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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1998
REGISTRATION NO. 333-62145
================================================================================
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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COPIES TO:
ROBERT J. GRAMMIG STEVEN C. DUPRE
HOLLAND & KNIGHT LLP CARLTON, FIELDS, WARD, EMMANUEL,
400 NORTH ASHLEY DRIVE SMITH & CUTLER, P.A.
SUITE 2300 BARNETT TOWER
TAMPA, FLORIDA 33602 P.O. BOX 2861
(813) 227-8500 ST. PETERSBERG, FLORIDA 33731
(813) 821-7000
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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. [ ]
------------------------------
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.
1,804,441 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.
_____________________
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.
_____________________
The date of this Prospectus is September 3, 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.
________________________
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
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 15
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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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 and information 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
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
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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; Commission File No. 001-11599), (ii) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998 (filed May 5, 1998;
Commission File No. 001-11599), (iii) Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (filed August 14, 1998; Commission File No. 001-
11599), (iv) Current Report on Form 8-K dated August 19, 1998 (filed August 21,
1998; Commission File No. 001-11599) and (v) 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; Commission File No. 001-11599).
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, home equity lending, 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 five different business lines: asset
management, commercial mortgage banking, residential mortgage banking,
commercial finance and home equity lending. 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.
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.
HOME EQUITY LENDING
Through AMRESCO Residential, the Company originates, acquires,
warehouses, services and securitizes conventional, nonconforming home equity
mortgage loans. Prior to July 1998, this business line was known as the
Company's residential mortgage banking line of business.
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 home equity mortgage loans through portfolio
acquisitions, correspondent lending, wholesale broker operations and various
retail channels, including telemarketing, direct mail and retail 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 home equity 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 July 17, 1998, the Company completed the acquisition (the
"IFC/Telecapital Acquisition") of substantially all of the assets of
Independence Funding Company, LLC ("IFC") and Telecapital, L.P.
("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.
RESIDENTIAL MORTGAGE BANKING
On August 11, 1998, pursuant to the MIC Merger Agreement, the Company
acquired Mortgage Investors Corporation, a residential mortgage company, and
MSPI, Inc. (formerly known as Marketing Solution Publications, Inc.), an
affiliated company of Mortgage Investors Corporation (unless the context
otherwise requires, such entities are collectively referred to herein as
"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 proceeds and reduce accumulation risk. Pursuant to
the MIC Merger Agreement, the Company acquired MIC for an initial payment of
approximately $2.6 million in cash and 1,804,441 shares of the Company's Common
Stock. Additionally, the Company will pay an annual earnout over a three-year
period, the total of which is not to exceed $105 million. At least 82% in
value of each earnout payment will consist of the Company's Common Stock. The
activities conducted by MIC have become the Company's fifth line of business,
known as "Residential Mortgage Banking." See"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, home
equity lending, 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. See
"The Company - Residential Mortgage Banking." 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 home equity lending,
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
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 and other
loans on
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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 home equity 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 June 30, 1998, the Company's aggregate
investment in Subordinated Certificates was approximately $392.8 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 home equity 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. From time to time, the Company may
utilize insurance policies issued by monoline insurance companies to provide
the credit enhancement necessary to obtain investment grade ratings for home
equity mortgage-backed and commercial loan-backed securities issued in
securitization transactions. 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 home equity
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 home equity lending, commercial mortgage banking, residential
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 home equity 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.
Home Equity Lending. The Company recently has encountered increased
competition in the market for conventional, nonconforming home equity 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 home
equity 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.
Residential Mortgage Banking. The Company has recently engaged, through
MIC, in the residential mortgage banking business. There are numerous
competitors in the residential mortgage banking business, certain of which are
larger and have access to greater financial resources and lower costs of
capital than the Company.
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 READINESS
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 Issue". As the year 2000
approaches, such systems may recognize a date using "00" as the year 1900
rather than the year 2000 and be unable to accurately process certain date-
based information.
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<PAGE> 14
The Company has reviewed its mission-critical computer systems in order
to evaluate necessary modifications for Year 2000 readiness. The Company does
not anticipate any material difficulties in achieving Year 2000 readiness with
respect to the Company's mission-critical computer systems. Furthermore, the
Company does not anticipate that it will incur material expenditures in
connection with any modifications necessary to achieve Year 2000 readiness. In
addition, the Company is in the process of communicating with others with whom
it does significant business to determine their Year 2000 readiness status and
the extent to which the Company could be affected by any third party Year 2000
readiness issues. Although the Company has not received responses from all
third parties with whom it does business, the Company does not anticipate that
it will be materially affected by any third party Year 2000 readiness issues.
However, there can be no assurance that the systems of the Company or those 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
forward-looking 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.
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> 15
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 registration of the shares of Common Stock
offered for resale hereby is pursuant to the Registration Rights Agreement.
Pursuant to the Registration Rights 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
Rights Agreement" for a more complete description of the Registration Rights
Agreement.
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 (*)
--------------------------------------- ----------------------- -------------------- -------------------
<S> <C> <C> <C>
William Edwards . . . . . . . . . . . 0 1,472,593 0
Lynn Rushmore . . . . . . . . . . . . 0 33,366 0
Jeffrey J. Crilley . . . . . . . . . . 0 83,414 0
Lawrence J. Fisher . . . . . . . . . 0 16,683 0
James A. McMahan . . . . . . . . . . 0 16,683 0
James J. Schatz . . . . . . . . . . . 0 33,366 0
Derek Van Hoose . . . . . . . . . . . 0 83,414 0
Edwin Hill . . . . . . . . . . . . . 0 33,366 0
Raymond James & Associates, Inc. . . ** 31,556 **
--- ---------- ---
TOTAL . . . . . . . . . . . . . . . . 0 1,804,441 0
=== ========= ===
</TABLE>
- --------------------
* Assumes all shares held by such Selling Stockholder and registered
hereby will be offered and sold.
** Raymond James & Associates, Inc. makes a market in the Common Stock and
trades the Common Stock in the ordinary course of its business.
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<PAGE> 16
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 August 10, 1998, the Company had issued and outstanding
44,243,668 shares of Common Stock and no shares of Preferred Stock. As of such
date, there were approximately 2,646 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
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> 17
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> 18
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
17
<PAGE> 19
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 RIGHTS AGREEMENT
In connection with the MIC Merger Agreement, the Company entered into
the Registration Rights Agreement dated August 11, 1998, whereby the Company
agreed to register shares of the Common Stock to be issued to the Selling
Stockholders. Pursuant to the Registration Rights Agreement, the Company
agreed to file this Registration Statement and to use commercially reasonable
efforts to cause the Registration Statement to become effective not later than
120 days after the closing date of the MIC Merger Agreement or as promptly as
practicable thereafter. The rights of the Selling Stockholders under the
Registration Rights Agreement cease to apply on the earliest of (i) the time
when all such shares have been effectively registered under the Securities Act
and sold or distributed pursuant to an effective registration statement
covering them, (ii) the time when all such shares are eligible, in the opinion
of counsel to the Company, to be sold or distributed immediately pursuant to
Rule 144 (within the then-applicable volume limitation pursuant to Rule 144(e))
or Rule 144(k), (iii) the date on which each party to the Registration Rights
Agreement agrees in writing to such termination and (iv) the fourth anniversary
of the closing date of the MIC Merger Agreement.
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<PAGE> 20
OTHER MATTERS
The Common Stock is quoted as a national market security by the Nasdaq
Stock Market, Inc. The Common Stock is identified on 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; (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; and (iv) exchange distributions in
accordance with applicable rules. 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 distributions of the shares of Common Stock covered
hereby or otherwise, the Selling Stockholders may enter into hedging
transactions with broker-dealers. In connection with such transactions,
broker-dealers may engage in short sales of the shares of Common Stock covered
hereby in the course of hedging the positions they assume with the Selling
Stockholders. The Selling Stockholders may also sell shares of Common Stock
covered hereby short and redeliver such shares to close out such short
positions. The Selling Stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-
dealer of shares of Common Stock covered hereby, which the broker-dealer may
resell or otherwise transfer. The Selling Stockholder may also loan or pledge
shares of the Common Stock covered hereby to a broker-dealer and the broker-
dealer may sell the shares so loaned, or upon a default the broker-dealer may
effect sales of the pledged shares.
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 Rights Agreement provides that the Company will
indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act. The Selling Stockholders may agree to
indemnify any broker-dealer or agent that participates in transactions
involving sales of shares of Common Stock covered hereby against certain
liabilities, including liabilities under the Securities Act. The Registration
Rights Agreement also provides that costs, fees and expenses in connection with
the registration of the shares of Common Stock will be borne by the Company,
and that commissions and discounts, if any, attributable to the sale of the
shares of Common Stock will be borne by the Selling Stockholders.
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.
19
<PAGE> 21
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 July 28, 1998, Mr. Blackwell owned beneficially 32,295 shares of Common
Stock (excluding 12,265 unvested shares allocated under the Company's
restricted stock plan) and held options to purchase 213,275 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.
20
<PAGE> 22
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.
"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 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, which was converted 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.
"MASTER SERVICER" means an entity which provides administrative
services with respect to securitized pools of mortgage-backed securities.
"MIC", unless the context otherwise requires, means Mortgage Investors
Corporation, an Ohio corporation, and MSPI, Inc., formerly known as Marketing
Solution Publications, Inc., a Michigan corporation and an affiliated company
of Mortgage Investors Corporation.
21
<PAGE> 23
"MIC MERGER AGREEMENT" means the Agreement and Plan of Merger dated July
14, 1998 by and among AMRESCO, INC., MIC Acquisition, Inc., Mortgage Investors
Corporation, William Edwards and the other stockholders listed on the signature
page thereto.
"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.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated August 11, 1998 by and among AMRESCO, INC., William Edwards, Lynn
Rushmore, Jeffrey Crilley, Larry Fisher, Jim McMahan, Jim Shatz, Derek Van
Hoose and Edwin Hill.
"REVOLVING LOAN AGREEMENT" means the Credit Agreement dated as of August
12, 1998 among AMRESCO, INC., NationsBank, N.A., as administrative agent,
Credit Suisse First Boston, as syndication agent, and the lending institutions
and funds 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 9 7/8% 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 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, which was converted into
shares of Common Stock as described therein.
"VA" means the United States Department of Veteran Affairs.
"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.
22
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . $10,514
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $68,014
=======
</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> 25
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 Rights Agreement, 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
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
2.1** Agreement and Plan of Merger dated July 14, 1998 by and among AMRESCO, INC., MIC
Acquisition, Inc., Mortgage Investors Corporation, William Edwards and the other
stockholders listed on the signature page thereto.
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 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.
4.4** Registration Rights Agreement, dated as of August 11, 1998, by and among AMRESCO, INC.,
William Edwards, Lynn Rushmore, Jeffrey Crilley, Larry Fisher, Jim McMahan, Jim Shatz,
Derek Van Hoose and Edwin Hill.
4.5 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.
10.1* Credit Agreement, dated as of August 12, 1998 among AMRESCO, INC., NationsBank, N.A., as
administrative agent, Credit Suisse First Boston, as syndication agent, and the lending
institutions and funds which are parties thereto from time to time.
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.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth
II-2
<PAGE> 26
in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S--3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission 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 therein, 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.
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<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this Pre-
Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on the 3rd day of September, 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 Pre-
Effective Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities indicated and on the 3rd day of September,
1998:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ ROBERT H. LUTZ, JR.* Chairman of the Board and
- ---------------------------- Chief Executive Officer
Robert H. Lutz, Jr.
/s/ ROBERT L. ADAIR III* Director, President and
- ---------------------------- Chief Operating Officer
Robert L. Adair III
/s/ BARRY L. EDWARDS* Executive Vice President and
- ---------------------------- Chief Financial Officer
Barry L. Edwards (Principal Financial Officer)
/s/ JAMES P. COTTON, JR.* Director
- ----------------------------
James P. Cotton, Jr.
/s/ RICHARD L. CRAVEY* Director
- ----------------------------
Richard L. Cravey
/s/ GERALD E. EICKHOFF* Director
- ----------------------------
Gerald E. Eickhoff
/s/ SIDNEY E. HARRIS* Director
- ----------------------------
Sidney E. Harris
/s/ AMY J. JORGENSEN* Director
- ----------------------------
Amy J. Jorgensen
/s/ BRUCE W. SCHNITZER* Director
- ----------------------------
Bruce W. Schnitzer
/s/ 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> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
2.1** Agreement and Plan of Merger dated July 14, 1998 by and among AMRESCO, INC., MIC
Acquisition, Inc., Mortgage Investors Corporation, William Edwards and the other
stockholders listed on the signature page thereto.
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 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.
4.4** Registration Rights Agreement, dated as of August 11, 1998, by and among AMRESCO, INC.,
William Edwards, Lynn Rushmore, Jeffrey Crilley, Larry Fisher, Jim McMahan, Jim Shatz,
Derek Van Hoose and Edwin Hill.
4.5 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.
10.1* Credit Agreement, dated as of August 12, 1998 among AMRESCO, INC., NationsBank, N.A., as
administrative agent, Credit Suisse First Boston, as syndication agent, and the lending
institutions and funds which are parties thereto from time to time.
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 10.1
===============================================================================
CREDIT AGREEMENT
DATED AS OF
AUGUST 12, 1998
AMONG
AMRESCO, INC.,
AS BORROWER,
NATIONSBANK, N.A.,
AS ADMINISTRATIVE AGENT,
CREDIT SUISSE FIRST BOSTON,
AS SYNDICATION AGENT,
AND
CERTAIN FINANCIAL INSTITUTIONS AND FUNDS,
AS LENDERS
AS ARRANGED BY
NATIONSBANC MONTGOMERY SECURITIES LLC,
AS LEAD ARRANGER,
AND
CREDIT SUISSE FIRST BOSTON,
AS LEAD ARRANGER
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
ARTICLE I - TERMS DEFINED
<S> <C> <C>
SECTION 1.1. Definitions....................................................................1
SECTION 1.2. Singular and Plural of Definitions............................................25
SECTION 1.3. Substantive Definitions.......................................................25
SECTION 1.4. Money.........................................................................25
SECTION 1.5. Captions; References..........................................................25
SECTION 1.6. Accounting Terms and Determinations...........................................25
ARTICLE II - COMMITMENT
SECTION 2.1. Commitment....................................................................26
SECTION 2.2. Method of Borrowing...........................................................29
SECTION 2.3 Competitive Bid Loans.........................................................32
SECTION 2.4. Additional Guarantors.........................................................36
SECTION 2.5. Fees..........................................................................36
ARTICLE III - TERMS OF THE CREDIT FACILITIES
SECTION 3.1. Notes.........................................................................37
SECTION 3.2. Maturity......................................................................38
SECTION 3.3. Interest Rate.................................................................38
SECTION 3.4. Interest Payments.............................................................38
SECTION 3.5. Conversion of Revolving Credit Advances and
Interest Rate Elections under Term Facility............................39
SECTION 3.6. Payments of Advances; Reduction of Commitment Amount;
Consequential Loss.....................................................41
SECTION 3.7. Schedules on Notes............................................................43
SECTION 3.8. General Provisions as to Payments.............................................43
SECTION 3.9. Application of Payments.......................................................44
SECTION 3.10. Post-Default Interest; Past Due Principal and Interest........................45
SECTION 3.11. Computation of Interest and Fees..............................................45
SECTION 3.12. Lenders' Capital Adequacy.....................................................45
SECTION 3.13. Regulatory Changes; Indemnification for Failure to Pay When Due...............45
SECTION 3.14. Taxes.........................................................................47
SECTION 3.15. EURO Provisions...............................................................49
ARTICLE IV - CONDITIONS TO CLOSING...............................................................50
SECTION 4.1. Conditions To Closing.........................................................50
SECTION 4.2. Conditions To All Advances....................................................52
SECTION 4.3. Conditions to Letters of Credit...............................................52
ARTICLE V - COLLATERAL AND GUARANTIES
SECTION 5.1. Security and Guaranties.......................................................53
SECTION 5.2. Requirements For Assigned Loans...............................................53
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5.3. Requirements for Mortgaged Properties.........................................54
SECTION 5.4. Recording.....................................................................55
SECTION 5.5. Administrative Agent's Discretion.............................................55
SECTION 5.6. Lockbox; Lockbox Account......................................................55
SECTION 5.7. Release of Collateral During Ordinary Course of Business......................56
SECTION 5.8. Deposit of Cash Collateral for Letters of Credit..............................56
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Existence and Power of Borrower and Guarantors................................57
SECTION 6.2. Subsidiaries..................................................................57
SECTION 6.3. Authorization; Contravention..................................................57
SECTION 6.4. Enforceable Obligations.......................................................58
SECTION 6.5. Financial Information.........................................................58
SECTION 6.6. Litigation....................................................................58
SECTION 6.7. ERISA.........................................................................58
SECTION 6.8. Taxes and Filing of Tax Returns...............................................59
SECTION 6.9. Ownership of Assets...........................................................59
SECTION 6.10. Business; Compliance..........................................................60
SECTION 6.11. Licenses, Permits.............................................................60
SECTION 6.12. Compliance with Law...........................................................60
SECTION 6.13. Full Disclosure...............................................................60
SECTION 6.14. Environmental Matters.........................................................60
SECTION 6.15. Purpose of Credit.............................................................61
SECTION 6.16. Governmental Regulations......................................................62
SECTION 6.17. Indebtedness..................................................................62
SECTION 6.18. Insurance.....................................................................62
SECTION 6.19. Solvency......................................................................62
SECTION 6.20. Underwriting and Servicing Procedures.........................................62
SECTION 6.21. Year 2000 Compliance..........................................................62
ARTICLE VII - AFFIRMATIVE COVENANTS
SECTION 7.1. Information From Borrower.....................................................63
SECTION 7.2. Business of Borrower and Guarantors...........................................65
SECTION 7.3. Right of Inspection; Confidentiality and Non-Solicitation.....................65
SECTION 7.4. Maintenance of Insurance......................................................66
SECTION 7.5. Payment of Taxes, Impositions and Claims......................................66
SECTION 7.6. Compliance with Laws and Documents............................................66
SECTION 7.7. Environmental Law Compliance and Indemnity....................................67
SECTION 7.8. Covenant Compliance...........................................................68
SECTION 7.9. Quantity and Quality of Documents.............................................68
SECTION 7.10. Use of Proceeds...............................................................68
SECTION 7.11. Additional Documents..........................................................68
SECTION 7.12. Compliance With Credit and Underwriting Policies..............................68
SECTION 7.13. Appraisals....................................................................69
SECTION 7.14 Year 2000 Compliance..........................................................69
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII - NEGATIVE COVENANTS
SECTION 8.1. Minimum Consolidated Tangible Net Worth.......................................69
SECTION 8.2. Leverage Ratio................................................................69
SECTION 8.3. Interest/Dividend Coverage Ratio..............................................69
SECTION 8.4. Capital Adequacy; Asset Coverage..............................................69
SECTION 8.5. Permitted Debt................................................................70
SECTION 8.6. Limitation on Sale of Properties..............................................71
SECTION 8.7. Permitted Liens...............................................................71
SECTION 8.8. Consolidations, Mergers, Sales of Assets, and Maintenance.....................71
SECTION 8.9. Investments...................................................................72
SECTION 8.10. Distributions.................................................................74
SECTION 8.11. Limitation on Contingent Liabilities..........................................74
SECTION 8.12. Negative Pledge; No Restriction on Dividends..................................74
SECTION 8.13. Transactions with Affiliates..................................................74
SECTION 8.14. Employee Plans................................................................75
SECTION 8.15. Use Violations................................................................75
SECTION 8.16. Exceptions to Covenants.......................................................75
SECTION 8.17. Fiscal Year and Accounting Methods............................................75
SECTION 8.18. Governmental Regulations......................................................75
SECTION 8.19. Treasury Stock................................................................76
ARTICLE IX - DEFAULTS AND REMEDIES
SECTION 9.1. Events of Default.............................................................76
SECTION 9.2. Remedies......................................................................78
SECTION 9.3. Rights of Set-Off.............................................................79
SECTION 9.4. Remedies Cumulative, Concurrent and Non-Exclusive.............................80
SECTION 9.5. No Conditions Precedent to Exercise Remedies..................................80
SECTION 9.6. Release of and Resort to Collateral...........................................81
SECTION 9.7. Waivers.......................................................................81
SECTION 9.8. Discontinuance of Proceedings.................................................81
SECTION 9.9. Power of Attorney.............................................................81
SECTION 9.10. Application of Proceeds.......................................................82
ARTICLE X - AGENTS AND THE LENDERS
SECTION 10.1. Appointment and Authorization of Agents.......................................83
SECTION 10.2. Possession of Instruments by Administrative Agent.............................84
SECTION 10.3. Expenses......................................................................84
SECTION 10.4. Delegation of Duties; Reliance; Consultation..................................84
SECTION 10.5. Limitation of Agents' Liability...............................................85
SECTION 10.6. Default; Collateral..........................................................86
SECTION 10.7. Lenders' Decisions...........................................................87
SECTION 10.8. Limitation of Liability of Lenders...........................................87
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 10.9. Relationship of Lenders......................................................87
SECTION 10.10. Debtor-Creditor Relationship.................................................87
SECTION 10.11. Credit Decisions.............................................................88
SECTION 10.12. Removal of any Agent.........................................................88
SECTION 10.13. Resignation by any Agent.....................................................88
SECTION 10.14. Sharing of Payments and Setoffs..............................................89
SECTION 10.15. Non-Advancing Lenders........................................................89
SECTION 10.16. Benefit of Lenders...........................................................90
SECTION 10.17. Roles of Agents..............................................................90
ARTICLE XI - MISCELLANEOUS
SECTION 11.1. Continuing Agreement.........................................................91
SECTION 11.2. Notices......................................................................91
SECTION 11.3. No Waivers...................................................................91
SECTION 11.4. Expenses; Documentary Taxes; Indemnification.................................91
SECTION 11.5. Amendments and Waivers; Consent to Deviation.................................92
SECTION 11.6. Survival.....................................................................92
SECTION 11.7. Prior Understandings; No Defenses; Release; No Oral Agreements...............92
SECTION 11.8. Limitation on Interest.......................................................93
SECTION 11.9. Invalid Provisions...........................................................93
SECTION 11.10. Assignments and Participations...............................................94
SECTION 11.11. Senior Debt; Borrower Subordination..........................................96
SECTION 11.12. Nonliability of Agent and Lender.............................................96
SECTION 11.13. Construction.................................................................96
SECTION 11.14. APPLICABLE LAW...............................................................97
SECTION 11.15. Submission To Jurisdiction; Service of Process...............................97
SECTION 11.16. JURY TRIAL WAIVER............................................................97
SECTION 11.17. Counterparts.................................................................97
SECTION 11.18. Inconsistent Provisions......................................................97
SECTION 11.19. Non-Waiver of Rights or Remedies.............................................97
SECTION 11.20. Judgment Currency. ..........................................................98
SECTION 11.21. Consolidated Group...........................................................98
SECTION 11.22. Amendment and Restatement/Renewal and Extension..............................99
</TABLE>
iv
<PAGE> 6
SCHEDULES AND EXHIBITS
SCHEDULE I LENDERS AND BORROWER
SCHEDULE II COMMITMENT FEE PERCENTAGE: LIBOR MARGIN
SCHEDULE III CAPITAL ADEQUACY TEST
SCHEDULE IV ASSET COVERAGE REQUIREMENT
SCHEDULE V EXCLUDED SUBSIDIARIES
EXHIBIT A REVOLVING NOTE
EXHIBIT A-1 TERM NOTE
EXHIBIT A-2 COMPETITIVE BID NOTE
EXHIBIT A-3 SWINGLINE NOTE
EXHIBIT B REQUEST FOR ADVANCE
EXHIBIT C FORM OF COMPLIANCE LETTER
EXHIBIT D ASSIGNMENT AND ACCEPTANCE
EXHIBIT E REQUEST FOR COMPETITIVE BID QUOTE
EXHIBIT E-1 INVITATION FOR COMPETITIVE BID QUOTE
EXHIBIT E-2 COMPETITIVE BID QUOTE
v
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of the 12th day of August, 1998,
by and among AMRESCO, INC., a Delaware corporation, as borrower, NationsBank,
N.A., a national banking association, as administrative agent, Credit Suisse
First Boston, as syndication agent, and the lending institutions and funds
designated as "Lenders" on Schedule I hereto (as modified from time to time).
PRELIMINARY STATEMENT
I. NationsBank, N.A. (successor in interest by merger to NationsBank of Texas,
N.A.), as agent, certain of the Lenders, and AMRESCO, INC. and AMRESCO UK
Holdings Limited (the "Third Agreement Borrowers") executed that certain Third
Amended and Restated Loan Agreement (as modified and amended, the "Third Loan
Agreement") dated as of September 30, 1997, wherein certain of the Lenders
agreed to make a revolving credit facility and a term facility available to the
Third Agreement Borrowers in an aggregate amount not to exceed Five Hundred
Fifty Million and No/100 Dollars ($550,000,000).
II. AMRESCO, INC. has requested that Agents and Arrangers (each as herein
defined) arrange a credit facility to replace the credit facility created by the
Third Loan Agreement in order to, in part, (a) increase the aggregate credit
facility to Seven Hundred Thirty-Seven Million Five Hundred Thousand and No/100
Dollars ($737,500,000), with the ability to further increase such credit
facility to Nine Hundred Million and No/100 Dollars ($900,000,000), and (b)
revise certain financial covenants and other provisions set forth in the Third
Loan Agreement. Upon and subject to the terms of this Agreement and each of the
other Loan Documents, Agents and Lenders are willing to replace the credit
facility created by the Third Loan Agreement. Accordingly, in consideration of
the mutual covenants contained herein, Borrower, Guarantors, Agents and Lenders
(each as herein defined) agree as follows:
ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein, have the
following meanings:
Account Debtor means, collectively, the "borrower" and each other obligor,
guarantor or other liable party under any Assigned Loan.
Acquisition means any transaction pursuant to which Borrower or any of its
Subsidiaries, (a) whether by means of a capital contribution or purchase or
other acquisition of stock or other securities or other equity participation or
interest, (i) acquires more than 50% of the equity interests in any Person
pursuant to a solicitation by Borrower or such Subsidiary of tenders of equity
CREDIT AGREEMENT PAGE 1
<PAGE> 8
securities of such Person, or through one or more negotiated block, market,
private or other transactions, or a combination of any of the foregoing, or (ii)
makes any corporation a Subsidiary of Borrower or such Subsidiary, or causes any
corporation, other than a Subsidiary of Borrower or such Subsidiary, to be
merged into Borrower or such Subsidiary (or agrees to be merged into any other
corporation other than a wholly-owned Subsidiary (excluding directors'
qualifying shares) of Borrower or such Subsidiary), or (b) purchases all or
substantially all of the business or assets of any Person or of any operating
division of any Person.
Acquisition Consideration means consideration given or the amount of the
Investment made by Borrower or any Subsidiary of Borrower in an Acquisition,
including, without limitation, (a) capital stock or other securities or equity
so given or invested, plus (b) the fair market value of any cash, property or
services given or invested, plus (c) the amount of any Debt assumed, incurred or
guaranteed by Borrower or any Subsidiary of Borrower in connection with such
Acquisition, to the extent such Debt is included as part of the purchase price
paid in such Acquisition on Borrower's consolidated financial statements.
Additional Term Loans means any and all Term Loans funded after the Closing
Date pursuant to an increase in the Term Facility as contemplated by Section
2.1(c).
Adjusted Asset Amount at any time of determination means the sum of the
value of Borrower's assets on a consolidated basis as shown on a consolidated
balance sheet for Borrower prepared in accordance with GAAP adjusted by the
leverage advance rates therefor as shown on Schedule III attached hereto, as
such schedule may be changed from time to time by Borrower and Required Lenders;
provided, that any asset shown on Borrower's balance sheet prepared in
accordance with GAAP and not included in a line item specifically shown in
Schedule III shall be included in the "New Asset Pool" line item (but subject to
being included in a separate asset category pursuant to the footnote included in
Schedule III).
Adjusted LIBOR Rate shall mean on the applicable Effective Date, with
respect to a LIBOR Rate Advance or LIBOR Rate Portion, a rate per annum equal to
the sum of (a) the quotient of (i) the LIBOR Rate on the applicable Effective
Date, divided by (ii) the remainder of 1.00 minus the LIBOR Reserve Requirement,
if any, on the applicable Effective Date, plus (b) the FDIC Percentage in effect
on the applicable Effective Date, together with any additional impositions,
assessments, fees or surcharges that may be imposed on Administrative Agent or
any Lender (expressed as a percentage), to the extent such impositions,
assessments, fees or surcharges are not reflected in the FDIC Percentage or the
LIBOR Reserve Requirement and are generally imposed on banks with capitalization
and supervisory risk factors comparable to Administrative Agent, plus (c) the
LIBOR Margin.
Adjusted Net Worth means the sum of Consolidated Tangible Net Worth plus
fifty percent (50%) of the outstanding principal balance of Approved
Subordinated Debt.
Administrative Agent means NationsBank, in its capacity as administrative
agent for the Lenders hereunder, or any successor administrative agent pursuant
to Section 10.12 or Section 10.13 or any agreement entered into pursuant to
Section 10.16.
Administrative Fees means all administrative or fronting fees of any kind
to be paid to Administrative Agent as set forth in a separate letter between
Administrative Agent and Borrower.
CREDIT AGREEMENT PAGE 2
<PAGE> 9
Advance means an Advance made by either the Revolving Lenders (including
advances under Competitive Bid Notes and the Swingline Advances) or the Term
Lenders, as applicable, to Borrower under the applicable Credit Facility
pursuant to the terms and conditions of this Agreement.
Affiliate means, as to any Person, any Subsidiary of such Person, or any
Person which, directly or indirectly, controls, is controlled by, or is under
common control with such Person. For the purposes of this definition, "control"
means the possession of the power to direct or cause the direction of management
and policies of such Person, whether through the ownership of voting securities
or other equity interests, by contract or otherwise.
Agents means Administrative Agent and Syndication Agent.
Aggregate Loan Percentage means, with respect to each Lender, the fraction,
expressed as a percentage, obtained by dividing (a) the sum of (i) the aggregate
principal amount outstanding on the date of determination under the Term Note
and/or Revolving Note and/or the Competitive Note payable to such Lender, plus
(ii) such Lender's portion of the Letter of Credit Exposure and Swingline
Advances, divided by (b) the aggregate principal amount outstanding on the date
of determination under the Notes plus the Letter of Credit Exposure.
Agreement means this and all renewals, extensions, modifications,
amendments and rearrangements thereof.
Alternate Currency means (a) British pounds sterling, Canadian dollars,
French francs, Deutsche marks and Japanese yen, and the currency of any other
foreign country agreed to by the Revolving Lenders from time to time or (b) as
to Competitive Bid Loans, any currency selected by Borrower.
Alternate Currency Advance means an Advance which is funded in an Alternate
Currency and bears interest at the Alternate Currency Rate (including, without
limitation, Advances under Competitive Bid Foreign Currency Loans).
Alternate Currency Base Rate means for any Interest Period for each
Alternate Currency Advance, the rate of interest determined by Administrative
Agent at which deposits in the applicable Alternate Currency (except for British
pounds sterling or any other Alternate Currency for which there is not a quote
available on the Telerate Screen) for the relevant Interest Period are offered
based on information presented on the Telerate Screen as of 11:00 A.M. (London
time) on the day which is two (2) Business Days prior to the first day of such
Interest Period; provided, that if at least two such offered rates appear on the
Telerate Screen in respect of such Interest Period, the arithmetic mean of all
such rates (as determined by Administrative Agent) will be the rate used;
provided, further, if (i) the Telerate System ceases to provide the required
quotation, or (ii) with respect to any Alternate Currency Advance made in
British pounds sterling or any other Alternate Currency for which there is not a
quote available on the Telerate Screen, such rate shall be the per annum rate of
interest determined by the arithmetic average (rounded upward, if necessary, to
the nearest .01%) of the respective rates per annum at which deposits in British
pounds sterling or such other Alternate Currency would be offered to each of the
Reference Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period in
an amount approximately equal to the principal amount in British pounds sterling
or such
CREDIT AGREEMENT PAGE 3
<PAGE> 10
other Alternate Currency of the related Alternate Currency Advance to which such
Interest Period is to apply and for a period of time comparable to such Interest
Period.
Alternate Currency Loss has the meaning set forth in Section 3.6(e).
Alternate Currency Option has the meaning set forth in Section 2.2(b).
Alternate Currency Rate shall mean, on the applicable Effective Date with
respect to an Alternate Currency Advance, a rate per annum equal to the sum of
(a) the quotient of (i) the Alternate Currency Base Rate on the applicable
Effective Date, divided by (ii) the remainder of 1.00 minus the LIBOR Reserve
Requirement, if any, on the applicable Effective Date, plus (b) the FDIC
Percentage in effect on the applicable Effective Date, together with any
additional impositions, assessments, fees or surcharges that may be imposed on
Administrative Agent or any Lender (expressed as a percentage), to the extent
such impositions, assessments, fees or surcharges are not reflected in the FDIC
Percentage or the LIBOR Reserve Requirement and are generally imposed on banks
with capitalization and supervisory risk factors comparable to Administrative
Agent, plus (c) the LIBOR Margin.
Applicable Environmental Laws has the meaning set forth in Section 7.7.
Applicable Lending Office means with respect to each Lender, such Lender's
domestic lending office (as designated by such Lender) for Variable Rate
Advances or Variable Rate Portions, and such Lender's Eurodollar lending office
(as designated by such Lender) for LIBOR Rate Advances, LIBOR Rate Portions,
Alternate Currency Advances and Competitive Bid Advances.
Applicable Rate means at any time, (a) with respect to a Variable Rate
Advance or a Variable Rate Portion, a rate per annum equal to the Variable Rate,
(b) with respect to a LIBOR Rate Advance or LIBOR Rate Portion, a rate per annum
equal to the Adjusted LIBOR Rate, and (c) with respect to an Alternate Currency
Advance (other than pursuant to a Competitive Bid Foreign Currency Loan), a rate
per annum equal to the Alternate Currency Rate, in all cases subject to
adjustment as set forth in the first proviso of the definition of Asset Coverage
Requirement.
Approved Subordinated Debt means Debt issued by Borrower which is unsecured
and subordinated to payment of the Credit Facilities and the terms of which
(including, without limitation, the subordination provisions thereof) have been
approved in writing by the Required Lenders, and shall include, without
limitation, (a) the Debt evidenced by notes made pursuant to the terms of that
certain Indenture (the "March Indenture") dated March 1, 1997, executed by and
between Borrower and Bank One, Columbus, N.A., as Trustee, and (b) any other
promissory notes evidencing subordinated debt issued on terms consistent with
those of the March Indenture, provided that (i) Administrative Agent has
received projections from Borrower showing financial covenant compliance
following issuance of such notes; (ii) no Default or Event of Default has
occurred and has not been cured; and (iii) Administrative Agent has approved the
terms for the issuance of such promissory notes, including, without limitation,
the terms regarding subordination of such promissory notes to the Credit
Facilities.
Arrangers means NationsBanc Montgomery Securities LLC and Credit Suisse
First Boston.
Asset Coverage Requirement has the meaning set forth in Section 8.4.
CREDIT AGREEMENT PAGE 4
<PAGE> 11
Asset Coverage Values at any time of determination means an amount equal to
the aggregate asset values obtained after applying approved advance rates to
certain of Borrower's net assets (on a consolidated basis and adjusting for
liens other than Lenders' Liens but excluding all assets of Excluded
Subsidiaries and any Foreign Subsidiary or which are located outside the United
States), as shown on, and using the advance rates shown on, Schedule IV attached
hereto, as such schedule may be changed from time to time by Borrower and
Administrative Agent (except that changes to the advance rates applied shall be
approved by Required Lenders and the addition of new asset categories shall be
subject to a veto of Required Lenders as set forth in Schedule IV); provided,
however, that if and to the extent that the value of retained interests in
securitizations (including without limitation interest only strips, residuals
and other similar items) equals or exceeds forty percent (40%) of the aggregate
asset values used in determining the Asset Coverage Requirement, and any such
excess value is a necessary component of the Asset Coverage Requirement to
support the aggregate outstanding principal balances of the Credit Facilities
and the Letter of Credit Exposure, then, notwithstanding anything to the
contrary in this Agreement or the other Loan Documents, the Applicable Rate
shall automatically be increased by one quarter of one percent (.25%) until such
time as the monthly report calculating the Asset Coverage Requirement delivered
pursuant to Section 7.1(f) indicates that such circumstances no longer exist;
and, provided further, that if and to the extent that the value of retained
interests in securitizations (including without limitation interest only strips,
residuals and other similar types) equals or exceeds fifty percent (50%) of the
aggregate asset values used in determining the Asset Coverage Requirement, then
such excess value shall not be included in the determination of the Asset
Coverage Requirement.
Asset Portfolios means one or more pools or portfolios of (a) performing,
non-performing or under-performing loans, and/or (b) real estate or other assets
acquired in connection with the foreclosure, restructure or settlement of
non-performing or under-performing loans, together with all documents,
instruments, certificates and other information related thereto.
Assigned Loans means all loans or other evidence of indebtedness owned or
hereafter originated or acquired by Borrower or any Guarantor which are not
pledged to secure Debt other than the Credit Facilities to the extent such other
Liens are permitted by Section 8.7.
Assignment and Acceptance has the meaning set forth in Section 11.10.
Authorized Officer means, as to Borrower or any other Person, any of its
Chairman, Vice-Chairman, President, Executive Vice President(s), Chief Financial
Officer, Chief Accounting Officer, Treasurer or Assistant Treasurer, who is duly
authorized by the Board of Directors of such Person to execute the Loan
Documents or any other documents or certificates to be executed by such Person
hereunder or in connection with any Advance or Letter of Credit.
Base Rate means, on any date of determination, the greater of (a) the rate
of interest per annum most recently announced by Administrative Agent as its
prime rate in effect at its principal office automatically fluctuating upward
and downward until and at the time specified in each such announcement without
special notice to Borrower or any other Person, which prime rate may not
necessarily represent the lowest or best rate actually charged to a customer and
(b) the sum of the Federal Funds Rate plus 138 basis points.
Borrower means AMRESCO, INC., a Delaware corporation, and its successors
and assigns.
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Borrowing Date means the date on which an Advance is made under this
Agreement.
Bridge Debt means Debt of Borrower to one or more of the Lenders in an
aggregate amount outstanding at any time not to exceed Seventy-Five Million and
No/100 Dollars ($75,000,000.00), which Debt may be included in the Obligations
and secured by the Collateral, but, if it is secured by the Collateral, shall be
subordinate to the Credit Facilities for certain purposes as set forth in
Section 10.6.
Business Day means (a) for all purposes other than as covered by clause (b)
of this definition, any day of the week, other than Saturday, Sunday or other
day Administrative Agent or any Lender is required or authorized by law or
executive order to close, and (b) with respect to all requests, notices and
determinations in connection with LIBOR Rate Advances, LIBOR Rate Portions and
Alternate Currency Advances, a day which is a Business Day described in clause
(a) of this definition and which is a day other than a day on which banks are
required or authorized to close in the London interbank market or other city in
which an Alternate Currency Advance is to be paid or advanced.
Change in Control means (a) the acquisition by a person (as such term is
used in Section 13(d) and Section 14(d)(2) of the Exchange Act) or related
persons constituting a group (as such term is used in Rule 13d-5 under the
Exchange Act) of the beneficial ownership of issued and outstanding shares of
the voting stock of Borrower, the result of which acquisition is that such
person or such group possess in excess of 50% of the combined voting power of
all the issued and outstanding voting stock of Borrower, or (b) during any
period of twelve consecutive calendar months, individuals who were directors of
Borrower on the first day of such period shall cease to constitute a majority of
the Board of Directors of Borrower.
Closing Date means the effective date of execution of this Agreement as
designated in the first paragraph of this Agreement.
Code means the Internal Revenue Code of 1986, as amended.
Collateral means all property, assets and interests of any kind securing
the Credit Facilities or other Obligations pursuant to this Agreement or any of
the other Loan Documents, which shall include, without limitation, (a) all of
the issued and outstanding stock or other ownership interests of each Guarantor
and each of Borrower's and Guarantors' Subsidiaries (except for the Foreign
Subsidiaries, the Investment Advisors Subsidiaries and the Partially-Owned
Subsidiaries), sixty-five percent (65%) of the issued and outstanding stock of
each Foreign Subsidiary, and all of the ownership interest of Borrower and
Guarantors in all Partially-Owned Subsidiaries and any entity which is not a
Subsidiary, (b) all assets included in satisfying the Asset Coverage
Requirement, (c) all other Assigned Loans, retained interests in or
distributions in respect of securitizations, asset backed and other securities
available for sale and other assets owned by Borrower and each Guarantor, which
are not pledged as collateral (to the extent permitted by Section 8.7) for Debt
other than the Credit Facilities; provided, however, that (i) assets of AMRESCO
MBS II, Inc. shall not be pledged as Collateral so long as such entity is
subject to a negative pledge under the terms of Debt permitted by Section 8.5,
and (ii) prior to the occurrence of a Default or unless otherwise required by
Required Lenders, any Mortgaged Property with an acquisition cost less than
$5,000,000 shall not be required to be included as Collateral, and (d) the
Foreign Subsidiary Inter-Company Notes.
CREDIT AGREEMENT PAGE 6
<PAGE> 13
Collateral Assignment means, collectively, all collateral assignments,
debentures, charges and any other document or assignment of any kind assigning
or creating liens on promissory notes and liens, executed by Borrower or any
Guarantor in favor of Administrative Agent, on behalf and for the benefit of
Lenders, as security for the Credit Facilities, which collateral assignment,
debentures, charges or other documents or assignments are intended to cover all
of the Assigned Loans and all renewals, modifications, amendments, supplements
and restatements thereof.
Commitment Fee shall mean the non-refundable fee equal to the product of
(a) the applicable percentage in effect as computed pursuant to Schedule II
attached hereto, times (b) the average daily unused portion of the Revolving
Commitment after adjustment for the Letter of Credit Exposure, but not including
any reduction for outstanding Competitive Bid Loans or Swingline Advances.
Competitive Bid Acceptance Notice is defined in Section 2.3.
Competitive Bid Advance means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made on the same Borrowing
Date by some or all of the Lenders to Borrower for the same Interest Period.
Competitive Bid Auction means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.3.
Competitive Bid Foreign Currency Loan means a Competitive Bid Loan made by
a Lender pursuant to Section 2.3, denominated in an Alternate Currency selected
by Borrower.
Competitive Bid Loan means either a Competitive Bid Pricing Loan or a
Competitive Bid Foreign Currency Loan.
Competitive Bid Pricing Loan means a Competitive Bid Loan made by a Lender
pursuant to Section 2.3, denominated in Dollars, which bears interest at a
Eurodollar Bid Rate selected by Borrower.
Competitive Bid Margin means the margin above or below, as applicable, (a)
the applicable Adjusted LIBOR Rate (excluding the LIBOR Margin) offered for a
Competitive Bid Pricing Loan, expressed as a percentage (rounded to the nearest
1/100 of 1%) or (b) the applicable Alternate Currency Rate (excluding the LIBOR
Margin) offered for a Competitive Bid Foreign Currency Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%).
Competitive Bid Note means a promissory note in substantially the form of
Exhibit A-2 hereto, with appropriate insertions, duly executed and delivered by
Borrower and payable to the order of the applicable Lender, including, without
limitation, any amendment, modification, renewal or replacement of such
promissory note.
Competitive Bid Quote means a Competitive Bid Quote substantially in the
form of Exhibit E-2 hereto completed and delivered by a Revolving Lender to
Administrative Agent in accordance with Section 2.3.
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<PAGE> 14
Competitive Bid Quote Request means a Competitive Bid Quote Request
substantially in the form of Exhibit E hereto completed and delivered by
Borrower to Administrative Agent in accordance with Section 2.3.
Consequential Loss has the meaning set forth in Section 3.6(d).
Consolidated EBITDA means, for any period, determined in accordance with
GAAP on a consolidated basis for Borrower and its Subsidiaries, an amount equal
to (a) the sum of consolidated net income before taxes and non-recurring gains
or losses, plus depreciation, plus amortization, plus interest expense, each as
deducted in determining such consolidated net income before taxes less (b) write
downs of retained interests in securitizations (which includes, without
limitation, interest only strips, servicing rights and other similar assets) for
prior years to the extent prior year financial statements are restated in the
period of determination to reflect such write downs and such write downs are not
included in calculating net income for the period of determination.
Consolidated Interest Expense means, for any period, the interest expense
which is required to be shown as such on the financial statements of Borrower
and its Subsidiaries, on a consolidated basis, prepared in accordance with GAAP.
Consolidated Net Income means, as of the first day of each calendar
quarter, the net income after taxes of Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, for the immediately
preceding calendar quarter, which amount shall be zero if there was a net loss
for the immediately preceding calendar quarter.
Consolidated Net Worth means, as of any date, the total shareholder's
equity (including capital stock, additional paid-in capital and retained
earnings after deducting treasury stock) which would appear on a consolidated
balance sheet of Borrower and its Subsidiaries prepared as of such date in
accordance with GAAP.
Consolidated Tangible Net Worth means, as of any date, (a) the total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) which would appear on a
consolidated balance sheet of Borrower and its Subsidiaries prepared as of such
date in accordance with GAAP, less (b) the aggregate book value of Intangible
Assets shown on such balance sheet of such Person, prepared in accordance with
GAAP and less (c) unamortized debt discount and expenses.
Contingent Obligation of any Person means any obligation, contingent or
otherwise, of such Person (a) directly or indirectly guaranteeing any Debt of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreements to keep-well, to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions, by "comfort
letter" or other similar undertaking of support or otherwise), or (ii) entered
into for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), or (b) assuring any creditor or
purchaser from such Person against loss, including without limitation, any
recourse obligation with respect to loans or other receivables sold with
recourse to such Person, provided that the term Contingent Obligation shall not
include loan commitments or loan take-out
CREDIT AGREEMENT PAGE 8
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agreements which are typically issued by providers of long-term debt, or
endorsements for collection or deposit in the ordinary course of business.
Credit Facilities means the Revolving Credit Facility (including all
Competitive Bid Loans and the Swingline Commitment) and the Term Facility.
Credit Period means the period commencing on the date of this Agreement and
ending on the Short Term Revolving Facility Termination Date, Long Term
Revolving Facility Termination Date or Term Facility Termination Date, as
applicable.
Custodial Agreement means each Custodial Agreement in form approved by
Administrative Agent by and between the Custodian, Borrower, for itself and on
behalf of Guarantors, and Administrative Agent, whereby Custodian agrees to act
as bailee for the documents evidencing certain of the Assigned Loans, as any
such Custodial Agreement may be amended or supplemented from time to time,
together with any replacement or substitution therefor.
Custodian means a financial institution or other Person approved by the
Administrative Agent to act as a custodian under a Custodial Agreement.
Debt of any Person means at any date, without duplication, (a) all
indebtedness, obligations and liabilities of such Person which, in accordance
with GAAP and practices thereof, would be included in determining liabilities as
shown in the liability section of the balance sheet of such Person, including,
without limitation, all indebtedness, obligations and liabilities of such Person
evidenced by bonds, debentures, notes or other similar instruments, whether
recourse or non-recourse and whether secured or unsecured, trade payables, and
structured financing transactions of any type, (b) all other indebtedness
(including capitalized lease obligations) of such Person on which interest
charges are customarily paid or accrued, (c) all obligations for indebtedness in
respect of Contingent Obligations of such Person and obligations under Interest
and Foreign Exchange Hedge Agreements, (d) the unfunded or unreimbursed portion
of all letters of credit issued for the account of such Person, and (e) all
personal liability of such Person as a general partner or joint venturer of a
partnership or joint venture for obligations of such partnership or joint
venture of the nature described in (a) through (d) preceding.
Default means any condition or event which constitutes an Event of Default
or which with the giving of notice or lapse of time or both would, unless cured
or waived, become an Event of Default.
Default Rate means the fluctuating per annum rate of interest equal to the
lesser of (a) four percent (4.0%) plus the Base Rate, or (b) the Maximum Lawful
Rate.
Designated Successor Agent means, at any given time, the Lender other than
the applicable Administrative Agent which has the largest Aggregate Loan
Percentage; provided, however, if two or more such Lenders have the same
Aggregate Loan Percentage at such time, then the Designated Successor Agent
shall be such of those Lenders having the same Aggregate Loan Percentage which
has the largest net worth; and, provided further, that if the Required Lenders
object to the newly named Designated Successor Agent, or if any Lender
determined to be a Designated Successor Agent declines to serve as successor
Administrative Agent in writing delivered to the outgoing Administrative Agent,
within seven (7) Business Days after such Designated Successor Agent is
CREDIT AGREEMENT PAGE 9
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determined, then the Lender other than Administrative Agent or such rejected or
declining Designated Successor Agent which has the next largest Aggregate Loan
Percentage shall be the Designated Successor Agent. For each such Lender that is
a member of a bank holding company, its net worth shall be deemed to be the
consolidated net worth of its bank holding company.
DIDMCA means the Depositary Institutions Deregulation and Monetary Control
Act of 1980, Public Law 96-221, as amended, codified at 12 U.S.C. ss.1735f-7.
Distribution by any Person, means (a) with respect to any stock issued by
such Person or any partnership or joint venture interest of such person, the
retirement, redemption, repurchase, or other acquisition for value of such
stock, partnership or joint venture interest, (b) the declaration or payment
(without duplication) of any dividend or other distribution, whether monetary or
in kind, on or with respect to any stock, partnership or joint venture of any
Person, and (c) any other payment or distribution of assets of a similar nature
or in respect of an equity investment.
Dollar Equivalent means the equivalent in Dollars of any Alternate Currency
or with respect to Letters of Credit, other currency approved by Administrative
Agent and the Issuing Lender. For purposes of this Agreement, Dollar Equivalent
shall be determined by using the quoted spot rate at which NationsBank or any
affiliate of NationsBank offers to exchange Dollars for such currency prior to
10:00 a.m. (Dallas, Texas time) three Business Days prior to the date on which
such equivalent is to be determined pursuant to the provisions of this
Agreement. Administrative Agent shall notify each affected Lender of such
determination on such date. The Dollar Equivalent of each Alternate Currency
Advance (or Letter of Credit denominated in an Alternate Currency or other
currency approved by Administrative Agent and the Issuing Lender) shall be
recalculated hereunder on each date it is necessary to determine the unused
portion of each Lender's Revolving Loan Commitment Amount or any Advances
outstanding on such date.
Effective Date means the date selected by Borrower to be the first day of
the applicable Interest Period related to a LIBOR Rate Advance, LIBOR Rate
Portion or an Alternate Currency Advance.
Eligible Assignee means (a) a Lender; (b) an Affiliate of a Lender; (c) a
Related Fund of any Lender; and (d) any other Person approved by the
Administrative Agent (which approval shall not be unreasonably withheld or
delayed); provided, however, that none of Borrower, Guarantors nor any Affiliate
of Borrower or any of the Guarantors shall qualify as an Eligible Assignee.
Employee Plan means at any time an employee benefit plan as defined in
Section 3(3) of ERISA that is now or was previously maintained, sponsored or
contributed to by Borrower or any Guarantor or any ERISA Affiliate of Borrower
or any Guarantor.
ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time, together with all regulations issued pursuant thereto.
ERISA Affiliate means any person that is treated as a single employer with
Borrower or any Guarantor under Section 414 of the Code.
Eurodollar Bid Rate means, with respect to a Competitive Bid Loan made by a
given Lender for the relevant Interest Period, the sum of (a) as to Competitive
Bid Pricing Loans, the Adjusted
CREDIT AGREEMENT PAGE 10
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LIBOR Rate (less the LIBOR Margin), and as to Competitive Bid Foreign Currency
Loans, the Alternate Currency Rate (less the LIBOR Margin), and (b) the
Competitive Bid Margin offered by such Lender and accepted by Borrower pursuant
to Section 2.3.
Event of Default has the meaning set forth in Section 9.1.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Excluded Subsidiaries means, collectively, (a) all Investment Advisor
Subsidiaries, Partially- Owned Subsidiaries and AMRESCO Securities, Inc., while
acting as a broker-dealer, (b) all Subsidiaries established as bankruptcy remote
special purpose entities in connection with any asset securitization of any kind
and no matter how such securitization is treated under GAAP, and (c) any other
Subsidiary that Borrower designates is to be an Excluded Subsidiary by written
notice to Administrative Agent accompanied by an updated Schedule V to this
Agreement that includes such newly designated Excluded Subsidiary, any such
designation to be irrevocable once so made by Borrower.
FDIC Percentage shall mean, on any day, the net assessment rate (expressed
as a percentage rounded to the next highest 1/100 of 1%) which is in effect on
such day (under the regulations of the Federal Deposit Insurance Corporation or
any successor) for determining the assessments paid by Administrative Agent to
the Federal Deposit Insurance Corporation (or any successor) for insuring
Eurocurrency deposits made in dollars at Administrative Agent's principal
offices (which for NationsBank shall be its offices in Dallas, Texas, or, if
applicable, the Applicable Lending Office). Each determination of said
percentage made by Administrative Agent shall, in the absence of manifest error,
be binding and conclusive.
Federal Funds Rate means, for any day, the rate per annum (rounded upwards
if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Administrative Agent
on such day on such transactions from three Federal funds brokers of recognized
standing.
Fiscal Year means any fiscal year of Borrower or any Guarantor commencing
on January 1 and ending on December 31.
Foreign Subsidiaries means Borrower's Subsidiaries incorporated outside the
United States.
Foreign Subsidiary Inter-Company Note means a promissory note in form
approved by Administrative Agent representing the amount of any loans, advances
or extensions of credit of any kind of Borrower or any Guarantor in a Foreign
Subsidiary.
GAAP means generally accepted accounting principles consistently applied as
in effect at the time of application of the provisions hereof; provided,
however, that wherever in this Agreement
CREDIT AGREEMENT PAGE 11
<PAGE> 18
principles of consolidation different from those required by generally accepted
accounting principles are specified, the principles of consolidation specified
in this Agreement shall govern.
Governmental Authority means any government, any state or other political
subdivision thereof, or any Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
Guarantor means each Subsidiary of Borrower (other than Excluded
Subsidiaries and Foreign Subsidiaries), and its respective successors and
assigns.
Guaranty Agreement means each Subsidiary Guaranty executed by a Guarantor
in favor of Administrative Agent, for the ratable benefit of Lenders,
guaranteeing payment and performance of the Obligations, as it may be amended or
modified or in effect from time to time.
Impositions means all real estate and personal property taxes; charges for
any easement, license or agreement maintained for the benefit of any of the real
property of Borrower or any Guarantor, or any part thereof; and all other taxes,
charges and assessments and any interest, costs or penalties with respect
thereto, general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever, which at any time prior to or
after the execution hereof may be assessed, levied or imposed upon any of the
real property of Borrower or any Guarantor, or any part thereof, or the
ownership, use, sale, occupancy or enjoyment thereof, in each case which, if not
timely paid or otherwise discharged, would materially and adversely affect (a)
such ownership, use, sale, occupancy or enjoyment, or (b) the financial
condition of Borrower or any Guarantor.
Intangible Assets of any Person means those assets of such Person which are
(a) deferred assets, other than prepaid insurance and prepaid taxes, (b)
patents, copyrights, trademarks, tradenames, franchises, goodwill, experimental
expenses and other similar assets which would be classified as intangible assets
on a balance sheet of such Person, prepared in accordance with GAAP, and (c)
unamortized debt discount and expenses.
Interest Adjustment Date means the earlier of either the last day of an
Interest Period or, as applicable, the Long Term Revolving Facility Termination
Date, Short Term Revolving Facility Termination Date or Term Facility
Termination Date.
Interest and Foreign Exchange Hedge Agreements means any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, as the same may be amended
or modified and in effect from time to time, and any and all cancellations, buy
backs, reversals, terminations or assignments of any of the foregoing.
Interest/Dividend Coverage Ratio means as to Borrower (on a consolidated
basis), for any date of determination, the ratio of (a) Consolidated EBITDA for
the immediately preceding twelve calendar months, to (b) the sum of (i) the
Consolidated Interest Expense plus (ii) the amount of any
CREDIT AGREEMENT PAGE 12
<PAGE> 19
dividends paid by Borrower on Borrower's preferred stock, if any, both for the
immediately preceding twelve calendar months.
Interest Period means, with respect to a LIBOR Rate Advance, LIBOR Rate
Portion, Alternate Currency Advance or Competitive Bid Loan, a period selected
by Borrower of one month through six months, commencing on the Effective Date of
such LIBOR Rate Advance, LIBOR Rate Portion or Alternate Currency Advance, or
the Borrowing Date with respect to a Competitive Bid Loan; provided that (a) any
Interest Period related to, and ending on a date later than, the Long Term
Revolving Facility Termination Date, Short Term Revolving Facility Termination
Date or the Term Facility Termination Date, as applicable, shall be deemed to
end on the Long Term Revolving Facility Termination Date, Short Term Revolving
Facility Termination Date or the Term Facility Termination Date, as applicable;
(b) if any Interest Period would otherwise end on a day which is not a Business
Day, such Interest Period shall end on the next succeeding Business Day, except
that if the next Business Day would fall in the next calendar month, the
Interest Period shall end on the immediately preceding Business Day; and (c) any
Interest Period that begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period shall
end on the last Business Day of such calendar month.
Interest Rate Exposure Report means a report showing the aggregate amount
of Borrower's and each Guarantor's potential liability under each Interest and
Foreign Exchange Hedge Agreement and how such liability was calculated, together
with evidence satisfactory to Administrative Agent that the amount of such
potential liability has been confirmed by the counterparty to such Interest and
Foreign Exchange Hedge Agreement.
Investment Advisor Subsidiaries means AMRESCO Advisors, Inc., and any other
existing or future wholly or partially-owned subsidiary of Borrower which is
subject to the Investment Advisors Act of 1940, as amended.
Investment Grade means a rating of BBB- or better by Standard & Poor's
Ratings Group (a Division of McGraw-Hill, Inc.) and Baa3 or better by Moody's
Investors Service, Inc.
Investments has the meaning set forth in Section 8.10 hereof.
Invitation for Competitive Bid Quotes means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit E-1 hereto, completed and
delivered by Administrative Agent to Revolving Lenders in accordance with
Section 2.3(c).
Issuing Lender means NationsBank in its capacity as issuer of the Letters
of Credit.
Legal Requirements means (a) any and all present and future judicial
decisions, statutes, laws, rulings, rules, orders, regulations, permits,
licenses, certificates, or ordinances of any Governmental Authority in any way
applicable to Borrower or any Subsidiary of Borrower, (b) the presently or
subsequently effective bylaws and articles of incorporation and any other form
of business association agreement of Borrower or any Subsidiary of Borrower, (c)
any and all covenants, conditions or restrictions applicable to the Collateral
or the ownership, use or occupancy thereof, and (d) any and all leases or
contracts (written or oral) of any nature that relate in any way to any
Collateral, or any portion thereof, or to which Borrower or any Subsidiary of
Borrower may be bound, and in each case which, if violated, would materially and
adversely affect (i) the present
CREDIT AGREEMENT PAGE 13
<PAGE> 20
or potential ownership, use, sale, occupancy or possession of the Collateral or
any part thereof, by Borrower or any such Subsidiary, (ii) the Lenders' Liens or
(iii) the financial condition of Borrower or any such Subsidiary.
Lenders means each of the financial institutions listed as a "Lender" on
Schedule I attached hereto as the same may be modified or amended from time to
time, which term shall include both the Revolving Lenders and the Term Lenders.
Lenders' Liens means all liens, security interests, charges, pledges or
encumbrances created by the Loan Documents.
Letter of Credit Exposure means the aggregate amount of the unfunded
portion of each Letter of Credit outstanding at any time.
Letter of Credit Fee has the meaning set forth in Section 2.5(c).
Letters of Credit means all letters of credit issued by the Issuing Lender
for the account of Borrower pursuant to this Agreement.
LIBOR Margin means the applicable margins based on the leverage ratio
described in, and determined pursuant to, Schedule II attached hereto.
LIBOR Rate shall mean, with respect to a LIBOR Rate Advance or LIBOR Rate
Portion for the Interest Period applicable thereto, the rate of interest
determined by Administrative Agent at which deposits in dollars for the relevant
Interest Period are offered based on information presented on the Telerate
Screen as of 11:00 A.M. (London time) on the day which is two (2) Business Days
prior to the first day of such Interest Period; provided, that if at least two
such offered rates appear on the Telerate Screen in respect of such Interest
Period, the arithmetic mean of all such rates (as determined by Administrative
Agent) will be the rate used; provided, further, that if the Telerate System
ceases to provide LIBOR quotations, such rate shall be the average rate of
interest determined by Administrative Agent (rounded upward to the nearest .01%)
at which deposits in Dollars are offered for the relevant Interest Period by
Administrative Agent (or its successor) to banks with combined capital and
surplus in excess of $500,000,000 in the London interbank market as of 11:00
A.M. (London time) on the applicable Effective Date.
LIBOR Rate Advance shall mean an Advance under the Revolving Credit
Facility which bears interest computed with reference to the LIBOR Rate
(including, without limitation, Competitive Bid Loans and Swingline Advances).
LIBOR Rate Portion shall mean any portion of the Term Facility which bears
interest computed with reference to the LIBOR Rate.
LIBOR Reserve Requirement shall mean, on any day, that percentage
(expressed as a decimal fraction) which is in effect on such date, as provided
by the Federal Reserve System for determining the maximum reserve requirements
generally applicable to financial institutions regulated by the Federal Reserve
Board comparable in size and type to Administrative Agent (including, without
limitation, basic supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined in
Regulation D, or
CREDIT AGREEMENT PAGE 14
<PAGE> 21
under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding (or, if reserves for Eurocurrency
liabilities are not separately stated in such regulations, the other applicable
category of liabilities which includes deposits by reference to which the
interest rate on a LIBOR Rate Advance, LIBOR Rate Portion or Alternate Currency
Advance is determined). Each determination by Administrative Agent of the LIBOR
Reserve Requirement, shall, in the absence of manifest error, be conclusive and
binding.
Lien means with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
Loan Documents means this Agreement, the Notes, the Pledge Agreements, the
Letters of Credit, the LOC Applications, the Collateral Assignment, the Lockbox
Agreement, the Security Agreement, all related financing statements, the
Guaranty Agreements and all other agreements, statements, certificates,
documents or instruments evidencing, securing or pertaining to either or both of
the Credit Facilities or otherwise executed and/or delivered from time to time
pursuant to or in connection with this Agreement, as the same may be modified,
amended, renewed, extended, rearranged, restated or replaced from time to time.
LOC Application has the meaning set forth in Section 2.2(e).
Lockbox means a post office box, or collectively post office boxes,
established by Borrower and Guarantors and Lockbox Agent pursuant to the
provisions of Section 5.6 and the Lockbox Agreement.
Lockbox Account means a cash collateral account or accounts maintained with
Lockbox Agent and styled "(name of Borrower or particular Guarantor) Lockbox
Account for the Benefit and Under the Control of NationsBank, N.A., as
Administrative Agent for Lenders," which accounts shall be (a) subject to the
provisions of Section 5.6, and (b) pledged and assigned to Lenders as additional
security for the payment, performance and observance of the Obligations.
Lockbox Agent means NationsBank.
Lockbox Agreement means, collectively any lockbox agreement or any other
similar agreement or arrangement which is created to cause the proceeds of
Assigned Loans or other Collateral to be placed under Administrative Agent's
(for the benefit of Lenders) dominion and control.
Long Term Revolving Facility means that portion of the Revolving Credit
Facility in the original amount of $502,500,000 (as the same may be increased
pursuant to Section 2.1(d)), which matures on the Long Term Revolving Facility
Termination Date.
Long Term Revolving Facility Termination Date means August 12, 2001.
Margin Regulations mean Regulations T, U and X of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
CREDIT AGREEMENT PAGE 15
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Margin Stock means "margin stock" as defined in Regulation U.
Maximum Lawful Rate means the maximum rate (or, if the context so permits
or requires, an amount calculated at such rate) of interest which, at the time
in question would not cause the interest charged on either of the Credit
Facilities at such time to exceed the maximum amount which Lenders would be
allowed to contract for, charge, take, reserve, or receive under applicable
federal or state law after taking into account, to the extent required by
applicable law, any and all relevant payments, fees or charges under the Loan
Documents. If under applicable law there is no legal limitation on the amount or
rate of interest that may be charged on amounts outstanding under either of the
Credit Facilities, there shall be no Maximum Lawful Rate under the applicable
Credit Facility, notwithstanding any reference thereto herein or in any of the
Loan Documents.
MIC Convertible Debt means the portion of the earnout payment required to
be paid by Borrower pursuant to that certain Agreement and Plan of Merger, dated
July 14, 1998, by and among Borrower, MIC Acquisition, Inc., Mortgage Investors
Corporation, William Edwards and certain other stockholders, which was recorded
as Debt on the financial statements of Borrower but is to be Tpaid by the
issuance of Borrower's common stock as contemplated by such Agreement and Plan
of Merger.
Minimum Notice Requirement has the meaning set forth in Section 3.5.
Mortgage means any deed of trust, mortgage, fixed or floating charge or
other lien document covering a Mortgaged Property executed by Borrower or any
Guarantor, granted to Administrative Agent, for the benefit of the Lenders, to
secure repayment of the Credit Facilities and the other Obligations,
substantially in the form approved by Administrative Agent, and all renewals,
extensions, modifications, amendments or supplements thereto, and all mortgages,
deeds of trust, fixed or floating charges or other documents given in renewal,
extension, modification, restatement or replacement thereof.
Mortgaged Property or Mortgaged Properties means any and all lots or
parcels of land which Borrower or any Guarantor owns on the Closing Date or
which it may hereafter acquire and which has not been granted as collateral for
Debt other than the Credit Facilities as permitted by Section 8.7 hereof, and
improvements, fixtures and personal property located thereon and all other
property referenced in and subject to the Mortgages. The Mortgaged Property is
intended to include all of the above-described real property whether or not a
Mortgage is actually granted or filed.
NationsBank means NationsBank, N.A., a national banking association, and
its successors.
Notes means the Term Notes, the Revolving Notes, the Competitive Bid Notes,
and the Swingline Note.
Obligations means all present and future indebtedness, obligations and
liabilities, or any part thereof, of Borrower or any Guarantor now or hereafter
existing or arising under or in connection with this Agreement, the Notes or any
other of the Loan Documents (specifically including, without limitation, the
principal amount outstanding under the Notes), together with: (a) all interest
accrued thereon; (b) all reasonable costs, expenses, and attorneys' fees of
counsel to Agents and Lenders (as a group) and of counsel to any Lender (subject
to any limitations set forth in Section 11.4) incurred
CREDIT AGREEMENT PAGE 16
<PAGE> 23
in the documentation of any amendments, waivers or extensions of the Loan
Documents or administration, enforcement or collection thereof (specifically
including, without limitation, any of the foregoing incurred in connection with
any bankruptcy or other insolvency proceedings of Borrower or any Guarantor);
(c) the reimbursement and payment of all sums which might be advanced by
Administrative Agent or any Lender to pay or satisfy amounts required to be paid
by Borrower or any Guarantor under this Agreement or under any other Loan
Document; (d) all liability which Borrower or any Guarantor may incur with
respect to any Interest and Foreign Exchange Hedge Agreements between Borrower
or any Guarantor and any Lender or under any Bridge Debt; and (e) all costs,
charges, reasonable commissions, reasonable attorneys' fees and expenses owing
and to become owing in connection with the documentation, administration,
enforcement and collection of the foregoing obligations and indebtedness, and
those owing or to become owing in connection with the repossession, operation,
maintenance, preservation or foreclosure of any or all of the Collateral;
regardless of whether such indebtedness, obligations and liabilities are direct,
indirect, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several. The Obligations shall include all renewals, extensions,
modifications, rearrangements and replacements of any of the above-described
obligations and indebtedness.
Partially-Owned Subsidiary means any Subsidiary which is not 100% owned by
Borrower and/or its directly or indirectly wholly-owned Subsidiaries.
Participation Fee means the nonrefundable participation fee to be paid by
Borrower to each of the Lenders in accordance with Section 2.5 hereof in the
amounts shown for each such Lender either on Schedule I attached hereto, or as
otherwise agreed to between Borrower and such Lender in a separate letter.
PBGC means the Pension Benefit Guaranty Corporation, or its successors.
Pension Plan means any Employee Plan that is now or was previously covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code.
Permitted Encumbrances means with respect to any Mortgaged Property:
(a) Liens securing the Notes in favor of the Lenders;
(b) Exceptions affecting title which are shown in a Title Policy
included in Borrower's or any Guarantor's files or are described with respect to
a particular Mortgaged Property in Borrower's underwriting or due diligence
files with respect to such Mortgaged Property;
(c) In the case of any portion of the Mortgaged Property that is not
covered by a Title Policy, minor defects in title or customary easements,
platted building lines, restrictive covenants, mineral reservations and similar
exceptions affecting title which do not secure the payment of money;
(d) Inchoate statutory or operators' liens securing obligations for
labor, services, materials and supplies furnished to the Mortgaged Properties,
which (i) are not delinquent, or (ii) are being contested by Borrower or any
Guarantor in good faith and for which Borrower or such Guarantor has obtained a
proper payment and performance bond in the amount of the contested claim;
CREDIT AGREEMENT PAGE 17
<PAGE> 24
(e) Mechanics', materialmen's, warehousemen's, journeymen's and
carriers' liens and other similar liens arising by operation of law or statute
in the ordinary course of business if (i) the underlying claim is not delinquent
and did not in any event cover a billing period not exceeding sixty (60) days,
or (ii) unless the claim giving rise to such lien is being contested by Borrower
or any Guarantor in good faith and for which Borrower or such Guarantor has
obtained a proper payment and performance bond in the amount of the contested
claim; and
(f) Liens for Taxes or Impositions not yet due or not yet delinquent,
or, if delinquent, that are being contested by Borrower or any Guarantor as
permitted by and in accordance with the terms and conditions set forth in
Section 7.5.
Permitted Secured Debt means funded Debt of any Guarantor, any Excluded
Subsidiary or any Foreign Subsidiary, which is (a) secured by Liens on assets
not included in determining the Asset Coverage Requirement, (b) non-recourse to
Borrower, except as permitted by Section 8.5(b)(ii), (c) recourse only to the
Subsidiary that receives the proceeds from such Debt, and (d)
cross-collateralized only with Debt which has the same borrower and lender.
Permitted Secured Debt and Warehouse Lines Report and Certification means a
report (a) showing such information concerning the Permitted Secured Debt
(including Warehouse Lines) and any other funded Debt of Borrower and its
Subsidiaries as required by Administrative Agent from time to time, including,
without limitation, the amount of each such Permitted Secured Debt (including
Warehouse Lines) and other funded Debt, the entities obligated as borrowers
thereunder, the payment schedule thereunder and the collateral and guaranties
securing such Debt, and (b) certifying compliance by Borrower and Guarantors
with the limitations on Permitted Secured Debt and Warehouse Lines contained in
this Agreement, in detail satisfactory to Administrative Agent.
Person means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Pledge Agreement shall mean the Stock Pledge Agreement or Stock Pledge
Agreements, and all amendments, modifications and replacements thereof, executed
by and between Borrower or the appropriate Subsidiaries and Administrative
Agent, covering all of the issued and outstanding stock or other ownership
interests of each Subsidiary of Borrower and Guarantors (expressly including the
stock of all Subsidiaries established as bankruptcy remote special purpose
entities in connection with any asset securitization), and all stock or other
ownership interests of each Partially-Owned Subsidiary owned by Borrower or any
Subsidiary wholly-owned, directly or indirectly, by Borrower, but excluding the
stock of the Investment Advisor Subsidiaries; provided that the Pledge Agreement
shall cover only sixty-five percent (65%) of the stock or other ownership
interests of each Foreign Subsidiary held by Borrower or any Subsidiary of
Borrower.
Pledged Asset Schedule and Certification means a schedule of all assets
which are owned by (a) Borrower and Guarantors and required to be pledged to
Administrative Agent for the benefit of the Lenders pursuant to the Loan
Documents and (b) each Foreign Subsidiary showing which assets have been pledged
and to whom and which assets are not pledged, and a certification that such
assets have been so pledged; provided, that any assets listed therein but not so
pledged shall be
CREDIT AGREEMENT PAGE 18
<PAGE> 25
pledged to Administrative Agent for the benefit of the Lenders as soon as
practical but in no case more than sixty (60) days after the end of the
immediately preceding calendar quarter.
Reference Banks means the Applicable Lending Office of NationsBank and such
substitute bank or banks as may be mutually agreed to by Borrower and
Administrative Agent.
Register has the meaning set forth in Section 11.10 hereof.
Regulation U means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time and shall include any successor
or other regulation or official interpretation of the Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks that is applicable to member banks of the Federal Reserve
System.
Regulatory Change shall mean the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority charged with the administration thereof.
Related Fund means, with respect to any Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is advised or
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
Representatives has the meaning set forth in Section 10.4.
Request for Advance means a written request for an Advance or a Letter of
Credit, substantially in the form attached hereto as Exhibit B.
Required Lenders means:
(a) All Lenders in order to make any amendment or modification to (i)
change the definition of Aggregate Loan Percentage, (ii) release any
Lenders' Liens on any Collateral after the occurrence of an Event of
Default (other than a release of Lenders' Liens in connection with a
liquidation of such Collateral approved by Administrative Agent so long as
the net proceeds of such liquidation are applied to reduce the Obligations
in the order required by this Agreement), or, prior to the occurrence of an
Event of Default, release Lenders' Liens on all of the Collateral, thereby
causing the Credit Facilities to be unsecured, or any of the Collateral
except as expressly provided or permitted by this Agreement, (iii) amend or
modify Section 3.9 of this Agreement, (iv) extend the due date for,
decrease the amount or rate of calculation of, or waive the late or
non-payment of, any scheduled payment or mandatory prepayment of principal
or interest on any of the Notes or under this Agreement or any fees payable
to Lenders under the Loan Documents, except, in each case, any adjustments
or reductions expressly contemplated by any Loan Document (provided that by
unanimous consent, the Revolving Lenders can elect to reduce the Applicable
Rate under the Revolving Credit Facility and by unanimous consent the Term
Lenders can elect to reduce the Applicable Rate under the Term Facility),
(v) increase the amount of either Credit Facility, (vi) reinstate any of
the Notes and other indebtedness pursuant to the provisions in Section
9.2(a) hereof, (vii) increase the Applicable Rate related to either Credit
Facility other than an increase in the interest rate after the occurrence
of a Default as permitted by the Loan
CREDIT AGREEMENT PAGE 19
<PAGE> 26
Agreement, (viii) change the consent of Lenders required by Section
11.10(a) hereof, or (ix) change this subparagraph (a).
(b) Except as provided in clause (a) above and prior to the occurrence
of an Event of Default, Lenders holding at the time in question a portion
of the Credit Facilities (including participations in Letters of Credit and
Swingline Advances) equal to or greater than 51% of the sum of (i) the
Revolving Commitment, plus (ii) the aggregate unpaid principal amount of
the Term Notes.
(c) Except as provided in clause (a) above and after the occurrence of
an Event of Default, Lenders holding at the time in question a portion of
the Credit Facilities (including participations in Letters of Credit and
Swingline Advances) equal to or greater than 51% of the sum of (i) the
aggregate unpaid principal amount of the Notes, plus (ii) the Letter of
Credit Exposure; provided, that, after the occurrence of an Event of
Default which has been waived, the approval of Revolving Lenders holding at
the time in question a portion of the Revolving Credit Facility equal to or
greater than 51% of the Revolving Commitment shall be required prior to
making the initial Advance under the Revolving Credit Facility subsequent
to such waiver.
Residual Interests Report shall mean a report satisfactory to
Administrative Agent listing the Retained Residential Residual Interests (as
shown on Borrower's consolidated balance sheet) owned by Borrower or any
Subsidiary of Borrower.
Revolving Commitment means the aggregate Revolving Loan Commitment Amounts
committed to by Revolving Lenders under this Agreement on the date of
determination, evidenced by two promissory notes (one for the Long Term
Revolving Facility and the other for the Short Term Revolving Facility) to be
made by Borrower to each Revolving Lender in the aggregate amount of such
Revolving Lender's applicable Revolving Loan Commitment Amount.
Revolving Credit Facility means the revolving line of credit created
pursuant to this Agreement in an amount equal to the lesser of (a) $800,000,000
minus the original principal amount of any Additional Term Loans, or (b) the
Revolving Commitment; provided, that, the revolving line credit as of the
Closing Date is in an amount equal to $675,000,000.
Revolving Lenders means those Lenders designated as the Revolving Lenders
in Schedule I attached hereto, as modified or amended from time to time pursuant
to this Agreement, and their permitted successors and assigns.
Revolving Loan Commitment Amount means, with respect to each Revolving
Lender, the amount indicated as such Revolving Lender's Revolving Loan
Commitment Amount opposite the name of such Revolving Lender in Schedule I, as
such amount (a) is divided between the Short Term Revolving Facility and Long
Term Revolving Facility on Schedule I, (b) may be reduced from time to time, as
a result of a reduction in the Revolving Commitment as provided herein, or (c)
may be adjusted from time to time to account for any assignment of a Revolving
Lender's interest as provided in Section 11.10 of this Agreement.
Revolving Loan Percentage means, with respect to the Revolving Credit
Facility and each Revolving Lender, the percentage indicated as such Lender's
Revolving Loan Percentage opposite
CREDIT AGREEMENT PAGE 20
<PAGE> 27
the name of such Lender on Schedule I, as such percentage may be adjusted from
time to time to account for any assignments of a Revolving Lender's interest as
provided in Section 11.10.
Revolving Notes means those certain promissory notes in the form attached
hereto as Exhibit A evidencing the Revolving Credit Facility, executed by
Borrower, payable to the order of each Revolving Lender, with two promissory
notes to be delivered to each Revolving Lender, one evidencing such Revolving
Lender's Revolving Loan Commitment Amount allocated to the Long Term Revolving
Facility and the other promissory note evidencing such Revolving Lender's
Revolving Loan Commitment Amount allocated to the Short Term Revolving Facility.
Rights means rights, remedies, powers, privileges and benefits.
SEC means the federal Securities and Exchange Commission, and its
successors.
Security Agreement means, collectively, all security agreements executed by
Borrower and each Guarantor in favor of Administrative Agent, on behalf and for
the benefit of Lenders, as security for the Credit Facilities, which security
agreement are intended to cover all personal property of any type of Borrower
and the Guarantors other than the collateral for the Warehouse Lines and
Permitted Secured Debt, and all amendments, modifications and replacements
thereof.
Security Documents means the Collateral Assignment, the Security Agreement,
the Pledge Agreements, the Lockbox Agreement, all Mortgages and all other
documents or instruments granting a Lien in favor of the Lenders (or
Administrative Agent for the benefit or on behalf of the Lenders) as collateral
for the Credit Facilities, and all financing statements related thereto, and all
modifications, renewals or extensions thereof and any documents executed in
modification, renewal, extension or replacement thereof.
Short Term Revolving Facility means that portion of the Revolving Credit
Facility in the original amount of $167,500,000 (as the same may be increased
pursuant to Section 2.1(d)) which matures on the Short Term Revolving Facility
Termination Date.
Short Term Revolving Facility Termination Date means the date which is 364
days from the Closing Date, as the same may be extended from time to time in
accordance with this Agreement.
Structure Fee means the fee to be paid by Borrower to the Arrangers
pursuant to a separate letter or letters to be executed by Borrower and
Arrangers effective on the Closing Date.
Subsidiary means, for any Person, any corporation, partnership or other
entity (a) of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
(including that of a general partner) is at the time directly or indirectly
owned, by or the management is otherwise controlled by such Person and any
Subsidiaries of such Person and (b) the financial statements of which are
consolidated with Borrower's financial statements in accordance with GAAP. The
term Subsidiary shall include Subsidiaries of Subsidiaries (and so on). Unless
otherwise qualified, references to "Subsidiary" or "Subsidiaries" herein shall
refer to those of Borrower and its Subsidiaries.
CREDIT AGREEMENT PAGE 21
<PAGE> 28
Supplement to Schedule I means an addendum to this Agreement, the other
Loan Documents, Schedule I to the Collateral Assignment, and Schedule I to the
Security Agreement, in form as previously agreed to between Borrower and
Administrative Agent as contemplated by Sections 2.1 and 2.4.
Swingline Advances means any Swingline Advance made by Swingline Lender to
Borrower pursuant to Section 2.2.
Swingline Commitment means $25,000,000.
Swingline Lender means NationsBank.
Swingline Note means the Swingline Note made by Borrower payable to the
order of Swingline Lender, substantially in the form as Exhibit A-3, evidencing
the Swingline Advances, and any amendments and modifications thereto, any
substitutions therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part.
Syndication Agent means Credit Suisse First Boston, in its capacity as
syndication agent for the Lenders hereunder, or any successor agent pursuant to
Section 10.12 or Section 10.13.
Taxes means all taxes, assessments, filing or other fees, levies, imposts,
duties, deductions, withholdings, stamp taxes, interest equalization taxes,
capital transaction taxes, foreign exchange taxes or other charges of any nature
whatsoever, from time to time or at any time imposed by law or any federal,
state or local governmental agency. "Tax" means any one of the foregoing.
Telerate Screen means the display designated as Screen 3750 (as to Dollars,
and any other applicable Alternate Currency shown thereon) or Screen 3740 (as to
Canadian dollars) on the Telerate System or such other screen on the Telerate
System as shall display the London interbank offered rates for deposits in U.S.
dollars or the applicable Alternate Currency quoted by selected banks.
Term Facility means the term facility created by this Agreement in an
original amount equal to Sixty-Seven Million Five Hundred Thousand and No/100
Dollars ($67,500,000), but in a maximum amount not to exceed One Hundred Million
and No/100 Dollars ($100,000,000) (which amount includes any Additional Term
Loans) evidenced by the promissory notes to be made by Borrower to each Term
Lender in the amount of such Term Lender's Term Loan Commitment Amount.
Term Facility Termination Date means August 12, 2003.
Term Lenders means, as to the Term Facility, such financial institutions
listed as Term Lenders on Schedule I attached hereto, and their permitted
successors or assigns, as the same may be amended to include Term Lenders under
Additional Term Loans.
Term Loan Commitment Amount means, with respect to each Term Lender, the
amount indicated as such Term Lender's Term Loan Commitment Amount opposite the
name of such Term Lender in Schedule I, as such amount may be adjusted from time
to time to account for any
CREDIT AGREEMENT PAGE 22
<PAGE> 29
assignment of a Term Lender's interest, and as Schedule I may be amended to
include Term Lenders under Additional Term Loans.
Term Loan Percentage means, with respect to the Term Facility and each Term
Lender, the percentage indicated as such Lender's Term Loan Percentage opposite
the name of such Term Lender on Schedule I, as such percentage may be adjusted
from time to time to account for any assignments of a Term Lender's interest as
provided in Section 11.10, and as such percentage may be changed to reflect the
loan percentages of Term Lenders under Additional Term Loans.
Term Notes means those certain promissory notes evidencing the Term
Facility, executed by Borrower and payable to the order of each Term Lender in
the amount of such Lender's Term Loan Commitment Amount, and in the form as
attached hereto as Exhibit A-1.
Title Company means a title company or title companies selected by Borrower
or any Guarantor and not disapproved by Administrative Agent, together with any
issuing agent that issues all or any part of a Title Policy.
Title Policy means a Mortgagee or Loan Policy of Title Insurance issued and
underwritten by a Title Company for the benefit of (a) Administrative Agent, on
behalf of the Lenders, covering that portion of the Mortgaged Property therein
described and insuring the lien of the Mortgage which covers such portion of the
Mortgaged Property, or (b) Borrower or any Guarantor insuring a lien on
Underlying Real Estate securing an Assigned Loan.
Total Consolidated Debt at any time of determination means the sum of (a)
consolidated Debt of Borrower, its Subsidiaries and any other Person which would
be reflected on the consolidated balance sheet of Borrower prepared in
accordance with GAAP if such balance sheet were prepared as of such date of
determination, plus (b) the unfunded obligations of Borrower or any Guarantor
under outstanding letters of credit, plus (c) the amount of any Contingent
Obligations which are reasonably quantifiable by Borrower (as confirmed by
Administrative Agent) and which do not duplicate any amounts otherwise included
under this definition of Total Consolidated Debt, but less the MIC Convertible
Debt to the extent included in the above sum.
Transfer of Lien means an absolute assignment of note and liens (including,
without limitation, all mortgages and any other security for each of the
Assigned Loans) or other similar document transferring a lien or security
interest, executed by Borrower or any Guarantor to Administrative Agent, for the
benefit of the Lenders, in form agreed to by Borrower and Administrative Agent
(which document may also be referred to as an "Assignment of Lien" in certain
states).
UCC means the Uniform Commercial Code in effect under the laws of the State
of Texas, as amended, or, if stated with reference to another jurisdiction, the
Uniform Commercial Code as adopted in the relevant jurisdiction.
Underlying Obligor means any obligor under any residential or commercial
mortgage loan acquired, originated or funded by Borrower or any Guarantor,
provided, that the primary business of Borrower or such Guarantor is the
acquisition, origination or funding of such residential or commercial mortgage
loans.
CREDIT AGREEMENT PAGE 23
<PAGE> 30
Underlying Real Estate means the real property, together with all
improvements thereon, which secures any of the Assigned Loans or any one of such
parcels of real property.
Variable Rate means a fluctuating rate of interest equal to the Base Rate.
Variable Rate Advance shall mean an Advance under the Revolving Credit
Facility which will bear interest computed with reference to the Variable Rate.
Variable Rate Portion shall mean that portion of the Term Facility which
bears interest computed with reference to the Variable Rate.
Warehouse Lines means any Debt of Borrower, any Guarantor or any Foreign
Subsidiary created for the purpose of acquiring or originating loans, leases,
securities and, if approved by Administrative Agent in its sole and absolute
discretion, other asset types provided that (a) such loans, leases, securities
or other assets are intended to be sold, repaid or otherwise liquidated in order
to make payments on such Debt, (b) such Debt is related to the lines of business
of Borrower, Guarantors and the Foreign Subsidiaries permitted by Section 7.2
hereof, (c) any such Debt shall be fully collateralized at its inception, and
(d) there shall exist at the inception of such Debt a strategy for selling or
otherwise liquidating specific collateral securing such Debt in a commercially
reasonable manner within the time period typically required in the industry (and
not in a liquidation or distress situation) and by Borrower and its Subsidiaries
for such specific collateral, but in no event more than twelve (12) months
following its inclusion as collateral for the applicable Debt.
SECTION 1.2. Singular and Plural of Definitions. Each term defined in the
singular form in Section 1.1 shall mean the plural thereof when the plural form
of such term is used in this Agreement, and each term defined in the plural form
in Section 1.1 shall mean the singular thereof when the singular form of such
term is used in this Agreement.
SECTION 1.3. Substantive Definitions. The terms, provisions and agreements
set forth in the definitions contained in Section 1.1 shall be substantive terms
of this Agreement and fully binding on the parties hereto.
SECTION 1.4. Money. Unless stipulated otherwise, all references herein or
in any of the Loan Documents to "Dollars," "$," "money," "payments" or other
similar financial or monetary terms are references to lawful money of the United
States of America.
SECTION 1.5. Captions; References. The captions in this Agreement and in
the table of contents hereof are for convenience of reference only and shall not
define, affect or limit any of the terms or provisions hereof. All references
herein to Articles and Sections are, unless specified otherwise, references to
articles and sections of this Agreement. Unless specifically indicated
otherwise, all references herein to an "Exhibit," "Annex" or "Schedule" are
references to exhibits, annexes or schedules attached hereto, all of which are
incorporated herein and made a part hereof for all purposes, the same as if set
forth fully herein, it being understood that if any exhibit, annex or schedule
attached hereto which is to be executed and delivered contains blanks, the same
shall be completed correctly and in accordance with this Agreement prior to or
at the time of the execution and delivery thereof. The words "herein," "hereof,"
"hereunder" and other similar
CREDIT AGREEMENT PAGE 24
<PAGE> 31
compounds of the word "here" when used in this Agreement shall refer to the
entire Agreement and not to any particular provision or section unless
specifically indicated otherwise.
SECTION 1.6. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE II
COMMITMENT
SECTION 2.1. Commitment. Subject to and upon the terms, covenants and
conditions of this Agreement:
(a) Revolving Credit Facility Advances. Each Revolving Lender
severally agrees to make in the manner set forth in Section 2.2, its pro rata
part (based on its Revolving Loan Percentage) of one or more Advances under the
Revolving Credit Facility (excluding Competitive Bid Loans) for general
corporate purposes, which, subject to the Loan Documents, Borrower may borrow,
repay, and reborrow under this Agreement; provided, that, (i) each such Advance
must occur on a Business Day and no later than the Business Day immediately
preceding the Short Term Revolving Facility Termination Date or Long Term
Revolving Facility Termination Date, as applicable, (ii) each such Advance must
be in an amount not less than the limitations provided in Section 2.2, and (iii)
on any date of determination, the outstanding principal balance of the Revolving
Credit Facility (including the Letter of Credit Exposure and the outstanding
balance of all Competitive Bid Loans and the Swingline Note) shall never exceed
the lesser of (A) the difference between (1) the Asset Coverage Requirement,
minus (2) the aggregate amount outstanding under the Term Facility, (B) the
Revolving Commitment, or (C) the difference between (1) $832,500,000, minus (2)
the original principal amount of the Additional Term Loans. Except as provided
in Section 2.3 hereof, in no event shall any Revolving Lender be required to
make any Advances in excess of such Lender's Revolving Loan Percentage of the
amount required to be advanced by the Revolving Lenders under the above
provisions of this Section 2.1 or which would cause any Revolving Lender to have
made Advances in excess of such Lender's Revolving Loan Commitment Amount.
Advances shall be made under the Short Term Revolving Facility only after and so
long as the Long Term Revolving Facility is fully funded. Repayments on the
Revolving Credit Facility shall be applied first to reduce the Short Term
Revolving Facility and then to the Long Term Revolving Facility.
(b) Letters of Credit. Each Revolving Lender agrees to cause Letters
of Credit to be issued by the Issuing Lender for the account of Borrower
(provided any such Letter of Credit can be issued in the name or for the benefit
of any Affiliate or other Person designated by Borrower) for any of the purposes
for which Borrower can obtain an Advance under the Revolving Credit Facility;
provided, that (i) each such Letter of Credit shall be issued on a Business Day,
(ii) after the issuance of any such Letter of Credit, (A) the Letter of Credit
Exposure must be less than or equal to the Revolving Commitment under the Long
Term Revolving Facility (as the same may be adjusted as herein provided) less
the sum of all outstanding Advances under the Long TermRevolving Facility
(including, without limitation, Swingline Advances), and (B) the Letter of
Credit
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<PAGE> 32
Exposure shall not exceed fifteen percent (15%) of the Revolving Commitment, and
(iii) each such Letter of Credit must have an expiration date no later than the
Long Term Revolving Facility Termination Date. To the extent that funds are ever
drawn under any of the Letters of Credit and not repaid by Borrower, each such
draw will be paid by the Issuing Lender, and each of the Revolving Lenders will
make an Advance under the Long Term Revolving Facility in the amount of such
Lender's Revolving Loan Percentage of the amount so paid by the Issuing Lender
to reimburse the Issuing Lender for such draw.
(c) Term Facility Advances. Each Term Lender which is a party to this
Agreement on the Closing Date has funded or acquired its Term Loan Commitment
Amount prior to the Closing Date. Any Term Lenders providing Additional Term
Loans shall advance the amounts thereof as and when agreed to by Borrower,
Administrative Agent and such Term Lenders.
(d) Increase in Aggregate Commitment. So long as no Default or Event
of Default shall have occurred and be continuing, Borrower shall have the right
from time to time upon prior written notice to Administrative Agent to increase
the Revolving Commitment or the Term Facility; provided, that in no event shall
(i) the aggregate Revolving Commitment and Term Loan Commitment Amounts be
increased to an amount greater than $900,000,000, and (ii) the aggregate Term
Loan Commitment Amounts exceed the maximum amount of the Term Facility;
provided, further, that:
(1) Any increase in the Revolving Commitment which is
accomplished by increasing the Revolving Loan Commitment Amount of any
Revolving Lender or Revolving Lenders who are at the time of such increase
party to this Agreement (which increase shall be subject to the consent of
such Revolving Lender or Revolving Lenders shall consent to such increase
in their sole and absolute discretion) shall be subject to the following
terms: (i) this Agreement will be amended by Borrower, the Administrative
Agent and those Revolving Lender(s) whose Commitment(s) is or are being
increased to reflect the revised Revolving Loan Commitment Amounts of each
such Revolving Lender, (ii) Administrative Agent will deliver an updated
Schedule I to Borrower and each of the Revolving Lenders reflecting the
revised Revolving Loan Commitment Amount and Revolving Loan Percentage of
each of the Revolving Lenders, (iii) the Advances under the Revolving
Credit Facility will be reallocated on the effective date of such increase
among the Revolving Lenders in accordance with their revised Revolving Loan
Percentages (and Borrower shall pay any and all costs required pursuant to
Section 3.6 in connection with such reallocation as if such reallocation
were a prepayment), and (iv) Borrower will deliver new Revolving Note(s) to
the Revolving Lender or Revolving Lenders whose Revolving Loan Commitment
Amount(s) is or are being increased reflecting the revised Revolving Loan
Commitment Amount of such Revolving Lender(s).
(2) Any increase in the Revolving Commitment which is
accomplished by addition of a new Revolving Lender under this Agreement
shall be subject to the following terms: (i) such new Revolving Lender
shall be an Eligible Assignee and shall be subject to the consent of
Administrative Agent and, prior to the occurrence and during the
continuance of a Default, Borrower , which consent shall not be
unreasonably withheld, (ii) this Agreement will be amended by Borrower, the
Administrative Agent and by the party becoming an additional Revolving
Lender hereunder to reflect the addition of such party as a Lender
hereunder, (iii) Administrative Agent will deliver an updated Schedule I to
CREDIT AGREEMENT PAGE 26
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Borrower and each of the Lenders, reflecting the revised Revolving Loan
Commitment Amount and Revolving Loan Percentage of each of the Revolving
Lenders, (iv) the outstanding Advances under the Revolving Credit Facility
will be reallocated on the effective date of such increase among the
Revolving Lenders in accordance with their revised Revolving Loan
Percentages (and Borrower shall pay any and all costs required pursuant to
Section 3.6 in connection with such reallocation as if such reallocation
were a prepayment), and (v) Borrower will deliver a Revolving Note to such
party.
(3) Any increase in the Revolving Commitment pursuant to this
Section 2.1 shall be prorated between the Short Term Revolving Facility and
Long Term Revolving Facility in a manner which will cause the Revolving
Commitments under each such facility (in the aggregate and for each
Revolving Lender) to retain the same percentage relationship as existed
immediately prior to such increase.
(4) Any increase in the Term Facility which is accomplished by
addition of a new Term Lender under this Agreement shall be subject to the
following terms: (i) such new Term Lender shall be an Eligible Assignee and
shall be subject to the consent of Administrative Agent and, prior to the
occurrence and during the continuance of a Default, Borrower , which
consent shall not be unreasonably withheld, (ii) this Agreement will be
amended by Borrower, the Administrative Agent and by the party becoming an
additional Term Lender hereunder to reflect the addition of such party as a
Lender hereunder, (iii) Administrative Agent will deliver an updated
Schedule I to Borrower and each of the Lenders, reflecting the revised Term
Loan Commitment Amount and Term Loan Percentage of each of the Term
Lenders, and (iv) Borrower will deliver a Term Note to such party.
(5) Any increase in the Term Facility which is accomplished by
increasing the Term Loan Commitment Amount of any Term Lender or Term
Lenders who are at the time of such increase party to this Agreement (which
increase shall be subject to the consent of such Term Lender or Term
Lenders in their sole and absolute discretion) shall be subject to the
following terms: (i) this Agreement will be amended by Borrower, the
Administrative Agent and those Term Lender(s) whose Commitment(s) is or are
being increased to reflect the revised Term Loan Commitment Amounts of each
such Term Lender, (ii) Administrative Agent will deliver an updated
Schedule I to Borrower and each of the Lenders reflecting the revised Term
Loan Commitment Amount and Term Loan Percentage of each of the Term
Lenders, and (iii) Borrower will deliver new Term Note(s) to the Term
Lender or Term Lenders whose Term Loan Commitment Amount(s) is or are being
increased reflecting the revised Term Loan Commitment Amount of such Term
Lender(s).
(6) Borrower shall pay an administrative fee to Administrative
Agent in connection with any such increase in the Revolving Loan Commitment
Amount and/or the Term Loan Commitment Amount, in accordance with the terms
of a separate letter agreement between Borrower and Administrative Agent.
(e) Swingline Commitment. Subject to the terms and conditions of this
Agreement, Swingline Lender agrees to make Swingline Advances to Borrower from
time to time from the Closing Date through the Long Term Revolving Facility
Termination Date; provided, that the aggregate principal amount of all
outstanding Swingline Advances (after giving effect to any amount requested),
shall not exceed the lesser of (i) the Revolving Commitment less the sum of all
CREDIT AGREEMENT PAGE 27
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outstanding Advances under the Revolving Credit Facility (including Competitive
Bid Advances) and the Letter of Credit Exposure and (ii) the Swingline
Commitment.
SECTION 2.2. Method of Borrowing under Revolving Credit Facility. Subject
to the terms and conditions of this Agreement, Borrower shall be entitled to
obtain Advances under the Revolving Credit Facility from Revolving Lenders and
Swingline Advances from the Swingline Lender pursuant to Section 2.1 in the
following manner:
(a) Request for Advance. Borrower shall give Administrative Agent
irrevocable prior written notice pursuant to a Request for Advance not later
than 10:00 a.m. (Dallas time) or, in the case of Swingline Advances, 2:00 p.m
(Dallas time) (i) on the same Business Day as any Swingline Advance, (ii) at
least one Business Day before each Variable Rate Advance (other than Swingline
Advances) and (iii) at least three (3) Business Days before each LIBOR Rate
Advance (other than Swingline Advances), of its intention to borrow, specifying
(A) the date of such Advance, which shall be a Business Day, and whether such
Advance is to be a Swingline Advance or an Advance under the Revolving Credit
Facility, (B) the amount of such Advance, which shall be in an aggregate
principal amount of $5,000,000 (or in the case of Swingline Advances,
($1,000,000) or a whole multiple of $1,000,000 in excess thereof with respect to
LIBOR Rate Advances and $1,000,000 or a whole multiple of $100,000 in excess
thereof with respect to Variable Rate Advances (including Swingline Advances
accruing interest with respect to the Variable Rate), (C) whether such Advance
(including any Swingline Advance) is to be a LIBOR Rate Advance or Variable Rate
Advance, and (D) in the case of a LIBOR Rate Advance, the duration of the
Interest Period applicable thereto. Notices received after 10:00 a.m. (Dallas
time), shall be deemed received on the next Business Day.
(b) Alternate Currency Option. In the case of any Alternate Currency
Advance (other than in connection with a Competitive Bid Foreign Currency Loan),
Borrower (acting for itself or on behalf of each other Borrower), through an
Authorized Officer, shall give Administrative Agent at least three Business
Days' irrevocable written notice of its intention to borrow or reborrow such
advance hereunder (the "Alternate Currency Option"). Notice shall be given to
Administrative Agent prior to 10:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
Alternate Currency Advances shall in all cases bear interest at the Alternate
Currency Rate computed with respect to the applicable Alternate Currency and be
subject to availability and to Section 3.5 hereof. Such notice of borrowing
shall specify (i) the requested funding date, which shall be a Business Day,
(ii) the Dollar Equivalent of the amount of the proposed Alternate Currency
Advance, (iii) the currency of such proposed Alternate Currency Advance, (iv)
the Interest Period selected by Borrower (provided that no such Interest Period
shall extend past the Long Term Revolving Facility Termination Date) and (v)
Borrower's election of the Effective Date on which the Alternate Currency
Advance shall begin. The aggregate amount of Alternate Currency Advances to be
made on any funding date shall not be less than Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) (in its Dollar Equivalent), or
greater whole multiples of One Million and No/100 Dollars ($1,000,000.00) (in
its Dollar Equivalent). The aggregate amount of Alternate Currency Advances plus
Competitive Bid Foreign Currency Advances outstanding at any time (in its Dollar
Equivalent) shall not exceed thirty percent (30%) of the Revolving Commitment.
The aggregate amount of Competitive Bid Foreign Currency Advances outstanding at
any time (in its Dollar Equivalent) shall not exceed $50,000,000.
CREDIT AGREEMENT PAGE 28
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(c) Notice To Revolving Lenders. Administrative Agent shall promptly
notify Revolving Lenders or Swingline Lender, as applicable, of each notice
received from Borrower pursuant to this Section 2.2. Each Revolving Lender or
Swingline Lender, as applicable, shall, not later than noon, Dallas, Texas time,
on the date of any such Advance, deliver to Administrative Agent, at its address
set forth herein, such Lender's Revolving Loan Percentage of such Advance or, in
the case of a Swingline Advance the amount thereof, in immediately available
funds in accordance with Administrative Agent's instructions. Prior to 2:00
p.m., Dallas, Texas time, on the date of any Advance hereunder Administrative
Agent shall, subject to satisfaction of the conditions set forth in Article IV,
disburse the amounts made available to Administrative Agent by the Revolving
Lenders or Swingline Lender, as applicable, by (i) transferring such amounts by
wire transfer pursuant to Borrower's instructions, or (ii) in the absence of
such instructions, crediting such amounts to the account of Borrower maintained
with Administrative Agent. All Advances under the Revolving Credit Facility
shall be made by each Revolving Lender according to its Revolving Loan
Percentage.
(d) Swingline Advances. Swingline Advances shall be refunded by the
Revolving Lenders on demand by Swingline Lender. Such refundings shall be made
by the Revolving Lenders in accordance with their respective Revolving Loan
Percentages and shall thereafter be reflected as Advances under the Revolving
Credit Facility of the Revolving Lenders on the books and records of the
Administrative Agent, which Advances under the Revolving Credit Facility shall
be Variable Rate Advances. Each Revolving Lender shall fund its respective
Revolving Loan Percentage of Advances as required to repay Swingline Advances
outstanding to the Swingline Lender upon demand by the Swingline Lender but in
no event later than 2:00 p.m. (Dallas time) on the next succeeding Business Day
after such demand is made. No Revolving Lender's obligation to fund its
respective Revolving Loan Percentage of a Swingline Advance shall be affected by
any other Revolving Lender's failure to fund its Revolving Loan Percentage of a
Swingline Advance, nor shall any Revolving Lender's Percentage be increased as a
result of any such failure of any other Revolving Lender to fund its Revolving
Loan Percentage.
Borrower shall pay to Swingline Lender on demand the amount of any
Swingline Advances to the extent amounts received from the Revolving Lenders are
not sufficient to repay in the full the outstanding Swingline Advances requested
or required to be refunded.
Each Revolving Lender acknowledges and agrees that its obligation to
refund Swingline Advances in accordance with the terms of this Section 2.2 is
absolute and unconditional and shall not be affected by any circumstance
whatsoever (including, without limitation, repayment of such Swingline Advance
by Borrower pursuant to the above paragraph if the same is required to be
refunded to Borrower by Swingline Lender; provided, that if prior to the
refunding of any outstanding Swingline Advance pursuant to this Section 2.2, one
of the events described in Section 9.1(f) or (g) shall have occurred, each
Revolving Lender will, on the date the applicable Advance under the Revolving
Credit Facility would have been made, purchase an undivided participating
interest in the Swingline Advance to be refunded in an amount equal to its
Revolving Loan Percentage of the aggregate amount of such Swingline Advance).
Each Revolving Lender will immediately transfer to the Swingline Lender, in
immediately available funds, the amount of its participation and upon receipt
thereof the Swingline Lender will deliver to such Revolving Lender a certificate
evidencing such participation dated the date of receipt of such funds and for
such amount.
CREDIT AGREEMENT PAGE 29
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(e) Method of Issuing Letters of Credit. Not less than three (3)
Business Days prior to the requested date of issuance of any Letter of Credit,
Borrower shall deliver to Administrative Agent a Request For Advance and shall
execute and deliver to the Issuing Lender the customary letter of credit
application and agreement used by the Issuing Lender from time to time (the "LOC
Application"). Nothing in this Agreement shall prohibit the Issuing Lender from
modifying the form of LOC Application in effect from time to time in connection
with the issuance of any Letter of Credit, provided that such modification does
not substantially modify this Agreement to the detriment of Borrower. In the
event of a direct conflict between the provisions of the LOC Application and
this Agreement, the provisions of this Agreement shall govern. In no event shall
a Letter of Credit have an expiration date which is later than the Long Term
Revolving Facility Termination Date. Letters of Credit may be issued on behalf
of Borrower or any Affiliate or other Person designated by Borrower, provided,
that any such designation shall not limit or effect the liability of Borrower or
Guarantors, for repayment of any amounts drawn thereon. Upon satisfaction of the
applicable conditions precedent set forth in Article IV, and subject to the
other terms and conditions of this Agreement, the Issuing Lender shall issue
Letters of Credit for the account of Borrower or any Guarantor within three (3)
Business Days from receipt by the Issuing Lender of the fully-executed LOC
Application (so long as the requested terms of such Letter of Credit are
acceptable to the Issuing Lender in its reasonable discretion).
Borrower shall be entitled to have issued for itself or any Affiliate
or other Person under the Revolving Credit Facility, subject to the terms of
this Agreement, Letters of Credit denominated in an Alternate Currency or other
currency as approved by Administrative Agent and the Issuing Lender, provided,
that, if drawn, each Revolving Lender shall be required to fund its pro rata
part of the Dollar Equivalent of such Advance. Each such Advance shall be
subject to the terms and conditions of this Agreement related to Advances. The
amount to be reserved under the Revolving Credit Facility related to any such
Letter of Credit issued in an Alternate Currency or other currency approved by
Administrative Agent and the Issuing Lender, and therefore the Letter of Credit
Exposure related thereto, shall be an amount equal to 115% of the amount
remaining to be funded under any said Letter of Credit from time to time (in
Dollar Equivalent calculated from time to time).
Immediately upon the issuance of each Letter of Credit, the Issuing
Lender shall be deemed to have sold and transferred to each Revolving Lender,
and each Revolving Lender shall be deemed to have purchased and received from
the Issuing Lender, in each case irrevocably and without any further action by
any party, an undivided interest and participation in such Letter of Credit,
each drawing thereunder and the obligations of Borrower under this Agreement in
respect thereof in an amount equal to the product of (x) such Lender's Revolving
Loan Percentage times (y) the maximum amount available to be drawn under such
Letter of Credit (assuming compliance with all conditions to drawing). Subject
to the limits referred to above, Borrower may request the issuance of Letters of
Credit under this Section 2.2(e), repay any Advances under the Revolving Credit
Facility resulting from drawings thereunder pursuant to this Section 2.2(e) and
request the issuance of additional Letters of Credit under this Section 2.2(e).
Borrower unconditionally agrees to pay to the Issuing Lender (and the
LOC Application shall so provide) all amounts drawn under and payable to Issuing
Lender under or in connection with any Letter of Credit immediately when due
(and in any event shall reimburse any Issuing Lender for drawings under a Letter
of Credit no later than the Business Day after payment by the Issuing Lender),
irrespective of any claim, set-off, defense or other right which Borrower, any
CREDIT AGREEMENT PAGE 30
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Subsidiary or any account party may have at any time against the Issuing Lender
or any other Person, including without limitation, (i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (ii) the
existence of any claim, setoff, defense or other right which Borrower or any
Subsidiary may have at any time against a beneficiary named in a Letter of
Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Agent, the Issuing Lender, any Lender, or
any other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transaction
(including, without limitation, any underlying transactions between Borrower or
any Subsidiary and the beneficiary named in any Letter of Credit); (iii) any
draft, certificate or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) the surrender
or impairment of any security for the performance or observance of any of the
terms of any of the Loan Documents; or (v) the occurrence of any Default or
Event of Default. However, nothing in this Agreement constitutes a waiver of
Borrower's rights to assert independently of its reimbursement obligation any
claim against Issuing Lender for its gross negligence or willful misconduct in
connection with its funding any Letter of Credit. If Borrower fails to reimburse
the Issuing Lender as above required, the payment by the Issuing Lender of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Lender of an Advance under the Revolving
Credit Facility, which shall bear interest at the Variable Rate, in the amount
of such draft (but without any requirement for compliance with the conditions
set forth in Article IV hereof). In the event that a drawing under any Letter of
Credit is not reimbursed by Borrower by 10:00 a.m. (Dallas time) on the first
Business Day after such drawing, the Issuing Lender shall promptly notify
Administrative Agent and each other Revolving Lender. Each such Revolving Lender
shall, on the first Business Day following such notification, make an Advance
under the Revolving Credit Facility, which shall bear interest at the Variable
Rate, and shall be used to repay the applicable portion of the Issuing Lender's
advance with respect to such Letter of Credit, in an amount equal to the amount
of its participation in such drawing for application to reimburse the Issuing
Lender (but without any requirement for compliance with the applicable
conditions set forth in Article IV hereof) and shall make available to
Administrative Agent for the account of the Issuing Lender, by deposit at
Administrative Agent's office, in same day funds, the amount of such Advance. In
the event that any Revolving Lender fails to make available to Administrative
Agent for the account of the Issuing Lender the amount of such Advance, the
Issuing Lender shall be entitled to recover such amount on demand from such
Revolving Lender together with interest thereon at a rate per annum equal to the
lesser of (i) the Maximum Lawful Rate or (ii) the Federal Funds Rate.
SECTION 2.3 Competitive Bid Loans
(a) Competitive Bid Advances. In addition to Advances pursuant to
Sections 2.1 and 2.2, but subject to all of the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in Section
2.1 as to the maximum aggregate principal amount of all outstanding Advances
under the Revolving Credit Facility), Borrower may, as set forth in this Section
2.3, request the Revolving Lenders, prior to the Long Term Revolving Facility
Termination Date, to make offers to make Competitive Bid Advances to Borrower.
Each Revolving Lender may, but shall have no obligation to, make such offers and
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section 2.3. Competitive Bid Advances shall be
evidenced by the Competitive Bid Notes. Each Competitive
CREDIT AGREEMENT PAGE 31
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Bid Advance shall be repaid in full by Borrower on the last day of the Interest
Period applicable thereto.
(b) Competitive Bid Quote Request. When Borrower wishes to request
offers to make Competitive Bid Loans under this Section 2.3, Borrower shall
transmit to Administrative Agent by telecopy a Competitive Bid Quote Request to
be received no later than 11:00 a.m., Dallas time, at least five Business Days
prior to the Borrowing Date proposed therein, specifying in accordance with all
of the terms of this Agreement:
(i) the proposed Borrowing Date for the proposed Competitive Bid
Advance;
(ii) the aggregate principal amount in Dollar Equivalents of such
Competitive Bid Advance;
(iii) the Interest Period applicable thereto;
(iv) whether such request is for a Competitive Bid Pricing Loan or
a Competitive Bid Foreign Currency Loan; and
(v) in the case of Competitive Bid Foreign Currency Loans, the
currency in which such Advance is to be made.
Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for both Competitive Bid Pricing Loans and Competitive Bid
Foreign Currency Loans in a single Competitive Bid Quote Request. No Competitive
Bid Quote Request shall be given within five Business Days (or upon reasonable
prior notice to the Revolving Lenders, such other number of days as Borrower and
Administrative Agent may agree) of any other Competitive Bid Quote Request. Each
Competitive Bid Quote Request shall be in a minimum amount of $5,000,000 or a
larger multiple of $1,000,000. Borrower shall not be entitled to have more than
six Competitive Bid Loans outstanding at any time. A Competitive Bid Quote
Request that does not conform substantially to the format of Exhibit E hereto
shall be rejected, and Administrative Agent shall promptly notify Borrower of
such rejection by telecopy.
(c) Invitation for Competitive Bid Quotes. Promptly upon receipt of a
Competitive Bid Quote Request that is not rejected pursuant to Section 2.3(b),
Administrative Agent shall send to each of the Revolving Lenders by telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
Borrower to each Revolving Lender to submit Competitive Bid Quotes offering to
make the Competitive Bid Loans to which such Competitive Bid Quote Request
relates in accordance with this Section 2.3.
(d) Submission and Contents of Competitive Bid Quotes.
(i) Each Revolving Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid Quotes.
Each Competitive Bid Quote must comply with the requirements of this
Section 2.3 and must be submitted to Administrative Agent by telecopy
at its offices specified in or pursuant to Section 11.2 not later than
1:00 p.m., Dallas time, at least four Business Days prior to the
proposed Borrowing Date (or upon
CREDIT AGREEMENT PAGE 32
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reasonablTe prior notice to the Revolving Lenders, such other time and
date as Borrower and Administrative Agent may agree). Subject to
Articles IV and IX, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of Borrower.
(ii) Each Competitive Bid Quote shall in any case specify: (1) the
proposed Borrowing Date, which shall be the same as that set forth in
the applicable Invitation for Competitive Bid Quotes; (2) the principal
amount of the Competitive Bid Loan for which each such offer is being
made, (x) which principal amount may be greater than, less than or
equal to the Revolving Loan Commitment Amount of the quoting Lender,
but in no case greater than an amount which would cause the then
outstanding Advances under the Revolving Credit Facility (including
Swingline Advances), the Letter of Credit Exposure and the outstanding
balances of all Competitive Bid Loans to exceed the Revolving
Commitment (or in the case of Competitive Bid Foreign Currency Loans,
the limitations set forth in Section 2.2(b)), (y) which principal
amount must be at least $2,000,000 and an integral multiple of
$500,000, and (z) which principal amount may not exceed the principal
amount of Competitive Bid Loans for which offers were requested; (3)
whether the quote is for a Competitive Bid Pricing Loan or a
Competitive Bid Foreign Currency Loan if quotes are being requested for
both types of Advances in the same Competitive Bid Quote Request; (4)
the Competitive Bid Margin offered for each such Competitive Bid Loan;
(5) the minimum or maximum amount, if any, of the Competitive Bid Loan
which may be accepted by Borrower; (6) the applicable Interest Period;
and (7) the identity of the quoting Lender.
(iii) Administrative Agent shall reject any Competitive Bid Quote
that: (1) is not substantially in the form of Exhibit E-2 hereto or
does not specify all of the information required by Section 2.3(d)(ii);
(2) contains qualifying, conditional or similar language, other than
any such language contained in Exhibit E-2 hereto; (3) proposes terms
other than or in addition to those set forth in the applicable
Invitation for Competitive Bid Quotes, except as contemplated by
Section 2.3(d)(ii); or (4) arrives after the time set forth in Section
2.3(b).
(iv) If any Competitive Bid Quote shall be rejected pursuant to
Section 2.3(d)(iii), then Administrative Agent shall notify the
relevant Revolving Lender of such rejection as soon as practicable.
(e) Notice to Borrower. Administrative Agent shall promptly notify
Borrower of (1) the terms of any Competitive Bid Quote submitted by a Revolving
Lender that is in accordance with this Section 2.3 and (2) if not disregarded by
Administrative Agent in accordance with the immediately succeeding sentence, of
any Competitive Bid Quote that is in accordance with this Section 2.3 which
amends, modifies or is otherwise inconsistent with a previous Competitive Bid
Quote submitted by such Revolving Lender with respect to the same Competitive
Bid Quote Request. Any such subsequent Competitive Bid Quote shall be
disregarded by Administrative Agent unless such subsequent Competitive Bid Quote
specifically states that it is submitted solely to correct a manifest error in
such former Competitive Bid Quote. Administrative Agent's notice to Borrower
shall specify the aggregate principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period specified in the related
Competitive Bid Quote Request and the respective principal amounts and
Competitive Bid Margins so offered.
CREDIT AGREEMENT PAGE 33
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(f) Acceptance and Notice by Borrower. Subject to the receipt of the
notice from Administrative Agent referred to in this Section 2.3, not later than
11:00 a.m. (Dallas time) at least three Business Days prior to the proposed
Borrowing Date, Borrower shall notify Administrative Agent of Borrower's
acceptance or rejection of each offer received by it pursuant to this Section
2.3; provided, however, that the failure by Borrower to give such notice to
Administrative Agent shall be deemed to be a rejection by Borrower of all such
offers. In the case of acceptance, such notice (a "Competitive Bid Acceptance
Notice") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. Borrower may accept or reject any Competitive
Bid Quote in whole or in part (subject to the terms of this Section 2.3);
provided that:
(i) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;
(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins; and
(iii) Borrower may not accept any offer of the type described in
this Section 2.3 that otherwise fails to comply with the requirements
of this Agreement for the purpose of obtaining a Competitive Bid Loan
under this Agreement.
(g) Allocation by Administrative Agent. If offers are made by two or
more Revolving Lenders with the same Competitive Bid Margins for a greater
aggregate principal amount than the amount in respect of which offers are
permitted to be accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by Administrative Agent among such Revolving Lenders as nearly as
possible (in such multiples as Administrative Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers; provided, however,
that no Revolving Lender shall be allocated a portion of any Competitive Bid
Advance which is less than the minimum amount which such Revolving Lender has
indicated that it is willing to accept. Allocations by Administrative Agent of
the amounts of Competitive Bid Loans shall be conclusive in the absence of
manifest error. Administrative Agent shall promptly, but in any event on the
same Business Day, notify each Revolving Lender of its receipt of a Competitive
Bid Acceptance Notice and the aggregate principal amount of each Competitive Bid
Advance allocated to each participating Revolving Lender.
(h) Commitment to Lend Not Reduced and Other Agreements. The agreement
of a Revolving Lender to make a Competitive Bid Loan hereunder shall not reduce
such Revolving Lender's obligation to fund other Advances under the Revolving
Credit Facility to the extent of such Revolving Lender's Revolving Loan
Commitment Amount, it being expressly acknowledged and agreed that the agreement
to make a Competitive Bid Loan is optional on the part of such Revolving Lender
and in addition to its Revolving Loan Commitment Amount. The amount of
Competitive Bid Loans shall not reduce the Revolving Loan Commitment Amount of
any Revolving Lender for purposes of calculating the Commitment Fee. In no event
shall the aggregate amount of Competitive Bid Loans outstanding at any time
exceed (i) $100,000,000 with respect to Competitive Bid Pricing Loans and (ii)
the limitation set forth in Section 2.2(b) with respect to Competitive Bid
Foreign Currency Loans.
CREDIT AGREEMENT PAGE 34
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SECTION 2.4. Additional Guarantors. Upon the earlier to occur of (1)
thirty (30) days after the filing of articles of incorporation, certificates of
limited partnership or similar organizational documents with the appropriate
Governmental Authority of any future Subsidiary of Borrower (excluding Excluded
Subsidiaries and Foreign Subsidiaries) or (2) two (2) Business Days prior to the
date that such Subsidiary obtains from Borrower proceeds of an Advance under the
Revolving Credit Facility or includes any of its assets in calculating the Asset
Coverage Requirement, Borrower shall cause to be delivered to Administrative
Agent (a) a Supplement to Schedule I properly executed by such future
Subsidiary, (b) a Guaranty Agreement, executed by such future Subsidiary, (c) a
contribution and indemnification agreement, in form and substance satisfactory
to Administrative Agent, executed by Borrower, Administrative Agent and all of
the Guarantors, (d) a Pledge Agreement and all financing statements related
thereto, properly executed by Borrower or the appropriate Guarantor pursuant to
which all of the outstanding shares of stock of such future Subsidiary are
pledged to Administrative Agent (for the benefit of Lenders), together with the
original stock certificates accompanied by stock powers executed in blank by
Borrower or the appropriate Guarantor evidencing the shares of stock required to
be pledged under this Agreement, and (e) all resolutions, certificates or
documents Administrative Agent may reasonably request relating to the formation,
existence and good standing of such future Subsidiary, corporate authority for
the execution and validity of the Loan Documents described in clauses (a), (b),
(c) and (d) immediately above and any other documents and matters relevant to
the formation of such future Subsidiary and its status as a Guarantor hereunder
(if applicable), all in form and substance satisfactory to Administrative Agent,
which resolutions, certificates and documents shall include, without limitation,
(i) the articles of incorporation and bylaws of such future Subsidiary, (ii)
resolutions of the board of directors of such future Subsidiary authorizing the
execution of the Loan Documents described in clauses (a), (b), (c) and (d)
immediately above on behalf of such future Subsidiary and the granting of all
the relevant Lenders' Liens as security for the Credit Facilities and the
Letters of Credit, (iii) certificates of incumbency for the officers of such
future Subsidiary, and (iv) certificates of corporate existence and good
standing issued by the state of incorporation of such future Subsidiary and from
the appropriate Governmental Authority of each state in which such future
Subsidiary is required by applicable law to be qualified.
SECTION 2.5. Fees.
(a) Participation Fee. In consideration for the commitment of each
Revolving Lender to make Advances under the Revolving Credit Facility upon the
terms and conditions set forth in this Agreement and the reserving of sufficient
funds by each Revolving Lender from which to make disbursement of the Advances
under the Revolving Credit Facility, Borrower shall pay to each such Revolving
Lender on the Closing Date (or the date such Revolving Lender becomes a party to
this Agreement) its Participation Fee. In consideration for the commitment of
each Term Lender to fund its pro rata part of the Term Facility upon the terms
and conditions set forth in this Agreement and the reserving of sufficient funds
by each Term Lender from which to make such Advance under the Term Facility,
Borrower shall pay to each such Term Lender its Participation Fee on the Closing
Date or, if later, the date when such Term Lender funds its Term Loan Commitment
Amount.
(b) Commitment Fee. Throughout the Credit Period, Borrower shall
pay to Administrative Agent for the account of each Revolving Lender, such
Revolving Lender's Revolving Loan Percentage of the Commitment Fee, such fee to
be computed based on the number of actual
CREDIT AGREEMENT PAGE 35
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days elapsed assuming each calendar year consisted of 360 days, and due and
payable quarterly in arrears, commencing on October 1, 1998, and continuing on
the first day of each calendar quarter thereafter, with a final payment of such
Commitment Fee being due and payable on the Long Term Revolving Facility
Termination Date.
(c) Letter of Credit Fees. Borrower shall pay to Administrative
Agent for the account of each Revolving Lender a letter of credit fee (the
"Letter of Credit Fee") (which shall be payable quarterly in arrears, commencing
on October 1, 1998, and continuing on the first day of each calendar quarter
thereafter, with a final payment of such Letter of Credit Fee being due and
payable on the Long Term Revolving Facility Termination Date) on the average
daily amount available for drawing under all outstanding Letters of Credit
(using the Dollar Equivalent for any Letters of Credit denominated in an
Alternate Currency) at the per annum percentages determined in accordance with
Schedule II hereof.
The fee payable in respect of the Letters of Credit shall be subject to
reduction or increase, as set forth in Schedule II. Subject to Section 11.8
hereof, such fee shall be computed on the basis of the actual number of days
elapsed.
(d) Structure Fee. In consideration for the Arrangers' efforts in
structuring the Credit Facilities and arranging for such Credit Facilities,
Borrower agrees to execute on or before the Closing Date a letter or letters
reasonably satisfactory to Administrative Agent and each Arranger concerning the
Structure Fee and to pay to each Arranger the Structure Fee in accordance with
such letter.
(e) Administrative Fees. In consideration for Administrative
Agent's administration services under the Credit Facilities, Borrower agrees to
execute on or before the Closing Date a letter reasonably satisfactory to
Administrative Agent concerning the Administrative Fees and to pay
Administrative Agent the Administrative Fees in accordance with such letter.
ARTICLE III
TERMS OF THE CREDIT FACILITIES
SECTION 3.1. Notes. The Credit Facilities shall be evidenced by the
Notes. Each Revolving Lender shall receive two originally executed Revolving
Notes (one for the Short Term Revolving Facility and the other for the Long Term
Revolving Facility) in an aggregate amount equal to such Lender's Revolving Loan
Commitment Amount. Each Term Lender shall receive an originally executed Term
Note in an amount equal to such Lender's Term Loan Commitment Amount. Each
Revolving Lender providing a Competitive Bid Loan shall receive an appropriate,
originally executed Competitive Bid Note. The Swingline Lender shall receive the
originally executed Swingline Note in an amount equal to the Swingline
Commitment.
SECTION 3.2. Maturity. All outstanding principal of the Revolving
Notes, together with all accrued but unpaid interest and other amounts owed with
respect thereto, shall be due and payable in full on the Short Term Revolving
Facility Termination Date or Long Term Revolving Facility Termination Date, as
applicable. All outstanding principal of the Term Notes, together with all
accrued but unpaid interest and other amounts owed with respect thereto, shall
be due and payable
CREDIT AGREEMENT PAGE 36
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in full on the Term Facility Termination Date. All outstanding principal of any
Competitive Bid Note shall be due and payable on the last day of the applicable
Interest Period. Borrower shall be entitled to request an extension of the Short
Term Revolving Facility by delivering written notice thereof to Administrative
Agent (which shall immediately forward such request to all Revolving Lenders) at
least 90 but no more than 120 days prior to the Short Term Revolving Facility
Termination Date. Revolving Lenders shall accept or reject such request by
notice to Administrative Agent delivered on or before 30 days prior to the Short
Term Revolving Facility Termination Date (provided, that, the failure of the
Revolving Lenders to respond prior to such date shall be deemed a rejection of
such request). On such date which is 30 days prior to the Short Term Revolving
Facility Termination Date, Administrative Agent shall give notice to Borrower as
to whether Revolving Lenders have accepted or rejected (or deemed to have
rejected) such request, provided, the failure of Administrative Agent to so
notify Borrower shall be deemed a notice that the Revolving Lenders have
rejected such request.
SECTION 3.3. Interest Rate. Interest on the Notes (other than
Competitive Bid Notes) shall accrue at a rate per annum equal to the lesser of
(a) the Applicable Rate as selected by Borrower pursuant to this Agreement,
subject, however, to the provisions of Section 11.8, or (b) the Maximum Lawful
Rate; provided, however, if at any time the Applicable Rate exceeds the Maximum
Lawful Rate, resulting in the charging of interest hereunder to be limited to
the Maximum Lawful Rate, then any subsequent reduction in the Applicable Rate
shall not reduce the rate of interest below the Maximum Lawful Rate until the
total amount of interest accrued on the indebtedness evidenced hereby equals the
amount of interest which would have accrued on such indebtedness if the
Applicable Rate had at all times been in effect.
Without notice to Borrower or anyone else, the Variable Rate and the
Maximum Lawful Rate shall each automatically fluctuate upward and downward as
and in the amount by which the Base Rate and Maximum Lawful Rate, respectively,
fluctuate, subject always to limitations contained in this Agreement. In
addition, the Adjusted LIBOR Rate and the Alternate Currency Rate with regard
to Advances under the Revolving Credit Facility and Term Facility shall
fluctuate upward and downward as and in the amount by which the LIBOR Margin
fluctuates, subject always to limitations contained in this Agreement, any such
changes in the LIBOR Margin and, therefore, the Adjusted LIBOR Rate or Alternate
Currency Rate, as applicable, to occur as provided in Schedule II attached
hereto.
SECTION 3.4. Interest Payments. Interest on the Notes, computed as
provided in Section 3.11, shall be due and payable as it accrues on (a) the
first day of each calendar quarter commencing on October 1, 1998, and continuing
on the first day of each January, April, July and October thereafter until, as
applicable, either the Long Term Revolving Facility Termination Date, the Short
Term Revolving Facility Termination Date or the Term Facility Termination Date,
and (b) at the end of each Interest Period as to any LIBOR Rate Portion, LIBOR
Rate Advance, Alternate Currency Advance or Competitive Bid Note then expiring,
and on demand after, as applicable, the Long Term Revolving Facility Termination
Date, the Short Term Revolving Facility Termination Date or the Term Facility
Termination Date so long as any principal of any Note remains unpaid.
SECTION 3.5. Conversion of Revolving Credit Advances and Interest Rate
Elections under Term Facility.
CREDIT AGREEMENT PAGE 37
<PAGE> 44
(a) Minimum Notice. Upon at least three (3) Business Days' prior
written notice from Borrower to Administrative Agent ("Minimum Notice
Requirement"), Borrower may, on any Interest Adjustment Date (other than, as
applicable, the Long Term Revolving Facility Termination Date, the Short Term
Revolving Facility Termination Date or Term Facility Termination Date, as
applicable), convert amounts of any LIBOR Rate Advances or LIBOR Rate Portion,
as applicable, into Variable Rate Advances or a Variable Rate Portion, as
applicable, with interest accruing thereon with reference to the Variable Rate,
as provided in Section 3.3 above.
(b) Selection of LIBOR Rate Pricing. Upon satisfaction by Borrower of
the Minimum Notice Requirement, and subject to the conditions provided in this
Agreement or the Notes, Borrower may, on any date prior to the Long Term
Revolving Facility Termination Date, Short Term Revolving Facility Termination
Date or Term Facility Termination Date, as applicable, convert amounts of not
less than Five Million and No/100 Dollars ($5,000,000.00) in the aggregate on
the same date, or any whole multiple of One Million and No/100 Dollars
($1,000,000.00) in excess thereof of any Variable Rate Advances or a Variable
Rate Portion, as applicable, into LIBOR Rate Advances or LIBOR Rate Portions, as
applicable, with interest accruing thereon with reference to the Adjusted LIBOR
Rate, as provided in Section 3.3 above, for the Interest Period selected in such
notice. Borrower may make a LIBOR Rate election with respect to each Advance of
the Term Facility by satisfying the Minimum Notice Requirement prior to the
related funding of the Term Facility.
Each notice of Adjusted LIBOR Rate election by Borrower (whether in
connection with an initial funding or a conversion of an existing funding) shall
include (i) the amount of the proposed aggregate LIBOR Rate Advances or the
LIBOR Rate Portions, as applicable, (ii) the Interest Period selected by
Borrower, and (iii) the Effective Date, and is subject to the following
conditions: (1) the Interest Period shall be limited to a period commencing on
the Effective Date and ending on a date one through six months later elected by
Borrower in its notice to Administrative Agent; (2) Borrower's written notice of
an election shall be received by Administrative Agent in time to satisfy the
Minimum Notice Requirement; (3) the last day of the Interest Period will not be
subsequent in time to the Long Term Revolving Facility Termination Date, the
Short Term Revolving Facility Termination Date or Term Facility Termination
Date, as applicable; (4) in the case of a continuation of a LIBOR Rate Advance
or LIBOR Rate Portion, the Interest Period applicable after such continuation
shall commence on the last day of the preceding Interest Period; (5) no LIBOR
Rate election shall be made if Administrative Agent determines by reason of
circumstances affecting the interbank Eurodollar market that either adequate or
reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for any
Interest Period, or it becomes impracticable for Administrative Agent or any
Lender under the applicable Credit Facility to obtain funds by purchasing U.S.
dollars in the interbank Eurodollar market, or if Administrative Agent or any
Lender under the applicable Credit Facility determines that the Adjusted LIBOR
Rate will not adequately or fairly reflect the costs to such Lender of
maintaining the applicable LIBOR Rate Advances or LIBOR Rate Portion, as
applicable, at such rate, or if as a result of any Regulatory Change, it shall
become unlawful or impossible for Lenders under the applicable Credit Facility
to maintain any such LIBOR Rate election; (6) there shall never be more than
fifteen (15) LIBOR Rate Advances, in the aggregate, in effect at any one time
under the Revolving Credit Facility and no more than five (5) LIBOR Rate
Portions in effect at any one time under the Term Facility; and (7) no LIBOR
Rate election shall be made after the occurrence and during the continuance of a
Default or Event of Default.
CREDIT AGREEMENT PAGE 38
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(c) Selection of Alternate Currency Rate. As a condition to each
Alternate Currency Advance under the Revolving Credit Facility (and excluding
Competitive Bid Foreign Currency Loans), Borrower shall select an Alternate
Currency Rate (based on the applicable Alternate Currency) to be applicable
thereto; provided, that each such Alternate Currency Advance must be in an
amount of not less than Five Million and No/100 Dollars ($5,000,000.00) (in its
Dollar Equivalent) in the aggregate on the same date, or any whole multiple of
One Million and No/100 Dollars ($1,000,000.00) (in its Dollar Equivalent) in
excess thereof; and provided, further, that (1) no Alternate Currency election
shall be made if Administrative Agent or any Revolving Lender determines that,
as a result of any Regulatory Change, it shall become unlawful, impracticable or
impossible for Revolving Lenders to maintain any such Alternate Currency
election; (2) there shall never be more than ten (10) Alternate Currency
Advances, in the aggregate, in effect at any one time under the Revolving Credit
Facility (excluding Competitive Bid Foreign Currency Loans); (3) in no event
shall the Dollar Equivalent amount of the requested Alternate Currency Advance
plus the then current outstanding balance of all previous Alternate Currency
Advances and Competitive Bid Foreign Currency Loans based on the Dollar
Equivalent thereof (as of the Business Day immediately prior to the date of such
Advance) exceed in the aggregate thirty percent (30%) of the Revolving
Commitment; (4) no Alternate Currency election shall be made after the
occurrence and during the continuance of a Default or Event of Default; and (5)
Revolving Lenders shall not be required to make any Alternate Currency Advance
if the applicable Alternate Currency Rate would be limited to the Maximum Lawful
Rate pursuant to Section 3.3. Upon the expiration of any Interest Period
applicable to an Alternate Currency Advance under the Revolving Credit Facility
(excluding Competitive Bid Foreign Currency Loans) and provided that no Default
has occurred and Borrower is entitled to have outstanding such Alternate
Currency Advance under this Agreement, the Alternate Currency Advance shall
continue for an Interest Period having the same duration as the Interest Period
then ended (but not beyond the Long Term Revolving Facility Termination Date)
unless Borrower shall, upon three (3) Business Days prior written notice, elect
a different Interest Period. Upon the occurrence of an Event of Default,
Administrative Agent may convert all Alternate Currency Advances into the Dollar
Equivalent at the end of the respective Interest Periods therefor.
(d) Election and Conversion to Variable Rate. To the extent Borrower
has not made an effective election under and in accordance with subparagraphs
(a) or (b) above (including, without limitation, at the expiration of an
Interest Period or, as of the Closing Date, with respect to the initial Advance
of the Term Facility), the Applicable Rate shall be the Variable Rate. If
Borrower has failed to make such election at the end of an Interest Period under
the Revolving Credit Facility, the Revolving Lenders shall be deemed to have
made a Variable Rate Advance in Dollars and in the amount, and in replacement,
of the LIBOR Rate Advance then maturing. If Borrower has failed to make such
elections at the end of any Interest Period under the Term Facility, the
applicable LIBOR Rate Portion shall expire and convert to a Variable Rate
Portion. To the extent Borrower has not made an effective election under clause
(c) above prior to the expiration of the applicable Interest Period with respect
to Alternate Currency Advances, then Borrower shall be deemed to have elected an
Interest Period in accordance with the penultimate sentence of clause (c) above.
CREDIT AGREEMENT PAGE 39
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SECTION 3.6. Payments of Advances; Reduction of Commitment Amount;
Consequential Loss.
(a) At any time prior to the occurrence of an Event of Default,
Borrower may by notice from Borrower to Administrative Agent prior to 10:00 a.m.
(Dallas, Texas time) on the date on which prepayment under this Section 3.6 is
to be made, voluntarily prepay amounts outstanding under the Revolving Credit
Facility from time to time and at any time, in whole or in part, without premium
or penalty; provided, that (i) each such partial payment must be in a minimum
amount of at least Five Million and No/100 Dollars ($5,000,000.00) (or, as to
prepayment of portions thereof which are Alternate Currency Advances, the Dollar
Equivalent thereof), (ii) Borrower shall pay any related Consequential Losses or
Alternate Currency Losses within ten days after Administrative Agent's demand
therefor, and (iii) prepayments shall be applied first to reduce outstandings
under the Short Term Revolving Facility and then under the Long Term Revolving
Facility. Each such optional prepayment shall be applied to the Revolving Credit
Facility ratably in accordance with Section 3.9 to pay the amounts owed to each
Revolving Lender thereunder. At any time subsequent to the Long Term Revolving
Facility Termination Date or the termination of the Revolving Credit Facility,
but prior to the occurrence of an Event of Default, Borrower may by notice from
Borrower to Administrative Agent prior to 10:00 a.m. (Dallas, Texas time) on the
date on which prepayment under this Section 3.6 is to be made, voluntarily
prepay amounts outstanding under the Term Facility from time to time and at any
time, in whole or in part, without premium or penalty; provided, that Borrower
shall pay any related Consequential Losses within ten days after Administrative
Agent's demand therefor. Each such optional prepayment shall be applied to the
Term Facility ratably in accordance with Section 3.9 to pay the amounts owed to
each Term Lender thereunder. Borrower shall not be entitled to prepay any
Competitive Bid Note unless Borrower simultaneously with such payment pays any
Consequential Loss and/or any Alternate Currency Loss resulting from such
prepayment.
(b) Borrower shall make mandatory prepayments under the Revolving
Credit Facility prior to the occurrence of an Event of Default in an amount
equal to the excess, if any, of the sum of the outstanding principal balance of
the Revolving Credit Facility (including amounts outstanding under Competitive
Bid Notes and Swingline Advances) plus the Letter of Credit Exposure, at any
time, over the lesser of (1) the Asset Coverage Requirement less the amount
outstanding under the Term Facility, and (2) the Revolving Commitment. Borrower
shall pay on demand given by Administrative Agent any Consequential Loss and/or
any Alternate Currency Loss arising as a result of any such mandatory
prepayments.
(c) Borrower may, prior to the occurrence of an Event of Default, fully
or partially, reduce the Revolving Commitment, provided that (i) notice of such
reduction must be received by Administrative Agent by 10:00 a.m. Dallas, Texas,
time on the fifth Business Day preceding the effective date of such reduction,
(ii) each such reduction in the Revolving Commitment must be in a minimum amount
of $20,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof ,
(iii) Borrower shall not be entitled to an increase in the Revolving Commitment
once it has been so reduced, (iv) if the sum of the aggregate outstanding
principal balance of the Revolving Credit Facility (including amounts
outstanding under Competitive Bid Notes and Swingline Advances), plus the Letter
of Credit Exposure, exceeds the Revolving Commitment as so reduced, Borrower
shall make a mandatory prepayment on the principal amount of the Revolving
Credit Facility in at least the amount of such excess, together with any
Consequential Loss and/or Alternate Currency
CREDIT AGREEMENT PAGE 40
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Loss arising as a result thereof, and (v) in no event shall Borrower be entitled
to so reduce the Revolving Commitment below $50,000,000.00, unless Borrower has
elected to terminate the Revolving Credit Facility in full.
(d) If Borrower shall prepay any LIBOR Rate Advance, LIBOR Rate
Portion, or in the event of an acceleration, a Competitive Bid Loan prior to the
expiration of its applicable Interest Period or if Borrower shall fail to obtain
an Advance or convert any amounts pursuant to an election satisfying the Minimum
Notice Requirement, Borrower shall pay to Revolving Lenders, Term Lenders or the
applicable holder of the Competitive Bid Loan an amount (the "Consequential
Loss") equal to any loss, expense or reduction in yield that any such Lender
reasonably incurs as a result of such event. Any Consequential Loss required to
be paid by Borrower pursuant to this Section 3.6 or any other provisions of this
Agreement or of the other Loan Documents in connection with the prepayment of
any LIBOR Rate Advances, LIBOR Rate Portions or Competitive Bid Loans shall be
due and payable whether such prepayment is being made voluntarily or
involuntarily, including, without limitation, as a result of an acceleration of
sums due under LIBOR Rate Advances, LIBOR Rate Portions, Competitive Bid Loans
or any part thereof due to an Event of Default.
(e) If Borrower shall prepay, or fail to borrow pursuant to a timely
election, any Alternate Currency Advance or Competitive Bid Foreign Currency
Loan or for whatever reason an Alternate Currency Advance or Competitive Bid
Foreign Currency Loan is converted to Dollars prior to the expiration of its
applicable Interest Period, a prepayment fee shall be due to Revolving Lenders
or the applicable holder of the Competitive Bid Foreign Currency Loan for any
loss, cost, liability, or expense (an "Alternate Currency Loss") which any
Revolving Lender or the applicable holder of the Competitive Bid Foreign
Currency Loan incurs as a result thereof, including, without limitation, (i) any
loss or reasonable expense sustained or incurred in liquidating or employing
deposits from third Persons acquired to effect or maintain such Alternate
Currency Advance, Competitive Bid Foreign Currency Loan or any part thereof,
(ii) an amount equal to the excess, if any of (A) its cost of obtaining the
funds for the Alternate Currency Advance or Competitive Bid Foreign Currency
Loan being prepaid or converted prior to the expiration of its applicable
Interest Period for the period from the date of such prepayment or conversion to
the last day of the Interest Period for such Alternate Currency Advance or
Competitive Bid Foreign Currency Loan, over (B) the amount of interest (as
reasonably determined by such Revolving Lender or the applicable holder of the
Competitive Bid Foreign Currency Loan) that would be realized by such Revolving
Lender or the applicable holder of the Competitive Bid Foreign Currency Loan in
re-employing the funds so prepaid or converted for such Interest Period, (iii)
any loss incurred in liquidating or closing out any foreign currency contract
undertaken by such Revolving Lender or the applicable holder of the Competitive
Bid Foreign Currency Loan in funding or maintaining such Alternate Currency
Advance or Competitive Bid Foreign Currency Loan, and (iv) any loss arising from
any change in the value of Dollars in relation to any such Alternate Currency
Advance or Competitive Bid Foreign Currency Loan which was not paid on the date
due between the date such payment was due and the date of payment, or which was
not paid in the Alternate Currency in which it was made, all as determined by
such Revolving Lender or the applicable holder of the Competitive Bid Foreign
Currency Loan in its good faith discretion, but otherwise without penalty.
(f) As long as no Event of Default has occurred and is continuing,
Borrower shall make such regularly scheduled principal payments under the Term
Facility as are set forth in the Term Notes; provided, that prior to the Long
Term Revolving Facility Termination Date or the termination
CREDIT AGREEMENT PAGE 41
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of the Revolving Credit Facility, the aggregate amount of such principal
payments under the Term Facility during the twelve (12) month period immediately
preceding any such payment shall not exceed one percent (1%) of the face amount
of the Term Notes.
A Lender (through the Administrative Agent) must request compensation
under Sections 3.6 (d) and (e) as promptly as practicable after it obtains
knowledge of the event which entitles it to such compensation, but in any event
within 180 days after it obtains such knowledge and pursuant to a certificate
which sets forth the amount such Lender is entitled to receive pursuant to
Sections 3.6 (d) and (e) and the basis for determining such amount, which
certificate shall be conclusive as to the matters set forth therein in the
absence of manifest error. Any amounts received by Administrative Agent from
Borrower pursuant hereto shall be disbursed by Administrative Agent in
immediately available funds to the Lenders requesting such amounts.
SECTION 3.7. Schedules on Notes. Each Revolving Lender is hereby
authorized to record the date and amount of the initial principal balance of its
Revolving Notes and the date and amount of each advance and repayment of
principal on such Revolving Notes, and to attach any such recording as a
schedule to the applicable Revolving Note whereupon such schedule shall
constitute a part of such Revolving Note for all purposes. Any such recording
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided that the absence or inaccuracy of any such schedule or
notation thereon shall not limit or otherwise affect the liability of Borrower
for the repayment of all amounts outstanding under the Revolving Notes together
with interest thereon.
SECTION 3.8. General Provisions as to Payments. All payments and
indemnities required to be made by Borrower under any of the Loan Documents
shall be joint and several obligations of Borrower and each Guarantor. Borrower
shall make each payment of principal and interest on either of the Credit
Facilities and all fees payable hereunder or under any other Loan Document not
later than 12:00 noon (Dallas time) on the date when due, in Federal or other
funds immediately available in Dallas, Texas, to Administrative Agent at
Administrative Agent's address for payments set forth in Schedule I.
Administrative Agent will promptly (and if such payment is received by
Administrative Agent by 12:00 noon (Dallas, Texas time), and otherwise if
reasonably possible, on the same Business Day, and in any event not later than
the next Business Day after receipt of such payment) distribute to each Lender
under the Credit Facility on which a payment is made a payment on the applicable
Note, in accordance with such Lender's pro rata share of each such payment
received by Administrative Agent. Any payment made by Borrower under an
Alternate Currency Advance or Competitive Bid Foreign Currency Loan shall be
made in the currency in which such Alternate Currency Advance or Competitive Bid
Foreign Currency Loan was made. For purposes of calculating accrued interest on
either of the Credit Facilities, any payment received by Administrative Agent as
aforesaid by 12:00 noon (Dallas, Texas time) on any Business Day shall be deemed
made on such day; otherwise, such payment shall be deemed made on the next
Business Day after receipt by Administrative Agent. Whenever any payment of
principal or interest on either of the Credit Facilities, or any fees under the
Loan Documents, shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
CREDIT AGREEMENT PAGE 42
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SECTION 3.9. Application of Payments. Prior to the occurrence of an
Event of Default, all payments made on the Revolving Credit Facility (including
any Swingline Loan), the Term Credit Facility or the Competitive Bid Loans shall
be applied against the Revolving Credit Facility (including any Swingline
Advances), the Term Facility or the Competitive Bid Loans as designated by
Borrower (other than any payments required under the Term Notes) and shall be
paid to each Revolving Lender or Term Lender, as applicable, in accordance with
its Revolving Loan Percentage or Term Loan Percentage, respectively, or to
Swingline Lender or the holder of the applicable Competitive Bid Note, subject
to the provisions of Article X and any provision in the Loan Documents or
agreements among the applicable Lenders providing for the application of such
proceeds against expenses or other amounts. Payments applied to the Revolving
Credit Facility, whether before or after a Default, shall be applied first to
repay Swingline Advances, then to reduce the Short Term Revolving Facility and
then to reduce the Long Term Revolving Facility. After the occurrence of an
Event of Default and for a period of thirty days after notice of such Event of
Default has been received and acknowledged by, or delivered by, Administrative
Agent, all payments made on the Credit Facilities (other than scheduled payments
on the Credit Facilities and any provisions in the Loan Documents providing for
the application of such proceeds against expenses and other amounts) shall be
applied first against the Revolving Credit Facility. If an Event of Default
continues uncured or unwaived after said thirty-day period, payments on the
Credit Facilities shall be ratably paid to each Lender in accordance with its
Aggregate Loan Percentage, subject to Article X and any provision in the Loan
Documents or agreements among the Lenders providing for the application of such
amounts. Revolving Lenders and Borrower agree that if an Event of Default
continues uncured or unwaived after the above-referenced thirty day period, the
Revolving Lenders shall make an Advance to each of the Term Lenders and holders
of Competitive Bid Loans in an amount equal to the net aggregate payments
applied against the Revolving Credit Facility (including against any Swingline
Advances) during such thirty-day period times the Aggregate Loan Percentage of
such Term Lenders and holders of Competitive Bid Loans. The Advance or Advances
so made shall not require any action on the part of Borrower and shall be made
notwithstanding Borrower's failure to comply with the conditions for making
Advances under the Revolving Credit Facility. Except as (a) to principal
payments made pursuant to Section 3.6(a),(b),(c) or (d)(iv), (b) provided in
Section 9.10, and (c) otherwise specifically provided in this Agreement or in
any Loan Document, all prepayments on the respective Credit Facilities
(including Competitive Bid Loans) shall be applied against accrued but unpaid
interest and then against the principal portion of the applicable Credit
Facility; provided, however, that, unless otherwise designated by Borrower or
required by law, prepayments and involuntary payments received by the holder
hereof and applied to principal hereunder shall be applied first to the Variable
Rate Advances or Variable Rate Portion, as applicable, in Dollars (or that
portion of LIBOR Rate Advances or LIBOR Rate Portions, as applicable, not
subject to a prepayment penalty), second to the LIBOR Rate Advances or LIBOR
Rate Portions, as applicable, in Dollars, third, to the Competitive Bid Pricing
Loans, fourth to the Alternate Currency Advances and fifth to the Competitive
Bid Foreign Currency Loans.
SECTION 3.10. Post-Default Interest; Past Due Principal and Interest.
After maturity of the Notes or the occurrence of an Event of Default, the
outstanding principal balance of the Notes shall, at the option of the Required
Lenders, bear interest at the Default Rate. Any past due principal of and, to
the extent permitted by law, past due interest on the Notes shall bear interest,
payable as it accrues on demand, for each day until paid at the Default Rate.
Such interest shall continue to accrue at the Default Rate notwithstanding the
entry of a judgment with respect to any of the
CREDIT AGREEMENT PAGE 43
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Obligations or the foreclosure of any of the Lenders' Liens, except as otherwise
provided by applicable law.
SECTION 3.11. Computation of Interest and Fees. All interest payable on
the Notes hereunder or the amount of any fees hereunder shall be computed based
on the number of days elapsed and 360 days per year (or 365 days for Alternate
Currency Advances or Competitive Bid Foreign Currency Loans in British pounds
sterling), subject to the provisions hereof limiting interest to the maximum
permitted by applicable law.
SECTION 3.12. Lenders' Capital Adequacy. If any present or future law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) or the interpretation thereof by a court or
governmental authority with appropriate jurisdiction affects the amount of
capital required or expected to be maintained by any Lender or any corporation
controlling such Lender and such Lender reasonably determines that as a
consequence of its obligations under the Credit Facilities the rate of return on
it capital has been reduced to a level below that which it otherwise would have
achieved (taking into consideration its policies with respect to capital
adequacy) then such Lender may notify Borrower of such fact, and commencing
ninety (90) days following such notice, Borrower shall pay to such Lender or
Administrative Agent (for such Lender) from time to time on demand, as an
additional fee payable hereunder, such amount as Lender shall determine in good
faith and certify in a notice to Borrower in reasonable detail to be an amount
that will adequately compensate such Lender in light of these circumstances for
such loss. Each Lender shall allocate such cost increases among its customers in
good faith and on an equitable basis.
SECTION 3.13. Regulatory Changes; Indemnification for Failure to Pay
When Due.
(a) If, on or after the Closing Date, any Regulatory Change shall make
it unlawful, impracticable or impossible for any Lender (or its Eurodollar
lending office) to make, maintain or fund LIBOR Rate Advances, LIBOR Rate
Portions, Alternate Currency Advances or Competitive Bid Notes, as applicable,
and such Lender shall so notify Administrative Agent, Administrative Agent shall
forthwith give notice thereof to the other applicable Lenders and Borrower,
whereupon until such Lender notifies Borrower and Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Lender to maintain or fund LIBOR Rate Portions or to make LIBOR Rate
Advances or Alternate Currency Advances or to maintain the funding under a
Competitive Bid Note, as the case may be, shall be suspended. If such Lender
shall determine that it may not lawfully continue to maintain and fund any of
its outstanding LIBOR Rate Advances, LIBOR Rate Portions, Alternate Currency
Advances or amounts under a Competitive Bid Note, to maturity and shall so
specify in such notice, Borrower shall immediately prepay in full the then
outstanding principal amount of such Lender's portion of the LIBOR Rate
Advances, Alternate Currency Advances or Competitive Bid Notes, as the case may
be, together with accrued interest thereon, or, if applicable, any LIBOR Rate
Portion shall immediately convert to a Variable Rate Portion. Concurrently with
prepaying such portion of the LIBOR Rate Advances or Alternate Currency
Advances, as the case may be, Borrower shall borrow a Variable Rate Advance
and/or an Advance in Dollars, as the case may be, in an equal principal amount
from such Lender (on which interest and principal shall be payable
contemporaneously with the related LIBOR Rate Advances or Alternate Currency
Advances, as the case may be, of the other Lenders), and such Lender shall make
such Variable Rate Advance or Advance in Dollars, as the case may be. If a
Lender shall be
CREDIT AGREEMENT PAGE 44
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unable to make, maintain or fund LIBOR Rate Advances, LIBOR Rate Portions or
Alternate Currency Advances as above provided for more than sixty days, and the
other Lenders are not similarly restricted, Borrower shall be entitled to
designate an Eligible Assignee acceptable to Administrative Agent to purchase
the interest of the Lender which is unable to fund LIBOR Rate Advances, LIBOR
Rate Portions or Alternate Currency Advances, as the case may be, and such
Lender shall sell its interest to such Eligible Assignee within ten Business
Days of Borrower's request. Any such purchase shall be in accordance with and
subject to the provisions of Section 11.10.
(b) Borrower shall promptly indemnify (i) Administrative Agent and
Lenders against any loss or expense which Administrative Agent or Lenders may,
as a consequence of Borrower's failure to make a payment on the date such
payment is due hereunder, or the payment, prepayment or conversion of any LIBOR
Rate Advances, LIBOR Rate Portions, Alternate Currency Advances or amounts due
under Competitive Bid Notes hereunder on a day other than an Interest Adjustment
Date or, in the case of Competitive Bid Notes, the last day of the applicable
Interest Period, sustain or incur in liquidating or employing deposits from
third parties acquired to effect, fund or maintain any such LIBOR Rate Advances,
LIBOR Rate Portions, Alternate Currency Advances or Competitive Bid Notes or any
part thereof, including, without limitation, any Consequential Loss or Alternate
Currency Loss; (ii) Lenders against and reimburse Lenders for increased costs to
Lenders, as a result of any Regulatory Change, in the maintaining of any LIBOR
Rate Advances, LIBOR Rate Portions, Alternate Currency Advances or Competitive
Bid Notes (Administrative Agent shall give Borrower written notice of such costs
within ninety (90) days of its or any Lender's implementation and/or compliance
with any such Regulatory Change, and such costs shall be reimbursed to such
Lender prior to the earlier of (A) the Long Term Revolving Facility Termination
Date, Short Term Revolving Facility Termination Date or the Term Facility
Termination Date, as applicable, or (B) ten (10) days following written notice
thereof from Administrative Agent to Borrower); and (iii) Administrative Agent
and Revolving Lenders against any loss which Administrative Agent or Revolving
Lenders may sustain or incur, as a consequence of Borrower's failure to (A) pay
any Alternate Currency Advance or Competitive Bid Foreign Currency Loan on the
date due or in the Alternate Currency in which it was made or (B) borrow
Alternate Currency Advances or Competitive Bid Foreign Currency Advances on the
date for such borrowing specified in the relevant Request for Advance or
Competitive Bid Acceptance Notice, as applicable, including without limitation,
any loss (1) arising from any change in the value of Dollars in relation to any
such Alternate Currency Advance or Competitive Bid Foreign Currency Advance
which was not paid on the date due between the date such payment was due and the
date of payment, or which was not paid in the Alternate Currency in which it was
made, or (2) incurred in liquidating or closing out any foreign currency
contract undertaken by such Revolving Lender in funding or maintaining such
Alternate Currency Advance (including any Competitive Bid Foreign Currency
Advance), all as determined by such Revolving Lender in its sole discretion. All
payments made pursuant to this paragraph shall be made free and clear, without
reduction for, or account of, any present or future taxes or other levies of any
nature, excluding net income and franchise taxes.
SECTION 3.14. Taxes.
(a) No Deduction for Taxes. Except as provided in Section 3.14(d)
hereof, any and all payments by Borrower hereunder or under the Notes or in
respect of the Letters of Credit shall be made free and clear of and without
deduction for any and all present or future Taxes,
CREDIT AGREEMENT PAGE 45
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excluding, (i) in the case of each Lender and the Agents, income and franchise
taxes imposed by the jurisdiction under the laws of which such Lender or Agent
(as the case may be) is organized or is or should be qualified to do business or
any political subdivision thereof and (ii) in the case of each Lender, income
and franchise taxes imposed by the jurisdiction of such Lender's Applicable
Lending Office or any political subdivision thereof. If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note or in respect of any Letter of Credit to any Lender
or any Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.14) such Lender or Agent (as the
case may be) receives an amount equal to the amount such party would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, (iii) Borrower shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law, and (iv)
Borrower shall deliver to Administrative Agent evidence of such payment to the
relevant taxing authority or other authority in the manner provided in Section
3.14(c); provided that Borrower shall not be required to increase any payment by
any amount which such Lender shall be entitled to have repaid by the taxing
authority upon filing of the appropriate documents.
(b) Indemnification. Borrower shall indemnify each Lender and each
Agent for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this Section 3.14 paid by
such Lender or Agent (as the case may be)), except for Lender's income or
franchise Taxes and withholding therefor as required by the applicable taxing
authority, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted. Such indemnification shall be made within thirty
(30) days from the date such Lender or Agent (as the case may be) makes written
demand therefor. Each Lender and Agent agree to notify Borrower of any event
occurring after the Closing Date entitling such Lender or Agent to
indemnification under this Section as promptly as practicable; provided, that
except as otherwise limited by the next sentence, the failure of any Lender or
Agent to give such notice shall not result in any liability to such Lender or
Agent or release Borrower from any of its obligations hereunder. Lender or Agent
shall only be entitled to indemnification under this Section for Taxes paid
during the ninety (90) day period ending on the date Borrower receives the
notice described in the immediately preceding sentence; provided, that from and
after such notice, such Lender or Agent shall be entitled to compensation for
Taxes occurring after such notice until such time as such Taxes cease to exist.
(c) Tax Payment Receipt. Within thirty (30) days after the date of any
payment of Taxes, Borrower shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to the Administrative Agent.
(d) Tax Forms. Each Lender (or Permitted Assignee) that is not a
corporation or partnership created or organized in or under the laws of the
United States, any estate that is subject to federal income taxation regardless
of the source of its income or any trust which is subject to the supervision of
a court within the United States and the control of a United States fiduciary as
described in section 7701 (a) (30) of the Internal Revenue Code (a "Non-U.S.
Lender") shall deliver to Borrower and Administrative Agent (or, in the case of
a Participant, to the Lender from which the related participation shall have
been purchased ) on or before the date on which it becomes a party to this
Agreement (or, in the case of a Participant, on or before the date on which such
Participant purchases the related participation) either:
CREDIT AGREEMENT PAGE 46
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(i) (x) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling
it to a complete exemption from withholding of U.S. Taxes on all amounts to
be received by such Non-U.S. Lender pursuant to this Agreement and the
other Loan Documents) or Form 4224 (relating to all amounts to be received
by such Non-U.S. Lender pursuant to this Agreement and the other Loan
Documents), or successor and related applicable forms, as the case may be,
or (y) two duly completed and signed copies of Internal Revenue Service
Form W-8 or W-9, or successor and related applicable forms, as the case may
be; or
(ii) in the case of a Non-U.S. Lender that is not a "bank" within the
meaning of Section 881 (c) (3) (A) of the Code and that does not comply
with the requirements of clause (a) hereof, (x) a statement in a form as
shall be reasonably requested by Borrower from time to time to the effect
that such Non-U.S. Lender is eligible for a complete exemption from
withholding of U.S. Taxes under Code Section 87(b) or 881(c), and (y) two
duly completed and signed copies of Internal Revenue Service Form W-8 or
successor and related applicable forms.
Further, each Non-U.S. Lender agrees to deliver to Borrower and Administrative
Agent, and if applicable, the assigning Lender (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two further duly completed and signed copies of such Forms 1001,
4224, W-8 or W-9, as the case may be, or successor and related applicable forms,
on or before the date that any such form expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) previously delivered by it to Borrower (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) in accordance with applicable United States laws and regulations;
unless, in any such case, any change in law or regulations has occurred
subsequent to the date such Lender became a party to this Agreement ( or in the
case of a Participant, the date on which such Participant purchased the related
participation) which renders all such forms inapplicable or which would prevent
such Lender (or Participant) from properly completing and executing any such
form with respect to it and such Lender promptly notifies Borrower and
Administrative Agent (or, in the case of a Participant, the Lender from which
the related participation shall have been purchased) if it is no longer able to
deliver, or if it is required to withdraw or cancel, any form or statement
previously delivered by it pursuant to this Section 3.14. A Non-U.S. Lender
shall not be required to deliver any form or statement pursuant to the
immediately preceding sentences in this Section 3.14 that such Non-U.S. Lender
is not legally able to deliver, it being understood and agreed that Borrower
shall withhold or deduct such amount from any payments made to any Non-U.S.
Lender that Borrower reasonably determines is required by law and that payments
resulting from a failure to comply with this Section 3.14 shall not be subject
to payment or indemnity by Borrower and Guarantors pursuant to this Section
3.14.
SECTION 3.15. EURO Provisions.
(a) If, as a result of the implementation of the European
economic and monetary union ("EMU"), (i) any currency available for borrowing
under this Agreement (a "national currency") ceases to be lawful currency of the
state issuing the same and is replaced by a European single or common currency
(the "Euro") or (ii) any national currency and the Euro are at the same time
both recognized by the central bank or comparable governmental authority of the
state issuing
CREDIT AGREEMENT PAGE 47
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such currency as lawful currency of such state, then any amount payable
hereunder by any party hereto in such national currency shall instead be payable
in the Euro and the amount so payable shall be determined by redenominating or
converting such amount into the Euro at the exchange rate officially fixed by
the European Central Bank for the purpose of implementing the EMU, provided,
that to the extent any EMU legislation provides that an amount denominated
either in the Euro or in the applicable national currency can be paid either in
Euros or in the applicable national currency, each party to this Agreement shall
be entitled to pay or repay such amount in Euros or in the applicable national
currency. Prior to the occurrence of the event or events described in clause (i)
or (ii) of the preceding sentence, each amount payable hereunder in any such
national currency will, except as otherwise provided herein, continue to be
payable only in that national currency.
(b) Borrower shall from time to time, at the request of Administrative
Agent, pay to Administrative Agent for the account of each Lender the amount of
any cost or increased cost incurred by, or of any reduction in any amount
payable to or in the effective return on its capital to, or of interest or other
return foregone by, such Lender or any holding company of such Lender as a
result of the introduction of, changeover to or operation of the Euro in any
applicable nation.
(c) In addition, this Agreement (including, without limitation, the
definition of LIBOR Rate and Alternate Currency Base Rate), will be amended to
the extent determined by Administrative Agent (acting reasonably and in
consultation with Borrower) to be necessary to reflect such implementation of
the EMU and change in currency and to put the Lenders and Borrower in the same
position, so far as possible, that they would have been in if such
implementation and change in currency had not occurred. Except as provided in
the foregoing provisions of this Section, no such implementation or change in
currency nor any economic consequences resulting therefrom shall (i) give rise
to any right to terminate prematurely, contest, cancel, rescind, alter, modify
or renegotiate the provisions of this Agreement or (ii) discharge, excuse or
otherwise affect the performance of any obligations of Borrower under this
Agreement or other Loan Documents.
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.1. Conditions To Closing. The obligation of the Revolving Lenders
to fund the first Advance under the Revolving Credit Facility after the Closing
Date, the Issuing Lender to issue any Letter of Credit after the Closing Date,
any Term Lender to fund any additional Term Loan, or any Revolving Lender to
fund a Competitive Bid Loan, whichever is first, as provided herein is subject
to the satisfaction of the following conditions and requirements:
(a) receipt by Administrative Agent of (i) this Agreement, properly
executed by Borrower, and (ii) evidence acceptable to Administrative Agent that
Borrower has paid all fees and expenses required to be paid by Borrower as of
the date of such Advance or issuance;
(b) receipt by each Lender of its Note or Notes, properly executed by
Borrower, together with its Participation Fee;
CREDIT AGREEMENT PAGE 48
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(c) receipt by Administrative Agent of one or more Pledge Agreements,
in form and substance satisfactory to Administrative Agent, and all financing
statements related thereto, properly executed by Borrower and all appropriate
Subsidiaries, together with the original stock certificates accompanied by stock
powers executed in blank by Borrower and the appropriate Subsidiaries evidencing
(i) all of the outstanding shares of stock of each Subsidiary of Borrower and
Guarantors which is incorporated in the United States (other than stock of the
Investment Advisor Subsidiaries and Partially-Owned Subsidiaries), (ii)
sixty-five percent (65%) of the stock of the Foreign Subsidiaries, and (iii) all
of the stock of each Partially-Owned Subsidiary owned by Borrower or any
Subsidiaries wholly-owned, directly or indirectly, by Borrower;
(d) receipt by Administrative Agent of one or more Collateral
Assignments, in form and substance satisfactory to Administrative Agent, and all
financing statements and/or UCC-3 amendments related thereto, as required by
Administrative Agent, properly executed by Borrower and the appropriate
Guarantors;
(e) receipt by Administrative Agent of one or more Security
Agreements, in form and substance satisfactory to Administrative Agent, and all
financing statements and/or UCC-3 amendments related thereto, properly executed
by Borrower and all Guarantors;
(f) receipt by Administrative Agent of one or more Lockbox Agreements,
in form and substance satisfactory to Administrative Agent, and all financing
statements related thereto, properly executed by Borrower, Guarantors and the
Lockbox Agent;
(g) receipt by the Custodians of the original promissory notes
evidencing the Assigned Loans owned by Borrower or any Guarantor as of the
Closing Date and which are to be pledged as Collateral under this Agreement,
together with allonge endorsements attached thereto (in form acceptable to
Administrative Agent) executed in blank by Borrower or the appropriate
Guarantor, and all other documents required to be delivered to the Custodian
pursuant to the terms of the Custodial Agreement, the Collateral Assignment or
the other Loan Documents (including, without limitation, as required by Sections
5.2 and 5.3 hereof);
(h) receipt by Administrative Agent from each Custodian of copies of
its Custodial Agreement and the certificate required to be delivered under its
respective Custodial Agreement to reflect receipt by the Custodian of the items
referenced in (g) above;
(i) receipt by Administrative Agent of a Guaranty Agreement executed
by each Subsidiary of Borrower other than the Excluded Subsidiaries and the
Foreign Subsidiaries;
(j) receipt by Administrative Agent of a contribution and
indemnification agreement in form and substance satisfactory to Administrative
Agent executed by Borrower and each Guarantor;
(k) receipt by Administrative Agent of an opinion of general counsel
for Borrower and each Guarantor, opining as to the due organization and
existence of Borrower and each Guarantor, the enforceability of each of the Loan
Documents and such other matters as Administrative Agent may reasonably request,
in form and substance satisfactory to Administrative Agent;
CREDIT AGREEMENT PAGE 49
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(l) receipt by Administrative Agent of all resolutions, certificates
or documents it may reasonably request relating to the formation, existence and
good standing of Borrower and each Guarantor on the date hereof, corporate
authority for the execution and validity of this Agreement and the other Loan
Documents, and any other matters relevant to this Agreement, all in form and
substance satisfactory to Administrative Agent, which resolutions, certificates
and documents shall include, without limitation, (i) the certificates of
incorporation and bylaws of Borrower and each Guarantor, (ii) resolutions of the
board of directors of Borrower and each Guarantor authorizing the execution of
the Loan Documents on behalf of each such Borrower and Guarantor and the
granting of all the Lenders' Liens as security for the Credit Facilities and the
Letters of Credit, (iii) certificates of incumbency for the officers of Borrower
and each Guarantor, and (iv) certificates of corporate existence and good
standing issued by the state of incorporation of Borrower and each Guarantor
and, as requested by Administrative Agent, from the appropriate governmental
authority of each state in which Borrower and each Guarantor is required by
applicable law to be qualified;
(m) receipt by Administrative Agent of filing officer certificates (or
commercial reports similar thereto, if satisfactory to Administrative Agent)
under Section 9-407(2) of the UCC, releases or partial releases of liens or
financing statements, and other evidence satisfactory to Administrative Agent
that there are no Liens on any assets of Borrower, any Guarantor or any Foreign
or Excluded Subsidiary, except Liens permitted by Section 8.7 hereof;
(n) satisfaction of all conditions contained in Section 4.2 if an
Advance is being made, or satisfaction of all conditions contained in Section
4.3 if a Letter of Credit is being issued;
(o) receipt by Administrative Agent of copies of certificates of
insurance for each policy maintained by Borrower or any Guarantor, together with
evidence of payment of all premiums thereon;
(p) receipt by Administrative Agent of all reports required to be
delivered pursuant to Section 7.1(h), an organizational chart showing Borrower
and its Subsidiaries together with a list of States where Borrower and each such
Subsidiary are incorporated, their principal place of business and any offices
where material files or assets are located, and a listing of all Custodians and
a summary of the assets being held by each such Custodian;
(q) receipt by Administrative Agent of a collateral assignment of the
Foreign Subsidiary Inter-Company Notes executed by Borrower or the appropriate
Guarantor, together with the original of each such Foreign Subsidiary
Inter-Company Note endorsed to Administrative Agent in form satisfactory to
Administrative Agent; and
(r) receipt by Administrative Agent and/or Lenders of all other
documents, instruments, certificates and information to be delivered on or
before the Closing Date pursuant to the terms of this Agreement and the other
Loan Documents.
All the documents, instruments, certificates, information, evidences and
opinions referred to in this Section 4.1 shall be delivered to Administrative
Agent no later than the Closing Date, and Lenders shall not be bound by or
obligated hereunder until Administrative Agent has received all such items.
CREDIT AGREEMENT PAGE 50
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SECTION 4.2. Conditions To All Advances. The obligation of Lenders to fund
any Advance as provided herein is subject to the satisfaction of the following
conditions and requirements:
(a) timely receipt by Administrative Agent of a Request For Advance
(which shall be appropriately modified to Administrative Agent's satisfaction
with respect to the funding of the Term Facility);
(b) immediately before and after giving effect to such Advance, no
Default shall have occurred and be continuing and the making of such Advance
shall not cause a Default;
(c) the representations and warranties contained in this Agreement and
in the other Loan Documents shall be true and correct in all material respects
on and as of the date of such Advance, except that all representations and
warranties that speak as of a particular date shall only be required on the date
of each such Advance to be true and correct in all material respects as of the
date to which such representation or warranty speaks and not as of any
subsequent date; and
(d) such other information and documentation as Administrative Agent
shall reasonably deem necessary or desirable in connection with the funding of
such Advance.
SECTION 4.3. Conditions to Letters of Credit. The obligation of the
Issuing Lender to issue any Letter of Credit as provided herein is subject to
the satisfaction by Borrower of the following conditions and requirements:
(a) timely receipt by the Issuing Lender of a fully completed LOC
Application;
(b) timely receipt by Administrative Agent of a Request For Advance;
(c) immediately before and after the issuance of such Letter of Credit,
no Default shall have occurred and be continuing and the issuance of any Letter
of Credit shall not cause a Default;
(d) the representations and warranties contained in this Agreement and
in the other Loan Documents shall be true in all material respects on and as of
the date of issuance of such Letter of Credit, except that all representations
and warranties that speak as of a particular date shall only be required on the
date of issuance of each such Letter of Credit to be true and correct in all
material respects as of the date to which such representation or warranty speaks
and not as of any subsequent date;
(e) timely receipt by Administrative Agent (on behalf of the Issuing
Lender) of the issuance fee required to be paid by the Issuing Lender related to
the issuance of such Letter of Credit; and
(f) such other information and documentation as Administrative Agent or
the Issuing Lender shall reasonably deem necessary or desirable in connection
with the issuance of such Letter of Credit.
CREDIT AGREEMENT PAGE 51
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ARTICLE V
COLLATERAL AND GUARANTIES
SECTION 5.1. Security and Guaranties. The Credit Facilities, the Letters of
Credit, and the Obligations (as modified and increased pursuant to this
Agreement) shall all be (a) secured by the Collateral pursuant to the Liens
created by the Security Documents, and all proceeds thereof, until the
particular item of Collateral is released or until the Letters of Credit have
expired and the Credit Facilities and all the Obligations are paid and performed
in full (and any obligation of Lenders to make Advances has been terminated) and
(b) guaranteed by each Subsidiary (other than an Excluded Subsidiary or Foreign
Subsidiary) pursuant to the terms of a Guaranty Agreement. Upon the occurrence
of a Default which has not been waived by the Required Lenders, Borrower and
Guarantors shall cause the Foreign Subsidiaries to grant to Administrative Agent
(on behalf of Lenders) a Lien on all of their assets except to the extent they
are prohibited from so doing pursuant to an agreement permitted by Section 8.12;
and to execute, deliver to Administrative Agent and file all documents,
instruments and agreements (all at Borrower's and Guarantors' expense) which
Administrative Agent shall require to create and perfect such Liens. On or
before thirty (30) days after Borrower or any Guarantor makes an Investment in
any Foreign Subsidiary, Borrower or such applicable Guarantor shall deliver to
Administrative Agent the related, original Foreign Subsidiary Inter-Company
Note, together with a collateral assignment and endorsement thereof in form
satisfactory to Administrative Agent.
SECTION 5.2. Requirements For Assigned Loans. With respect to each of the
Assigned Loans, Borrower or the applicable Guarantor shall deliver to the
applicable Custodian the documents required by the applicable Custodial
Agreement, which shall include, without limitation, the following:
(a) Either (i) the original promissory note or notes evidencing the
Assigned Loan properly endorsed showing endorsements thereof from the original
holder thereof, and all subsequent holders, to Borrower or the applicable
Guarantor, together with an endorsement thereof by Borrower or such Guarantor to
Administrative Agent, on behalf of Lenders (in form satisfactory to
Administrative Agent), which endorsement may be an allonge endorsement affixed
to the respective promissory note, (ii) with respect to any Assigned Loan where
the original promissory note has been lost, an original lost note affidavit in
form which is sufficient under the UCC or the laws of any applicable
jurisdiction to enable the owner thereof to maintain an action on the related
promissory notes and recover from any party liable thereon, and properly
executed by the Person that sold such promissory note to Borrower or the
applicable Guarantor, (iii) with respect to any Assigned Loan for which Borrower
or a Guarantor has a participation interest, the original or a copy of the
participation certificate or agreement evidencing Borrower's or applicable
Guarantor's interest in such Assigned Loan, or (iv) with respect to any Assigned
Loan for which a Borrower or a Guarantor has a judgment, an original Assignment
of Judgment (as defined in the Collateral Assignment);
(b) Copies of the mortgage, deed of trust or other security documents
by which a lien or security interest has been granted to secure the Assigned
Loan;
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(c) An original Transfer of Liens properly executed and acknowledged
by Borrower or the appropriate Guarantor;
(d) To the extent in the possession of Borrower or a Guarantor or an
Affiliate of Borrower or a Guarantor, a Title Policy and certificate of hazard
and/or liability insurance with respect to any Underlying Real Estate; and
(e) Such other information related to the Underlying Real Estate, to
the extent in the possession of Borrower, any Guarantor or an Affiliate of
Borrower or any Guarantor, as Administrative Agent shall reasonably request.
SECTION 5.3. Requirements for Mortgaged Properties. With respect to each of
the Mortgaged Properties, Borrower or Guarantor which owns such Mortgaged
Property shall deliver to a Custodian the documents required by the applicable
Custodial Agreement with respect thereto which shall include, without
limitation, the following:
(a) A copy of the deed or conveyance instrument by which the
applicable Borrower or the applicable Guarantor took title to the Mortgaged
Property;
(b) A Title Policy (which Title Policy may be a mortgagee policy of
title insurance which has converted to an owner's policy of title insurance
after foreclosure), for each Mortgaged Property with a value in excess of One
Hundred Thousand and No/100 Dollars ($100,000.00) and, unless covered under an
umbrella policy approved by Administrative Agent, a certificate of hazard and/or
liability insurance covering the Mortgaged Property;
(c) An original, properly executed and acknowledged Mortgage, together
with a financing statement related thereto; and
(d) Such other information as Administrative Agent shall reasonably
request.
SECTION 5.4. Recording. Any original Mortgage (and related financing
statement) and Transfer of Lien held by Custodian shall be recorded in the
appropriate real estate (or UCC, as appropriate) records if and when (i) a
Default occurs, or (ii) Administrative Agent delivers ten (10) days prior
written notice to the Custodians and Borrower that the Required Lenders require
the recordation of such Mortgages (and related financing statements) or
Transfers of Liens. After the occurrence of any of the above events, the
Custodians or Administrative Agent shall record all Mortgages (and related
financing statements) and Transfers of Liens then held by the Custodians, and
Borrower shall be required to pay, or reimburse the Lenders for the payment of,
all filing fees, mortgage and stamp taxes and other expenses incurred by
Lenders, Administrative Agent or Custodians in connection with the recordation
of the Mortgages (and related financing statements) and Transfers of Liens.
SECTION 5.5. Administrative Agent's Discretion. All requirements for the
Collateral are imposed solely and exclusively for the benefit of the Lenders but
are to be enforced and monitored solely and exclusively by Administrative Agent
in accordance with the provisions of the Loan Documents. No Person (including
Borrower, any Guarantor or any other Lender) other than Administrative Agent
shall have any standing to require satisfaction of any such requirements.
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Administrative Agent shall be entitled to require delivery of the items
referenced in Section 5.2 and Section 5.3 at any time and, from time to time
(subject to the limitation contained in Section 5.4), and the failure of
Administrative Agent to request any such items at any particular time shall not
constitute a waiver of the Lenders' rights to thereafter require that such items
be delivered.
SECTION 5.6. Lockbox; Lockbox Account.
(a) Notwithstanding any provision herein or in the other Loan
Documents to the contrary, Borrower and Guarantors agree that they have
instructed, or will cause instructions to be given to, all Account Debtors, or
within thirty (30) days after the acquisition of an Asset Portfolio or other
Assigned Loan which will be included in computing the Asset Coverage Requirement
will instruct, or will cause instructions to be given to, all Account Debtors,
pursuant to a letter from Borrower, or the appropriate Guarantor, or the seller
of such Asset Portfolio or a Custodian in form approved by Administrative Agent,
to mail all payments and other remittances owing with respect to the Assigned
Loans directly to the Lockbox. Lockbox Agent will have exclusive and
unrestricted access to the Lockbox and will have complete and exclusive
authority to receive, pick up and open all mail addressed to the Lockbox,
whether registered, certified, insured or otherwise. Neither Borrower nor any
Guarantors will have access to or control over the Lockbox or any checks or
monies received in the Lockbox. All items received and monies collected in
connection with the Assigned Loans will be processed by the Lockbox Agent
pursuant to the terms of the Lockbox Agreement, and in the event any checks or
monies shall be submitted to Borrower or any Guarantor by any Account Debtor
under the Assigned Loans, or shall otherwise come into the possession of
Borrower or any Guarantor, the same shall be deemed held by Borrower or such
Guarantor in trust for Lenders, and Borrower or such Guarantor shall deliver the
same to the Lockbox Agent within three (3) Business Days after received by
Borrower or such Guarantor, endorsed if appropriate, for deposit into the
Lockbox Account.
(b) Prior to the occurrence of a Default, on each Business Day during
each Credit Period, the Lockbox Agent shall, and Borrower and each Guarantor
hereby authorize and instruct the Lockbox Agent to, withdraw all funds from the
Lockbox Account, if any, and deposit same into Borrower's operating account at
NationsBank as designated in writing from time to time by Borrower to the
Lockbox Agent. Upon the occurrence of a Default and thereafter, all amounts in
the Lockbox Account shall be disbursed to and applied by Lockbox Agent and
Administrative Agent to reduce the outstanding obligations as provided in
Section 9.10.
(c) If an Assigned Loan is being held, collected and disbursed by a
Custodian pursuant to a Custodial Agreement, Borrower or the applicable
Guarantor shall not be required to enter into the Lockbox arrangement above
described with respect to such Assigned Loan.
SECTION 5.7. Release of Collateral During Ordinary Course of Business.
Prior to the occurrence of a Default or an Event of Default, Borrower and
Guarantors shall be entitled to obtain a release of the Lenders' Liens with
respect to certain of the Collateral designated by Borrower so long as (a)
either (i) the Collateral being released is being sold by Borrower or the
applicable Guarantor, or (ii) the Collateral being released is being pledged by
Borrower or such Guarantor to secure Debt which Borrower or such Guarantor is
entitled to incur under Section 8.5 and Borrower or such Guarantor is entitled
under Section 8.7 to grant a lien on such Collateral being released in favor of
the Person for whom, and securing the Debt which, such lien is then being
created to secure,
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(b) Borrower and Guarantors shall continue to be in compliance under this
Agreement following the release of such Lenders' Liens, including, without
limitation, in compliance with the Asset Coverage Requirement, (c) Borrower has
reduced or will reduce on a date approved by Administrative Agent the amount
outstanding under the Credit Facilities in an amount deemed satisfactory by
Administrative Agent, in its sole discretion, due to such release of Collateral,
and (d) in no event shall Borrower or Guarantor be entitled to a release of
Lenders' Liens with respect to (i) the stock and other ownership interests of
Borrower's direct and indirect Subsidiaries required to be pledged hereunder,
except in connection with a merger, consolidation, or dissolution permitted by
Section 8.8 and (ii) the Foreign Subsidiary Inter-Company Notes, unless such
notes are paid in full. If Collateral is released as part of an asset exchange
or capital contribution in connection with an Investment permitted by this
Agreement, then condition (c) above can be satisfied by Borrower granting to
Administrative Agent (for the benefit of Lenders) liens or security interests in
Collateral of the same value as the Collateral being released as determined by
Administrative Agent in its sole discretion.
SECTION 5.8. Deposit of Cash Collateral for Letters of Credit. Upon the
occurrence of any Event of Default, Borrower shall, on the next succeeding
Business Day, deposit in a segregated, interest bearing account with
Administrative Agent such funds as Administrative Agent may request, up to a
maximum amount equal to the aggregate existing Letter of Credit Exposure. Any
funds so deposited shall be held by Administrative Agent as security for the
Obligations (including the Letters of Credit) and Borrower will, in connection
therewith, execute and deliver such assignments and security agreements in form
and substance satisfactory to Administrative Agent which Administrative Agent
may, in its discretion, require. As drafts or demands for payment are presented
under any Letter of Credit, Borrower hereby irrevocably directs Administrative
Agent to apply such funds to satisfy such drafts or demands. When all Letters of
Credit have expired and the Revolving Notes have been repaid in full (and
Lenders have no obligation to make further Advances or issue Letters of Credit
hereunder) or such Event of Default has been cured to the satisfaction of
Administrative Agent, Administrative Agent shall release to Borrower any
remaining funds deposited under this Section 5.8. Whenever Borrower is required
to make deposits under this Section 5.8 and fails to do so on the day such
deposit is due, Revolving Lenders may make such deposit using any funds of
Borrower then available to any Revolving Lender.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower and each Guarantor represent and warrant to Agents and Lenders
that:
SECTION 6.1. Existence and Power of Borrower and Guarantors. Each Borrower
and Guarantor (a) is a corporation or partnership, as appropriate, duly created,
validly existing and in good standing under the laws of the state, province or
country under which it is organized, and is or will be qualified and in good
standing as a foreign corporation or partnership, as appropriate, under the laws
of each state where such qualification is necessary for Borrower or such
Guarantor to conduct its business; and (b) has all corporate or partnership, as
appropriate, powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and as contemplated
to be conducted, except where the failure to have any such item
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would not have a material adverse effect on Borrower's or such Guarantor's
business and financial condition.
SECTION 6.2. Subsidiaries. Other than the Excluded Subsidiaries and Foreign
Subsidiaries, all direct and indirect Subsidiaries of Borrower are Guarantors.
100% of the stock or other ownership interests of each Subsidiary other than
Investment Advisor Subsidiaries, Partially-Owned Subsidiaries and Foreign
Subsidiaries and sixty-five percent (65%) of the stock or other ownership
interest of each Foreign Subsidiary has been collaterally assigned to
Administrative Agent (on behalf of Lenders) pursuant to the Pledge Agreement.
With respect to any Partially-Owned Subsidiary, all of the stock or other
ownership interests thereof that are owned, directly or indirectly, by Borrower
has been collaterally assigned to Administrative Agent (on behalf of Lenders)
pursuant to the Pledge Agreement. No Guarantor is an Investment Advisor
Subsidiary. All of the Partially-Owned Subsidiaries and the ownership thereof
are included in the organizational chart for Borrower required to be delivered
pursuant to Section 7.1(h). Schedule V is a true and correct list of each
Excluded Subsidiary, its net worth, the aggregate amount of its assets, and the
Investment of Borrower and any Guarantors in such Excluded Subsidiary, as of the
Closing Date and as of each update thereof as required by Section 7.1(h) and in
the definition of Excluded Subsidiary.
SECTION 6.3. Authorization; Contravention. The execution, delivery and
performance of this Agreement, the Notes, the LOC Applications, the Security
Documents, the Guaranty Agreements and the other Loan Documents by Borrower and
each Guarantor as appropriate, are within Borrower's or such Guarantor's
corporate or partnership, as appropriate, powers, have been duly authorized by
all necessary corporate or partnership, as appropriate, action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation, bylaws or
partnership agreement, as appropriate, of Borrower or any such Guarantor or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon Borrower or any such Guarantor or result in the creation or imposition of
any Lien on any asset of Borrower or any such Guarantor except Liens securing
the Notes.
SECTION 6.4. Enforceable Obligations. This Agreement, the Notes, the LOC
Applications and the other Loan Documents each constitutes a valid and binding
agreement of Borrower to the extent Borrower is a party thereto, enforceable in
accordance with its terms except as (a) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer or similar laws affecting
creditors rights generally, and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability. The Guaranty
Agreements and the Loan Documents each constitutes a valid and binding agreement
of each Guarantor to the extent such Guarantor is a party thereto, enforceable
in accordance with its terms except as (a) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer or similar laws affecting
creditors rights generally, and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.5. Financial Information.
(a) The current financial statements of Borrower and each Guarantor
and all of the other financial reports and information of Borrower and each
Guarantor that have been delivered
CREDIT AGREEMENT PAGE 56
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to Lenders are true and correct in all material respects as of the date of such
current financial statements and other reports and information.
(b) Except as disclosed in writing to Lenders prior to the execution
and delivery of this Agreement, since March 31, 1998, there has been no material
adverse change in the business, financial position or results of operations of
Borrower or any Guarantor; and, there exists no condition, event or occurrence
that, individually or in the aggregate, could reasonably be expected to result
in a material adverse change in the business, financial position or results of
operations of Borrower or any Guarantor.
SECTION 6.6. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of Borrower, threatened against or affecting,
Borrower or any Guarantor before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the business, financial
position or results of operations of Borrower or any Guarantor or which could in
any manner draw into question the validity of the Loan Documents.
SECTION 6.7. ERISA.
(a) Each Employee Plan has been maintained and administered in
substantial compliance with the applicable requirements of the Code and ERISA.
No circumstances exist with respect to any Employee Plan that could have a
material adverse effect on Borrower or any Guarantor.
(b) With respect to each Pension Plan, (i) no accumulated funding
deficiency (within the meaning of Section 412(a) of the Code), whether waived or
unwaived, exists; (ii) the present value of accrued benefits (based on the most
recent actuarial valuation prepared for each such plan, if any, in accordance
with ongoing assumptions) does not exceed the current value of plan assets
allocable to such benefits by a material amount; (iii) no reportable event
(within the meaning of Section 4043 of ERISA) other than purchases and sales of
securities from a plan trustee as reported in the audited financial statements
of such plan has occurred; (iv) no uncorrected prohibited transactions (within
the meaning of Section 4975 of the Code) exist which could have a material
adverse effect on Borrower or any Guarantor; (v) to the extent such plan is
covered by PBGC, no material liability to the PBGC exists and no circumstances
exist that could reasonably be expected to result in any such liability; and
(vi) no material withdrawal liability (within the meaning of Section 4201(a) of
ERISA) exists and no circumstances exist that could reasonably be expected to
result in any such liability.
(c) As of the date hereof, neither Borrower nor any Guarantor has any
obligation under any Employee Plan to provide post-employment health care
benefits to any of its current or former employees, except as may be required by
Section 4980B of the Code.
SECTION 6.8. Taxes and Filing of Tax Returns. Borrower and each Guarantor
have filed all material tax returns required to have been filed and has paid all
Taxes shown to be due and payable on such returns, including interest and
penalties, and all other Taxes which are payable by such party, to the extent
the same have become due and payable other than Taxes with respect to which a
failure to pay would not have a material adverse effect on Borrower or any
Guarantor.
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Neither Borrower nor any Guarantor has any knowledge of any proposed Tax
assessment against Borrower or any Guarantor other than customary ad valorem
taxes or other Taxes to become due in the normal course of business, and all Tax
liabilities of Borrower and each Guarantor are adequately provided for. No
income tax liability of Borrower or any Guarantor has been asserted by the
Internal Revenue Service for Taxes in excess of those already paid, the payment
of which would have a material adverse affect on Borrower or any Guarantor.
SECTION 6.9. Ownership of Assets. Borrower and each Guarantor have good and
indefeasible title to all of the Collateral and all other assets reflected on
their most current financial statements delivered to Lenders. Except for
Permitted Encumbrances and liens permitted by Section 8.7 hereof, there is no
Lien on any property of Borrower or any Guarantor, and the execution, delivery,
performance or observance of the Loan Documents will not require or result in
the creation of any Lien (except Lenders' Liens) on any such property. Borrower
and each Guarantor have properly granted to Lenders a perfected security
interest or lien in all Assigned Loans and other Collateral and a valid first
lien on all Mortgaged Properties owned by Borrower or any Guarantor which have
not been previously released pursuant to the terms of the applicable Custodial
Agreement. Borrower and Guarantors have requested as an accommodation to
Borrower and Guarantors because of the number of Assigned Loans and for ease of
administering the Credit Facilities that the Assigned Loans be endorsed by using
an allonge endorsement, and Borrower and Guarantors acknowledge that, if an
allonge endorsement is so used in connection with an Assigned Loan, Borrower and
Guarantors intend such endorsement to be a part of the Assigned Loan as fully as
if such endorsement was made on the instrument itself.
SECTION 6.10. Business; Compliance. Borrower and each Guarantor have
performed and abided by all obligations required to be performed by them under
any license, permit, order, authorization, grant, contract, agreement, or
regulation to which they are a party or by which they or any of their assets are
bound and which, if Borrower or such Guarantor were to fail to perform or abide
by, such failure would have a material adverse effect on the business operations
of Borrower or such Guarantor.
SECTION 6.11. Licenses, Permits. Borrower and each Guarantor possess such
valid franchises, licenses, permits, consents, authorizations, exemptions and
orders of Governmental Authorities, as are necessary to carry on their business
as now being conducted, other than violations which would not (either
individually or collectively) have a material adverse effect on the financial
condition or operations of Borrower or any Guarantor.
SECTION 6.12. Compliance with Law. The business and operations of Borrower
and each Guarantor have been and are being conducted in accordance with all
applicable laws, rules and regulations of all Governmental Authorities, other
than violations which would not (either individually or collectively) have a
material adverse effect on the financial condition or operations of Borrower or
any Guarantor.
SECTION 6.13. Full Disclosure. All information heretofore furnished by
Borrower or any Guarantor (or any other party on Borrower's or any Guarantor's
behalf) to Agents and Lenders for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by Borrower or any Guarantor to Agents and any Lender will
be, true and accurate in every material respect and shall be, to the best of the
knowledge and belief
CREDIT AGREEMENT PAGE 58
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of the party furnishing such information, without material omission. Borrower
and each Guarantor have, to the best of their knowledge, disclosed to
Administrative Agent in writing any and all facts which might reasonably be
expected to materially and adversely affect the business, operations, prospects
or condition, financial or otherwise, of Borrower or any Guarantor, or the
ability of Borrower or any Guarantor to perform its obligations under this
Agreement or the other Loan Documents.
SECTION 6.14. Environmental Matters.
(a) With respect to assets of Borrower and Guarantors, other than any
Mortgaged Property, and except for conditions, circumstances or violations that
would not, individually or in the aggregate, have a material adverse effect on
the financial condition, operation or business of Borrower or any Guarantor,
neither Borrower nor any Guarantor (i) knows of any environmental condition or
circumstance, such as the presence of any hazardous substance (as defined in
Section 7.7), adversely affecting the properties or operation of Borrower or any
Guarantor, (ii) has received any report of a violation by Borrower or any
Guarantor of any Applicable Environmental Law, or (iii) knows that Borrower or
any Guarantor is under any obligation to remedy any violation of any Applicable
Environmental Laws.
(b) With respect to the Mortgaged Properties, (i) no portion of any
Mortgaged Property is contaminated by any substance or material presently
identified to be toxic or hazardous according to any Applicable Environmental
Law, including, without limitation, any asbestos, polychlorinated biphenyl,
radioactive substance, methane, volatile hydrocarbons, industrial solvents or
any other material or substance which has in the past or could foreseeably at
the present time or at any time in the future cause or constitute a material
health, safety or other environmental hazard to any Person or property, except
as reflected in Borrower's underwriting and due diligence records or the
applicable investment approval reports (ii) neither Borrower nor any Guarantor
nor, to the knowledge of Borrower or any Guarantor, any other Person has caused
or suffered to occur a discharge, spillage, uncontrolled loss, seepage or
filtration of oil or petroleum or chemical liquids or solids, liquid or gaseous
products or hazardous waste, or hazardous substance at, upon, under or within
any portion of any Mortgaged Property or any contiguous real estate which either
(A) would be a violation of Applicable Environmental Law or (B) has not been
remediated so as to cure any violation of Applicable Environmental Law (such
remediation having been accomplished without increasing the potential
environmental liability of Borrower or any Guarantor or Lender), (iii) neither
Borrower nor any Guarantor nor, to the knowledge of Borrower or any Guarantor,
any other Person has been or is involved in operations at or near any portion of
any Mortgaged Property which could lead to the imposition on Borrower, any
Guarantor or any operator of such Mortgaged Property of liability which could
have a material adverse effect on the financial condition or business operations
of Borrower or any Guarantor, or the creation of a lien on such property, under
any Applicable Environmental Law, (iv) neither Borrower, any Guarantor nor any
other Person has permitted any tenant or occupant of any portion of any
Mortgaged Property, to engage in any activity that could lead to the imposition
of liability on such tenant or occupant, Borrower, any Guarantor or any operator
of any of such property which could have a material adverse effect on the
financial condition or business operations of Borrower or any Guarantor, or
could lead to the creation of a lien on such property, under any Applicable
Environmental Law, or (v) to the knowledge of Borrower and Guarantors, no part
of any Mortgaged Property is contaminated by any substance or material presently
identified to be toxic or hazardous according to any Applicable
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Environmental Law, except as otherwise disclosed in the Borrower Due Diligence
Reports or otherwise described in writing to Administrative Agent.
(c) With respect to the Underlying Real Estate, to the knowledge of
Borrower and Guarantors, no part of any Underlying Real Estate is contaminated
by any substance or material presently identified to be toxic or hazardous
according to any Applicable Environmental Law, or if any part of any Mortgaged
Property or any Underlying Real Estate is so contaminated the holder of the
related Assigned Loan is not subject to liability resulting from such
contamination because such party is a secured lender, as opposed to an owner, of
such property.
SECTION 6.15. Purpose of Credit. Borrower will use the proceeds of the
Credit Facilities for the purposes stated in Section 2.1(a) hereof. No part of
the proceeds of either of the Credit Facilities will be used, directly or
indirectly, for a purpose which violates any law, rule or regulation. Borrower
will not, directly or indirectly, use any of the proceeds of either of the
Credit Facilities for the purpose of purchasing or carrying, or retiring any
Debt which was originally incurred to purchase or carry, any "margin stock" as
defined in the Margin Regulations, or to purchase or carry any "security that is
publicly-held" within the meaning of Regulation T of the Board of Governors of
the Federal Reserve System, or otherwise take or permit any action which would
involve a violation of such Margin Regulations or any other regulation of such
Board of Governors. The Credit Facilities are not secured, directly or
indirectly, in whole or in part, by collateral that includes any "margin stock"
within the meaning of the Margin Regulations. Borrower will not engage
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "margin stock" within the
meaning of the Margin Regulations.
SECTION 6.16. Governmental Regulations. Neither Borrower nor any Guarantor
is subject to regulation under the Investment Advisers Act of 1940, as amended.
Neither Borrower nor any Guarantor is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, any Margin Regulations or any other law, rule or regulation which
regulates the incurrence of Debt.
SECTION 6.17. Indebtedness. Neither Borrower nor any Guarantor is an
obligor on any Debt other than Debt permitted by Section 8.5. Neither Borrower
nor any Guarantor is (nor will Borrower or any Guarantor ever become) an obligor
on any Debt of any Excluded Subsidiary or, except as permitted by Section 8.5,
any Foreign Subsidiary, and none of the assets of Borrower or any Guarantor have
been pledged to secure, or otherwise given as security for, any Debt of any
Excluded Subsidiary or any Foreign Subsidiary.
SECTION 6.18. Insurance. Borrower and each Guarantor maintain with
financially sound, responsible and reputable insurance companies or associations
(or, as to workers' compensation or similar insurance, with an insurance fund or
by self-insurance authorized by the jurisdictions in which it operates)
insurance concerning its properties and business against such casualties and
contingencies and of such types and in such amounts (and with co-insurance and
deductibles) as is customary for the same or similar businesses.
SECTION 6.19. Solvency. On a consolidated basis as of the Closing Date (a)
the aggregate fair market value of Borrower's assets exceeds its liabilities
(whether contingent, subordinated, unmatured, unliquidated, or otherwise), (b)
Borrower has sufficient cash flow to enable it to pay its
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Debts as they mature, and (c) Borrower has a reasonable amount of capital to
conduct its respective businesses as presently contemplated.
SECTION 6.20. Underwriting and Servicing Procedures. The due diligence,
collateral control, collection, credit and underwriting procedures used by
Borrower and Guarantors in the conduct of their business are no less stringent
than those used by comparable companies engaged in similar business lines and
those in effect on the Closing Date.
SECTION 6.21. Year 2000 Compliance. Borrower has (a) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its subsidiaries (or
suppliers, vendors or customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (b) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (c) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, Borrower believes that
all mission critical computer applications (including those of its suppliers and
vendors) that are material to Borrower and its Subsidiaries' business and
operations taken as a whole, are reasonably expected on a timely basis to be
able to perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, to be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably be expected to have material
adverse effect on the financial condition of Borrower and Guarantors, taken as a
whole.
ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower and each Guarantor covenant and agree that, so long as the
Revolving Lenders' commitment to make Advances under the Revolving Credit
Facility remains in effect, any amounts remain outstanding under the Term
Facility, any Letters of Credit remain outstanding or any of the Obligations
remain unpaid:
SECTION 7.1. Information From Borrower. Borrower will deliver, or cause to
be delivered, to Administrative Agent on behalf of Lenders:
(a) As soon as available and in any event within one hundred twenty
(120) days after the end of each Fiscal Year of Borrower, a consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such Fiscal Year and the
related statements of income and cash flow for such Fiscal Year, setting forth
in each case in comparative form the figures for the previous Fiscal Year, all
reported by Borrower in accordance with GAAP and audited by Deloitte & Touche
(or its successors) or other independent public accountants reasonably
acceptable to Administrative Agent.
(b) As soon as available and in any event within sixty (60) days after
the end of each calendar quarter, a consolidated cash flow statement and a
consolidating and consolidated balance sheet and related statement of income of
Borrower and its Subsidiaries as of the end of such quarter and year-to-date,
all certified by the chief financial officer, the chief accounting officer or
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Treasurer of Borrower as to fairness of presentation and as to whether such
financial statements fairly reflect the financial condition of Borrower and its
Subsidiaries as of the date of delivery thereof, subject to year-end
adjustments. Such financial statements shall be prepared in conformity with
GAAP, except that certain information and note disclosures normally included in
annual financial statements prepared in accordance with GAAP may be condensed or
omitted provided that the disclosures made are adequate to make the information
presented not misleading, and GAAP shall be applied on a basis consistent with
the financial statements referred to in Section 7.1(a).
(c) Simultaneously with the delivery of each set of financial
statements referred to in Sections 7.1(a) and (b), a certificate of an
Authorized Officer of Borrower, in the form as attached hereto as Exhibit C, (i)
setting forth in reasonable detail the calculations required to establish
whether Borrower was in compliance with the requirements of Sections 8.1 through
and including Section 8.4 on the date of such financial statements, and (ii)
with respect to only the financial statements delivered pursuant to Sections
7.1(a) and (b), stating, to the best of such Authorized Officer's knowledge and
belief, whether or not such financial statements fairly reflect the financial
condition of Borrower and its Subsidiaries and results of Borrower's and its
Subsidiaries' operations as of the date of the delivery of such financial
statements.
(d) Promptly after the filing thereof, a true, correct and complete
copy of each Form 10-K and Form 10-Q and each other report filed by or on behalf
of Borrower with the SEC.
(e) Immediately upon the occurrence of any Default, a certificate of
an Authorized Officer of Borrower setting forth the details thereof and the
action which Borrower or any applicable Guarantor is taking or proposes to take
with respect thereto.
(f) Within fifteen (15) days after the end of each calendar month, a
report in form as attached hereto as Schedule IV and certified by an Authorized
Officer as being true and correct calculating the Asset Coverage Requirement,
together with such additional information related thereto as Administrative
Agent shall require.
(g) Upon Administrative Agent's request from time to time, an Interest
Rate Exposure Report and a detailed description of all assets included in Asset
Portfolios.
(h) Within sixty (60) days after the end of each calendar quarter, (i)
a Residual Interests Report, (ii) beginning on January 1, 1999, an
organizational chart showing Borrower and its Subsidiaries and the ownership
structure thereof, together with any update to Schedule V and a list of the
states where Borrower and each such Subsidiary are incorporated and their
principal offices are located (provided that (A) until January 1, 1999, Borrower
shall give prompt notice of any material changes in the organization chart
delivered on the Closing Date and (B) Borrower shall update Schedule V at the
time of designation of any new Excluded Subsidiary), (iii) a Permitted Secured
Debt and Warehouse Lines Report and Certification, (iv) a Pledged Asset Schedule
and Certification, (v) a report in form satisfactory to Administrative Agent
detailing any loans which had been sold or securitized by Borrower or any
Subsidiary, but which were repurchased by Borrower or any Subsidiary (whether
voluntarily or involuntarily) if the amount of such loans which Borrower or any
Subsidiary repurchased exceeds $2,000,000.00 in the aggregate during such
quarter, and (vi) a delinquency report in form satisfactory to Administrative
Agent showing the amount and number of loans (on an aggregate basis) which have
been originated, acquired and/or securitized by
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Borrower or any Subsidiary (but excluding loans contained in Asset Portfolios)
and are past due, have been determined to be uncollectible and charged off or
are involved in a bankruptcy.
(i) Prompt notification of (i) any material adverse change in the
financial condition of Borrower or any Guarantor, including, without limitation,
the occurrence of any litigation which could reasonably be expected to have a
material adverse effect on Borrower or any Guarantor, or (ii) the occurrence of
any acceleration of the maturity of any indebtedness owing by Borrower or any
Guarantor, or any default under any indenture, mortgage, agreement, contract or
other instrument to which Borrower or any Guarantor is a party or by which
Borrower or any Guarantor or any properties of Borrower or any Guarantor are
bound, if such default or acceleration might have a material adverse effect upon
the financial condition of Borrower or any Guarantor.
(j) As soon as practicably possible, notice to Administrative Lender
of (i) any Warehouse Lines not included in the most current Permitted Secured
Debt and Warehouse Lines Report Certification received by Lenders, (ii) any
material changes in the collateral for an existing Warehouse Line previously
reported in a Permitted Secured Debt and Warehouse Lines Report Certification,
(iii) the occurrence of any event which would cause Borrower or any Subsidiary
to be terminated as a servicer prior to the scheduled termination date under any
servicing agreement, and (iv) the occurrence of any hyper-amortization event or
any other event which would cause the scheduled cash flow distributions or
payments under any securitization or Warehouse Line to be distributed or paid in
any manner different than the cash flow distribution or payment mechanism set
forth as the standard to be followed absent certain events under such
securitization or Warehouse Line.
(k) From time to time such additional information regarding the
financial position or business of Borrower and/or any of Borrower's Subsidiaries
as Administrative Agent, at the request of any Lender, may reasonably request,
including, without limitation, financial projections of Borrower or any
Guarantor and information concerning the insurance being maintained by Borrower
and Guarantors.
SECTION 7.2. Business of Borrower and Guarantors. The primary business of
Borrower and each Guarantor is, and Borrower and each Guarantor covenant that it
shall remain, as a financial services company which specializes in residential
and commercial mortgage banking, commercial finance, asset management and
related capital market activities.
SECTION 7.3. Right of Inspection; Confidentiality and Non-Solicitation.
Borrower and each Guarantor will permit Agents or any Lender, or any officer,
employee or agent of any such party, to visit and inspect any of the assets of
Borrower or any Guarantor, examine the books of record and accounts of Borrower
or any Guarantor, take copies and extracts therefrom, and discuss the affairs,
finances and accounts of Borrower or any Guarantor with the respective officers,
accountants and auditors of Borrower or any Guarantor, all at such reasonable
times and as often as Agents or any Lender may reasonably require, all at the
expense of Borrower; provided, that, prior to the occurrence of a Default, each
Lender will make no more than two such visits or inspections in any twelve month
period. Each Lender covenants and agrees to preserve the confidentiality of any
financial data concerning Borrower, any Affiliate of Borrower or related to
Borrower's, or any Borrower's Affiliate's businesses or operations or any
information with respect to which Borrower or any Affiliate has (a) an
obligation of confidentiality to a third party (to the extent such obligation
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has been disclosed to such Lender) or (b) informed such Lender of the
confidential nature of the specific information, except to the extent such
Lender is required to disclose such information pursuant to any applicable law,
rule, regulation or order of any Governmental Authority; provided that (i) any
information contained in any annual report, or any Form 10-K, Form 10-Q or Form
8-K reports (if any) which have been delivered to the SEC, or any other annual
or quarterly reports to the stockholders of Borrower subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, proxy material
delivered to the stockholders of any Borrower or any report delivered to the
SEC, or any other information that is in the public domain or has become
publicly known, shall not in any event be deemed confidential, and (ii) each
Lender may make any information received by it available (A) to a transferee of
or participant in any interest in either of the Credit Facilities or the Notes,
provided that such transferee or participant agrees in writing to be bound by
the provisions of this Section 7.3, (B) to any accountants or other
professionals engaged by such Lender, provided that each such accountant or
professional agrees to be bound by the provisions of this Section 7.3, or (C) in
connection with the enforcement of any of the Loan Documents or any litigation
in connection therewith. Additionally, each Lender covenants and agrees to
preserve the confidentiality of this Agreement and the transactions contemplated
herein, except as set forth in (ii)(A),(B) and (C) of the preceding sentence.
Further each Lender agrees that, during the term of the Credit Facilities, it
will not use the information provided by Borrower and not otherwise generally
known or obtainable through sources other than Borrower to take any action to
personally, by telephone or mail, solicit any Underlying Obligor for any purpose
which is in conflict with the services and products which Borrower is providing
or can provide with Borrower's current products and services to such Underlying
Obligor, including to refinance loans made by Borrower to such Underlying
Obligor, without the prior written consent of Borrower. It is understood and
agreed that all rights, title and interest in and to the list of such Underlying
Obligors and data relating to their mortgages are the property of Borrower, and
Lenders shall take no action to undermine these rights and benefits.
SECTION 7.4. Maintenance of Insurance. Borrower and each Guarantor will at
all times maintain or cause to be maintained insurance covering its respective
risks as are customarily carried by businesses similarly situated including,
without limitation, the following: (a) worker's compensation insurance; (b)
comprehensive general public liability and property damage insurance in respect
of all activities in which Borrower or such Guarantor might incur personal
liability for the death or injury of an employee or third person, or damage to
or destruction of another's property; (c) insurance against loss or damage by
fire, lightning, hail, tornado, explosion and other similar risk; and (d)
comprehensive automobile liability insurance. Borrower and each Guarantor shall
maintain coverage with respect to the foregoing risks in such coverage amounts
as are customarily carried by businesses similarly situated.
SECTION 7.5. Payment of Taxes, Impositions and Claims. Borrower and each
Guarantor shall pay (a) all Taxes imposed upon it or any of its assets or with
respect to any of its franchises, business, income or profits, and all
Impositions not later than the due date thereof, or before any material penalty
or interest may accrue thereon and (b) all material claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become a Lien on any
of its assets; provided, however, payment of Taxes, Impositions or claims shall
not be required if and for so long as (i) the amount, applicability or validity
thereof is currently being contested in good faith by appropriate action
promptly initiated and diligently conducted in accordance with good business
practices and no
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material part of the property or assets of Borrower or any Guarantor are subject
to levy or execution, (ii) Borrower or such Guarantor as required in accordance
with GAAP, shall have set aside on its books reserves (segregated to the extent
required by GAAP) deemed by it to be adequate with respect thereto, and (iii)
Borrower or such Guarantor has notified Administrative Agent of such
circumstances, in detail satisfactory to Administrative Agent, and, provided
further, that Borrower or such Guarantor shall pay any such Tax, Imposition or
claim if such contest is not successful and in any event prior to the
commencement of any action to realize upon or foreclose any Lien against any
part of the Collateral.
SECTION 7.6. Compliance with Laws and Documents. Borrower shall at all
times comply, and cause each of its Subsidiaries to comply, with all Legal
Requirements, the articles of incorporation and bylaws of Borrower, and each of
Borrower's Subsidiaries, and any other agreement to which Borrower, or any
Subsidiary of Borrower is a party, unless its failure to so comply alone or in
the aggregate would not have a material adverse effect on the financial
condition or operations of Borrower, together with its Subsidiaries taken as a
whole.
SECTION 7.7. Environmental Law Compliance and Indemnity. Borrower and each
Guarantor agrees to promptly pay and discharge when due all debts, claims,
liabilities and obligations with respect to any clean-up measures necessary for
Borrower or any Guarantor to comply with Applicable Environmental Laws affecting
Borrower or any Guarantor, provided that, with respect to any single tract or
parcel of real property, neither Borrower nor any Guarantor shall be required to
take such action if failure to take such action would not have a material
adverse effect on the financial condition of Borrower or any Guarantor or would,
in the reasonable opinion of Administrative Agent, have the potential for
creating any liability or claim against Administrative Agent or any of the
Lenders. Borrower and Guarantors hereby, jointly and severally, indemnify and
agree to defend and hold Agents and each Lender and their respective successors
and assigns harmless from and against any and all claims, demands, causes of
action, loss, damage, liabilities, costs and expenses (including reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Agents or any
Lender at any time and from time to time including, without limitation, those
asserted or arising subsequent to the payment or other satisfaction of the Notes
and expiration of the Letters of Credit, by reason of, arising out of or related
in any way to the failure of Borrower or any Subsidiary to comply with any
Applicable Environmental Law or Agents' and Lenders' entering into this
Agreement and the transactions herein contemplated, INCLUDING MATTERS WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE (SOLE,
COMPARATIVE, CONTINGENT OR OTHERWISE) OF ANY AGENT OR ANY LENDER OR FOR WHICH
ANY AGENT OR ANY LENDER MAY HAVE STRICT LIABILITY, BUT EXCLUDING MATTERS ARISING
OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY AGENT OR ANY LENDER. It
shall not be a defense to the covenant of Borrower and Guarantors to indemnify
that the act, omission, event or circumstance did not constitute a violation of
any Applicable Environmental Law at the time of its existence or occurrence. The
terms "hazardous substance" and "release" shall have the meanings specified in
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), and the terms
"solid waste" and "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976 ("RCRA"); provided, to the extent that any
other applicable laws of the United States of America or political subdivision
thereof establish a meaning for "hazardous substance," "release," "solid waste,"
or "disposed" which is broader than that specified
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in either SARA or RCRA, such broader meaning shall apply. As used in this
Agreement, "Applicable Environmental Law" shall mean and include the singular,
and "Applicable Environmental Laws" shall mean and include the collective
aggregate of the following: Any law, statute, ordinance, rule, regulation, order
or determination of any governmental authority or any board of fire underwriters
(or other body exercising similar functions), or any restrictive covenant or
deed restriction (recorded or otherwise) affecting Borrower or any Guarantor
pertaining to health, safety or the environment, including, without limitation,
all applicable flood disaster laws and health, safety and environmental laws and
regulations pertaining to health, safety or the environment, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the
Superfund Amendments and Reauthorization Act of 1986, the Occupational Safety
and Health Act, the Texas Water Code, the Texas Solid Waste Disposal Act, the
Texas Workers' Compensation Laws, and any federal, state or municipal laws,
ordinances, regulations or law which may now or hereafter require removal of
asbestos or other hazardous wastes from any property of Borrower or any
Guarantor or impose any liability on Administrative Agent or any Lender related
to asbestos or other hazardous wastes in any property of Borrower or any
Guarantor. The provisions of this Section 7.7 shall survive the repayment of the
Notes and expiration of the Letters of Credit. In the event of the transfer of
the Notes or any portion thereof, each Lender or any prior holder of the Notes
and any participants shall continue to be benefitted by this indemnity and
agreement with respect to the period of such holding of the Notes.
SECTION 7.8. Covenant Compliance. Borrower and each Guarantor shall perform
and comply with all covenants, obligations and agreements contained in this
Agreement and in the other Loan Documents.
SECTION 7.9. Quantity and Quality of Documents. All certificates, opinions,
reports and documents to be delivered from time to time hereunder shall be in
such number of counterparts as Administrative Agent may reasonably request and
in form reasonably acceptable to Administrative Agent, and counterpart signature
pages to any such documents may be attached to and shall, together with all
counterparts, constitute one and the same document.
SECTION 7.10. Use of Proceeds. Borrower and each Guarantor will use the
proceeds of the Credit Facilities (including the Letters of Credit) solely for
the purposes represented in this Agreement and shall not use such proceeds,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, and none of such proceeds
will be used in violation of applicable law (including, without limitation, the
Margin Regulations).
SECTION 7.11. Additional Documents. Within ten (10) Business Days after
request by Administrative Agent, Borrower and each Guarantor agree that they
will execute and deliver or cause to be executed and delivered to Administrative
Agent upon Administrative Agent's request such other and further instruments,
documents or certificates as in the judgment of Administrative Agent may be
required to better effectuate the transactions contemplated herein or to
conform, create, evidence, perfect, preserve or maintain the Lenders' Liens or
the Lenders' rights hereunder or under the other Loan Documents, and Borrower
and each Guarantor shall do all such additional acts, give such assurances and
execute such instruments as Administrative Agent may reasonably require to vest
more completely in and assure to Lenders their rights under this Agreement.
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SECTION 7.12. Compliance With Credit and Underwriting Policies. Borrower
and each Guarantor shall at all times comply with such Person's current
practices and procedures related to credit control, underwriting, due diligence,
collateral control, collection and reporting procedures as such practices and
procedures may be modified or amended from time to time so that such practices
and procedures are no less stringent than those used by comparable companies in
Borrower's or Guarantors' lines of business or as in effect on the Closing Date.
Borrower's and each Guarantor's chief executive office shall at all times be as
shown in the current organizational chart delivered to Administrative Agent
pursuant to Section 7.1. The material documents and files related to the
Assigned Loans included in the Collateral shall at all times be held by a
Custodian. Borrower and each Guarantor shall maintain all files related to the
Assigned Loans included in the Collateral in a reasonably prudent manner.
SECTION 7.13. Appraisals. Administrative Agent may require, and Borrower or
the appropriate Guarantor shall deliver to Administrative Agent promptly upon
request therefor (but Borrower or such Guarantor shall not be required to pay
the cost of more than one appraisal for any particular item or portion of the
Collateral in any twelve month period), with respect to any item or portion of
the Collateral which has a cost in excess of One Hundred Thousand and No/100
Dollars ($100,000.00) an appraisal thereof. If required by applicable
regulations, Administrative Agent may order any such appraisal directly, and
Borrower or Guarantors shall reimburse Administrative Agent for the reasonable
cost of such appraisal upon request by Administrative Agent. Administrative
Agent shall provide Borrower with a copy of any such appraisal ordered by
Administrative Agent. Each such appraisal shall be in form and substance
satisfactory to Administrative Agent.
SECTION 7.14 Year 2000 Compliance. Borrower will promptly notify
Administrative Agent in the event Borrower discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to the business and operation of Borrower and its Subsidiaries, taken
as a whole, will not be Year 2000 compliant, except to the extent that such
failure could not reasonably be expected to have a material adverse effect on
Borrower and its Subsidiaries, taken as a whole.
ARTICLE VIII
NEGATIVE COVENANTS
Borrower and each Guarantor covenant and agree that without the prior
written consent of the Required Lenders, so long as Lenders' commitment to make
Advances under the Revolving Credit Facility remains in effect, any amounts
remain outstanding under the Term Facility, any Letters of Credit remain
outstanding or any of the Obligations remain unpaid:
SECTION 8.1. Minimum Consolidated Tangible Net Worth. Borrower shall not
permit Consolidated Tangible Net Worth to be less than the sum of (a) Three
Hundred Thirty-Five Million and No/100 Dollars ($335,000,000), plus (b)
seventy-five percent (75%) of the cumulative Consolidated Net Income for each
calendar quarter commencing on July 1, 1998, through the quarter ending
immediately prior to, or on, the date as of which compliance with this covenant
is being measured, plus (c) seventy-five percent (75%) of the amount of any
proceeds (less reasonable and customary transaction costs) received by Borrower
from the issuance of any additional shares of stock or other equity instruments.
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SECTION 8.2. Leverage Ratio. Borrower shall not permit the ratio of (a)
Total Consolidated Debt less the outstanding balance of all Warehouse Lines to
(b) Consolidated Net Worth to be greater than 3.0 to 1.0.
SECTION 8.3. Interest/Dividend Coverage Ratio. Borrower shall not permit
the Interest/Dividend Coverage Ratio to be less than 1.50 to 1.00 between the
Closing Date and up to June 30, 1999, and 1.75 to 1.00 thereafter.
SECTION 8.4. Capital Adequacy; Asset Coverage. Borrower shall not permit an
amount equal to Total Consolidated Debt less fifty percent (50%) of the face
value of all Approved Subordinated Debt as of the last day of any fiscal quarter
of Borrower to exceed the Adjusted Asset Amount at such time. In addition,
Borrower shall not permit the ratio of the Asset Coverage Values to the
aggregate outstanding balance of the Revolving Credit Facility (including
Swingline Advances and Competitive Bid Loans), the Term Facility and the Letter
of Credit Exposure to be less than 1.4 to 1.0 (the "Asset Coverage Requirement")
for two consecutive Business Days.
SECTION 8.5. Permitted Debt. Neither Borrower nor any Subsidiary of
Borrower shall incur any Debt, except
(a) the Credit Facilities (including the Letters of Credit);
(b) unsecured Debt, the occurrence of which would not cause Borrower
or any Subsidiary of Borrower to be in violation of any covenant or term of this
Agreement; provided, that, (i) with respect to any unsecured (or secured only to
the extent permitted by Section 8.5(c)(ii) below) Interest and Foreign Exchange
Hedge Agreements, (x) the purpose of each such Interest and Foreign Exchange
Hedge Agreement is to hedge the applicable Borrower's or Subsidiary's interest
rate or foreign exchange or other business risk, and is not speculative in
nature, and (y) neither Borrower nor any Subsidiary deviates from the current
practices and policies related to obtaining Interest and Foreign Exchange Hedge
Agreements in effect on the date hereof as such practices and policies may be
reasonably changed so long as such changes are consistent with such practices
and policies in effect on the date hereof, (ii) neither Borrower nor any
Guarantor shall have any liability with respect to any Debt of any Foreign
Subsidiary or Excluded Subsidiary other than Borrower's unsecured guarantee of
funded Debt of Foreign Subsidiaries (x) operating, and with their principal
place of business, in the United Kingdom, so long as such Debt is fully secured
by assets located in a country which is a member of the European Union and is in
an aggregate amount not to exceed (pound)125,000,000 pounds sterling and (y)
operating, or with their principal place of business, outside the United Kingdom
in an aggregate amount not to exceed the Dollar Equivalent of $75,000,000, (iii)
neither Borrower nor any Subsidiary shall make payments on or redeem, or approve
by board of director action or otherwise the payment of any amounts on, or
redemption of, the Approved Subordinated Debt or any publicly-held senior
unsecured long term debt after the occurrence of a Default or, prior to the
occurrence of a Default, which would exceed the scheduled payments due under the
documents evidencing the Approved Subordinated Debt or any publicly-held senior
unsecured long term debt, such prohibited payments including any payments made
under Article 11 of that certain Indenture, dated January 15, 1996, by and
between Borrower and Bank One, Columbus, N.A., as Trustee, and (iv) all
Contingent Obligations must be quantifiable and included in the covenants
contained in Sections 8.2 and 8.4 (except to the extent any related Debt is
included in calculating such ratios) and given in lieu of an Investment
permitted by Section 8.9 hereof, other
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than Contingent Obligations in the form of indemnity obligations or typical
repurchase obligations related to the sale by Borrower or any Guarantor of
assets in the ordinary course of its business, including the securitization of
loans (which are expressly permitted hereunder) and the guaranty by AMRESCO
Commercial Finance, Inc. of Debt of AMRESCO Leasing Corporation, in an amount
not to exceed $15,000,000 in the aggregate;
(c) obligations under Interest and Foreign Exchange Hedge Agreements,
(i) which are secured, so long as the provider of any such Interest and Foreign
Exchange Hedge Agreement is a Lender and such Lender's Liens are evidenced by
the Security Documents securing the Credit Facilities or secure margin accounts
required to be maintained with such Lender which are in an amount and on terms
which are usual and customary, or (ii) which are permitted by Section 8.5(b)(i)
and secured only by margin accounts required to be maintained with the provider
of the applicable hedge product and are in an amount and on terms which are
usual and customary;
(d) Permitted Secured Debt;
(e) Debt secured by purchase money security interests permitted by
Section 8.7; and
(f) the Bridge Debt (Lenders hereby agreeing that Administrative Agent
shall be entitled to execute on behalf of Lenders any documents or agreements
approved by Administrative Agent acknowledging that the Bridge Debt is included
in the Obligations and secured by the Collateral, subject, however, to the
provisions of Section 10.6 hereof).
SECTION 8.6. Limitation on Sale of Properties. Neither Borrower nor any
Guarantor shall sell, assign, convey, exchange, lease or otherwise dispose of
any of its properties, rights, assets or business, whether now owned or
hereafter acquired, except in the ordinary course of its business.
SECTION 8.7. Permitted Liens. Borrower shall not , and Borrower shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its assets (including, without limitation, the stock of any
Foreign Subsidiary or Excluded Subsidiary and not pledged to Lenders), except
for (a) the Lenders' Liens; (b) the Permitted Encumbrances; (c) with respect to
computer and other office equipment or inventory, (i) landlord's Liens arising
in the ordinary course of Borrower's or any Subsidiary's business and (ii)
purchase money liens; (d) Liens on the Collateral to secure obligations under
Interest and Foreign Exchange Hedge Agreements, so long as the provider of any
such Interest and Foreign Exchange Hedge Agreement is a Lender and such Liens
are evidenced by the Security Documents securing the Credit Facilities; (e) the
six percent (6%) net profits interest granted by AMRESCO New Hampshire, Inc. to
Heller Financial, Inc. pursuant to Section 3.6 of that certain Term Loan
Agreement, dated as of December 31, 1993, among AMRESCO New Hampshire, Inc.,
AMRESCO Holdings, Inc. and Heller Financial, Inc.; (f) Liens involuntarily filed
against any asset of Borrower or any Subsidiary, provided, that within fifteen
(15) days after such filing, Borrower or the applicable Subsidiary has obtained
a release of any such Lien or is contesting the filing of such Lien in good
faith and an adequate bond has been obtained to satisfy in full any claim which
such Lien secures; (g) liens on margin accounts as described in Section
8.5(c)(ii), and (h) Liens securing Permitted Secured Debt.
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SECTION 8.8. Consolidations, Mergers, Sales of Assets, and Maintenance.
Borrower shall not, and Borrower shall not permit any of its Subsidiaries to,
(a) consolidate or merge with or into any other Person except for (i) mergers of
any Guarantor into Borrower or another Guarantor, (ii) mergers of any Guarantor
with or into any other Person which also becomes a "Guarantor" under this
Agreement and delivers all Loan Documents required by this Agreement and
otherwise complies with Section 2.4, (iii) merger of any Excluded Subsidiary
into a similar type of Excluded Subsidiary, or (iv) merger of any Foreign
Subsidiary into another Foreign Subsidiary, so long as, if applicable, such
merger would satisfy the conditions of Section 8.9(a) or (b) if it were
applicable, and in the case of a consolidation or merger by any Subsidiary of
Borrower with another Person, Borrower will remain the direct or indirect owner
of all of the outstanding capital stock and other equity securities of the
continuing or surviving corporation, (b) sell, lease, abandon or otherwise
transfer all or any material part of its assets to any Person, in one or a
series of related transactions, other than the sale of assets singly or in bulk
in the normal course of business, (c) other than in connection with (i) a
consolidation or merger permitted in clause (a) immediately above or (ii) the
dissolution of any Guarantor of which Administrative Agent has been notified and
the distribution of all of the assets of such Guarantor to another Guarantor,
terminate, or fail to maintain, its corporate existence or qualification, as
applicable, in the state of its incorporation and any other applicable
jurisdiction where the business of such Guarantor requires such qualification
(provided that nothing herein shall permit the dissolution of Borrower or the
failure of Borrower to maintain its corporate existence and qualification to do
business as elsewhere required in this Agreement), or (d) terminate, or fail to
maintain, its good standing and qualification to transact business in all
jurisdictions where the failure to maintain its good standing or qualification
to transact business could have a material adverse effect on its financial
condition or operations.
SECTION 8.9. Investments. Without the prior written consent of Required
Lenders, Borrower shall not, and Borrower shall not permit any of its
Subsidiaries to, directly or indirectly, make any loans, advances, extensions of
credit (including providing letters of credit and guaranties) or capital
contributions (whether made in cash or in kind) to, make any investment in, or
purchase any stock or securities of, or interest in, any Person (collectively
"Investments"), except for
(a) Acquisitions approved by the board of directors of the entity
whose stock or assets are being acquired and consistent with the business of
Borrower as set forth in Section 7.2 hereof, so long as either (i) concurrently
with such Investment the entity whose stock is being acquired becomes a Borrower
or Guarantor or (ii) the Acquisition Consideration paid in connection with such
Acquisition when added to the Acquisition Consideration paid in similar
Acquisitions where the acquired entity does not become a Borrower or Guarantor
does not exceed $10,000,000 in the aggregate, provided, that there shall not be
included in such $10,000,000 limitation the Acquisition Consideration paid in
connection with any Acquisition approved by Administrative Agent;
(b) Investments with respect to any Acquisition in which the board of
directors of the entity being acquired has not approved such Acquisition,
provided that (i) the assets, property or business acquired or invested in shall
be consistent with the business of Borrower as set forth in Section 7.2, and
(ii) the Acquisition Consideration does not exceed $10,000,000;
(c) Investments in Excluded Subsidiaries, so long as the aggregate
amount of such Investments does not exceed 15% of Adjusted Net Worth; provided,
however, that if the
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following requirements with respect to a particular Excluded Subsidiary are met
in Administrative Agent's determination in its sole and absolute discretion,
then Investments in such Excluded Subsidiary shall not be included for purposes
of calculating the foregoing limitation:
(i) the applicable Excluded Subsidiary was established and is serving
as a bankruptcy remote special purpose entity in connection with an asset
securitization of any kind (and no matter how such securitization is
treated under GAAP), and (A) 100% of the stock or other ownership interest
in such Excluded Subsidiary has been pledged to Administrative Agent on
behalf of the Lenders pursuant to a Pledge Agreement, and (B) either (x)
all of Borrower's or any of its Subsidiaries' retained or residual
interests in such securitization transaction or any other rights to
distributions or payments thereunder (whether such rights are certificated,
a contractual right to payment, a retained ownership right or security, or
otherwise) and/or assets of such Excluded Subsidiary of a type and value
acceptable to Administrative Agent in its sole and absolute discretion,
have been collaterally assigned to Administrative Agent on behalf of the
Lenders such that Administrative Agent has a valid first priority perfected
security interest therein on terms and subject to documentation acceptable
to Administrative Agent or (y) Administrative Agent in its sole and
absolute discretion determines that Borrower's and each Guarantor's
investment in such Excluded Subsidiary can be timely recovered in full by
Borrower or such Guarantor or that the loss of such investment will not
materially adversely affect the financial condition of Borrower or such
Guarantor; or
(ii) the applicable Excluded Subsidiary is a Partially-Owned
Subsidiary and all of the stock or other ownership interest of Borrower or
any Subsidiary of Borrower in such Excluded Subsidiary has been pledged to
Administrative Agent on behalf of the Lenders pursuant to a Pledge
Agreement, such stock or other ownership interest gives the holder thereof
a controlling interest in such entity, as determined by Administrative
Agent in its sole and absolute discretion, and Administrative Agent in its
sole and absolute discretion determines with respect to any Partially-Owned
Subsidiary that Borrower's and each Guarantor's investment therein can be
timely recovered in full by Borrower or such Guarantor or the loss of such
investment will not materially adversely effect the financial condition of
Borrower or such Guarantor;
(d) Investments by Borrower and Guarantors in Foreign Subsidiaries, so
long as the aggregate amount of such Investments (at original cost) does not
exceed 25% of Adjusted Net Worth, provided that after and so long as Borrower's
senior unsecured long term debt shall be rated Investment Grade by both Standard
& Poor's Rating Group and Moody's Investors Service, Inc., the limitation on
Investments in Excluded Subsidiaries herein contained shall not be applicable so
long as the Liens securing the Permitted Secured Debt (other than Warehouse
Lines) of the Foreign Subsidiaries are similarly released;
(e) loans to any employee of Borrower or any Subsidiary of Borrower
(i) to facilitate relocations and (ii) other loans to employees so long as the
aggregate of such loans does not exceed $1,500,000;
(f) Investments made by Borrower or any Subsidiary of Borrower in the
ordinary course of its business as contemplated by Section 7.2 hereof; and
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(g) any other Investments which would otherwise be prohibited by this
section so long as the aggregate amount (at original cost) of all such
Investments of Borrower and its Subsidiaries at any time shall be less than 20%
of Consolidated Tangible Net Worth.
Notwithstanding the foregoing, in no event shall any Investment permitted
pursuant to this Section 8.9 be permitted if (i) there shall exist a Default or
Event of Default, or (ii) if after giving effect to any such Investment,
Borrower or Guarantors shall not be in compliance with any covenant set forth in
the Loan Documents.
SECTION 8.10. Distributions. Neither Borrower nor any Guarantor shall make
or declare any Distributions after the occurrence of a Default or if the making
or declaring of any such Distribution would cause a Default.
SECTION 8.11. Limitation on Contingent Liabilities. Neither Borrower nor
any Guarantor shall create, incur, assume or suffer to exist any contingent
liabilities, except for Contingent Obligations permitted by Section 8.5 and
litigation claims which do not result in a violation of Section 9.1(i).
SECTION 8.12. Negative Pledge; No Restriction on Dividends. Borrower shall
not and shall not permit any Subsidiary of Borrower to, create or otherwise
cause to become effective, any consensual encumbrance or restriction of any kind
on the ability of Borrower or any Subsidiary to (a) pay dividends or make any
other distribution on its capital stock, (b) pay any indebtedness owed to
Borrower or any other Subsidiary or (c) make loans, advances, or capital
contributions to Borrower or any other Subsidiary except (i) as set forth in the
instrument evidencing or the agreement governing Debt of any acquired entity
which becomes a Subsidiary, provided, that any restriction or encumbrance under
such instrument or agreement existed at the time of the Acquisition, was not put
in place in anticipation of such Acquisition, and is not applicable to any
Person, other than the Person or property or assets of the Person so acquired;
(ii) customary provisions restricting subletting or assignment of any lease or
licence of Borrower or any Subsidiary (iii) any encumbrance or restriction
arising under applicable law; (iv) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into for the sale or
disposition of the stock, business, assets or properties of such Subsidiary; (v)
any encumbrance or restriction arising under customary non-assignment provisions
in installment purchase contracts; (vi) any encumbrance or restriction on the
ability of any Subsidiary to transfer any of its property to Borrower or any
Subsidiary that is required by a lender to, or purchaser of any indebtedness of,
such Subsidiary in connection with a financing of the acquisition or origination
of the property, but limited to the property so acquired or originated
(including with respect to the purchase of asset portfolios and pursuant to the
underwriting or origination of mortgage loans) by each Subsidiary; and (vii) any
encumbrance or restriction pursuant to any agreement that extends, refinances,
renews or replaces any agreement described in the foregoing clauses.
SECTION 8.13. Transactions with Affiliates. Neither Borrower nor any
Guarantor shall engage in any transaction with an Affiliate of Borrower or any
Guarantor unless such transaction is (a) between Borrower and any Guarantor or
between Guarantors or (b) is generally as favorable to Borrower or such
Guarantor as could be obtained in an arm's length transaction with an
unaffiliated Person in accordance with prevailing industry customs and
practices.
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SECTION 8.14. Employee Plans.
(a) Neither Borrower nor any Guarantor shall, nor shall any such
Person cause any member of its Controlled Group (as that term is defined in the
Code) to, fail to maintain and administer any Employee Plan in accordance with
the applicable requirements of the Code and ERISA. Neither Borrower nor any
Guarantor shall permit or suffer to exist any circumstances with respect to any
Employee Plan that could have a material adverse effect on Borrower or such
Guarantor.
(b) With respect to any Pension Plan, neither Borrower nor any
Guarantor shall (i) permit any accumulated funding deficiency (within the
meaning of Section 412(a) of the Code), whether waived or unwaived, to exist;
(ii) permit the present value of accrued benefits (based on the most recent
actuarial valuation prepared for each such plan, if any, in accordance with
ongoing actuarial assumptions) to exceed the current value of plan assets
allocable to such benefits by a material amount; (iii) permit any reportable
event (within the meaning of Section 4043 of ERISA) to occur, other than
purchases and sales of securities from a plan trustee as reported in the audited
financial statements of such plan; (iv) permit a prohibited transaction (within
the meaning of Section 4975 of the Code) to occur which has or could have a
material adverse effect on Borrower or any Guarantor; (v) incur any material
liability to the PBGC; or (vi) incur any material withdrawal liability (within
the meaning of Section 4201(a) of ERISA).
(c) Neither Borrower nor any Guarantor shall incur a material
obligation to provide post-employment health care benefits to any of its current
or former employees, except as may be required by Section 4980B of the Code or
otherwise required by law.
SECTION 8.15. Use Violations. Neither Borrower nor any Guarantor shall use,
maintain, operate or occupy, or allow the use, maintenance, operation or
occupancy of, any of its properties in any manner which (a) violates any Legal
Requirement unless such violation would not have a material adverse effect on
the financial condition, operations or business of Borrower or any Guarantor,
(b) may be dangerous unless safeguarded as required by law, (c) constitutes a
public or private nuisance, (d) makes void, voidable or cancelable any insurance
then in force with respect thereto or (e) makes void, voidable, or cancelable
any governmental permit.
SECTION 8.16. Exceptions to Covenants. Neither Borrower nor any Guarantor
shall take or permit to be taken any action or fail to take any action which is
permitted by any of the covenants contained in this Agreement if such action or
omission would result in the breach of any other covenant contained in this
Agreement.
SECTION 8.17. Fiscal Year and Accounting Methods. Neither Borrower nor any
Guarantor will change its Fiscal Year or its method of accounting (other than
changes as are concurred with by Borrower's or such Guarantor's independent
public accountants as being required by GAAP).
SECTION 8.18. Governmental Regulations. Neither Borrower nor any Guarantor
will conduct its business in such a way that it will become subject to
regulation under the Investment Advisers Act of 1940, as amended. Neither
Borrower nor any Guarantor will conduct its business in such a way that it will
become subject to regulation under the Investment Company Act of 1940, as
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amended, or the Public Utility Holding Company Act of 1935, as amended, or any
other laws, rules or regulations which regulate the incurrence of Debt.
SECTION 8.19. Treasury Stock. Borrower shall not purchase any of its stock
or other equity securities after the occurrence of a Default or if the value of
the treasury stock of Borrower shown on Borrower's balance sheet prepared in
accordance with GAAP exceeds 5% of Borrower's Consolidated Tangible Net Worth.
ARTICLE IX
DEFAULTS AND REMEDIES
SECTION 9.1. Events of Default. The term "Event of Default" as used in this
Agreement, shall mean any one of the following:
(a) The failure of Borrower to pay when due any principal of or
interest on the Notes, or any fees, charges or any other amounts payable to
Agents, Arrangers, or any Lender hereunder or under any of the Notes or other
Loan Documents, including, without limitation, the Participation Fees, the
Commitment Fees, the Administrative Fees, the Structure Fee and Letter of Credit
Fees;
(b) The failure, refusal or neglect of Borrower or any Guarantor to
observe, perform or comply with any covenant or agreement contained in Article
VIII other than Sections 8.13 and 8.14;
(c) The failure, refusal or neglect of Borrower or any Guarantor to
properly observe, perform or comply with any covenant, agreement or obligation
contained in this Agreement, or any of the other Loan Documents [other than
those covered by Sections 9.1(a) and (b)] and the continuation of such failure,
refusal or neglect for fifteen (15) days after written notice thereof has been
given to Borrower by Administrative Agent or a representative of Administrative
Agent;
(d) Any representation, warranty, certification or statement made by
Borrower or any Guarantor (either for itself or for any other Person) in this
Agreement or by Borrower, any Guarantor or any other Person on behalf of
Borrower or any Guarantor in any certificate, financial statement or other
document delivered pursuant to this Agreement or any other Loan Document shall
prove to have been untrue in any material respect when made or deemed to have
been made;
(e) The occurrence of (1) any event or condition which (i) results in
the acceleration of the maturity of any Debt of Borrower or any Subsidiary, or
(ii) constitutes a default under any Debt of Borrower or any Subsidiary,
provided, that if notice is required to be given under the documents evidencing
or securing such Debt prior to acceleration thereof, it shall not be an Event
of Default hereunder until Borrower has received written notice of such default,
(2) any event or condition which would require Borrower or any Subsidiary to
make a payment under any Interest and Foreign Exchange Hedge Agreement, and the
effect of making such payment, would cause Borrower or any Subsidiary to violate
any provision of Article VIII hereunder as tested on the date any such Interest
or Foreign Hedge Agreement payment became payable or (3) a payment by
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Borrower or any Subsidiary, or the approval of the board of directors of
Borrower or any Subsidiary for the payment, of amounts under any Approved
Subordinated Debt or publicly held senior unsecured debt in excess of the
regularly scheduled payments thereunder, or which would otherwise cause a
violation by Borrower or any Subsidiary of any covenant or condition contained
in any of the Loan Documents;
(f) The filing or commencement by Borrower or any Subsidiary of
Borrower of a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or Borrower or
any Subsidiary of Borrower shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; provided, however, that, with respect to any violation of this
Section 9.1(f) that pertains to a Subsidiary of Borrower (which Subsidiary is
not also a Guarantor), it shall not be an Event of Default if such violation
does not (i) otherwise result in an Event of Default or (ii) have a material
adverse effect on the business, financial position or results of operations of
Borrower or any Guarantor;
(g) The filing or commencement of an involuntary case or other
proceeding against Borrower or any Subsidiary of Borrower seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of sixty (60) days; or an order for relief shall be entered against
Borrower or any Subsidiary of Borrower under the federal bankruptcy laws as now
or hereafter in effect; provided, however, that, with respect to any violation
of this Section 9.1(g) that pertains to a Subsidiary of Borrower (which
Subsidiary is not also a Guarantor), it shall not be an Event of Default if such
violation does not (i) otherwise result in an Event of Default or (ii) have a
material adverse effect on the business, financial position or results of
operations of Borrower or any Guarantor;
(h) The liquidation or dissolution of Borrower or any Subsidiary,
other than any liquidation or dissolution of any Guarantor permitted by Section
8.8;
(i) One or more judgments or orders for the payment of money
aggregating in excess of $500,000.00 shall be rendered against Borrower and/or
any Subsidiary of Borrower and such judgment or order (A) shall continue
unsatisfied and unstayed (unless bonded with a supersedeas bond at least equal
to such judgment or order) for a period of thirty (30) days, unless Borrower or
any such Subsidiary has obtained an indemnification of the full amount of such
judgment or order by a third party approved by the Required Lenders [it being
acknowledged that an indemnification from any Lender or the Resolution Trust
Corporation shall be deemed an approved third party for purposes of this
subparagraph (i)] pursuant to a written indemnification agreement approved by
the Required Lenders, or (B) is not fully paid and satisfied at least ten (10)
days prior to the date on which any of its assets may be lawfully sold to
satisfy such judgment or order;
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(j) The Lenders' Liens with respect to the Collateral, or any part
thereof, shall not constitute first and prior liens and/or security interests
other than second liens on a portion of the Collateral which is not material and
has been disclosed to Administrative Agent; or
(k) There shall occur a Change in Control.
It is understood and agreed by Borrower and each Guarantor that any of the
foregoing "Events of Default" shall constitute an Event of Default under each of
the Notes, and that such "Events of Default" are cumulative and in addition to
any default or events of default contained in any of the other Loan Documents,
and that in the event of any discrepancy or inconsistency between any Event of
Default hereunder and any default or event of default contained in any other
Loan Document, the description of the Event of Default stated herein shall
control.
SECTION 9.2. Remedies. Upon the occurrence of an Event of Default,
Administrative Agent may, and at the direction and election of the Required
Lenders shall, acting by or through any of its agents, trustees or other
Persons, without notice (unless expressly provided for herein), demand or
presentment (including, without limitation, notice of default, notice of intent
to accelerate or of acceleration) all of which are hereby waived, and in
addition to any other provision of this Agreement or any other Loan Document,
exercise any or all of the following rights, remedies and recourses:
(a) Terminate Lenders' commitment to make Advances hereunder and
declare the unpaid principal balance of each of the Notes, the accrued and
unpaid interest thereon and any other accrued but unpaid portion of the
Obligations to be immediately due and payable, without notice (expressly
including, but not limited to, notice of default, notice of intent to accelerate
or of acceleration), except any notice that is expressly required by the terms
of this Agreement, presentment, protest, demand or action of any nature
whatsoever, each of which hereby is expressly waived by Borrower, whereupon the
same shall become immediately due and payable. Notwithstanding the foregoing or
anything to the contrary contained herein or in any other Loan Document, upon
the occurrence of an Event of Default described in Section 9.1(f) or Section
9.1(g) by Borrower, the entire unpaid principal balance of the Notes, and all
accrued, unpaid interest thereon shall automatically be accelerated and
immediately be due and payable in full, without notice (expressly including, but
not limited to, notice of default, intent to accelerate or of acceleration),
presentment, protest, demand or action of any nature whatsoever, each of which
hereby is expressly waived by Borrower; provided, however, that if accelerated
automatically pursuant to this sentence, the Notes and all such indebtedness may
be reinstated at the option and upon the written approval of the Required
Lenders.
(b) Enter upon the Mortgaged Property or any other Collateral or any
part thereof and take exclusive possession thereof and of all books, records and
accounts relating thereto (including, without limitation, all Borrower Due
Diligence Reports). If Borrower or any Guarantor remains in possession of all or
any part of the Collateral after an Event of Default occurs and is continuing
and without Administrative Agent's prior written consent thereto, Administrative
Agent may invoke any and all legal remedies to dispossess Borrower or such
Guarantor, including specifically one or more actions for declaratory or
injunctive relief, forcible entry and detainer, trespass to try title and writ
of restriction. Nothing contained in the foregoing sentence shall, however, be
construed to impose any greater obligation or any prerequisites to acquiring
possession
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of the Collateral or any part thereof after an Event of Default occurs than
would have existed in the absence of such sentence.
(c) Hold, lease, manage, operate or otherwise use or permit the use of
the Mortgaged Property, the Assigned Loans and all other Collateral, or any part
thereof, either by itself or by other Persons, in such manner, for such time and
upon such other terms as Administrative Agent may deem to be prudent and
reasonable under the circumstances (making such repairs, alterations, additions
and improvements thereto and taking any and all other action with reference
thereto, from time to time, as Administrative Agent shall deem necessary or
desirable), and apply all proceeds from the Mortgaged Property, the Assigned
Loans and all other Collateral in connection therewith in accordance with the
provisions of Section 9.10 hereof.
(d) Sell or offer for sale the Collateral, or any part thereof, in
such portions, order and parcels as Administrative Agent may determine, with or
without having first taken possession of same, in accordance with the provisions
of the applicable Loan Documents and applicable Legal Requirements.
(e) Make application to a court of competent jurisdiction, as a matter
of strict right and, except as otherwise provided by applicable law, without
notice to Borrower or without regard to the adequacy of the Collateral for the
payment of the Obligations, for the appointment of a receiver of the Collateral,
or any part thereof, and, to the extent permitted by applicable law, Borrower
does hereby irrevocably consent to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain, sell, dispose and otherwise operate the
Collateral, or any part thereof, upon such terms that may be approved by the
court, and shall apply all proceeds from such operation of the Collateral in
accordance with the provisions of Section 9.10 hereof.
(f) Exercise any and all other rights, remedies and recourses granted
hereunder or under the other Loan Documents or otherwise now or hereafter
existing in equity, at law, by virtue of statute or otherwise.
SECTION 9.3. Rights of Set-Off.
(a) In addition to the Lender's Liens, Borrower and each Guarantor
hereby expressly grant to Lenders the right of setoff against all deposits and
other sums at any time held or credited by or due from any Lender to Borrower or
any Guarantor, in accordance with the provisions of this Section 9.3. The rights
of each Lender under this Section 9.3 are in addition to other rights and
remedies (including, without limitation, other rights of setoff under law or
equity) which such Lender may have under law or by agreement.
(b) Upon the occurrence and during the continuance of any Event of
Default, each Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, at its option, without notice or demand and
without liability, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, excepting, however, any fiduciary
or escrow accounts established by Borrower or any Guarantor into which only
funds of unrelated third-parties are deposited, and provided that Borrower or
such Guarantor has informed such Lender and Administrative Agent of the nature
of such accounts) at any time held, and other indebtedness
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at any time owing, by any Lender to or for the credit or the account of Borrower
or any Guarantor against any and all of the Obligations now or hereafter
existing under this Agreement, the Notes and the other Loan Documents, in such
order and manner as such Lender may determine, subject, however, to the
agreements contained in Section 10.14 hereof, regardless of whether such Lender
shall have made any demand under this Agreement or the Notes and although such
obligations may be unmatured.
(c) Borrower and each Guarantor agree, to the fullest extent it may
effectively do so under applicable law, that each Lender and any holder of a
participation in any of the Notes (with the appropriate consent of such Lender)
may exercise rights of setoff or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of Borrower or such Guarantor in the amount of such participation.
SECTION 9.4. Remedies Cumulative, Concurrent and Non-Exclusive. Lenders
shall have all rights, remedies and recourses granted in the Loan Documents, and
available at law or equity and same (a) shall be cumulative and concurrent, (b)
may be pursued separately, successively or concurrently against Borrower or any
Guarantor, or any others obligated under any of the Notes, or against any one or
more of them, at the sole discretion of Lenders, (c) may be exercised as often
as the occasion therefor shall arise, it being agreed by Borrower and each
Guarantor that the exercise or failure to exercise any of same shall in no event
be construed as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be, non-exclusive.
SECTION 9.5. No Conditions Precedent to Exercise Remedies. Borrower and
each other Person hereafter obligated for payment or fulfillment of all or any
part of the Obligations shall not, except as otherwise provided by applicable
law, be relieved of such obligation by reason of (a) the failure of a trustee to
comply with any request of Borrower, or any other Person so obligated to
foreclose the Lenders' Liens or to enforce any provisions of the Loan Documents,
(b) the release, regardless of consideration, of any Person obligated with
respect to the Obligations, or of the Collateral or any part thereof, or the
addition of any other property to the Collateral, (c) any agreement or
stipulation between any subsequent owner of the Collateral and any Agent or any
Lender extending, renewing, rearranging or in any other way modifying the terms
of the Loan Documents without first having obtained the consent of, given notice
to or paid any consideration to Borrower, or such other Person, and in such
event, Borrower and all such other Persons shall continue to be liable to make
payments in accordance with the terms of any such extension or modification
agreement unless expressly released and discharged in writing by the Required
Lenders, and (d) any other act or occurrence, save and except the complete
payment of the Obligations. Borrower and each Guarantor waive any right to
require Lenders to proceed against any other Person, exhaust any Collateral, or
pursue any other remedy in Lenders' power. All dealings between Borrower, any
Guarantor and any Lender, whether or not resulting in the creation of the
Obligations, shall conclusively be presumed to have been had or consummated upon
reliance upon this Agreement. Borrower and each Guarantor authorize Lenders,
without notice or demand and without any reservation of rights against Borrower
or any Guarantor and without affecting liability hereunder or on the
Obligations, from time to time, to (i) renew, extend for any period, accelerate,
modify, compromise, settle, or release the obligation of any other Person that
may be obligated with respect to any or all of the Obligations or Collateral;
(ii) take and hold any other property as collateral, other than the Collateral,
for the payment of any or all of the Obligations, and exchange, enforce, waive,
and release any or all of the Collateral or other property; and (iii) after
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the occurrence of an Event of Default, apply the Collateral or other property
and direct the order or manner of sale thereof in accordance with the terms of
this Agreement and the Security Documents.
SECTION 9.6. Release of and Resort to Collateral. The release or
substitution of all or any part of the Collateral, regardless of consideration,
shall not in any way impair, affect, subordinate, or release the Lenders' Liens
or their status as first and prior Liens in and to any remaining Collateral. For
payment and performance of the Obligations, Lenders may resort to any other
security therefor held by a trustee in such order and manner as Required Lenders
may elect.
SECTION 9.7. Waivers. To the full extent permitted by law, Borrower and
each Guarantor hereby irrevocably and unconditionally waive and release (a) all
benefit that might accrue to Borrower or any Guarantor by virtue of any present
or future law exempting the Collateral from attachment, levy or sale on
execution or providing for any appraisement, evaluation, stay of execution,
exemption from civil process, redemption or extension of time for payment, (b)
except as specifically provided for herein, all notices of any Default or Event
of Default or of any trustee's or Lenders' election to exercise or his or their
actual exercise of any right, remedy or recourse provided for under the Loan
Documents, (c) any right to a marshalling of assets with respect to the Notes or
the Letters of Credit or any of the Collateral or any Debt of Borrower or any
Guarantor, or a sale in inverse order of alienation and (d) except as
specifically provided for herein, any and all right to receive demand, grace,
notice, presentment for payment, protest, notice of intention to accelerate the
Obligations or notice of acceleration of the Obligations.
SECTION 9.8. Discontinuance of Proceedings. In case Administrative Agent
shall have proceeded to invoke any right, remedy or recourse permitted under the
Loan Documents and shall thereafter elect to discontinue or abandon same for any
reason, Administrative Agent shall have the unqualified right to do so and, in
such event, Borrower, each Guarantor and Lenders shall be restored to their
former positions with respect to the Obligations, the Loan Documents, the
Collateral and otherwise, and the rights, remedies, recourses and powers of
Agents and Lenders shall continue as if same had never been invoked.
SECTION 9.9. Power of Attorney. Borrower and each Guarantor hereby
irrevocably appoint Administrative Agent, acting for all the Lenders, as the
true and lawful attorney of Borrower or such Guarantor with full power of
substitution for, and on behalf of Borrower and such Guarantor, and in its name,
upon the request and instruction of Borrower and such Guarantor and in any event
after the occurrence of an Event of Default (or prior to the occurrence of any
Event of Default if Administrative Agent otherwise reasonably believes it is
necessary to take such action), to take any action to preserve, maintain,
protect or enforce the rights and interests of Borrower or such Guarantor with
respect to the Collateral, including, without limitation, to (i) endorse any
Assigned Loans to Administrative Agent, on behalf of Lenders, or to any other
Person, (ii) enforce, cure any default or otherwise act with respect to any
leases, sales contracts, management or marketing contracts or any other
agreements pertaining to or affecting any of the Mortgaged Property, (iii) take
all such action and to execute all such documents as Administrative Agent deems
necessary or desirable to operate or preserve or protect the Assigned Loans and
the collateral therefor, the Mortgaged Property or any other Collateral, (iv)
sue for, demand or collect any sums owing to Borrower or any Guarantor under the
Assigned Loans or under leases or other agreements affecting the Mortgaged
Property and (v) exercise rights of Borrower or any Guarantor under any purchase
agreement related to any Assigned Loan. The power so vested in Administrative
Agent under this
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Section 9.9 is one coupled with an interest and shall be irrevocable, except by
written instrument executed jointly by Borrower, each Guarantor and
Administrative Agent and filed for record in the Office of the County Clerk of
Dallas County, Texas. Notwithstanding the foregoing, Administrative Agent shall
be under no obligation to exercise any of the foregoing rights or take any
action necessary to preserve any right in any asset subject to the Lenders'
Liens against any other Person, and Administrative Agent, to the extent
permitted herein or by applicable law, may exercise any of the foregoing rights
without incurring any responsibility or liability to Borrower or any other
Person and without in any way affecting the Obligations or any other obligations
of Borrower or any Guarantor to Lenders. Borrower and Guarantors, jointly and
severally, agree to reimburse Administrative Agent and Lenders upon demand for
any costs and expenses, including, without limitation, reasonable attorneys'
fees and collection costs, that Administrative Agent or any Lender may incur
while acting as the attorney-in-fact of Borrower and Guarantors as provided
hereunder (or pursuant to the attorney-in-fact herein created), all of which
costs and expenses shall be included in the Obligations.
SECTION 9.10. Application of Proceeds. All payments on the Notes or the
Letters of Credit received by any Lender during the existence of an Event of
Default (unless otherwise elected by Lenders), and the proceeds of any sale or
disposition of, and all proceeds generated by the holding, leasing, operation or
other use of, the Collateral, or any part thereof, during the existence of an
Event of Default and upon the exercise of Lenders' rights and remedies hereunder
or under any of the other Loan Documents, shall be applied by Lenders, the
applicable trustee or the receiver, if one is appointed, to the extent that
funds are so available therefrom, as determined by the Required Lenders
(provided that, as among themselves, Lenders agree that any such proceeds shall
be applied as contemplated by Article X hereof).
ARTICLE X
AGENTS AND THE LENDERS
SECTION 10.1. Appointment and Authorization of Agents.
(a) Each Lender hereby irrevocably appoints and authorizes Administrative
Agent as its nominee and agent, in its name and on its behalf: (i) to act as
nominee for and on behalf of such Lender in and under all Loan Documents; (ii)
to arrange the means whereby the funds of the Lenders are to be made available
to Borrower under the Loan Documents; (iii) to take such action as may be
requested by any Lender under the Loan Documents (when such Lender is entitled
to make such request under the Loan Documents and after such requesting Lender
has obtained the concurrence of such other Lenders as may be required under the
Loan Documents); (iv) to receive all documents and items to be furnished to
Lenders under the Loan Documents; (v) to promptly distribute to each Lender the
material information, requests, documents and items received from Borrower or
Guarantors under the Loan Documents; (vi) to promptly distribute to each Lender
such Lender's Aggregate Loan Percentage of each payment or prepayment in
accordance with the terms of the Loan Documents; and (vii) to deliver to the
appropriate Persons requests, demands, approvals and consents received from
Lenders.
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(b) The obligations of each Agent hereunder are only those expressly set
forth herein. Each Lender and Borrower and each Guarantor agree that no Agent is
a fiduciary for Lenders or for Borrower or Guarantors but simply is acting in
the capacity described herein to alleviate administrative burdens for both
Borrower and Lenders and that no Agent has duties or responsibilities to
Lenders, Borrower or Guarantors except those expressly set forth herein. Without
limiting the generality of the foregoing, no Agent shall be required to take any
action or exercise any right or remedy with respect to any Default or Event of
Default, except if requested by the Required Lenders. Notwithstanding the
administrative authority delegated to Administrative Agent, Administrative Agent
shall not cause or permit any modification of the Loan Documents or take other
action relating to either or both of the Credit Facilities specifically
requiring the consent or approval of the Required Lenders without such consent
or approval. Action taken by Administrative Agent including, without limitation,
any exercise of remedies or initiation of suit or other legal proceedings made
in accordance with the instructions of the Required Lenders or as otherwise
permitted by this Article X, shall be binding upon each of the Lenders. Each
Lender specifically acknowledges that it has reviewed and approved the voting
and other provisions of this Agreement and the other Loan Documents setting
forth the relative rights and obligations among the Lenders and agrees to be
bound by such provisions notwithstanding that such Lender is only a Revolving
Lender or only a Term Lender, and acknowledges that Agents (and counsel for the
Lenders, as a group) are acting on behalf of all the Lenders and not the
Revolving Lenders, as a group, and Term Lenders, as a separate group.
(c) Each Agent, in its capacity as a Lender, shall have the same Rights
under the Loan Documents as any other Lender and may exercise the same as though
it were not acting as an Agent, and any resignation by any Agent hereunder shall
not impair or otherwise affect any Rights which it has or may have in its
capacity as an individual Lender.
(d) Each Agent may now or hereafter be engaged in one or more loan, letter
of credit, leasing, or other financing transactions with Borrower or any
Guarantor, act as trustee or depositary for Borrower or any Guarantor or
otherwise be engaged in other transactions with Borrower, any Guarantor and/or
their Affiliates (collectively, the "other activities") not the subject of the
Loan Documents. Without limiting the Rights of Lenders specifically set forth in
the Loan Documents, no Agent shall be responsible to account to Lenders for such
other activities, and no Lender shall have any interest in any other activities,
any present or future guaranties by or for the account of Borrower or any
Guarantor which are not contemplated or included in the Loan Documents (any
present or future offset exercised by any Agent in respect of such other
activities), any present or future property taken as security for any such other
activities, or any property now or hereafter in the possession or control of any
Agent which may be or become security for the Obligations by reason of the
general description of indebtedness secured or of property contained in any
other agreements, documents or instruments related to any such other activities;
provided that, if any payments in respect of such guaranties, such property or
the proceeds thereof or any offset shall be applied to reduction of the
Obligations, then each Lender shall be entitled to share in such application
pursuant to the terms of this Agreement.
SECTION 10.2. Possession of Instruments by Administrative Agent.
Administrative Agent shall exercise all rights and remedies under the Loan
Documents and take all actions with respect thereto in accordance with the
request or direction of the Required Lenders, or otherwise as and to the extent
provided herein or in the other Loan Documents; provided, however, that
Administrative
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Agent may take such actions in its name without the joinder of Lenders, and
Borrower, Guarantors and all third parties shall be entitled to rely on the
actions taken by Administrative Agent with respect to the execution by
Administrative Agent of any and all agreements, financing statements,
affidavits, notices or any other type of document or instrument pertaining
thereto, including, without limitation, in connection with the exercise of any
rights or remedies of Lenders under the Loan Documents (and specifically
including any foreclosure proceedings under any of the Security Documents or
other legal proceedings), and the same shall be binding upon all Lenders as to
any third party relying on such actions of Administrative Agent. Administrative
Agent shall also be the named secured party or beneficiary under the Security
Documents and shall take and maintain possession of all the Security Documents,
as agent for and on behalf of all Lenders, and the grant to Administrative Agent
of any Lien under any Security Document shall be for the ratable benefit of all
Lenders.
SECTION 10.3. Expenses. Each Lender shall pay its Aggregate Loan Percentage
of any reasonable expenses (including, without limitation, court costs,
reasonable attorneys' fees and other costs of collection) incurred by
Administrative Agent in connection with any of the Loan Documents if
Administrative Agent does not receive reimbursement therefor from other sources
within thirty (30) days after incurred; provided that, and subject to the terms
and conditions of Section 11.4, each Lender shall be entitled to receive its
Aggregate Loan Percentage of any reimbursement for such expenses, or part
thereof, which Administrative Agent subsequently receives from such other
sources.
SECTION 10.4. Delegation of Duties; Reliance; Consultation. Lenders may
perform any of their duties or exercise any of their Rights under the Loan
Documents by or through Administrative Agent, and Lenders and Administrative
Agent may perform any of their duties or exercise any of their Rights under the
Loan Documents by or through their respective officers, directors, employees,
attorneys, agents, or other representatives (collectively, "Representatives").
Administrative Agent, Lenders, and their respective Representatives shall (a) be
entitled to rely upon (and shall be protected in relying upon) any writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telecopy, telegram, telex or teletype message, statement, order or other
documents or conversation believed by any of them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinion of counsel selected by Administrative Agent or such
Lender, (b) be entitled to deem and treat each Lender as the owner and holder of
its Revolving Loan Percentage or Term Loan Percentage, as applicable, for all
purposes until, subject to Section 11.10, written notice of the assignment or
transfer thereof shall have been given to and received by Administrative Agent
(and, any request, authorization, consent or approval of any Lender shall be
conclusive and binding on each subsequent holder, assignee, or transferee of
such Lender's Revolving Loan Percentage or Term Loan Percentage, as applicable,
or Participant therein until such notice is given and received), and (c) other
than in connection with Borrower's failure to pay required principal or interest
under the Obligations, not be deemed to have notice of the occurrence of a
Default or an Event of Default unless notified thereof by another Lender or
Borrower. Administrative Agent may consult with legal counsel, independent
public accountants, consultants, appraisers and other experts selected by
Administrative Agent, and shall not be liable for any action taken or omitted to
be taken by Administrative Agent in good faith in accordance with the advice of
such counsel, accountants or experts. Any such counsel, accountants or other
experts shall be engaged to represent and render services to all Lenders as a
group, and not the Revolving
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Lenders as a group, and the Term Lenders as a separate group, unless otherwise
specified by Administrative Agent.
SECTION 10.5. Limitation of Agents' Liability.
(a) Neither any Agent nor any of its Representatives shall be liable for
any action taken or omitted to be taken by it or them under the Loan Documents
in good faith and believed by it or them to be within the discretion or power
conferred upon it or them by the Loan Documents or be responsible for the
consequences of any error of judgment or negligence, except for gross negligence
or willful misconduct, and neither any Agent nor any of its Representatives has
a fiduciary relationship with any Lender by virtue of the Loan Documents
(provided that nothing herein shall negate the obligation of any Agent to
account for funds received by it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss, cost, liability,
and expense, no Agent shall be compelled to do any act under the Loan Documents
or to take any action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Loan Documents. If
any Agent requests instructions from Lenders with respect to any act or action
(including, but not limited to, any failure to act) in connection with any Loan
Document, such Agent shall be entitled (but shall not be required) to refrain
(without incurring any liability to any Person by so refraining) from such act
or action unless and until it has received such instructions. In no event,
however, shall any Agent or any of its Representatives be required to take any
action which it or they reasonably determine could incur for it or them criminal
or civil liability.
(c) No Agent (nor its Representatives) shall be responsible in any manner
to any Lender or any participant of a Lender for, and each Lender represents and
warrants that it has not relied upon any Agent in respect of, (i) the
creditworthiness of Borrower or any Guarantor and the risks involved to such
Lender, (ii) the effectiveness, enforceability, genuineness, validity, or the
due execution of any Loan Document, (iii) any representation, warranty,
document, certificate, report, or statement made therein or furnished thereunder
or in connection therewith, (iv) the existence, priority, or perfection of any
Lien granted or purported to be granted under any Loan Document, (v) the
observation of or compliance with any of the terms, covenants, or conditions of
any Loan Document on the part of Borrower or any Guarantor, or (vi) the relative
Rights of the Lenders as among themselves. Each Lender jointly and severally
agrees to indemnify each Agent and hold it harmless from and against (but
limited to such Lender's Aggregate Loan Percentage of) any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses, and reasonable disbursements of any kind or nature
whatsoever (including counsel fees and disbursements) which may be imposed on,
asserted against, or incurred by such Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by Administrative Agent
under the Loan Documents (PROVIDED THAT, ALTHOUGH EACH AGENT SHALL HAVE THE
RIGHT TO BE INDEMNIFIED FOR ITS NEGLIGENCE [SOLE, COMPARATIVE, CONTINGENT OR
OTHERWISE], AGENT SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS
OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT).
SECTION 10.6. Default; Collateral. Upon the occurrence and continuance of a
Default or an Event of Default, Administrative Agent shall make a recommendation
to Lenders of any actions to be taken, and each Lender agrees to promptly confer
with the other Lenders in order that Lenders
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can consider such course of action or any other actions to be taken for the
enforcement of the Rights of Lenders; provided that Administrative Agent shall
be entitled (but not obligated) to proceed to take any actions necessary in its
reasonable judgment to preserve Rights, pending agreement by Lenders on the
course of action to be taken. If the Required Lenders cannot agree on a course
of action to be taken within sixty (60) days following Administrative Agent's
initial recommendation, Administrative Agent shall thereafter take such action
as Administrative Agent deems advisable to enforce the Rights of Lenders;
provided, that if, after Administrative Agent has begun taking such action, the
Required Lenders agree on a course of action contrary to that undertaken by
Administrative Agent, then Administrative Agent shall change its course of
action so as to follow the course of action agreed upon by the Required Lenders.
Any action directed or approved by the Required Lenders, including without
limitation, any exercise of remedies or initiation of suit or other legal
proceedings, shall be binding upon each Lender. In actions with respect to any
property of Borrower or any Guarantor, Administrative Agent is acting for the
account of each Lender to the extent of each Lender's Aggregate Loan Percentage.
Any and all agreements to subordinate (whether made heretofore or hereafter)
other indebtedness or obligations of Borrower or any Guarantor to the
Obligations shall be construed as being for the benefit of each Lender to the
extent of its respective Aggregate Loan Percentage. If Administrative Agent
acquires any security for the Obligations or any guaranty of the Obligations
upon or in lieu of foreclosure, the same shall be held for the benefit of each
Lender in proportion to such Lender's respective Aggregate Loan Percentage.
Lenders agree, among themselves, that unless otherwise agreed to by
Administrative Agent and the Required Lenders, all monies collected or received
by Administrative Agent after the occurrence of an Event of Default in respect
of the security for the Credit Facilities, directly or indirectly, or by any
other means shall be applied (a) to the Administrative Fees and all costs of
collection or maintenance of the Collateral, and then to either interest or
principal of the Credit Facilities as recommended by Administrative Agent and
approved by the Required Lenders (except that any amounts to be applied to
interest or principal shall be distributed to Lenders based on their Aggregate
Loan Percentage) until the Credit Facilities (including the Competitive Bid
Loans) are paid in full, (b) to the amounts owed to any Lender under any
Interest and Foreign Exchange Hedge Agreement, only after payment in full of the
outstanding principal and interest under the Credit Facilities, and (c) to the
amounts owed under the Bridge Debt, but only after payment in full of the
outstanding principal and interest under the Credit Facilities and the amounts
owed to all Lenders under any Interest and Foreign Exchange Hedge Agreement.
SECTION 10.7. Lenders' Decisions. Lenders agree as among themselves that
any decisions or elections to be made by Lenders (and not any Agent) under this
Agreement and the other Loan Documents shall be made by the Required Lenders,
except in the case, if any, where a specific different number or percentage of
Lenders is expressly required under this Agreement or any other Loan Documents
(use of the terms "Lenders" in any of the Loan Documents, without an express
provision for different voting rights other than as set forth in the definition
of Required Lenders, does not imply that unanimous consent is thereby required).
Administrative Agent may, at its election, request any determination, vote,
consent or approval by Lenders in writing or orally (by telephone or in person),
and Administrative Agent shall be entitled to take or refrain from taking any
action if it has received the oral or written approval of those Lenders which
would satisfy the requirements set forth in the definition of Required Lenders,
without having to contact or solicit the vote of any other Lenders. In addition,
if any request by Administrative Agent for Lenders' determination or approval
hereunder is made in writing and such writing contains written notice to
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Lenders requesting a response within five Business Days, or longer, from the
date Lenders are deemed to have received notice as herein provided (and setting
forth the actual date of the last day of the Lender reply period), then Lenders
shall use reasonable efforts to reply within the applicable reply period,
provided, that if any such Lender does not reply within the applicable reply
period, such Lender shall be deemed not to have approved of or consented to or
concurred with such recommendation or determination.
SECTION 10.8. Limitation of Liability of Lenders. To the extent permitted
by law, (a) neither any Agent nor any Lender or participant of a Lender shall
incur any liability to any other Lender or participant of a Lender except for
acts or omissions in bad faith, and (b) neither any Agent nor any Lender or
participant of a Lender shall incur any liability to Borrower, Guarantors or any
other Person for any act or omission of any other Lender or any participant.
SECTION 10.9. Relationship of Lenders. Nothing herein shall be construed as
creating a partnership or venture among any Agents, among any Agents and
Lenders, or among Lenders.
SECTION 10.10. Debtor-Creditor Relationship. Each Lender has and shall
maintain a direct creditor-debtor relationship with Borrower and will have
direct recourse, singly or in the aggregate, against Borrower and Guarantors,
subject to the terms and conditions of the Loan Documents. Notwithstanding the
foregoing, any right, remedy, action, omission or waiver respecting this
Agreement, the Notes, the Security Documents and the other Loan Documents shall
only be exercised, made, taken, or permitted by Administrative Agent, acting
upon the direction of the Required Lenders, as the agent for all Lenders;
provided, however, that if the Required Lenders have elected and directed
Administrative Agent to institute suit against Borrower or any Guarantor for
payment of any past due amounts under the Notes or any other Obligations for
which Lenders have recourse against Borrower or any Guarantor, or in the event
of any bankruptcy proceedings or other legal proceedings relating to this
Agreement against Borrower or any Guarantor, each Lender shall be entitled, at
its option, to bring or join in such proceedings in its own name.
SECTION 10.11. Credit Decisions. Each Lender acknowledges that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and each of the other
Loan Documents to which it is a party or to which any Agent is a party for its
benefit. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement or with
respect to either Credit Facility.
SECTION 10.12. Removal of any Agent. Lenders, acting by written notice to
Administrative Agent from and agreed to by all Lenders other than Administrative
Agent, may remove for cause Administrative Agent, as an agent under the Credit
Facilities, and appoint one of the other Lenders as Administrative Agent's
successor. Upon the appointment of a successor Administrative Agent, the removed
Administrative Agent and the successor Administrative Agent shall execute such
documents as any Lender may reasonably request to reflect such appointment of a
successor Administrative Agent and shall notify Borrower of the change in such
agent. The successor Administrative Agent shall be vested with all rights,
powers and privileges and be bound to all duties, obligations and
responsibilities of the Administrative Agent so removed in and under this
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Agreement and the other Loan Documents; provided, however, that until such time
as Borrower is notified in writing signed by both the removed and successor
Administrative Agent as to the appointment of the successor Administrative
Agent, Borrower and Guarantors shall be entitled to rely on any decision,
approval or other act by the removed Administrative Agent as binding on Lenders,
and, may pay to Administrative Agent any amounts due or owing by Borrower under
the Loan Documents. Lenders, acting by written notice to the Syndication Agent
from and agreed to by all Lenders other than Syndication Agent, may remove for
cause the Syndication Agent, provided the no successor Syndication Agent shall
be named.
SECTION 10.13. Resignation by any Agent. An Agent's status as an Agent
under this Agreement shall automatically terminate fifteen (15) days after the
closing or liquidation of such Agent or fifteen (15) days after such Agent is
adjudicated insolvent. Additionally, any Agent may resign its position as an
Agent at any time by giving at least thirty (30) days written notice thereof to
Borrower and the other Lenders. Upon any such occurrence causing a termination
of an Agent or the delivery of such notice of resignation from such Agent, the
Required Lenders and Borrower shall select a successor for the Administrative
Agent and may select a successor for the Syndication Agent. If the Required
Lenders and Borrower cannot agree upon the choice of the successor
Administrative Agent within ten (10) days after the occurrence causing a
termination in the case of a termination of such Administrative Agent, or ten
(10) days prior to the effective resignation date set forth in such
Administrative Agent's resignation notice in the case of a resignation by such
Administrative Agent, then the Designated Successor Agent shall become the
Administrative Agent's successor. Borrower shall be entitled to participate in
the selection of the replacement Administrative Agent only prior to the
occurrence of a Default. Upon any such termination or resignation, (a) the
successor Agent shall automatically be vested with all rights, powers and
privileges and be bound to all duties, obligations and responsibilities of the
Agent being replaced in and under this Agreement and the other Loan Documents
and shall thereafter be deemed the "Administrative Agent", "Syndication Agent",
or other designated Agent, for all purposes under the Loan Documents and (b)
such terminating or resigning Agent shall act only in a custodial capacity for
the holding by it of any funds theretofore received from Borrower and any such
funds shall be held in trust for the benefit of Lenders or Borrower, as the case
may be. Additionally, upon the successor Agent becoming an Agent as provided in
this Section 10.13, the terminating or resigning Agent and the new Agent shall
execute such documents as any Lender may reasonably request to reflect such
succession. All costs incurred in connection with the execution of such
documents shall be paid by Lenders in proportion to each Lender's Aggregate Loan
Percentage.
SECTION 10.14. Sharing of Payments and Setoffs. Each Lender agrees that if
it should receive any amount (whether by voluntary payment, by realization upon
any Collateral, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Loan
Documents or otherwise) which is applicable to the payment of the principal of
or interest on either of the Credit Facilities, of a sum which with respect to
the related sum or sums received by the other Lenders exceeds such Lender's
Aggregate Loan Percentage, then such Lender receiving such excess payment shall
purchase without recourse or warranty from the other Lenders an interest in the
indebtedness of Borrower to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount; provided that
if all or any portion of such excess amount is thereafter recovered from such
Lender, such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. This Section 10.14 shall not
impair the right of any Lender to exercise any right of setoff or counterclaim
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it may have with respect to any funds in an account pledged to such Lender to
secure only indebtedness other than the Obligations, and to apply the amount
received or subject to such exercise to the payment of such other indebtedness,
it being expressly agreed by all Lenders, however, that until the Obligations
are paid and satisfied in full, any and all amounts received by any Lender from
offset of any account of Borrower or any Guarantor that either (a) constitutes
Collateral or (b) contains funds exclusively derived from or related to the
Collateral, shall be applied to the Obligations, and not to any other
indebtedness of Borrower or any Guarantor to such Lender, except in the case of
a certificate of deposit or other designated account (but in no event any
operating account of Borrower or any Guarantor) that is specifically pledged or
assigned to a Lender as security for indebtedness other than the Obligations.
SECTION 10.15. Non-Advancing Lenders. In the event that Revolving Lender
shall fail or refuse to advance its Revolving Loan Percentage of any Advance
under the Revolving Credit Facility, or any Lender shall fail or refuse to
advance its Aggregate Loan Percentage of any payment or reimbursement by Lenders
as required hereunder, or of any amount to be funded pursuant to Section 10.3,
when it is obligated to do so, Administrative Agent shall notify, in the case of
the failure or refusal to make an Advance under the Revolving Credit Facility,
the Revolving Lenders, and, in all other instances, the other Lenders, and such
remaining Revolving Lenders or all other Lenders, as applicable, or any of them,
may elect, at their sole option and discretion (without any obligation
whatsoever to do so), to advance such non-advancing Lender's portion, pro rata
in accordance with the proportion that (i) in the case of the failure or refusal
to make an Advance under the Revolving Credit Facility, the Revolving Loan
Percentage of each Revolving Lender electing to make such advance bears to the
Revolving Loan Percentages of all Revolving Lenders electing to make such
advance, or (ii) in all other instances, the Aggregate Loan Percentage of each
Lender electing to make such advance bears to the Aggregate Loan Percentage of
all Lenders electing to make such advance. Upon making any such advance, and
notwithstanding anything to the contrary expressed or implied herein or in the
Notes or any other Loan Document, all subsequent payments made on the Revolving
Credit Facility, or both Credit Facilities, as applicable, and all proceeds
realized from the sale of any Collateral securing the Credit Facilities or from
the exercise of right of setoff or other remedies under this Agreement or the
other Loan Documents, shall be applied, in the manner described below, only to
Revolving Lenders, or all other Lenders, as applicable, other than the
non-advancing Lender (and the non-advancing Lender shall not be entitled to
receive the same), until the amounts advanced by such advancing Revolving
Lenders, or all other Lenders, as applicable, on behalf of the non-advancing
Lender (together with the interest earned thereon pursuant to this Agreement and
the applicable Notes), have been repaid in full. As among Lenders other than the
non-advancing Lender, Lenders that advanced funds on behalf of the non-advancing
Lender shall receive the portion the non-advancing Lender would have been
entitled to receive had it advanced (together with the interest earned thereon
pursuant to this Agreement and the applicable Notes), to be applied pro rata in
accordance with the amounts advanced by each such advancing Lender, until the
amounts advanced by such Lenders on behalf of the non-advancing Lender (together
with the interest earned thereon pursuant to this Agreement and the applicable
Notes), have been repaid in full; any Revolving Lender that advanced only on its
own behalf based on its Revolving Loan Percentage shall be repaid based on such
Revolving Loan Percentage or its Aggregate Loan Percentage, as applicable. In
addition, any Lenders that advance funds on behalf of a non-advancing Lender
pursuant to this Section 10.15 shall (i) receive a proportionate share (based on
the amounts so advanced by such Lenders) of the amount the non-advancing Lender
would have been entitled to receive of any distribution of any Collateral
securing the Credit
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Facilities in the event the same are distributed among Lenders, and (ii) have a
claim against such non-advancing Lender for the amounts so advanced and shall be
entitled to all rights and remedies at law or in equity to recover any unpaid
amounts. A non-advancing Lender shall not be entitled to vote on any matters
hereunder or related to either or both of the Credit Facilities (and its
interest shall be excluded for purposes of determining the requisite percentage
or number of Lenders for a vote) so long as such Lender remains a non-advancing
Lender.
SECTION 10.16. Benefit of Lenders. All terms, conditions and agreements set
forth in this Article X, specifically including, without limitation, the
provisions of Section 10.14 are for the sole and exclusive benefit of Lenders,
and neither Borrower, Guarantors nor any other Person shall be entitled to rely
on or seek the benefit of such provisions; provided, however, that Borrower and
Guarantors shall be entitled to rely on any decision, approval or other act by
Administrative Agent as binding Lenders.
SECTION 10.17. Roles of Agents. Neither Syndication Agent nor any other
agent other than Administrative Agent shall have any duties or obligations, nor
shall Syndication Agent or any such other agent take any action as an Agent,
under this Agreement or the other Loan Documents other than, with respect to
Syndication Agent, assisting in the syndication of the Credit Facilities or with
respect to any other agent, as specifically designated by Administrative Agent.
Any action to be taken by Agents under this Agreement or the other Loan
Documents, other than syndicating the Credit Facilities, shall be taken solely
by Administrative Agent.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Continuing Agreement. This is a continuing Agreement and all
the rights, powers and remedies of Lenders hereunder and all agreements and
obligations of Borrower, Guarantors, and Lenders hereunder, shall continue to
exist until the Notes have been paid in full, the commitment of Lenders to make
Advances hereunder has been terminated, all Letters of Credit have been
terminated and all other Obligations have been paid in full.
SECTION 11.2. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopy or
similar writing), except for any telephone notices as specifically provided for
herein, may be personally served or sent by telecopier, mail or the express mail
service of the United States Postal Service, Federal Express or other equivalent
overnight or expedited delivery service, and (a) if given by personal service or
telecopier (confirmed by telephone), it shall be deemed to have been given upon
receipt; (b) if sent by telecopier without telephone confirmation, it shall be
deemed to have been given twenty-four (24) hours after being given; (c) if sent
by mail, it shall be deemed to have been given upon the earlier of (i) actual
receipt, or (ii) three (3) Business Days after deposit in a depository of the
United States Postal Service, first class mail, postage prepaid; (d) if sent by
Federal Express, the express mail service of the United States Postal Service or
other equivalent overnight or expedited delivery service, it shall be deemed
given upon the earlier of (i) actual receipt or (ii) twenty-four (24) hours
after delivery to such overnight or expedited delivery service, delivery charges
prepaid, and properly addressed to Administrative Agent, Borrower, the
applicable Guarantor or the applicable Lender;
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provided that notices to Administrative Agent under Article III and Article IV
shall not be effective until received. For purposes hereof, the address of the
parties to this Agreement shall be as set forth in Schedule I attached hereto.
Any party may, by proper written notice hereunder to the other parties, change
the address to which notices shall thereafter be sent to it. Notwithstanding
anything to the contrary implied or expressed herein, the notice requirements
herein (including the method, timing or deemed giving of any notice) is not
intended to and shall not be deemed to increase the number of days or to modify
the method of notice or to otherwise supplement or affect the requirements for
any notice required or sent pursuant to any Legal Requirement (including,
without limitation, any applicable statutory or law requirement), or otherwise
given hereunder, that is not required under this Agreement or the other Loan
Documents. The provisions of this Section 11.2 shall control over any
conflicting contractual notice provisions contained in the Loan Documents.
SECTION 11.3. No Waivers. No failure or delay by any Agent or any Lender in
exercising any right, power or privilege hereunder or under the Notes or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or in any of the other Loan Documents.
SECTION 11.4. Expenses; Documentary Taxes; Indemnification. Borrower and
Guarantors, jointly and severally, agree to pay (a) all expenses of each Agent
and the reasonable fees and disbursements of legal counsel for Lenders as a
group, in connection with the negotiation, documentation and closing of the
Credit Facilities, and thereafter all reasonable expenses of each Agent and
Lenders in connection with any waiver or consent hereunder or under the other
Loan Documents or any amendment, supplement or replacement of any of the Loan
Documents, or any Default or alleged Default hereunder; and (b) if a Default or
an Event of Default occurs, all out-of-pocket expenses incurred by each Agent or
Lenders, including fees and disbursements of legal counsel in connection with
such Event of Default and collection and other enforcement proceedings resulting
therefrom (including, without limitation, any bankruptcy or other insolvency
proceedings), fees of auditors and consultants incurred in connection therewith
and investigation expenses incurred by Lenders in connection therewith. Borrower
and Guarantors, jointly and severally, indemnify each Agent and each Lender and
hold each Agent and each Lender harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for each Agent and
Lenders in connection with any investigative, administrative or judicial
proceeding, whether or not Agents or Lenders shall be designated a party
thereto) which may be incurred by any Agent or any Lender relating to or arising
out of this Agreement or any actual or proposed use of proceeds of the Notes or
the Letters of Credit; PROVIDED THAT NEITHER ANY AGENT NOR ANY LENDER SHALL HAVE
THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, IT BEING THE INTENTION HEREBY THAT AGENT AND EACH LENDER SHALL BE
INDEMNIFIED FOR THE CONSEQUENCES OF ITS NEGLIGENCE (SOLE, CONTRIBUTORY,
CONTINGENT OR OTHERWISE) WHETHER WHOLE OR IN PART.
SECTION 11.5. Amendments and Waivers; Consent to Deviation. Any provision
of this Agreement, the Notes or the other Loan Documents may be amended or
waived if, but only if, such
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amendment or waiver is in writing and is signed by Borrower, Administrative
Agent and Required Lenders.
SECTION 11.6. Survival. All representations, warranties and covenants made
by Borrower or any Guarantor herein or in any certificate or other instrument
delivered by it or on its behalf under the Loan Documents shall be considered to
have been relied upon by Lenders and shall survive the delivery to
Administrative Agent or Lenders of such Loan Documents or the extension of any
of the Notes or the issuance of any of the Letters of Credit (or any part
thereof), regardless of any investigation made by or on behalf of Agent or any
Lender.
SECTION 11.7. Prior Understandings; No Defenses; Release; No Oral
Agreements. This Agreement supersedes all other prior understandings and
agreements, whether written or not, between the parties hereto relating
specifically to the transactions provided for herein. Borrower and each
Guarantor confirm that there are no existing defenses, claims, counterclaims or
rights of offset against any Lender in connection with the negotiation,
preparation, execution, performance or any other matters related to this
Agreement or any of the other Loan Documents executed as of the date hereof and
any of the transactions contemplated thereby, and Borrower and each Guarantor
hereby expressly release and discharge each Lender, and its Representatives,
from any and all such claims, known or unknown. Borrower and each Guarantor
further confirm that no Lender has made any agreements with, or commitments or
representations to, Borrower or any Guarantor (either in writing or orally)
other than as expressly stated herein or in the other Loan Documents executed as
of the date hereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
To the fullest extent applicable, Borrower, each Guarantor and Lender
acknowledge and agree that this Agreement and each of the other Loan Documents
shall be subject to Section 26.02 of the Texas Business and Commerce Code.
SECTION 11.8. Limitation on Interest. It is expressly stipulated and agreed
to be the intent of Borrower and Lenders at all times to comply with the
applicable law governing the maximum rate or amount of interest payable on or in
connection with the Notes, the Credit Facilities and the Letters of Credit. If
the applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Notes or under any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect to any of the
Notes or the Letters of Credit, or if acceleration of the maturity of the Notes,
any prepayment by Borrower, or any other circumstance whatsoever, results in any
Lender having been paid any interest in excess of that permitted by applicable
law, then it is the express intent of Borrower and Lenders that all excess
amounts theretofore collected by Lenders be credited on the principal balance of
the Notes (or, if the Notes have been or would thereby be paid in full, refunded
to Borrower), and the provisions of the Notes and the other applicable Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new document, so
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as to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and thereunder. The right to
accelerate the maturity of the Notes does not include the right to accelerate
any interest which has not otherwise accrued on the date of such acceleration,
and Lenders do not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Lenders for the use,
forbearance or detention of the indebtedness evidenced hereby or by the Notes
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the rate or amount of interest on account of such indebtedness
does not exceed the Maximum Lawful Rate or maximum amount of interest permitted
under applicable law. The term "applicable law" as used herein shall mean the
laws of the state which govern this Agreement, or DIDMCA or any other applicable
United States federal law to the extent that it permits Lenders to contract for,
charge, take, reserve or receive a greater amount of interest than under laws of
the state which govern this Agreement. The provisions of this Section 11.8 shall
control all agreements between Borrower and Lenders.
SECTION 11.9. Invalid Provisions. If any provision of the Loan Documents is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term thereof, such provision shall be fully severable, the
Loan Documents shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Documents a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 11.10. Assignments and Participations. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that Borrower shall not,
directly or indirectly, assign or transfer, or attempt to assign or transfer,
any of its rights, duties or obligations under this Agreement without the
express prior written consent of all of the Lenders. Lenders may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Note and
its Revolving Loan Commitment Amount or Term Loan Commitment Amount, as
applicable); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender, an
Affiliate of any Lender or a Related Fund of any Lender, or an assignment
of all of a Lender's rights and obligations under this Agreement, any such
partial assignment shall be in an amount at least equal to (1) as to the
Term Facility, Five Million and No/100 Dollars ($5,000,000.00), and (2) as
to the Revolving Credit Facility, Ten Million and No/100 Dollars
($10,000,000.00) in Revolving Loan Commitment Amounts unless the
Administrative Agent otherwise consents to a lesser amount;
(iii) each such assignment by a Lender shall be of a constant, and not
varying, percentage of all of its rights and obligations under this
Agreement and the applicable Note, any assignment by a Revolving Lender of
its interest in the Revolving Credit Facility prior
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to the occurrence of an Event of Default must be made in a manner such that
each Revolving Lender continues to own an interest in both the Long Term
Revolving Facility and Short Term Revolving Facility which bears the same
pro rata relationship as such facilities bear to each other in the
aggregate; and
(iv) the parties to such assignment shall execute and deliver to
Administrative Agent for its acceptance, with a copy to Borrower, an
Assignment and Acceptance in the form of Exhibit D hereto, together with
any Note subject to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Agreement. Upon the consummation of any assignment pursuant to this
Section, the assignor, Administrative Agent and Borrower shall make
appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee. If the assignee is not incorporated under the
laws of the United States of America or a state thereof, it shall deliver
to Borrower and Administrative Agent certification as to exemption from
deduction or withholding of Taxes in accordance with Section 3.14.
(b) Administrative Agent shall maintain at its address referred to in
Schedule I a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recordation of the names and addresses of the Lenders
and the Revolving Loan Commitment Amount or Term Loan Commitment Amount, as
applicable, owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower, Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit D
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Loan Commitment Amount or Term Loan Commitment Amount,
as applicable, and its Note); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) prior to an Event of Default which has occurred and is
continuing, such participant (unless it is a Related Fund or an Affiliate of a
Lender) shall be approved by Borrower, such approval not to be unreasonably
withheld or delayed by Borrower and such approval to be deemed given by Borrower
if no objection is received by the selling Lender from Borrower within two (2)
Business Days after notice of such proposed participation has been provided by
the selling Lender
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to Borrower, (iv) the participant shall be entitled to the benefit of the yield
protection provisions contained in Article III, and (v) Borrower shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of Borrower relating to its Note and to
approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Note,
extending any scheduled principal payment date or date fixed for the payment of
interest on such Note or extending the Revolving Facility or Term Facility, as
applicable).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Note or any
amount outstanding thereunder to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank, and any Lender that is a fund that invests in bank loans may,
without the consent of the Administrative Agent or Borrower, pledge all or any
portion of its Notes to any trustee for, or any other representative of, holders
of obligations owed, or securities issued, by such fund, as security for such
obligations or securities; provided that any foreclosure or similar action by
such trustee shall be subject to the provisions of this Section concerning
assignments. Additionally, any Lender that is not a fund may, with the consent
of Administrative Agent, pledge all or any portion of its Notes to any trustee
for, or any other representative of, holders of obligations owed by such Lender,
as security for such obligations; provided that any foreclosure or similar
action by such trustee shall be subject to the provisions of this Section
concerning assignments. No such assignment shall release the assigning Lender
from its obligations hereunder.
(f) Any Lender may furnish any information concerning Borrower or any of
the Subsidiaries in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants), subject,
however, to the provisions of Section 7.3 hereof; and provided, that until
Borrower has approved or disapproved a prospective assignee or participant
pursuant to this Agreement (if such approval is permitted by this Agreement),
any Lender may provide to such prospective assignee or participant only
information available to the public.
SECTION 11.11. Senior Debt; Borrower Subordination. The indebtedness of
Borrower and Guarantors hereunder and under the Notes and all of the Obligations
is intended to be and shall be senior to any subordinated indebtedness of
Borrower or any Guarantor or any other indebtedness of Borrower or any Guarantor
secured by a Lien on any portion of the Collateral (the foregoing shall not in
any way imply Lenders' consent to any such subordinate debt or Liens which is
not otherwise permitted by this Agreement). The Notes and any other amounts
advanced to or on behalf of Borrower or any other Person pursuant to the terms
of this Agreement or any other Loan Document, shall never be in a position
subordinate to any Debt of Borrower or any Guarantor owing to any other Person,
except with the knowledge and written consent of Lenders. If Borrower or any
Guarantor is now or hereafter becomes indebted to Borrower or any other
Guarantor, (a) such indebtedness and all interest thereon shall, at all times,
be subordinate in all respects to the Obligations and to all liens, security
interests and rights now or hereafter existing to secure the Obligations; and
(b) Borrower or any other Guarantor holding such inter-company indebtedness
shall not be entitled after the occurrence of a Default to enforce or receive
payment, directly or
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indirectly, of any such indebtedness until the Obligations have been fully and
finally paid and performed.
SECTION 11.12. Nonliability of Agent and Lender. The relationship between
Borrower and Guarantors, on the one hand, and that of Agent and Lenders, on the
other, shall be solely that of debtor and creditor. Neither Agent nor any Lender
shall have any fiduciary responsibility to Borrower, Guarantors or any other
Subsidiary. Borrower agrees that neither Agent nor any Lender shall have
liability to Borrower or any Subsidiary (whether sounding in tort, contract or
otherwise) for losses suffered by Borrower or any Subsidiary in connection with,
arising out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined by a court of
competent jurisdiction in a final and non-appealable order that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither Agent nor any Lender shall have any liability with
respect to, and Borrower, each Guarantor and each other Subsidiary hereby
waives, releases and agrees not to sue for, any special, indirect or punitive
damages suffered by Borrower or any Subsidiary in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
SECTION 11.13. Construction. The parties hereto acknowledge and agree that
neither this Agreement nor any other Loan Document shall be construed more
favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiations and preparation of this Agreement and the other Loan Documents.
SECTION 11.14. APPLICABLE LAW. THIS AGREEMENT, THE NOTES AND ALL THE OTHER
LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER
JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE
REMEDIES, RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED
STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OR OTHERWISE.
SECTION 11.15. Submission To Jurisdiction; Service of Process.
(a) Any legal action or proceeding with respect to this Agreement or the
Notes or any other Loan Document may be brought in the courts of the State of
Texas or of the United States of America for the Northern District of Texas,
and, by execution and delivery of this Agreement, Borrower and each Guarantor
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
(b) Borrower and each Guarantor irrevocably consent to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Borrower or such Guarantor at its address provided herein.
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(c) Nothing contained in this Section 11.15 shall affect the right of any
Agent, any Lender or any holder of a Note to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against
Borrower in any other jurisdiction.
SECTION 11.16. JURY TRIAL WAIVER. BORROWER, GUARANTORS AND LENDERS EACH
HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OR
RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 11.17. Counterparts. This Agreement and all amendments hereto, and
all the other Loan Documents may be executed in any number of original
counterparts, each of which when so executed and delivered shall be an original,
and all of which, collectively, shall constitute one and the same agreement, it
being understood and agreed that the signature pages may be detached from one or
more counterparts and combined with the signature pages from any other
counterpart in order that one or more fully executed originals may be assembled.
SECTION 11.18. Inconsistent Provisions. In the event of any conflict or
inconsistency between the terms of this Agreement and the terms of the other
Loan Documents, the terms of this Agreement shall control.
SECTION 11.19. Non-Waiver of Rights or Remedies. Except as otherwise set
forth herein, this Agreement shall not be deemed (a) a waiver of, or consent by
Administrative Agent or any Lender to any default or event of default which may
exist or hereafter occur under the Third Loan Agreement or any of the Loan
Documents, (b) a waiver by Administrative Agent or any Lender of any of
Borrower's or Guarantor's obligations under the Third Loan Agreement or the Loan
Documents, or (c) a waiver by Administrative Agent or any Lender of any rights,
offsets, claims, or other causes of action that Administrative Agent or any
Lender may have against Borrower or any Guarantor.
SECTION 11.20. Judgment Currency.
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder or any other Loan Document in one
currency into another currency, the rate of exchange used shall be that at which
in accordance with normal banking procedures Administrative Agent could purchase
the first currency with such other currency on the Business Day preceding that
on which final judgment is given. The obligation of Borrower and Guarantors in
respect of any such sum due from it to Administrative Agent, the Lenders, or any
other Person hereunder (the "Judgment Creditors") or under the other Loan
Documents shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than that in which such sum is denominated in accordance with
the applicable provisions of this Agreement (the "Agreement Currency"), be
discharged only to the extent that on the Business Day following receipt by the
Judgment Creditor(s) of any sum adjudged to be so due in the Judgment Currency,
Administrative Agent may in accordance with normal banking procedures purchase
the Agreement Currency with the Judgment Currency. If the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Judgment Creditor(s) in the Agreement Currency, Borrower and each Guarantor
jointly and severally agree, as a separate obligation and notwithstanding any
such judgment, to indemnify the Judgment Creditor(s) against such loss. If the
amount of the Agreement Currency so purchased is greater than the sum originally
due to the Judgment
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Creditor(s) in such currency, the Judgment Creditor receiving such overpayment
agrees to return the amount of any excess received by such entity to Borrower
(or to any other Person who may be entitled thereto under applicable law).
(b) Borrower and each Guarantor jointly and severally promise to indemnify
each Judgment Creditor against and hold each Judgment Creditor harmless from all
loss and damage resulting from any change in exchange rates between the date any
claim is reduced to judgment and the date of payment (or, in the case of partial
payments, the date of each partial payment) thereof by Borrower, or any
Guarantor. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this Agreement, shall give
rise to a separate and independent cause of action, shall apply irrespective of
any indulgence granted by Administrative Agent, the Required Lenders, or the
Lenders from time to time, and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due hereunder or under any judgment or order.
SECTION 11.21. Consolidated Group. Borrower and Guarantors are engaged in
the businesses set forth in Section 7.2 of this Agreement. These operations
require financing on a basis such that the credit supplied can be made available
from time to time to Borrower and Guarantors, as required for the continued
successful operation of Borrower and Guarantors. Borrower and Guarantors have
requested that Lenders make the Credit Facilities available primarily for the
purposes of financing the operations of Borrower and Guarantors. Borrower and
Guarantors expect to derive benefit (and the boards of directors or other
governing body of each of Borrower and Guarantors may reasonably be expected to
derive benefit), directly or indirectly, from the Credit Facilities established
by Lenders, both in their separate capacities and as members of the group of
companies, since the successful operation and condition of Borrower and each
Guarantor is dependent on the continued successful performance of the functions
of the group as a whole.
SECTION 11.22. Amendment and Restatement/Renewal and Extension. Borrower
and Guarantors acknowledge and agree that all liens and security interests
securing the credit facilities under the Third Loan Agreement are hereby renewed
and extended and continue to secure the Credit Facilities, which refinance,
renew, extend and increase the credit facilities under the Third Loan Agreement
pursuant to this Agreement. Each of the Revolving Lenders hereunder acknowledges
that certain of the Revolving Lenders under the Third Loan Agreement are not
parties to this Agreement, and to the extent that no individual Revolving Lender
has agreed prior to the Closing Date to increase its Revolving Loan Commitment
by the amount of any such former Revolving Lender's Revolving Loan Commitment
Amount, each Revolving Lender agrees to fund its proportionate share of the
outstanding balance of the revolving credit facility under the Third Loan
Agreement, not to exceed its Revolving Loan Commitment Amount.
CREDIT AGREEMENT PAGE 96
<PAGE> 103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers effective as of the
Closing Date.
BORROWER:
AMRESCO, INC., a Delaware corporation
By: /s/ THOMAS J. ANDRUS
----------------------------------
Thomas J. Andrus,
Treasurer
GUARANTORS:
AFC EQUITIES, INC.
AFC EQUITIES MANAGEMENT, INC.
ALPINE, INC.
AMREIT HOLDINGS, INC.
AMREIT MANAGERS GP, INC.
AMRESCO ATLANTA INDUSTRIAL, INC.
AMRESCO BUILDERS GROUP, INC.
AMRESCO CAPITAL CONDUIT CORPORATION
AMRESCO CAPITAL LIMITED, INC.
AMRESCO CAPITAL, L.P.
AMRESCO CMF, INC.
AMRESCO COMMERCIAL FINANCE, INC.
AMRESCO CONSOLIDATION CORP.
AMRESCO EQUITY INVESTMENTS, INC.
AMRESCO EQUITY INVESTMENTS II, INC.
AMRESCO FINANCE AMERICA CORPORATION
AMRESCO FINANCIAL I, INC.
AMRESCO FINANCIAL I, L.P.
AMRESCO FUNDING CORPORATION
AMRESCO FUNDING OF GEORGIA, L.P.
AMRESCO FUNDING INVESTORS, INC.
AMRESCO FUNDING MANAGEMENT, INC.
AMRESCO FUNDING MID-ATLANTIC, INC.
AMRESCO FUNDING PACIFIC, INC.
CREDIT AGREEMENT PAGE 97
<PAGE> 104
AMRESCO INDEPENDENCE FUNDING, INC.
AMRESCO INSTITUTIONAL, INC.
AMRESCO INVESTMENTS, INC.
AMRESCO MANAGEMENT, INC.
AMRESCO MBS II, INC.
AMRESCO MORTGAGE CAPITAL LIMITED-I, INC.
AMRESCO MORTGAGE SERVICES LIMITED, INC.
AMRESCO NEW ENGLAND, L.P.
AMRESCO NEW ENGLAND II, L.P.
AMRESCO NEW ENGLAND, INC.
AMRESCO NEW ENGLAND II, INC.
AMRESCO NEW HAMPSHIRE, INC.
AMRESCO NEW HAMPSHIRE, L.P.
AMRESCO OVERSEAS, INC.
AMRESCO PORTFOLIO INVESTMENTS, INC.
AMRESCO PRINCIPAL MANAGERS I, INC.
AMRESCO PRINCIPAL MANAGERS II, INC.
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
AMRESCO RESIDENTIAL CREDIT CORPORATION
AMRESCO RESIDENTIAL MORTGAGE
CORPORATION
AMRESCO RESIDENTIAL PROPERTIES, INC.
AMRESCO RHODE ISLAND, INC.
AMRESCO SERVICES, L.P.
AMRESCO VENTURES, INC.
AMRESCO 1994-N2, INC.
AMRESCO TEXAS, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BEI 1992 - N1, INC.
BEI 1993 - N3, INC.
BEI 1994 - N1, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
BEI SANJAC, INC.
COMMONWEALTH TRUST DEED SERVICES, INC.
CREDIT AGREEMENT PAGE 98
<PAGE> 105
ENT MIDWEST, INC.
ENT NEW JERSEY, INC.
ENT SOUTHERN CALIFORNIA, INC.
EXPRESS FUNDING, INC.
FINANCE AMERICA CORPORATION
GRANITE EQUITIES, INC.
HOLLIDAY FENOGLIO FOWLER, L.P.
LIFETIME HOMES, INC.
MARKETING SOLUTION PUBLICATIONS, INC.
OAK CLIFF FINANCIAL, INC.
PRESTON HOLLOW ASSET HOLDINGS, INC.
QUALITY FUNDING, INC.
SAVE-MORE INSURANCE SERVICES INC.
WHITEROCK INVESTMENTS, INC.
By: AMRESCO, INC., a Delaware corporation, as
attorney-in-fact
By: /s/ THOMAS J. ANDRUS
------------------------------------
Thomas J. Andrus, as Treasurer
CREDIT AGREEMENT PAGE 99
<PAGE> 106
AGENT:
NATIONSBANK, N.A.,
a national banking association, as
Agent for Lenders
By: /s/ ELIZABETH KURILECZ
----------------------------------------
Elizabeth Kurilecz
Senior Vice President
<PAGE> 107
CREDIT SUISSE FIRST BOSTON
By: /s/ JAY CHALL
--------------------------------------
Name: Jay Chall
--------------------------------------
Title: Director
--------------------------------------
By: /s/ JAMES H. LEE
--------------------------------------
Name: James H. Lee
--------------------------------------
Title: Assistant Vice President
--------------------------------------
AMRESCO LOAN AGREEMENT SYNDICATION AGENT AND REVOLVING LENDER
<PAGE> 108
NATIONSBANK, N.A.,
a national banking association
By: /s/ ELIZABETH KURILECZ
----------------------------------------
Elizabeth Kurilecz
Senior Vice President
AMRESCO CREDIT AGREEMENT TERM AND REVOLVING LENDER
<PAGE> 109
BANK ONE, TEXAS, N.A.,
a national banking association
By: /s/ KRISTIN BLANCHARD
--------------------------------------
Name: Kristin Blanchard
--------------------------------------
Title: Assistant Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 110
BANK UNITED,
a federal savings bank
By: /s/ DEBORAH A. BOURQUE
--------------------------------------
Name: Deborah A. Bourque
--------------------------------------
Title: Regional Director
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 111
COMERICA BANK - TEXAS,
a state banking association
By: /s/ DAVID TERRY
--------------------------------------
Name: David Terry
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 112
CREDIT LYONNAIS, NEW YORK BRANCH
By: /s/ W. JAY BUCKLEY
--------------------------------------
Name: W. Jay Buckley
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 113
FLEET BANK, N.A.,
a national banking association
By: /s/ GERARD PAINTER
--------------------------------------
Name: Gerard Painter
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 114
THE BANK OF NEW YORK,
a national banking association
By: /s/ ROBERT A. TWEED
--------------------------------------
Name: Robert A. Tweed
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT TERM AND REVOLVING LENDER
<PAGE> 115
LASALLE NATIONAL BANK
By: /s/ TERRY M. KEATING
--------------------------------------
Name: Terry M. Keating
--------------------------------------
Title: Senior Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT TERM AND REVOLVING LENDER
<PAGE> 116
U.S. BANK NATIONAL ASSOCIATION
By: /s/ JOHN P. CRENSHAW
--------------------------------------
Name: John P. Crenshaw
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 117
WELLS FARGO BANK (TEXAS), N.A.,
a national banking association
By: /s/ CRAIG T. SCHEEF
--------------------------------------
Name: Craig T. Scheef
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 118
BEAR STEARNS INVESTMENT PRODUCTS,
INC.
By: /s/ HARRY ROSENBERG
--------------------------------------
Name: Harry Rosenberg
--------------------------------------
Title: Authorized Signatory
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 119
PRUDENTIAL SECURITIES CREDIT CORP.
By: /s/ GEORGE D. MORGAN III
--------------------------------------
Name: George D. Morgan III
--------------------------------------
Title: Senior Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 120
DRESDNER BANK AG,
NEW YORK & GRAND CAYMAN BRANCHES
By: /s/ JONATHAN WALLIN
--------------------------------------
Name: Jonathan Wallin
--------------------------------------
Title: Vice President
--------------------------------------
By: /s/ J. CURTIN BEAUDOUIN
--------------------------------------
Name: J. Curtin Beaudouin
--------------------------------------
Title: First Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 121
PNC BANK, N.A.
By: /s/ JANICE BOLLING
--------------------------------------
Name: Janice Bolling
--------------------------------------
Title: Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT REVOLVING LENDER
<PAGE> 122
ML CLO XIX STERLING (CAYMAN) LTD.
By: Sterling Asset Manager, L.L.C.,
as its Investment Advisor
By: /s/ LOUIS PISTECCHIA
--------------------------------------
Name: Louis Pistecchia
--------------------------------------
Title: Executive Vice President
--------------------------------------
AMRESCO CREDIT AGREEMENT TERM LENDER
<PAGE> 123
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ PATRICIA W. WILSON
--------------------------------------
Name: Patricia W. Wilson
--------------------------------------
By: /s/ JERRY D. ZINKULA
--------------------------------------
Name: Jerry D. Zinkula
--------------------------------------
Its Authorized Signatories
AMRESCO CREDIT AGREEMENT TERM LENDER
<PAGE> 124
ALLSTATE INSURANCE COMPANY
By: /s/ PATRICIA W. WILSON
--------------------------------------
Name: Patricia W. Wilson
--------------------------------------
By: /s/ JERRY D. ZINKULA
--------------------------------------
Name: Jerry D. Zinkula
--------------------------------------
Its Authorized Signatories
AMRESCO CREDIT AGREEMENT TERM LENDER
<PAGE> 125
STRATA FUNDING LTD.
By: /s/ JOHN CULLINANE
----------------------------------------
John Cullinane
AMRESCO CREDIT AGREEMENT TERM LENDER
<PAGE> 126
CERES FINANCE LTD.
By: /s/ JOHN CULLINANE
----------------------------------------
John Cullinane
AMRESCO CREDIT AGREEMENT TERM LENDER
<PAGE> 127
SCHEDULE I
LENDERS AND BORROWER
I. LENDERS, AGENTS AND ARRANGERS
A. ADMINISTRATIVE AGENT
NATIONSBANK, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attn: Elizabeth Kurilecz
Tel: (214) 508-0975
Fax: (214) 508-0338
B. SYNDICATION AGENT
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, New York 10010
Attn: Jay Chall
Tel: (212) 325-9010
Fax: (212) 325-8320
C. ARRANGERS
NATIONSBANC MONTGOMERY SECURITIES LLC
901 Main Street, 66th Floor
Dallas, Texas 75202
Attn: Gary Kahn
Tel: (214) 508-3507
Fax: (214) 325-8320
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, New York 10010
Attn: Jay Chall
Tel: (212) 325-9010
Fax: (212) 325-8320
C. REVOLVING LENDERS:
NATIONSBANK, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attn: Elizabeth Kurilecz
Tel: (214) 508-0975
Fax: (214) 508-0338
<PAGE> 128
BANK ONE, TEXAS, NA
1717 Main Street, 4th Floor
Dallas, Texas 75201
Attn: Kristin Blanchard
Tel: (214) 290-3028
Fax: (214) 290-2054
BANK UNITED
3100 S.W. Freeway
Suite 1325
Houston, TX 77027
Attn: Deborah A. Bourque
Tel: (713) 543-6397
Fax: (713) 543-6022
COMERICA BANK - TEXAS
8828 Stemmons, Suite 441
Dallas, Texas 75247
Attn: David Terry
Tel: (214) 841-4419
Fax: (972)-263-9837
CREDIT LYONNAIS, NEW YORK BRANCH
1301 6th Avenue
New York, New York 10019
Attn: Paul Connolly
Tel: (212) 261-3885
Fax: (212) 261-3401
FLEET BANK, N.A.
1185 Avenue of the Americas
16th Floor
New York, New York 10036
Attn: Gerard Painter
Tel: (212) 819-6081
Fax: (212) 819-6207
THE BANK OF NEW YORK
One Wall Street, 17th Floor
New York, NY 10286
Attn: Robert A. Tweed
Tel: (212) 635-6465
Fax: (212) 635-6468
SCHEDULE I TO CREDIT AGREEMENT - Page 2
LENDERS AND BORROWERS
<PAGE> 129
LASALLE NATIONAL BANK
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Terry Keating
Tel: (312) 904-2689
Fax: (312 904-2903
U.S. BANK NATIONAL ASSOCIATION
601 2nd Avenue South
MPFP 0508
Minneapolis, Minnesota 55402
Attn: John Crenshaw
Tel: (612) 973-0572
Fax: (612) 973-0826
WELLS FARGO BANK (TEXAS), N.A.
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Craig T. Scheef
Tel: (214) 740-1548
Fax: (214) 740-1543
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, New York 10010
Attn: Jay Chall
Tel: (212) 325-9010
Fax: (212) 325-8320
BEAR STEARNS INVESTMENT PRODUCTS, INC.
245 Park Avenue, 4th Floor
New York, NY 10167
Attn: Mark A. Sorenson
Tel: (212) 272-7959
Fax: (212) 272-4844
PRUDENTIAL SECURITIES CREDIT CORP.
One New York Plaza
14th Floor
New York, NY 10292-2014
Attn: Brendan Keane
Tel: (212) 778-5852
Fax: (212) 778-7401
SCHEDULE I TO CREDIT AGREEMENT - Page 3
LENDERS AND BORROWERS
<PAGE> 130
DRESDNER BANK AG,
NEW YORK & GRAND CAYMAN BRANCHES
75 Wall Street
New York, NY 10005
Attn: J. Curtin Beaudouin
Tel: (212) 429-2120
Fax: (212) 429-2524
PNC BANK, N.A.
500 West Jefferson Street
Suite 1100
Louisville, Ky 40202
Attn: Janice Bolling
Tel: (502) 581-3112
Fax: (502) 581-3844
D. TERM LENDERS
THE BANK OF NEW YORK
One Wall Street, 17th Floor
New York, NY 10286
Attn: Robert A. Tweed
Tel: (212) 635-6465
Fax: (212) 635-6468
ML CLO XIX STERLING (CAYMAN) LTD.
c/o Sterling Asset Management, L.L.C.
40 Fulton Street, 10th Floor
New York, NY 10038
Attn: Rafael Scolari
Tel: (212) 406-3580
Fax: (212) 406-3710
ALLSTATE LIFE INSURANCE COMPANY
3075 Sanders Road, Suite G3A
Northbrook, IL 60062-7127
Attn: Tom Napholz
Tel: (847) 402-7835
Fax: (847) 402-3092
KZH HOLDING CORPORATION III (OAKMONT)
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attn: Virginia Conway
Tel: (212) 946-7575
Fax: (212) 946-7776
SCHEDULE I TO CREDIT AGREEMENT - Page 4
LENDERS AND BORROWERS
<PAGE> 131
NATIONSBANK, N.A.
100 North Tryon Street
NCI-007-06-07
Charlotte, NC 28255
Attn: Kelly C. Walker
Tel: (704) 388-8943
Fax: (704) 388-0648
STRATA FUNDING LTD.
State Street Bank & Trust Co.
Corporate Trust Dept.
Two International Place
Boston, MA 02110
Attn: Bill Czar
Tel: (617) 664-5206
Fax: (617) 664-5366
CERES FINANCE LTD.
State Street Bank & Trust Co.
Corporate Trust Dept.
Two International Place
Boston, MA 02110
Attn: Bill Czar
Tel: (617) 664-5206
Fax: (617) 664-5366
PACIFICA PARTNERS I, L.P.*
c/o Imperial Credit Asset Management
1530 S. Rodeo Drive, Suite 230
Beverly Hills, CA 90212
Attn: Mike Bacevich
Tel: (310) 246-3726
Fax: (310) 246-3715
LASALLE NATIONAL BANK
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Terry Keating
Tel: (312) 904-2689
Fax: (312 904-2903
ALLSTATE INSURANCE COMPANY
3075 Sanders Road, Suite G3A
Northbrook, IL 60062-7127
Attn: Tom Napholz
Tel: (847) 402-7835
Fax: (847) 402-3092
*By assignment from NationsBank, N.A.
SCHEDULE I TO CREDIT AGREEMENT - Page 5
LENDERS AND BORROWERS
<PAGE> 132
<TABLE>
<CAPTION>
REVOLVING LOAN COMMITMENT AMOUNT
REVOLVING PART.
SHORT TERM LONG TERM AGGREGATE LOAN FEE
PERCENTAGE AMOUNT
REVOLVING
LENDERS:
<S> <C> <C> <C> <C> <C>
NationsBank $ 18,750,000 $ 56,250,000 $ 75,000,000 11.19402985%
Credit Suisse $ 18,750,000 $ 56,250,000 $ 75,000,000 11.19402985%
First Boston
U.S. Bank $ 18,750,000 $ 56,250,000 $ 75,000,000 11.19402985% $562,500
Bank One $ 12,500,000 $ 37,500,000 $ 50,000,000 7.46268657% $250,000
Bank United $ 12,500,000 $ 37,500,000 $ 50,000,000 7.46268657% $250,000
Fleet Bank $ 12,500,000 $ 37,500,000 $ 50,000,000 7.46268657% $250,000
Prudential Sec. $ 12,500,000 $ 37,500,000 $ 50,000,000 7.46268657% $250,000
LaSalle Bank $ 11,250,000 $ 33,750,000 $ 45,000,000 6.71641791% $250,000
Bank of $ 11,250,000 $ 33,750,000 $ 45,000,000 6.71641791% $250,000
New York
Dresdner Bank $ 8,750,000 $ 26,250,000 $ 35,000,000 5.22388060% $122,500
Comerica $ 7,500,000 $ 22,500,000 $ 30,000,000 4.47761194% $ 75,000
Bear Stearns $ 6,250,000 $ 18,750,000 $ 25,000,000 3.73134328% $ 62,500
Credit Lyonnais $ 6,250,000 $ 18,750,000 $ 25,000,000 3.73134328% $ 62,500
Wells Fargo $ 6,250,000 $ 18,750,000 $ 25,000,000 3.73134328% $ 62,500
PNC Bank $ 3,750,000 $ 11,250,000 $ 15,000,000 2.23880597% $ 22,500
------------ ------------ ------------ ------------ ------------
Total $167,500,000 $502,500,000 $670,000,000 100.000000%
=============== ============ ============ ============ ============ ============
</TABLE>
SCHEDULE I TO CREDIT AGREEMENT - Page 6
LENDERS AND BORROWERS
<PAGE> 133
<TABLE>
<CAPTION>
TERM LOAN TERM LOAN PARTICIPATION
COMMITMENT PERCENTAGE FEE AMOUNT
AMOUNT
TERM LENDERS:
<S> <C> <C> <C>
Pacifica Partners* $10,000,000 14.8148148% $10,000
ML CLO XIX $10,000,000 14.8148148% $10,000
NationsBank $ 7,500,000 11.1111112% $7,500
KZH Holding $ 5,100,000 7.5555556% $5,100
Allstate Life
Insurance Company $ 5,000,000 7.4074074% $5,000
Allstate Insurance
Company $ 5,000,000 7.4074074% $5,000
Bank of New York $ 5,000,000 7.4074074% included above
NationsBank $ 5,000,000 7.4074074% $5,000
LaSalle Bank $ 5,000,000 7.4074074% included above
Ceres $ 4,950,000 7.3333333% $4,950
Strata $ 4,950,000 7.3333333% $4,950
----------- ---------- --------------
Total $67,500,000 100.0%
================== =========== ========== ==============
</TABLE>
*By assignment from NationsBank, N.A.
II. BORROWER
AMRESCO, INC.
700 N. Pearl Street
Suite 2400
Dallas, Texas 75201-7424
Attn: Treasurer
Fax No.: (214) 953-7828
with a copy to:
AMRESCO, INC.
700 N. Pearl Street
Suite 2400
Dallas, Texas 75201-7424
Attn: General Counsel
Fax No.: (214) 953-7757
SCHEDULE I TO CREDIT AGREEMENT - Page 7
LENDERS AND BORROWERS
<PAGE> 134
SCHEDULE II
COMMITMENT FEE PERCENTAGE; LIBOR MARGIN; LETTER OF CREDIT FEES
<TABLE>
<CAPTION>
Ratio of Total Consolidated
Debt Less Outstanding
Balance of Warehouse Lines Commitment Letter of
to Borrower's Consolidated LIBOR Fee Credit Fee
TIERS Net Worth* Margin** Percentages Percentages
- ----- --------------------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
I Greater than or equal to (a) 162.5 b.p. (c) 37.5 b.p. 162.5 b.p
2.50X (b) 225.0 b.p. (d) 35.0 b.p
- ----- --------------------------- -------------- ------------- -----------
II Greater than or equal to (a) 137.5 b.p. (c) 25.0 b.p. 137.5 b.p
1.50X but less than 2.50X (b) 200.0 b.p. (d) 22.5 b.p.
- ----- --------------------------- -------------- ------------- -----------
III Greater than or equal to (a) 125.0 b.p. (c) 25.0 b.p. 125.0 b.p
1.00X but less than 1.50X (b) 200.0 b.p. (d) 22.5 b.p.
- ----- --------------------------- -------------- ------------- -----------
IV Less than 1.00X (a) 100.0 b.p. (c) 25.0 b.p. 100 b.p
(b) 175.0 b.p. (d) 22.5 b.p.
===== =========================== ============== ============= ===========
</TABLE>
(a) - The LIBOR Margin for the Revolving Credit Facility.
(b) - The LIBOR Margin for the Term Facility.
(c) - The Commitment Fee for the Long Term Revolving Facility
(d) - The Commitment Fee for the Short Term Revolving Facility
* - The calculation of the applicable ratio of Total Consolidated Debt
less outstanding balance of Warehouse Lines to Borrower's Consolidated Net
Worth shall be made and effective on the first day of the calendar month in
which Administrative Agent receives the quarterly financial statements and
related officer's certificate required to be delivered by Borrower pursuant
to Section 7.2 (b) and (c) showing that such adjustment is appropriate
(except that with respect to any Adjusted LIBOR Rate or Competitive Bid
Loan then in effect, such change shall occur at the end of the applicable
Interest Period or maturity as to the related Advance, LIBOR Rate Portion
or Competitive Bid Loan),
** - Should Borrower receive an Investment Grade rating on its senior
unsecured long term debt from both Standard & Poor's Ratings Group (a
Division of McGraw - Hill, Inc.) and Moody's Investors Service, Inc., the
LIBOR Margin and Letter of Credit Fee Percentages shall be reduced by 25
basis points
SCHEDULE II TO REVOLVING LOAN AGREEMENT - SOLO PAGE
FACILITY FEE PERCENTAGE; LIBOR MARGIN
<PAGE> 135
SCHEDULE III
CAPITAL ADEQUACY TEST
<TABLE>
<CAPTION>
ASSETS ADVANCE %
------ ---------
<S> <C>
Cash and Equivalents 100%
Temporary Investments 100%
Accounts Receivable (net of reserves)
Management Contracts 85% (0% until 1/1/99)
Amresco Capital Trust Stock Held 50%
Loans held for sale, net
Residential Mortgage - Originated 100%
Residential Mortgage - Wholesale 95%
Residential Mortgage - Impaired 80%
Residential Mortgage - FHA/VA 100%**
Commercial Mortgage 95%
Commercial Mortgage - FNMA 100%**
Commercial Mortgage - Small Business 95%
Commercial Finance - Franchise 98%
Commercial Finance - Construction 95%
Commercial Finance - Sba Guaranteed 98%
Commercial Finance - Sba Non-guarantied 75%
Commercial Finance - Telecapital 85%
Loans, Net
Residential Mortgage 100%
Commercial Mortgage - Servicing Advances 90%
Commercial Finance - Real Estate Structure 85%
Finance
Commercial Finance - Builders Group 85%
Commercial Finance - BLD 85%
Commercial Finance - SBA Guarantied 98%
Commercial Finance - SBA Non-Guarantied 75%
Commercial Finance - Telecapital 85%
Corporate and other 85%
Investments in Purch. Loan and Other Asset Port.
Loan Portfolios
Foreign 80%
Domestic 85%
Real Estate
Foreign 80%
Domestic 85%
Partnerships and Joint Ventures 70%
Asset Backed and Other Securities Available for 75%
Sale
Retained Interests In Securitization
Residential Mortgage 70%
NIMS 25%
Commercial Lending 85%
New Asset Pool* 50%
Premises and Equipment, Net of Acc. Depreciation 50%
Intangibles 0%
Other Assets 0%
Deferred Income Taxes 0%
Funded Debt
Notes Payable - Banks 100%
Notes Payable 100%
Warehouse Loans Payable
Residential 100%
Comm. Mort. 100%
Comm. Finance 100%
Senior Notes 100%
Senior Subordinated Notes 50%
Convertible Debt 50%
Guaranties 100%
L/C Outstanding 100%
</TABLE>
SCHEDULE III TO CREDIT AGREEMENT - PAGE 1
CAPITAL ADEQUACY TEST
<PAGE> 136
*An advance rate of 50% will be applied to any new asset class; provided that
Borrower shall be entitled to add a new class of assets with a higher advance
rate than 50%, by delivering a written request for such approval to
Administrative Agent and the Lenders so long as such request is not refused by
the Required Lenders within thirty (30) days of receipt of such request (the
addition of any new class shall be effective, if no objection is raised, on the
first reporting date after the expiration of such thirty day period)
**The advance rate used for "Loans held for sale, net - Residential Mortgage
FHA/VA" and "Loans held for sale, net - Commercial Mortgage FNMA" are based on
Borrower, or its applicable Subsidiary, obtaining financing for the origination
or acquisition for such loans at a 100% advance rate. if the advance rate
obtained by Borrower or the applicable Subsidiary is less than 100% then the
advance rate for "Loans held for sale - Residential FHA/VA" shall be 98% and
"Loans held for sale, net - Commercial FNMA" shall be 99%.
SCHEDULE III TO CREDIT AGREEMENT - PAGE 2
CAPITAL ADEQUACY TEST
<PAGE> 137
SCHEDULE IV
ASSET COVERAGE REQUIREMENT
<TABLE>
<CAPTION>
Balance Pledged Advance Net Asset
------- ------- ------- ---------
Assets Sheet Values Less Ncv Assets % Value)
------ ------------ -------- ------ ---
(a) (b) (a)-(b)=(c) (d) (c) x d = e)
<S> <C> <C> <C> <C> <C>
Cash and Equivalents 100%
Accounts Receivable (Net of Reserves)
Management Contracts 85%
AMRESCO CAPITAL TRUST Stock Held 50%(g)
Loans held for sale, net
Residential Mortgage - Originated 100%
Residential Mortgage - Wholesale 95%
Residential Mortgages - Impaired 80%
Residential Mortgage - FHA/VA 98%
Commercial Mortgage 95%
Commercial Mortgage - FNMA 99%
Commercial Finance - Small Business 95%
Commercial Finance - Franchise 98%
Commercial Finance - Construction 95%
Commercial Finance - Guarantied 98%
Commercial Finance - SBA Non-Guarantied 75%
Commercial Finance - Telecapital 85%
Loans, net
Residential Mortgage 100%
Commercial Mortgage - Servicing Advances 90%
Commercial Finance - Real Estate Structure Finance 85%
Commercial Finance - Builders Group 85%
Commercial Finance - BLD 85%
Commercial Finance - SBA Guarantied 98%
Commercial Finance - SBA Non-Guarantied 75%
Commercial Finance - Telecapital 85%
Corporate and Other 85%
Cmbs Servicing Strips 50%
Investments in purch. Loan and other asset port.
Loan portfolios
Foreign 0%
Domestic 85%
Real Estate
Foreign 0%
Domestic 85%
Partnerships and joint ventures 70%
Asset backed and other securities available for sale 75%
Retained interests in securitizations-trading
Residential Mortgage 70%
Nim 25%
Commercial Lending Corporation 85%
New Asset Pool (f) 50%
Premises and equipment, net of acc. depreciation 50%
Other Assets 0%
Intangible Assets 0%
Deferred Income Taxes 0%
------------ ---------- ----------- ----- ----------
</TABLE>
SCHEDULE IV TO CREDIT AGREEMENT PAGE 1
ASSET COVERAGE REQUIREMENT
<PAGE> 138
<TABLE>
<CAPTION>
Balance Pledged Advance Net Asset
------- ------- ------- ---------
Assets Sheet Values Less Ncv Assets % Value)
------ ------------ -------- ------ ---
(a) (b) (a)-(b)=(c) (d) (c) x d = e)
<S> <C> <C> <C> <C> <C>
Total Asset Values
Ratio of Net Asset Value to Aggregate Outstandings
under Credit Facilities plus Letter of Credit Exposure
must be greater than 1.4 to 1.0
</TABLE>
(a) Value of Borrower's assets per balance sheet
(b) Assets pledged under other credit facilities
(c) Balance sheet value less assets pledged under other facilities
(d) Advance rate applied
(e) Value of assets securing Credit Facilities times Advance Percentage
(f) An advance rate of 50% will be applied to any new asset class; provided
that (i) the total value related to new asset classes included in the
calculation of the Asset Coverage Requirement shall be the lesser of
$100,000,000 or an amount equal to 10% of the total "Pledged Assets" value
included in such calculation, and (ii) Borrower shall be entitled to add a
new class of assets with a higher advance rate than 50%, by delivering a
written request for such approval to Administrative Agent and the Lenders
so long as such request is not refused by the Required Lenders within
thirty (30) days of receipt of such request (the addition of any new class
shall be effective, if no objection is raised, on the first reporting date
after the expiration of such thirty day period)
(g) 0% until 1/1/99
SCHEDULE IV TO CREDIT AGREEMENT PAGE 2
ASSET COVERAGE REQUIREMENT
<PAGE> 139
EXHIBIT A
LONG TERM REVOLVING FACILITY
OR
SHORT TERM REVOLVING FACILITY
REVOLVING NOTE
$________________ Dallas, Texas _________ __, 1997
FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation, and the
other parties executing this Note or hereafter added hereto as "Maker"
(collectively "Makers"), hereby, jointly and severally, promise to pay to the
order of _____________________________ ("Lender") in care of Agent, at its
banking house in the City of Dallas, Dallas County, Texas, or at such other
address in Dallas County, Texas, given to Makers by Agent, the principal sum of
____________________________ Dollars ($______________), or so much thereof as
may be advanced and outstanding, together with interest, as hereinafter
described.
This Note has been executed and delivered pursuant to the terms of
that certain Credit Agreement (as the same may be modified, amended,
supplemented, extended or restated from time to time, the "Credit Agreement")
dated the date hereof, executed by and among Makers, Agent and the Lenders
(which includes the payee of this Note) and is one of the notes defined therein
as a "Revolving Note", the terms and provisions of the Credit Agreement related
to this Note being incorporated herein by reference for all purposes. Each
capitalized term not expressly defined herein shall have the meaning given to
such term under the Credit Agreement. The terms of the Credit Agreement shall
govern in the case of any inconsistency between such terms and the terms
hereof.
This Note is secured by the Collateral Assignment, the Pledge
Agreements, the Security Agreement, the Mortgages, the other Security Documents
and all the other Loan Documents, and all liens and security interests created
or evidenced thereby. Any holder shall be entitled to all benefits and
remedies and security set forth in the Credit Agreement and all the other Loan
Documents. [This Note renews, extends and replaces that certain Promissory Note
dated ______________, in the amount of $________, executed by Makers, payable
to Lender.]
1. Interest and Payment.
(a) Maturity. The principal of this Note and all accrued
but unpaid interest hereon shall be due and payable in full on the [as
applicable, Long Term or Short Term] Revolving Facility Termination Date.
(b) Accrual of Interest. Subject to Paragraph 1(f)
below, interest on this Note shall accrue at a rate per annum equal to the
lesser of (i) at Makers' option, the Variable Rate or the Adjusted LIBOR Rate,
subject, however, to the provisions of the Credit Agreement, or (ii) the
Maximum Lawful Rate; provided, however, that as to any portion of the
outstanding principal balance hereof that is not subject to an effective
election of or conversion to the Adjusted LIBOR Rate in accordance with the
terms of the Credit Agreement, interest on such portion of this Note shall
accrue interest at the lesser of (i) the Variable Rate or (ii) the Maximum
Lawful Rate. Interest on this Note shall be calculated at a daily rate equal
to 1/360 of the annual percentage rate which this Note bears, subject to the
provisions hereof limiting interest to the Maximum Lawful Rate. Without notice
to any Maker or any other Person, the Variable Rate and the Maximum Lawful Rate
shall each automatically fluctuate upward and downward as and in the amount by
which the Base Rate and the Maximum Lawful Rate, respectively, fluctuate,
subject always to limitations contained in this Note and the Credit Agreement.
EXHIBIT A TO CREDIT AGREEMENT
REVOLVING NOTE PAGE 2
<PAGE> 140
(c) Agreements Concerning Pricing Election. Reference
should be made to the provisions of Section 3.5 of the Credit Agreement
concerning the terms, manner and agreements related to the interest rate
elections available to Makers under this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in Article III of the
Credit Agreement, which provides, in part, for quarterly payments of interest
on the first (1st) day of each calendar quarter, commencing on October 1, 1998,
and continuing on the first (1st) day of each January, April, July and October
during the Credit Period.
(e) Costs Due to Regulatory Changes. Makers shall
indemnify Lender against and reimburse Lender for increased costs to Lender, as
a result of any Regulatory Change, in the maintaining of any LIBOR Rate Advance
or Alternate Currency Advance. All payments made pursuant to this paragraph
shall be made free and clear, without reduction for, or account of, any present
or future taxes or other levies of any nature, excluding net income and
franchise taxes.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal balance of this
Note shall, at the option of the Required Lenders, bear interest at the Default
Rate. Any past due principal, and to the extent permitted by law, past due
interest on this Note shall bear interest, payable as it accrues on demand, for
each day until paid at the Default Rate. Such interest shall continue to
accrue at the Default Rate notwithstanding the entry of a judgment with respect
to any of the Obligations or the foreclosure of any of the Lenders' Liens,
unless otherwise provided by law.
(g) Maximum Lawful Rate Adjustments. If at any time the
Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent
reductions in the Applicable Rate shall not reduce the rate of interest on this
Note below the Maximum Lawful Rate until the total amount of interest accrued
equals the amount of interest which would have accrued if the Applicable Rate
had at all times been in effect. In the event that at maturity (stated or by
acceleration), or at the final payment of the [as applicable, Long Term or
Short Term] Revolving Facility, the total amount of interest paid or accrued on
the [as applicable, Long Term or Short Term] Revolving Facility is less than
the amount of interest which would have accrued if the Applicable Rate had at
all times been in effect with respect thereto, then at such time, to the extent
permitted by law, Makers shall pay to Administrative Agent, for the ratable
benefit of the Lenders, an amount equal to the difference between (a) the
lesser of the amount of interest which would have accrued if the Applicable
Rate had at all times been in effect and the amount of interest which would
have accrued if the Maximum Lawful Rate had at all times been in effect, and
(b) the amount of interest actually paid on the [as applicable, the Long Term
or Short Term] Revolving Facility.
2. Default. The occurrence of a Default or an Event of Default,
under and as defined in the Credit Agreement, shall constitute, respectively, a
Default or an Event of Default under this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of an
Event of Default, the holder hereof, acting by and through Administrative Agent
in accordance with the terms of Articles IX and X of the Credit Agreement,
shall have the right to declare the entire unpaid principal balance of, and all
accrued unpaid interest on, this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable), to foreclose any and
all liens and security interests securing payment hereof, to offset against
this Note any sum or sums owed by it to Maker, and to exercise any of its other
rights, powers and remedies under this Note, under the Credit Agreement or any
other Loan Document, or at law or in equity.
(b) No Waiver. Neither the failure by the holder hereof
to exercise, nor delay by the holder hereof in exercising, the right to
accelerate the maturity of this Note or any other right, power
EXHIBIT A TO CREDIT AGREEMENT
REVOLVING NOTE PAGE 3
<PAGE> 141
or remedy upon any Default or Event of Default shall be construed as a waiver of
such Default or Event of Default or as a waiver of the right to exercise any
such right, power or remedy at any time. No single or partial exercise by the
holder hereof of any right, power or remedy shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right, power or
remedy may be exercised at any time and from time to time. All rights and
remedies provided for in this Note and in any other Loan Document are cumulative
of each other and of any and all other rights and remedies existing at law or in
equity, and the holder hereof shall, in addition to the rights and remedies
provided herein or in any other Loan Document, be entitled to avail itself of
all such other rights and remedies as may now or hereafter exist at law or in
equity for the collection of the indebtedness owing hereunder, and the resort to
any right or remedy provided for hereunder or under any such other Loan Document
or provided for by law or in equity shall not prevent the concurrent or
subsequent employment of any other appropriate rights or remedies. Without
limiting the generality of the foregoing provisions, the acceptance by the
holder hereof from time to time of any payment under this Note which is past due
or which is less than the payment in full of all amounts due and payable at the
time of such payment, shall not (i) constitute a waiver of or impair or
extinguish the rights of the holder hereof to accelerate the maturity of this
Note or to exercise any other right, power or remedy at the time or at any
subsequent time, or nullify any prior exercise of any such right, power or
remedy, or (ii) constitute a waiver of the requirement of punctual payment and
performance, or a novation in any respect.
4. Usury Savings Provisions.
(a) General Limitation. Notwithstanding anything herein
or in any other Loan Documents, expressed or implied, to the contrary, in no
event shall any interest rate charged hereunder or under any of the other Loan
Documents, or any interest contracted for, collected or received by Lender or
any holder hereof, exceed the Maximum Lawful Rate.
(b) Intent of Parties. It is expressly stipulated and
agreed to be the intent of Makers and Lender at all times to comply with the
applicable law governing the maximum rate or amount of interest payable on or
in connection with this Note. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to this Note, or if acceleration of the
maturity of this Note, any prepayment by Makers, or any other circumstance
whatsoever, results in Lender having been paid any interest in excess of that
permitted by applicable law, then it is the express intent of Makers and Lender
that all excess amounts theretofore collected by Lender be credited on the
principal balance of this Note (or, if this Note has been or would thereby be
paid in full, refunded to Makers), and the provisions of this Note and the
other applicable Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate the maturity of this Note
does not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned interest in the event of acceleration. All sums paid or agreed to
be paid to Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such indebtedness does not exceed the Maximum Lawful
Rate. The term "applicable law" as used herein shall mean the laws of the
state which governs the Credit Agreement, or DIDMCA or any other applicable
United States federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under the
laws of the state which governs the Credit Agreement. The provisions of this
paragraph shall control all agreements between Makers and Lender.
EXHIBIT A TO CREDIT AGREEMENT
REVOLVING NOTE PAGE 4
<PAGE> 142
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on which such
payment is due shall be extended to the next succeeding Business Day, and such
extension of time shall be included in the computation of the amount of
interest then payable.
(b) Manner of Payment. The manner in which payments are
to be made on this Note shall be governed by the provisions hereof and the
Credit Agreement, including, without limitation, Article III of the Credit
Agreement.
(c) Prepayments. Prepayments may be made, and as
provided in Section 3.6 of the Credit Agreement are required to be made, on
this Note subject to and in accordance with
Section 3.6 of the Credit Agreement.
(d) Application of Payments. All payments made on this
Note shall be applied in accordance with Sections 3.6, 3.9 and 9.10 of the
Credit Agreement, as applicable. Nothing herein shall limit or impair any
rights of any holder hereof to apply as provided in the Loan Documents any past
due payments, any proceeds from the disposition of any collateral by
foreclosure or other collections after default. Except to the extent specific
provisions are set forth in this Note or another Loan Document with respect to
application of payments, all payments received by the holder hereof shall be
applied, to the extent thereof, to the indebtedness owing by Makers to the
holder hereof in such order and manner as the Required Lenders shall deem
appropriate, any instructions from Makers or anyone else to the contrary
notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity or to
collect, enforce or defend this Note or any other Loan Document in any lawsuit
or in any probate, reorganization, bankruptcy or other proceeding, or if any
Maker sues any holder of this Note in connection with this Note or any other
Loan Document and does not prevail, then Makers agree to pay to each such
holder, in addition to principal and interest, all costs and expenses incurred
by such holder in trying to collect this Note or in any such suit or
proceeding, including reasonable attorneys' fees.
(f) Waivers and Acknowledgments. Each Maker and all
sureties, endorsers, guarantors and any other party now or hereafter liable for
the payment of this Note in whole or in part, hereby severally (i) waive
demand, presentment for payment, notice of dishonor and of nonpayment, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
all other notice (except only for any notice that is specifically required by
the terms of the Credit Agreement or any other Loan Document), filing of suit
and diligence in collecting this Note or enforcing any of the security herefor;
(ii) agree to any substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily liable hereon;
(iii) agree that the holder hereof shall not be required first to institute
suit or exhaust its remedies against any Maker or others liable or to become
liable hereon or to enforce its rights against them or any security herefor;
(iv) consent to any extension or postponement of time of payment of this Note
for any period or periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; and (v) submit (and waive all rights to object) to
personal jurisdiction in the State of Texas, and venue in Dallas County, Texas,
for the enforcement of any and all obligations under the Loan Documents.
(g) Amendments in Writing. This Note may not be changed,
amended or modified except in a writing expressly intended for such purpose and
executed by the party against whom enforcement of the change, amendment or
modification is sought.
(h) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as provided in
Section 11.2 of the Credit Agreement.
EXHIBIT A TO CREDIT AGREEMENT
REVOLVING NOTE PAGE 5
<PAGE> 143
(i) Assignments/Participations. Makers acknowledge and
agree that the holder of this Note may, at any time and from time to time,
assign all or a portion of its interest in the Revolving Credit Facility or
transfer to any Person a participation interest in the Revolving Credit
Facility, subject to and in accordance with the terms and conditions of the
Credit Agreement, including Section 11.10 thereof.
(j) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by or on behalf of
Makers shall bind their successors and assigns and shall be for the benefit of
Lender and any holder hereof, and their successors and assigns, whether so
expressed or not, subject, however, to the provisions of Section 11.10 of the
Credit Agreement.
(k) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY NEW YORK LAW, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF
INTERESTS, OR THE REMEDIES RELATED TO ANY PART OF THE COLLATERAL, OR TO THE
EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE
CREDIT AGREEMENT OR OTHERWISE.
(l) Time of the Essence. Time shall be of the essence in
this Note with respect to all of Makers' obligations hereunder.
(m) INTEGRATION. THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note as of the date
first above written.
MAKER:
AMRESCO, INC., a Delaware
corporation
By:
-----------------------------------
Thomas J. Andrus,
Treasurer
EXHIBIT A TO CREDIT AGREEMENT
REVOLVING NOTE PAGE 6
<PAGE> 144
EXHIBIT A-1
TERM NOTE
$________________ Dallas, Texas __________ __, 1997
FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation, and the
other parties executing this Note or hereafter added hereto as "Maker"
(collectively "Makers"), hereby, jointly and severally, promise to pay to the
order of _____________________________ ("Lender") in care of Agent, at its
banking house in the City of Dallas, Dallas County, Texas, or at such other
address in Dallas County, Texas, given to Makers by Agent, the principal sum of
____________________________ Dollars ($______________), or so much thereof as
may be advanced and outstanding, together with interest, as hereinafter
described.
This Note has been executed and delivered pursuant to the terms of
that certain Credit Agreement (as the same may be modified, amended,
supplemented, extended or restated from time to time, the "Credit Agreement")
dated the date hereof, executed by and among Makers, Agent and the Lenders
(which includes the payee of this Note) and is one of the notes defined therein
as a "Term Note", the terms and provisions of the Credit Agreement related to
this Note being incorporated herein by reference for all purposes. Each
capitalized term not expressly defined herein shall have the meaning given to
such term under the Credit Agreement. The terms of the Credit Agreement shall
govern in the case of any inconsistency between such terms and the terms
hereof.
This Note is secured by the Collateral Assignment, the Pledge
Agreements, the Security Agreement, the Mortgages, the other Security Documents
and all the other Loan Documents, and all liens and security interests created
or evidenced thereby. Any holder shall be entitled to all benefits and
remedies and security set forth in the Credit Agreement and all the other Loan
Documents. [This Note renews, extends and replaces that certain Promissory Note
dated ______________, in the amount of $________, executed by Makers, payable
to Lender.]
1. Interest and Payment.
(a) Maturity. The principal of this Note and all accrued
but unpaid interest hereon shall be due and payable in full on the Term
Facility Termination Date.
(b) Accrual of Interest. Subject to Paragraph 1(f)
below, interest on this Note shall accrue at a rate per annum equal to the
lesser of (i) at Makers' option, the Variable Rate or the Adjusted LIBOR Rate,
subject, however, to the provisions of the Credit Agreement, or (ii) the
Maximum Lawful Rate; provided, however, that as to any portion of the
outstanding principal balance hereof that is not subject to an effective
election of or conversion to the Adjusted LIBOR Rate in accordance with the
terms of the Credit Agreement, interest on such portion of this Note shall
accrue interest at the lesser of (i) the Variable Rate or (ii) the Maximum
Lawful Rate. Interest on this Note shall be calculated at a daily rate equal
to 1/360 of the annual percentage rate which this Note bears, subject to the
provisions hereof limiting interest to the Maximum Lawful Rate. Without notice
to any Maker or any other Person, the Variable Rate and the Maximum Lawful Rate
shall each automatically fluctuate upward and downward as and in the amount by
which the Base Rate and the Maximum Lawful Rate, respectively, fluctuate,
subject always to limitations contained in this Note and the Credit Agreement.
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 1
<PAGE> 145
(c) Agreements Concerning Pricing Election. Reference
should be made to the provisions of Section 3.5 of the Credit Agreement
concerning the terms, manner and agreements related to the interest rate
elections available to Makers under this Note.
(d) Principal and Interest Payments. Principal and
interest hereon shall be due and payable as is provided in Article III of the
Credit Agreement, which provides, in part, for (i) quarterly payments of
interest on the first (1st) day of each calendar quarter, commencing on October
1, 1998, and continuing on the first (1st) day of each October, January, April
and June during the Credit Period, and (ii) an annual principal payment in an
amount equal to $_______[1% of the principal] on ________ of each year,
commencing on _______, 199__, and continuing on each ________ thereafter during
the Credit Period.
(e) Costs Due to Regulatory Changes. Makers shall
indemnify Lender against and reimburse Lender for increased costs to Lender, as
a result of any Regulatory Change, in the maintaining of any LIBOR Rate
Portion. All payments made pursuant to this paragraph shall be made free and
clear, without reduction for, or account of, any present or future taxes or
other levies of any nature, excluding net income and franchise taxes.
(f) Default Rate. After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal balance of this
Note shall, at the option of the Required Lenders, bear interest at the Default
Rate. Any past due principal, and to the extent permitted by law, past due
interest on this Note shall bear interest, payable as it accrues on demand, for
each day until paid at the Default Rate. Such interest shall continue to
accrue at the Default Rate notwithstanding the entry of a judgment with respect
to any of the Obligations or the foreclosure of any of the Lenders' Liens,
unless otherwise provided by law.
(g) Maximum Lawful Rate Adjustments. If at any time the
Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent
reductions in the Applicable Rate shall not reduce the rate of interest on this
Note below the Maximum Lawful Rate until the total amount of interest accrued
equals the amount of interest which would have accrued if the Applicable Rate
had at all times been in effect. In the event that at maturity (stated or by
acceleration), or at the final payment of the Term Facility, the total amount
of interest paid or accrued on the Term Facility is less than the amount of
interest which would have accrued if the Applicable Rate had at all times been
in effect with respect thereto, then at such time, to the extent permitted by
law, Makers shall pay to Agent, for the ratable benefit of the Lenders, an
amount equal to the difference between (a) the lesser of the amount of interest
which would have accrued if the Applicable Rate had at all times been in effect
and the amount of interest which would have accrued if the Maximum Lawful Rate
had at all times been in effect, and (b) the amount of interest actually paid
on the Term Facility.
2. Default. The occurrence of a Default or an Event of Default,
under and as defined in the Credit Agreement, shall constitute, respectively, a
Default or an Event of Default under this Note.
3. Remedies.
(a) All Remedies Available. Upon the occurrence of an
Event of Default, the holder hereof, acting by and through Agent in accordance
with the terms of Articles IX and X of the Credit Agreement, shall have the
right to declare the entire unpaid principal balance of, and all accrued unpaid
interest on, this Note at once due and payable (and upon such declaration, the
same shall be at once due and payable), to foreclose any and all liens and
security interests securing payment hereof, to offset against this Note any sum
or sums owed by it to Maker, and to exercise any of its other rights, powers
and remedies under this Note, under the Credit Agreement or any other Loan
Document, or at law or in equity.
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 2
<PAGE> 146
(b) No Waiver. Neither the failure by the holder hereof
to exercise, nor delay by the holder hereof in exercising, the right to
accelerate the maturity of this Note or any other right, power or remedy upon
any Default or Event of Default shall be construed as a waiver of such Default
or Event of Default or as a waiver of the right to exercise any such right,
power or remedy at any time. No single or partial exercise by the holder
hereof of any right, power or remedy shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
may be exercised at any time and from time to time. All rights and remedies
provided for in this Note and in any other Loan Document are cumulative of each
other and of any and all other rights and remedies existing at law or in
equity, and the holder hereof shall, in addition to the rights and remedies
provided herein or in any other Loan Document, be entitled to avail itself of
all such other rights and remedies as may now or hereafter exist at law or in
equity for the collection of the indebtedness owing hereunder, and the resort
to any right or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in equity shall not prevent the concurrent
or subsequent employment of any other appropriate rights or remedies. Without
limiting the generality of the foregoing provisions, the acceptance by the
holder hereof from time to time of any payment under this Note which is past
due or which is less than the payment in full of all amounts due and payable at
the time of such payment, shall not (i) constitute a waiver of or impair or
extinguish the rights of the holder hereof to accelerate the maturity of this
Note or to exercise any other right, power or remedy at the time or at any
subsequent time, or nullify any prior exercise of any such right, power or
remedy, or (ii) constitute a waiver of the requirement of punctual payment and
performance, or a novation in any respect.
4. Usury Savings Provisions.
(a) General Limitation. Notwithstanding anything herein
or in any other Loan Documents, expressed or implied, to the contrary, in no
event shall any interest rate charged hereunder or under any of the other Loan
Documents, or any interest contracted for, collected or received by Lender or
any holder hereof, exceed the Maximum Lawful Rate.
(b) Intent of Parties. It is expressly stipulated and
agreed to be the intent of Makers and Lender at all times to comply with the
applicable law governing the maximum rate or amount of interest payable on or
in connection with this Note. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to this Note, or if acceleration of the
maturity of this Note, any prepayment by Makers, or any other circumstance
whatsoever, results in Lender having been paid any interest in excess of that
permitted by applicable law, then it is the express intent of Makers and Lender
that all excess amounts theretofore collected by Lender be credited on the
principal balance of this Note (or, if this Note has been or would thereby be
paid in full, refunded to Makers), and the provisions of this Note and the
other applicable Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate the maturity of this Note
does not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned interest in the event of acceleration. All sums paid or agreed to
be paid to Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such indebtedness does not exceed the Maximum Lawful
Rate. The term "applicable law" as used herein shall mean the laws of the
state which governs the Credit Agreement, or DIDMCA or any other applicable
United States federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under the
laws of the state which governs the Credit Agreement. The provisions of this
paragraph shall control all agreements between Makers and Lender.
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 3
<PAGE> 147
5. General Provisions.
(a) Business Days. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on which such
payment is due shall be extended to the next succeeding Business Day, and such
extension of time shall be included in the computation of the amount of
interest then payable.
(b) Manner of Payment. The manner in which payments are
to be made on this Note shall be governed by the provisions hereof and the
Credit Agreement, including, without limitation, Article III of the Credit
Agreement.
(c) Prepayments. Prepayments may be made, and as
provided in Section 3.6 of the Credit Agreement are required to be made, on
this Note subject to and in accordance with Section 3.6 of the Credit
Agreement.
(d) Application of Payments. All payments made on this
Note shall be applied in accordance with Sections 3.6, 3.9 and 9.10 of the
Credit Agreement, as applicable. Nothing herein shall limit or impair any
rights of any holder hereof to apply as provided in the Loan Documents any past
due payments, any proceeds from the disposition of any collateral by
foreclosure or other collections after default. Except to the extent specific
provisions are set forth in this Note or another Loan Document with respect to
application of payments, all payments received by the holder hereof shall be
applied, to the extent thereof, to the indebtedness owing by Makers to the
holder hereof in such order and manner as the Required Lenders shall deem
appropriate, any instructions from Makers or anyone else to the contrary
notwithstanding.
(e) Costs of Collection. If any holder of this Note
retains an attorney in connection with any default or at maturity or to
collect, enforce or defend this Note or any other Loan Document in any lawsuit
or in any probate, reorganization, bankruptcy or other proceeding, or if any
Maker sues any holder of this Note in connection with this Note or any other
Loan Document and does not prevail, then Makers agree to pay to each such
holder, in addition to principal and interest, all costs and expenses incurred
by such holder in trying to collect this Note or in any such suit or
proceeding, including reasonable attorneys' fees.
(f) Waivers and Acknowledgments. Each Maker and all
sureties, endorsers, guarantors and any other party now or hereafter liable for
the payment of this Note in whole or in part, hereby severally (i) waive
demand, presentment for payment, notice of dishonor and of nonpayment, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
all other notice (except only for any notice that is specifically required by
the terms of the Credit Agreement or any other Loan Document), filing of suit
and diligence in collecting this Note or enforcing any of the security herefor;
(ii) agree to any substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily liable hereon;
(iii) agree that the holder hereof shall not be required first to institute
suit or exhaust its remedies against any Maker or others liable or to become
liable hereon or to enforce its rights against them or any security herefor;
(iv) consent to any extension or postponement of time of payment of this Note
for any period or periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; and (v) submit (and waive all rights to object) to
personal jurisdiction in the State of Texas, and venue in Dallas County, Texas,
for the enforcement of any and all obligations under the Loan Documents.
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 4
<PAGE> 148
(g) Amendments in Writing. This Note may not be changed,
amended or modified except in a writing expressly intended for such purpose and
executed by the party against whom enforcement of the change, amendment or
modification is sought.
(h) Purpose of Proceeds. The proceeds of this Note will
be used solely for business purposes and not for personal, family, household or
agricultural purposes.
(i) Notices. Any notice required or which any party
desires to give under this Note shall be given and effective as provided in
Section 11.2 of the Credit Agreement.
(j) Assignments/Participations. Makers acknowledge and
agree that the holder of this Note may, at any time and from time to time,
assign all or a portion of its interest in the Term Facility or transfer to any
Person a participation interest in the Term Facility, subject to and in
accordance with the terms and conditions of the Credit Agreement, including
Section 11.10 thereof.
(k) Successors and Assigns. All of the covenants,
stipulations, promises and agreements contained in this Note by or on behalf of
Makers shall bind their successors and assigns and shall be for the benefit of
Lender and any holder hereof, and their successors and assigns, whether so
expressed or not, subject, however, to the provisions of Section 11.10 of the
Credit Agreement.
(l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY NEW YORK LAW, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF
INTERESTS, OR THE REMEDIES RELATED TO ANY PART OF THE COLLATERAL, OR TO THE
EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE
CREDIT AGREEMENT OR OTHERWISE.
(m) Time of the Essence. Time shall be of the essence in
this Note with respect to all of Makers' obligations hereunder.
(n) INTEGRATION. THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 5
<PAGE> 149
IN WITNESS WHEREOF, Maker has duly executed this Note as of the date
first above written.
MAKER:
AMRESCO, INC., a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A-1 TO CREDIT AGREEMENT
TERM NOTE PAGE 6
<PAGE> 150
EXHIBIT A-2
________________
(Date)
COMPETITIVE BID NOTE
This Note is being executed and delivered pursuant to the terms of
that certain Credit Agreement (as the same may be modified, amended,
supplemented, extended or restated from time to time, the "Credit Agreement"),
dated August __, 1998, executed by and among AMRESCO, INC., a Delaware
corporation ("Borrower"), certain entities listed as "Guarantors" on Schedule A
attached thereto, NationsBank, N.A., as administrative Agent (the
"Administrative Agent"), Credit Suisse First Boston, as syndication agent, and
the Lenders (which includes the payee of this Note) and is one of the notes
defined therein as a "Competitive Bid Note", the terms and provisions of the
Credit Agreement related to this Note being incorporated herein by reference
for all purposes. Each capitalized term not expressly defined herein shall
have the meaning given to such term under the Credit Agreement. The terms of
the Credit Agreement shall govern in the case of any inconsistency between such
terms and the terms hereof.
Lender has submitted to Borrower the Competitive Bid Quote attached to
this Note and Borrower has accepted all or a portion of the offer reflected in
such Competitive Bid Quote pursuant to the terms of the Competitive Bid
Acceptance Notice attached hereto (the "Accepted Terms")
Borrower promises to pay to the order of ___________________________
(the "Lender") the aggregate unpaid principal amount of all Competitive Bid
Loans made by the Lender to the Borrower pursuant to the Accepted Terms, in
immediately available funds at the main Dallas, Texas office of NationsBank,
N.A., a national banking association, as Administrative Agent, together with
interest on the unpaid principal amount hereof at the rates and on the dates
included in the Accepted Terms. Borrower shall pay the principal of and accrued
and unpaid interest on each Competitive Bid Loan in full on the last day of the
applicable Interest Period as included in the Accepted Terms.
Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Competitive Bid Loan and the date and amount of
each principal payment hereunder, provided that its failure to do so shall not
absolve Borrower of its obligations hereunder or under any other Loan Document.
This Note is secured by the Security Documents and all the other Loan
Documents, and all liens and security interests created or evidenced thereby,
and guaranteed by the Guaranty Agreements. Any holder shall be entitled to all
benefits and remedies and security set forth in the Credit Agreement and all
the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY NEW
YORK LAW, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT
TO SECTION 11.8 OF THE CREDIT AGREEMENT OR OTHERWISE.
Time shall be of the essence in this Note with respect to all of
Borrower's obligations hereunder.
THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXHIBIT A-2 TO CREDIT AGREEMENT
COMPETITIVE BID NOTE PAGE 1
<PAGE> 151
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
date first above written.
BORROWER:
AMRESCO, INC., a Delaware
corporation
By:
---------------------------------
Thomas J. Andrus,
Treasurer
EXHIBIT A-2 TO CREDIT AGREEMENT
COMPETITIVE BID NOTE PAGE 2
<PAGE> 152
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF AMRESCO, INC.,
DATED __________, _____
Principal Principal
Amount of Amount Unpaid
Date Competitive Bid Loan Paid Balance
---- -------------------- --------- -------
EXHIBIT A-2 TO CREDIT AGREEMENT
COMPETITIVE BID NOTE PAGE 3
<PAGE> 153
DOCUMENTS TO BE ATTACHED TO COMPETITIVE BID NOTE
o COMPETITIVE BID QUOTE
o COMPETITIVE BID ACCEPTANCE NOTICE
EXHIBIT A-2 TO CREDIT AGREEMENT
COMPETITIVE BID NOTE PAGE 4
<PAGE> 154
EXHIBIT A-3
SWINGLINE NOTE
$______________ ___________, ____
AMRESCO, INC., a Delaware corporation (the "Borrower"), promises to
pay to the order of NATIONSBANK, N.A., a national banking association (the
"Lender") the lesser of the principal sum of Twenty-Five Million and No/100
Dollars ($25,000,000) or the aggregate principal amount of all Swingline
Advances made by Lender to the Borrower pursuant to the Credit Agreement (as
hereinafter defined), in immediately available funds at the main Dallas, Texas
office of the Administrative Agent (as defined in the Credit Agreement),
together with interest on the unpaid principal amount hereof at the rates and
on the dates set forth in the Credit Agreement. The Borrower shall pay the
principal of and accrued and unpaid interest on the Swingline Advances in full
on demand by Lender, but in any event on or before the Long Term Revolving
Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Swingline Advance and the date and amount of each
principal payment hereunder, provided that its failure to do so shall not
absolve the Borrower of its obligations hereunder or under any other Loan
Documents.
This Note is the Swingline Note issued pursuant to, and is entitled to
the benefits of, the Credit Agreement dated as of August __, 1998 (which, as
it may be amended or modified and in effect from time to time, is herein called
the "Credit Agreement"), among the Borrower, the lenders parties thereto,
including without limitation the Lender, NationsBank, N.A., as Administrative
Agent, and Credit Suisse First Boston, as Syndication Agent, to which Credit
Agreement reference is hereby made for a statement of terms and conditions
governing this Note, including, without limitation, the interest rate to be
paid hereunder and the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. This Note is guaranteed pursuant to
the Guaranty Agreements, and is secured by the liens and security interests
created by the Security Documents and other Loan Documents. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNALS LAWS
(AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAW APPLICABLE TO NATIONAL BANKS.
AMRESCO, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A-3 TO CREDIT AGREEMENT
SWINGLINE NOTE PAGE 1
<PAGE> 155
SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL
TO
SWINGLING NOTE OF AMRESCO, INC.
Principal Amount of Principal Amount Unpaid
Date Swingline Loan Paid Balance
---- ------------------- ---------------- -------
EXHIBIT A-3 TO CREDIT AGREEMENT
SWINGLINE NOTE PAGE 2
<PAGE> 156
EXHIBIT B
REQUEST FOR ADVANCE
This Request for Advance is being delivered by AMRESCO, INC.
("Borrower") pursuant to that certain Credit Agreement (the "Credit
Agreement"), dated as of August ____, 1998 executed by Borrower, NationsBank,
N.A., as Administrative Agent, Credit Suisse First Boston, as Syndication
Agent, and the Lenders, as therein defined. Unless defined herein or indicated
otherwise, each capitalized term used herein shall have the meaning given to
such term in the Credit Agreement.
1. Borrower hereby requests an Advance under the Revolving Credit
Facility in an amount equal to $_________ ______ Borrower requests that the
proceeds of such Advance be wired to ___________________________ or deposited
in ______________________________. Borrower represents and warrants to Lenders
that the Advance herein requested does not exceed the amount which Borrower is
entitled to receive pursuant to Section 2.1 (or any other provisions) of the
Credit Agreement.
2. The aggregate Advance herein requested consists of:
___(a) An Advance (other than an Alternate Currency Advance or
Swingline Advance) for the purposes set forth in Section
2.1(a) of the Credit Agreement in the amount of $__________.
Such Advance is to be used for _______________________________
__________________________________________.
___(b) An Alternate Currency Advance for the purposes set forth in
Section 2.1(a) of the Credit Agreement in the amount of
__________ (the Dollar Equivalent being $________), to be
advanced in [ ] British pounds sterling, [ ] Canadian dollars,
or [ ] other __________________. Such Alternate Currency
Advance is to be used for ___________________________________
__________________________________________.
___(c) A Swingline Advance for the purposes set forth in Section 2.1
of the Credit Agreement in the amount of $
______________________. Such Swingline Advance to be used for
_____________________________________________________________.
___(d) A Letter of Credit in the amount of $__________. The Letter
of Credit will be used for __________________________________.
Borrower requests that the original of such Letter of Credit
be delivered to ___________________________.
3. ___(a) Borrower requests that of the Advance requested hereby,
$_____________ bear interest based at the Variable Rate and
$_______________ bear interest based at the Applicable LIBOR
Rate. With respect to the LIBOR Rate Advance, the Interest
Period shall be ______ months, with the Effective Date being
_______________________________.
___(b) With respect to an Alternate Currency Advance, the initial
Interest Period shall be ______ months, with the Effective
Date being _________________.
4. Borrower hereby certifies, represents and warrants to Lenders
that:
(a) This Request for Advance has been duly authorized by
all necessary action on the part of Borrower.
EXHIBIT B TO CREDIT AGREEMENT
REQUEST FOR ADVANCE PAGE 1
<PAGE> 157
(b) The representations and warranties contained in the
Credit Agreement and the other Loan Documents remain true and correct
on and as of the date hereof with the same force and effect as though
made on the date hereof.
(c) No Default or Event of Default has occurred and is
continuing, and the making of the Advance or issuance of the Letter of
Credit requested hereby shall not constitute a Default or Event of
Default.
(d) Borrower has performed and complied with all
agreements and conditions in the Credit Agreement and the other Loan
Documents required to be performed or complied with by Borrower on or
prior to the date hereof, and each of the conditions precedent
contained in the Credit Agreement applicable to the Advance or Letter
of Credit requested hereby has been satisfied.
(e) The proceeds of the Advance or Letter of Credit
herein requested will not be used in violation of any provision of the
Credit Agreement or any other Loan Document.
5. Borrower acknowledges and agrees that the making of the
Advance or the issuance of the Letter of Credit requested hereby shall not (a)
constitute a waiver of any condition precedent to the obligation of Lenders to
make further Advances or arrange for the issuance of additional Letters of
Credit or (b) preclude Lenders from thereafter declaring the failure of
Borrower to satisfy all such conditions precedent to be a Default.
6. Attached hereto is a true and correct schedule showing the
ratio of the current Asset Coverage Values to the outstanding balance of the
Revolving Credit Facility, the Term Facility and the Letter of Credit Exposure
after giving effect to the Advance requested hereby.
EXECUTED as of ____________, 19__.
BORROWER:
AMRESCO, INC., a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT B TO CREDIT AGREEMENT
REQUEST FOR ADVANCE PAGE 2
<PAGE> 158
EXHIBIT C
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he/she is the duly elected Chief
Financial Officer (or other duly authorized officer permitted under the Loan
Agreement (as herein defined)) of AMRESCO, Inc., a Delaware corporation
("Borrower"). This Certificate is being delivered pursuant to that certain
Credit Agreement dated as of August __, 1998 (the "Credit Agreement"), among
Borrower, NationsBank, N.A., as administrative agent, Credit Suisse First
Boston, as syndication agent, and the lenders (the "Lenders") named in the
Credit Agreement. All terms used but not defined herein shall have the
meanings set forth in the Credit Agreement. This Certificate is submitted on a
quarterly basis on or before the sixtieth (60th) day following the end of
Borrower's fiscal quarter for the period ended _________________, ____. The
undersigned hereby further certifies to the following as of the date set forth
below:
1. The representations and warranties of Borrower and Guarantors
under the Credit Agreement are true and complete in all material respects.
2. No event has occurred which constitutes a Default or Event of
Default.
3. As of __________________, _____ (being the last day of
Borrower's most recently ended fiscal quarter) Borrower and its Subsidiaries,
on a consolidated basis, are in compliance with the financial covenants
contained in Sections 8.1, 8.2, 8.3 and 8.4 of the Credit Agreement and the
following information is true, accurate and complete as of such date:
A. Pertinent Information
(a) (1) Seventy-five percent (75%) of Borrower's
cumulative Consolidated Net Income for each
calendar quarter commencing on July 1, 1998,
through the end of the immediately preceding
calendar quarter is $____________. (2)
Seventy-Five Percent (75%) of the amount of
proceeds received by Borrower from issuance
of additional stock or other equity is
$_________. (3) The required Consolidated
Tangible Net Worth is $____________, which is
equal to the sum of $335,000,000, plus the
amount set forth in clause (1) above , plus
the amount set forth in clause (2) above.
(b) (1) Borrower's Total Consolidated Debt is
$___________. (2) The amount outstanding
under all Warehouse Lines is $_____________.
(3) Borrower's Total Consolidated Debt less
the amount outstanding under the Warehouse
Lines is $_________.
(c) Borrower's Consolidated Tangible Net Worth is
$____________.
(d) Borrower's Consolidated EBITDA (twelve
calendar months) is $______________.
(e) Borrower's Consolidated Interest Expense
(twelve calendar months) is $______________.
(f) Fifty percent (50%) of all Approved
Subordinated Debt as of the last day of the
immediately preceding quarter is
$___________________. Total Consolidated
Debt less the face value of all Approved
Subordinated Debt is $______________________.
EXHIBIT C TO CREDIT AGREEMENT
CERTIFICATE OF COMPLIANCE PAGE 1
<PAGE> 159
(g) The Adjusted Asset Amount is $___________.
(h) The aggregate outstanding balance of the
Revolving Credit Facility, the Term Facility
and the Letter of Credit Exposure is
$_________________.
(i) The amount of the Asset Coverage Values is
$______________.
B. Covenants
(a) Borrower's Consolidated Tangible Net Worth is
$__________ (compare to required Consolidated
Tangible Net Worth shown in 3.A(a) above).
(b) The ratio of (i) Total Consolidated Debt less
the outstanding balance of the Warehouse
Lines to (ii) Consolidate Tangible Net Worth
is _______ to 1.0.
(c) Borrower's Interest Charge Coverage Ratio is
___________ to 1.00.
(d) The amount calculated in 3.A(f) is less than
the amount shown in 3.A(g)
(e) The ratio of the amount shown in 3.A(i) to
the amount shown in 3.A(h) is greater than
1.4 to 1.0.
4. I hereby certify, in my capacity as the Chief Financial
Officer (or other officer indicated below) of Borrower, that the information
set forth herein and on the attachments hereto is true and correct in all
material respects to the best of my knowledge and prepared in accordance with
GAAP.
5. If this Certificate is being delivered in connection with the
fiscal year-end financial statements of Borrower, I hereby certify that, to the
best of my knowledge and belief, the financial statements of Borrower being
delivered herewith fairly reflect the financial condition of Borrower and its
Subsidiaries and the results of Borrower's and its Subsidiaries' operations as
of the date of delivery of such financial statements
IN WITNESS WHEREOF, I have executed this Certificate as of the ______
day of _________________, 19___.
---------------------------------------
Title:
---------------------------------
EXHIBIT C TO CREDIT AGREEMENT
CERTIFICATE OF COMPLIANCE PAGE 2
<PAGE> 160
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE is made and entered into effective as
of the __ day of ____________, 199__ by and between ________________
("Assignor"), and ________________.("Assignee").
R E C I T A L S:
I. Pursuant to the terms and provisions of that certain Credit
Agreement (as amended from time to time, the "Credit Agreement") dated as of
August __, 1998, executed by and among AMRESCO, INC., a Delaware corporation
("Borrower"), NationsBank. N.A., a national banking association, as
administrative agent ("Administrative Agent"), Credit Suisse First Boston, as
syndication agent, and the other lenders (collectively, the "Lenders") from
time to time party to the Credit Agreement, two credit facilities (as modified
and amended, the "Credit Facilities") were made available to Borrower. Each
capitalized term defined in the Credit Agreement and used herein without
definition shall have the same meaning assigned to such term in the Credit
Agreement.
II. Assignor owns and holds a ____ % undivided interest in the
[Revolving Credit or Term] Facility, and, therefore, has an interest the Credit
Agreement, the Security Documents, and all of the other Loan Documents, as one
of the [Revolving or Term] Lenders thereunder, as more particularly set forth
therein.
III. Assignor desires to assign to Assignee a _____________ percent
(_________%) interest in all of Assignor's right, title and interest in, to and
under the [Revolving Credit or Term] Facility, and a proportionate interest in
the Credit Agreement, the Security Documents, and all of the other Loan
Documents.
NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars
($10.00), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Assignor and
Assignee hereby covenant and agree as follows:
1. Assignor has SOLD, ASSIGNED, TRANSFERRED and CONVEYED, and by
these presents does hereby SELL, ASSIGN, TRANSFER and CONVEY,
unto Assignee as of the Assignment Date (hereinafter defined)
a __________ percent (___________%) interest in all of
Assignor's rights, interests and obligations as a [Revolving
or Term] Lender under the Credit Agreement, the Security
Documents and all of the other Loan Documents (the "Assigned
Interest").
2. Assignee hereby assumes all obligations of Assignor with
respect to the Assigned Interest.
3. Assignor hereby represents and warrants to Assignee that
Assignor (a) is the legal and beneficial owner of the Assigned
Interest and (b) is legally authorized to enter into this
Assignment and Acceptance.
4. Assignee hereby confirms and acknowledges that, except as
specifically set forth herein, Assignor: (i) makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations
EXHIBIT D TO CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE PAGE 1
<PAGE> 161
made in or in connection with any Loan Document, or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other
instrument or document furnished pursuant thereto, other than
that Assignor is the legal and beneficial owner of the
Assigned Interest and that such interest is free and clear of
any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to the value or
condition of, or title to, the Assigned Loans or any other
Collateral, or the financial condition of Borrower; and (iii)
makes no representation or warranty and assumes no
responsibility with respect to the performance or observance
by either Borrower of any of its obligations under any Loan
Document or any other instrument or document furnished
pursuant thereto.
5. Assignor hereby requests that Administrative Agent exchange
Assignor's [Revolving or Term] Note(s) as follows:
Note Payable to Amount of
the Order of: Note
--------------- ---------
[Assignor] $_________
[Assignee] $_________
6. Assignee hereby represents and warrants that Assignee (a) is
legally authorized to enter into this Assignment and
Acceptance, and (b) is an Eligible Assignee.
7. Assignee hereby: (i) appoints Administrative Agent as the
Administrative Agent under the Credit Agreement and the other
Loan Documents and authorizes Administrative Agent to take
such action as agent on its behalf and to exercise such powers
under the Credit Agreement and the other Loan Documents as are
delegated to Administrative Agent by the terms thereof; (ii)
confirms that it has received a copy of the Loan Documents,
together with copies of such financial statements of Borrower
and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that
it will, independently and without reliance upon Assignor, any
other Lender, Administrative Agent or any other Person, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan
Documents, subject to and in accordance with Article X of the
Credit Agreement; (iv) agrees with Assignor for the benefit of
Administrative Agent, each other Lender and Borrower and any
other Person that it will perform all of the obligations which
by the terms of the Loan Documents are required to be
performed by it as a [Revolving or Term] Lender thereunder,
and that it shall be liable directly to Assignor,
Administrative Agent, Borrower, each other Lender or any other
Person for the performance of such obligations; and (v) agrees
not to disclose any financial information of the Borrower or
other confidential information regarding the Credit Facilities
as and to the extent provided in Section 7.3 of the Credit
Agreement.
8. The effective date of this Assignment and Acceptance shall be
________ __, ____ (the "Assignment Date"), determined in
accordance with Section 11.10(c) of the Credit Agreement.
Following the execution of this
EXHIBIT D TO CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE PAGE 2
<PAGE> 162
Assignment and Acceptance, each party hereto and each Person
consenting hereto shall deliver its duly executed counterpart
hereof to Administrative Agent for acceptance and recording in
the Register by Administrative Agent.
9. As of the Assignment Date, (i) Assignee shall be a "[Revolving
or Term] Lender" under the Loan Documents and, to the extent
provided in this Assignment and Acceptance and subject to the
terms of Article X of the Credit Agreement, shall have the
rights and obligations of a Lender thereunder, and (ii)
Assignor shall, with respect only to the Assigned Interest,
relinquish its rights and be released from its obligations
under the Loan Documents, subject to Section 11.10 of the
Credit Agreement.
10. In accordance with Section 11.10 (a) (iv) of the Credit
Agreement, Assignor and Assignee agree to pay Administrative
Agent a processing fee in the sum of $3,500.00.
11. Upon acceptance and recording of this Assignment and
Acceptance, from and after the Assignment Date, Administrative
Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and
other amounts) to Assignee.
12. If Assignee is organized under the laws of a jurisdiction
outside the United States, it hereby represents that it has
delivered to Assignor and Administrative Agent completed and
signed copies of any forms that may be required by the United
States Internal Revenue Service in order to certify Assignee's
exemption from United States withholding taxes with respect to
any payment or distributions made or to be made to Assignee
with respect to the Credit Facilities or under the Credit
Agreement or such other documents as are necessary to indicate
that all such payments or distributions are subject to such
taxes at a rate reduced by an applicable tax treaty.
13. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF.
14. This Assignment and Acceptance may be executed in any number
of counterparts which shall together constitute but one and
the same agreement.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment and Acceptance as of the date first above written.
EXHIBIT D TO CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE PAGE 3
<PAGE> 163
ASSIGNOR:
--------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNEE:
Address of Assignee:
---------------------
By:
- ----------------------- ------------------------------------
Name:
- ----------------------- ---------------------------------
Title:
- ----------------------- ---------------------------------
ACKNOWLEDGED and ACCEPTED as of
the _____ day of _________, ____.
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., a
national banking association, as Administrative Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BORROWER:
AMRESCO, INC., a Delaware
corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT D TO CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE PAGE 4
<PAGE> 164
EXHIBIT E
COMPETITIVE BID QUOTE REQUEST
(Section 2.3(b))
________________________,_____
(Date)
To: NationsBank, N.A.., as
administrative agent (the "Administrative Agent")
From: AMRESCO, Inc. ("Borrower")
Re: Credit Agreement (as the same may be modified, amended, supplemented,
extended or restated from time to time, the "Credit Agreement") dated
August __, 1998, executed by and among Borrower, certain entities
listed as "Guarantors" on Schedule A attached thereto, Administrative
Agent, Credit Suisse First Boston, as Syndication Agent, and the
Lenders
1. Capitalized terms used herein have the meanings assigned to them in
the Credit Agreement.
2. We hereby give notice pursuant to Section 2.3(b) of the Credit
Agreement that we request Competitive Bid Quotes for the following
proposed Competitive Bid Advance(s):
Borrowing Date: __________________________, ____________
<TABLE>
Principal Amount (in Dollar Equivalent)(1) Interest Period(2) Alternate Currency(3)
--------------------------------------- --------------- ------------------
<S> <C> <C>
</TABLE>
3. Such Competitive Bid Quotes should offer a Competitive Bid Margin.
4. Upon acceptance by the undersigned of any or all of the Competitive
Bid Advances offered by Lenders in response to this request, the
undersigned shall be deemed to affirm as of the Borrowing Date thereof
the representations and warranties made in Article VI of the Credit
Agreement and that all conditions specified in Section 4.2 of the
Credit Agreement have been satisfied.
AMRESCO, INC., a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
- --------------------
1 Amount must be at least US$5,000,000 and an integral multiple of
US $1,000,000.
2 One through six months, subject to the provisions of the definition of
Interest Period.
3 If no Alternate Currency is show, the Competitive Bid Quote is for a
Competitive Bid Pricing Loan
EXHIBIT E TO CREDIT AGREEMENT
COMPETITIVE BID QUOTE REQUEST PAGE 1
<PAGE> 165
EXHIBIT E-1
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3(c))
_________________________
(Date)
To: Each of the Revolving Lenders party to the
Credit Agreement referred to below
Re: Invitation for Competitive Bid Quotes to
AMRESCO, Inc. (the "Borrower")
Pursuant to Section 2.3 of that certain Credit Agreement (as the same
may be modified, amended, supplemented, extended or restated from time to time,
the "Credit Agreement") dated August __, 1998, executed by and among Borrower,
certain entities listed as "Guarantors" on Schedule A attached thereto,
NationsBank, N.A., as Administrative Agent, Credit Suisse First Boston, as
Syndication Agent, and the Lenders, we are pleased on behalf of the Borrower
to invite you to submit Competitive Bid Quotes to the Borrower for the
following proposed Competitive Bid Advance(s):
Borrowing Date:_____________________,_____
<TABLE>
<S> <C> <C>
Principal Amount (in Dollar Equivalent) Interest Period Alternate Currency
</TABLE>
Such Competitive Bid Quotes should offer a Competitive Bid Margin.
Your Competitive Bid Quote must comply with Section 2.3(d) of the Credit
Agreement and the foregoing. Capitalized terms used herein have the meanings
assigned to them in the Credit Agreement
Please respond to this invitation by no later than [1:00 p.m.] [9:00
am.] (Dallas, Texas time) on ______________ ___________, _________.
NATIONSBANK, N.A.,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT E-1 TO CREDIT AGREEMENT
INVITATION FOR COMPETITIVE BID QUOTE SOLO PAGE
<PAGE> 166
EXHIBIT E-2
COMPETITIVE BID QUOTE
(Section 2.3(d))
To: NationsBank, N.A.,
as Administrative Agent
Re: Competitive Bid Quote to AMRESCO, Inc., ("Borrower")
In response to your invitation on behalf of the Borrower dated
_________ we hereby make the following Competitive Bid Quote pursuant to
Section 2.3(d) of the Credit Agreement hereinafter referred to and on the
following terms:
1. Quoting Lender:
----------------------
2. Person to contact at Quoting Lender:
---------------------
3. Borrowing Date: 1/
-----------------
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
<TABLE>
<S> <C> <C> <C> <C>
Principal Interest Competitive Minimum Alternate
Amount2/ Period3/ Bid Margin4/ Amount5/ Currency
- ------- ------- ------------ ------- --------
</TABLE>
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in that certain Credit
Agreement (as the same may be modified, amended, supplemented, extended or
restated from time to time, the "Credit Agreement") dated July __, 1998,
executed by and among Borrower, certain entities listed as "Guarantors" on
Schedule A attached thereto, Administrative Agent, Credit Suisse First Boston,
as Syndication Agent, and the Lenders, irrevocably obligates us to make the
Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in
part. Capitalized terms used herein and not otherwise defined herein shall
have their meanings as defined in the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By:
-----------------------------------
Title:
--------------------------------
- ----------------
1/ As specified in the related Invitation For Competitive Bid Quotes.
2/ Principal amount bid for each Interest Period may not exceed the
principal amount requested. Bids must be made for at least $2,000,000
and an integral multiple of $500,000, and in the case of Competitive
Bid Foreign Currency Loans must be denominated in the Dollar
Equivalent.
3/ One, two, three, four, five or six months, as specified in the related
Invitation for Competitive Bid Quotes.
4/ Competitive Bid Margin over or under the Applicable LABOR Rate
(excluding the LIBOR Margin) or Alternate Currency Rate (excluding the
LABOR Margin) determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/100 of 1%) and specify whether
PLUS or MINUS .
5/ Specify minimum or maximum amount, if any, which the Borrower may
accept (see Section 2.3(d)(ii)).
EXHIBIT E-2 TO CREDIT AGREEMENT
COMPETITIVE BID QUOTE SOLO PAGE
<PAGE> 167
AS OF MAY 31, 1998
SCHEDULE V
LIST OF EXCLUDED SUBSIDIARIES
<TABLE>
<CAPTION>
Total Capital
Subsidiary Net Worth Invested Total Assets
- ---------- ----------- ------------ ------------
<S> <C> <C> <C>
AMRESCO Leasing Corporation $ 344,260 $ 2,391,632
AMRESCO Residential Securities Corporation (60,787) 100,184
AMRESCO Securities Inc. 0 0
AMRESCO Advisors, Inc. 1,137,637 6,340,642
AMRESCO - MBS III, Inc. 10,687,674 8,985,430
AFBT I, LLC 15,399,452 14,317,706
AFBT II, LLC 2,917,430 2,977,433
Scottsdale Inn, LLC 9,925,597 9,776,888
ACLC SPV 0 0
AMRESCO Builders Funding Corp. 0 0
11 South LaSalle, LLC 11,325,650 10,615,012
Noble Building Investors, LLC 1,043,000 1,043,000
Oakmont Land Three, L.P. 0 0
----------- ------------
Total $52,719,913 $56,547,927
</TABLE>
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment
No. 1 to Registration Statement No. 33-62145 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 such
Registration Statement.
DELOITTE & TOUCHE LLP
Dallas, Texas
September 3, 1998
