registration Statement as Selling Stockholders. Such investors include David
W. Mills, James S. Regan, Amy H. Regan, WS Investments, L.P., Overbrook Limited
Partnership, Keith R. Gollust, B. Russ Smith and Stephen W. G. Smith, who,
assuming IFC and Telecapital distributed all of the shares of Common Stock
received in the conversion, would own 25,332; 2,273; 8,904; 605,596; 134,187;
67,940; 125,756; and 24,837 shares of Common Stock, respectively. The other
accredited investors who would receive shares of Common Stock upon such a
distribution by IFC and Telecapital would own, in the aggregate, less than one
percent of the number of shares of Common Stock outstanding prior to the
conversion of the Notes.
The following table lists the name of each initial Selling Stockholder,
the number of shares of Common Stock owned by each Selling Stockholder before
this Offering, the number of shares of Common Stock that may be offered by each
Selling Stockholder pursuant to this Prospectus and the number of shares of
Common Stock to be owned by each Selling Stockholder upon completion of the
Offering if all shares registered hereby are sold. The information below is as
of the date of this Prospectus.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES NUMBER OF SHARES
NAME OF SHARES OWNED BEING REGISTERED OWNED AFTER
SELLING STOCKHOLDER BEFORE THIS OFFERING FOR RESALE THIS OFFERING(1)
------------------- -------------------- ---------------- ----------------
<S> <C> <C> <C>
Independence Funding Company, LLC 0 1,002,644 0
Telecapital, L.P. 0 291,057 0
---- --------- ----
TOTAL 0 1,293,701 0
==== ========= ====
</TABLE>
(1) Assumes all shares held by such Selling Stockholder and registered
hereby will be offered and sold.
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<PAGE> 18
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 150,000,000 shares of Common Stock,
par value $0.05 per share, and 5,000,000 shares of Preferred Stock, par value
$1.00 per share. As of June 17, 1998, the Company had issued and outstanding
42,893,705 shares of Common Stock and no shares of Preferred Stock. As of such
date, there were approximately 2,662 holders of record of the outstanding shares
of Common Stock.
The following summary of the Company's Common Stock and Preferred Stock
is qualified in its entirety by reference to the Company's Restated Certificate
of Incorporation (the "Certificate of Incorporation"), its Amended and Restated
Bylaws (the "Bylaws"), and the Delaware General Corporation Law, as amended (the
"DGCL").
COMMON STOCK
Subject to such preferential rights as may be granted by the Board of
Directors in connection with any issuances of Preferred Stock, holders of shares
of Common Stock are entitled to receive such dividends as may be declared by the
Board of Directors in its discretion from funds legally available therefor.
Since October 1995, the Company has not paid cash dividends. The Board of
Directors currently intends to retain all earnings to support anticipated growth
in the current operations of the Company and to finance future expansion. The
Company's Revolving Loan Agreement and the indentures governing certain of the
Company's debt securities restrict the payment of cash dividends unless certain
earnings tests are satisfied. Additional restrictions on the payment of cash
dividends may be imposed in connection with future issuances of Preferred Stock
and indebtedness by the Company. Further declarations and payments of cash
dividends, if any, will also be determined in light of then-current conditions,
including the Company's earnings, operations, capital requirements, liquidity,
financial condition, restrictions in financing agreements and other factors
deemed relevant by the Board of Directors. Upon the liquidation, dissolution or
winding up of the Company, after payment of creditors, the remaining net assets
of the Company will be distributed pro rata to the holders of Common Stock,
subject to any liquidation preference of the holders of additional shares or
series of Preferred Stock which may then be outstanding. There are no preemptive
rights, conversion rights, or redemption or sinking fund provisions with respect
to the shares of Common Stock. All of the outstanding shares of Common Stock are
duly and validly authorized and issued, fully paid and non-assessable.
Holders of Common Stock are entitled to one vote per share of Common
Stock held of record on all such matters submitted to a vote of the
stockholders. With respect to any act or action required of or by the holders of
the Common Stock, the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at a meeting and entitled to
vote thereon is sufficient to authorize, affirm, ratify or consent to such act
or actions, except as otherwise provided by law or in the Certificate of
Incorporation. The DGCL requires the approval of the holders of a majority of
the outstanding stock entitled to vote for certain extraordinary corporate
transactions, such as a merger, sale of substantially all assets, dissolution or
amendment of the Certificate of Incorporation. Holders of the shares of Common
Stock do not have cumulative voting rights. As a result, the holders of a
majority of the outstanding shares of Common Stock voting for the election of
directors can elect all the directors, and, in such event, the holders of the
remaining shares of Common Stock will not be able to elect any persons to the
Board of Directors.
PREFERRED STOCK
The Board of Directors may, without approval of the Company's
stockholders, from time to time, authorize the issuance of Preferred Stock in
one or more series for such consideration and, within certain limits, with such
relative rights, preferences and limitations as the Board of Directors may
determine. The relative rights, preferences and limitations that the Board of
Directors has the authority to determine as to any such series of Preferred
Stock include, among other things, dividend rates, voting rights, conversion
rights, redemption rights and liquidation preferences. Because the Board of
Directors has the power to establish the relative rights, preferences and
limitations of each series of Preferred Stock, it may afford to the holders of
any such series preferences and rights senior to the rights of the holders of
shares of Common Stock. In connection with the Stockholder Rights Plan described
below, the Board of Directors has authorized the issuance of 100,000 shares of
Series A Preferred Stock. As of June 17, 1998, no shares of Series A Preferred
Stock have been issued. Although the Board of Directors has no intention at the
present time of doing so, it could cause the issuance of additional shares or
series of Preferred Stock that could
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<PAGE> 19
discourage an acquisition attempt or other transaction that some, or a majority
of, the stockholders might believe to be in their best interest or in which the
stockholders might receive a premium for their shares of Common Stock over the
market price of such shares.
STOCKHOLDER RIGHTS PLAN
On May 28, 1997, the Board of Directors of the Company declared a
dividend of one right to purchase one one-thousandth of a share of Series A
Preferred Stock (a "Right") for each outstanding share of Common Stock to the
holders of record on June 9, 1997 and authorized and directed the issuance of
one Right with respect to each share of Common Stock that shall become
outstanding prior to the occurrence of certain terminating events. The Rights
were issued with a purchase price of $125 per one one-thousandth of a share of
Series A Preferred Stock (the "Purchase Price"). Currently, the Rights trade
with the shares of Common Stock. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and The
Bank of New York, as Rights Agent (the "Rights Agent").
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
to prevent dilution upon the occurrence of certain events described in the
Rights Agreement. The Rights will separate from the Common Stock upon the
earlier of (i) ten (10) business days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent (15%) or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) ten (10) business days (or such later date as the
Board of Directors shall determine) following the commencement of a tender or
exchange offer that would result in a person or group beneficially owning
fifteen percent (15%) or more of such outstanding shares of Common Stock. The
date the Rights separate is referred to as the "Distribution Date." The Rights
are not exercisable until the Distribution Date and will expire at the close of
business on June 9, 2007, unless earlier redeemed by the Company as described
below. As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person (or any associate
or affiliate thereof) and its Common Stock remains outstanding and unchanged,
(ii) any person shall acquire beneficial ownership of more than fifteen percent
(15%) of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which a majority of the Disinterested Directors (as defined
below) determines to be in the best interests of the Company and its
stockholders), or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or other
transactions (other than certain consolidations and mergers involving the
Company and sales or transfers of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than 1% the
proportionate share of any class of the outstanding equity securities of the
Company or any of its subsidiaries beneficially owned by an Acquiring Person (or
any associate or affiliate thereof), each holder of a Right (other than the
Acquiring Person and certain related parties) will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the Purchase Price of the Right. However, Rights are not exercisable following
the occurrence of any of the events described above until such time as the
Rights are no longer redeemable by the Company as described below.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company enters into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction pursuant
to which all or part of the outstanding shares of Common Stock are changed into
or exchanged for stock or other securities of any other person or cash or any
other property or (iii) more than 50% of the combined assets, cash flow or
earning power of the Company and its
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<PAGE> 20
subsidiaries is sold or transferred (in each case other than certain
consolidations with, mergers with and into, or sales of assets, cash flow or
earning power by or to subsidiaries of the Company as specified in the Rights
Agreement), each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the Purchase Price of the Right. The events described in this paragraph
and in the preceding paragraph are referred to as "Triggering Events."
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may,
without payment of the Purchase Price by the holder, exchange the Rights (other
than Rights owned by such person or group, which will become void), in whole or
in part, for shares of Common Stock at an exchange ratio of one-half the number
of shares of Common Stock (or in certain circumstances Preferred Stock) for
which a Right is exercisable immediately prior to the time of the Company's
decision to exchange the Rights (subject to adjustment).
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner which causes the Rights to become exercisable. The Company believes,
however, that the Rights should neither affect any prospective offeror that is
willing to negotiate with the Board of Directors of the Company nor interfere
with any merger or other business combination approved by the Board of Directors
of the Company. At any time until 10 business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (payable in cash, shares of Common Stock or other
consideration deemed appropriate by the Board of Directors).
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date; provided, that
any amendments after the Stock Acquisition Date must be approved by a majority
of the Disinterested Directors. The term "Disinterested Director" means any
member of the Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Disinterested Directors, but shall not include an Acquiring Person, or an
affiliate or associate of an Acquiring Person, or any representative of the
foregoing entities. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity,
inconsistency or defect, to make changes which do not adversely affect the
interest of holders of Rights (excluding the interest of any Acquiring Person)
or to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable; and, provided, that any
amendments after the Stock Acquisition Date must be approved by a majority of
the Disinterested Directors.
Copies of the Rights Agreement are also available free of charge from
the Rights Agent. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
DELAWARE LAW AND CERTAIN CORPORATE PROVISIONS
The Company is subject to the provisions of Section 203 of the DGCL. In
general, this statute prohibits a publicly-held Delaware corporation from
engaging, under certain circumstances, in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person becomes an interested stockholder, unless either
(i) prior to the date at which the stockholder became an interested stockholder
the Board of Directors approved either the business combination or the
transaction in which the person became an interested stockholder, (ii) the
stockholder acquires more than 85% of the outstanding voting stock of the
corporation (excluding shares held by directors who are officers or held in
certain employee stock plans) upon consummation of the transaction in which the
stockholder became an interested stockholder or (iii) the business combination
is approved by the Board of Directors and by two-thirds of the outstanding
voting stock of the corporation (excluding shares held by the interested
stockholder) at a meeting of the stockholders (and not by written consent) held
on or subsequent to the date on which the person became an "interested
stockholder" of the business combination. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or is an affiliate or
associate of the
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<PAGE> 21
corporation and, together with affiliates and associates, at any time within the
prior three years did own) 15% or more of the corporation's voting stock and the
affiliates and associates of such person. Section 203 defines a "business
combination" to include, without limitation, mergers, consolidations, stock
sales and asset based transactions and other transactions resulting in a
financial benefit to the interested stockholder.
The Company's Certificate of Incorporation and Bylaws contain a number
of provisions relating to corporate governance and to the rights of
stockholders. Certain of these provisions may be deemed to have a potential
"anti-takeover" effect in that such provisions may delay, defer or prevent a
change of control of the Company. These provisions include (i) the
classification of the Board of Directors into three classes, each class serving
for staggered three-year terms; (ii) the authority of the Board of Directors to
determine the size of the Board of Directors, subject to certain minimums and
maximums; (iii) the authority of certain members of the Board of Directors to
fill vacancies on the Board of Directors; (iv) a requirement that special
meetings of stockholders may be called only by the Board of Directors, the
Chairman of the Board or holders of at least one-tenth of all the shares
entitled to vote at the meeting; (v) the elimination of stockholder action by
written consent; (vi) the authority of the Board of Directors to issue series of
Preferred Stock with such voting rights and other powers as the Board of
Directors may determine; (vii) the requirement that the Article in the
Certificate of Incorporation creating the staggered board may only be amended by
the vote of at least 66 2/3% of the voting securities of the Company; and (viii)
a requirement that any business combinations between the Company and a
beneficial owner of more than five percent of any class of an equity security of
the Company must be approved by the holders of a majority of the Company's
securities, excluding those securities held by such beneficial owner, voted at a
meeting called for the purpose of approving such business combination.
INDEMNIFICATION AND LIMITED LIABILITY
The Company's Certificate of Incorporation and Bylaws require the
Company to indemnify the directors and officers of the Company to the fullest
extent permitted by law. In addition, as permitted by the DGCL, the Company's
Restated Certificate of Incorporation and Amended and Restated Bylaws provide
that no director of the Company will be personally liable to the Company or its
stockholders for monetary damages for such director's breach of duty as a
director. This limitation of liability does not relieve directors from liability
for (i) any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) any liability under
Section 174 of the DGCL for unlawful distributions, or (iv) any transaction from
which the director derived an improper personal benefit. This provision of the
Restated Certificate of Incorporation will limit the remedies available to a
stockholder who is dissatisfied with a decision of the Board of Directors
protected by this provision, and such stockholder's only remedy in that
circumstance may be to bring a suit to prevent the action of the Board of
Directors. In many situations, this remedy may not be effective, including
instances when stockholders are not aware of a transaction or an event prior to
action of the Board of Directors in respect of such transaction or event.
Subject to certain limitations, the Company's executive officers and
directors are insured against losses arising from claims made against them for
wrongful acts which they may become obligated to pay or for which the Company
may be required to indemnify them.
REGISTRATION AGREEMENT
In connection with the IFC/Telecapital Acquisition, the Company entered
into the Registration Agreement effective June 11, 1998, whereby the Company
agreed to register shares of the Common Stock to be issued to IFC and
Telecapital. Pursuant to the Registration Agreement, the Company agreed to file
this Registration Statement and to use commercially reasonable efforts to cause
the Registration Statement to become effective as soon as practicable. The
rights of IFC and Telecapital under the Registration Agreement cease to apply on
the earlier of (i) the time when all such shares have been sold by IFC,
Telecapital and any accredited investors receiving such shares in a distribution
by IFC or Telecapital or by a member or partner of IFC or Telecapital or (ii)
the time when all such shares are eligible to be sold (a) pursuant to Rule
144(k) or (b) in a single transaction pursuant to Rule 144. Additionally, the
Registration Agreement terminates automatically if the IFC/Telecapital Asset
Purchase Agreement is terminated.
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<PAGE> 22
OTHER MATTERS
The Common Stock is quoted as a national market security by the Nasdaq
Stock Market, Inc. The Common Stock is identified as such market by the symbol
"AMMB." The Bank of New York, New York, New York, is the transfer agent and
registrar for the Common Stock.
PLAN OF DISTRIBUTION
The shares of Common Stock covered hereby may be offered and sold from
time to time by the Selling Stockholders. The Selling Stockholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. Such sales may be made on the Nasdaq National
Market in ordinary brokerage transactions or otherwise, at market prices
prevailing at the time of the sale, at prices related to the then prevailing
market price or in negotiated transactions, including pursuant to an
underwritten offering or pursuant to one or more of the following methods: (i)
purchases by a broker-dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (ii) ordinary brokerage
transactions and transactions in which a broker solicits purchasers; and (iii)
block trades in which a broker-dealer so engaged will attempt to sell the shares
as agent but may take a position and resell a portion of the block as principal
to facilitate the transaction. In effecting sales, broker-dealers engaged by the
Selling Stockholders may arrange for other broker-dealers to participate.
Broker-dealers may receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated immediately prior to the sale.
In connection with the sale of shares of Common Stock covered hereby,
underwriters or agents may receive compensation from the Selling Stockholders or
from purchasers of the shares of Common Stock covered hereby for whom they may
act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell shares of Common Stock to or through dealers and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they act as agents. Underwriters, dealers and agents that participate in
the distribution of shares of Common Stock covered hereby may be deemed to be
underwriters, and any discounts or commissions received by them from the Selling
Stockholders and any profit on the resale of shares of Common Stock by them may
be deemed to be underwriting discounts and commissions under the Securities Act.
The Registration Agreement with IFC and Telecapital provides that the
Company will indemnify the Selling Stockholders against certain liabilities,
including liabilities under the Securities Act.
This Offering will terminate on the earlier of (i) the time when all
shares offered hereby have been sold by the Selling Stockholders or (ii) the
time when all such shares are eligible to be sold (a) pursuant to Rule 144(k) or
(b) in a single transaction pursuant to Rule 144.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by L. Keith Blackwell, General Counsel of the
Company. As of June 24, 1998, Mr. Blackwell owned beneficially 33,295 shares of
Common Stock (excluding 12,265 unvested shares allocated under the Company's
restricted stock plan) and held options to purchase 88,275 shares of Common
Stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference
and has been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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<PAGE> 23
CERTAIN DEFINITIONS
The following are certain defined terms which may be used in this
Prospectus:
"AMMB" is the symbol used to trade the Company's Common Stock on the
Nasdaq National Market.
"AMRESCO CAPITAL" means AMRESCO Capital, L.P., a subsidiary of the
Company.
"AMRESCO MEXICO" means AMRESCO Mexico, S.A. de C.V.
"AMRESCO SERVICES" means a division of AMRESCO Services, L.P., a
subsidiary of the Company.
"BASIS POINT" means one one-hundredth of a percentage point.
"BUILDERS WAREHOUSE FACILITY" means that certain Loan and Security
Agreement between AMRESCO Builders Group, Inc. and Bank United dated September
16, 1997.
"COMPANY" means, unless otherwise stated in this Prospectus or unless
the context otherwise requires, the Company and each of its subsidiaries.
"CONDUIT PURCHASERS" means investment bankers and other financial
intermediaries who purchase or otherwise accumulate pools or portfolios of loans
having common features (e.g., real estate mortgages, etc.), with the intent of
securitizing such loan assets and selling them to a trust that obtains its funds
by selling ownership interests in the trust to public or private investors.
"CREDIT ENHANCEMENT" means the method by which a seller of asset-backed
securities achieves a higher credit rating with respect to such securities than
the credit rating of the assets collateralizing such securities. Credit
enhancement is often achieved through the use of financial guaranty insurance
policies.
"DUS" means the Delegated Underwriting and Servicing program
established by Fannie Mae that permits a DUS approved lender to commit and close
loans for multifamily mortgages for resale to Fannie Mae without Fannie Mae's
prior approval of such loans.
"FACE VALUE" means, with respect to any loan or asset portfolio, the
aggregate unpaid principal balance of a loan or loans.
"FANNIE MAE" means the Federal National Mortgage Association.
"FREDDIE MAC" means the Federal Home Loan Mortgage Corporation.
"HOLLIDAY FENOGLIO FOWLER" means Holliday Fenoglio Fowler, L.P., a
subsidiary of the Company.
"IFC" means Independence Funding Company, LLC, a Texas limited
liability company.
"IFC NOTE" means the Convertible Promissory Note to be delivered by the
Company to IFC on the date of the closing of the IFC/Telecapital Acquisition in
the principal amount of $28,320,000, convertible into shares of Common Stock as
described therein.
"IFC/TELECAPITAL ACQUISITION" means the acquisition by the Company of
substantially all of the assets of IFC and Telecapital and the related
assumption of certain liabilities of IFC and Telecapital.
"IFC/TELECAPITAL ASSET PURCHASE AGREEMENT" means the Asset Purchase
Agreement dated June 1, 1998, by and among IFC Telecapital and AMRESCO
Independence Funding Inc., AMRESCO Commercial Lending Corp., and AMRESCO, INC.
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<PAGE> 24
"MASTER SERVICER" means an entity which provides administrative
services with respect to securitized pools of mortgage-backed securities.
"NOTES" means the IFC Note and the Telecapital Note.
"PREFERRED STOCK" means the Company's preferred stock, par value $1.00
per share.
"PRIMARY SERVICER" means an entity which provides various
administrative services with respect to loans such as collecting monthly
mortgage payments, maintaining escrow accounts for the payment of taxes and
insurance premiums on behalf of borrowers, remitting payments of principal and
interest promptly to investors in mortgages or the Master Servicer of a pool and
reporting to those investors or the Master Servicer on financial transactions
related to such mortgages.
"PRIOR LOAN AGREEMENT" means the First Amended and Restated Revolving
Loan Agreement dated as of April 25, 1996 and as subsequently amended, among the
Company, NationsBank of Texas, as Agent, and the banks which are parties thereto
from time to time.
"REVOLVING LOAN AGREEMENT" means the Third Amended and Restated
Revolving Loan Agreement dated as of September 30, 1997 and as subsequently
amended, among the Company and certain of its subsidiaries, and NationsBank of
Texas, N.A., as Agent, Bank One, Texas, N.A., as Co-Agent, and the lenders which
are parties thereto from time to time.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"SECURITIZATION" and "SECURITIZED" mean a transaction in which loans
originated or purchased by an entity are sold to special purpose entities
organized for the purpose of issuing asset-backed, mortgage-backed or commercial
loan-backed securities.
"SENIOR NOTES" means the Company's 8.75% Senior Notes, Series 1996-A,
due 1999.
"SENIOR SUBORDINATED NOTES" means the Company's 10% Senior Subordinated
Notes due 2003, the Company's 10% Senior Subordinated Notes due 2004 and the
Company's 97/8% Senior Subordinated Notes due 2005, collectively.
"SPECIAL SERVICER" means an entity which provides asset management and
resolution services with respect to nonperforming or underperforming loans
within a pool of performing loans and/or mortgages.
"SUBORDINATED CERTIFICATES" means the unrated and uninsured tranches of
collateralized residential or commercial mortgage-backed securities which are
included under the caption "Retained Interests in Securitizations Trading" in
the Company's consolidated balance sheet.
"SUB-PRIME LOAN" means a residential mortgage loan to borrowers who do
not qualify for conventional loans or whose borrowing needs are not met by
traditional residential mortgage lenders. Such borrowers may not satisfy the
more rigid underwriting standards of the traditional residential mortgage
lending market for a number of reasons, such as blemished credit histories (from
past loan delinquencies or bankruptcy), inability to provide income verification
data or lack of established credit history.
"TELECAPITAL" means Telecapital, L.P., a Delaware limited partnership.
"TELECAPITAL NOTE" means the Convertible Promissory Note to be
delivered by the Company to Telecapital on the date of the closing of the
IFC/Telecapital Acquisition in the principal amount of $8,223,000, convertible
into shares of Common Stock as described therein.
"WAREHOUSE" means a type of lending arrangement whereby loans funded or
purchased and held for sale are financed by financial institutions or
institutional lenders on a short-term basis and secured by the underlying loans.
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<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $11,789
Nasdaq National Market Listing Fee.............................. 17,500
Printing Expenses............................................... 5,000
Accounting Fees and Expenses.................................... 5,000
Legal Fees and Expenses......................................... 10,000
Fees of Transfer Agent and Registrar............................ 10,000
Miscellaneous Expenses.......................................... 10,000
-------
Total........................................................ $69,289
=======
</TABLE>
All of the above expenses except the Securities and Exchange Commission
registration fee and the Nasdaq National Market listing fee are estimated. All
of such expenses will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate") and the Company's Amended and Restated Bylaws (the "Bylaws")
provide that the Company shall indemnify, to the full extent permitted by law,
any person against liabilities arising from their service as directors,
officers, employees or agents of the Company. Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled, and that the corporation is empowered to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The Certificate and the Bylaws provide that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this provision related to director's
liability shall not adversely affect any right or protection of a director of
the Company existing immediately prior to such repeal or modification. Further,
if the DGCL shall be repealed or
II-1
<PAGE> 26
modified, the elimination of liability of a director provided in the Certificate
and the Bylaws shall be to the fullest extent permitted by the DGCL as so
amended.
Pursuant to the Registration Agreement with IFC and Telecapital, the
Company has agreed to indemnify such Selling Stockholders against certain
liabilities, including liabilities under the Securities Act or otherwise. For
the undertaking with respect to indemnification, see Item 17 herein.
The Company maintains insurance for its officers and directors which
provides for indemnification of officers and directors. The premiums for such
insurance are paid by the Company.
ITEM 16. EXHIBITS
EXHIBIT NO. Exhibit
2.1** Asset Purchase Agreement dated June 1, 1998 by and among
Independence Funding Company, LLC, Telecapital, L.P. and
AMRESCO Independence Funding Inc., AMRESCO Commercial Lending
Corp., and AMRESCO, INC.
2.2* Amendment No. 1 to the Asset Purchase Agreement, dated July
17, 1998, by and among Independence Funding Company, LLC,
Telecapital, L.P. and AMRESCO Independence Funding, Inc.,
AMRESCO Commercial Finance, Inc. (formerly AMRESCO Commercial
Lending Corp.), and AMRESCO, INC.
4.1 Restated Certificate of Incorporation, filed as Exhibit 3(a)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, which exhibit is incorporated
herein by reference.
4.2 Amended and Restated Bylaws effective as of February 25, 1997,
filed as Exhibit 3(b) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, which
exhibit is incorporated herein by reference.
4.3 Third Amended and Restated Revolving Loan Agreement, dated as
of September 30, 1997, by and among AMRESCO, INC. and certain
of its subsidiaries, and NationsBank of Texas, N.A., as Agent,
Bank One, Texas, N.A., as Co-Agent and the lenders which are
parties thereto from time to time, filed as Exhibit 10(v) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, which exhibit is incorporated herein
by reference.
4.4 Specimen Common Stock Certificate, filed as Exhibit 4.4 to the
Company's Registration Statement on Form S-3 (No. 33-63683),
which exhibit is incorporated herein by reference.
4.5* Registration Agreement, dated effective as of June 11, 1998,
by and among the Company and Independence Funding Company, LLC
and Telecapital, L.P.
4.6 Rights Agreement, dated as of May 28, 1997, by and between the
Company and the Bank of New York, as Rights Agent, filed as
Exhibit 4 to the Company's Current Report on Form 8-K dated
May 28, 1997, which exhibit is incorporated herein by
reference.
5.1* Opinion of L. Keith Blackwell, General Counsel of the Company,
as to the validity of Common Stock to be offered.
23.1* Consent of L. Keith Blackwell, contained in the opinion filed
as Exhibit 5.1.
23.2* Consent of Deloitte & Touche LLP.
24.1** Power of Attorney of the Directors and certain Executive
Officers of the Company.
* Filed herewith.
** Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II-2
<PAGE> 27
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on the 16th day of July, 1998.
AMRESCO, INC.
By: /s/ L. KEITH BLACKWELL
--------------------------------------
L. Keith Blackwell
Senior Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to its Registration Statement has been signed by the following
persons in the capacities and on the 16th day of July, 1998:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
ROBERT H. LUTZ, JR.* Chairman of the Board and
- --------------------------------- Chief Executive Officer
Robert H. Lutz, Jr.
ROBERT L. ADAIR III* Director, President and
- --------------------------------- Chief Operating Officer
Robert L. Adair III
BARRY L. EDWARDS* Executive Vice President and
- --------------------------------- Chief Financial Officer
Barry L. Edwards (Principal Financial Officer)
JAMES P. COTTON, JR.* Director
- ---------------------------------
James P. Cotton, Jr.
RICHARD L. CRAVEY* Director
- ---------------------------------
Richard L. Cravey
GERALD E. EICKHOFF* Director
- ---------------------------------
Gerald E. Eickhoff
SIDNEY E. HARRIS* Director
- ---------------------------------
Sidney E. Harris
AMY J. JORGENSEN* Director
- ---------------------------------
Amy J. Jorgensen
BRUCE W. SCHNITZER* Director
- ---------------------------------
Bruce W. Schnitzer
EDWIN A. WAHLEN, JR.* Director
- ---------------------------------
Edwin A. Wahlen, Jr.
RONALD B. KIRKLAND* Vice President and Chief
- --------------------------------- Accounting Officer
Ronald B. Kirkland (Principal Accounting Officer)
*By: /s/ L. Keith Blackwell
-----------------------------
L. Keith Blackwell
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. EXHIBIT PAGE
----------- ------- ------------
<S> <C> <C>
2.1** Asset Purchase Agreement dated June 1, 1998 by and among
Independence Funding Company, LLC, Telecapital, L.P. and
AMRESCO Independence Funding Inc., AMRESCO Commercial Lending
Corp., and AMRESCO, INC.
2.2* Amendment No. 1 to the Asset Purchase Agreement, dated July
17, 1998, by and among Independence Funding Company, LLC,
Telecapital, L.P. and AMRESCO Independence Funding, Inc.,
AMRESCO Commercial Finance, Inc. (formerly AMRESCO Commercial
Lending Corp.), and AMRESCO, INC.
4.1 Restated Certificate of Incorporation, filed as Exhibit 3(a)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, which exhibit is incorporated
herein by reference.
4.2 Amended and Restated Bylaws effective as of February 25, 1997,
filed as Exhibit 3(b) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, which
exhibit is incorporated herein by reference.
4.3 Third Amended and Restated Revolving Loan Agreement, dated as
of September 30, 1997, by and among AMRESCO, INC. and certain
of its subsidiaries, and NationsBank of Texas, N.A., as Agent,
Bank One, Texas, N.A., as Co-Agent and the lenders which are
parties thereto from time to time, filed as Exhibit 10(v) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, which exhibit is incorporated herein
by reference.
4.4 Specimen Common Stock Certificate, filed as Exhibit 4.4 to the
Company's Registration Statement on Form S-3 (No. 33-63683),
which exhibit is incorporated herein by reference.
4.5* Registration Agreement, dated effective as of June 11, 1998,
by and among the Company and Independence Funding Company, LLC
and Telecapital, L.P.
4.6 Rights Agreement, dated as of May 28, 1997, by and between the
Company and the Bank of New York, as Rights Agent, filed as
Exhibit 4 to the Company's Current Report on Form 8-K dated
May 28, 1997, which exhibit is incorporated herein by
reference.
5.1* Opinion of L. Keith Blackwell, General Counsel of the Company,
as to the validity of Common Stock to be offered.
23.1* Consent of L. Keith Blackwell, contained in the opinion filed
as Exhibit 5.1.
23.2* Consent of Deloitte & Touche LLP.
24.1** Power of Attorney of the Directors and certain Executive
Officers of the Company.
</TABLE>
- ----------
* Filed herewith.
** Previously filed.
<PAGE> 1
EXHIBIT 2.2
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
WITNESSETH THAT:
WHEREAS, pursuant to an Asset Purchase Agreement dated June 1, 1998
(the "Agreement") by and among Independence Funding Company, LLC, a Texas
limited liability company ("IFC"), Telecapital, L.P., a Delaware limited
partnership ("Telecapital" and together with IFC, "Sellers"), AMRESCO
Independence Funding, Inc., a Delaware corporation ("Purchaser1," each of
Purchaser1 and Purchaser2 being a "Purchaser"), AMRESCO Commercial Finance, Inc.
(formerly known as AMRESCO Commercial Lending Corp.), a Nevada corporation
("Purchaser2"), and AMRESCO, INC., a Delaware corporation ("Parent", and
collectively with Purchaser1 and Purchaser2, the "Purchaser Parties"), Sellers
agreed to transfer to Purchaser1 and Purchaser2, and Purchaser1 and Purchaser2
agreed to purchase and assume from Sellers, all of the IFC Purchased Assets (as
defined) and Telecapital Purchase Assets (as defined), respectively, and all of
the IFC Assumed Liabilities (as defined) and Telecapital Assumed Liabilities (as
defined), respectively;
WHEREAS, pursuant to the Agreement the obligation to redeem the limited
partnership interest in Telecapital of David R. Harvey ("Harvey") was excluded
from the Telecapital Assumed Liabilities; and
WHEREAS, pursuant to the Agreement, the "stay put" bonuses payable by
IFC to Charles P. Bell, Jr., W. David Jenkins, Dianna Seaborn, and Stuart
Mitchell (together with Harvey, "Executive Employees") were excluded from the
IFC Assumed Liabilities; and
WHEREAS, Sellers have agreed to assign, and the Purchaser Parties have
agreed to assume, all of IFC's rights and obligations under the employment
agreements between IFC and Telecapital, as the case may be, and the Executive
Employees, including without limitation the obligation to pay the "stay put"
bonuses thereunder and the obligation to pay for Harvey's limited
-1-
<PAGE> 2
partnership unit in Telecapital but excluding the right to receive and acquire
Harvey's limited partnership interest in Telecapital (which shall be redeemed
and cancelled by Telecapital, without any Purchaser Party acquiring any interest
therein); and
WHEREAS, the Executive Employees have agreed to certain modifications
to their respective employment agreements, to be effective upon the closing of
the transactions under the Agreement on the date hereof; and
WHEREAS, the parties desire to amend the Agreement to reflect the
foregoing;
NOW, THEREFORE, in consideration of the foregoing premises, the
execution of various documents simultaneously herewith by IFC, Telecapital, the
Purchaser Parties, and the Executive Employees, and the mutual covenants
contained herein, Sellers and the Purchaser Parties agree that the Agreement is
hereby amended as follows:
1. Capitalized Terms. Each capitalized term used in this Amendment which is
not defined herein shall have the defined meaning set forth in the Agreement.
2. Amendments to Purchase Price.
(a) Section 2.2(a)(i) of the Agreement is hereby amended to read as
follows:
(i) At the Closing the Purchaser Parties shall pay to IFC cash in an
amount equal to $33,834,585 in immediately available funds by
wire transfer to an account designated by IFC.
(b) The first sentence of Section 2.2(a)(ii) of the Agreement is hereby
amended to read as follows:
-2-
<PAGE> 3
(ii) The Purchaser Parties shall deliver a convertible promissory
note (the "IFC Note") in the principal amount of $ 27,685,509
convertible into the number of shares of common stock, par value $.05
per share ("Common Stock"), of Parent which results from dividing the
principal amount plus accrued interest by the average closing sales
prices (adjusted for any stock splits, stock dividends,
reclassification, reorganization or similar event during the
applicable time period) for the Common Stock as reported on the Nasdaq
National Market System for the five (5) trading days immediately
preceding the effective date of the Registration Statement.
The remainder of Section 2.2(a)(ii) shall remain unchanged.
(c) Section 2.2(b)(i) of the Agreement is hereby amended to read as
follows:
(i) At the Closing the Purchaser Parties shall pay to Telecapital
cash in an amount equal to $9,819,544 in immediately available funds
by wire transfer to an account designated by Telecapital.
(d) The first sentence of Section 2.2(b)(ii) of the Agreement is
hereby amended to read as follows:
(ii) The Purchaser Parties shall deliver a convertible promissory
note (the "Telecapital Note") in the principal amount of $8,036,837,
convertible into the number of shares of common stock, par value $.05
per share ("Common Stock"), of Parent which results from dividing the
principal amount plus accrued interest by the average closing sales
prices (adjusted for any stock splits, stock dividends,
reclassification, reorganization or similar event during the
applicable time period) for the Common Stock as reported on the Nasdaq
National Market System for the five (5) trading days immediately
preceding the effective date of the Registration Statement.
The remainder of Section 2.2 (b)(ii) shall remain unchanged.
3. Interpretation. The Amendments made hereby shall be considered an
integral part of the Agreement.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
INDEPENDENCE FUNDING COMPANY, LLC
By: /s/ B. Russ Smith
--------------------------------------
Name: B. Russ Smith
Title: Chief Executive Officer
TELECAPITAL, L.P.
By: Telecapital Corp., General Partner
By: /s/ B. Russ Smith
--------------------------------------
Name: B. Russ Smith
Title: Chief Executive Officer
AMRESCO INDEPENDENCE
FUNDING, INC.
By: /s/ Randolph Brown
--------------------------------------
Name: Randolph Brown
Title: Chairman of the Board
AMRESCO COMMERCIAL
FINANCE, INC.
By: /s/ Randolph Brown
--------------------------------------
Name: Randolph Brown
Title: Vice President
AMRESCO, INC.
By: /s/ Randolph Brown
--------------------------------------
Name: Randolph Brown
Title: President B Commercial Finance
-4-
<PAGE> 5
[The Registrant hereby agrees to provide supplementally a copy of any schedule
omitted from the Asset Purchase Agreement, as amended by this Amendment No. 1 to
Asset Purchase Agreement, to the Commission upon request.]
-5-
<PAGE> 1
EXHIBIT 4.5
REGISTRATION AGREEMENT
This Agreement (the "Agreement") is made and entered into as of June
11, 1998, by and among AMRESCO, INC., a Delaware corporation with its principal
executive offices located at 700 North Pearl Street, Suite 2400, LB 342, Dallas,
Texas 75201 (the "Company"), INDEPENDENCE FUNDING COMPANY, LLC, a Texas limited
liability company ("IFC"), with its principal offices at 3010 LBJ Freeway, Suite
930, Dallas, Texas 75234, TELECAPITAL, L.P., a Delaware limited partnership
("Telecapital"), with its principal offices at 3010 LBJ Freeway, Suite 930,
Dallas, Texas 57234, and the other persons and entities who have executed this
Agreement.
WHEREAS, the Company has issued or will issue to IFC and Telecapital
shares of Common Stock (as hereinafter defined); and
WHEREAS, said shares of Common Stock have been or will be issued to IFC
and Telecapital without registration or qualification under the Securities Act
of 1933, as amended, or any other applicable securities laws;
WHEREAS, the Company is obligated to file a Registration Statement (as
hereinafter defined), by June 21, 1998, to provide for the registration and/or
qualification of the sale of said shares of Common Stock upon the terms
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"Accredited Investor" shall have the meaning set forth for such term
under Rule 501 of Regulation D promulgated under the Securities Act.
"Business Day" shall mean a day (other than a Saturday or Sunday) on
which commercial banks in the State of Texas are open for the general
transaction of business.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean the $.05 par value per share common stock of
the Company.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, or any federal statute or code which is a successor thereto.
<PAGE> 2
"Holder(s)" shall mean the persons and entities who may hold
Registrable Shares but only during the time period within which they hold such
Registrable Shares.
"Register, Registered and Registration" shall mean a registration
effected by filing a registration statement in compliance with the Securities
Act and the declaration or ordering by the Commission of the effectiveness of
such registration statement.
"Registrable Shares" shall mean the numbers of shares of Common Stock
held by IFC, Telecapital and any Accredited Investors receiving such shares in a
distribution (a "Distribution") pursuant to a distribution plan adopted by IFC
or Telecapital or by a member or partner of IFC or Telecapital, including,
without limitation, Harbourton Holdings, L.P., Preserve General, L.P., Preserve
Capital, L.P., Telecapital Corp., or Telecapital, L.P., which shares were issued
by the Company to IFC and Telecapital in connection with the Transaction. As to
any particular Registrable Shares, such Registrable Shares will cease to be
Registrable Shares when they are no longer beneficially owned by IFC,
Telecapital or an Accredited Investor receiving such shares in a Distribution.
"Registration Period" shall mean the period commencing with the
calendar month during which the Registration Statement is declared effective by
the Commission and ending on the earlier of (i) the sale by the Holders of all
the Registrable Shares (it being understood that the disposition of Registrable
Shares to an Accredited Investor in a Distribution is not a sale), or (ii) the
time when all such Registrable Shares are eligible to be sold (x) pursuant to
subparagraph (k) of Rule 144 promulgated under the Securities Act or (y) in a
single transaction pursuant to Rule 144, or any successor thereto.
"Registration Statement" shall mean the registration statement (No.
333-57635) filed by the Company on June 24, 1998.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any federal statute or code which is a successor thereto.
"Transaction" shall mean the sale and purchase and other related
transactions contemplated by that certain Asset Purchase Agreement dated June 1,
1998, by and between the Company, AMRESCO Independence Funding Co., AMRESCO
Commercial Lending Corp., IFC and Telecapital.
ARTICLE II
AGREEMENTS IN RESPECT OF THE REGISTRABLE SHARES
SECTION 2.1 AGREEMENT TO REGISTER. Upon the terms and conditions and
subject to the limitations hereinafter set forth, the Company hereby agrees to
file the Registration Statement by June 21, 1998 and to use commercially
reasonable efforts to cause the Registration Statement to become effective as
soon as practicable and to remain effective throughout the Registration Period.
-2-
<PAGE> 3
SECTION 2.2 SALES OF REGISTRABLE SHARES. Holders agree that all sales
or other dispositions of Registrable Shares will be made by them in compliance
with all applicable laws, including, without limitation, federal and state
securities laws. In connection with each such sale or disposition, the Holders
agree to certify to the Company such compliance. Nothing contained in this
Section 2.2 shall obligate any Holder to assume or perform any of the
obligations of the Company under Section 2.3 hereof.
SECTION 2.3 REGISTRATION PROCEDURES. The Company will:
(a) if necessary, as determined by counsel to the Company, prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement current and effective throughout the
Registration Period;
(b) furnish to each Holder who effects sales of Registrable Shares
pursuant to the Registration Statement such number of copies of a prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the sale or other
disposition of the Registrable Shares by such Holder, and promptly furnish to
each Holder notice of any stop order or similar notice issued by the Commission
or state agency charged with the regulation of securities;
(c) use commercially reasonable efforts to register or qualify the
Registrable Shares under state blue sky or other state securities laws to enable
the Holders to consummate the public sale of the Registrable Shares owned by
such Holders; provided, however, that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not at the time so
qualified or to take any action which would subject it to service of process in
suits other than those arising out of the offer or sale of Registrable Shares in
any jurisdiction where it is not at the time so subject; provided, further, that
in no event shall the Company be obligated to register or qualify the
Registrable Shares under state blue sky or other state securities laws if such
registration or qualification cannot be effected without undue burden or expense
to the Company, as determined by the Board of Directors of the Company;
(d) notify each Holder of Registrable Shares at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in the Registration Statement or any document incorporated therein by reference
contains an untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein not misleading;
(e) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission; and
(f) cause all Registrable Shares to be sold to be listed on each
securities exchange on which the Common Stock may hereafter be listed.
-3-
<PAGE> 4
SECTION 2.4 LIMITATIONS ON SALES.
(a) A Holder may not effect a sale of Registrable Shares to be made
pursuant to the Registration Statement except in accordance with the terms of
this Agreement.
(b) No Holder may publicly offer or sell Registrable Shares prior to
the effectiveness of the Registration Statement, except pursuant to Rule 144 or
Rule 145 promulgated under the Securities Act.
(c) Subject to Section 2.2 above, this Agreement shall not preclude a
Holder from effecting a sale of Registrable Securities in a transaction not
involving a public offering.
SECTION 2.5 COOPERATION OF PROSPECTIVE SELLERS.
(a) Each Holder electing to participate in a Registered sale pursuant
to this Agreement agrees to promptly furnish to the Company such information as
the Company may reasonably require from such Holder in connection with the
Registration Statement or any amendment or supplement thereto.
(b) Failure of a Holder to furnish the information described in Section
2.5(a), after reasonable opportunity to cure, shall relieve the Company from any
obligation to Register the Registrable Shares held by such Holder but shall not
affect the obligations of the Company under this Agreement to Holders who timely
furnish such information unless, in the opinion of counsel to the Company, such
failure impairs or may impair the legality of the Registration Statement or the
underlying offering.
(c) The Holders may not (until further notice) effect sales of
Registrable Shares after receipt of telegraphic or written notice from the
Company of (i) the issuance of any stop order or similar notice issued by the
Commission or any state agency charged with the regulation of securities or (ii)
the Company's intention to amend, correct or update the Registration Statement
or any prospectus contained therein (which amendment, correction or update shall
be effected as promptly as is reasonably practicable). Upon the withdrawal of
such stop order or similar notice or the effectiveness of such amendment,
correction or update, the Company will notify Holders of the date as of which
sales may once again be made.
(d) The Company shall provide Holders with notice of the expiration of
the Registration Period whereupon the Holders shall discontinue sales of shares
pursuant to the Registration Statement. Such notice shall indicate the Company's
intention to remove from Registration any Registrable Shares covered by such
Registration Statement which remain unsold, if any.
SECTION 2.6 EXPENSES OF REGISTRATION AND REGISTERED SALES. All expenses
(other than any discounts and commissions incurred by Holders in effecting any
sales of Registrable Shares pursuant to the Registration Statement), including,
without limitation, all registration and filing fees,
-4-
<PAGE> 5
printing and engraving expenses, expenses of compliance with blue sky laws,
transfer agent fees, fees and disbursement of counsel to the Company, and
expenses of any audits incidental to or required by any such registration, shall
be borne by the Company; provided, that, discounts and commissions attributable
to sales by a Holder shall be borne by such Holder; provided, further, that the
fees of any attorneys, accountants or other professionals retained by Holders or
any of them shall be paid by the Holder or Holders retaining any such
professionals.
SECTION 2.7 TRANSFER OF RIGHTS UNDER THIS AGREEMENT. Without the prior
written consent of the Company, the rights granted Holders in this Agreement are
not transferable or otherwise assignable except by will or by operation of law.
SECTION 2.8 DELAY OF REGISTRATION. Holders shall have no right to take
any action to restrain, enjoin or otherwise delay any Registration or any sale
pursuant to the Registration Statement as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Agreement or any other agreement relating to any Registration or any sale
pursuant to the Registration Statement.
SECTION 2.9 EXECUTION OF AGREEMENT. Prior to selling any Registrable
Shares pursuant to the Registration Statement, each Holder who is not then a
signatory to this Agreement must sign an Addendum to this Agreement (in
substantially the form attached hereto as Exhibit A) whereby such Holder agrees
to abide and be bound by the terms of this Agreement.
SECTION 2.10 TERMINATION. The rights of Holders to sell Registrable
Shares pursuant to the terms of this Agreement shall terminate at the expiration
of the Registration Period. This Agreement shall automatically terminate in the
event that the Asset Purchase Agreement, dated June 1, 1998, by and between the
Company, AMRESCO Independence Funding Co., AMRESCO Commercial Lending Corp., IFC
and Telecapital is terminated.
SECTION 2.11 ADDITIONAL SHARES. It is expressly acknowledged and agreed
by the parties to this Agreement that the Company, in its sole discretion, may
at any time hereafter agree to Register shares of Common Stock held by any
person or entity and include such shares of Common Stock in a Registration,
including, without limitation, the Registration contemplated by the Registration
Statement.
SECTION 2.12 DEREGISTRATION OF SHARES AT THE REQUEST OF HOLDERS. If,
during the term of this Agreement, a Holder shall request that Registrable
Shares held by such Holder be removed from Registration, the Company shall
remove such Registrable Shares from Registration at the earliest practicable
date and such Holder's right to require the Registration of such Registrable
Shares shall terminate.
-5-
<PAGE> 6
ARTICLE III
INDEMNIFICATION
SECTION 3.1 INDEMNIFICATION.
(a) The Company will indemnify each Holder who is a signatory to this
Agreement requesting or joining in a Registration, each officer, director, agent
or partner thereof, and each person, if any, who controls any thereof within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and each underwriter (within the meaning of the Securities Act) of the
securities so registered, and their respective successors (collectively,
"Indemnitees"), against all claims, losses, damages and liabilities, joint and
several, or actions in respect thereof, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document prepared by or at the direction
of the Company incident to the Registration, qualification or compliance (or in
the Registration Statement or any related registration statement, notification
or the like), including without limitation all documents incorporated therein by
reference or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made, or any
violation of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company or relating to any action or inaction
required of the Company in connection with the Registration, qualification or
compliance, and will reimburse each such Indemnitee for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 3.1(a) shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
to the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission in any such document made in reliance
on and in conformity with information furnished to the Company by such
Indemnitee(s); provided further, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in a prospectus but eliminated or remedied in the amended prospectus on file
with the Commission at the time the Registration Statement becomes effective or
in the amended prospectus filed with the Commission pursuant to Rule 424(b) (a
"424(b) Prospectus"), such indemnity agreement shall not inure to the benefit of
any Indemnitee, if a copy of the 424(b) Prospectus was furnished by the Company
to the Indemnitee, but not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act.
(b) Each Holder who is a signatory to this Agreement requesting or
joining in a Registration will indemnify the Company and its officers and
directors and its legal counsel, and each person, if any, who controls any
thereof within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each underwriter (within the meaning of the Securities
Act) of the securities so registered, and their respective successors against
all claims, losses, damages and
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<PAGE> 7
liabilities, joint and several, or actions in respect thereof, arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document incident to the
Registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) of a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made and
will reimburse the Company and each other person indemnified pursuant to this
Section 3.1(b) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that this Section 3.1(b) shall apply
only if (and only to the extent that) such statement or omission was made in
reliance upon and in conformity with written information (including, without
limitation, written negative responses to inquiries) furnished to the Company by
such Holder (or any shareholder, partner or member of such Holder) expressly for
use in the Registration Statement (or any amendment or supplement thereto) or
any prospectus (or any amendment or supplement thereto) used in connection
therewith.
(c) Each party entitled to indemnification hereunder (the "Indemnified
Party") shall give notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
reasonably satisfactory to the Indemnified Party, and the Indemnified Party may
participate in such defense at such party's expense, and provided, further, that
if the Indemnified Party reasonably determines that a conflict of interest
exists such that it is advisable for the Indemnified Party to be represented by
separate counsel or that, upon advice of counsel, there may be legal defenses
available to it which are different from or in addition to those available to
the Indemnifying Party, then the Indemnifying Party shall not be entitled to
assume such defense and the Indemnified Party shall be entitled to separate
counsel at the Indemnifying Party's expense, and provided, further, that the
omission by any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Article III except
to the extent that the omission is materially prejudicial to the ability of the
Indemnifying Party to defend. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of an unconditional release from all liability in
respect to such claim or litigation.
(d) If the indemnification provided for in this Article III is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to herein,
then the Indemnifying Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, liability, claim,
damage or expense, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the
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Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunities to correct or prevent such
statement or omission.
(e) The indemnity and contribution provided herein shall be in addition
to, and not in lieu of, any other liability that one party may have to another.
(f) The obligation of the Company and the Holders under this Article
III shall survive the completion of any offering of Registrable Shares pursuant
to this Agreement and the Registration Statement, or otherwise.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 AMENDMENT. This Agreement shall not be amended without the
written consent of Holders of at least 51% of the then Registrable Shares.
SECTION 4.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH , THE INTERNAL LAWS OF THE STATE OF TEXAS AND,
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF. EACH OF THE PARTIES
HERETO IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF TEXAS AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING OR JUDGMENT RELATING TO OR
ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. SERVICE
OF PROCESS IN CONNECTION WITH ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE SERVED
ON EACH PARTY HERETO ANYWHERE IN THE WORLD BY THE SAME METHODS AS ARE SPECIFIED
FOR THE GIVING OF NOTICES UNDER THIS AGREEMENT. EACH OF THE PARTIES HERETO
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING AND TO THE LAYING OF VENUE IN SUCH COURT. EACH PARTY HERETO
IRREVOCABLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN SUCH COURTS AND IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors (including any corporation into which the Company
is merged or with which it is consolidated) and assigns, heirs, executors and
administrators of the parties hereto.
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SECTION 4.4 NOTICES, ETC. All notices or other communications required
or permitted hereunder shall be in writing and shall be delivered personally, or
sent by facsimile, sent by certified, registered or express air mail, postage
prepaid, or sent by a reputable overnight courier service, and shall be deemed
given when so delivered personally or by facsimile, if sent by certified or
registered mail, three (3) Business Days after the date of mailing, or if sent
by overnight courier or express air mail, one (1) Business day after being sent,
as follows:
If to the Company: AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201
Telephone: (214)953-7700
Facsimile: (214)953-7757
Attention: Randolph E. Brown
With a copy to: AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201
Telephone: (214)953-7700
Facsimile: (214)953-7757
Attention: General Counsel
If to IFC or Telecapital: Independence Funding Company, LLC
Telecapital, L.P.
c/o Harbourton Enterprises
33 Witherspoon Street
Princeton, New Jersey 08542
Telephone: (609)924-4001
Facsimile: (609)924-4155
Attention: Managing Partner
and: Harbourton Holdings, L.P.
c/o Mills & Lynn Enterprises
1205 Pacific Avenue
Suite 203, 2nd Floor
Santa Cruz, California 95060
Telephone: (408)458-6000
Facsimile: (408)458-1421
Attention: David W. Mills
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With a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: (973)597-2500
Facsimile: (973)597-2400
Attention: Allen B. Levithan, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
SECTION 4.5 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable, the intent of the parties, and the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
SECTION 4.6 TITLES AND SUBTITLES. The titles and subtitles of this
Agreement are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement.
SECTION 4.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 4.8 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed themselves or by their respective representatives thereunto duly
authorized as of the day and year first above written.
AMRESCO, INC.
By: /s/ Randolph Brown
-----------------------------------
Name: Randolph Brown
------------------------------
Title: President-Commercial Finance
-----------------------------
INDEPENDENCE FUNDING COMPANY, LLC,
a Texas limited liability company
By: /s/ B. Russ Smith
-----------------------------------
Name: B. Russ Smith
------------------------------
Title: CEO
-----------------------------
TELECAPITAL, L.P.,
a Delaware limited partnership
By: Telecapital Corp.
By: /s/ B. Russ Smith
--------------------------------
Name: B. Russ Smith
---------------------------
Title: CEO
--------------------------
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<PAGE> 1
EXHIBIT 5.1
July 16, 1998
AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
Re: Registration on Form S-3 of 1,293,701 shares of Common Stock,
par value $0.05 per share, of AMRESCO, INC.
Gentlemen:
I am general counsel of AMRESCO, INC., a Delaware corporation (the
"Company"), in connection with the registration and sale of up to 1,293,701
shares of Common Stock, par value $0.05 per share, of the Company (the "Shares")
to be sold by the Selling Shareholders described in the Prospectus constituting
a part of the Registration Statement on Form S-3 to which this opinion is an
exhibit (the "Selling Shareholders") following conversion of the Company's
Convertible Promisory Note to be issued by the Company to Independence Funding
Company, LLC and the Company's Convertible Promissory Note to be issued by the
Company to Telecapital, L.P. (collectively, the "Notes").
I have examined such documents, records and matters of law as I have
deemed necessary for purposes of this opinion. Based on the foregoing, I am of
the opinion that the Selling Shareholders' Shares are duly authorized and, when
issued in accordance with the terms of the Notes and sold by the Selling
Shareholders as described in the Prospectus contained in the Company's
Registration Statement on Form S-3 to which this opinion is an exhibit, will be
validly issued, fully paid and nonassessable.
In rendering the foregoing opinion, I have relied as to certain factual
matters upon certificates of officers of the Company, the Selling Shareholders
and public officials, and I have not independently checked or verified the
accuracy of the statements contained therein.
This opinion supersedes in its entirety the opinion with respect to
1,180,221 shares of Common Stock dated June 24, 1998.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Company's Registration Statement on Form S-3 relating to the Shares and any
amendments thereto filed by the Company to effect registration of the Shares
under the Securities Act of 1933, as amended, and to the reference to me under
the caption "Legal Matters" in the Prospectus constituting a part of such
Registration Statement.
Very truly yours,
/s/ L. Keith Blackwell
L. Keith Blackwell
General Counsel
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Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment No.
1 to Registration Statement No. 333-57635 of AMRESCO, INC. on Form S-3 of
our report dated February 2, 1998, appearing in the Annual Report on Form 10-K
of AMRESCO, INC. for the year ended December 31, 1997 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Dallas, Texas
July 16, 1998
