UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-11599
AMRESCO, INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-1781257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 N. Pearl Street, Suite 2400, LB 342, 75201-7424
Dallas, Texas
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 953-7700
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
45,096,935 shares of common stock, $.05 par value per share, as of
November 12, 1998.
AMRESCO, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1998 and
December 31, 1997 3
Consolidated Statements of Income - Three and Nine
Months Ended September 30, 1998 and 1997 4
Consolidated Statement of Shareholders' Equity - Nine
Months Ended September 30, 1998 5
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 23
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURE 24
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMRESCO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)
September December
30, 31,
1998 1997
(Unaudited)
ASSETS
Cash and cash equivalents $ 52,470 $ 25,866
Loans held for sale, net 2,726,320 1,330,337
Loans and asset portfolios, net 886,638 648,694
Retained interests in securitizations - trading
(at fair value) 480,867 294,062
Asset backed and other securities - available for
sale (at fair value) 178,857 107,677
Intangible assets, net of accumulated amortization
of $29,450 and $20,038, respectively 247,381 113,841
Deferred income taxes 42,379 28,324
Investments in equity affiliates 30,563 23,308
Other assets 138,920 61,739
TOTAL ASSETS $4,784,395 $2,633,848
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 32,678 $ 22,821
Accrued employee compensation and benefits 37,090 33,609
Warehouse loans payable 2,404,052 1,216,796
Notes payable 923,561 583,442
Senior subordinated notes 580,183 250,000
Senior notes 57,500 57,500
Other liabilities 80,237 61,180
Total liabilities 4,115,301 2,225,348
SHAREHOLDERS' EQUITY:
Common stock, $0.05 par value, authorized
150,000,000 shares; 46,121,274 and 36,543,210
shares issued, respectively 2,307 1,827
Capital in excess of par 524,000 257,941
Reductions for employee stock (6,520) (2,713)
Treasury stock, $0.05 par value, 1,024,339 and
24,339 shares, respectively (17,363) (160)
Accumulated other comprehensive income (loss) (11,043) 8,359
Retained earnings 177,713 143,246
Total shareholders' equity 669,094 408,500
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,784,395 $2,633,848
See notes to consolidated financial statements.
AMRESCO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
REVENUES:
<S> <C> <C> <C> <C>
Interest and other investment income $126,137 $ 58,977 $323,555 $140,311
Gain on sale of loans and investments, net 56,714 23,075 116,397 67,701
Mortgage banking and servicing fees 35,664 19,031 84,215 48,384
Unrealized loss on mortgage loans held for sale (40,571) (40,571)
Asset management and resolution fees 6,601 6,741 13,433 18,632
Income (loss) from equity affiliates (833) 3,736 5,521 14,193
Other revenues 604 1,226 2,731 2,286
Total revenues 184,316 112,786 505,281 291,507
EXPENSES:
Interest 70,711 29,807 182,704 71,219
Personnel 63,688 37,324 156,964 102,300
Other general and administrative 36,107 11,764 73,671 35,812
Provision for loan and asset portfolio losses 5,166 4,338 18,731 11,556
Depreciation and amortization 7,309 4,001 16,740 10,776
Total expenses 182,981 87,234 448,810 231,663
Income before income taxes 1,335 25,552 56,471 59,844
Income tax expense 577 10,216 22,004 23,461
NET INCOME $ 758 $ 15,336 $ 34,467 $ 36,383
Earnings per share:
Basic $ 0.02 $ 0.43 $ 0.82 $ 1.04
Diluted 0.02 0.41 0.80 1.00
Weighted average number of common shares
outstanding:
Basic 44,280 35,996 41,921 35,146
Diluted 45,443 37,487 43,297 36,318
</TABLE>
See notes to consolidated financial statements.
AMRESCO, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Nine Months Ended September 30, 1998
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTIONS>
Common Stock Reductions Accumulated
$0.05 Par Value Capital in for Other Total
Number of Excess of Employee Treasury Comprehensive Retained Shareholders'
Shares Amount Par Stock Stock Income Earnings Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1998 36,543,210 $1,827 $257,941 $(2,713) $(160) $ 8,359 $143,246 $408,500
Common stock offering,
net of offering costs 5,175,000 259 147,265 147,524
Issuance of common stock
for purchase of subsidiaries 3,561,697 177 98,142 98,319
Issuance of common stock for
earnout 335,761 17 8,690 8,707
Exercise of stock options
(including tax benefing) 307,399 17 5,957 5,974
Grant of restricted stock 220,085 11 6,515 (6,526)
Cancellation of restricted (21,878) (1) (510) 511
Acquisition of treasury stock (17,203) (17,203)
Amortization of unearned stock
compensation 2,208 2,208
Realized gain on securities
available for sale (4,889) (4,889)
Unrealized loss on securities
available for sale (13,696) (13,696)
Foreign currency transaltion
adjustments (817) (817)
Net income 34,467 34,467
September 30, 1998 46,121,274 $2,307 $524,000 $(6,520) $(17,363) $(11,043) $177,713 $669,094
</TABLE>
<TABLE>
<CAPTION>
See notes to consolidated financial statements.
AMRESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30,
1998 1997
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 34,467 $ 36,383
Adjustments to reconcile net income to net cash used
in operating activities:
Gain on sale of loans and investments (116,397) (67,701)
Unrealized loss on mortgage loans held for sale 40,571
Undistributed earnings of equity affiliate (3,785) (2,530)
Depreciation and amortization 16,740 10,776
Accretion of interest income (12,942) (27,608)
Provision for loan and investment losses 18,731 11,556
Deferred tax benefit (2,224) (13,565)
Other 2,208 1,229
Increase (decrease) in cash for changes in (exclusive
of assets and liabilities acquired in business
combinations):
Accounts receivable 4,501 (5,973)
Loans held for sale, net (1,465,161) (223,426)
Retained interests in securitizations 33,731 106,434
Other assets (46,707) (3,311)
Accounts payable and accrued compensation and
benefits 4,776 9,969
Warehouse loans payable 1,187,256 120,431
Income taxes payable (18,718) 6,824
Other liabilities 35,102 13,994
Net cash used in operating activities (287,851) (26,518)
INVESTING ACTIVITIES:
Sale of temporary investments, net 34,190
Origination of loans and purchase of asset (698,763) (351,107)
portfolios
Collections on loans and asset portfolios 463,942 137,902
Purchase of asset-backed securities - available for
sale (115,702) (59,054)
Proceeds from sale of and collections on asset-
backed securities - available for sale 22,572 28,067
Cash used for purchase of subsidiaries (68,951) (2,176)
Investment in and advances to equity affiliate (28,786) (15,450)
Distribution from equity affiliate 25,316 17,789
Purchase of premises and equipment (8,071) (1,086)
Net cash used in investing activities (408,443) (210,925)
FINANCING ACTIVITIES:
Net proceeds from notes payable and other debt 1,423,806 724,779
Repayment of notes payable and other debt (1,158,031) (677,012)
Proceeds from issuance of senior subordinated notes 320,828 186,631
Proceeds from common stock offering 147,524
Acquisition of treasury stock (17,203)
Stock options exercised and tax benefit from
employee stock compensation 5,974 5,345
Net cash provided by financing activities 722,898 239,743
Net increase in cash and cash equivalents 26,604 2,300
Cash and cash equivalents, beginning of period 25,866 29,046
Cash and cash equivalents, end of period $ 52,470 $ 31,346
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 170,660 $ 69,585
Exchange of loans held for sale for retained
interests in securitizations 120,069 93,474
Common stock issued for the purchase of
subsidiaries and earnouts 107,026 35,085
Income taxes paid 27,228 26,249
Common stock issued for unearned stock
compensation, net 6,015 3,213
See notes to consolidated financial statements
</TABLE>
AMRESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting
Policies
The accompanying unaudited consolidated financial statements of
AMRESCO, INC. and subsidiaries (the "Company") have been prepared by
the Company in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month
periods ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the entire fiscal year or any
other interim period. It is recommended that these statements be
read in conjunction with the Company's consolidated financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997. Certain
reclassifications of prior period amounts have been made to conform
to the current period presentation.
Retained interests in securitizations are classified as trading
and are carried at estimated fair market value. Changes in market
value are included in earnings. Cash flows for retained interests in
securitizations are generally subordinated to other security holders
in a securitization trust. The retained interests in securitizations
are valued at the discounted present value of the cash flows expected
to be realized over the anticipated average life of the assets sold
after estimated future credit losses, estimated prepayments and
normal servicing and other related fees. The discounted present
value of such retained interests is computed using management's
assumptions of market discount rates, prepayment rates, default
rates, credit losses and other costs. The carrying value of the
retained interests in securitizations is determined by the Company on
a disaggregated basis and considers historical prepayment and loss
experience, economic conditions and trends, collateral values and
other relevant factors. The discount rate used to value the retained
interests is influenced primarily by volatility and predictability of
the underlying cash flows which generally become more certain as the
securities season. The weighted average discount rate used to value
the Company's retained interests at September 30, 1998 was 18.0%.
The Company has utilized, for initial valuation purposes in 1998, a
20% discount rate on its home equity loan securitizations, discount
rates ranging from 18% - 20% for its commercial finance franchise
loan securitizations and a 15% discount rate on its commercial
finance small business loan securitizations. The lower discount
rates on the commercial finance securitizations were due to the
reduced risk related to a borrower cross-collateralization feature in
these securitizations.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. If certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to changes in
the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a foreign-
currency-denominated forecasted transaction. This statement is
effective for all fiscal quarters for fiscal years beginning after
June 15, 1999. The Company has not yet determined the impact on the
Consolidated Financial Statements upon adoption of this standard.
In October 1998, the Financial Accounting Standards Board issued
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a
Mortgage Banking Enterprise," which establishes accounting and
reporting standards for certain activities of mortgage banking
enterprises and other enterprises that conduct operations that are
substantially similar to the primary operations of a mortgage banking
enterprise. SFAS No. 134 requires that after the securitization of
mortgage loans held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed securities based
upon its ability and intent to sell or hold those investments. This
statement is effective for the first fiscal quarter beginning after
December 15, 1998 with early adoption permitted. The Company has not
yet determined the impact on the Consolidated Financial Statements
upon adoption of this standard.
2. Notes Payable and Other Debt
Revolving Loan Agreement - Effective August 12, 1998 the Company
entered into a Credit Agreement (the "Credit Agreement") with a
syndicate of lenders led by NationsBank, N.A., as administrative
agent and Credit Suisse First Boston, as syndication agent, replacing
the Third Amended and Restated Loan Agreement (as modified and
amended) dated as of September 30, 1997. The $737.5 million Credit
Agreement provides for a revolving loan commitment with a short and
long term commitment of $167.5 million and $502.5 million,
respectively, and a term loan commitment of $67.5 million. The short
term and long term revolving facilities terminate August 11, 1999 and
August 12, 2001, respectively, and the term loan commitment
terminates August 12, 2003. As of September 30, 1998, $666.9 million
was outstanding under the Credit Agreement. Interest under the
Credit Agreement is based upon LIBOR or the prime interest rate plus
a spread as determined by the Company's leverage ratio. The Credit
Agreement is secured by substantially all of the assets of the
Company not pledged under other credit facilities, including stock of
a majority of the Company's subsidiaries, and includes covenants
similar to the prior agreement.
Warehouse Debt - On February 26, 1998, a wholly-owned subsidiary
of the Company entered into an Interim Warehouse and Security
Agreement (the "Commercial Concepts Agreement") with Prudential
Securities Credit Corporation ("Prudential") for an amount not to
exceed $100.0 million for the origination and purchase of commercial
concepts (small business) loans. At September 30, 1998, $59.9
million was outstanding under the Commercial Concepts Agreement. On
February 27, 1998, a wholly-owned subsidiary of the Company entered
into an Interim Warehouse and Security Agreement (the "Security
Agreement") with Prudential for an amount not to exceed $350.0
million for the origination and purchase of certain residential
mortgage loans. At September 30, 1998, $340.3 million was
outstanding under the Security Agreement. On March 17, 1998, a wholly-
owned subsidiary of the Company entered into an Interim Warehouse and
Security Agreement (the "Franchise Agreement") with Prudential for an
amount not to exceed $150.0 million for the origination and purchase
of certain franchise and construction loans. At September 30, 1998,
$6.8 million was outstanding under the Franchise Agreement.
On August 31, 1998, a wholly-owned subsidiary of the Company
entered into a Loan Agreement ("Loan Agreement") with Salomon
Brothers Realty Corporation for an amount not to exceed $200.0
million to provide funding for a portion of the principal amount of
the mortgage loans secured by certain real estate properties
originated or acquired. As of September 30, 1998, $21.9 million was
outstanding under the Loan Agreement.
On September 1, 1998, a wholly-owned subsidiary of the Company
entered into an amendment of a Whole Loan Financing Facility (the
"Facility"), which replaced an existing amended warehouse agreement,
with Credit Suisse First Boston Mortgage Capital LLC to finance the
acquisition and warehousing of mortgage loans. Indebtedness under
the Facility is secured by the loans originated with funds advanced
under the Facility. As of September 30, 1998, $729.7 million was
outstanding under the Facility. Such facility was repaid in October
1998 and no further advances are available.
On October 1, 1998, a wholly-owned subsidiary of the Company
entered into an amendment of a Master Repurchase Agreement with
Goldman Sachs Mortgage Company for an amount not to exceed $850.0
million prior to October 1, 1998, $900.0 million from October 1, 1998
through November 2, 1998 and $700.0 million after November 2, 1998.
As of September 30, 1998, $813.8 million was outstanding under the
Master Repurchase Agreement. Such facility was repaid in October
1998 and no further advances are available.
On October 16, 1998, a wholly-owned subsidiary of the Company
entered into a First Amended and Restated Promissory Note
("Promissory Note") with Residential Funding Corporation for an
amount not to exceed $200.0 million for the purpose of financing the
origination and acquisition of mortgage loans. The Promissory Note
replaced an Amended and Restated Warehousing Credit and Security
Agreement ("Warehousing Agreement") with Residential Funding
Corporation dated March 6, 1998 for an amount not to exceed $150.0
million. As of September 30, 1998, $75.0 million was outstanding
under the Warehousing Agreement.
Commercial Paper Conduit - On September 29, 1998 a wholly-owned
subsidiary of the Company amended its June 26, 1998, Transfer and
Administration Agreement ("Transfer Agreement") with Kitty Hawk
Funding Corporation to provide a maximum facility of $100.0 million
to provide transfer financing to residential construction builders.
Indebtedness under the Transfer Agreement is secured by the loans
originated with funds advanced under the Transfer Agreement. As of
September 30, 1998, $80.1 million was outstanding under the Transfer
Agreement.
Subordinated Debt - On February 24, 1998 and March 10, 1998, the
Company issued $290.0 million and $40.2 million, respectively,
aggregate principal amount of senior subordinated notes. The notes
bear interest at 9.875% per annum and mature on March 15, 2005. The
net proceeds from the offerings aggregated approximately $320.7
million. The notes are unsecured obligations of the Company and are
subordinated to prior payment of all existing and future senior debt
and to indebtedness and other liabilities of the Company's
subsidiaries.
3. Shareholders' Equity
On February 23, 1998, the Company completed a registered public
offering of 5.2 million shares of common stock, including the
underwriters' over-allotment option. The net proceeds from such
offering, after underwriter's discount and offering expenses,
aggregated approximately $147.2 million. The price to the public was
$30.00 per share and the proceeds to the Company were $28.56 per
share, after underwriting discounts.
On February 24, 1998, March, 4, 1998, May 18, 1998 and July 28,
1998 the Company issued options to purchase approximately 331,000,
15,000, 152,000 and 2,629,000 shares, respectively, of common stock.
On February 24, 1998, July 17, 1998 and July 22, 1998 the Company
issued approximately 166,000, 34,000 and 21,000 restricted shares,
respectively, of the Company's common stock to certain key employees.
On July 16, 1998, the Company purchased the assets of
Independence Funding Co. L.L.P. ("IFC") and TeleCapital L.P.
("TeleCapital") for approximately 1.3 million shares of the Company's
common stock and cash of $44.0 million. IFC's primary line of
business is providing long term financing to small businesses and
TeleCapital's primary line of business is providing financing to the
pay phone industry. On August 11, 1998, the Company acquired the
operations of Mortgage Investors Corporation ("MIC"), a privately
held specialized producer of veteran's administration streamlined re-
financed loans, by merging a wholly-owned subsidiary of the Company
with MIC. The merger agreement provided for an acquisition price of
approximately 1.8 million shares of the Company's common stock and
$2.6 million in cash. Additionally, the Company will pay an annual
earnout over a three-year period, the total of which will not exceed
$105.0 million, comprised of approximately 82% in the Company's
common stock and 18% cash. The purchase price for each of the above
acquisitions was based upon preliminary estimates and is subject to
adjustment.
During July and August 1998, the Company repurchased 1.0 million
shares of the Company's outstanding common stock at an average price
of $17.20 per common share.
4. Comprehensive Income (Loss)
Effective January 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This Statement requires that all
items recognized under accounting standards as components of
comprehensive earnings be reported in an annual financial statement
that is displayed with the same prominence as other annual financial
statements. This Statement also requires that an entity classify
items of other comprehensive earnings by their nature in an annual
financial statement. For example, other comprehensive earnings
includes foreign currency translation adjustments and unrealized
gains and losses on marketable securities classified as available-for-
sale. Annual financial statements for prior periods will be
reclassified, as required. The Company's total comprehensive
earnings were as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET INCOME $ 758 $15,336 $ 34,467 $36,383
Other comprehensive income (loss),
net of tax:
Foreign currency translation adjustments (289) (156) (817) (238)
Unrealized gains (losses) on securitites
Unrealized holding gains
(losses) during period (12,877) 293 (13,696) 470
Less: Reclassification adjustment
for gains included in net income (4,889)
Other comprehensive income (loss),
net of tax (13,166) 137 (19,402) 232
COMPREHENSIVE INCOME (LOSS) $(12,408) $15,473 $ 15,065 $36,615
</TABLE>
5. Subsequent Events
In October 1998, approximately $1.0 billion of commercial
mortgage loans (which included $90.0 million of loans held by a 50%
owned joint venture) were sold and the proceeds were used to repay
the related warehouse line and for general corporate purposes. In
connection with this loan sale, the Company retained an interest in
the loans sold which entitles the Company to receive the proceeds of
a subsequent securitization or sale of the loans in excess of the
buyers purchase price, investment banking fees and transaction costs.
Approximately $550.0 million of the loans sold were included in a
securitization transaction in early November 1998 and it is currently
anticipated that the remaining loans sold will be included in a
securitization prior to December 31, 1998. The Company anticipates
recording a pre-tax loss of approximately $62.0 million in the fourth
quarter of 1998 related to these transactions. As of November 12,
1998, the retained interest, after completion of the initial $550.0
million securitization, is carried on the Company's balance sheet at
approximately $22.0 million, which represents the Company's remaining
exposure related to this loan sale. Based upon market conditions,
the Company is currently not operating as a principal in the
commercial mortgage loan conduit business.
The Company also sold $1.4 billion of home equity loans in
October 1998 and the proceeds were used to repay warehouse lines and
for general corporate purposes. In connection with this loan sale,
the Company retained an interest in the loans sold which entitles the
Company to receive a portion of the proceeds of a subsequent
securitization or sale of the loans sold in excess of the buyers
purchase price, investment banking fees and transaction costs. It is
currently anticipated that the home equity loans sold will be
included in one or more securitizations in the fourth quarter of 1998
or first quarter of 1999. The Company anticipates recording a pre-
tax loss of approximately $45.0 million in the fourth quarter of 1998
related to these transactions. As of November 12, 1998, the retained
interest is carried on the Company's balance sheet at approximately
$40.0 million, which represents the Company's remaining exposure
related to this loan sale. The Company has discontinued the purchase
of non-conforming residential mortgages in bulk and through
correspondent relationships.
Additionally, in October 1998 the Company sold approximately
$45.0 million of delinquent home equity loans and real estate owned
and recorded a loss of $16.7 million. In October 1998, the Company
also recorded a loss of $5.0 million related to the termination of a
commitment to purchase approximately $260.0 million of home equity
loans.
In October of 1998, the Board of Directors adopted a resolution
allowing employees to exchange approximately 5.7 million options to
purchase the Company's common shares at exercise prices ranging from
$7.50 to $34.56 per common share for approximately 4.0 million
options having an exercise price of $7.44 per common share. The
Company utilized the Black-Scholes option pricing model to determine
the exchange ratio between the old and new options.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
The Company is a diversified financial services company with
five principal lines of business: asset management, commercial
mortgage banking, home equity lending (previously residential
mortgage banking), commercial finance and residential mortgage
banking. The asset management business involves acquiring asset
portfolios at a discount to face value and managing and resolving
such asset portfolios to maximize cash recoveries. In addition, in
its asset management business, the Company provides special servicing
for nonperforming and underperforming loans in commercial mortgage-
backed bond trusts and similar securitized commercial asset-backed
loan portfolios. The commercial mortgage banking business involves
the origination, warehousing, placement and servicing of commercial
real estate mortgages and commercial real estate brokerage. The home
equity lending business involves originating and servicing
nonconforming mortgage loans. In its commercial finance business,
the Company focuses on (i) loans to franchisees of nationally
recognized restaurant, hospitality and service organizations, (ii)
loans to small business owners, (iii) real estate structured finance,
(iv) communications finance and (v) single family residential
construction lending. The residential mortgage banking line of
business (which consists of the newly acquired operations of Mortgage
Investors Corporation ("MIC")) originates and sells Veterans
Administration streamlined re-financed loans.
Revenues from the Company's asset management activities
primarily consist of earnings on asset portfolios, fees charged for
the management of asset portfolios and for the successful resolution
of the assets within such asset portfolios and gains on sale of
investments. The Company's revenues from its commercial mortgage
banking activities are primarily earned from fees generated by the
(i) origination and underwriting of commercial real estate mortgage
loans, (ii) placement of such loans with permanent investors and
(iii) servicing of loans, interest earned on commercial loans held
for sale and deposits. Revenues from the Company's home equity
lending activities primarily consist of interest earned on originated
and purchased residential loans, accrued earnings on retained
interests in securitizations, gains on the securitization and sale of
residential loans and other related securities and fees generated by
the origination, underwriting and servicing of residential loans.
Revenues from the Company's commercial finance business are primarily
earned from (i) interest and fees on real estate structured finance
activities, loans to franchisees of nationally recognized restaurant,
hospitality, service organizations and other small business owners
and loans to single family residential contractors, (ii) accrued
earnings on retained interests in securitizations and (iii) gains on
the securitization and sale of loans. Revenues from the Company's
residential mortgage banking activities consist primarily of cash
gains from sales of Veterans Administration streamlined re-financed
loans. Corporate and other revenues primarily consist of interest
earned on investments, other miscellaneous income and intercompany
eliminations. Corporate and other expenses primarily include
corporate personnel and overhead and certain incentive compensation,
unallocated interest expense and amortization of intangibles.
Retained interests in securitizations are classified as trading
and are carried at estimated fair market value. Changes in market
value are included in earnings. Cash flows for retained interests in
securitizations are generally subordinated to other security holders
in a securitization trust. The retained interests in securitizations
are valued at the discounted present value of the cash flows expected
to be realized over the anticipated average life of the assets sold
after estimated future credit losses, estimated prepayments and
normal servicing and other related fees. The discounted present
value of such retained interests is computed using management's
assumptions of market discount rates, prepayment rates, default
rates, credit losses and other costs. The carrying value of the
retained interests in securitizations is determined by the Company on
a disaggregated basis and considers historical prepayment and loss
experience, economic conditions and trends, collateral values and
other relevant factors. The actual weighted average annual
prepayment rate on the Company's home equity securitizations was
24.2% for the period from inception of each security through August
31, 1998, which is higher than originally projected, and is modeled
to be 27.8% for the next twelve months. Prepayment rates on the
Company's franchise and small business loan securitizations are in
line with expectations. Current valuations take into account the
change in prepayment assumptions as well as other assumptions
influenced by market conditions. The discount rate used to value the
retained interests is influenced primarily by volatility and
predictability of the underlying cash flows which generally become
more certain as the securities season. The weighted average discount
rate used to value the Company's retained interests at September 30,
1998 was 18.0%. The Company has utilized, for initial valuation
purposes in 1998, a 20% discount rate on its home equity
securitizations, discount rates ranging from 18% - 20% for its
commercial finance franchise loan securitizations and a 15% discount
rate on its commercial finance small business loan securitizations.
The lower discount rate on the commercial finance securitizations
were due to the reduced risk related to a borrower cross-
collateralization feature in these securitizations.
Results of Operations
During the latter part of the third quarter of 1998, the Company
incurred losses due to unprecedented market conditions related to
mortgage backed securities ("MBS") and related instruments. The
Company recorded $51.0 million of losses during the quarter ended
September 30, 1998 related to mark-to-market valuations of commercial
and home equity mortgage loans held for sale and related hedge
positions, including commercial mortgage loans held by an equity
affiliate, an actual loss on commercial mortgage loan sales and a
reserve for outstanding commercial mortgage loan commitments.
The following discussion and analysis presents the significant
changes in results of operations of the Company for the three and
nine months ended September 30, 1998 and 1997 by primary business
lines. The results of operations of acquired businesses are included
in the consolidated financial statements from the date of
acquisition. This discussion should be read in conjunction with the
consolidated financial statements and notes thereto and the
discussion under the caption "Recent Developments" below.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(in thousands, except per share data) September 30, September 30,
1998 1997 1998 1997
Revenues:
<S> <C> <C> <C> <C>
Asset management $ 36,589 $ 24,199 $101,224 $ 72,367
Commercial mortgage banking 23,300 25,461 111,732 69,772
Home equity lending 70,735 50,835 190,391 122,050
Commercial finance 34,440 12,021 82,193 27,856
Residential mortgage banking 18,891 - 18,891 -
Corporate, other and
intercompany eliminations 361 270 850 (538)
Total revenues 184,316 112,786 505,281 291,507
Operating expenses:
Asset management 24,281 14,636 63,164 44,161
Commercial mortgage banking 56,465 16,727 129,029 45,865
Home equity lending 56,653 33,569 155,019 85,378
Commercial finance 20,661 8,763 47,634 17,785
Residential mortgage banking 10,276 - 10,276 -
Corporate, other and
intercompany eliminations 14,645 13,539 43,688 38,474
Total operating expenses 182,981 87,234 448,810 231,663
Operating profit (loss):
Asset management 12,308 9,563 38,060 28,206
Commercial mortgage banking (33,165) 8,734 (17,297) 23,907
Home equity lending 14,082 17,266 35,372 36,672
Commercial finance 13,779 3,258 34,559 10,071
Residential mortgage banking 8,615 - 8,615 -
Corporate, other and
intercompany eliminations (14,284) (13,269) (42,838) (39,012)
Total operating profit 1,335 25,552 56,471 59,844
Income tax expense 577 10,216 22,004 23,461
Net income $ 758 $ 15,336 $ 34,467 $ 36,383
Earnings per share (1):
Basic $ 0.02 $ 0.43 $ 0.82 $ 1.04
Diluted 0.02 0.41 0.80 1.00
Weighted average shares outstanding:
Basic 44,280 35,996 41,921 35,146
Diluted 45,443 37,487 43,297 36,318
</TABLE>
(1) Prior period restated for the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 128 "Earnings Per Share."
Three Months Ended September 30, 1998 Compared to Three Months Ended
September 30, 1997
The Company reported a 63% increase in revenues from $112.8
million to $184.3 million due primarily to a $67.2 million increase
in interest and investment income and a $33.6 million increase in
gains on sale of loans and investments offset, in part by a $40.6
million unrealized loss on mortgage loans held for sale. Operating
profit decreased from $25.6 million for the third quarter of 1997 to
$1.3 million for the third quarter of 1998, or 95%, and net income
decreased from $15.3 million to $0.8 million, or 95%, compared to the
prior year period. The decreases in operating profit and net income
were due primarily to losses totaling $51.0 million related to mark-
to-market valuations of commercial and home equity mortgage loans
held for sale and related hedge positions, including commercial
mortgage loans held by an equity affiliate, an actual loss on
commercial mortgage loan sales and a reserve for outstanding
commercial mortgage loan commitments. Such losses were the result of
unprecedented market conditions resulting in a widening of spreads on
MBS and related instruments. Diluted weighted average common shares
outstanding increased 21% due primarily to the early 1998 public
offering of the Company's common stock and stock issued in
acquisitions offset partially by share repurchases. Diluted earnings
per share decreased 95% from $0.41 to $0.02.
Asset Management. Revenues for the three months ended September
30, 1998 primarily consisted of $27.3 million in interest income,
$6.6 million in asset management and resolution fees and $2.2 million
in gain on sale of investments. The $12.4 million increase in
revenues from $24.2 million for the third quarter of 1997 to $36.6
million for the third quarter of 1998 was primarily comprised of an
$11.0 million increase in interest income and a $1.5 million increase
on gain on sale of investments. Interest income increased due
primarily to a significant increase in aggregate investments for the
Company's own account since early 1997. The increase in gain on sale
of investments was due primarily to sales of commercial mortgage
backed securities and real estate.
Operating expenses for the quarter ended September 30, 1998
primarily consisted of $10.9 million in interest expense, $8.9
million in other general and administrative expenses and $4.2 million
in personnel cost. The $9.7 million increase in expenses from $14.6
million for the prior year period to $24.3 million for the quarter
ended September 30, 1998 was due primarily to a $5.0 million increase
in other general and administrative expenses primarily related to
increased real estate balances and a $4.6 million increase in
interest expense related to the financing of increased levels of
investments from the third quarter of 1997.
Commercial Mortgage Banking. Revenues for the quarter ended
September 30, 1998 primarily consisted of $32.6 million in
origination, underwriting and servicing revenues and $27.2 million in
interest income offset, in part, by a $34.1 million unrealized loss
on mortgage loans held for sale due to a mark-to-market valuation.
The $2.2 million decrease in revenues from $25.5 million for the
prior year period to $23.3 million for the quarter ended September
30, 1998 primarily relates to a $34.1 million mark-to-market
valuation on commercial mortgage loans driven by a widening of
spreads and a $4.9 million decrease in income from equity affiliate
(income from equity affiliate was from the AMRESCO Capital L.P. 50%
share in a joint venture). Such decreases were offset, in part, by
an increase of $22.1 million in interest income due primarily to
increased balances of commercial loans held for sale and an increase
of $16.0 million in mortgage banking and servicing revenues due
primarily to transaction volume of $3.7 billion during the third
quarter of 1998 compared to $1.8 billion for the third quarter of
1997.
Operating expenses for the quarter ended September 30, 1998
primarily consisted of $25.1 million in personnel expense, $16.0
million in other general and administrative expense and $14.5 million
in interest expense. The $39.8 million increase in expenses from
$16.7 million for the prior year period to $56.5 million for the
quarter ended September 30, 1998 was due primarily to an increase of
$14.0 million in interest expense related to financing an increased
balance of commercial loans held for sale, a $12.6 million increase
in personnel expenses primarily related to commissions on increased
originations and increased number of personnel due to expanded
operations and an increase of $12.7 million in other general and
administrative expense due to an accrual for settlement of
outstanding loan commitments and expanded operations.
Home Equity Lending. Revenues for the three months ended
September 30, 1998 primarily consisted of $45.5 million in interest
income and $29.4 million of gains on securitization and sale of home
equity loans offset, in part, by a $6.5 million unrealized loss on
mortgage loans held for sale. The $19.9 million increase in revenues
from $50.8 million for the prior year period to $70.7 million for the
quarter ended September 30, 1998 primarily related to a $17.0 million
increase in interest income related to increased balances of loans
held for sale and retained interests in securitizations and a $9.0
million increase in gain on securitization offset, in part by a $6.5
million mark-to-market adjustment on mortgage loans related to the
widening of spreads on MBS.
Operating expenses for the quarter ended September 30, 1998
primarily consisted of $30.4 million in interest expense, $15.4
million in personnel expense, $6.4 million in other general and
administrative expense and $3.4 million in provision for loan losses.
Operating expenses increased by $23.1 million from $33.6 million for
the prior year period to $56.7 million for the quarter ended
September 30, 1998. This increase primarily consisted of $13.4
million in interest expense and $5.9 million in personnel expense.
Interest expense primarily related to borrowings under warehouse
loans payable which funded the origination, acquisition and
warehousing of mortgage loans held for sale and personnel costs
increased significantly from the prior year period due primarily to
the increased operations of the wholesale/retail business.
Commercial Finance. Revenues for the three months ended
September 30, 1998 primarily consisted of $25.2 million of interest
income and $8.3 million of gain on securitization and sale of loans.
The $22.4 million increase in revenues from $12.0 million for the
prior year period to $34.4 million for the three months ended
September 30, 1998 relates primarily to a $16.2 million increase in
interest income and a $6.3 million increase in gain on sale of loans
and investments. The increase in interest and other investment
income was due primarily to loan payoffs and interest earned on loans
and securities retained in securitizations, both of which have
increased significantly since the third quarter of 1997. The
increase in gain on sale of loans and investments was due primarily
to the securitization of approximately $114.0 million of franchise
loans.
Operating expenses for the quarter ended September 30, 1998
primarily consisted of $11.7 million in interest expense and $5.0
million in personnel cost. The $11.9 million increase in expenses
from $8.8 million for the prior year period to $20.7 million for the
quarter ended September 30, 1998 was due primarily to an increase of
$8.3 million in interest expense related to the financing for
increased levels of loans held for sale and investments from 1997 and
$2.6 million in personnel expense related to expanded operations.
Residential Mortgage Banking. The residential mortgage banking
line of business is comprised of the newly acquired operations of
MIC. Revenues for the period from inception (August 11, 1998)
through September 30, 1998 primarily consisted of $18.2 million of
gain on sale of Veteran's Administration streamlined re-financed
loans. Operating expenses of $10.3 million primarily consisted of
$7.5 million in personnel expense (primarily commissions) and $2.1
million in other general and administrative expense.
Corporate, Other and Intercompany Eliminations. Operating
losses for the three months ended September 30, 1998 increased $1.0
million due primarily to amortization of intangibles related to
acquisitions.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 30, 1997
The Company reported a 73% increase in revenues from $291.5
million for the year-to-date period ended September 30, 1997 to
$505.3 million for the year-to-date period ended September 30, 1998
due primarily to a $183.2 million increase in interest and other
investment income, a $48.7 million increase in gain on sale of loans
and investments and a $35.8 million increase in mortgage banking and
servicing fees offset, in part, by a $40.6 million unrealized loss on
mortgage loans held for sale. Operating profit decreased from $59.8
million to $56.5 million, or 6%, and net income decreased from $36.4
million to $34.5 million, or 5%, compared to the prior year period.
Such decreases were due primarily to losses totaling $51.0 million
related to mark-to-market valuations of commercial and home equity
mortgage loans held for sale and related hedge positions, including
commercial mortgage loans held by an equity affiliate, an actual loss
on commercial mortgage loan sales and a reserve for outstanding
commercial mortgage loan commitments. Diluted weighted average
common shares outstanding increased 19% due primarily to the early
1998 public offering of the Company's common stock. Diluted earnings
per share decreased 20% from $1.00 to $0.80.
Asset Management. Revenues for the nine months ended September
30, 1998 primarily consisted of $73.6 million in interest income,
$13.4 million in asset management and resolution fees and $13.0
million in gain on sale of investments. The $28.8 million increase
in revenues from $72.4 million for the first nine months of 1997 to
$101.2 million for the nine months ended September 30, 1998 was
primarily comprised of a $27.1 million increase in interest and
investment income and a $7.1 million increase in gain on sale of
investments offset, in part, by a $5.2 million decrease in management
and resolution fees. Interest income increased due primarily to a
significant increase in aggregate investments for the Company's own
account from 1997. Gain on sale of loans and investments increased
due primarily to higher current year sales of commercial mortgage
backed securities and real estate. Asset management and resolution
fees decreased as a result of a shift in business away from primarily
managing and investing in partnerships and joint ventures to
investing in wholly-owned portfolios.
Operating expenses for the nine months ended September 30, 1998
primarily consisted of $28.3 million in interest expense, $21.0
million in other general and administrative expenses and $11.8
million in personnel cost. The $19.0 million increase in expenses
from $44.2 million for the prior year period to $63.2 million for the
year-to-date period ended September 30, 1998 was due primarily to a
$12.4 million increase in interest expense related to the financing
of increased levels of investments from early 1997 and a $9.2 million
increase in other general and administrative expenses primarily
related to increased real estate.
Commercial Mortgage Banking. Revenues for the nine months ended
September 30, 1998 primarily consisted of $78.5 million in
origination, underwriting and servicing revenues and $63.8 million in
interest income offset, in part, by a $34.1 million unrealized loss
on mortgage loans held for sale due to the widening of spreads on MBS
and related instruments. The $41.9 million increase in revenues from
$69.8 million for the prior year period to $111.7 million for the
nine months ended September 30, 1998 primarily relates to an increase
of $50.3 million in interest income due primarily to increased
balances of commercial loans held for sale since 1997 and $36.4
million of increased mortgage banking and servicing revenues due
primarily to transaction volume of $9.1 billion during the first nine
months of 1998 compared to $4.5 billion for the first nine months of
1997 offset, in part, by a $34.1 million unrealized loss on
commercial mortgage loans held for sale.
Operating expenses for the year-to-date period ended September
30, 1998 primarily consisted of $62.8 million in personnel expense,
$35.9 million in interest expense and $28.3 million in other general
and administrative expense. The $83.1 million increase in expenses
from $45.9 million for the prior year period to $129.0 million for
the nine months ended September 30, 1998 was due primarily to an
increase of $33.2 million in interest expense related to financing an
increased balance of commercial loans held for sale, a $30.4 million
increase in personnel expenses primarily related to commissions on
increased originations and number of personnel and an increase of
$19.4 million in other general and administrative expense due to an
accrual for the settlement of outstanding loan commitments and
expanded operations.
Home Equity Lending. Revenues for the nine months ended
September 30, 1998 primarily consisted of $129.8 million in interest
income and $61.7 million of gains on securitization and sale of home
equity mortgage loans offset, in part, by a $6.5 million unrealized
loss on home equity mortgage loans held for sale due the widening of
interest rate spreads. The $68.3 million increase in revenues from
$122.1 million for the prior year period to $190.4 million for the
nine months ended September 30, 1998 primarily related to a $66.3
million increase in interest income related to originated and
acquired loans held for sale, which have increased significantly
since the same period in 1997, and retained interests in
securitizations (including related hedging and mark-to-market
activities).
Operating expenses for the year-to-date period ended September
30, 1998 primarily consisted of $83.3 million in interest expense,
$40.4 million in personnel expense, $17.1 million in other general
and administrative expense and a $12.0 million provision for loan
losses. Operating expenses increased by $69.6 million from $85.4
million for the prior year period to $155.0 million for the quarter
ended September 30, 1998. This increase primarily consisted of $43.7
million in interest expense, $12.4 million in personnel expense, $7.7
million in provision for loan losses, and $4.7 million in other
general and administrative expenses. Interest expense was primarily
related to borrowings under warehouse loans payable which funded the
origination, acquisition and warehousing of mortgage loans held for
sale. Personnel and other general and administrative costs increased
significantly from the prior year period due primarily to the
expanded operations of the wholesale/retail business and the
provision for loan losses increased due to increased levels of under-
performing loans.
Commercial Finance. Revenues for the nine months ended
September 30, 1998 primarily consisted of $55.3 million of interest
income and $25.3 million of gain on securitization and sale of loans.
The $54.3 million increase in revenues from $27.9 million for the
prior year period to $82.2 million for the nine months ended
September 30, 1998 relates primarily to the acquisition of the
operations of the business lending group (formerly known as
Commercial Lending Corporation) in March 1997 and increased lending
activity. Interest income increased $37.6 million due primarily to
interest earned on loans and securities retained in securitizations,
both of which have increased significantly since early 1997. Gain on
sale of loans and investments increased $16.9 million due primarily
to a gain on the securitization and sale of approximately $233.7
million of small business and franchise loans.
Operating expenses for the nine months ended September 30, 1998
primarily consisted of $26.0 million in interest expense, $11.3
million in personnel cost, $5.2 million in other general and
administrative expenses and a $4.8 million provision for loan losses.
The $29.8 million increase in expenses from $17.8 million for the
prior year to $47.6 million for the nine months ended September 30,
1998 was due primarily to an increase of $19.0 million in interest
expense related to the financing for increased levels of loans held
for sale and investments from 1997, $6.5 million in personnel expense
related to expanded operations due primarily to the acquisition of
business lending group and $2.9 million in other general and
administrative expenses primarily related to expanded operations.
Residential Mortgage Banking. The residential mortgage banking
line of business is comprised of the newly acquired operations of
MIC. Revenues for the period from inception (August 11, 1998)
through September 30, 1998 primarily consisted of $18.2 million of
gain on sale of Veteran's Administration streamlined re-financed
loans. Operating expenses of $10.3 million primarily consisted of
$7.5 million in personnel expense (primarily commissions) and $2.1
million in other general and administrative expense.
Corporate, Other and Intercompany Eliminations. Operating
losses for the nine months ended September 30, 1998 increased $3.8
million from the prior year period due primarily to increased
amortization of intangibles related to acquisitions.
Recent Developments
During the latter part of the third quarter of 1998, and
continuing into the fourth quarter of 1998, the capital markets
experienced rapid and extreme changes evidenced by a decline of
investor demand for corporate fixed income investments, including
MBS, and a widening of spreads between interest rates on treasury
securities and interest rates on MBS. The widening of spreads
between treasury securities and MBS resulted in securitized lenders,
such as the Company, having to meet significant margin calls from the
lenders who had financed the accumulation of mortgage loans intended
for securitization. Also, in many cases, securitized lenders were
required to meet further margin calls caused by the decline in the
value of related hedge positions. At the same time the Company was
faced with an uncertain securitization market for the approximately
$2.4 billion of commercial mortgage and home equity loans held on its
balance sheet. As discussed in more detail below, in October 1998
the Company undertook and completed several significant transactions
which addressed the rapidly changing liquidity concerns raised by
margin calls and the uncertain market for MBS. The Company is also
in the process of restructuring certain business operations to reduce
its reliance on capital markets transactions and to emphasize
businesses that have demonstrated strong cash earnings and growth
potential and risk adjusted returns on capital. Due to the rapid
changes in the capital markets, the Company anticipates a
consolidated after-tax loss in the fourth quarter of 1998 of
approximately $85.0 - $95.0 million based upon current market
conditions and operations.
Commercial Mortgage Banking
In October of 1998, the Company made the decision to re-focus
its commercial mortgage banking business to emphasize the following
operations which have historically provided strong and predictable
earnings growth: (i) core real estate investment banking and
mortgage banking through Holliday Fenoglio Fowler, (ii) commercial
mortgage loan originations and sales under agency multifamily lending
programs with quasi-governmental agencies, such as Fannie Mae and
Freddie Mac, and "private label" conduit programs with institutional
participants and (iii) commercial mortgage loan servicing through
AMRESCO Services. In connection with this decision, and in response
to the Company's rapidly changing liquidity needs, the Company
decided to sell its portfolio of commercial mortgage loans
aggregating approximately $1.0 billion and to negotiate with
borrowers to release the Company from commitments to fund
approximately $400.0 million of commercial mortgage loans in the
conduit program. Based upon current market conditions, the Company
is currently not operating in the commercial mortgage loan conduit
business.
Proceeds from the October 1998 sale of the $1.0 billion of
commercial mortgage loans (which included $90.0 million of loans held
by a 50% owned joint venture), for which the related hedge positions
were also closed, were used to repay the related warehouse line and
for general corporate purposes. In connection with this loan sale,
the Company retained an interest in the loans sold which entitles the
Company to receive a portion of the proceeds of a subsequent
securitization or sale of the loans sold in excess of the purchase
price, investment banking fees and transaction costs. Approximately
$550.0 million of the loans were included in a securitization
transaction in early November 1998 and it is currently anticipated
that the remaining loans will be included in a securitization prior
to December 31, 1998. The Company anticipates recording a pre-tax
loss of approximately $62.0 million in the fourth quarter of 1998
related to these transactions, however, such loss will not result in
any net cash outlay by the Company. As of November 12, 1998, the
retained interest, after completion of the initial $550.0 million
securitization, is carried on the Company's balance sheet at
approximately $22.0 million, which represents the Company's remaining
exposure related to this loan sale.
At November 12, 1998, the Company has completed negotiations
with substantially all of the borrowers to terminate the loan
commitments in the commercial mortgage conduit program.
Home Equity Lending
In October of 1998, the Company made the decision to re-focus
its home equity lending business on its retail and wholesale
operations, the area of the home equity lending segment considered to
hold the greatest potential for profitable growth. In connection
with this decision, and in response to the Company's rapidly changing
liquidity needs, the Company decided to sell its portfolio of
performing home equity loans aggregating approximately $1.4 billion.
The Company also decided to negotiate the termination of a commitment
to purchase $260.0 million of home equity loans. The Company has
suspended the "bulk" purchase of home equity loans and the
origination of home equity loans through the correspondent channel
which collectively accounted for approximately $2.7 billion and $2.3
billion of loan volumes in 1997 and for the nine months ended
September 30, 1998, respectively.
Proceeds from the October 1998 sale of the $1.4 billion of
performing home equity loans, for which the related hedge positions
were also closed, were used to repay warehouse lines and for general
corporate purposes. In connection with this loan sale, the Company
retained an interest in the loans which entitles the Company to
receive a portion of the proceeds of a subsequent securitization or
sale of the loans in excess of the purchase price, investment banking
fees and transaction costs. It is currently anticipated that the
home equity loans sold will be included in one or more securitization
in the fourth quarter of 1998 or first quarter of 1999. The Company
anticipates recording a pre-tax loss of approximately $45.0 million
in the fourth quarter of 1998 related to these transactions, however,
such loss will not result in any net cash outlay by the Company. As
of November 12, 1998, the retained interest is carried on the
Company's balance sheet at approximately $40.0 million, which
represents the remaining exposure related to this loan sale.
Additionally, in October 1998 the Company sold approximately
$45.0 million of delinquent home equity loans and real estate owned
and recorded a loss of $16.7 million. In October 1998, the Company
also recorded a loss of $5.0 million related to the termination of a
commitment to purchase approximately $260.0 million of home equity
loans.
Liquidity and Capital Resources
Cash and cash equivalents totaled $52.5 million at September 30,
1998. Cash flows used in operating activities plus principal
collections on loans, asset portfolios and asset-backed securities
totaled an inflow of $198.7 million for the first nine months of 1998
compared to $139.5 million for the same period in 1997. The variance
from the prior period was due primarily to increased principal
collections on loans and asset portfolios offset, in part, by
providing financing for the increased balance of loans held for sale
not covered by warehouse lines and retained interests. The following
table is a summary of selected cash flow activity and debt ratios
during the first nine months of 1998 and 1997 (dollars in thousands):
For the Nine Months
Ended September 30,
1998 1997
Net cash used in operating activities $(287,851) $ (26,518)
Net cash used in investing activities (408,443) (210,925)
Net cash provided by financing activities 722,898 239,743
Other financial measures:
Cash flow from operations and collections on
loans, asset portfolios and asset-backed securities 198,663 139,451
Cash provided by new capital and borrowings, net
(excluding warehouse loans payable) 734,127 234,398
Cash used for purchase of asset portfolios,
asset-backed securities and originations of loans (814,465) (410,161)
EBITDA (1) 255,915 141,839
Interest coverage ratio (2) 1.5x 2.0x
The following table is a summary of selected debt ratios as of
September 30, 1998 and December 31, 1997:
1998 1997
Ratio of total debt to equity 5.9:1 5.2:1
Ratio of core debt to equity (3) 2.3:1 2.2:1
_______________
(1) EBITDA is calculated as operating income before interest, income
taxes, depreciation and amortization. The Company has included
information concerning EBITDA because EBITDA is one measure of an
issuer's historical ability to service its indebtedness. EBITDA
should not be considered as an alternative to, or more meaningful
than, net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity.
(2) Interest coverage ratio means the rolling twelve month ratio of
earnings before interest, taxes, depreciation and amortization to
cash interest expense.
(3) Excludes indebtedness under warehouse lines of credit.
The following table shows the components of the Company's
capital structure, including certain short-term debt, as of September
30, 1998 and December 31, 1997 (dollars in millions):
1998 1997
% of % of
Dollars Total Dollars Total
Shareholders' equity $ 669.1 14% $ 408.5 16%
Senior notes 57.5 1 57.5 2
Senior subordinated notes 580.2 13 250.0 10
Mortgage warehouse loans 2,404.1 52 1,216.8 49
Notes payable 923.6 20 583.4 23
Total $4,634.5 100% $2,516.2 100%
Total assets increased $2.2 billion to $4.8 billion at September
30, 1998 from $2.6 billion at December 31, 1997. This increase was
due primarily to an increase in loans held for sale, loans and
investments in real estate portfolios, retained interests in
securitizations and intangibles.
Senior Credit Facility
Effective August 12, 1998 the Company entered into a Credit
Agreement (the "Credit Agreement") with a syndicate of lenders led by
NationsBank, N.A., as administrative agent and Credit Suisse First
Boston, as syndication agent, replacing the Third Amended and
Restated Loan Agreement (as modified and amended) dated as of
September 30, 1997. The Credit Agreement provides for a revolving
loan commitment with a short and long term commitments of $167.5
million and $502.5 million, respectively, and a term commitment of
$67.5 million. The short and long term revolving facilities
terminate August 11, 1999 and August 12, 2001, respectively, and the
term loan commitment terminates August 12, 2003. As of September 30,
1998, $666.9 million was outstanding under the Credit Agreement. The
Company expects to repay the $ 167.5 million revolving loan
commitment that matures August 11, 1999 using internally generated
funds.
Commercial Mortgage Banking Facilities
During the nine months ended September 30, 1998, the Company
financed its commercial mortgage lending operations with warehouse
lines of credit with aggregate credit limits of $1.6 billion. As a
result of the restructuring of the commercial mortgage banking
operations discussed above, the Company's financing requirements and
financing sources have been significantly reduced.
The First Amended and Restated Promissory Note ("Promissory
Note") dated October 16, 1998, between a wholly owned subsidiary of
the Company and Residential Funding Corporation provides financing in
an amount not to exceed $200.0 million for the purpose of financing
the origination and acquisition of commercial mortgage loans,
principally loans originated in the Fannie Mae program. The
Promissory Note replaced a prior financing arrangement with
Residential Funding Corporation. At September 30, 1998, $75.0
million was outstanding under such prior financing arrangement.
Home Equity Lending Facilities
During the nine months ended September 30, 1998, the Company
financed its home equity lending operations with warehouse lines of
credit with aggregate credit limits of $2.9 billion. As a result of
the restructuring of the home equity lending business described
above, the Company's financing requirements and financing sources
have been significantly reduced.
The Interim Warehouse and Security Agreement (the "Security
Agreement") dated February 27, 1998, between a wholly owned
subsidiary of the Company and Prudential provides financing in an
amount not to exceed $350.0 million for the origination and purchase
of certain residential mortgage loans. As of September 30, 1998,
$340.3 million was outstanding under the Security Agreement.
Commercial Finance Facilities
The Interim Warehouse and Security Agreement (the "Commercial
Concepts Agreement") dated February 26, 1998, between a wholly owned
subsidiary of the Company and Prudential Securities Credit
Corporation ("Prudential") provides financing in an amount not to
exceed $100.0 million for the origination and purchase of small
business loans. At September 30, 1998, $59.9 million was outstanding
under the Commercial Concepts Agreement.
The Interim Warehouse and Security Agreement (the "Franchise
Agreement") dated March 17, 1998, between a wholly owned subsidiary
of the Company and Prudential provides financing in an amount not to
exceed $150.0 million for the origination and purchase of certain
franchise and construction loans. At September 30, 1998, $6.8
million was outstanding under the Franchise Agreement.
The Loan Agreement ("Loan Agreement") dated August 31, 1998,
between a wholly owned subsidiary of the Company and Salomon Brothers
Realty Corporation provides financing in an amount not to exceed
$200.0 million to provide financing for the origination of commercial
mortgage loans secured by certain real estate properties originated
or acquired. At September 30, 1998, $21.9 million was outstanding
under the Loan Agreement.
The Transfer and Administration Agreement ("Transfer Agreement")
dated September 29, 1998, between a wholly owned subsidiary of the
Company and Kitty Hawk Funding Corporation provides financing in an
amount not to exceed $100.0 million for the funding of residential
construction builders. At September 30, 1998, $80.1 million was
outstanding under the Transfer Agreement.
General
The Company believes that it has sufficient liquidity to meet
its obligations, including the $167.5 million due in August 1999
under the Credit Agreement and the $57.5 million of senior notes due
July 1999, and to fund its operations at current levels. The primary
sources of liquidity currently include the Credit Agreement and, to
the extent described above, the Warehouse Facilities, and internally
generated funds. In addition to the loan sales and other matters
described above under "Recent Developments", the Company has taken a
number of steps to manage its liquidity. The Company has temporarily
suspended investment activities and expects that income from its
existing investments and the proceeds received from the liquidation
of investments in the ordinary course of business will significantly
enhance the Company's liquidity position beginning in the first
quarter of 1999. In addition, the Company is seeking to obtain third
party financing for certain assets which, if successful, would result
in additional capacity under the Credit Agreement.
The Credit Agreement, the Warehouse Facilities and the
indentures under which the senior notes and senior subordinated notes
are issued contain certain financial covenants relating to among
other things, interest coverage, leverage and tangible net worth. If
the losses experienced by the Company are higher than currently
expected, it may be in default under the financial covenants. Any
such default could materially impact the Company's financial
condition and prospects. The Company does not anticipate that it
will be in default under any of its credit agreements and facilities
in the foreseeable future.
The Company has historically accessed the capital markets as an
important part of its capital raising activities, including to raise
funds in debt and equity offerings, to finance the acquisition of
assets and the origination and accumulation of loans, and to
securitize and sell mortgage loans originated by its different
business lines. The Company anticipates that its access to the
capital markets will be significantly limited for the foreseeable
future and that other sources of third party financing will also be
limited.
Other Matters
On July 16, 1998, the Company purchased the assets of
Independence Funding Co. L.L.P. ("IFC") and TeleCapital L.P.
("TeleCapital") for approximately 1.3 million shares of the Company's
common stock and cash of $44.0 million. IFC's primary line of
business is providing long term financing to small businesses and
TeleCapital's primary line of business is providing financing to the
pay phone industry.
On August 11, 1998, the Company acquired MIC, a privately held
specialized producer of veteran's administration streamlined re-
financed loans, by merging a wholly-owned subsidiary of the Company
with MIC. The merger agreement provided for an acquisition price of
approximately 1.8 million shares of the Company's common stock and
$2.6 million in cash. Additionally, the Company will pay an annual
earnout over a three-year period, the total of which will not exceed
$105.0 million, comprised of approximately 82% in the Company's
common stock and 18% cash.
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards for
derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires
an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the
exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction, or (c) a
hedge of the foreign currency exposure of a net investment in a
foreign operation, an unrecognized firm commitment, an available-for-
sale security, or a foreign-currency-denominated forecasted
transaction. This statement is effective for all fiscal quarters for
fiscal years beginning after June 15, 1999. The Company has not yet
determined the impact on the Consolidated Financial Statements upon
adoption of this standard.
In October 1998, the Financial Accounting Standards Board issued
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a
Mortgage Banking Enterprise," which establishes accounting and
reporting standards for certain activities of mortgage banking
enterprises and other enterprises that conduct operations that are
substantially similar to the primary operations of a mortgage banking
enterprise. SFAS No. 134 requires that after the securitization of
mortgage loans held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed securities based
upon its ability and intent to sell or hold those investments. This
statement is effective for the first fiscal quarter beginning after
December 15, 1998 with early adoption permitted. The Company has not
yet determined the impact on the Consolidated Financial Statements
upon adoption of this standard.
Year 2000 Issue
General
Many of the world's computers, software programs and other
equipment using microprocessors or embedded chips currently have date
fields that use two digits rather than four digits to define the
applicable year. These computers, programs and chips may be unable
to properly interpret dates beyond the year 1999; for example,
computer software that has date sensitive programming using a two-
digit format may recognize a date using "00" as the year 1900 rather
than the year 2000. Such errors could potentially result in a system
failure or miscalculation causing disruptions of operations,
including, among other things, a temporary inability to process
transactions or engage in similar normal business activities, which,
in turn, could lead to disruptions in the Company's operations or
performance.
The Company's assessments of the cost and timeliness of
completion of Year 2000 modifications set forth below 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 internal and external resources
and third party readiness plans. Furthermore, as the Company's Year
2000 initiative (described below) progresses, the Company continues
to revise its estimates of the likely problems and costs associated
with the Year 2000 problem and to adapt its contingency plan.
However, there can be no assurance that any estimate or assumption
will prove to be accurate.
The Company's Year 2000 Initiative
The Company is conducting a comprehensive Year 2000 initiative
with respect to its internal business-critical systems. This
initiative encompasses information technology ("IT") systems and
applications, as well as non-IT systems and equipment with embedded
technology, such as fax machines and telephone systems, which may be
impacted by the Year 2000 problem. Business-critical systems
encompass internal accounting systems, including general ledger,
accounts payable and financial reporting applications; cash
management systems; loan servicing systems; and decision support
systems; as well as the underlying technology required to support the
software. The initiative includes assessing, remediating or
replacing, testing and upgrading the Company's business-critical IT
systems with the assistance of a consulting firm that specializes in
Year 2000 readiness. Based upon a review of the completed and
planned stages of the initiative, and the testing done to date, the
Company does not anticipate any material difficulties in achieving
Year 2000 readiness with respect to its internal business-critical
systems, and the Company anticipates that Year 2000 readiness with
respect to virtually all its internal business-critical systems will
be achieved by December 1998, with the exception of its home equity
loan origination system, which is expected to be Year 2000 ready by
March 31, 1999.
In addition to its own internal IT systems and non-IT systems,
the Company may be at risk from Year 2000 failures caused by or
occurring to third parties. These third parties can be classified
into two groups. The first group includes borrowers, significant
business partners, lenders, vendors and other service providers with
whom the Company has a direct contractual relationship. The second
group, while encompassing certain members of the first group, is
comprised of third parties providing services or functions to large
segments of society, both domestically and internationally such as
airlines, utilities and national stock exchanges.
As is the case with most other companies, the actions the
Company can take to avoid any adverse effects from the failure of
companies, particularly those in the second group, to become Year
2000 ready is extremely limited. However, the Company is in the
process of communicating with those companies that have significant
business relationships with the Company, particularly those in the
first group, to determine their Year 2000 readiness status and the
extent to which the Company could be affected by any of their Year
2000 readiness issues. In connection with this process, the Company
is seeking to obtain written representations and other independent
confirmations of Year 2000 readiness from the third parties with whom
the Company has material contracts. Responses from all third parties
having material contracts with the Company have not been received.
In addition to contacting these third parties, where there are direct
interfaces between the Company's systems and the systems of these
third parties in the first group, the Company plans to conduct
testing in the second quarter of 1999 in conformance with the
guidelines of the Federal Financial Institutions Examination Council.
Based on responses received and testing to date, it is not currently
anticipated that the Company will be materially affected by any third
party Year 2000 readiness issues.
For all business-critical systems interfaces, readiness is
scheduled to be achieved by December 31, 1998. Significant third
party service providers that have not completed their Year 2000
initiatives by March 31, 1999 are scheduled to be replaced with
comparable firms that are believed to be compliant. The Company
anticipates that this portion of its Year 2000 initiative will be
completed within the scheduled time periods.
There can be no assurance that the systems of the Company or
those of third parties will be timely converted. Furthermore, there
can be no assurance that a failure to convert by another company, or
a conversion that is not compatible with the Company's systems or
those of other companies on which the Company's systems rely, would
not have a material adverse effect on the Company.
The Company does not anticipate that it will incur material
expenditures in connection with any modifications necessary to
achieve Year 2000 readiness. The Company estimates that it has
incurred approximately $650,000 of costs related to its Year 2000
initiative through September 30, 1998, and the Company anticipates
that it will incur approximately $600,000 of costs in the future with
respect to the initiative. These cost estimates do not include costs
associated with internal resources assigned to the initiative.
Potential Risks
In addition to the Company's internal systems and the systems
and embedded technology of third parties with whom the Company does
business, there is a general uncertainty regarding the overall
success of global remediation efforts relating to the Year 2000
problem, including those efforts of providers of services to large
segments of society, as described above in the second group. Due to
the interrelationships on a global scale that may be impacted by the
Year 2000 problem, there could be short-term disruptions in the
capital or real estate markets or longer-term disruptions that would
affect the overall economy.
Due to the general uncertainty with respect to how this issue
will affect businesses and governments, it is not possible to list
all potential problems or risks associated with the Year 2000
problem. However, some examples of problems or risks to the Company
that could result from the failure by third parties to adequately
deal with the Year 2000 problem include:
in the case of lenders, the potential for liquidity stress due
to disruptions in funding flows;
in the case of exchanges and clearing agents, the potential for
funding disruptions and settlement failures;
in the case of vendors or providers, service failures or
interruptions, such as failures of power, telecommunications and the
embedded technology of building systems (such as HVAC, sprinkler and
fire suppression, elevators, alarm monitoring and security, and
building and parking garage access).
With respect to the Company's loan portfolios, risks due to the
potential failure of third parties to be ready to deal with the Year
2000 problem include:
potential borrower defaults resulting from computer failures of
retail systems of major tenants in retail commercial real estate
properties such as shopping malls and strip shopping centers;
potential borrower defaults resulting from increased expenses or
legal claims related to failures of embedded technology in building
systems, such as HVAC, sprinkler and fire suppression, elevators,
alarm monitoring and security, and building and parking garage
access;
delays in reaching projected occupancy levels due to
construction delays, interruptions in service or other market
factors.
These risks are also applicable to the Company's portfolios of
MBS, as these securities are dependent upon the pool of mortgage
loans underlying them. If the investors in these types of securities
demand higher returns in recognition of these potential risks, the
market value of any future MBS portfolios of the Company also could
be adversely affected.
Other problems that could result from the failure of the Company
or third parties to achieve Year 2000 readiness include impairment of
the Company's ability to report to investors and owners with respect
to portfolio performance and collect and remit payments, including
those with respect to return on investments, taxes and insurance.
Furthermore, the Company's loan servicing operations rely on
computers to process and manage loans. These operations are of such
a volume and nature that manual processing would be time consuming
and expensive. Therefore, a failure of the Company's own systems or
the systems provided by third parties and used by the Company to be
timely compliant could have a material adverse effect on the
Company's loan servicing operations.
The Company believes that the risks most likely to affect the
Company adversely relate to the failure of third parties, including
its borrowers and sources of capital, to achieve Year 2000 readiness.
If its borrowers' systems fail, the result could be a delay in making
payments to the Company or the complete business failure of such
borrowers. The failure, although believed to be unlikely, of the
Company's sources of capital to achieve Year 2000 readiness could
result in the Company being unable to obtain the funds necessary to
continue its normal business operations.
Some of the risks associated with the Year 2000 problem may be
mitigated through insurance maintained or purchased by the Company,
its business partners, borrowers and vendors. However, the scope of
insurance coverage in addressing these potential issues under
existing policies has yet to be tested, and the economic impact on
the solvency of the insurers has not been explored. Therefore, no
assurance can be given that insurance coverage will be available or,
if it is available, that it will be available on a cost-effective
basis or that it will cover all or a significant portion of any
potential loss.
Business Continuity/Disaster Recovery Plan
The Company currently has a business continuity/disaster
recovery plan that includes business resumption processes that do not
rely on computer systems and the maintenance of hard copy files,
where appropriate. The business continuity/disaster recovery plan is
monitored and updated as potential Year 2000 readiness issues of the
Company and third parties are specifically identified. Due to the
inability to predict all of the potential problems that may arise in
connection with the Year 2000 problem, there can be no assurance that
all contingencies will be adequately addressed by such plan.
Private Litigation Securities Reform Act of 1995
This report contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The
forward-looking statements are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
The factors that could cause actual results to differ materially
include the following: industry conditions and competition, interest
rates, business mix, availability of additional financing, and the
risks described from time to time in the Company's reports to the
Securities and Exchange Commission.
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds.
For the quarterly period covered by this Report, the Company
issued the following equity securities that were not registered under
the Securities Act of 1933, as amended (the Securities Act):
1. On July 17, 1998, the Company issued 1,293,701 shares of
Common Stock to the former members and partners of Independence
Funding Co. L.L.C. and TeleCapital, L.P. (the IFC Entities) in
connection with the acquisition by the Company of the IFC Entities.
In addition to the Common Stock, the Company paid $43,654,000 in cash
in connection with such acquisition. The Company issued the Common
Stock pursuant to a private offering exemption under Section 4(2) of
the Securities Act, as this was an isolated transaction involving a
small number of purchasers.
2. On July 22, 1998, the Company issued 20,915 shares of
Common Stock to the former members of Vanguard Commercial Mortgage,
Inc. ("Vanguard") in connection with the acquisition by the Company
of Vanguard. In addition to the Common Stock, the Company paid
$1,000,000 in cash in connection with such acquisition. The Company
issued the Common Stock pursuant to a private offering exemption
under Section 4(2) of the Securities Act, as this was an isolated
transaction involving a small number of purchasers.
3. On August 11, 1998, the Company issued 1,804,441 shares of
Common Stock to the former members of Mortgage Investors Corporation
("MIC") in connection with the acquisition by the Company of MIC. In
addition to the Common Stock, the Company paid $2,634,000 in cash in
connection with such acquisition and will pay up to an additional
$105,000,000 in cash and stock over a three-year period in the event
certain performance goals are met or exceeded during the fiscal years
1999, 2000 and 2001. The Company issued the Common Stock pursuant to
a private offering exemption under Section 4(2) of the Securities
Act, as this was an isolated transaction involving a small number of
purchasers.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits and Exhibit Index
Exhibit No.
10 Credit Agreement among AMRESCO INC., as borrower,
NationsBank, N.A. as administrative agent and Credit
Suisse First Boston as syndication agent for the
"Lenders".
11 Computation of Per Share Earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The Registrant filed a Current Report on Form 8-K, dated
August 19, 1998, reporting pursuant to Items 5 and 7 of
such Form the repurchase of up to one million shares of the
Company's common stock, par value $0.05 per share.
The Registrant filed a Current Report on Form 8-K, dated
October 12, 1998, reporting pursuant to Items 5 and 7 of
such Form the completed sale of approximately $936 million
of commercial mortgage loans, the completed sale of $1.0
billion of home equity loans and the entering into an
agreement to sell approximately $400 million of additional
home equity loans.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
AMRESCO, INC.
Registrant
Date: November 13, 1998 By: /s/Barry L. Edwards
Barry L. Edwards
Executive Vice President
and Chief Financial Officer
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
TABLE OF CONTENTS
ARTICLE I - TERMS DEFINED
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 26
ARTICLE II - COMMITMENT 26
Section 2.1. Commitment 26
Section 2.2. Method of Borrowing 29
Section 2.3 Competitive Bid Loans 33
Section 2.4. Additional Guarantors 36
Section 2.5. Fees 36
ARTICLE III - TERMS OF THE CREDIT FACILITIES 38
Section 3.1. Notes 38
Section 3.2. Maturity 38
Section 3.3. Interest Rate 38
Section 3.4. Interest Payments 39
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 44
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 46
Section 3.14. Taxes 47
Section 3.15. EURO Provisions 49
ARTICLE IV - CONDITIONS TO CLOSING
Section 4.1. Conditions To Closing 50
Section 4.2. Conditions To All Advances 52
Section 4.3. Conditions to Letters of Credit 53
ARTICLE V - COLLATERAL AND GUARANTIES
Section 5.1. Security and Guaranties 53
Section 5.2. Requirements For Assigned Loans. 54
Section 5.3. Requirements for Mortgaged Properties 55
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 57
ARTICLE VI - REPRESENTATIONS AND WARRANTIESSection 6.1.Existence and Power of
Borrower and Guarantors 57
Section 6.2. Subsidiaries 57
Section 6.3. Authorization; Contravention 58
Section 6.4. Enforceable Obligations 58
Section 6.5. Financial Information 58
Section 6.6. Litigation 59
Section 6.7. ERISA 59
Section 6.8. Taxes and Filing of Tax Returns 59
Section 6.9. Ownership of Assets 60
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 61
Section 6.15. Purpose of Credit 62
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. 63
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 67
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. 69
Section 7.13. Appraisals 69
Section 7.14 Year 2000 Compliance 69
ARTICLE VIII - NEGATIVE COVENANTS
Section 8.1. Minimum Consolidated Tangible Net Worth 69
Section 8.2. Leverage Ratio 70
Section 8.3. Interest/Dividend Coverage Ratio 70
Section 8.4. Capital Adequacy; Asset Coverage. 70
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 72
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 75
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 76
Section 8.18. Governmental Regulations 76
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 80
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 82
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
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 92
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 97
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 98
Section 11.19. Non-Waiver of Rights or Remedies 98
Section 11.20. Judgment Currency. 98
Section 11.21. Consolidated Group 99
Section 11.22. Amendment and Restatement/Renewal and Extension. 99
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
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 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.
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 Credit Agreement 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 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.
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.
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.
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.
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 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
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. 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
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 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 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
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 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 supplemented, 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.
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 paid 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 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;
(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 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
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 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
supplements, 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.
Supplement to Loan Documents means a Supplement to this
Agreement, the Guaranty Agreement and the other Loan Documents
(to the extent applicable), including Schedule A to certain Loan
Documents, executed by Borrower and any applicable future
Subsidiary, in form as agreed to between Borrower and
Administrative Agent, as contemplated by Section 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 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.
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 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
Term Revolving Facility (including, without limitation, Swingline
Advances), and (B) the Letter of Credit 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 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 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.
(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.
(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 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 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 reasonable 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.
(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.
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 Loan Documents properly
executed by such future Subsidiary to add such Subsidiary to the
Guaranty Agreement, the related contribution and indemnification
agreement, the Security Agreement, the Pledge Agreement, the
Collateral Assignment and any and all other Loan Documents, as
applicable, (b) all financing statements related thereto deemed
necessary or advisable by Administrative Agent, properly executed
by such Subsidiary, Borrower and/or the appropriate Guarantor,
(c) the original stock certificates for 100% (or 65% in the case
of a Foreign Subsidiary) of the outstanding shares of stock of
such future Subsidiary accompanied by appropriate stock powers
executed in blank by Borrower or the appropriate Subsidiary, and
(d) 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) and (c) above and any other documents and
matters relevant to the formation of such future Subsidiary and
its status as a Guarantor (or pledgor 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 or other
organizational documents of such future Subsidiary,
(ii) resolutions of the board of directors or other appropriate
consents authorizing the execution of the Loan Documents
described in clauses (a), (b) and (c) above on behalf of such
future Subsidiary and the granting of all 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 (or other legal
entity) existence and good standing issued by the state of
organization 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 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 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.
(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.
(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.
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 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 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.
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 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
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, 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:
(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 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;
(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;
(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.
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.
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;
(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. 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, (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 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 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. 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 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 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 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 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 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 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 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 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.
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.
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 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 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.
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 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
(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.
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 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 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;
(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
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 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 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 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.
(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 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 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 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 indebted
ness 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 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 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 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 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;
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
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 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 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 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 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.
(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 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.
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:
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.
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.
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.
MORTGAGE INVESTORS CORPORATION
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:
Thomas J. Andrus, as Treasurer
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
901Main 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
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
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
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
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.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P.O. 10184 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attn: Director
Tel: (345) 949-8244
Fax: (345) 949-8178
Ceres Finance Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P.O. 10184 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attn: Director
Tel: (345) 949-8244
Fax: (345) 949-8178
Pacifica Partners I, L.P.*
c/o Imperial Credit Asset Management
150 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.
Revolving Loan Commitment Amount
Revolving Part.
Short Term Long Term Aggregate Loan Fee
Percentage Amount
Revolving
Lenders:
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%
Term Loan Term Loan Participation
Commitment Percentage Fee Amount
Amount
Term Lenders:
Pacifica $10,000,000 14.8148148% $10,000
Partners*
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 $5,000,000 7.4074074% $5,000
Insurance Company
Allstate $5,000,000 7.4074074% $5,000
Insurance Company
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%
*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 II
COMMITMENT FEE PERCENTAGE; LIBOR MARGIN; LETTER OF CREDIT FEES
Ratio of Total
Consolidated Debt
Less Outstanding Commitment Letter of
Balance of Warehouse LIBOR Fee Credit Fee
Lines to Borrowers Net Margin** Percentages Percentages
TIERS Consolidated Net Worth*
I Greater than or (a) 162.5 b.p. (c) 37.5 b.p. 162.5 b.p
equal to 2.50X (b) 225.0 b.p. (d) 35.0 b.p.
II Greater than or (a) 137.5 b.p. (c) 25.0 b.p. 137.5 b.p
equal to 1.50X but (b) 200.0 b.p. (d) 22.5 b.p.
less than 2.50X
III Greater than or (a) 125.0 b.p. (c) 25.0 b.p. 125.0 b.p
equal to 1.00X but (b) 200.0 b.p. (d) 22.5 b.p.
less than 1.50X
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.
(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 III
CAPITAL ADEQUACY TEST
ASSETS ADVANCE %
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 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%
CMBA Servicing Strips 50%
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 75%
Available for Sale
Retained Interests in Securitization
Residential Mortgage 70%
NIMs 25%
Commercial Lending 85%
New Asset Pool* 50%
Premises and equipment, Net 50%
of Acc. Depreciation
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 50%
Notes
Convertible Debt 50%
Guaranties 100%
L/C Outstanding 100%
*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 IV
ASSET COVERAGE REQUIREMENT
Assets Balance Less NCV Pledged Advance Net
Sheet (b) Assets % (d) Asset
Values (a) (a)-(b)=(c) Value
(cxd=e)
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 75%
securities available for sale
Retained interests in
securitizations-trading
Residential Mortgage 70%
Nim 25%
Commercial Lending Corporation 85%
New Asset Pool (f) 50%
Premises and equipment, net of 50%
acc. depreciation
Other Assets 0%
Intangible Assets 0%
Deferred Income Taxes 0%
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
(a) Value of Borrower's assets per balance sheet
(b) Assets pledged under other credit facilities or not subject to prior
perfected security interest securing Credit Facilities
(c) Balance sheet value less assets pledged under other facilities or not
subject to prior perfected security interest securing Credit 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
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.
(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
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.
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.
(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-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.
(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.
(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.
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) 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.
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-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.
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
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF AMRESCO, INC.,
DATED ,
Date Principal Principal Unpaid
Amount of Amount Balance
Competitive Bid Paid
Loan
DOCUMENTS TO BE ATTACHED TO COMPETITIVE BID NOTE
COMPETITIVE BID QUOTE
COMPETITIVE BID ACCEPTANCE NOTICE
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:
SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL
TO
SWINGLING NOTE OF AMRESCO, INC.
Principal Amoun Principal Amou Unpaid
Date t of Swingline nt Balance
Loan Paid
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.
(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 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 $
.
(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 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 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 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.
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 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: ,
Principal Amount (in Dollar Equivalent)1
Interest Period2 Alternate Currency3
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:
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: ,
Principal Amount (in Dollar Equivalent) Interest
Period Alternate Currency
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-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: /4
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:
Principal Interest Competitive Minimum Alternate
Amount/5 Period/6 Bid Margin/7 Amount/8 Currency
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:
As of May 31, 1998
SCHEDULE V
List of Excluded Subsidiaries
Subsidiary Net Worth Total Total
Capital Assets
Invested
AMRESCO Leasing Corporation $344,260 $2,391,632
AMRESCO Residential Securities (60,787) 100,184
Corporation
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
_______________________________
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
4/ As specified in the related Invitation For Competitive Bid
Quotes.
5/ 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.
6/ One, two, three, four, five or six months, as specified in
the related Invitation for Competitive Bid Quotes.
7/ 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".
8/ Specify minimum or maximum amount, if any, which the
Borrower may accept (see Section 2.3(d)(ii)).
<TABLE>
<CAPTION>
AMRESCO, INC.
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic:
Net income $758,000 $15,336,000 $34,467,000 $36,383,000
Weighted average common shares outstanding 44,678,175 36,318,936 42,215,166 35,417,398
Contingently issuable shares 72,965 16,980
Restricted shares (398,658) (322,544) (366,832) (288,793)
Total 44,279,517 35,996,392 41,921,299 35,145,585
Earnings per share $0.02 $0.43 $0.82 $1.04
Diluted:
Net income $758,000 $15,336,000 $34,467,000 $36,383,000
Weighted average common shares outstanding 44,678,175 36,318,936 42,215,166 35,417,398
Contingently issuable shares 72,965 16,980
Net effect of dilutive stock options based on
the Treasury stock method using the average
market price 765,022 1,168,540 1,009,117 883,350
Total 45,443,197 37,487,476 43,297,248 36,317,728
Earnings per share $0.02 $0.41 $0.80 $1.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 52,470
<SECURITIES> 0
<RECEIVABLES> 18,010
<ALLOWANCES> 395
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 34,132
<DEPRECIATION> 14,917
<TOTAL-ASSETS> 4,784,395
<CURRENT-LIABILITIES> 0
<BONDS> 1,561,244
0
0
<COMMON> 2,307
<OTHER-SE> 666,787
<TOTAL-LIABILITY-AND-EQUITY> 4,784,395
<SALES> 0
<TOTAL-REVENUES> 505,281
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 247,375
<LOSS-PROVISION> 18,731
<INTEREST-EXPENSE> 182,704
<INCOME-PRETAX> 56,471
<INCOME-TAX> 22,004
<INCOME-CONTINUING> 34,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,467
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.80
</TABLE>
