Exhibit 10.52
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement") is made as of this
16th day of March, 1998, by and between American Physicians Service Group, Inc.
, a Texas corporation ("Seller"), and the undersigned under ▇▇▇ ▇▇▇▇▇▇▇,
"▇▇▇▇▇▇▇▇▇" ("▇▇▇▇▇▇▇▇▇"), (Seller and each Purchaser are referred to herein
separately as a "Participant" and collectively, as "Participants").
W I T N E S S E T H :
WHEREAS, Seller has made or will make a line of credit loan in the
maximum principal amount of Two Million Four Hundred Thousand and No/100 DOLLARS
($2,400,000) to ▇▇▇▇▇▇ Acquisition, Inc., a Texas corporation (the "Borrower"),
which loan shall be secured by a lien on all Borrower's assets including certain
real property located in Bexar, Fort Bend and ▇▇▇▇▇▇ Counties, Texas, as more
fully set forth on Exhibit "A" attached hereto, together with all equipment,
fixtures and personal property located thereon (the "Property"); and
WHEREAS, in connection with the making of the line of credit loan,
Borrower has executed or will execute and deliver the loan documents set forth
in the schedule attached hereto, marked Exhibit "B", and hereby made a part
hereof (the "Loan Documents"); and
WHEREAS, Seller is duly authorized to sell participation shares in
loans originated by it and the participation created hereby is eligible for such
sale; and
WHEREAS, Purchaser further desires to participate in owning the
evidences of the Loan and the security therefor, with Seller serving as agent
and trustee for Purchaser in certain respects as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. AGREEMENT FOR PURCHASE OF THE PARTICIPATION.
a. By its execution of this Agreement and in consideration of
the mutual covenants herein set forth, Purchaser does hereby purchase an
undivided interest (the "Participation"), the percentage of which (the
"Percentage Interest") shall be calculated as set forth in Section 2 hereof, in
(i) all of Seller's loans and other extensions of credit to or for the benefit
of Borrower under the Loan Documents (all loans and other extensions of credit
are hereinafter referred to as the "Loan"), (ii) all existing and future real
and personal property and interests therein securing the Loan, including the
Property ("Collateral"), (iii) all existing and future claims against persons
liable for the Loan ("Guaranty Claims"). The Participation includes a Percentage
Interest in all amounts, other than those amounts, if any, which are to be
retained by Seller or otherwise allocated to Purchaser or Seller pursuant to
Sections 4, 5 and 13 hereof, which are received by Seller on account of the Loan
("Payments"), whether from (i) Borrower, (ii) the Collateral, (iii) guarantors
or others obligated to Seller with respect to the Loan (an "Obligor"), or (iv)
any other source, including, without limitation, recovery from litigation
without limitation, recovery from any setoff of Borrower's accounts deposited
with Seller, proceeds of title insurance claims, other insurance claims,
condemnation awards or recovery from litigation. Purchaser acknowledges and
understands the liens and security interests against the Collateral are
secondary and inferior to other substantial loans to third party lenders.
b. PARTICIPATION. Purchaser has advanced to Seller its
respective Contribution Percentage, as defined in Section 2 hereof, of funds
advanced, or to be advanced, by Seller to Borrower pursuant to the Loan. Seller
shall deposit all Contribution Percentages, to the extent not initially advanced
under the Loan, into an escrow account with Seller ("Escrow Account"). Seller
shall invest the funds in the Escrow Account at its discretion and any interest
earned thereon shall be held on each Purchaser's behalf in their respective
Contribution Interest. Seller shall, from time to time, pay to Purchaser all
amounts in which Purchaser has an interest in the manner herein provided.
c. NATURE OF RELATIONSHIP. The relationship between Purchaser
and Seller is and shall be that of a purchaser and seller of a property
interest, respectively, (i.e., an outright purchase and sale of assets being an
assignment of a partial interest in the Loan, the Collateral and the Guaranty
Claims) and not a creditor-debtor, partner, or joint venture relationship
provided that any documents, monies or other property received, retained or held
by Seller for Purchaser shall be held by Seller in trust for Purchaser.
d. SERVICING COMPENSATION. Seller shall receive no
compensation for servicing the Loan.
2. PERCENTAGE INTEREST; CONTRIBUTION PERCENTAGE; MAXIMUM AMOUNT OF
PURCHASER'S COMMITMENT. As used herein, the term "Percentage Interest", when
used with respect to any Purchaser, shall mean the percentage by each
Purchaser's name as set forth and described in Exhibit "D" attached hereto
multiplied by the aggregate amount of principal advanced and outstanding at any
particular time. As used herein, the term "Percentage Interest", when used with
respect to Seller, shall mean the remaining percentage of eighty-nine and 20/100
percent (89.20%) of the aggregate amount of outstanding principal advanced and
outstanding, and from time to time as each such respective Percentage Interest
bears at such time to the aggregate principal balance of the Loan then
outstanding. As used herein, the term "Contribution Percentage" of Purchaser
shall mean the same as the Percentage Interest.
3. FUNDING CRITERIA.
a. ESTABLISHMENT OF PARTICIPATION. Upon execution of the Loan
Documents, Seller shall deliver to Purchaser a Participation Certificate
executed by Seller evidencing Purchaser's contribution to the Loan, in the form
attached hereto as Exhibit "C" and hereby made a part hereof.
b. DEFAULT BY PURCHASER. Any failure by Purchaser to make any
required advance when requested by Seller, shall constitute a default hereunder
as of the day on which the payment was to be made by Purchaser.
4. ALLOCATION OF PAYMENTS. Distributions of principal and interest to
Purchaser or to the Escrow Account on behalf of Purchaser with respect to its
Participation Interest shall be made and payable only out of Payments. Payments
shall be applied by Seller to the indebtedness owing by Borrower and distributed
to the Participants in the following order: (i) to all Extraordinary Expenses,
as hereinafter defined, to the extent thereof; (ii) to liquidated damages and
late fees or charges (other than interest and loan fees) owing under the Loan
Documents, to the extent thereof; (iii) to loan fees owing under the Loan
Documents, to the extent thereof; (iv) to accrued interest, to the extent
thereof; and (v) to unpaid principal of the Loan. Such Payments shall be
allocated among the Participants on the basis of Sections 5 and 13 hereof.
5. PAYMENTS TO PARTICIPANTS.
a. ALLOCATIONS. Subject to Sections 5(b), 5(c) and 13
hereof, each Participant shall be entitled to share in the following payments
to the extent and in the manner hereinafter set forth:
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(i) Extraordinary Expenses, to the extent advanced
by the Participants, shall be reimbursed to the Participants on the basis which
the amount of Extraordinary Expenses advanced by each Participant bears to the
total Extraordinary Expenses advanced by all Participants.
(ii) All liquidated damages, late fees or charges and
other ancillary income (other than as provided
herein) shall be paid solely to Seller;
(iii) All loan, extension, prepayment charges and
reconveyance fees received from Borrower shall be
distributed to the Participants in accordance with their respective Percentage
Interests;
(iv) All interest payments received from Borrower,
excluding interest paid at the "Default Interest
Rate," as defined in the Note, shall be paid first to each Participant, or the
Escrow Account at Seller's election, on the basis of such Participant's
respective Percentage Interest, to the extent the interest accrued at the rate
set forth in the Note on amounts advanced by such Participant from the date that
such amounts were disbursed to Borrower; and interest payments received by
Seller from Borrower at the Default Interest Rate shall be paid to the
Participants, or the Escrow Account at Seller's election, on the basis of their
Percentage Interests, net of a 25 basis point servicing override to be allocated
to Seller and paid to Seller after the Participants have received their
respective allocations of Default Interest Rate interest payment due and payable
under the Note in accordance with the foregoing Default Interest Rate
distribution; and
(v) All Payments in respect of and applied to
principal of the Loan received by Seller from Borrower
shall be paid to the Escrow Account on behalf of each Participant in accordance
with their respective Percentage Interests.
b. RIGHTS TO FUNDS IN THE EVENT OF DEFAULT BY PURCHASER.
Notwithstanding the provisions of Section 5(a) hereof, following any default by
Purchaser and in the event Payments are insufficient to pay the Participant's
their respective Percentage Interests under both Sections 5(a)(iv) and 5(a)(v),
each Participant, or the Escrow Account on behalf of each Participant, shall
receive its prorata share, and only to the extent Seller accepts, in its sole
discretion, partial Payments.
c. EFFECTIVE DATE; RETURNED FUNDS. For purposes of the
calculations of amounts due to or from Purchaser, Payments allocated to
principal and interest of the Loan shall be apportioned between the Participants
as of the time such Payments are received by Seller. If any Payment received by
Seller and distributed or credited to Purchaser is later returned or repaid by
Seller to Borrower or its representative or successor in interest because of the
legal obligation of Seller to do so, Purchaser shall, upon notice by Seller,
immediately pay to Seller Purchaser's pro rata share of such Payment so returned
or repaid. All funds held in the Escrow Account shall be distributed in a time
and manner as reasonably determined by Seller, but in no event will Payments in
respect of interest or principal payments be held in the Escrow Account for more
than sixty (60) days after the Termination Date. All interest or dividends
earned on the Escrow Account shall be distributed sixty (60) days after each
quarterly Payment under the Loan by Seller to Purchaser in accordance with their
respective Percentage Interest.
d. FORM OF PAYMENTS TO PURCHASER. Amounts payable to Purchaser
hereunder shall be made by Seller to the account of Purchaser. Payments or
credits in accordance with Sections 5(a), 5(b) and 13 hereof shall be made by
check, and, made on or before the 60th calendar day after Seller receives such
amounts.
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6. ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION. Seller shall make
its files relating to Borrower available for review by Purchaser. Purchaser
acknowledges that prior to its execution hereof it will have independently, and
without reliance upon any representations of Seller, and based on (i) the
financial information referred to or set forth in the Loan Documents, (ii)
various information provided to Purchaser by Borrower, (iii) its prior
experience and communications with Borrower and the Collateral, and (iv) such
other financial statements, documents and information as Purchaser deemed
appropriate, made and relied upon its own credit analysis and judgment to
execute this Agreement. Seller shall use its best efforts to give prompt notice
to Purchaser as to any default of which it has actual knowledge under the terms
of any Loan Document, or of any other matter which materially affects the
interest of Purchaser in the Loan.
7. DOCUMENTS AND OTHER AGREEMENTS REGARDING ADMINISTRATION OF THE LOAN.
To facilitate Seller's administration and enforcement of the Loan on its own
behalf, and as agent and as applicable, trustee for Purchaser, and to induce
Seller to enter into this Agreement, Purchaser acknowledges and agrees that it
is in Purchaser's best interest that (i) Seller hold for itself, and as trustee
for Purchaser, all executed original copies of the Loan Documents, at its office
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; and (ii)
Seller shall not be required to segregate from its own funds Payments allocable
to Purchaser hereunder. Upon written notice from Purchaser, Seller will permit
Purchaser's agents, at any reasonable time during business hours, to examine the
originals and/or copies of the Loan Documents which are in Seller's possession
and Seller's books and records relating to the Loan; Seller will, upon
Purchaser's request, and at Purchaser's expense, furnish to Purchaser copies of
such documents and agreements relating to the Loan as Seller may have in its
possession; and Seller will use its best efforts, at no expense to Seller, to
obtain such other documents and information from or concerning Borrower as
Purchaser may reasonably request.
8. SELLER'S REPRESENTATIONS, DUTY OF CARE AND RESPONSIBILITY TO
PURCHASER.
a. LIMITED WARRANTIES AND REPRESENTATIONS. Seller hereby
represents and warrants to Purchaser that, at the time of closing the Loan, (i)
to the best of Seller's knowledge, information and belief, no condition or fact
exists which would permit Seller to accelerate the Loan under the Loan Documents
and (ii) the Loan conforms in all respects to the requirements of the Loan
Documents. Notwithstanding the foregoing, to the extent of its Contribution
Interest, each party accepts the full risk of non-payment of the Loan by
Borrower. Seller shall not be responsible for the performance or observance by
Borrower or any Obligor of any of the terms, covenants or conditions of the Loan
Documents or for the inspection or policing of the Collateral. Purchaser
specifically acknowledges that Seller has made no warranty or representation to
Purchaser with respect to the collectibility of the Loan or with respect to the
solvency, financial condition or future financial condition of Borrower or any
Obligor or the genuineness, existence or value of the Collateral.
b. DUTY OF CARE. Seller shall manage and service the Loan and
Escrow Account in accordance with prudent practices, modified from time to time
as it deems appropriate under the circumstances on its behalf and as independent
contractor and trustee on behalf of Purchaser, and, except as expressly set
forth in Section 10 hereof, Seller shall be entitled to take all actions with
respect to the Loan as if there were no other Participant and as if Seller were
solely involved in making the Loan. Seller may act upon any notice, consent,
certificate, cable, telex or other instrument or writing believed by Seller to
be genuine, and Seller may consult with legal counsel, independent accountants,
appraisers and other experts selected by Seller, and provided that Seller has
not breached any duty of care as set forth in this Section 8(b), Seller shall
not be liable for any action taken or omitted to be taken in good faith by
Seller in accordance with the advice of such counsel, accountants, appraisers or
experts. Seller shall not be liable to Purchaser under any circumstances except
for actual losses, if any, suffered by Purchaser hereunder which are proximately
caused either by Seller's negligence, gross negligence, willful misconduct or
bad faith or by Seller's violation of the provisions of Section 10 hereof.
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9. WAIVERS AND RELEASE OF RIGHTS UNDER LOAN DOCUMENTS. Subject to the
affirmative obligations imposed on Seller in Section 10 hereof, Seller reserves
the right, in its sole discretion, at any time or times hereafter, upon
reasonable prior notice to Purchaser, (i) to release any of the Collateral in a
manner which would not materially and adversely impair the value of the Loan,
(ii) to modify, waive or release any of the terms of the Loan Documents, but
only if such modification, waiver or release does not materially and adversely
increase risks relating to the Loan, (iii) to exercise or refrain from
exercising any powers or rights which Seller may have as a matter of law, or
under, or in respect of the Loan Documents, including, without limitation, the
right to enforce the obligations of Borrower or any Obligor, and (v) to take any
other action allowed under the Loan Documents or applicable law; provided,
however, that Seller shall not have the power or authority hereunder, without
the prior written consent of Purchaser, to waive any rights against or release
the Obligors. Seller shall not settle any judicial proceeding between it and any
Borrower without obtaining the prior consent of Purchaser, which consent shall
not be unreasonably withheld or delayed.
10. RESTRICTIONS ON CHANGES IN FUNDAMENTAL TERMS OF LOAN DOCUMENTS.
Unless previously accomplished, Seller shall at closing on the Loan execute and
deliver and cause Borrower and each Obligor to execute and deliver those Loan
Documents required to be filed, recorded or otherwise perfected in such manner
as shall be necessary and appropriate to fully secure the real and personal
property securing the Loan, the rights, privileges, powers and benefits which
such Loan Documents are intended to confer upon Seller and Purchaser. In
addition, Seller shall not, without the written consent of Purchaser, which
consent shall not be unreasonably withheld or delayed, take any of the following
actions: (i) waive any default by Borrower involving the payment of money to
Seller pursuant to the Loan Documents; (ii) extend the time of payment of any of
Borrower's obligations with respect to the Loan for more than 60 days after any
due date; (iii) agree to any change in the rate of interest payable by Borrower
with respect to the Loan (except for reductions which are contemplated by the
Loan Documents); (iv) release any liens or security interests which secure the
Loan and relate to equipment, fixtures or real estate if such release will have
a materially adverse impact on the Collateral; or (v) terminate any financing
statements filed with respect to any of the Collateral.
11. EXPENSES. Except as set forth herein, all normal costs and expenses
of monitoring and collecting the Loan shall be borne by Seller. Upon demand by
Seller, Purchaser shall pay its share of all Extraordinary Expenses, as
hereinafter defined, incurred by Seller in connection with the Loan based on its
Percentage Interest. The term "Extraordinary Expenses" means all costs, expenses
(including, without limitation, attorneys' fees and legal expenses), taxes,
costs and expenses of appeals, and out-of-pocket advances (not including
ordinary overhead expenses or salary expenses for Seller's clerical or
supervisory personnel) which are incurred by Seller at any time or times
hereafter, in connection with (i) the collection or enforcement of the Loan;
(ii) the acquisition and preservation of the Collateral; (iii) the collection or
enforcement of Borrower's liabilities to Seller, or the liabilities of any
Obligor liable with respect to the Loan; (iv) the operation, sale, disposition
or other realization upon or the recovery of possession of the Collateral
(including the collection of loss proceeds for destruction thereof and
collection of awards for the condemnation thereof); (v) the filing and
prosecution of a complaint with respect to any of the above matters; or (vi) the
defense of any claim, actual or threatened by Borrower, a receiver or trustee in
bankruptcy for Borrower, any Obligor or third party, for, or on account of, or
with respect to the Loan, or the Loan Documents, whether to recover damages for
business interference, for liabilities for debts of Borrower, including, but not
limited to, taxes, for alleged preferences or fraudulent conveyances or
transfers received or alleged to have been received from Borrower or any such
Obligor as a result of the Loan or in connection with any Payments, otherwise,
and shall include the amount of any recovery from Seller in such litigation or
proceeding, whether by settlement or pursuant to a judgment (except for any such
recovery resulting from the gross negligence or willful misconduct of Seller
about which Purchaser had no actual knowledge or, if known by Purchaser, about
which Purchaser objected by giving written notice to Seller).
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12. SELLER'S BOOKS AND RECORDS CORRECT. Seller's books and records and
all entries thereon, and statement received by Purchaser from Seller with
respect to the Loan, will at all times (i) evidence both Purchaser's interest
and Seller's interest in the Loan; and, (ii) identify the same as such.
13. DEFAULT BY BORROWER.
a. In the event default occurs in the payment to Seller of
principal or interest on the Loan, Seller at its option, but without obligation
to do so, may re-purchase any or all Purchasers' interests in the Loan.
b. In the event Seller is unable to collect any sums when due
on the Loan, after exercising reasonable efforts to do so, Seller shall give
notice thereof to Purchaser, and, Seller may, if it determines it is in the best
interest of the Participants, proceed to foreclose upon the Collateral securing
the Loan by appropriate proceedings, or sale in lieu of foreclosure. Seller
shall in no way be required to take title to the Collateral in its own name. If
Seller determines necessary, Seller may create a separate entity as an
Extraordinary Expense to take title to the Collateral.
c. If Seller or another designated entity shall acquire title
to any of the Property or Collateral covered by the Loan Documents after, or in
lieu of, foreclosure, all monies received or collected by it (including, but not
limited to, proceeds of title insurance claims) from the operation of or sale of
such property shall be applied in the following order of priority:
(i) First, to the reimbursement of Extraordinary
Expenses to the extent advanced by the Participants on the basis of their
respective Percentage Interests;
(ii) Second, to the payment of any reconveyance fees,
prepayment penalties on the basis set forth in
clause (iii) of Section 5(a) hereof;
(iii) Third, to the payment of the entire amount then
due and payable under the Loan Documents for
accrued interest in accordance with the terms thereof, on the basis and in the
manner required by clause (iv) of Section 5(a) hereof (subject to the provisions
of Section 5(b) hereof);
(iv) Fourth, to the payment of the outstanding
principal balance of the Loan in the manner required by
clause (v) of Section 5(a) hereof (subject to the provisions of Section 5(b)
hereof);
(v) Fifth, to the payment of all accrued but unpaid
liquidated damages and late fees or charges (other
than interest and loan fees) which shall be paid solely to Seller; and
(vi) Sixth, any surplus shall be paid to Seller and
Purchaser in accordance with their respective
Percentage Interests provided that no Participant which is then in default of
its obligations hereunder shall in any event receive more than the unpaid
principal balance it has advanced in respect of the Loan.
d. In the event any or all of the Collateral encumbered by the
Loan Documents, including the Property, are acquired by foreclosure, or by deed
in lieu of foreclosure, at a time when both Seller and Purchaser have an
interest in the Loan, they shall have an undivided interest in such Collateral
equal to the amount of their then respective Percentage Interests as tenants in
common.
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e. In the event Seller shall purchase the interest of
Purchaser pursuant to the provisions of this Section 13, the purchase price
shall be equal to the sum of: (i) all accrued but unpaid interest in respect of
principal advanced by the selling party to which such party is entitled and such
other amounts accrued but unpaid to the selling party pursuant to Section 5
hereof through the date of such purchase, and, (ii) all principal advanced by
the selling party and subtracting from the foregoing sum unreimbursed
Extraordinary Expenses advanced by the purchasing party.
14. SHARING OF SETOFFS AND COLLATERAL. Neither Seller nor Purchaser
shall set-off against the amount of its Percentage Interest or other claims
against Borrower, any of Borrower's accounts or funds now or hereafter received.
If Purchaser shall receive possession of any of the Collateral for any reason
whatsoever, such Collateral shall be held by Purchaser as Seller's agent and
shall, on demand, be delivered to Seller. Any security interest granted by
Borrower to Purchaser, or Seller at any time or times hereafter in all or any
part of the Collateral described in the Loan Documents shall be subordinate in
all respects to the interest of Purchaser and Seller created by this Agreement
or the Loan Documents, regardless of the actual date or order of filing of any
financing statements or other means of perfection under applicable law, or the
date of any loan or advance by Seller under the Loan Documents, and if Seller or
Purchaser shall at any time hereafter hold any lien or security interest other
than the Collateral, then neither shall not commence or take any action to
enforce that lien or security interest without giving the other thirty (30) days
prior written notice. Seller and Purchaser each hereby appoints the other as
their agent for the purpose of perfecting a security interest in any of the
Collateral which may at any time come into the possession of Seller or
Purchaser.
15. PURCHASER'S COMPLIANCE WITH LAW; RESALE OR ASSIGNMENT OF
PARTICIPATION; SALE OF ADDITIONAL PARTICIPATIONS. Purchaser hereby warrants and
represents to Seller that (i) Purchaser's execution and delivery of this
Agreement and purchase of the Participation does not constitute a violation by
Purchaser of any agreement, law, statute, decree or decisions (including any
legal lending limits) which is binding on Purchaser; and (ii) Purchaser is
acquiring the Participation for its own account and will not sell, pledge,
encumber or assign its Participation, or any part thereof, to any person without
Seller's prior written consent. Purchaser may, without further consent of
Seller, and without releasing Purchaser from liability hereunder, assign its
Participation to a parent or a wholly owned subsidiary of Purchaser. Any
prohibited transfer of an interest in the Participation shall be void if
attempted without Seller's written consent. Purchaser may at any time, and from
time to time, enter into one or more agreements with other financial
institutions to reparticipate its Participation; provided, however, that (i) any
such reparticipation shall not be deemed to be an assignment or transfer of
Purchaser's Participation to such financial institution, (ii) any such financial
institution shall not be and shall not be deemed to be a party hereto or a third
party beneficiary hereof and Seller shall have no duty or liability to such
financial institution whatsoever, (iii) neither Seller's nor Purchaser's duties
hereunder may be assigned or transferred hereunder, (iv) such reparticipation
shall not in any manner whatsoever relieve Purchaser from any of its obligations
or liabilities hereunder, (v) such reparticipation shall not involved more than
one financial institution, which shall have previously engaged in the purchase
or sale of participations and to all of which full, true and complete
information concerning the Loan and Borrower shall have been provided, and (vi)
Purchaser and each of its participants shall each have equal shares with one
another. Seller may participate, reparticipate, sell, pledge or assign its
interest in the Loan or its Participation to any other person without
Purchaser's consent. A Participation shall not be, and shall not be construed to
be, a "security" under any federal or state securities law.
16. CERTAIN REPRESENTATIONS AND WARRANTIES.
a. By Seller. Seller represents and warrants that it is duly
organized and validly existing as a Texas corporation; that it has all power and
authority and has taken all actions necessary to execute and deliver this
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Agreement, the Loan Documents, and each document required hereunder; and that
this Agreement, the Loan Documents and each document required hereunder; and
that this Agreement, the Loan Documents and each document required hereunder,
when executed and delivered by it, shall constitute the legal, valid and binding
act of Seller, enforceable, each in accordance with its respective terms, except
as limited by bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting the rights of creditors or depositors of Seller
generally, and by the exercise of judicial discretion in accordance with general
principles of equity.
b. BY PURCHASER. Purchaser represents and warrants that is has
all power and authority and has taken all actions necessary to execute and
deliver this Agreement and each document required hereunder, when executed and
delivered by it, shall constitute the legal, valid and binding act of Purchaser,
enforceable, each in accordance with its respective terms, except as limited by
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting the rights of creditors or depositors of Purchaser generally, and by
the exercise of judicial discretion in accordance with general principles of
equity.
17. DEFAULTS.
a. BY SELLER. It shall be an event of default on the part of
Seller if: (i) Seller has failed to observe and perform each and every one of
the terms, covenants, promises and agreements on its part to be observed and
performed under this Agreement; or (ii) any representation or warranty made by
Seller shall prove untrue in any material respect; or (iii) there shall be a
filing by or against Seller of a petition in bankruptcy or insolvency or
reorganization or the appointment of a receiver or trustee due to insolvency, or
the making by Seller of any assignment for the benefit of creditors, or the
filing of a petition or arrangement by Seller, or in the event of any similar
act or occurrence, Seller admits in writing its inability to pay its debts as
they mature; or (iv) Seller shall fail to promptly remit pursuant to Sections 4,
5 and 13 all sums payable hereunder.
b. BY PURCHASER. It shall be an event of default on the part
of Purchaser if: (i) Purchaser shall have failed to observe and perform each and
every one of the terms, covenants, promises and agreements on its part to be
observed and performed under this Agreement; or (ii) any representation or
warranty made by Purchaser shall prove untrue in any material respect; or (iii)
there shall be a filing by or against Purchaser of a petition in bankruptcy or
insolvency or reorganization or the appointment of a receiver or trustee due to
insolvency, or the making by Purchaser of an assignment for the benefit of
creditors, or the filing of a petition or arrangement by Purchaser, or in the
event of any similar act or occurrence, Purchaser admits in writing its
inability to pay its debts as they mature; or (iv) Purchaser shall fail to
promptly remit pursuant to Sections 3(a) or 11 all sums payable hereunder.
18. REMEDIES.
a. BY PURCHASER. Upon the occurrence of any event of default
by Seller, Purchaser shall give Seller notice thereof and Seller shall have (A)
with respect to a default arising under clause (i) or (ii) of Section 17(a)
hereof thirty (30) days within which to cure such default or within which to
commence such judicial or other appropriate action as will efficiently and
effectively remedy such default; and (B) with respect to a default arising under
clause (iv) of Section 17(a) hereof ten (10) days within which to cure such
default; and (C) with respect to a default arising under clause (iii) of Section
17(a) hereof, sixty (60) days within which to obtain the dismissal or discharge
of any such proceeding. Upon failure by Seller to timely cure any event of
default by it, any and all Purchasers shall have the option to: (i) purchase the
interest of Seller at the purchase price set forth in Section 13(e) in their
prorata share; (ii) with respect to (C) of this Section 18(a) above, after
expiration of the sixty day period, any and all Purchasers shall automatically
succeed to all rights, titles, status and responsibilities which Seller may have
regarding the holding and servicing of the Loan, may exercise all of the powers
8
hereinabove granted to Seller, have the option to designate any one Purchaser on
behalf of all Purchasers or any person or firm in its discretion to exercise
such powers on behalf of all Purchasers and, in such event, the Loan and all
books and records thereof shall be delivered to a Purchaser or its designee, as
applicable, together with necessary or proper assignments, transfers and
documents of authority; and/or (iii) exercise any and all of the remedies to
which Purchaser may be entitled at law or equity. Seller hereby indemnifies
Purchaser from any and all loss, damage or expenses (including, but not limited
to reasonable attorneys' fees) which Purchaser may sustain or incur by reason of
or in consequence of the exercise of its remedies upon any event of default by
Seller pursuant to this Section 18(a) other than direct costs incurred in
connection with any purchase of Seller's interest.
b. BY SELLER. Upon the occurrence of any event of default by
Purchaser, Seller shall give Purchaser notice thereof and Purchaser shall have
(A) with respect to a default arising under clause (i) or (ii) of Section 17(b)
hereof thirty (30) days within which to cure such default or within which to
commence such judicial or other appropriate action as will efficiently and
effectively remedy such default; and (B) with respect to a default arising under
clause (iv) of Section 17(b) hereof ten (10) days within which to cure such
default; and (C) with respect to a default arising under clause (iii) of Section
17(b) hereof, sixty (60) days within which to obtain the dismissal or discharge
of any such proceeding. Upon failure by Purchaser to timely cure any event of
default by it, Seller shall have the option to: (i) purchase the interest of
Purchaser at the purchase price set forth in Section 13(e); (ii) with respect to
(C) of this Section 18(b) above, after expiration of the sixty day period,
Seller shall automatically succeed to all rights, titles, status and
responsibilities which Purchaser may have regarding the holding and servicing of
the Loan, may exercise all of the powers hereinabove granted to Purchaser, have
the option to designate itself or any person or firm in its discretion to
exercise such powers and, in such event, the Loan and all books and records
thereof shall be delivered to Seller or its designee, as applicable, together
with necessary or proper assignments, transfers and documents of authority;
and/or (iii) exercise any and all of the remedies to which Seller may be
entitled at law or equity. Purchaser hereby indemnifies Seller from any and all
loss, damage or expenses (including, but not limited to reasonable attorneys'
fees) which Seller may sustain or incur by reason of or in consequence of the
exercise of its remedies upon any event of default by Purchaser pursuant to this
Section 18(b) other than direct costs incurred in connection with any purchase
of Purchaser's interest.
19. NO WAIVER OR AMENDMENT UNLESS IN WRITING. No waiver or modification
of any provision of this Agreement nor any termination of this Agreement shall
be effective unless in writing and signed by the party against which the waiver,
modification or termination is sought to be enforced, nor shall any waiver be
applicable except in the specific instance for which it is given.
20. NOTICE. All notices, demands, requests, consents, approvals or
other communications (collectively, "Notices") desired or required to be given
under this Agreement shall be in writing, and, any law or statute to the
contrary notwithstanding, shall be effective for any purpose if given or served
by prepaid certified or registered mail, return receipt requested, addressed as
follows. If to Purchaser to: to the address shown on the signature page hereto.
If to Seller, to: American Physicians Service Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇. All Notices
shall be deemed given or served on the earlier to occur of actual receipt or the
second business day after being deposited in the United States mail, postage
prepaid in the manner previously specified. Any party to this Agreement may
change the address to which Notice shall be delivered to him or it and his or
its representatives by notice in accordance with this Section 20. As used in
this Agreement, the term "business day" shall mean any day on which Seller is
open for business with the general public.
9
21. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
22. EXPENSES OF ENFORCEMENT. In the event this Agreement is placed in
the hands of an attorney for enforcement, the prevailing party shall reimburse
the non-prevailing party for all reasonable expenses incurred thereby, including
reasonable costs and attorneys' fees.
23. ENTIRE UNDERSTANDING; COUNTERPARTS. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and may be executed by one or more of the parties in several counterparts, each
of which shall be deemed an original with respect to the party so signing, but
all of which together shall constitute one and the same instrument.
24. SUCCESSORS; GOVERNING LAW. This Agreement shall be binding upon and
shall inure to the benefit of the legal representatives, successors and assigns
of the respective parties hereto and shall be governed by and interpreted in
accordance with the law of the State of Texas.
10
SIGNATURE PAGES
PARTICIPATION AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Participation
Agreement as of the date first set forth herein.
"Seller"
AMERICAN PHYSICIANS SERVICE GROUP, INC.,
a Texas corporation
By:
Name:
Title:
"Purchaser"
Address for Notice
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. ---------------------
Suite C-300 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address for Notice: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. TRUST
c/o American Physicians Service Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇.
Suite C-300 By /s/ Dunane ▇. ▇▇▇▇, ▇▇.
---------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Trustee
Address for Notice:
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
1301 Capital of Texas Hwy. -------------------
Suite C-300 ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address: ▇. ▇. ▇▇▇▇▇▇ DESCENDANTS' TRUST
c/o American Physicians Service Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. By: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ C H Masters
Name: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
Title: Trust Manager
S-1
Address:
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. -----------------------
Suite C-300 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address:
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. -----------------------
Suite C-300 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address:
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. -------------------
Suite C-300 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address:
c/o American Physicians Service Group, Inc. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. ---------------------
Suite C-300 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address:
c/o American Physicians Service Group, Inc. /s/ ▇. ▇. ▇▇▇▇▇▇ III
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇. ---------------------
Suite C-300 ▇. ▇. ▇▇▇▇▇▇ III
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
S-2
EXHIBIT A
REAL PROPERTY
Tract 1: A 0.8800 acre tract now known as ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ FARMS, UNIT 7B, PLANNED UNIT DEVELOPMENT, City of San Antonio, Bexar
County, Texas, according to plat thereof recorded in Volume 9535, Page 203, Deed
and Plat Records of Bexar County, Texas.
Tract 2: All that certain tract or parcel of land, containing 1.6756 acres, more
or less, being out of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Survey, Abstract No. l, situated in Fort
Bend County, Texas. Said 1.6756 acres being all of Commercial Reserve "F" and
part of Commercial Reserve "D" of the Replat of the Amending Plat for Edgewater,
Section Two (2), according to the map or plat thereof recorded in Slide No.
1353/A of the Plat Records of Fort Bend County, Texas. Said 1.6756 acres being
more particularly described by metes and bounds in Exhibit "A-1" attached hereto
and made a part hereof; together with those nonexclusive easement rights
described in that Ingress and Egress Easement, recorded in Volume 2364, Page
1480 of the County Clerk Official Records of Fort Bend County, Texas, and those
easement rights reserved in that deed recorded in Volume 2364, Page 1452 of the
County Clerk Official Records of Fort Bend County, Texas.
Tract 3: A tract or parcel of land being 0.2008 acres, more or less, located in
the ▇▇▇▇▇▇ ▇▇▇▇▇▇ League Survey, Abstract No. l, being out of Commercial Reserve
"D" of the Replat of the Amending Plat for Edgewater, Section Two (2), according
to the map or plat thereof recorded in Slide No. 1353/A of the Plat Records of
Fort Bend County, Texas. Said 0.2008 acres being more particularly described by
metes and bounds in Exhibit "B-1" attached hereto and made a part hereof.
Tract 4: ▇▇▇ ▇▇, ▇▇▇▇▇ "▇", of RESUBDIVISION OF ▇▇▇ ▇, ▇▇▇▇▇ "▇" MILWOOD SECTION
SIX, a subdivision in ▇▇▇▇▇▇ County, Texas, according to the map or plat, of
record in Volume 95, Page 231, of the Plat Records of ▇▇▇▇▇▇ County, Texas.
Tract 5: ▇▇▇ ▇▇, ▇▇▇▇▇ "▇", of RESUBDIVISION OF ▇▇▇ ▇, ▇▇▇▇▇ "▇" MILWOOD SECTION
SIX, a subdivision in ▇▇▇▇▇▇ County, Texas, according to the map or plat, of
record in Volume 95, Page 231, of the Plat Records of ▇▇▇▇▇▇ County, Texas.
EXHIBIT B
1. Promissory Note (Line of Credit)
2. Deed of Trust (Security Agreement, Assignment of Leases and Rents and
Financing Statement)
3. Security Agreement
4. Financing Statement
EXHIBIT C
PARTICIPATION CERTIFICATE
This Participation Certificate certifies that ("Participant") has an
interest of the following percentage and equal to the given amount in the
subject loan which has a principal balance as shown, made by American Physicians
Service Group, Inc., a Texas corporation ("Seller") which is described in a
certain Participation Agreement between Participant and Seller dated March ,
1998 ("Agreement").
Percentage Interest Participant's Loan Amount Current Principal Balance
The Participant shall receive for its Percentage Interest in the Loan,
the Percentage Amount listed above of any principal paid or prepaid pursuant to
the Agreement.
Dated: American Physicians Service Group, Inc.,
a Texas corporation
By:
Name:
Title:
EXHIBIT D
PURCHASER PERCENTAGE SCHEDULE
Purchaser's Name Percentage Interest
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ .50%
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. Trust 2.50%
▇▇▇▇▇▇ ▇. ▇▇▇▇ 2.25%
▇. ▇. ▇▇▇▇▇▇ Descendants' Trust 1.00%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1.30%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1.50%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ .50%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1.00%
▇. ▇. ▇▇▇▇▇▇ III .25%