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Term Loan Agreement With Heller

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TERM LOAN


AGREEMENT Dated as of


July 18, 1995


among


AMRESCO NEW ENGLAND,


INC., OAK CLIFF


FINANCIAL, INC. THE


LENDERS LISTED


HEREIN


and


HELLER FINANCIAL,
INC. as
Agent


TABLE OF CONTENTS Page ARTICLE I TERMS DEFINED 1.1 Definitions 1 1.2 Number and Gender 18 1.3 Substantive Definitions 18 1.4 Money 19 1.5 Captions; References 19 1.6 Accounting Terms and Determinations 19


ARTICLE II COMMITMENT


2.1 Commitment 19 2.2 Commitment Fees 19 2.3 Sources and Uses 20


ARTICLE III LOAN TERMS 3.1 Notes 20 3.2 Maturity 20 3.3 Interest Rate; LIBOR Election 20 3.4 Interest Payments 22 3.5 Mandatory Principal Payments 22 3.6 Voluntary Prepayments on the Loan 23 3.7 Schedules on Notes 25 3.8 General Provisions as to Payments 25 3.9 Application of Payments to the Lenders 25 3.10 Application of Payments to the Loan 25 3.11 PostDefault Interest; Past Due
Principal and Interest 26 3.12 Maximum Lawful Rate Adjustments 26 3.13 Computation of Interest and Fees 26 3.14 Security 26 3.15 Capital Adequacy; LIBOR Costs 27 3.16 Inability to Determine LIBOR Rate 27 3.17 Intentionally Omitted 27 3.18 LIBOR Rate UnlawfuL 27 3.19 Increased Costs 28 3.20 Assumptions Concerning LIBOR Tranche 29


ARTICLE IV COLLATERAL REQUIREMENTS 4.1 Requirements For Assigned Loans 29 4.2 Requirements for Mortgaged Properties 30 4.3 Recordation of Mortgages 30 4.4 Assignment of Collateral Sales Receivables 31 4.5 Agent's Discretion 31


ARTICLE V CONDITIONS TO FUNDING 5.1 Conditions 32


ARTICLE VI REPRESENTATIONS AND WARRANTIES


6.1 Existence and Power of Borrower 34 6.2 Authorization, Contravention 34 6.3 Enforceable Obligations 34 6.4 Financial Information 34 6.5 Litigation 35 6.6 ERISA 35 6.7 Taxes and Filing of Tax Returns 35 6.8 Title to Properties; Liens; Ownership 36 6.9 Business; Compliance 37 6.10 Licenses, Permits 37 6.11 Compliance with Law 37 6.12 Full Disclosure 37 6.13 Environmental Matters 37 6.14 Purpose of Credit 38 6.15 Governmental Regulations 39 6.16 Indebtedness 39 6.17 Insurance 39 6.18 Solvency 39 6.19 Pool Purchase Agreements 39 6.20 No Casualty or Condemnation 39 6.21 Access to the Properties 40 6.22 No Flood Zone 40 6.23 Participations 40 6.24 No Future Funding Obligations 40


ARTICLE VII AFFIRMATIVE COVENANTS


7.1 Information From Borrower 40 7.2 Business of Borrower 43 7.3 Right of Inspection 43 7.4 Maintenance of Insurance 44 7.5 Payment of Taxes, Impositions and Claims 44 7.6 Compliance with Laws and Documents 45 7.7 Agreements Related to Selected Asset Pool 45 7.8 Environmental Law Compliance and Indemnity 46 7.9 Collateral Assignment of Sales Contracts 46 7.10 Assurance Related to Mortgaged Property 46 7.11 Appraisals 47 7.12 Payment on Taking or Destruction 47 7.13 Covenant Compliance 48 7.14 Intentionally Deleted 48 7.15 Subordinated Debt of AMRESCO 48 7.16 Quantity and Quality of Documents 48 7.17 Additional Documents 48 7.18 Acquisition of Properties 48 7.19 Borrower Buyout Option 49 7.20 Maintenance and Repair 50 7.21 Right to Audit 50 7.22 Custodian 50 7.23 Lockbox 50 7.24 Notices to Obligor 50 7.25 Breaches of Pool Purchase Agreements 51 7.26 Account Status Reports, Meetings with Agent
and/or the Lenders 51
ARTICLE VIII NEGATIVE COVENANTS
8.1 Limitation on Sale of Properties 51
8.2 Limitation on Debt 51
8.3 Limitations on Liens 51
8.4 Consolidations, Mergers, Sales of Assets and
Maintenance 52
8.5 Investments 52
8.6 Distributions 52
8.7 Changes in Business/Ownership 52
8.8 Limitation on Contingent Liabilities 52
8.9 Transactions with Affiliates 52
8.10 Employee Plans 52
8.11 Alterations 53
8.12 Use Violations 53
8.13 Retention of Remaining Cash Flow 53
8.14 Exceptions to Covenants 53
8.15 Fiscal Year and Accounting Methods 54
8.16 Governmental Regulations 54
8.17 Servicing of Selected Asset Pool 54
8.18 Restructures 54
8.19 Release Prices 55
8.20 Disclosure or Use of Heller Name; Loan Terms 55


ARTICLE IX RELEASES
9.1 Releases and Sale of Collateral Prior to Default 55
9.2 Request for Releases 55
9.3 Releases After Default 55


ARTICLE X DEFAULTS AND REMEDIES
10.1 Events of Default 56
10.2 Remedies 58
10.3 Separate Sales 60
10.4 Rights of Set-Off 60
10.5 Remedies Cumulative, Concurrent and Non-Exclusive 61
10.6 No Conditions Precedent to Exercise Remedies 61
10.7 Release of and Resort to Collateral 62
10.8 Waivers 62
10.9 Discontinuance of Proceedings 62
10.10 Power of Attorney 62
10.11 Application of Proceeds 63
10.12 Certain Defaults 64


ARTICLE XI AGENT AND THE LENDERS
11.1 Appointment and Authorization of Agent 65
11.2 Possession of Instruments by Agent 66
11.3 Expenses 67
11.4 Delegation of Duties; Reliance; Consultation 67
11.5 Limitation of Agent's Liability 68
11.6 Default; Collateral 69
11.7 Lenders' Decision 69
11.8 Limitation of Liability of Lenders 69
11.9 Relationship of Lenders 70
11.10 Debtor-Creditor Relationship 70
11.11 Credit Decisions 70
11.12 Removal of Agent 70
11.13 Resignation by Agent 71
11.14 Sharing of Payments and Setoffs 71
11.15 Non-advancing Lenders 72
11.16 Benefit of Lenders 73


ARTICLE XII MISCELLANEOUS
12.1 Continuing Agreement 73
12.2 Notices 73
12.3 No Waivers 74
12.4 Expenses; Documentary Taxes; Indemnification 75
12.5 Amendments and Waivers; Consent to Deviation 75
12.6 Survival 75
12.7 Prior Understandings; No Defenses; Release; No Oral
Agreements 76
12.8 Limitation on Interest 76
12.9 Invalid Provisions 76
12.10 Successors and Assigns 77
12.11 Lenders' Right To Perform Borrower's Obligations 81
12.12 Senior Debt 82
12.13 Construction 82
12.14 Inconsistent Provisions 82
12.15 APPLICABLE LAW 83
12.16 VENUE 83
12.17 JURY TRIAL WAIVER 83
12.18 Counterparts 84
12.19 Recourse 84


EXHIBITS EXHIBIT A - MORTGAGE FORM EXHIBIT B - MORTGAGE ASSIGNMENT FORM EXHIBIT C - PROMISSORY NOTE FORM EXHIBIT D - REQUEST FOR RELEASE FORM EXHIBIT E - PAYMENT CALCULATION FORM EXHIBIT F - ASSIGNMENT AND ACCEPTANCE FORM EXHIBIT G - BORROWER CERTIFICATE FORM EXHIBIT H - CASH FLOW STATEMENT FORM EXHIBIT I - LITIGATION


TERM LOAN AGREEMENT

THIS TERM LOAN AGREEMENT (this "Agreement") is entered into as of the 18th day of July, 1995, by and among AMRESCO NEW ENGLAND, INC., a Delaware corporation, OAK CLIFF FINANCIAL, INC., a Delaware corporation, and HELLER FINANCIAL, INC., a Delaware corporation, for itself and as Agent, and the other lending institutions which may become parties hereto pursuant to Section 12.10.
PRELIMINARY STATEMENT

Borrower has requested that the Lenders make a term loan to Borrower in an amount up to Twenty-Seven Million Five Hundred Thousand and No/100 Dollars ($27,500,000.00). Upon and subject to the terms of this Agreement, the Lenders are willing to make the term loan to Borrower. Accordingly, in consideration of the mutual covenants contained herein, Borrower, Agent and the Lenders agree as follows:
ARTICLE I

TERMS DEFINED
1.1 Definitions. The following terms, as used herein, have the following meanings:
"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 and, with respect to Borrower, includes each holder of five percent (5%) or more of the equity of Borrower. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), means the possession, directly or indirectly, of the power (i) to vote more than fifty percent (50%) of the securities having ordinary voting power for the election of directors of the controlled Person, or (ii) to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" means Heller, in its capacity as agent for the Lenders hereunder, or any successor agent pursuant to Section 11.12 or Section 11.13.
"Agreement" means this Term Loan Agreement, and all renewals, extensions, modifications, amendments and rearrangements thereof.
"AMRESCO" means AMRESCO, INC., a Delaware corporation, that owns one hundred percent (100%) of the capital stock of Borrower. "Adjusted LIBOR Rate" means, on any date of determination for the relevant Interest Period with respect to a LIBOR Tranche, (a) the rate of interest determined by Agent at which deposits in Dollars for the relevant Interest Period are offered based on information presented on the Reuters Screen LIBOR Page 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 ("Interest Rate Determination Date"); provided, further, that if fewer than two offered rates appear or if Reuters ceases to provide LIBOR quotations, such rate shall be the rate of interest at which deposits in Dollars are offered for the relevant Interest Period by any of Bankers Trust Company, The Chase Manhattan Bank, National Association or Chemical Bank to first class banks in the London interbank market as of 11:00 a.m. (London time) on the applicable Interest Rate Determination Date, divided by, (b) a number equal to 1.0 minus LIBOR Reserve Requirement in effect on the Interest Rate Determination Date plus, as applicable, (c) the FDIC Percentage in effect on such day, together with any additional impositions, assessments, fees or surcharges that may be imposed on Agent or any Lender, 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 capitalizations and supervisory risk factors comparable to Bankers Trust Company, the Chase Manhattan Bank or Chemical Bank.


"Applicable Environmental Laws" has the meaning set forth in that certain Hazardous Substance Indemnification Agreement of even date herewith executed by Borrower in favor of Agent and the Lenders.
"Appraisal" means an appraisal stating the appraised value of all or a part of the Mortgaged Property prepared by an appraiser independent of Borrower and all Affiliates of Borrower and acceptable to Agent, which appraisal satisfies all regulatory requirements applicable to Agent and the Loan.
"Asset Portfolios" means one or more pools or portfolios of (i) non-performing, under-performing or performing loans, and/or (ii) real estate or other assets acquired in connection with the foreclosure, restructure or settlement of nonperforming or under-performing loans, together with all documents, instruments, certificates and other information related thereto.


"Assigned Loan Documents" means the documents evidencing and securing the Assigned Loans.


"Assigned Loans" means the loans and mortgages included in the Selected Asset Pool, whether or not such loans and mortgages have been properly assigned to Agent for the Lenders as collateral for the Loan.


"Assignment and Acceptance" has the meaning set forth in Section 12.10(c)(iv) hereof.


"Authorized Officer" means, as to Borrower or any other Person, any of its Chairman, Vice-Chairman, President, Executive Vice President(s), Senior Vice President(s), Chief Financial Officer, Chief Accounting Officer or Treasurer, or if such other Person is a partnership, its managing general partner or any other general partner, who are duly authorized by the Board of Directors, or applicable partnership agreement, 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 the Loan.


"Base Rate" means, on any date of determination, a variable rate of interest per annum equal to the higher of: (i) the rate of interest from time to time published by the Wall Street Journal under the caption "Money Rates, Prime Rate" or (ii) the Federal Funds Effective Rate. The applicable Base Rate for any date not set forth shall be the prime rate set forth for the last preceding date. In the event the Wall Street Journal ceases to publish a Bank Prime Loan rate or equivalent, the term "Base Rate" shall mean a variable rate of interest per annum equal to the highest of the "prime rate," "reference rate," "base rate" or other similar rate announced from time to time by any of Bankers Trust Company, The Chase Manhattan Bank, National Association or Chemical Bank (with the understanding that any such rate may merely be a reference rate and may not necessarily represent the lowest or best rate actually charged to any customer by such bank).


"Borrower" means, jointly and severally, AMRESCO New England, Inc., a Delaware corporation, and Oak Cliff Financial, Inc., a Delaware corporation, and their respective successors. Unless the context otherwise requires or unless specifically stated, "Borrower" means each Borrower individually and Borrowers collectively.


"Borrower Due Diligence Reports" means the various written reports, information and other materials that Borrower prepared or assembled and delivered to Agent prior to the Closing Date containing descriptions and evaluations of the Assigned Loans and Mortgaged Properties, and Borrower's assessments and projections regarding same, or other information regarding the Assigned Loans and the Mortgaged Property, including copies of the Pool Purchase Agreements, copies of any appraisals or environmental site assessments, and the "Round Table" books for each loan portfolio summarizing Borrower's due diligence regarding the Assigned Loans and the Mortgaged Property acquired pursuant to each of the Pool Purchase Agreements.
"Business Day" means (a) for all purposes other than as covered by clause (b) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Illinois, or is a day on which banking institutions located in Illinois are closed, and (b) with respect to all notices, determinations, fundings and payments in connection with Loans bearing interest at the LIBOR Rate, any day that is a Business Day described in clause (a) above and that is also a day for trading by and between banks in Dollar deposits in the applicable interbank LIBOR market.
"Business Plan" means Borrower's business plan for servicing and disposition of the Assigned Loans, which business plan shall be in form and substance approved by Agent, which approval will not be unreasonably withheld, provided that until the Business Plan with respect to the Assigned Loans are delivered pursuant to Section 7.1(d), Business Plan shall mean the Borrower Due Diligence Reports.
"Capital Lease" means any capital lease or sublease which should be capitalized in accordance with GAAP on a balance sheet.
"CERCLA" has the meaning set forth in that certain Hazardous Substance Indemnification Agreement of even date herewith executed by Borrower in favor of Agent and the Lenders.
"Closing Date" means the effective date 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 Loan pursuant to this Agreement or any of the Security Documents or other Loan Documents.
"Collateral Assignment" means the collateral assignment of promissory notes and liens and, collectively, all collateral assignments of promissory notes and liens, executed by Borrower in favor of Agent, on behalf and for the benefit of the Lenders, as security for the Loan, which collateral assignment is intended to cover all of the Assigned Loans, and all renewals, modifications, amendments, supplements and restatements thereof.
"Collateral Sales Receivables" means the amounts payable in cash to Borrower (exclusive of all closing costs) in connection with the sale of any portion of the assets included in the Selected Asset Pool.
"Commitment Fee" means Two Hundred Seventy Thousand Eight Hundred Ninety-Seven and 70/100 Dollars ($270,897.70).
"Credit Period" means the period commencing on the Closing Date and ending on the Termination Date.
"Debt" of any Person means at any date, without duplication, (a) all indebtedness, obligations and liabilities of such Person for borrowed money, (b) all indebtedness, obligations and liabilities of such Person evidenced by bonds, debentures, notes or other similar instruments, whether recourse or nonrecourse and whether secured or unsecured, (c) all other indebtedness (including capitalized lease obligations) of such Person on which interest charges are customarily paid or accrued, (d) all obligations for indebtedness in respect of Guarantees by such Person, (e) the unfunded or unreimbursed portion of all letters of credit issued for the account of such Person, and (f) all 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 (e) 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%) plus the Base Rate, or (b) the Maximum Lawful Rate.


"Designated Successor Agent" means, at any given time, the Lender other than Agent which has the largest Loan Percentage; provided, however, if two or more such Lenders have the same Loan Percentage at such time, then the Designated Successor Agent shall be such of those Lenders having the same Loan Percentage which has the largest net worth; and, provided further, that if the Required Lenders object to the newly named Designated Successor Agent, or if any Lender determined to be a Designated Successor Agent declines to serve as successor Agent, in writing delivered to the outgoing Agent within seven (7) Business Days after such Designated Successor Agent is determined, then the Lender other than Agent or such rejected or declining Designated Successor Agent which has the next largest Loan Percentage shall be the Designated Successor Agent. For each such Lender that is a member of a bank holding company, its net worth shall be deemed to be the consolidated ne worth of its bank holding company.


"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 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.


"Dollars" and the "$" symbol shall mean and refer to currency of the United States of America.


"Eligible Assignee" means any of (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (d) the central bank of any country which is a member of the OECD; or (e) an insurance company, pension fund, credit corporation or other finance company organized under the laws of any state of the United States which invests in United States real estate loans and/or mortgages as a significant part of its investment portfolio; provided, however, that no institution described in clause (a), (b), (c), (d) or (e) above shall be an Eligible Assignee unless it has total assets in excess of $10 billion and unless debt obligations issued by such financial institution (or by a parent entity owning beneficially all of the capital stock of such financial institution) are rated "Ba2" or higher by Moody's Investors Service, Inc. or "BB" or higher by standard & Poor's Corporation; and, provided further, that an institution described in clause (c) or (d) above must maintain a branCh or agency under the laws of the United States.
"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 ERISA Affiliate of Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all regulations issued pursuant thereto.
"ERISA Affiliate" means any Person that it treated as a single employer with Borrower under Section 414 of the Code.
"Event of Default" has the meaning set forth in Section 10.1.
"Excess Interest" has the meaning set forth in Section 12.8 hereof.
"Federal Funds Effective Rate" means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the immediately following Business Day by the Federal Reserve Bank of New York or, if such rate is not published for any Business Day, the average of the quotations for the day of the requested Loan received by Agent from three (3) Federal funds brokers of recognized standing selected by Agent.


"FDIC Percentage" shall mean, on any day, the net assessment rate (expressed as a percentage rounded to the next highest 1/100 of 1%) which is in effect on such day (under the regulations of the Federal Deposit Insurance Corporation or any successor) for determining the assessments paid by Agent to the Federal Deposit Insurance Corporation (or any successor) for insuring eurocurrency deposits made in dollars at Agent's principal offices in Chicago, Illinois. Each determination of said percentage made by Agent shall, in the absence of manifest error, be binding and conclusive.


"Fiscal Year" means any fiscal year of Borrower commencing on January 1 and ending on December 31.
"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
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