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EXHIBIT 10.8
RIGHT OF FIRST REFUSAL AND NONCOMPETITION AGREEMENT
This RIGHT OF FIRST REFUSAL AND NONCOMPETITION AGREEMENT (this
"Agreement") dated as of _____________, 1998 is by and between AMRESCO, INC., a
Delaware corporation ("AMRESCO") and AMRESCO CAPITAL TRUST, a Texas real estate
investment trust ("ACT"), with reference to the following:
A. ACT, together with its affiliated entities, is in the business
of, among other things, originating and acquiring certain types of Commercial
Mortgage Loans (as hereinafter defined) and investing in various types of
mortgage-backed securities ("MBS").
B. AMRESCO and certain of its affiliated entities (collectively,
the "AMRESCO Group") are in the business of, among other things, originating
and acquiring certain types of Commercial Mortgage Loans and investing in
various types of MBS.
C. ACT has entered into a Management Agreement (the "Management
Agreement") with AMREIT Managers, L.P., a Delaware limited partnership and a
member of the AMRESCO Group (the "Manager"), pursuant to which the Manager has
agreed, subject to the terms and conditions set forth therein, to act as
manager to ACT.
D. ACT has conditioned its obligations under the Management
Agreement upon the execution and delivery by AMRESCO of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. RIGHT OF FIRST REFUSAL WITH RESPECT TO COMMERCIAL MORTGAGE
LOANS.
(a) AMRESCO hereby agrees that, during each calendar
quarter, until the Cut-Off Date (as defined in Section 1(c) below), it
will cause each member of the AMRESCO Group to notify the Chief
Investment Officer of ACT (the "Chief Investment Officer") of any
Commercial Mortgage Loan which (i) is identified by or to any member
of the AMRESCO Group, (ii) is preliminarily reviewed and approved for
further consideration by such member of the AMRESCO Group and
accordingly, consistent with current procedures of the AMRESCO Group,
listed by such member of the AMRESCO Group on the "deal flow chart" of
the AMRESCO Group, and (iii) meets or, in the good faith judgment of
such member of the AMRESCO Group, could reasonably be expected to
meet, the investment criteria and objectives of ACT. Within _____
business days after the receipt of such notice by the Chief Investment
Officer, the Chief Investment Officer will make a determination as to
whether such Commercial Mortgage Loan actually meets the investment
criteria and objectives of ACT (in which case such Commercial Mortgage
Loan shall be deemed, for purposes of this Agreement, to be a
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"Targeted Mortgage Loan"). The Chief Investment Officer shall
promptly notify the member of such AMRESCO Group that entered such
Commercial Mortgage Loan on the "deal flow chart" of such
determination.
(b) During each calendar quarter, until the Cut-Off Date,
AMRESCO will not, and it will cause each member of the AMRESCO Group
not to, invest in any Targeted Mortgage Loan, unless the Manager shall
have notified AMRESCO (or any other member of the AMRESCO Group) that
the Investment Committee (as defined in Section 1(c) below) has
determined that ACT (i) should not invest in any such Targeted
Mortgage Loan, or (ii) should invest in only a portion of such
Targeted Mortgage Loan (in which case, members of the AMRESCO Group
may co-invest with ACT in such Targeted Mortgage Loan on such terms as
are approved by the Investment Committee).
(c) As used in this Agreement, the following terms shall
have the meanings set forth below:
"Commercial Mortgage Loan" means either a loan secured by
commercial or multifamily real property or a Mezzanine Loan.
"Cut-Off Date" means the date during each calendar quarter
during the term of this Agreement as of which at least $100 million of
Targeted Mortgage Loans (determined in the aggregate as to such
quarter) have been identified to ACT by one or more members of the
AMRESCO Group.
"Investment Committee" means the applicable committee
maintained by the Manager which approves the purchase, acquisition or
origination of Mortgage Loans, MBS or other investments by ACT.
"Mezzanine Loan" means a commercial real estate loan the
repayment of which is subordinate to a senior Commercial Mortgage Loan
and which is secured either by a second lien mortgage or a pledge of
the ownership interests of the borrower. "Mezzanine Loans" also
includes preferred equity investments in a commercial real estate loan
borrower.
2. RIGHT OF FIRST REFUSAL WITH RESPECT TO MORTGAGE-BACKED
SECURITIES. During the term of this Agreement, AMRESCO will not, and it will
cause each member of the AMRESCO Group not to, invest in any tranche of MBS,
other than MBS issued in securitizations sponsored in whole or in part by any
member of the AMRESCO Group, unless the Manager shall have notified AMRESCO
that the Investment Committee has determined that ACT (i) should not invest in
any such tranche of MBS, or (ii) should invest in only a portion of such
tranche of MBS (in which case, members of the AMRESCO Group may co-invest with
ACT in such tranche of MBS on such terms as are approved by the Investment
Committee).
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3. SPONSORSHIP OF OR INVESTMENT IN OTHER MORTGAGE REITS. During
the term of this Agreement, AMRESCO will not, and it will cause each member of
the AMRESCO Group not to, form or cause to be formed, sponsor, act as manager
to or make any significant equity investment in, any entity principally engaged
in mortgage lending activities which is or intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (a
"mortgage REIT") and which has investment objectives substantially similar to
those of ACT, unless such action or investment is approved, in advance and in
writing, by a majority of the independent trust managers of ACT. For purposes
of this Section 3, an equity investment in a mortgage REIT will not be deemed
to be material if it does not exceed five percent (5%) of the total outstanding
equity interests of such mortgage REIT.
4. NO OTHER RESTRICTIONS. Except as expressly provided herein,
there are no restrictions or limitations whatsoever on the ability of AMRESCO
and the other members of the AMRESCO Group to (i) make any investments
(including those investments which are appropriate investments for ACT or its
affiliates) or (ii) to otherwise conduct its business and operations.
5. REPRESENTATIONS AND WARRANTIES.
(a) AMRESCO represents and warrants to ACT as of the date
hereof that:
(i) It has full power and authority to enter into
this Agreement and to perform its duties and obligations
hereunder.
(ii) The execution, delivery and performance of this
Agreement by it have been duly authorized by all requisite
corporate action.
(iii) This Agreement, assuming due authorization,
execution and delivery by ACT, constitutes a valid, legal and
binding obligation of it enforceable against it in accordance
with the terms hereof, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and
(ii) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(iv) Its execution and delivery of this Agreement
and its performance of and compliance with the terms hereof
will not constitute a violation of any law, any order or
decree of any court, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority
with jurisdiction over it.
(v) No consent, approval, authorization or order
of, registration or filing with or notice to, any court or any
federal, state or local governmental
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or regulatory authority is required for the execution,
delivery and performance by it of this Agreement.
(b) ACT represents and warrants to AMRESCO as of the date
hereof that:
(i) ACT has full power and authority to enter into
this Agreement and to perform its duties and obligations
hereunder.
(ii) The execution, delivery and performance of this
Agreement by ACT have been duly authorized by all requisite
corporate action.
(iii) This Agreement, assuming due authorization,
execution and delivery by AMRESCO, constitutes a valid, legal
and binding obligation of ACT enforceable against ACT in
accordance with the terms hereof, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally
and (ii) general principles of equity, regardless of whether
such enforcement is considered in a proceeding in equity or at
law.
(iv) ACT's execution and delivery of this Agreement
and its performance of and compliance with the terms hereof
will not constitute a violation of any law, any order or
decree of any court, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority
with jurisdiction over ACT.
(v) No consent, approval, authorization or order
of, registration or filing with or notice to, any court or any
federal, state or local governmental or regulatory authority
is required for the execution, delivery and performance by ACT
of this Agreement.
6. TERMINATION OF AGREEMENT. This Agreement may not be
terminated at any time while the Management Agreement is in effect, or while
any member of the AMRESCO Group is the acting manager of ACT. This Agreement
may be terminated by either party hereto, so long as the Management Agreement
is not in effect and no member of the AMRESCO Group is acting as manager of
ACT, at any time upon 30 days prior written notice to the other party hereto.
7. NOTICES. Any notices necessary to be given under the
provisions of this Agreement shall be in writing and delivered either
personally or by facsimile or by mail, first class postage prepaid, to the
addresses set forth below:
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AMRESCO, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000, XX 000
Xxxxxx, Xxxxx 00000-0000
Attn: President and General Counsel
AMRESCO Capital Trust
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000, XX 000
Xxxxxx, Xxxxx 00000-0000
Attn: President and General Counsel
8. MISCELLANEOUS PROVISIONS.
(a) The arrangements and relationship contemplated in
this Agreement are the sole understandings of the parties hereto with
respect to the subject matter hereof, and any other agreements,
expressed or implied, entered into prior to or contemporaneously with
the execution of this Agreement relating to the matters set forth
herein are null and void.
(b) This Agreement shall be considered the entire
agreement and no further agreements between the parties as to the
matters set forth herein will be considered valid and enforceable
under this Agreement or any amendment thereto unless in writing and
executed by the parties hereto.
(c) This Agreement shall be governed by the laws of the
State of Texas. Any suit or controversy arising out of this Agreement
if litigated shall be filed in state or federal court of the State of
Texas.
(d) If any part of this Agreement is found to be
unenforceable, the remainder of the Agreement shall remain in full
force and effect.
(e) This Agreement may be executed in counterparts, each
of which shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
(f) Nothing herein contained shall be deemed or construed
to create a partnership or joint venture between the parties hereto.
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Executed and effective as of the _____ day of ________________, 1998.
AMRESCO, INC.
By:
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Name:
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Title:
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AMRESCO CAPITAL TRUST
By:
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Name:
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Title:
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