<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
DECEMBER 8, 1999
AMRESCO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
State of Delaware 0-8630 59-1781257
(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
</TABLE>
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (214) 953-7700
No Change
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
================================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS
Sale of Certain Businesses
General. On December 8, 1999, AMRESCO, INC. (collectively with the
selling subsidiaries described herein, the "COMPANY") and certain of its
subsidiaries, being AMRESCO Management, Inc., AMRESCO Services, L.P., AMRESCO
Capital, L.P., Holliday Fenoglio Fowler, L.P., AMRESCO Commercial Finance, Inc.,
AMRESCO-Institutional, Inc., AMRESCO Mortgage Capital, Inc., AMRESCO Equity
Investments II, Inc., AMRESCO Equities Canada Inc., AMRESCO Financial I, L.P.,
AMRESCO Securities, Inc., AMRESCO Portfolio Investments, Inc. and AMRESCO
Principal Managers II, Inc., as sellers, and Lend Lease (US) Services, Inc.
("LEND LEASE"), as purchaser, entered into an Asset Purchase Agreement (the
"PURCHASE AGREEMENT") pursuant to which the Company agreed to sell to Lend Lease
the Company's asset management, commercial mortgage banking (including
commercial mortgage servicing, commercial mortgage brokerage and commercial loan
origination (excluding the Company's conduit lending programs)) and real estate
structured finance businesses (the "BUSINESSES"). The transaction encompasses
both the domestic and international operations of the Businesses, other than
those Business operations conducted in Europe.
Purchase Price. The gross, unadjusted purchase price for the Businesses
is $247.5 million (the "CONSIDERATION"). The Consideration will be comprised of
$225.5 million of cash paid at closing and an unsecured, non-negotiable
promissory note of Lend Lease (the "NOTE") aggregating $25.0 million. The
Consideration received at closing will be adjusted for estimated increases or
decreases in the net working capital of the Businesses and decreases in the
estimated revenues to be received by Lend Lease pursuant to certain servicing
agreements as a result of pre-closing asset sales. After closing, the actual
amount of these adjustments will be calculated as of the closing date, and the
parties will promptly compensate each other for any difference with the
estimated adjustments. Additionally, the amount of Consideration paid will be
reduced on an item-by-item basis for certain significant consents or approvals
not obtained by the Company at the time of closing. If any of these consents or
approvals are obtained within one year of the closing and certain other
conditions are satisfied, the amount of the corresponding closing reduction will
be repaid to the Company. The purchase price was the result of arms-length
negotiations between the parties.
Interest on the Note accrues at a rate of 7.5% per annum. The initial
principal payment under the Note is due on the second anniversary of closing.
Payment of the principal will be subject to and may be offset by any obligation
of the Company owed to Lend Lease under the Purchase Agreement or other related
agreements, including the Company's indemnity obligations thereunder. The Note
will not be paid in full until all indemnity claims of Lend Lease or other
permitted holdbacks have been finally resolved.
Purchased Assets. The Purchase Agreement generally provides that Lend
Lease will acquire substantially all of the assets (the "PURCHASED ASSETS") used
in the Businesses. The Purchased Assets include the Businesses' real property,
real property leases, fixtures and improvements, furniture, office equipment and
similar tangible personal property, permits (to the extent transferable),
intellectual property, various servicing and other agreements, accounts
receivable, earned and unearned fees and cash. In addition, certain computer
hardware and software will also be conveyed as well as the equity interests of
certain co-investments related
2
<PAGE> 3
to the Businesses and certain foreign subsidiaries. Lend Lease will assume
certain liabilities associated with the Purchased Assets. With certain
exceptions, Lend Lease will not be acquiring the loans and other financial-type
assets (e.g., residual and subordinated interests in securitizations) of the
Company, whether or not originated by the Businesses.
Lend Lease will assume certain pre-closing liabilities relating to the
Businesses, including certain accounts payable accrued in the ordinary course of
business and included in the net working capital of the Businesses and certain
obligations to employees hired by Lend Lease to the extent included in the net
working capital of the Businesses. Outside of enumerated liabilities or
obligations expressly assumed by Lend Lease, all pre-closing liabilities and
obligations related to the Businesses will remain with the Company.
Representations and Warranties. The Purchase Agreement contains various
representations and warranties customary for asset purchase transactions. The
representations and warranties address various matters, including the
authorization of the Purchase Agreement, required consents, power and authority,
litigation, compliance with laws, title to the assets being conveyed,
intellectual property rights and software matters, accuracy of the information
supplied to Lend Lease by the Company, absence of changes and undisclosed
liabilities, and servicing contract matters.
Closing and Conditions to Closing. Closing of the transaction will
occur upon satisfaction of various conditions to closing. Closing is to occur on
or prior to April 14, 2000. Lend Lease's closing conditions include, among
others, the absence of any material litigation, the continued accuracy of the
representations and warranties of the parties, the receipt of required
governmental approvals and other third party consents and releases, the delivery
of favorable opinions of counsel, the retention of key employees, the execution
and delivery of various ancillary documents, the receipt of solvency and
fairness opinions regarding the Company, the lack of material adverse changes in
respect of the Businesses or events that might give rise to bankruptcy
proceedings in respect to the Company, the absence of additional material
encumbrances and liabilities, the amendment of a particular limited liability
company agreement, the maintenance of financial ratings of the Company's
servicing division, the absence of material default on the Company's debt, and
the completion of a refinancing by Lend Lease of a warehouse facility in respect
of one of the Businesses. There can be no assurance that all required consents
can be obtained, that all such closing conditions can be satisfied or that the
transactions contemplated by the Purchase Agreement will be consummated.
Covenants. The Purchase Agreement imposes restrictions and requirements
on the operations of the Company between the date of the Purchase Agreement and
the closing. Generally, the Company must use its best reasonable efforts to
maintain the Businesses in their form and substance as of the date of the
Purchase Agreement. With certain exceptions, the interim operations of the
Businesses may not include the making or amendment of any agreement involving
payments of $100,000 or more, the hiring of employees with an annual base salary
over $45,000, merger, consolidation, or sale of all or substantially all assets,
an increase in employee compensation, the execution of employment and consulting
agreements, the modification of current employee benefit plans and distributions
(except as required by law), the removal or replacement of assets, the sale or
purchase of assets over $50,000, the disposition of servicing rights, the
alteration of material practices regarding accounts payable and accounts
receivable, the initiation of any bankruptcy or insolvency proceeding or the
incurrence of
3
<PAGE> 4
additional liens and encumbrances. Additionally, AMRESCO, INC. and its
subsidiaries that are not parties to the Purchase Agreement are prohibited from
engaging in any merger, consolidation or sale of all or substantially all assets
unless the transaction gives full effect and recognition to the Purchase
Agreement. Following closing, the Company may neither compete, directly or
indirectly, in any manner with the Businesses nor solicit employees, customers,
clients, suppliers, or licensors with respect to any business conducted by the
Company substantially similar to the Businesses.
Termination. The Purchase Agreement provides for certain customary
termination rights, and contains a no fault termination date of April 14, 2000
by either the Company or Lend Lease. Principally, Lend Lease is given the right
to terminate the Purchase Agreement if the Company fails to meet the conditions
of closing, files for or becomes subject to a bankruptcy proceeding or is lead
to believe that it will not be able to obtain the required solvency and fairness
opinions. If Lend Lease terminates the Purchase Agreement as permitted and the
Company enters into an agreement to sell or otherwise dispose of all or a
significant portion of the Businesses or the Purchased Assets within 12 months
thereof, the Company must pay a termination fee of up to $23.5 million.
Survival and Indemnification. Generally, the representations and
warranties survive until the second anniversary of closing. Certain
representations and warranties survive indefinitely or until expiration of the
applicable statute of limitations. The Purchase Agreement provides that the
respective parties will indemnify the other for certain breaches, actions or
other claims, including claims arising with respect to liabilities to be assumed
by Lend Lease or retained by the Company. The indemnities made by each of the
Company and Lend Lease are subject to a basket or floor of $750,000 before any
claim can be pursued against the indemnifying party. The indemnity of the
Company is subject to a cap of $100 million for breaches of representations and
warranties claimed through the first anniversary of closing and, thereafter, $50
million (plus claims made during the first year). Lend Lease's indemnity is
limited to $25 million in the aggregate.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of December 8, 1999, by and
among the Company, AMRESCO Management, Inc., AMRESCO Services, L.P.,
AMRESCO Capital, L.P., Holliday Fenoglio Fowler, L.P., AMRESCO
Commercial Finance, Inc., AMRESCO- Institutional, INC., AMRESCO
Mortgage Capital, Inc., AMRESCO Equity Investments II, Inc., AMRESCO
Equities Canada Inc., AMRESCO Financial I, L.P., AMRESCO Securities,
Inc., AMRESCO Portfolio Investments, Inc., AMRESCO Principal Managers
II, Inc., and Lend Lease (US) Services, Inc.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
AMRESCO, INC.
Date: January 7, 2000 By: /s/ L. KEITH BLACKWELL
--------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President, General
Counsel, and Secretary
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Asset Purchase Agreement, dated as of December 8, 1999, by
and among the Company, AMRESCO Management, Inc., AMRESCO
Services, L.P., AMRESCO Capital, L.P., Holliday Fenoglio
Fowler, L.P., AMRESCO Commercial Finance, Inc., AMRESCO-
Institutional, INC., AMRESCO Mortgage Capital, Inc., AMRESCO
Equity Investments II, Inc., AMRESCO Equities Canada Inc.,
AMRESCO Financial I, L.P., AMRESCO Securities, Inc., AMRESCO
Portfolio Investments, Inc., AMRESCO Principal Managers II,
Inc., and Lend Lease (US) Services, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and among
AMRESCO, INC.,
AMRESCO MANAGEMENT, INC.,
AMRESCO SERVICES, L.P.,
AMRESCO CAPITAL, L.P.,
HOLLIDAY FENOGLIO FOWLER, L.P.,
AMRESCO COMMERCIAL FINANCE, INC.,
AMRESCO-INSTITUTIONAL, INC.,
AMRESCO MORTGAGE CAPITAL, INC.,
AMRESCO EQUITY INVESTMENTS II, INC.,
AMRESCO EQUITIES CANADA INC.,
AMRESCO FINANCIAL I, L.P.,
AMRESCO SECURITIES, INC.,
AMRESCO PORTFOLIO INVESTMENTS, INC.,
AMRESCO PRINCIPAL MANAGERS II, INC.
and
LEND LEASE (US) SERVICES, INC.
Dated as of
December 8, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions.................................................................2
ARTICLE II
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.1 Transfer of Assets.................................................................18
Section 2.2 Nonassignable Leases and Contracts.................................................22
Section 2.3 Assumption of Liabilities..........................................................23
ARTICLE III
PURCHASE PRICE; PAYMENT
Section 3.1 The Purchase Price.................................................................27
Section 3.2 Estimated Purchase Price Adjustment; Closing Date Adjustments......................28
Section 3.3 Post-Closing Purchase Price Adjustments............................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 4.1 Organization of the Seller; Purchased Entity Ownership.............................32
Section 4.2 Power and Authority................................................................33
Section 4.3 No Conflicts; Consents.............................................................33
Section 4.4 Litigation; Compliance with Laws...................................................34
Section 4.5 SEC Reports; Financial Statements..................................................35
Section 4.6 Owned Real Property and Leases.....................................................36
Section 4.7 Labor Relations....................................................................38
Section 4.8 Mortgage Loans.....................................................................38
Section 4.9 Approved Issuer....................................................................42
Section 4.10 Transactions with Affiliates.......................................................42
Section 4.11 Intellectual Property and Software.................................................43
Section 4.12 Environmental Liability............................................................44
Section 4.13 Brokers............................................................................44
Section 4.14 Information Supplied; Accuracy of Data.............................................45
Section 4.15 Taxes..............................................................................45
Section 4.16 Absence of Changes.................................................................47
Section 4.17 Absence of Undisclosed Liabilities.................................................47
Section 4.18 Employee Benefits..................................................................48
Section 4.19 Purchased Assets...................................................................49
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.20 Contracts..........................................................................49
Section 4.21 Insurance..........................................................................50
Section 4.22 Servicing Agreement Matters........................................................50
Section 4.23 Solvency...........................................................................51
Section 4.24 Foreign Practices Act Compliance...................................................51
Section 4.25 Purchased Entities.................................................................51
Section 4.26 AMRESCO Securities, Inc............................................................52
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 5.1 Organization of the Purchaser......................................................52
Section 5.2 Power and Authority................................................................52
Section 5.3 No Conflicts.......................................................................53
Section 5.4 Litigation.........................................................................53
Section 5.5 Brokers............................................................................53
Section 5.6 Financial Capability...............................................................53
ARTICLE VI
EMPLOYEES AND EMPLOYEE-RELATED MATTERS
Section 6.1 Human Resources Transition.........................................................53
Section 6.3 Incentive Based Payment Program....................................................53
Section 6.3 Additional Payments................................................................53
ARTICLE VII
CLOSING
Section 7.1 The Closing........................................................................54
Section 7.2 Closing Deliveries.................................................................54
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO
CONSUMMATE THE TRANSACTION
Section 8.1 Representations and Warranties; Compliance with Covenants..........................57
Section 8.2 No Proceedings.....................................................................58
Section 8.3 Approvals..........................................................................58
Section 8.4 Third Party Consents...............................................................58
Section 8.5 Opinion of Sellers' Counsel........................................................59
Section 8.6 Employment.........................................................................59
Section 8.7 Closing Deliveries.................................................................59
Section 8.8 Solvency Opinion...................................................................59
Section 8.9 Fairness Opinion...................................................................60
Section 8.10 No Material Adverse Change.........................................................60
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.11 Illegality.........................................................................60
Section 8.12 No Additional Liabilities or Encumbrances..........................................60
Section 8.13 Releases...........................................................................60
Section 8.14 Sublease...........................................................................60
Section 8.15 Pavilion Fund......................................................................60
Section 8.16 Decline in Ratings.................................................................61
Section 8.17 Default Under Bonds................................................................61
Section 8.18 Release of Encumbrances............................................................61
Section 8.19 Warehouse Line.....................................................................61
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS TO
CONSUMMATE THE TRANSACTION
Section 9.1 Representations and Warranties; Compliance with Covenants..........................61
Section 9.2 Illegality.........................................................................62
Section 9.3 Approvals..........................................................................62
Section 9.4 Closing Deliveries.................................................................62
Section 9.5 Payment............................................................................62
Section 9.6 Opinion of Purchaser's Counsel.....................................................62
ARTICLE X
COVENANTS
Section 10.1 Actions to Consummate the Transactions; Regulatory Filings and Consents............62
Section 10.2 Antitrust..........................................................................63
Section 10.3 Access to Information..............................................................63
Section 10.4 No Extraordinary Actions by the Seller.............................................65
Section 10.5 Further Assurances.................................................................68
Section 10.6 Insurance Policies.................................................................68
Section 10.7 Mail Received After Closing; Power of Attorney.....................................69
Section 10.8 Confidentiality; Publicity.........................................................69
Section 10.9 Transition Services Agreement; IT Services Agreement...............................70
Section 10.10 Other Agreements...................................................................70
Section 10.11 Agreement Not to Compete; Non-Solicitation.........................................70
Section 10.12 Updated Mortgage Loan Schedule; Rejected GSE Loans.................................72
Section 10.13 Notification.......................................................................73
Section 10.14 Real Property Matters..............................................................73
Section 10.15 Intellectual Property..............................................................74
Section 10.16 Entity Name and Survival...........................................................74
Section 10.17 Bank Debt..........................................................................74
Section 10.18 Release of Affiliate Claims........................................................74
Section 10.19 AMRESCO Securities, Inc............................................................75
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 10.20 Letter of Credit...................................................................75
ARTICLE XI
TAX MATTERS
Section 11.1 Section 338(h)(10) Election........................................................75
Section 11.2 Purchase Price Allocation..........................................................75
Section 11.3 Allocation of Purchase Price for Purchased Subsidiaries Assets.....................76
Section 11.4 Tax Periods Ending on or Before the Closing Date...................................76
Section 11.5 Consolidated, Combined and Unitary Tax Returns.....................................76
Section 11.6 Carrybacks and Refunds.............................................................77
Section 11.7 Tax Periods Beginning Before and Ending after the Closing Date.....................77
Section 11.8 Tax Returns Prepared by the Purchaser..............................................78
Section 11.9 Cooperation on Tax Matters.........................................................78
Section 11.10 Tax Indemnification................................................................78
Section 11.11 Allocation of Certain Taxes........................................................79
Section 11.12 Certain Taxes......................................................................79
Section 11.13 Termination of Tax Sharing Agreement...............................................79
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
Section 12.1 Survival...........................................................................80
Section 12.2 Indemnification of the Purchaser...................................................80
Section 12.3 Indemnification of the Sellers.....................................................81
Section 12.4 Procedures for Making Claims Against Indemnifying Party............................81
Section 12.5 Defense of Claims..................................................................81
Section 12.6 Remedies Exclusive.................................................................82
Section 12.7 Limitation of the Sellers' and the Purchaser's Obligations to Indemnify............83
Section 12.8 Offset Right.......................................................................84
Section 12.9 Duty to Mitigate...................................................................84
Section 12.10 Net Indemnifiable Losses...........................................................84
ARTICLE XIII
TERMINATION
Section 13.1 Termination........................................................................84
Section 13.2 Effect of Termination..............................................................86
Section 13.3 Fees and Expenses..................................................................87
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Complete Agreement.................................................................87
Section 14.2 Waiver and Amendment...............................................................87
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 14.3 Partial Invalidity.................................................................87
Section 14.4 Notices............................................................................88
Section 14.5 Governing Law......................................................................89
Section 14.6 Consent to Jurisdiction............................................................89
Section 14.7 Headings...........................................................................89
Section 14.8 Assignment; Successors and Assigns.................................................89
Section 14.9 Third Parties......................................................................90
Section 14.10 Interpretation.....................................................................90
Section 14.11 Enforcement........................................................................90
Section 14.12 Execution in Counterparts..........................................................91
Section 14.13 Arbitration........................................................................91
Section 14.14 Obligations of the Sellers.........................................................92
Exhibits:
Exhibit A-1 - Form of Asset Management and Servicing Agreement
Exhibit A-2 - Form of Designation Agreement
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Form of Bill of Sale
Exhibit D - Purchase Price Adjustment Examples Worksheet
Exhibit E - [Intentionally Omitted]
Exhibit F - [Intentionally Omitted]
Exhibit G-1 - Form of Opinion of Seller's Counsel
Exhibit G-2 - Form of Opinion of Purchaser's Counsel
Exhibit H - Form of Holdback Note
Exhibit I - Sublease Term Sheet
Exhibit J - Form of Lender Consent
Exhibit K - Form of Human Resources Transition Agreement
Exhibit L - Form of Seller Non-Exclusive Trademark License Agreement
Exhibit M - Form of Purchaser Non-Exclusive Trademark License Agreement
Schedules:
Schedule 2.1(a)(i) - Owned Real Property
Schedule 2.1(a)(ii) - Transferred Leases and Leased Premises
Schedule 2.1(a)(v) - Equipment; Equipment Leases
Schedule 2.1(a)(vi) - Permits
Schedule 2.1(a)(vii) - Intellectual Property
Schedule 2.1(a)(ix) - Purchased Contracts
Schedule 2.1(a)(xii) - Bank Accounts
Schedule 2.1(a)(xiii) - Business Records
Schedule 2.1(a)(xvi) - Computer Hardware
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Schedule 2.1(a)(xvii)A - Third Party Software
Schedule 2.1(a)(xvii)B - Seller Transferred Software
Schedule 2.1(a)(xvii)C - Seller Licensed Software
Schedule 2.1(a)(xix) - Purchased Entities
Schedule 2.1(b) - Excluded Assets
Schedule 2.1(b)(x) - Excluded Software
Schedule 2.3(a) - Other Assumed Liabilities
Schedule 2.3(b)(xi) - Bank Debt
Schedule 2.3(b)(xviii) - Earnout Liabilities
Schedule 3.3 - Post-Closing Purchase Price Adjustments
Schedule 3.3(c)(ii) - Co-Investment Entity Assets
Schedule 4.1(b) - Purchased Entity Interests
Schedule 4.3(a) - No Conflicts
Schedule 4.3(b) - Consents and Related Matters
Schedule 4.4 - Litigation; Judgments
Schedule 4.6 - Real Property
Schedule 4.8 - GSE Mortgage Loans
Schedule 4.9 - Approved Issuer
Schedule 4.10 - Affiliate Transactions
Schedule 4.11 - Intellectual Property
Schedule 4.15 - Tax Matters
Schedule 4.16 - Absence of Changes
Schedule 4.18 - Employee Benefits
Schedule 4.19 - Permitted Encumbrances
Schedule 4.20 - Contracts
Schedule 4.21 - Insurance Policies
Schedule 4.22 - Servicing Agreement Matters
Schedule 7.2(a)(ix) - Estoppel Letters
Schedule 7.2(a)(xiii) - Releases
Schedule 8.3 - Sellers Required Governmental Approvals
Schedule 8.4(a) - Sellers Required Consents
Schedule 8.4(c) - Third Party Software Consents
Schedule 8.6 - Key Employees
Schedule 9.3 - Purchaser Required Consents
Schedule 10.4(a) - Interim Operating Covenants
Schedule 14.10 - Knowledge
Purchaser Disclosure Schedule
</TABLE>
vi
<PAGE> 8
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
December 8, 1999, by and among AMRESCO, INC., a Delaware corporation, AMRESCO
Management, Inc., a Texas corporation ("AMI"), AMRESCO Services, L.P., a
Delaware limited partnership ("ASLP"), AMRESCO Capital, L.P., a Delaware limited
partnership ("ACLP"), Holliday Fenoglio Fowler, L.P., a Delaware limited
partnership ("HFF"), AMRESCO Commercial Finance, Inc., a Nevada corporation
("ACFI"), AMRESCO-Institutional, Inc., a Delaware corporation ("AII"), AMRESCO
Mortgage Capital, Inc., a Delaware corporation ("AMCI"), AMRESCO Equity
Investments II, Inc., a Delaware corporation ("AEI"), AMRESCO Equities Canada
Inc., a corporation organized under the laws of Alberta, Canada ("AECI"),
AMRESCO, Financial I, L.P., a Delaware limited partnership ("AFI"), AMRESCO
Securities, Inc., a Texas corporation ("ASI"), AMRESCO Portfolio Investments,
Inc., a Delaware corporation ("APII"), AMRESCO Principal Managers II, Inc., a
Delaware corporation ("APM"), and Lend Lease (US) Services, Inc., a Delaware
corporation ("LEND LEASE").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Sellers (as hereinafter defined) desire to sell, convey, assign,
transfer and deliver to the Purchaser (as hereinafter defined), and the
Purchaser desires to purchase and acquire from the Sellers, certain of the
assets, subject to certain specified liabilities, relating to the Businesses (as
hereinafter defined); and
WHEREAS, as an inducement to the Purchaser's entering into
this Agreement and as a condition to the Purchaser's obligation to consummate
the transactions contemplated hereby, certain employees of the Sellers have
entered into employment agreements and non-compete agreements with the Purchaser
(collectively, the "EMPLOYMENT AGREEMENTS"), dated as of the date hereof, which
agreements will become effective upon the Closing (as hereinafter defined); and
WHEREAS, as an inducement to the Purchaser's entering into
this Agreement and as a condition to the Purchaser's obligation to consummate
the transactions contemplated hereby, at the Closing, the Purchaser, AMRESCO,
INC. and certain of its Subsidiaries shall enter into various asset management
and designation agreements, in the forms of Exhibit A-1 and A-2 hereto (the
"PURCHASER SERVICING AGREEMENTS"), pursuant to which, among other things, the
Purchaser shall earn fees for providing certain services specified therein; and
WHEREAS, as a condition to the Purchaser's obligation to
consummate the transactions contemplated hereby, AMRESCO shall receive and
deliver to the Purchaser, at or prior to the Closing, the consent of each lender
under its revolving credit facility with Bank of America, N.A., as successor to
NationsBank, N.A., as administrative agent for the lenders thereunder, to the
consummation of the transactions contemplated hereby, which consent shall be in
the form of Exhibit J hereto or such other form as shall be reasonably
acceptable to the Purchaser (collectively, the "LENDER CONSENTS"); and
<PAGE> 9
WHEREAS, the Board of Directors of AMRESCO, INC. has received
the written opinion, dated as of the date of this Agreement, of Goldman, Sachs &
Co. ("GOLDMAN SACHS") that, as of the date of this Agreement, the consideration
to be received by the Sellers pursuant to this Agreement is fair to AMRESCO,
INC. from a financial point of view.
WHEREAS, the Board of Directors of AMRESCO, INC. has approved
the transactions described herein as being in the best interest of AMRESCO, INC.
and its stockholders.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. In addition to the words and
terms defined elsewhere in this Agreement, as used in this Agreement and the
Schedules hereto, the following terms shall have the meanings specified or
referred to below:
"ACCOUNTING FIRM" has the meaning specified in Section 3.3(b).
"ACCOUNTS RECEIVABLE" has the meaning specified in Section
2.1(a)(xi).
"ACFI" has the meaning specified in the first paragraph of
this Agreement.
"ACLP" has the meaning specified in the first paragraph of
this Agreement.
"ACTION" shall mean any action, appeal, petition, plea,
charge, complaint, claim, suit, demand, litigation, arbitration, hearing,
inquiry, investigation or similar event, occurrence or proceeding.
"ADVERSE CONSEQUENCES" means all Actions, Judgments,
Liabilities, Losses, Taxes, and Encumbrances.
"AECI" has the meaning specified in the first paragraph of
this Agreement.
"AEI" has the meaning specified in the first paragraph of this
Agreement.
"AFFILIATE" with respect to any party, means a party, Person
or entity that, directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such party, where
"control", "controlled by" and "under common control with" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such party, whether through the ownership of voting
securities, by voting trust, contract or similar arrangement, as trustee or
executor, or otherwise.
2
<PAGE> 10
"AFI" has the meaning specified in the first paragraph of this
Agreement.
"AGREEMENT" has the meaning referred in the first paragraph of
this Agreement.
"AII" has the meaning specified in the first paragraph of this
Agreement.
"ALTERNATIVE TRANSACTION" has the meaning specified in Section
13.2(a)(ii).
"AMCI" has the meaning specified in the first paragraph of
this Agreement.
"AMI" has the meaning specified in the first paragraph of this
Agreement.
"AMRESCO" means AMRESCO, INC., a Delaware corporation,
together with all of its Subsidiaries on a consolidated basis; provided that as
used in the definition of "Seller" or "Sellers", AMRESCO shall refer only to
AMRESCO, INC.
"AMRESCO GROUP" means the Affiliated Group of corporations,
within the meaning of Section 1504(a) of the Code, of which AMRESCO, INC. is the
common parent corporation.
"AMRESCO PARTY" means AMRESCO, INC. and any Subsidiary or
Affiliate of AMRESCO, INC., other than the Purchased Entities.
"ANTITRUST LAWS" has the meaning specified in Section 10.2(a).
"APII" has the meaning specified in the first paragraph of
this Agreement.
"APM" has the meaning specified in the first paragraph of this
Agreement.
"APPROVALS" means franchises, licenses, permits, novations,
certificates of occupancy and other approvals, authorizations, consents and
waivers.
"ASI" has the meaning specified in the first paragraph of this
Agreement.
"ASLP" has the meaning specified in the first paragraph of
this Agreement.
"ASSET MANAGEMENT AGREEMENT" means the Asset Management
Agreement, in the form of Exhibit A-1 hereto, to be entered into at the Closing.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement in substantially the form attached hereto as Exhibit B.
"ASSUMED LIABILITIES" has the meaning specified in Section
2.3(a).
"BANK DEBT" shall mean the indebtedness owed by any of the
Sellers to certain financial institutions as described on Schedule 2.3(b)(xi).
"BANKRUPTCY ACTION" has the meaning set forth in Section
10.4(a)(viii).
3
<PAGE> 11
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect and all
rules and regulations promulgated thereunder.
"BASKET" has the meaning set forth in Section 12.7(a).
"BENEFIT PLANS" has the meaning specified in Section 4.18(a).
"BILL OF SALE" means the bill of sale in substantially the
form attached hereto as Exhibit C.
"BUSINESSES" means the following lines of business of AMRESCO
and/or its Subsidiaries and Affiliates (whether existing now or existing at or
before the Closing, domestic or international, direct or indirect): servicing
commercial real estate mortgage loans which are owned by third parties; RESF;
representing and advising third parties in connection with due diligence,
acquisition, servicing and management of non-performing and under-performing
loans and under-performing real property investments; representation of third
parties, including brokerage activities, in connection with such third parties
obtaining debt and/or equity financing relating to real estate owned by or to be
acquired by such third parties or the sale of real properties owned by such
third parties; making loans pursuant to existing and future the Fannie Mae DUS
and Freddie Mac Program Plus Programs and the underwriting and closing of
mortgage loans on commercial properties pursuant to the TIAA Program; the
selling forward of Fannie Mae DUS mortgage loans and mortgage backed securities
as part of a Fannie Mae DUS Program; and the ownership and operation of the
Purchased Entities and the assets and interests held thereby; provided, however,
that the "Businesses" shall not include the operation or ownership of any of the
foregoing lines of business conducted in the United Kingdom or Europe as of the
date hereof.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close. Any event the scheduled occurrence of which would fall on a day
that is not a Business Day shall be deferred until the next succeeding Business
Day.
"BUSINESS RECORDS" shall mean all of the Sellers' right, title
and interest in and to all books, records, data, files and documents relating to
the Businesses or the Purchased Assets, including all account applications,
statements, mortgage documents, Loan Files and other related files, marketing
materials, financial information, tax filings, any reports or records relating
to investors, GSE Mortgage Loans, the Purchased Contracts and the Servicing
Agreements identified on the Schedules hereto (including any trustee reports,
current and previous customer information, including servicing and collection
records, information relating to correspondents and brokers, information
relating to origination history and practice, comments and correspondence,
whether in documentary form or on microfilm, microfiche, magnetic tape, computer
disk or other form), financial, environmental, production and operation, safety
or technical matters, as well as the customer lists owned exclusively by any
Seller or shared with any of their respective Subsidiaries or Affiliates, broker
and correspondent lists and any related mailing lists relating to the Businesses
and all records relating to the sale of loans by any Seller, all as may be in
the possession or the control (including the right to access) of any of the
Sellers or any of their Subsidiaries.
4
<PAGE> 12
"BUSINESS UNIT" means each of the ACLP, ASLP, HFF, AMI and
RESF units of the Businesses.
"CASH CONSIDERATION" has the meaning specified in Section 3.1.
"CLAIMS" has the meaning specified in Section 12.3.
"CLOSING" means the closing of the transactions contemplated
by this Agreement.
"CLOSING DATE" means the date on which the Closing actually
occurs in accordance with Section 7.1.
"CLOSING DATE ADJUSTMENT" has the meaning specified in Section
3.2(b).
"CLOSING BALANCE SHEET" has the meaning specified in Section
3.3(a).
"CLOSING BALANCE SHEET DATE" has the meaning specified in
Section 3.3.
"CMBS" has the meaning specified in Section 2.1(b)(vii).
"CODE" means the Internal Revenue Code of 1986, as amended.
All section references to the Code (or Treasury Regulations) shall include all
similar provisions under the applicable state, local or foreign Law.
"COMPUTER HARDWARE" shall have the meaning specified in
Section 2.1(a)(xvi).
"CONSENTS" shall have the meaning specified in Section
4.3(b)(ii).
"CONTRACT" means any note, bond, mortgage, indenture, deed of
trust, license agreement, franchise, contract, agreement, Lease, instrument or
guarantee, in whatever form, written or oral.
"COUNTER NOTICE" has the meaning specified in Section 12.4(a).
"CS FIRST BOSTON" has the meaning specified in Section 4.8(l).
"CUSTODIAL ACCOUNT" means the payment clearing accounts,
principal and interest accounts, Escrow Account or any other accounts that
include any funds held or controlled by any Seller pursuant to the Servicing
Agreements or obligations thereunder, including all principal and interest
funds, buydown funds and any other funds held by any Seller on behalf of others,
or due Investors or others.
"CUT-OFF DATE" has the meaning specified in Section 4.8(b).
"DEFERRED BONUS PAYMENTS" has the meaning specified in Section
2.3(a)(iv).
5
<PAGE> 13
"DESIGNATION AGREEMENT" means the Designation Agreement, in
the form of Exhibit A-2 hereto, to be entered into at the Closing.
"DIRECT LEASE" has the meaning specified in Section 8.14.
"DUS RESERVES" shall mean amounts, reflected in the Financial
Statements as of September 30, 1999 or reflected on the Closing Balance Sheet,
as the case may be, specifically reserved for losses (whether or not allocated)
arising from or related to any loans originated by or on behalf of ACLP under
the Fannie Mae DUS Program, or any loan commitments therefor.
"ELECTION ALLOCATIONS" has the meaning set forth in Section
11.3.
"ELECTION CORPORATION" means each Purchased Entity listed on
Schedule 4.15(h) hereto.
"EMPLOYEE" means any current officer, director, employee, or
leased employee of any of the Sellers or any of their respective Affiliates or
Subsidiaries (including individuals who are U.S.-based and individuals who are
located or performing services outside of the U.S.), who are employed or engaged
in, or otherwise providing services to, the Businesses, including the employees
listed in Schedule 2.1 to the form of Human Resources Transition Agreement
attached as Exhibit K.
"EMPLOYEE COMMITMENT" has the meaning specified in Section
4.18(a)(ii).
"EMPLOYEE COMPENSATION AMOUNT" has the meaning specified in
Section 2.3(a)(iv).
"EMPLOYEE PLAN" has the meaning specified in Section
4.18(a)(i).
"EMPLOYMENT AGREEMENTS" has the meaning specified in the
Recitals to this Agreement.
"ENCUMBRANCE" means any Lien, claim, charge, easement, defect
in title, covenant or other encumbrance.
"EQUIPMENT" has the meaning specified in Section 2.1(a)(v).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW ACCOUNT" means the account or accounts that includes
all funds due third parties (other than Investors) held or controlled by any
Seller with respect to Mortgage Loan escrows/impounds relating to the Servicing
Rights, including accounts for real estate taxes, flood and hazard insurance
premiums.
"ESTIMATED PURCHASE PRICE ADJUSTMENT" has the meaning
specified in Section 3.2(a).
6
<PAGE> 14
"EXCHANGE ACT" has the meaning specified in Section 4.5(a).
"EXCLUDED ASSETS" has the meaning specified in Section 2.1(b).
"EXCLUDED LIABILITIES" has the meaning specified in Section
2.3(b).
"EXCLUDED SOFTWARE" means, to the extent relating to or
utilized by any of the Businesses or the Purchased Assets, business-critical
computer software owned, developed or currently being developed, by, or on
behalf of, any of the Sellers or acquired by any such Seller from third parties,
ownership of which or licensing rights in which, do not constitute Purchased
Assets and shall not be transferred or granted to Purchaser pursuant to Section
2.1, as more fully described on Schedule 2.1(b)(x).
"EXCLUSIVITY AGREEMENT" has the meaning set forth in Section
13.1(h).
"FANNIE MAE" means Fannie Mae, a Federally chartered
corporation.
"FINANCIAL STATEMENTS" has the meaning specified in Section
4.5(b).
"FIRPTA CERTIFICATE" means a certificate in form and substance
reasonably satisfactory to Purchaser duly executed and acknowledged certifying
facts that would exempt the sale of the Purchased Assets hereunder from the
provisions of the Foreign Investment in Real Property Tax Act.
"FIXTURES AND IMPROVEMENTS" has the meaning specified in
Section 2.1(a)(iii).
"FOREIGN PLAN" has the meaning specified in Section 4.18(a).
"FREDDIE MAC" means the Federal Home Loan Mortgage
Corporation.
"GAAP" means United States generally accepted accounting
principles, applied consistently with the Sellers' past practices (to the extent
such past practices are consistent with United States generally accepted
accounting principles).
"GOLDMAN SACHS" has the meaning specified in the Recitals to
this Agreement.
"GOVERNMENTAL AUTHORITY" means any court, government (federal,
state, local or foreign), department, commission, board, bureau, agency or other
regulatory, administrative or governmental authority.
"GSE MORTGAGE LOANS" means, collectively, all the mortgage
loans relating to multi-family housing which are funded by ACLP and held under
the Warehouse Line for purchase under the GSE Programs.
"GSE/TIAA MORTGAGE SCHEDULE" has the meaning specified in
Section 4.8(a).
7
<PAGE> 15
"GSE PROGRAMS" means the Government Sponsored Enterprise
Programs for which ACLP is an approved lender, meaning specifically the Fannie
Mae Delegated Underwriting and Servicing ("DUS") and the Freddie Mac Program
Plus Programs.
"GSE/TIAA MORTGAGE LOANS" means, collectively, the GSE
Mortgage Loans and the TIAA Loans.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, polychlorinated biphenyls and radon gas; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Laws; and (c) any
materials which are defined by any applicable Law to be hazardous to human
health.
"HFF" has the meaning specified in the first paragraph of this
Agreement.
"HOLDBACK NOTE" has the meaning specified in Section 3.1.
"HSR ACT" has the meaning specified in Section 4.3(b)(i).
"INCENTIVE BASED PAYMENT PROGRAM" means the program to be
established by Purchaser and to be used to compensate certain Employees to be
determined by the Purchaser on terms previously approved by AMRESCO, INC.
"INDEMNIFIABLE LOSS" has the meaning specified in Section
12.2.
"INDEMNIFIED PARTY" means a party having indemnification
rights pursuant to Article XII.
"INDEMNIFYING PARTY" means a party having indemnification
obligations pursuant to Article XII.
"INSTRUMENTS OF TRANSFER" mean any warranty deeds, bills of
sale, assignments, endorsements and other instruments and documents, reasonably
satisfactory in form and substance to the Purchaser and its counsel, including
the Bill of Sale and the Assignment and Assumption Agreement.
"INSURANCE POLICIES" has the meaning specified in Section
4.21(i).
"INTELLECTUAL PROPERTY" or "IP" means any and all of the
following, owned by Sellers and used, or contemplated to be used as evidenced by
documentation or electronic media, in or related to the Businesses: (i) trade
secrets, inventions, ideas and conceptions of inventions, whether or not
patentable, whether or not reduced to practice, and whether or not yet made the
subject of a patent application or applications, (ii) United States or foreign
patents, patent applications and statutory invention registrations, all rights
therein provided by international treaties or conventions and all improvements
thereto, all continuations, divisions, reissuances, continuations
8
<PAGE> 16
in part, revisions, extensions and reexaminations relating thereto, (iii)
copyrightable works, translations, adaptations, derivative works or combinations
thereof, copyrights, whether or not registered, and registrations and
applications for registration thereof, and all rights therein, all of the
foregoing as further provided by United States or foreign law, equity,
international treaties or conventions, (iv) trademarks, service marks, trade
dress, logos, trade-names, corporate names, Internet domain names, whether or
not any of the above are registered; United States or foreign registrations or
applications to register any of the above, and renewals or extensions thereof,
(v) technical and business information, including know-how, research and
development information, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans, business forms, and
customer and supplier lists and information, that is maintained, or reasonably
expected to be maintained, by the Sellers or their respective Subsidiaries or
Affiliates in confidence, (vi) copies and tangible and intangible embodiments of
all the foregoing, in whatever form or medium, and (vii) all goodwill associated
with the foregoing and all rights to sue for past, present, or future
infringement of any of the foregoing, or to recover and retain past, present or
future damages due thereunder, and costs and attorneys' fees for past, present,
and future infringement or breach of any of the foregoing. Notwithstanding the
foregoing, Intellectual Property expressly excludes Third Party Software, Seller
Transferred Software, Seller Licensed Software and Excluded Software.
"INTENTIONAL" means (i) with respect to the Sellers, a willful
or intentional act or failure to act of any Person for which any of the
following persons has actual knowledge or, in the exercise of their respective
duties, would reasonably be expected to have knowledge: Robert H. Lutz, Jr.,
Barry L. Edwards, Robert L. Adair III, Ron Kirkland, L. Keith Blackwell, John P.
Gajdica, Mark Gibson, Doug Urquhart, Ed Hurley, Donnie Skidmore, Rhonda Lindsey
and Julia Williamson; and (ii) with respect to the Purchaser, a willful or
intentional act or failure to act of any Person for which any of the following
persons has actual knowledge or, in the exercise of their respective duties,
would reasonably be expected to have knowledge: Matthew S. Banks, Amber B.
Degnan, Graham Bond, Alex Jeffrey, Samuel F. Hatcher, Kurt L. Wright and Steve
Grubenhoff.
"INTERNAL REPORTS" has the meaning specified in Section
4.5(c).
"INVENTORIES" has the meaning specified in Section 2.1(a)(x).
"INVESTORS" shall mean any GSE Program or any private or
public investor or credit enhancer for which any of the Sellers or any of their
Subsidiaries is originating (with respect to GSE Mortgage Loans and TIAA Loans)
and/or servicing (or, to the extent of any related continuing obligation, has in
the past originated (with respect to GSE Mortgage Loans and TIAA Loans) or
serviced) Mortgage Loans pursuant to a Servicing Agreement.
"INVESTOR REQUIREMENTS" has the meaning specified in Section
4.8(c)(i).
"IT SERVICES AGREEMENT" has the meaning specified in Section
10.9.
"JUDGMENT" means any judgment, injunction, ruling, order or
decree, including final determinations under arbitration proceedings.
9
<PAGE> 17
"LAW" means any order, writ, injunction, decree, Judgment,
ruling, law, decision, opinion, statute, rule or regulation of any Governmental
Authority.
"LEASE" means any lease, sublease, easement, license,
right-of-way or similar interest in real or personal property.
"LEASED PREMISES" means the premises leased or subleased under
the Transferred Leases and as set forth on Schedule 2.1(a)(ii) hereto and all
right, title and interest of the Sellers or their respective Subsidiaries or
Affiliates in and to all fixtures, improvements, betterments, construction in
progress, installations and additions to the Leased Premises. The Leased
Premises include the premises described in Exhibit I hereto.
"LEASE GUARANTY" means that certain Guaranty of Lease dated
December 17, 1998, made by AMRESCO, INC. and AMRESCO Mortgage Capital, Inc. and
delivered to Peachtree-TSG Associates LLC in connection with that certain Office
Lease Agreement dated December 21, 1998, by and between Peachtree-TSG Associates
LLC, as Landlord, and AMRESCO Services, L.P., as Tenant for office space in the
Marquis I Office Tower in Atlanta, Georgia.
"LEND LEASE" has the meaning specified in the first paragraph
to this Agreement.
"LENDER CONSENTS" has the meaning specified in the Recitals to
this Agreement.
"LIABILITY" means any and all debts, losses, liabilities,
claims (including claims as defined in the Bankruptcy Code), damages, dues,
penalties, fines, costs, royalties, amounts paid in settlement, deficiencies or
obligations (including those arising out of any Action, such as any settlement
or compromise thereof or judgment or award therein), of any nature, whether
known or unknown, accrued or unaccrued, liquidated or unliquidated, absolute,
contingent or otherwise and whether due or to become due, and whether or not
resulting from third-party claims, and any out-of-pocket costs and expenses,
including any liability for Taxes.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
charge or deposit arrangement, lien (statutory or otherwise) or preference,
security interest or other priority or preferential arrangement of any kind or
nature whatsoever (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement), the interest of a lessor
under a capital lease (meaning any leasing or similar arrangement which is
classified as a capital lease in the Financial Statements in accordance with
GAAP), any financing lease bearing substantially the same economic effect as any
of the foregoing, or the filing of any financing statement naming the owner of
the asset to which such Lien relates as debtor, under the Uniform Commercial
Code (as in effect in any jurisdiction) or any comparable law, and any
contingent or other agreement to provide any of the foregoing.
"LITIGATION" means any Action by or before any court or other
Governmental Authority.
10
<PAGE> 18
"LLREI" means Lend Lease Real Estate Investments, Inc., a
Delaware corporation.
"LOAN DOCUMENTS" has the meaning specified in Section 4.8(d).
"LOAN FILES" has the meaning specified in Section 4.8(d).
"LOSSES" means, without duplication, any and all actual
damages, fines, fees, penalties, deficiencies, loss of profits, diminution in
value of investment, claims, Liabilities, Liens, losses or other obligations,
together with costs and expenses, including reasonable fees and disbursements of
counsel and any consultants or experts and expenses of investigation incurred in
the course of Litigation or other proceedings or of any claim, default or
assessment.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE", with
respect to the Sellers or with respect to the Businesses or Purchased Assets,
means, both before and after giving effect to the transactions contemplated by
this Agreement, any change, occurrence or effect, direct or indirect, that could
reasonably be expected to have a material adverse effect on (i) the business,
results of operations, assets, condition (financial or otherwise), or ability to
satisfy obligations or liabilities (whether absolute or contingent) of the
Sellers or of the Businesses or the Purchased Assets, as the case may be, or
(ii) the ability of the Sellers to consummate the transactions contemplated
hereby. References to a Material Adverse Effect or a Material Adverse Change
which do not specify whether they are with respect to the Sellers or the
Purchased Assets or the Businesses shall be deemed to be with respect to each of
(i) the Sellers, (ii) the Purchased Assets and (iii) the Businesses.
"MORTGAGE" means the mortgage, deed of trust or other
instrument creating a Lien on Mortgaged Property securing a Mortgage Note.
"MORTGAGE LOANS" means the mortgage loan(s), including GSE
Mortgage Loans, TIAA Loans and REO, for which any Seller owns or has the related
Servicing Rights, and all of such Seller's rights and benefits with respect
thereto.
"MORTGAGE LOAN SCHEDULE" has the meaning specified in Section
4.8(b).
"MORTGAGE NOTE" means the original executed note or other
evidence of the Mortgage Loan indebtedness of a Mortgagor.
"MORTGAGED PROPERTY" means a Mortgagor's real property
securing repayment of a Mortgage Note.
"MORTGAGOR" means the obligor on a Mortgage Note, the owner of
a Mortgaged Property or the grantor or mortgagor named in the related Mortgage,
as the case may be, and such grantor's or mortgagor's successors in title to the
Mortgaged Property.
"NET WORKING CAPITAL" shall have the meaning specified in
Section 3.3(c)(i).
"NOTICE OF DISAGREEMENT" has the meaning specified in Section
3.3(a).
11
<PAGE> 19
"NPV ADJUSTMENT" has the meaning specified in Section
3.3(c)(ii).
"NWC ADJUSTMENT" has the meaning specified in Section
3.3(c)(i).
"OFFSETS" has the meaning set forth in Section 12.8
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
commercial operations customarily engaged in by the Sellers consistent with past
practices (including loan collection and chargeoff practices), and specifically
does not include (i) the incurrence of any material liability for any tort or
any breach of or default under any Purchased Contract or Law or (ii) the failure
to meet obligations of the Sellers or any of their respective Subsidiaries as
they become due or payable.
"OWNED REAL PROPERTY" means the lands and premises more
particularly described in Schedule 2.1(a)(i), together with the buildings and
improvements thereon, owned in fee by any of the Sellers (subject to Permitted
Encumbrances), together with all Fixtures and Improvements, Realty Rights and
applicable Equipment. The Owned Real Property includes HFF's Houston, Texas
office building and related property, which is located on the tract of land
described in Schedule 2.1(a)(i).
"PARTNERSHIPS" has the meaning specified in Section 4.15(g).
"PARTIAL SALE" has the meaning specified in Section 13.2(a).
"PARTIAL TERMINATION" has the meaning set forth in Section
13.2(a).
"PERMITS" means all Approvals of Governmental Authorities and
other authorizations of Governmental Authorities required in connection with the
operation of the Businesses.
"PERMITTED AMRESCO BUSINESS COMBINATION" has the meaning
specified in Section 10.4(a)(vi).
"PERMITTED ENCUMBRANCES" has the meaning specified in Section
4.19.
"PERMITTED INVESTMENTS" means investments in publicly-held
companies of less than 5% of (x) the outstanding equity securities (as such term
is defined under the Exchange Act) and (y) the voting securities thereof;
provided, that no Person employed as of the Closing Date by any Seller or any
Subsidiary of such Seller shall serve on the board of directors or as an officer
of such company.
"PERSON" means an individual, a corporation, a limited
liability company, a partnership, an unincorporated association, a joint
venture, a Governmental Authority or another entity or group.
"POST-CLOSING PERIOD" means each taxable period that starts
after the Closing Date and the portion of each Straddle Period that starts after
the Closing Date.
12
<PAGE> 20
"POST-CLOSING PURCHASE PRICE ADJUSTMENTS" has the meaning
specified in Section 3.3(c).
"PRE-CLOSING PERIOD" means each taxable period that ends on or
before the Closing Date and the portion, ending on the Closing Date, of a
Straddle Period.
"PRELIMINARY LENDER CONSENT DATE" has the meaning specified in
Section 13.1(h).
"PURCHASE PRICE" has the meaning set forth in Section 3.1.
"PURCHASE PRICE ADJUSTMENT STATEMENT" has the meaning
specified in Section 3.3(c).
"PURCHASE PRICE ADJUSTMENTS" has the meaning specified in
Section 3.3(c).
"PURCHASE PRICE ALLOCATION" has the meaning set forth in
Section 11.2.
"PURCHASED ASSETS" has the meaning specified in Section
2.1(a).
"PURCHASED CONTRACTS" means all right, title and interest of
each of the Sellers in, to and under the Contracts listed on Schedule
2.1(a)(ix).
"PURCHASED ENTITIES" has the meaning specified in Section
2.1(a)(xix).
"PURCHASED ENTITY INTERESTS" has the meaning specified in
Section 4.1(b).
"PURCHASER" means Lend Lease and any permitted assignee
designated as the purchaser of any of the Purchased Assets in accordance
herewith.
"PURCHASER DISCLOSURE SCHEDULE" has the meaning specified in
Section 5.3.
"PURCHASER INDEMNITIES" has the meaning specified in Section
12.2.
"PURCHASER NON-EXCLUSIVE TRADEMARK LICENSE AGREEMENT" has the
meaning specified in Section 7.2(a).
"PURCHASER SERVICING AGREEMENT" has the meaning specified in
the Recitals of this Agreement.
"PURCHASER SOFTWARE LICENSE AGREEMENT" means the form of
software license agreement which will license the Seller Transferred Software to
the Sellers in the form to be mutually agreed upon by the parties.
"PURCHASER TAX INDEMNITEE" means the Purchaser and its
subsidiaries and Affiliates.
13
<PAGE> 21
"RATING AGENCY" means each of Standard & Poor's Corporation,
Moody's Investors Service, Duff & Phelps and Fitch IBCA, Inc.
"REALTY RIGHTS" has the meaning specified in Section
2.1(a)(iv).
"REJECTED GSE LOANS" has the meaning specified in Section
2.1(b)(vi).
"RELEASES" has the meaning specified in Section 7.2(a)(xiii).
"RELATED DOCUMENTS" means all other agreements and instruments
described in this Agreement that are to be executed and delivered at or prior to
the execution of this Agreement or Closing in connection with the transactions
contemplated hereby, including the agreements and instruments to be executed
pursuant to Article VII hereof.
"REO" means real estate acquired in connection with the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan.
"REPLACEMENT WAREHOUSE FACILITY" has the meaning specified in
Section 8.19.
"RESF" means the business of originating, underwriting and
closing for third parties high yielding, generally high loan-to-cost or high
loan-to-value, commercial real estate mortgage loans or equity investments (or
combinations or hybrids thereof) for or in connection with the acquisition and
rehabilitation of real estate and real properties and participating commercial
real estate construction loans conducted by AMRESCO's Real Estate Structured
Finance business unit.
"SEC" has the meaning specified in Section 4.5(a).
"SEC DOCUMENTS" has the meaning specified in Section 4.5(a).
"SECTION 3.38 FORMS" has the meaning specified in Section
11.1.
"SECTION 3.38(H)(10) ELECTION" has the meaning specified in
Section 11.1.
"SELLER INDEMNITIES" has the meaning set forth in Section
12.3.
"SELLER LICENSED SOFTWARE" means the computer software owned,
developed or currently being developed, by, or on behalf of, any of the Sellers
or acquired by any such Seller from third parties, the ownership of which will
not be transferred to the Purchaser under this Agreement, but that Purchaser
shall be granted licenses to use thereof, as listed on Schedule 2.1(a)(xvii)C
hereto, including, to the extent in Seller's direct or indirect control, source
code, object code, objects, comments, screens, user interfaces, report formats,
templates, menus, buttons, icons, and all files, data materials, data base
designs and electronic formats, manuals, design notes, technical information and
other items, documentation related thereto or associated therewith owned by any
Seller regardless of the form of manifestation thereof.
14
<PAGE> 22
"SELLER NON-EXCLUSIVE TRADEMARK LICENSE AGREEMENT" has the
meaning specified in Section 7.2(a).
"SELLER SOFTWARE LICENSE AGREEMENT" means the form of software
license agreement which will license the Seller Licensed Software to the
Purchaser in the form to be mutually agreed upon by the parties.
"SELLER TAX INDEMNITEE" means Sellers and their Subsidiaries
and Affiliates, other than the Purchased Entities.
"SELLER TRANSFERRED SOFTWARE" means the computer software
owned, developed or currently being developed, by, or on behalf of, any of the
Sellers or acquired by any such Seller from third parties, the ownership of
which will be transferred to the Purchaser under this Agreement, as listed on
Schedule 2.1(a)(xvii)B hereto, including, to the extent in Seller's direct or
indirect control, source code, object code, objects, comments, screens, user
interfaces, report formats, templates, menus, buttons, icons, and all files,
data materials, data base designs and electronic formats, manuals, design notes,
technical information and other items, documentation related thereto or
associated therewith owned by any Seller regardless of the form of manifestation
thereof.
"SELLERS" means, collectively, AMRESCO, INC., AMI, ASLP, ACLP,
HFF, ACFI, AII, AMCI, AEI, AECI, AFI, ASI, APII, APM and any other Subsidiary or
Affiliate of such parties which owns any right, title or interest in any
Purchased Asset. References to property or rights of the Sellers shall mean
property or rights of the Sellers, collectively, or of any one or more Seller.
"SERVICING AGREEMENTS" means the pooling and servicing
agreements, primary servicing agreements, subservicing agreements, special
servicing agreements, correspondent agreements, servicing agreements and related
agreements to which any of the Sellers is a party (or under which any such
Seller receives any benefits) and which are identified on Schedule 2.1(a)(ix).
"SERVICING RIGHTS" means all right, title and interest of any
Seller pursuant to the Servicing Agreements.
"SOFTWARE CONSENT ADJUSTMENTS" has the meaning specified in
Section 3.3(e).
"STRADDLE PERIOD" has the meaning set forth in Section 11.7.
"SUBLEASE" means a sublease, in form and substance reasonably
acceptable to the Purchaser, containing the terms set forth in Exhibit I hereto
and other customary and reasonable terms to be negotiated by the parties,
pursuant to which the Purchaser would, upon execution thereof at the Closing (if
the Purchaser elects to enter into the Sublease rather than the Direct Lease),
sublease certain space described in Exhibit I and located at 700 North Pearl
Street, Dallas, Texas from AMRESCO, INC., which sublease shall include a
non-disturbance agreement (in
15
<PAGE> 23
form and substance reasonably acceptable to the Purchaser) from the landlord
under the master lease underlying such sublease who is named in Exhibit I.
"SUBSIDIARIES" means any corporation, partnership, limited
liability company or other entity (whether domestic or foreign) with respect to
which any Seller, directly or indirectly, owns securities or other ownership
interests having (i) a majority of the economic interests of such entity or (ii)
the ordinary voting power to elect a majority of the board of directors of other
Persons performing similar functions. Notwithstanding the foregoing, the
Purchased Entities shall be deemed Subsidiaries of the Sellers; provided,
however, that in connection with representations and warranties in Article IV
hereof, "Subsidiary", when referring to a "Co-Investment Entity" identified on
Schedule 2.1(a)(xix) hereto that is not directly or indirectly controlled by any
of the Sellers, each such representation and warranty shall be deemed to be
qualified as to the knowledge of the Sellers with respect to, but only with
respect to (unless otherwise indicated therein), such Co-Investment Entity or
Co- Investment Entities not directly or indirectly controlled by any of the
Sellers.
"TAX" or "TAXES" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
in each case including any tax for which a Purchased Entity is or may be liable
as a result of Treasury Regulation section 1.1502-6 or a similar provision of
state, local or foreign Law.
"TAX AUTHORITY" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"TAX INDEMNITEE" means a Purchaser Tax Indemnitee or a Seller
Tax Indemnitee.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TERMINATION FEE" shall have the meaning specified in Section
13.2(a).
"TERMINATION PAYMENT DATE" has the meaning specified in
Section 13.2(a).
"THIRD PARTY SOFTWARE" means the computer software owned by
any party other than Sellers, as listed on Schedule 2.1(a)(xvii)A hereto,
including, to the extent in Seller's direct or indirect control, source code,
object code, objects, comments, screens, user interfaces, report formats,
templates, menus, buttons, icons, and all files, data materials, data base
designs and electronic formats, manuals, design notes, technical information and
other items, documentation related thereto or associated therewith, regardless
of the form of manifestation thereof. Third
16
<PAGE> 24
Party Software shall include, but not be limited to, software maintenance,
service, development and other agreements related to any of the above.
"TIAA" means Teachers Insurance and Annuity Association.
"TIAA LOAN" means a loan underwritten and closed by ACLP, as
lender, in connection with the TIAA Program.
"TIAA PROGRAM" means the TIAA loan origination program with
ACLP and any interest in TIAA CMBS securitizations.
"TITLE POLICIES" has the meaning specified in Section
7.2(a)(viii).
"TRANSFERRED LEASES" shall mean those Leases to be assigned,
subleased or transferred from the Sellers to the Purchaser as identified on
Schedule 2.1(a)(ii) hereto.
"TRANSITION SERVICES AGREEMENT" has the meaning specified in
Section 10.9.
"WALK-AWAY DATE" has the meaning specified in Section 13.1(b).
"WAREHOUSE LINE" shall mean the Amended and Restated
Warehousing Credit and Security Agreement, dated March 6, 1998, between ACLP and
Residential Funding Corporation, as amended prior to the date hereof.
"YEAR 2000 COMPLIANT" means that each item of hardware,
software, information technology, embedded, electro-mechanical or processor
based system and/or any combination thereof, (for the purpose of this
definition, to be referred to collectively as the "SYSTEM"), shall conform to
the following:
1. Until January 1, 2000, the System correctly processes
data containing dates before January 1, 2000.
2. Until January 1, 2000, the System correctly processes
data containing dates after December 31, 1999.
3. From January 1, 2000, the System correctly processes
data containing dates before January 1, 2000.
4. From January 1, 2000, the System correctly processes
data containing dates after December 31, 1999.
5. The System handles the date 01/01/01 (January 1, 2001)
correctly.
6. The System recognizes the year 2000 as a leap year.
o February 28, 2000 is recognized as a valid date.
17
<PAGE> 25
o Julian date 00060 is recognized as February 29,
2000.
o Julian date 00366 is recognized as December 31,
2000.
o Arithmetic operations performed recognize that the
year 2000 has 366 days.
7. The System correctly processes the following dates as
established by FFIEC (Federal Financial Institution
Examination Council) guidelines:
April 9, 1999 February 29, 2000
September 9, 1999 March 31, 2000
December 31, 1999 October 10, 2000
January 1, 2000 December 31, 2000
January 3, 2000 January 1, 2001
January 10, 2000 December 31, 2001
January 31, 2000
The term "correctly processes" shall mean any material
function providing specific dates or days, or calculating spans of dates or
days, shall record, store, process, sequence, provide and, where appropriate,
insert, true and accurate dates and calculations for dates and spans, as
described above.
ARTICLE II
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.1 Transfer of Assets.
(a) Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Sellers shall, or shall cause
their respective Subsidiaries and Affiliates to, sell, convey, assign, transfer
and deliver to the Purchaser, all of the legal and beneficial right, title and
interest of the Sellers and their respective Subsidiaries and Affiliates as of
the Closing Date in and to all of the following properties, assets, Contracts
and rights of whatever kind or nature, real or personal, tangible or intangible,
wherever located (whether in possession of the Sellers, their respective
Subsidiaries or Affiliates or other third parties), but excluding the Excluded
Assets (collectively, the "PURCHASED ASSETS"):
(i) Owned Real Property. The Owned Real Property.
(ii) Real Property Leases. The Transferred Leases and
the Leased Premises listed on and described in Schedule 2.1(a)(ii)
hereto. The premises described in Exhibit I hereto will either be
subleased to the Purchaser (or its designee) under the Sublease or
leased by the Purchaser (or its designee) under the Direct Lease, as
provided below.
18
<PAGE> 26
(iii) Fixtures and Improvements. All warehouses,
storage facilities, buildings, structures, fixtures, landings,
construction in progress, improvements, betterments, installations and
additions constructed, erected or located on or attached or affixed to
the Owned Real Property (the "FIXTURES AND IMPROVEMENTS").
(iv) Realty Rights. All tenements, hereditaments,
easements, rights of way, rights, leases, estates, patents, rights of
ingress and egress, reversionary interests, privileges and
appurtenances belonging, pertaining or relating to the Owned Real
Property or the Leased Premises (the "REALTY RIGHTS").
(v) Equipment. All of the furniture, office
equipment, parts, supplies and all other tangible personal property of
every kind and description (other than Inventory and Computer Hardware,
which are addressed separately below) now or hereafter located either
on or in the Owned Real Property or Leased Premises (the "EQUIPMENT"),
and including the items listed on Schedule 2.1(a)(v) hereto, but
excluding any personal property belonging to Employees. At the option
of the Purchaser, with respect to the leases for Equipment that are
listed on Schedule 2.1(a)(v), the Purchased Assets shall also include
all of the Sellers' rights, titles and interests in and those Leases
listed on Schedule 2.1(a)(v) which the Purchaser elects to assume, in
writing, prior to the Closing.
(vi) Permits. To the extent transferable (the
determination of which shall be subject to the Sellers' obligations to
exercise reasonable best efforts to transfer same under Sections 2.2
and 10.5), all Permits related to or utilized by the Businesses or all
or any of the Purchased Assets, including those listed on Schedule
2.1(a)(vi) hereto.
(vii) Intellectual Property. All IP including those
items listed on and described in Schedule 2.1(a)(vii) hereto.
(viii) Goodwill. The goodwill and going concern value
of the Businesses.
(ix) Purchased Contracts; GSE/TIAA Mortgage Loans;
Servicing Agreements. The Contracts, (including the Servicing
Agreements) listed on Schedule 2.1(a)(ix) (the "PURCHASED CONTRACTS"),
the GSE/TIAA Mortgage Loans (and the forward sale commitments,
agreements and contracts associated therewith) listed on the GSE/TIAA
Mortgage Schedule, including commitments and loan applications
therefor, and all rights (including rights of refund and offset),
privileges, deposits, claims, causes of action, options, escrow or
other accounts (including any Escrow Accounts and the Custodial
Accounts), mortgage loan documents, collateral and Liens relating to
the Purchased Contracts, or the GSE/TIAA Mortgage Loans.
(x) Inventories. All of the inventories now or
hereafter located at or in the Owned Real Property or Leased Premises
insofar as they relate to or are utilized by the Businesses, including
store room supplies, spare parts and other inventories (the
"INVENTORIES").
19
<PAGE> 27
(xi) Accounts Receivable. All accounts receivable and
all other rights of the Sellers or their respective Subsidiaries
existing as of the Closing Date for payment for goods sold or leased or
for services rendered to the extent reflected in Net Working Capital,
including those which are not evidenced by instruments, whether or not
they have been earned by performance or have been written off or
reserved against as a bad debt or doubtful account in any Financial
Statements or Internal Reports, together with all instruments and all
documents of title representing any of the foregoing, and all rights,
title, security and guarantees in favor of the Sellers or their
respective Subsidiaries or Affiliates with respect to any of the
foregoing, insofar as the foregoing relate to the Businesses ("ACCOUNTS
RECEIVABLE").
(xii) Cash and Bank Accounts. The bank accounts
described on Schedule 2.1(a)(xii) hereto (including all cash on deposit
in such accounts and uncleared deposits in such accounts), the petty
cash of Sellers, all temporary cash investments and instruments
representing the same, and all other cash and cash equivalents of
Sellers, insofar as the foregoing exist as of the Closing Date and
relate to or are utilized by the Businesses and are reflected in Net
Working Capital, and all Custodial Accounts; provided, however, that,
at the Closing, the Sellers will deliver a revised schedule of all bank
accounts to be included in Purchased Assets, which revised schedule
shall include all Custodial Accounts.
(xiii) Books and Records. All of Sellers' Business
Records of whatever nature and wherever located which are primarily
used in, or which primarily relate to, the Businesses, including the
Business Records listed on Schedule 2.1(a)(xiii); provided, however,
that, with respect to Business Records which are not primarily used in
the Businesses or not described in Schedule 2.1(a)(xiii), the Sellers
and the Purchaser shall, after the Closing Date, equitably and
reasonably divide all such Business Records; provided, further, that,
with respect to Business Records which are not primarily used in the
Businesses and which are retained by one of the parties in accordance
with the mutual agreement contemplated by the previous clause, the
party so retaining such Business Records shall, and shall cause its
respective Subsidiaries and Affiliates to, make available to the other
party and its employees, agents and representatives access to and/or
copies of any such Business Records in accordance with Section 10.3(c).
(xiv) Prepaid Expenses. All prepaid expenses, prepaid
rentals, bonds, deposits and financial assurance requirements relating
to the Purchased Assets or the Businesses and reflected in the Net
Working Capital as of the Closing Date.
(xv) Insurance Proceeds and Certain Rights. All
insurance proceeds and insurance claims of the Sellers and their
respective Subsidiaries relating to (x) the Assumed Liabilities or (y)
otherwise relating to the Businesses or the Purchased Assets to the
extent applicable to claims made against the Purchaser or its
subsidiaries or Affiliates; and, to the extent transferable, the
benefit of and right to enforce the covenants, representations and
warranties, if any, that any Seller is entitled to enforce with respect
to the Purchased Assets against such Seller's predecessors in title to
the Purchased Assets.
20
<PAGE> 28
(xvi) Computer Hardware. All the Sellers computer
equipment and hardware relating to or utilized by the Businesses,
including all central processing units, terminals, disk drives, tape
drives, printers, keyboards, monitors, peripherals, routers, modems and
all other equipment and parts that are used in the Sellers' or their
respective Subsidiaries' computer systems, as listed on Schedule
2.1(a)(xvi) (collectively, the "COMPUTER HARDWARE").
(xvii) Software. All Third Party Software and Seller
Transferred Software listed on Schedules 2.1(a)(xvii)A and B hereto.
(xviii) Other Intangibles. To the extent transferable
(provided, that the Sellers shall exercise their respective reasonable
best efforts to transfer such assets or rights), all rights,
privileges, claims, causes of action, warranties, covenants,
representations, indemnities and options relating to the Businesses or
the Purchased Assets, except such rights, privileges, claims, causes of
action, warranties, covenants, representations, indemnities and options
which relate solely to Excluded Assets and Excluded Liabilities.
(xix) Purchased Entities. The entities identified on
Schedule 2.1(a)(xix) (the "PURCHASED ENTITIES"), including, to the
extent of the Sellers' interest therein, in the properties and assets
(including Contract rights) owned by such Purchased Entities and in any
representations and warranties for the benefit of, or any other
contractual rights of, such Purchased Entities.
(xx) Earned and Unearned Fees. All rights, titles and
interest in and to all origination, loan commitment, modification,
forbearance, assumption, real estate brokerage and finder's fees, and
other prepaid fees or commissions associated with the Businesses,
including any such fees or commissions relating to any service provided
by the Businesses, any Mortgage Loan, GSE Mortgage Loan or other loan,
and any fees associated with Fannie Mae forward trades, and all rights
(including rights of refund and offset), privileges, deposits,
accounts, claims, and causes of action relating thereto.
(xxi) Other Property. Except to the extent not
transferable (provided, that the Sellers shall exercise their
respective reasonable best efforts to cause to be transferable and to
transfer such assets and rights), all other or additional privileges,
rights, interests, properties, Contracts or assets of the Sellers or
their respective Subsidiaries or Affiliates of every kind and
description and wherever located that are used or intended for use in
connection with, or that are necessary to the continued conduct of, the
Businesses as presently being conducted or otherwise reflected in Net
Working Capital.
(b) Excluded Assets. Notwithstanding anything to the contrary
in this Agreement, the Purchased Assets shall not include the following (the
"EXCLUDED ASSETS"):
(i) Rights Under Agreement. The Sellers' rights under
this Agreement and Related Documents.
21
<PAGE> 29
(ii) Records. The Sellers' minute books, stockholder
and transfer records, Tax Returns and accounting records (except for
the Purchaser's rights of access set forth herein).
(iii) Disposed Assets. Purchased Assets disposed of
after the date hereof in accordance with, and as permitted under the
terms of, this Agreement.
(iv) Tax Refunds. All claims of the Sellers for
refunds of any Taxes (whether federal, state, local or foreign)
applicable to the periods prior to Closing.
(v) Permits. All Permits of the Sellers that are not
transferable to Purchaser pursuant to this Agreement.
(vi) Rejected GSE Loans. Any GSE Mortgage Loans,
including commitments and applications therefor, (i) which have been
rejected by the applicable GSE Program, (ii) with respect to Fannie Mae
DUS loans, that would not qualify for "Level I loss sharing" treatment,
as such term is defined in the Fannie Mae DUS Guide, Chapter 1, Section
101, as in effect as of the date hereof and as same may be amended
prior to the Closing, or (iii) which Purchaser's lender under the
Replacement Warehouse Facility shall deem unacceptable or sub-standard
as collateral therefor ("REJECTED GSE LOANS"). Any determination as to
whether a GSE Mortgage Loan constitutes a Rejected GSE Loan shall be
made by the Purchaser, in its good faith sole discretion.
(vii) TIAA CMBS. Any commercial mortgage-backed
security ("CMBS") or other loss sharing arrangement acquired by ACLP
prior to the Closing Date in a securitization under the TIAA Program.
(viii) Conduit Program. ACLP's conduit program
described in Schedule 2.1(b), including any loan originated by ACLP
pursuant to any conduit program.
(ix) Benefit Plans. Any Benefit Plans.
(x) Excluded Software. The Excluded Software listed
on Schedule 2.1(b)(x) hereto.
(xi) Other Excluded Assets. The excluded assets
listed on Schedule 2.1(b) hereto.
Section 2.2 Nonassignable Leases and Contracts.
(a) To the extent that any Contract or Permit to be included
in the Purchased Assets would be subject to termination or restriction by virtue
of being, or is otherwise not capable of being, assigned, transferred, subleased
or sublicensed without the consent or waiver of the issuer thereof or the other
party thereto or any other third party, or to the extent that the assignment or
transfer thereof requires that notice of such transaction be delivered to such
other party thereto, or if such assignment, transfer or sublease would
constitute a breach thereof or a viola-
22
<PAGE> 30
tion of any Law, this Agreement shall not constitute an assignment, transfer,
sublease or sublicense thereof unless and until such consent or waiver is
obtained or such notice is delivered.
(b) The Sellers agree to use their respective reasonable best
efforts prior to the Closing to obtain the consents and waivers, to deliver any
required notices and to resolve any impracticalities of assignment or transfer
referred to in Section 2.2(a) and to obtain any other consents and waivers
necessary or desirable to sell, convey, assign, transfer and deliver legal and
beneficial ownership of such Purchased Assets to the Purchaser at the Closing,
subject to and in accordance with Section 10.5(b) to the extent applicable.
(c) To the extent that the consents and waivers referred to in
Section 2.2(a) are not obtained by the Sellers, or until the impracticalities of
transfer referred to therein are resolved, and subject to Sections 8.4 and
10.5(b), until the first anniversary of the Closing Date, the Sellers shall use
their respective reasonable best efforts (i) at the Purchaser's request, to
provide to the Purchaser the benefits of any Contract or Permit intended to be
included in the Purchased Assets, (ii) at the Purchaser's request, to cooperate
in any arrangement, reasonable and lawful as to the Sellers and the Purchaser,
designed to provide such benefits to the Purchaser and (iii) at the Purchaser's
request, to enforce for the account and at the expense of the Purchaser any
rights of the Sellers arising from the Contracts and Permits intended to be
included among the Purchased Assets, including the right to elect to terminate
or not renew in accordance with the terms thereof on the advice of the
Purchaser, which termination or non-renewal shall, upon becoming effective,
relieve the Sellers of any further obligation under this Section 2.2(c) with
respect to such Contract or Permit. The Sellers and the Purchaser shall
cooperate with each other to take such actions as are reasonably calculated to
effectuate the intent of the preceding sentence. Neither party shall take any
wrongful or illegal action under applicable Law in effectuating the foregoing.
With respect to such consents and waivers not obtained prior to Closing, the
Sellers agree, from and after the Closing until the first anniversary of the
Closing Date, to use their respective reasonable best efforts required by
Section 10.5(a) to obtain all such consents and waivers necessary to sell,
convey, assign, transfer and deliver legal and beneficial ownership to the
relevant Purchased Assets to the Purchaser.
Section 2.3 Assumption of Liabilities.
(a) Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, at the Closing the Purchaser agrees to assume the
following liabilities and obligations, but only to the extent such liabilities
or obligations do not arise from or relate to any breach by any Seller of any
covenant, representation or warranty set forth in this Agreement and only to the
extent such liabilities or obligations relate to Purchased Assets which are
transferred and assigned to the Purchaser (or its designee) at the Closing or
such other later transfer or assignment date expressly provided for in this
Agreement (collectively, the "ASSUMED LIABILITIES"):
(i) Real Estate. Any liabilities and obligations
accruing and arising after the Closing Date under the Transferred
Leases or with respect to the Leased Premises and the Owned Real
Property, but excluding such liabilities or obligations that arise
23
<PAGE> 31
in respect of Encumbrances thereon in existence at or prior to the
Closing other than Permitted Encumbrances.
(ii) Purchased Contracts; GSE Mortgage Loans. Any
liabilities and obligations accruing and arising after the Closing Date
under the Purchased Contracts, including the Servicing Agreements and
purchased GSE Mortgage Loans (including all commitments and loan
applications therefor, but not including any Rejected GSE Loans).
(iii) Accounts Payable. All accounts payable relating
to the Businesses or Purchased Assets, which have accrued in the
Ordinary Course of Business as presently conducted in the amount and to
the extent, but only to the extent such amounts are reflected in Net
Working Capital, but excluding accounts payable relating to the
Excluded Assets or Excluded Liabilities.
(iv) Employee Compensation. The obligations owed to
Employees with respect to the Businesses, which have accrued prior to
the Closing Date, including deferred bonus payments owed to Employees
under the Benefits Plans (the "DEFERRED BONUS PAYMENTS") (but expressly
excluding all amounts owing with respect to the production bonus plan
relating to the RESF business or RESF loans or investments whenever
accrued), in the amount and to the extent, but only to the extent, such
amounts are reflected in Net Working Capital (the "EMPLOYEE
COMPENSATION AMOUNT").
(v) Other Assumed Liabilities. Those liabilities and
obligations listed on Schedule 2.3(a) hereto.
(b) Excluded Liabilities. The parties acknowledge and agree
that the Purchaser is not assuming and shall not be responsible or liable for,
and the Sellers and their respective Subsidiaries shall perform and discharge as
and when due, and shall indemnify, hold harmless and defend the Purchaser from
and against, any and all liabilities or obligations of the Sellers or any of
their respective Subsidiaries or Affiliates (whether fixed, contingent or
unliquidated, absolute or otherwise and whether relating to any tort, statutory
or regulatory obligation, product liability, environmental claim, Taxes,
Contract, operations of the Businesses in the Ordinary Course of Business or
otherwise) other than the Assumed Liabilities (collectively, "EXCLUDED
LIABILITIES"). Excluded Liabilities shall include the following:
(i) Pre-Closing Liabilities. Any liability or
obligation relating to the Purchased Assets or the Businesses arising
or occurring prior to the Closing.
(ii) Loan Originations. Any liabilities or
obligations, contingent or otherwise, relating to loan originations of
any kind whatsoever that arose prior to the Closing, other than
obligations relating to commitments or loan applications for GSE/TIAA
Mortgage Loans expressly assumed hereby, including any lender liability
claims arising prior to the Closing Date.
(iii) Warehouse Line. Any liabilities or obligations
relating to the Warehouse Line.
24
<PAGE> 32
(iv) Breach of Contract. Any liabilities or
obligations arising out of any breach or non-performance by any of the
Sellers or any of their respective Subsidiaries or Affiliates under any
Contract, Purchased Contract, Transferred Lease, GSE Mortgage Loan or
other obligation to which any of them is a party or out of any failure
to comply with any Law, Judgment or other requirement of a Governmental
Authority.
(v) Excluded Assets. Any liabilities or obligations
arising from or relating to the Excluded Assets.
(vi) Agreement and Related Documents. Any liabilities
or obligations of the Sellers under this Agreement or the Related
Documents.
(vii) Fees. Any liabilities or obligations of the
Sellers or their respective Subsidiaries or Affiliates for expenses or
fees relating to this Agreement or the Related Documents, including
financial advisors', attorneys', consultants' and accountants' fees.
(viii) Taxes. Any liability of the Sellers or their
respective Subsidiaries or Affiliates with respect to Taxes, subject to
Section 11.12 with respect to property taxes and ad valorem taxes.
(ix) Contingent Liability. Any contingent liability
of any nature whatsoever of the Sellers or their respective
Subsidiaries or Affiliates arising at any time, except that with
respect to the Businesses or the Purchased Assets, only such contingent
liabilities arising prior to the Closing Date shall be Excluded
Liabilities.
(x) Environmental. Any liability or obligation of the
Sellers or their respective Subsidiaries or Affiliates relating to any
environmental claim or otherwise arising under any environmental Law,
except environmental claims relating to the Owned Real Property and the
Leased Premises for which the actions resulting in such claim first
arose or were taken by the Purchaser after the Closing Date.
(xi) Bank Debt. Any obligations of any of the Sellers
to pay principal and accrued interest on or perform obligations under
the Bank Debt.
(xii) Claims Under This Agreement. Any claims by any
of the Sellers, or any of their respective Subsidiaries or Affiliates,
directors, officers, employees, partners (limited or general) or
shareholders relating to this Agreement, or its performance or
consummation, not including claims against the Purchaser for breach by
the Purchaser of its obligations under this Agreement or any Related
Document.
(xiii) Intellectual Property. Any breach of any
intellectual property right, any infringement or unlicensed or other
unauthorized use by any of the Sellers of any invention, trade secret,
copyright, trademark or other intellectual property.
25
<PAGE> 33
(xiv) Dividends. Any dividend or other distribution
declared or otherwise payable by any of the Sellers.
(xv) Notes. Any note, account payable or other
obligation of any of the Sellers or any of their respective
Subsidiaries or Affiliates, except to the extent expressly included in
the Assumed Liabilities.
(xvi) Employee Compensation and Benefits. Except for
the Employee Compensation Amount (including the Deferred Bonus
Payments), any and all obligations, costs, expenses and liabilities
relating to any current or former employees, directors, consultants or
independent contractors of the Sellers or their respective Subsidiaries
or Affiliates, whether owed under any Benefit Plan, agreement
(including any change of control, severance, bonus, non-compete,
employment or other agreement, contract or arrangement, whether written
or oral, express or implied), policy, practice or arrangement
maintained or contributed by any of the Sellers or any of their
respective Subsidiaries or Affiliates, or otherwise, or any
compensation (including deferred compensation) owed by the Sellers or
any of their respective Subsidiaries or Affiliates to any Employee or
any other employee thereof (it being understood that the Purchaser is
not assuming, and will not assume, any obligations or liabilities under
any such employment or other agreements or arrangements between any
Employee and any Seller or Subsidiary or Affiliate thereof).
(xvii) ACFI Liabilities. Any claims relating to (a)
origination, ownership or, prior to Closing, servicing of loans made by
ACFI or any equity ownership of ACFI, (b) unadvanced loan amounts,
commitments or construction cost overruns, including any commitments
made by ACFI to make loans that have not been funded as of the Closing
Date, and (c) failures to obtain mechanic's lien waivers, completion
affidavits, construction affidavits and releases for any loan made by
ACFI for the construction of improvements.
(xviii) Earnout Liabilities. Earnout or similar
obligations related to the acquisition of any companies, assets or
businesses previously acquired by any of the Sellers or any of their
respective Subsidiaries or Affiliates, including the earnout
obligations described in Schedule 2.3(b)(xviii), and any and all such
earnout payments the payment of all or any portion of which shall be
accelerated by the consummation of the transactions contemplated
hereby.
(xix) Affiliate Liabilities. Any liability or
obligation of any of the Sellers or any of their respective
Subsidiaries or Affiliates, or which relates to or encumbers any
Purchased Asset or the Businesses, owed to any Affiliate of any of the
Sellers or any of their respective Subsidiaries or Affiliates, any such
Liabilities and obligations being hereby released.
(xx) Purchased Entities. Any liabilities or
obligations of any of the Purchased Entities arising prior to the
Closing or not disclosed in Schedule 2.1(a)(xix).
26
<PAGE> 34
(xxi) Leasing and other Commissions. Any liabilities
or obligations to pay leasing commissions with respect to any
Transferred Leases or to pay any other commissions which arose or were
agreed to prior to the Closing.
(xxii) Other Liabilities. Any other liability or
obligation, fixed or contingent, of the any of the Sellers or any of
their respective Subsidiaries or Affiliates or otherwise relating to
the Businesses or the Purchased Assets not expressly assumed by
Purchaser under this Agreement.
(c) The assumption of the Assumed Liabilities shall be
effected by delivery by the Purchaser to the Sellers at the Closing of the
closing documents described in Article VII .
ARTICLE III
PURCHASE PRICE; PAYMENT
Section 3.1 The Purchase Price. The purchase price for the
Purchased Assets is an aggregate amount of $247.5 million, subject to adjustment
in accordance with Section 3.3(e) (as adjusted by the Purchase Price
Adjustments, the "PURCHASE PRICE"), portions of which shall be payable
separately to each of the Sellers as set forth herein. Subject to the terms and
conditions of this Agreement, in reliance on the representations, warranties,
covenants and agreements of the Sellers contained herein and in consideration of
the sale, assignment and transfer of the Purchased Assets, at the Closing, the
Purchaser shall (i) assume the Assumed Liabilities, (ii) pay to the Sellers an
amount, in the aggregate for all of the Sellers, equal to $222.5 million in
cash, minus the aggregate amount of the Closing Date Adjustments, and adjusted
for the amount of the Estimated Purchase Price Adjustment pursuant to Section
3.2(a) (as so adjusted, the "CASH CONSIDERATION"), by wire transfer of
immediately available funds to separate accounts of each of the Sellers
designated in writing by each of the Sellers at least two Business Days prior to
the Closing Date, (iii) establish the Incentive Based Payment Program, and (iv)
issue and deliver to the Sellers a promissory note of the Purchaser, in the form
of Exhibit H hereto, having an initial principal amount of $25.0 million
(subject to adjustment as provided herein and therein) and such other terms and
conditions as are set forth in Exhibit H (the "HOLDBACK NOTE"). The allocation
of the Purchase Price, the Cash Consideration and the Holdback Note among the
respective Sellers shall be determined prior to the Closing by the Purchaser's
financial advisor, in consultation with the Sellers and their financial advisor,
based on their determination of the fair value of the Purchased Assets being
sold by each of the Sellers.
In addition, at the Closing, the Purchaser shall cause to be
paid to the lender under the Warehouse Line, upon the receipt of releases (in
form and substance reasonably acceptable to the Purchaser) of any and all
Encumbrances against the GSE Mortgage Loans being acquired by the Purchaser
hereunder, an aggregate amount equal to the face amount of the principal
indebtedness outstanding with respect to each GSE Mortgage Loan being acquired
by the Purchaser hereunder (which amount specifically excludes the principal
indebtedness outstanding with respect to all Rejected GSE Loans).
27
<PAGE> 35
Section 3.2 Estimated Purchase Price Adjustment; Closing
Date Adjustments.
(a) Estimated Purchase Price Adjustment. Not later than the
second Business Day prior to the Closing Date, the Purchaser shall, after
consultation with the Sellers, prepare a statement certified by the Chief
Financial Officer of the Purchaser setting forth (i) an estimate of the NWC
Adjustment and the NPV Adjustment, each computed in accordance with Section 3.3
and based on the good faith estimates of the Chief Financial Officer of the
Purchaser after consultation with the Sellers (the sum of such estimated NWC
Adjustment and NPV Adjustment, the "ESTIMATED PURCHASE PRICE ADJUSTMENT") and
(ii) an estimate of the Software Consent Adjustment. The Cash Consideration
shall be reduced by the amount of the Estimated Purchase Price Adjustment if
such amount is positive, or increased by the absolute value of the amount of the
Estimated Purchase Price Adjustment if such amount is negative, and shall be
reduced by the amount of the estimated Software Consent Adjustment.
(b) Closing Date Adjustments. In the event that one or more of
the Consents listed on Schedule 4.3(b) as to which a Closing Date Adjustment
amount is set forth in Schedule 4.3(b) shall not have been obtained by the
Sellers prior to the Closing (including the entry into the Westbrook Agreement
(as defined in Schedule 4.3(b)) on the terms set forth in Schedule 4.3(b) or
otherwise on terms reasonably acceptable to the Purchaser), or if the Purchaser
elects to treat the Owned Real Property as an Excluded Asset pursuant to Section
10.14(b), the Purchase Price and the Cash Consideration shall be reduced, for
each such Consent not obtained, dollar for dollar, by the Closing Date
Adjustment amount set forth on Schedule 4.3(b) in respect of such Consent or, if
applicable, by the amount set forth in Section 10.14(b) (each such reduction in
the Purchase Price, a "CLOSING DATE ADJUSTMENT" and, collectively, the "CLOSING
DATE ADJUSTMENTS"). The Purchaser agrees that, with respect to each Consent
listed on Schedule 4.3(b) for which a Closing Date Adjustment is made at the
Closing, the Purchaser shall pay to the Sellers (by wire transfer to an account
designated by the relevant Seller or Sellers in writing) the corresponding
Closing Date Adjustment amount (net of any reasonable out-of-pocket costs of the
Purchaser, other than personnel costs, incurred by the Purchaser in connection
with obtaining such Consent after the Closing Date) set forth on Schedule 4.3(b)
for such Consent, promptly following written receipt (if any) of such Consent
after the Closing Date, if the following conditions shall have all been
satisfied: (i) such Consent is received by the Purchaser prior to the first
anniversary of the Closing Date; (ii) prior to receipt of such Consent the
Purchaser has received and the Purchaser continues to receive the economic and
other benefits of the Contract or other relationship in connection with which
such Consent is required, without diminution or adverse effect (other than
changes arising by reason of the Purchaser's breach or nonperformance of such
Contract); and (iii) the receipt by the Purchaser of such Consent is not
conditioned on and does not result in any adverse change in the terms of the
underlying Contract or other relationship. In furtherance of the foregoing, the
Purchaser and the Sellers agree to use their respective reasonable best efforts
to obtain the relevant Consents as required by Sections 2.2 and 10.5. If any
Consent for which a Closing Date Adjustment is made is not obtained prior to the
first anniversary of the Closing Date, or if any of the other conditions set
forth in the immediately preceding sentence shall not have been satisfied, then
the Purchaser shall have no obligation to make any payment to the Sellers under
the immediately preceding sentence or otherwise upon receipt of such Consent,
regardless of when or whether it is obtained.
28
<PAGE> 36
Section 3.3 Post-Closing Purchase Price Adjustments.
(a) As promptly as practicable after the Closing, but in any
event not later than 30 Business Days after the Closing Date, the Sellers shall
deliver to the Purchaser a balance sheet in respect of the Businesses as of the
Closing Date (the "CLOSING BALANCE SHEET"). The Closing Balance Sheet shall
comply with the representations and warranties set forth in Section 4.5(c) in
all respects. During the 30-day period following the Purchaser's receipt of the
Closing Balance Sheet, the Purchaser and its independent auditors shall be
permitted to review all relevant books and records of the Sellers and their
respective Subsidiaries, as well as, to the extent reasonably available, any
relevant auditor's working papers, relating to the Closing Balance Sheet. The
Closing Balance Sheet shall become final and binding upon the parties hereto on
the 30th day following the Purchaser's receipt thereof unless the Purchaser
gives written notice of its disagreement with the Closing Balance Sheet (a
"NOTICE OF DISAGREEMENT") to the Sellers prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. If a Notice of Disagreement is received by the Sellers in a timely
manner, then the Closing Balance Sheet, as revised to reflect the resolution
pursuant to Section 3.3(b) of the disagreement expressed in the Notice of
Disagreement, shall become final and binding on the earlier of (A) the date the
Sellers and the Purchaser resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm (as
defined below) pursuant to Section 3.3(b). The date that the Closing Balance
Sheet becomes final and binding in accordance with this paragraph is referred to
as the "CLOSING BALANCE SHEET DATE".
(b) During the 30-day period following delivery of a Notice of
Disagreement, the Purchaser and the Sellers shall seek in good faith to resolve
in writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. Any and all matters which remain in
dispute after such 30-day period and which were included in the Notice of
Disagreement shall be submitted to PricewaterhouseCoopers LLP (the "ACCOUNTING
FIRM") for resolution. The Purchaser and the Sellers shall jointly use all
reasonable efforts to cause the Accounting Firm to render a decision within 30
days following submission of any disagreement to the Accounting Firm. The
Purchaser and the Sellers agree that judgment may be entered upon the
determination of the Accounting Firm in any court having jurisdiction over the
party against which such determination is to be enforced. Each of the parties
shall bear their own costs of dispute resolution under this Section 3.3(b), and
costs, fees and expenses of the Accounting Firm pursuant to this Section 3.3
shall be borne equally by the Purchaser and the Sellers. The provisions of
Section 14.13 shall not apply to disputes submitted to the Accounting Firm in
accordance with this Section 3.3(b) unless the Accounting Firm shall fail to
resolve any such dispute within 180 days of submission.
(c) Not later than 30 days after the Closing Balance Sheet
Date, the Purchaser shall prepare (after consultation with the Sellers) and
deliver to the Sellers a statement (the "PURCHASE PRICE ADJUSTMENT STATEMENT")
setting forth the following amounts (collectively, the "POST-CLOSING PURCHASE
PRICE ADJUSTMENTS"; and, together with the Closing Date Adjustments, the
"PURCHASE PRICE ADJUSTMENTS"):
29
<PAGE> 37
(i) an amount (the "NWC ADJUSTMENT"), positive or
negative, determined by subtracting (x) the net working capital for the
Businesses as of the Closing Date calculated in accordance with the
guidelines set forth in Schedule 3.3 based on the Closing Balance Sheet
(the "NET WORKING CAPITAL") from (y) $0.00; and
(ii) an amount (the "NPV ADJUSTMENT") equal to the
sum of the following: (w) the Co-Investment Adjustment, plus (x) the
Portfolio Liquidation Fee, plus (y) the RESF Liquidation Fee, plus (z)
the CMBS Liquidation Fee (as such terms are defined below).
"CO-INVESTMENT ADJUSTMENT" means the difference
between (a) the present value of the projected net cash flows
related to the Co-Investments as reflected on Schedule
3.3(c)(ii) and (b) the present value of the projected net cash
flows related to the Co-Investments, as reasonably updated by
the Purchaser, in consultation with the Sellers, as of the
Closing Date, with such present values calculated on a
quarterly basis using a base date of the Closing Date and
using an annualized discount rate of 15%.
"PORTFOLIO LIQUIDATION FEE" means the product of (i)
the Excess Portfolio Liquidation Fraction and (ii) $3.7
million.
"EXCESS PORTFOLIO LIQUIDATION FRACTION" means the
amount, if any, by which the Fraction of Portfolios Disposed
exceeds .19; provided, that the Excess Portfolio Liquidation
Fraction shall be 0 if the Fraction of Portfolios Disposed
does not exceed .19.
"FRACTION OF PORTFOLIOS DISPOSED" means the fraction,
determined as of the Closing Date, (i) the numerator of which
is the difference between (x) the Initial Value of all
Portfolios (as defined in the Asset Management Agreement)
listed on Exhibit A-1 to the Asset Management Agreement and
(y) the Initial Value of all Portfolios on Exhibit A-1 to the
Asset Management Agreement adjusted as of the Closing Date in
accordance with the adjustment provisions set forth in the
Asset Management Agreement, and (ii) the denominator of which
is the Initial Value of all Portfolios listed on Exhibit A-1
to the Asset Management Agreement.
"RESF LIQUIDATION FEE" means the product of (i) the
Excess RESF Liquidation Fraction and (ii) $2.7 million.
"EXCESS RESF LIQUIDATION FRACTION" means the amount,
if any, by which the Fraction of RESF Disposed exceeds .30;
provided, that the Excess RESF Liquidation Fraction shall be 0
if the Fraction of RESF Disposed does not exceed .30.
"FRACTION OF RESF DISPOSED" means the fraction,
determined as of the Closing Date, (i) the numerator of which
is the difference between (x) the Initial Value of all RESF
Assets (as defined in the Asset Management Agreement) listed
30
<PAGE> 38
on Exhibit A-2 to the Asset Management Agreement and (y) the
Initial Value of all RESF Assets on Exhibit A-2 to the Asset
Management Agreement adjusted as of the Closing Date in
accordance with the adjustment provisions set forth in the
Asset Management Agreement, and (ii) the denominator of which
is the Initial Value of all RESF listed on Exhibit A-2 to the
Asset Management Agreement.
"CMBS LIQUIDATION FEE" means the product of (i) the
Fraction of CMBS Disposed and (ii) $4.1 million.
"FRACTION OF CMBS DISPOSED" means the fraction,
determined as of the Closing Date, (i) the numerator of which
is the difference between (x) the initial outstanding stated
principal balance of all mortgage loans, whether performing or
non-performing, covered by the Designation Agreement (the
"INITIAL CMBS PRINCIPAL BALANCE") and (y) the Initial CMBS
Principal Balance adjusted as of the Closing Date in
accordance with the provisions set forth in the Designation
Agreement, and (ii) the denominator of which is the Initial
CMBS Principal Balance.
The Purchase Price Adjustment Statement shall be prepared by
the Purchaser in accordance with Schedule 3.3 and shall be certified by
the Chief Financial Officer of the Purchaser. Each Seller shall provide
reasonable cooperation, including reasonable access to books, records,
employees and, to the extent it may reasonably be capable of doing so,
former employees, in connection with the preparation of the Purchase
Price Adjustment Statement.
(d) If the sum of the Post-Closing Purchase Price Adjustments
shown on the Purchase Price Adjustment Statement is less than the
Estimated Purchase Price Adjustment then the Purchaser shall
immediately pay to the Sellers an amount in cash, by wire transfer of
immediately available funds to an account to be designated in writing
by the relevant Sellers, equal to the amount of the difference between
the Post-Closing Purchase Price Adjustment shown on the Purchase Price
Adjustment Statement and the Estimated Purchase Price Adjustment. If
the Estimated Purchase Price Adjustment is less than the sum of the
Post-Closing Purchase Price Adjustments shown on the Purchase Price
Adjustment Statement, then the Sellers shall promptly pay the
difference between Estimated Purchase Price Adjustment and the Purchase
Price Adjustment shown on the Purchase Price Adjustment Statement to
the Purchaser, in cash, by wire transfer of immediately available funds
to an account to be designated in writing by the Purchaser. For
informational purposes only, attached hereto as Exhibit D is a
Worksheet setting forth examples of the principles of payment relating
to the Purchase Price Adjustment described in this Section 3.3(d).
(e) As to any of the Third Party Software for which Sellers do
not obtain the Consents set forth on Schedule 10.15(b) prior to the
Closing Date, Sellers shall be responsible for, and shall pay to the
Purchaser (pursuant to the next two sentences), any and all license
fees in excess of Two Hundred and Fifty Thousand Dollars ($250,000.00)
for such Third Party Software licenses (to the extent such licenses (or
equivalent or similar licenses) were used in the operation of the
Businesses by the Sellers) which are obtained by the Purchaser prior to
the earlier
31
<PAGE> 39
of (x) the completion of the separation plan contemplated in the IT Services
Agreement or (y) six (6) months following the Closing Date (such payment amount,
the "SOFTWARE CONSENT ADJUSTMENT"). If the Software Consent Adjustment is
greater than the amount of such adjustment estimated pursuant to Section 3.2(a),
then the payment amount required by the previous sentence shall be the excess
over such estimated amount, and shall be promptly paid by the Sellers to the
Purchaser in the manner required by Section 3.3(d). If the Software Consent
Adjustment is less than such estimate, then the excess of such estimate over the
Software Consent Adjustment shall be promptly paid by the Purchaser to the
Seller in the manner required by Section 3.3(d).
(f) The Purchase Price shall be adjusted as follows: (w) the
Purchase Price shall be reduced by the aggregate amount of any Closing Date
Adjustments; (x) the Purchase Price shall be reduced by the sum of the
Post-Closing Purchase Price Adjustments if such sum is positive, or increased by
the absolute value of the aggregate amount of the Post-Closing Purchase Price
Adjustments if such sum is negative; (y) the Purchaser Price shall be reduced by
the amount of the Software Consent Adjustment, if any; and (z) if applicable,
the Purchase Price shall be increased, from time to time after the Closing, as
applicable, by the amount of any payments required under Section 3.2(b) to be
made to the Sellers in respect of Consents for which Closing Date Adjustments
shall have previously been made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to
the Purchaser as follows:
Section 4.1 Organization of the Seller; Purchased Entity
Ownership.
(a) Each of the Sellers and the Purchased Entities is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with full corporate, partnership or other
entity power and authority to own, operate and lease its properties and assets
and to carry on its businesses as now being or as previously conducted. Each of
the Sellers and the Purchased Entities is duly qualified to do business and is
in good standing in each jurisdiction in which the ownership of its property and
assets or the conduct of its business requires such qualification. The Sellers
have made available to the Purchaser complete and correct copies of each of
their and the Purchased Entities' certificate of incorporation, by-laws,
partnership agreement and/or other organizational and governance documents, in
each case, as amended, restated or otherwise supplemented or modified through
the date of this Agreement, and, with respect to the Purchased Entities, as
identified in Schedule 2.1(a)(xix).
(b) Schedule 2.1(a)(xix) sets forth the jurisdiction of
incorporation or formation of each Purchased Entity (including, with respect to
general partners listed on Schedule 2.1(a)(xix), the related partnerships), its
authorized shares, partnership or other equity or voting interests or
securities, the number and type of its issued and outstanding shares,
partnership or other equity or voting interests or securities (such shares,
interests and securities, the "PURCHASED ENTITY INTERESTS"), and the current
ownership thereof by the Sellers and any other Persons.
32
<PAGE> 40
Except as noted on Schedule 2.1(a)(xix), the Purchased Entity Interests
constitute all of the issued and outstanding shares of capital stock or other
ownership interests of the respective Purchased Entities. Except as set forth on
Schedule 4.1(b), the Purchased Entity Interests (other than with respect to the
entities designated as "Co-Investment Entities" on Schedule 2.1(a)(xix) which
are not directly or indirectly controlled by any of the Sellers) have been duly
and validly issued and are fully paid and non-assessable, free of any
preemptive, subscription or similar rights, and there are no agreements,
arrangements, warrants, options, puts, calls, rights, options, employee benefit
plans or other commitments or understandings of any character relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration,
voting, transfer or other disposition of any Purchased Entity Interest (other
than with respect to the entities designated as "Co-Investment Entities" on
Schedule 2.1(a)(xix) which are not directly or indirectly controlled by any of
the Sellers). The Purchased Entity Interests designated as "Co-Investment
Entities" on Schedule 2.1(a)(xix) which are not directly or indirectly
controlled by any of the Sellers have, to the knowledge of the Sellers, been
duly and validly issued and are fully paid and non-assessable, free of any
preemptive, subscription or similar rights, and there are no agreements,
arrangements, warrants, options, puts, calls, rights, options, employee benefit
plans or other commitments or understandings of any character relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration,
voting, transfer or other disposition of any Purchased Entity Interest
designated as "Co-Investment Entities" on Schedule 2.1(a)(xix) and not directly
or indirectly controlled by any of the Sellers. At the Closing, assuming the
performance by the Purchaser of its obligations hereunder in all respects, the
Purchased Entity Interests held by the Sellers or their respective Subsidiaries
will be free and clear of all Encumbrances. The Sellers own all of the Purchased
Assets directly and not through Subsidiaries.
Section 4.2 Power and Authority. Each of the Sellers has the
requisite corporate or partnership, as the case may be, power and authority to
execute and deliver this Agreement and the Related Documents to which it is or
will be a party and to perform the transactions contemplated hereby and thereby
to be performed by it. All corporate or partnership, as the case may be,
proceedings and actions on the part of the Sellers or their respective
shareholders required by Law, their certificates of incorporation, by-laws,
partnership agreements or otherwise to authorize the execution and delivery of
this Agreement and the Related Documents, the performance of the obligations
hereunder and thereunder to be performed by each of them and the consummation of
the transactions contemplated hereby and thereby have been duly taken, and no
other corporate proceedings or actions on the part of the Sellers, their
respective boards of directors, partners or shareholders is necessary. This
Agreement is, and each of the Related Documents to which each of the Sellers is
a party will be upon execution, a valid and binding agreement enforceable
against such Sellers in accordance with its terms, subject to the effect of
principles of equity.
Section 4.3 No Conflicts; Consents.
(a) Except as set forth in Schedule 4.3(a) or Schedule 4.3(b),
neither the execution or delivery by the Sellers of this Agreement or any
Related Document to which any of them is or will be a party nor the performance
by the Sellers of the transactions contemplated hereby or thereby to be
performed by any of them shall:
33
<PAGE> 41
(i) conflict with, result in a breach of, constitute
a default under or violate any provision of the certificate of
incorporation (or other organizational documents), bylaws or
partnership agreement of any of the Sellers or any Purchased Entity;
(ii) conflict with or violate any Law applicable to
the Sellers or any Purchased Entity or by which the Sellers, the
Purchased Entities or any of their respective properties or assets is
bound, which conflict or violation could have a Material Adverse
Effect; or
(iii) violate, modify, result in a loss of benefits
under or conflict with, or constitute an event of default or a breach
under, result in the acceleration, termination, modification,
amendment, rescission of or refusal to perform (or entitle any Person
to accelerate, terminate, modify, amend, rescind or refuse to perform)
any obligation under, any Contract or Approval binding on any of the
Sellers, or by which any Purchased Asset is bound, or result in the
creation of any Encumbrance upon any asset which will be a Purchased
Asset, except to the extent such violations, modifications, losses of
benefits, conflicts, defaults, breaches, accelerations, terminations,
modifications, amendments, rescissions or refusals to perform could
not, individually or in the aggregate, have a Material Adverse Effect.
(b) No Approval or other order or action of, or notice to, or
declaration, filing or registration with any Governmental Authority or any other
Person is required in connection with the execution, delivery, or consummation
of this Agreement, or the Related Documents or the actions of the Sellers
contemplated hereby or thereby, except for (i) the filing of a notification
report under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and a Current Report on Form 8-K under the Exchange Act
(which shall be subject to the prior comment and review of the Purchaser), or
(ii) the Approvals, orders, actions, notices, declarations, filings and
registrations set forth in Schedule 4.3(b) (collectively, the "CONSENTS").
(c) To the extent required by applicable Laws, all employees
and producers in investment sales relating to the Businesses were, for time
periods prior to the Closing, licensed to market, broker, and sell real estate
in each of the states where such real estate is located.
(d) To the extent required by applicable Laws, all employees
and producers in debt production relating to the Businesses were, for the time
periods prior to Closing, licensed to market, broker, and sell mortgage loans in
each of the states where such mortgage loans are originated and where the
mortgaged property is located.
Section 4.4 Litigation; Compliance with Laws.
(a) (i) Except as set forth on Schedule 4.4(a), none of the
Sellers, nor any of their respective Subsidiaries, nor the Businesses or the
Purchased Assets is in violation of, or has received any notice alleging a
violation of, and no investigation or review is pending or, to the knowledge of
the Sellers, threatened under, any applicable Law or any Approval issued or
required to be obtained thereunder and (ii) no Action has been filed or
commenced or is pending, or to the knowledge of the Sellers, threatened against
the Sellers or any of their respective Sub-
34
<PAGE> 42
sidiaries, the Businesses or the Purchased Assets alleging any failure to so
comply, except, solely with respect to AMRESCO, INC. and those of its
Subsidiaries that are not Sellers, for violations or Actions which, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on any Seller or on the Purchased Assets or the Businesses. Neither the
Sellers nor any their respective Subsidiaries has any unsatisfied liability or
obligation in respect of any such violation. The Sellers own or possess in the
operation of the Businesses as presently conducted all Approvals which are
necessary for the conduct of the Businesses, all of which are valid and
effective, except, solely with respect to AMRESCO, INC., for Approvals the
failure to be held or possessed could not have, individually or in the
aggregate, a Material Adverse Effect on any Seller or on the Purchased Assets or
the Businesses.
(b) Except as set forth in Schedule 4.4(b), there is no
pending or, to the knowledge of the Sellers, threatened Litigation by or before
any Governmental Authority, to which any of the Sellers or any of their
respective Subsidiaries is a party or by which the Businesses or any Purchased
Asset may be bound or affected, except, solely with respect to AMRESCO, INC.,
for Litigation that could not have, individually or in the aggregate, a material
adverse effect on any Seller or on the Purchased Assets or the Businesses. No
Governmental Authority has initiated any proceeding or, to the Sellers'
knowledge, any investigation into the businesses or operations of the Sellers
except pursuant to normal licensing application and extension inquiries that
could not reasonably be expected to have a Material Adverse Effect on any Seller
or on the Purchased Assets or the Businesses. There are no unresolved written
violations, citations or exceptions by any Governmental Authority with respect
to any examinations of the Sellers or any of their respective Subsidiaries or
Affiliates. To the knowledge of Sellers, the Insurance Policies provide coverage
with respect to each Litigation or other matter set forth on Schedule 4.4(a) or
(b) in amounts which the Sellers believe are adequate to cover each such
Litigation or other matter listed on Schedule 4.4(a) or (b), subject to any
deductibles thereunder, except to the extent such failure would not reasonably
be expected to have a Material Adverse Effect. Except as set forth on Schedule
4.4(a) or (b), none of the insurers under the Insurance Policies has provided
any of the Sellers with notice, and the Sellers have no other knowledge, that
such insurer intends to deny coverage with respect to any Litigation or other
matter listed on Schedule 4.4(a) or (b).
(c) Except as set forth in Schedule 4.4(c), none of the
Sellers nor any of their respective Subsidiaries or Affiliates is subject to any
Judgment binding upon or involving the Sellers, the Businesses or the Purchased
Assets and none are pending or, to the knowledge of the Sellers, threatened or
contemplated.
Section 4.5 SEC Reports; Financial Statements.
(a) Since January 1, 1997, AMRESCO has filed all required
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") (such forms, reports, schedules, statements and other
documents, to the extent filed and publicly available prior to the date of this
Agreement, other than preliminary filings, are referred to as the "SEC
DOCUMENTS"). The SEC
35
<PAGE> 43
Documents, at the time filed, (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) complied in all material
respects with the applicable requirements of the Exchange Act, and the rules of
the SEC applicable to such SEC Documents.
(b) The consolidated financial statements of AMRESCO included
in the SEC Documents (the "FINANCIAL STATEMENTS") (i) complied, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by the Instructions to Form 10-Q promulgated by the SEC) and (iii)
fairly present (subject, in the case of the unaudited statements, to normal,
recurring year-end adjustments the effect of which will not, individually or in
the aggregate, result in a Material Adverse Change) (A) the consolidated
financial position of AMRESCO and its Subsidiaries, (B) the consolidated results
of their operations, (C) changes in stockholders' equity and (D) cash flows, in
each case, as of the dates thereof or for the periods indicated, as the case may
be.
(c) The Sellers have previously delivered to the Purchaser
copies of the Sellers' internally prepared accounting reports as to the
Businesses for each month since June 30, 1999, and will deliver such reports for
October 31, 1999 and each month prior to the Closing when available (such
reports collectively, the "INTERNAL REPORTS"). The statements of income for the
months ended July 31, August 31 and September 30 and each subsequent month prior
to the Closing and the balance sheets as of July 31, August 31 and September 30
and each subsequent month prior to the Closing included in the Internal Reports
(i) to the knowledge of the Sellers, complied in all material respects with
applicable accounting requirements, (ii) to the knowledge of the Sellers, have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except for the omission of footnotes and normal year end
adjustments) and (iii) fairly present (subject to normal, recurring year-end
adjustments the effect of which will not, individually or in the aggregate,
result in a Material Adverse Change) (A) the consolidated financial position of
the Businesses and (B) the consolidated results of their operations.
Section 4.6 Owned Real Property and Leases.
(a) Schedule 2.1(a)(i) contains an accurate description of all
Owned Real Property that is included in the Purchased Assets. Except for the
Owned Real Property and Leased Premises, no other real property, or interest in
real property, is used in the operation of the Businesses. The Owned Real
Property includes all rights, easements and rights-of-way necessary for access
to and use, as currently utilized, of the Owned Real Property, including
easements for all utilities servicing the Owned Real Property. The Owned Real
Property conforms in all respects to all applicable zoning laws and regulations,
and no written notice of violation of any Laws or Judgments relating to the
Owned Real Property or the Leased Premises has been received by any of the
Sellers. No condemnation proceedings are pending or, to the knowledge of the
Sellers, proposed or threatened, with respect to the Owned Real Property. No
tenant, sub-
36
<PAGE> 44
tenant, licensee or other third party has any rights to use or occupy
any part of the Owned Real Property or the Leased Premises. No assessment
(general or specific) exists or is pending as to all or any part of the Owned
Real Property. The improvements on the Owned Real Property and the Leased
Premises are currently in good repair and operating condition and have been
maintained in accordance with customary and commercially reasonable practice.
There has been no material or labor contracted for by the Sellers furnished to
or on the Owned Real Property or the Leased Premises for which payment has not
been made (other than accounts payable due in the Ordinary Course of Business in
an aggregate amount not exceeding $100,000 and as reflected in the Financial
Statements), there are no mechanic's or materialmen's liens or claims filed
against the Owned Real Property or, to the knowledge of the Sellers, the Leased
Premises, and none of the Sellers has received any notices of any claims of
non-payment or claims of liens by any contractors, subcontractors, suppliers,
mechanics, materialmen or artisans with respect to any work performed on or
materials furnished to the Owned Real Property or the Leased Premises.
(b) Except as set forth on Schedule 4.6, there are no
agreements or guarantees, either written or oral, affecting the Owned Real
Property or, to the knowledge of the Sellers, the Leased Premises, other than
the Transferred Leases and the Bank Debt. There are no pending or, to the
knowledge of the Sellers, threatened actions or proceedings to alter the current
zoning for the Owned Real Property. Schedule 2.1(a)(ii) accurately set forth all
payment obligations under any Transferred Leases, expiration dates of
Transferred Leases and options to renew or cancel such Transferred Leases. There
are no Contracts (other than Purchased Contracts) affecting the Owned Real
Property or Leased Premises which are not terminable on 30 days notice. The
Sellers or one of their respective Subsidiaries has good, indefeasible and
insurable fee title to each Owned Real Property and good and valid leasehold
title to each Leased Premises.
(c) None of the Sellers nor their respective Subsidiaries has
granted any outstanding options or has entered into any outstanding contracts
with any third party for the sale, mortgage, pledge, hypothecation, assignment,
lease or other transfer of any part of or any interest in any Owned Real
Property or Leased Premises.
(d) To the knowledge of the Sellers, all buildings,
structures, improvements and fixtures on, under, over or within each Owned Real
Property or Leased Premises, and all other aspects of each Owned Real Property
and Leased Premises, (i) are structurally sound and free of any defects; (ii)
are suitable, sufficient and appropriate in all respects for their current uses;
(iii) comply with all applicable laws and regulations and codes and rules of
national and local associations and boards of insurance underwriters; (iv) are
within the boundary lines of their respective Owned Real Property; and (v)
consist of sufficient land, parking areas, sidewalks, driveways and other
improvements and facilities to permit the continued use of such facilities in
the manner and for the purposes to which they are presently devoted.
(e) There is no pending or, to the knowledge of the Sellers,
threatened proceeding which might interfere with the quiet enjoyment of the
tenant under any Transferred Lease. To the knowledge of the Sellers, no
Transferred Lease is junior or subordinate to any mortgage, deed of trust or
other monetary encumbrance on the underlying leased property which
37
<PAGE> 45
might threaten or adversely affect the Sellers' leasehold estate or rights under
any Transferred Lease.
Section 4.7 Labor Relations. With respect to each Employee,
each of the Sellers is, and at all times prior to the date hereof has been, in
compliance with all Laws related to employment except where the failure to so
comply would not have a Material Adverse Effect. With respect to any Employee,
there are no material controversies pending nor, to the knowledge of the
Sellers, any basis for any such controversies, with such Seller, which
controversies have had or may have a Material Adverse Effect. With respect to
Employees, to the knowledge of the Sellers, no officer or group of key employees
has any plans to terminate their employment (whether prior to, at or after the
Closing). With respect to any Employees, none of the Sellers is a party to any
collective bargaining agreement with a labor organization certified by the
National Labor Relations Board (the "NLRB"), and (a) there is no unfair labor
practice charge or complaint against any of the Sellers pending before, or to
the knowledge of the Sellers, threatened to be brought before, the NLRB, (b)
there is no labor strike, or organized dispute, slowdown, work stoppage or other
form of collective labor activity actually pending or, to the knowledge of the
Sellers, threatened against or affecting any of the Sellers, (c) there is no
union representation claim or petition pending before the NLRB and (d) none of
the Sellers has experienced any organized dispute, slowdown, work stoppage or
other form of collective activity in the past three years.
Section 4.8 Mortgage Loans.
(a) List of GSE/TIAA Mortgage Loans. The Sellers have included
in Schedule 4.8(a) a complete and correct list of (i) all GSE Mortgage Loans
held by ACLP as of two Business Days prior to the date hereof, including all
commitments and loan applications therefor, and (ii) all TIAA Loans originated
since, or otherwise not included in any CMBS securitization prior to, the last
CMBS securitization under the TIAA Program (completed on November 11, 1999),
including all commitments and loan applications therefor, in each case, as of
the date hereof, and containing all of the information required by this Section
4.8(a) for the GSE/TIAA Mortgage Schedule. The Sellers will at Closing provide a
complete and correct list, as of the Closing Date, of (x) all GSE Mortgage
Loans, including all commitments and loan applications therefor, and (y) all
TIAA Loans originated since, or otherwise not included any CMBS securitization
prior to the last CMBS securitization under the TIAA Program, including all
commitments and loan applications therefor (the "GSE/TIAA MORTGAGE SCHEDULE"),
in each case, including, for each GSE/TIAA Mortgage Loan, as applicable, (i) the
original principal balance and the aggregate unpaid principal balance of such
GSE Mortgage Loan or TIAA Loan, (ii) the GSE Program under which such GSE
Mortgage Loan was funded, (iii) the paid to date status of such GSE Mortgage
Loan or TIAA Loan; (iv) the original term to maturity in months; (v) the
original date of the mortgage; (vi) the mortgage interest rate in effect on the
Closing Date and (vii) the stated maturity date. The GSE/TIAA Mortgage Schedule
will also include the information required by Sections 4.8(j) and (k).
(b) Description of Mortgage Servicing Portfolio. In connection
with the execution of this Agreement, the Sellers have delivered to the
Purchaser (in a computer tape format
38
<PAGE> 46
reasonably acceptable to the Purchaser) a report that identifies the Mortgage
Loans (the "MORTGAGE LOAN SCHEDULE," which term includes, except where the
context requires otherwise, the updated schedule to be prepared and delivered in
accordance with Section 10.12 ("UPDATED MORTGAGE LOAN SCHEDULE")). The Mortgage
Loan Schedule identifies each Mortgage Loan which is serviced by the Sellers and
the Updated Mortgage Loan Schedule identifies each Mortgage Loan which will be
serviced by the Purchaser after the Closing under the Servicing Agreements or
the Purchaser Servicing Agreements, and sets forth the following information
with respect to each such Mortgage Loan as of the close of business on the last
day of the immediately preceding month (the "CUT-OFF DATE"): (i) the Seller's
mortgage loan identification number; (ii) the Mortgagor's name; (iii) the
original term to maturity in months; (iv) the origination date of the Mortgage;
(v) the mortgage interest rate in effect on the Cut-off-Date; (vi) the stated
maturity date; (vii) the property address for the property encumbered by the
related Mortgage; (viii) the property type for the property encumbered by the
related Mortgage; (ix) the applicable Investor; and (x) the original principal
balance, the current principal balance and the current payment status; all in a
level of detail and format reasonably acceptable to the Purchaser. The
information set forth in the Mortgage Loan Schedule is complete, true and
correct in all material respects as of the date hereof and the information in
the Updated Mortgage Loan Schedule to be prepared and delivered to the Purchaser
in accordance with Section 10.12 will be true and correct as of the Closing
Date.
(c) Compliance. Each GSE Mortgage Loan and each TIAA Loan has
been underwritten, originated, held and serviced in compliance with (i) all
applicable contractual requirements, including guidelines, procedures, rules and
regulations of its Investors ("INVESTOR REQUIREMENTS"), (ii) all applicable
Laws, (iii) all requirements of any insurer, and (iv) all requirements of the
applicable GSE Program or the TIAA Program, as the case may be. Each GSE
Mortgage Loan and each TIAA Loan was, at the time of origination, in compliance
with the underwriting criteria of the applicable Investor, or, to the extent not
in compliance, was covered by a written waiver from such Investor. Except as set
forth on Schedule 4.8(c) or on the GSE/TIAA Mortgage Schedule, none of the GSE
Mortgage Loans or TIAA Loans are delinquent or in monetary default or, to ACLP's
knowledge, any other type of material default, have been rejected by the
applicable GSE Program or otherwise do not qualify under guidelines of any GSE
Program or the TIAA Program, or have been foreclosed, and none of the Sellers
has any knowledge of any circumstances or conditions with respect to any
Mortgage, any Mortgaged Property, any Mortgagor or any Mortgagor's credit
standing that can reasonably be expected to cause institutional investors
investing in loans of the same type as a GSE Mortgage Loan or TIAA Loan to
regard such GSE Mortgage Loan or TIAA Loan to be an unacceptable investment or
adversely affect the value of the GSE Mortgage Loan or TIAA Loan. Each of the
GSE Mortgage Loans which is a Fannie Mae DUS loan qualifies for "Level I loss
sharing" treatment, as defined in Section 2.1(b). To the Sellers' knowledge, the
brokers and correspondents involved in the origination of the GSE Mortgage Loans
and TIAA Loans have complied in all material respects with all internal policies
and procedures of ACLP with respect to the origination of such GSE Mortgage
Loans and with all applicable Laws. Each loan approved by an Investor and funded
under the Warehouse Line that is a Fannie Mae DUS mortgage loan shall be subject
to a valid and binding forward sale agreement customary for such loan
origination.
39
<PAGE> 47
(d) Complete Files. In the normal course of closing and
circulation of documentation, ACLP's files contain (or will promptly contain) an
executed original or duplicate copy of all original customary closing documents
and instruments (the "LOAN DOCUMENTS") relating to each GSE Mortgage Loan, each
TIAA Loan, any commitments or applications for any such loans and any loans
financed under the Warehouse Line, all in accordance with the normal and
customary file retention procedures of prudent GSE loan or TIAA loan
originators, as the case may be (the "LOAN FILES"), and all monies received with
respect to each GSE Mortgage Loan and TIAA Loan, any commitment or application
therefor, loan financed by the Warehouse Line and Mortgage Loan (pursuant to the
relevant Servicing Agreement) have been properly accounted for and applied.
(e) Forward Purchases of GSE Mortgage Loans. Each GSE Mortgage
Loan that is a Fannie Mae DUS loan is subject to a valid and binding agreement,
commitment or contract providing for the sale of such GSE Mortgage Loan at a
future date, upon acceptance of such GSE Mortgage Loan by Fannie Mae, at an
amount equal to or in excess of the par value for such GSE Mortgage Loan. Each
such agreement, commitment or contract is in customary form, consistent with the
Sellers' past practice.
(f) Warehouse Line. Loans made under the Warehouse Line are
made and have been made solely for the purpose of financing 100% of the original
principal amount of GSE Mortgage Loans and for no other purpose. There is no
loan outstanding and, as of the Closing there will be no loan or commitment or
application for any loan outstanding under the Warehouse Line other than loans,
commitments or applications for loans that constitute GSE Mortgage Loans (except
to the extent that such loan, commitment or application may constitute a
Rejected GSE Loan).
(g) Original Terms Unmodified. The terms of each GSE Mortgage
Loan and TIAA Loan have not been impaired, waived, altered or modified in any
material respect from the date of their origination except by a written
instrument, which written instrument has been recorded if recordation is
necessary to protect the interests of the owner thereof. A copy of each such
written instrument is included in the Loan Files. The substance of any such
waiver, alteration or modification has been communicated to and approved in
writing by: (i) the relevant Investor, to the extent required by the relevant
Investor Requirements; and (ii) the title insurer, to the extent required by the
relevant policies, and its terms are reflected in the Loan Documents or the
applicable Loan Files. Except as authorized by the applicable Investor or ACLP's
agreement with such Investor, none of the Sellers has: (i) subordinated the Lien
of any GSE/TIAA Mortgage Loan to any other mortgage or Lien or given any other
mortgage or Lien equal priority with the Lien of a GSE Mortgage Loan or TIAA
Loan; (ii) taken any other action or omitted to take any other action, which
action or omission would impair the rights of the Sellers or (after the Closing)
the Purchaser in the GSE Mortgage Loans or, if applicable, the TIAA Loans or
prevent any such Person from collecting any amounts due thereunder, or (iii)
executed any instrument of release, cancellation or satisfaction, in whole or in
part, with respect to any GSE Mortgage Loan or, if applicable, any TIAA Loan.
40
<PAGE> 48
(h) Title to GSE Mortgage Loans. Until the settlement or the
purchase date related to each GSE Mortgage Loan, ACLP shall have beneficial
title to each of the GSE Mortgage Loans, free and clear of all Encumbrances and
no other Person has any interest in the GSE Mortgage Loans other than ACLP's
warehouse lender under the Warehouse Line and the applicable Investor.
(i) Consents. ACLP has obtained all consents and approvals
from Fannie Mae and Freddie Mac required to participate as a seller/servicer in
the Fannie Mae DUS Program or the Freddie Mac Program Plus and to operate in the
manner it currently operates, including any approvals or consents of Fannie Mae
or Freddie Mac required to authorize ASLP to perform subservicing functions for
ACLP with respect to all Fannie Mae DUS and Freddie Mac Program Plus mortgage
loans for which ASLP does or has provided such services. ACLP has obtained all
consents and approvals from TIAA and CS First Boston required to participate as
a lender and/or servicer under the TIAA Program and to operate in the manner it
currently operates. None of the consents or approvals described in this Section
4.8(i) has been suspended, revoked or modified in any way adverse to ACLP or, to
the extent applicable, ASLP, and neither ACLP nor ASLP has been notified by
Fannie Mae or Freddie Mac that any such suspension, revocation or modification
is contemplated.
(j) Program Loans. Schedule 4.8(j) contains a true and
complete list separately identifying (i) each loan originated and sold by ACLP
to Fannie Mae under the Fannie Mae DUS Program and Freddie Mac under the Freddie
Mac Program Plus, showing, for each such loan, the name of the borrower,
original principal balance of the loan, date of sale to Fannie Mae or Freddie
Mac, as the case may be, and, if applicable, the level or category assigned to
each such mortgage for loss sharing purposes; (ii) each loan funded by ACLP
under the Fannie Mae DUS Program or the Freddie Mac Program Plus but not yet
sold to Fannie Mae or Freddie Mac, as the case may be, showing, for each such
loan, the borrower, original principal balance of the loan, estimated number of
days until the sale of the loan to Fannie Mae or Freddie Mac, as the case may
be, is consummated, and, if applicable, the level or category assigned to such
loan for loss sharing purposes (i.e. Level 1, Level 2, or Level 3); and (iii)
each loan for which ACLP has issued a commitment but not yet funded, showing the
amount of the commitment and anticipated date of sale to Fannie Mae or Freddie
Mac, as the case may be, and, if applicable, the level or category to be
assigned to such loan for loss sharing purposes. Schedules 4.8(j) and 4.8(k)
shall be updated by the Sellers and delivered to the Purchaser on the Business
Day immediately prior to the Closing Date, and the representations set forth in
Sections 4.8(j) and 4.8(k) hereof shall apply also to such updated Schedules
4.8(j) and 4.8(k), as applicable.
(k) Originated Loans. Schedule 4.8(k) contains a true and
complete list of all loans originated by ACLP and sold to Fannie Mae under the
Fannie Mae DUS Program or Freddie Mac under the Freddie Mac Program Plus and
which appear on ACLP's internal watch list, identifying by loan the name of the
borrower, category or level assigned to such loan for loss sharing purposes,
applicable watch list category (e.g. Special Mention, Substandard, Doubtful,
etc.), amount (if any) specially reserved for such loan, nature of default (if
any) and current performance status of such loan with respect to scheduled
payments of principal and interest. To the knowledge of ACLP, the watch list
accurately and completely presents all loans originated
41
<PAGE> 49
by any Seller and sold to an investor which are subject to any breach, default,
non-payment or other non-performance of any kind or nature. To the knowledge of
ACLP, the DUS Reserves are sufficient to cover the breach, non-performance or
other reasonably expected losses for all loans originated by the Sellers under
the Fannie Mae DUS Program.
(l) Program Representations and Warranties. All of the
representations and warranties made by ACLP, as seller, under the Fannie Mae
DUS, the Freddie Mac Program Plus and the TIAA mortgage loan sale documents were
true when made with respect to each loan originated by ACLP and sold to Fannie
Mae under the Fannie Mae DUS Program or Freddie Mac under the Freddie Mac
Program Plus or that were underwritten by ACLP under the TIAA Program, as the
case may be; ACLP has recognized no loss to date with respect to any loan
pursuant to the loss sharing provisions of the Fannie Mae DUS Program or the
TIAA Program; and neither ACLP, as seller, nor, ASLP as subservicer, has been
notified or otherwise discovered, in the course of its duties, that any
representation or warranty made by ACLP at the time any loan was sold by ACLP to
Fannie Mae, Freddie Mac, TIAA or Credit Suisse First Boston Mortgage Capital,
LLC, ("CS FIRST BOSTON") as the case may be, is no longer true. The Sellers have
no reason to believe that the reserves listed on Schedule 4.8(l), including the
DUS Reserves, are not adequate to cover all reasonably expected losses from
loans originated by any Seller and sold to an Investor. ACLP has complied with,
and is currently in compliance with, any applicable net worth requirements
imposed by any GSE Program or by TIAA, if any.
(m) Claims. Except as disclosed on Schedule 4.4(b), no claims
have been overtly threatened or asserted, nor to the Sellers' knowledge, have
any investigations or proceedings been commenced, by any borrower, prospective
borrower, Governmental Authority or other Person which, if adversely settled or
adjudicated, would result in a material liability or loss to ACLP or to the
extent applicable, ASLP, or of the suspension, revocation or adverse
modification of the right or authority of either to continue its respective
services and duties under the Fannie Mae DUS Program, the Freddie Mac Program
Plus or the TIAA Program in the same manner and to the same extent that they are
currently being performed.
Section 4.9 Approved Issuer. Except as set forth in Schedule
4.9, ACLP is a Fannie Mae approved DUS lender and is a Freddie Mac approved
Program Plus lender, in each case, in good standing, and is a Fannie Mae and
Freddie Mac approved seller/servicer in good standing and an approved lender
and/or Servicer for TIAA in good standing. None of the Sellers has at any time
in the past received notice from any Governmental Authority or Investor of
pending or, to the knowledge of the Sellers, threatened actions or
investigations which would question the status of ACLP as an approved lender or
issuer as provided in this Section 4.9. To the knowledge of the Sellers, no
event has occurred which, with the passage of time or the giving of notice, or
both, would result in the loss by ACLP of its qualification as an approved
lender, servicer or issuer as set forth in this Section 4.9 or of ACLP as a
contractor or as a Person otherwise permitted to transact business with any
Governmental Authority, GSE Program or TIAA.
Section 4.10 Transactions with Affiliates. Except as set forth
in Schedule 4.10, none of the Sellers or the Businesses has or is subject to any
Contract or other arrangement (including loans and advances) or has entered into
any management, consulting or similar fee
42
<PAGE> 50
agreement, with any officer, director or employee of any of the Sellers or with
any of the Sellers' respective Affiliates, except for Contracts, arrangements or
agreements which do not relate to the Purchased Assets or the Businesses.
Section 4.11 Intellectual Property and Software.
(a) The Sellers are the sole owners of all right, title and
interest in, and have a valid right to use, the Intellectual Property, the
Seller Transferred Software and the Seller Licensed Software free and clear of
all Encumbrances or other restrictions, except as set forth in Schedule 4.11(a).
All fees and actions reasonably required to be taken for the registration,
maintenance, operation, use or protection of the Intellectual Property, the
Seller Transferred Software and the Seller Licensed Software have been paid and
taken. The Sellers have the right to use the Intellectual Property, the Seller
Transferred Software, the Seller Licensed Software and the Third Party Software.
The Sellers have the right to transfer to the Purchaser the Intellectual
Property, the Third Party Software, and the Seller Transferred Software subject
to licensing requirements and other required Consents set forth in Schedule
2.1(a)(xvii)A hereto. None of the Sellers has received any written charge,
complaint, claim, demand or notice alleging that the ownership or use of the
Intellectual Property, the Seller Transferred Software, the Seller Licensed
Software or the Third Party Software constitutes any interference with or
infringement or misappropriation of any rights of any Person, and none of the
Sellers has knowledge of any reasonable basis therefor, which claim is currently
unresolved. To the Sellers' knowledge, no Person has interfered with, infringed
on or misappropriated any of the Intellectual Property, the Seller Transferred
Software or the Seller Licensed Software. Except as set forth in Schedule
4.11(a), none of the Intellectual Property, the Seller Transferred Software or
the Seller Licensed Software is subject to any outstanding Judgment or Contract
to which any Seller is a party prohibiting or restricting the use thereof by
such Seller with respect to the Businesses or prohibiting or restricting the
licensing or transfer thereof by such Seller to the Purchaser or any other
Person, or restricting the use thereof by the Purchaser or any other Person.
(b) No Seller has entered into any agreement to indemnify any
Person against any charge of infringement of any intellectual property or
misappropriation of any trade secret related to Seller Transferred Software.
(c) To the best knowledge of the Sellers, all
business-critical Third Party Software, Seller Transferred Software, Seller
Licensed Software, Computer Hardware and other business-critical systems
currently used in the Businesses are Year 2000 Compliant. Each business-critical
third party whose systems interface with the Businesses' internal systems has
advised the Sellers that, such third party's systems will be Year 2000
Compliant, by the Closing Date, and the Sellers will have used their reasonable
best efforts to verify the accuracy of such advice. The Sellers have developed
and implemented a Year 2000 initiative consistent with the Federal Financial
Institution Examination guidelines dated April 10, 1998, as amended or updated.
(d) The Sellers are duly authorized or licensed to use all
confidential information currently, used in the operation of the Businesses. To
the Sellers' knowledge, the processes
43
<PAGE> 51
employed, the services provided, the business conducted and the products used or
dealt in by the Sellers in the conduct of the Businesses do not infringe any
intellectual property or other proprietary rights of any Person not a party to
this Agreement. Except as listed on Schedules 2.1(a)(xvii)A and 4.11(a), the use
of the Intellectual Property, Seller Transferred Software and Seller Licensed
Software in connection with the operation of the Businesses does not give rise
to any material royalty or like payment obligation.
(e) The Sellers have taken all reasonable, customary and usual
precautions to protect the secrecy, confidentiality, and value of their trade
secrets, confidential information and third party confidential information duly
licensed to such Sellers. The Sellers have good title and an absolute right to
use their trade secrets. No such trade secret is subject to any adverse claim
or, to the Sellers' knowledge, has been challenged or threatened in writing.
(f) To the knowledge of each of the Sellers, it owns, is
licensed or otherwise has the right to use, the Intellectual Property, Seller
Transferred Software, Seller Licensed Software and Third Party Software as is
reasonably necessary and in sufficient quantities for the operation of the
Businesses as of the Closing Date. The Third Party Software, Seller Transferred
Software, Seller Licensed Software and Excluded Software constitute all of the
business critical software used in the Businesses as of the Closing Date.
(g) No Seller has any obligation to compensate any Person for
the development, use, sale or exploitation of the Seller Transferred Software
nor has any Seller granted to any other person or entity any license, option or
other right to develop or sell the Seller Transferred Software, whether
requiring the payment of royalties or not.
Section 4.12 Environmental Liability. None of the Sellers or
their respective Subsidiaries, nor, to the Sellers' knowledge, any third party
has engaged in the generation, use, manufacture, treatment, transportation,
storage or disposal of any Hazardous Material on any of the properties included
in the Purchased Assets, and none of the Sellers has knowledge that the
Purchased Assets, as currently used and occupied, do not comply with applicable
Laws or Approvals, including those relating to land use, pollution, Hazardous
Materials and the environment or have thereon, therein or thereunder any
Hazardous Materials. There is no Litigation and, to the knowledge of the
Sellers, there are no private investigations or remediation activities or
governmental investigations pending or, to the Sellers' knowledge, threatened,
seeking to impose, or that would reasonably be expected to result in the
imposition, on the Sellers or any of their respective Subsidiaries or Affiliates
any obligation or liability under any Law relating to pollution, Hazardous
Materials or the environment which would reasonably be expected to have a
Material Adverse Effect on any Seller or on the Businesses, nor do the Sellers
know of any reasonable basis therefor. The Sellers do not have in their
possession and are not aware of any environmental report relating to the Owned
Real Property or any Leased Premises, except for that certain environmental
report ordered by AMRESCO, INC. in November 1999 in respect of the Owned Real
Property and received by it after the date hereof.
Section 4.13 Brokers. The fees and expenses due any broker,
finder, financial advisor or other agent retained by the Sellers are solely the
responsibility of the Sellers.
44
<PAGE> 52
Section 4.14 Information Supplied; Accuracy of Data.
(a) There is no material fact which the Sellers have not
disclosed to the Purchaser or its representatives which would reasonably be
expected to have a Material Adverse Effect upon the Businesses or the Purchased
Assets or which could reasonably be expected to have a material adverse effect
on the transactions contemplated hereby.
(b) The records (including computer records), files and other
information in written or recorded form relating to, or used by the Sellers in
connection with, the Businesses accurately reflect in all material respects the
information supplied to the Sellers by third parties and the actions taken by
the Sellers. All servicing accounts maintained by or on behalf of the Sellers
accurately reflect all material transactions in such accounts and all material
information supplied to the Sellers by third parties.
Section 4.15 Taxes.
(a) No Purchased Entity is or owns a single member limited
liability company that is treated as a disregarded entity.
(b) Each of the Sellers, the Purchased Entities and their
respective Subsidiaries have filed all Tax Returns that each of them were
required to file and have paid all Taxes shown thereon as due and owing. All
such Tax Returns were correct and complete in all material respects. To the
knowledge of the Sellers, no written claim has ever been made by a Tax Authority
in a jurisdiction where any of the Sellers, the Purchased Entities and their
respective Subsidiaries does not file Tax Returns that any of them is or may be
subject to taxation by that jurisdiction. There are no liens or security
interests on any of the assets owned by the Sellers, the Purchased Entities and
their respective Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Tax.
(c) Each of the Sellers, the Purchased Entities and their
respective Subsidiaries have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
former employee, independent contractor, creditor, stockholder, or other third
party.
(d) There is no dispute or claim concerning any material
amount of Tax liability of any of the Sellers, the Purchased Entities and their
respective Subsidiaries either (A) claimed or raised by any Tax Authority in
writing or (B) as to which the officers and directors (and employees responsible
for Taxes) of the Sellers, the Purchased Entities and their respective
Subsidiaries has knowledge based upon personal contact with any agent of such
Tax Authority. No issues have been raised in any examination by any Taxing
Authority with respect to any Purchased Asset or any Purchased Entity which, by
application of similar principles, reasonably could be expected to result in a
proposed deficiency or increase in Tax for any other period not so examined.
Schedule 4.15 lists all federal, state, local, and foreign income Tax Returns
filed with respect to any of the Sellers, the Purchased Entities and their
respective Subsidiaries for taxable periods ended on or after December 31, 1994,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Sellers
45
<PAGE> 53
delivered or made available to the Purchaser correct and complete copies all
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Sellers, the Purchased Entities and their
respective Subsidiaries since December 31, 1994.
(e) Except as disclosed in Schedule 4.15, none of the Sellers,
the Purchased Entities and their respective Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(f) The Sellers and each other entity transferring an interest
in United States real property hereunder is not a foreign Person within the
meaning of Section 1445(b)(2) of the Code.
(g) Immediately prior to the Closing, each of the partnerships
(or other "flowthrough" entities treated as partnerships for U.S. tax purposes)
included in the Purchased Entities (the "PARTNERSHIPS") qualifies and has since
the date of its formation qualified to be treated as a partnership for federal
income tax purposes and neither the Partnerships nor any of the partners thereof
has taken a position inconsistent with such treatment with regard to any Tax.
Schedule 4.15 sets forth Sellers' capital account and interest in profits,
losses and cash distributions in each of the Partnerships as of the date hereof
and as adjusted immediately prior to the Closing. Sellers' interest in the
capital, profits and cash flow of each of the Partnerships is set forth on
Schedule 4.15. Other than the Partnerships, the Purchased Entities and the
Purchased Assets do not include any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes.
(h) Except for the Election Corporations or as disclosed on
Schedule 4.15, none of the Purchased Entities has been a member of any group
that has filed a combined, consolidated or unitary Tax Return, other than such
Tax Returns for which the period for assessment has expired (taking into account
any extension or waiver thereof).
(i) Except for the Election Corporations, none of the non-U.S.
Purchased Entities is (i) engaged in or treated as or considered to be engaged
in the conduct of trade or business within the United States for federal income
tax purposes, or (ii) a foreign investment company within the meaning of the
Code.
(j) None of the Purchased Entities has (i) made any election,
and is not required, to treat any asset of the Purchased Entities as owned by
another person for tax purposes; or (ii) carried out or been engaged in any
transaction or arrangement such that the law provides that there may be
substituted for the amount or value or the actual consideration given or
received (or to be given or received) by the Purchased Entities any different
amount or value for Tax purposes.
(k) No Purchased Entity has received or is subject to any
written ruling of a Taxing Authority related to Taxes or has entered into any
written and legally binding agreement with a Taxing Authority relating to Taxes
(and none of the Purchased Assets is subject to or has been the topic of any
such agreement).
46
<PAGE> 54
(l) Except for the Election Corporations and except as
disclosed in Schedule 4.15, no Purchased Entity has, or at any time has had, an
investment in "United States property" within the meaning of Section 956(c) of
the Code.
(m) Except as disclosed in Schedule 4.15, no Purchased Entity
is, or at any time has been, a passive foreign investment company within the
meaning of Section 1297 of the Code, and no Purchased Entity is a shareholder,
directly or indirectly, in a passive foreign investment company.
(n) Other than an agreement or arrangement described in, and
to be terminated pursuant to, Section 11.13 of this Agreement, no Purchased
Entity (x) is a party to or is otherwise subject to any Tax allocation or
sharing agreement and (y) has no liability for the Taxes of another Person under
law, by contract or otherwise.
(o) Each Election Corporation is a member of the Amresco Group
of corporations that file a consolidated federal income tax return with Amresco
as the common parent, and Amresco is eligible to join with the Purchaser in
making a Section 338(h)(10) Election with respect to the acquisition by the
Purchaser of each such Election Corporation.
(p) Except as set forth on Schedule 4.15, each Partnership
that is a U.S. Person within the meaning of Section 7701 of the Code has in
effect an election under Section 754 of the Code, and each Partnership that is
not a U.S. Person has made a similar election under the corresponding provision
of Foreign law.
Section 4.16 Absence of Changes. Since December 31, 1998,
except as identified in the SEC Documents filed prior to the date hereof or in
Schedule 4.16, the Sellers and their Subsidiaries have operated their respective
businesses only in the ordinary course of business, and there has not been any
transaction or occurrence which has resulted in or will reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect on the
Sellers, the Businesses or the Purchased Assets. Without limiting the foregoing,
except as set forth in the SEC Documents filed prior to the date hereof or in
Schedule 4.16, since December 31, 1998, there has been no action taken by the
Sellers in respect of the Businesses of the type described in Section 10.4(a).
Section 4.17 Absence of Undisclosed Liabilities. The Sellers
and their respective Subsidiaries had no (and the Businesses and the Purchased
Assets were not subject to any) liabilities or financial obligations of any
nature, known or unknown, accrued or absolute, fixed or contingent, in respect
of the Businesses or the Purchased Assets, and the Sellers and their respective
Subsidiaries have not incurred any such liabilities or obligations since the
date of the last Internal Report in respect of the Businesses, except for such
liabilities or obligations (i) reflected in the Financial Statements and the
Internal Reports or (ii) incurred in the Ordinary Course of Business after the
date of the last Internal Report and, to the extent material, disclosed in
Schedule 4.17 hereto. Neither the Sellers nor any of their Subsidiaries or
Affiliates have any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) arising out of or related to the Businesses
or the Purchased Assets, except for (i) Excluded Liabilities or (ii) Assumed
Liabilities. Except for the earnout liabilities set forth in Schedule
2.3(b)(xviii)
47
<PAGE> 55
(each of which shall be paid in full by the Sellers at the Closing), there are
no earnouts or similar liabilities relating to the Businesses or the Purchased
Assets. Other than Liens relating to the Bank Debt (which will be released as to
Purchased Assets at the Closing in exchange for payment to the lenders
thereunder of a portion of the Cash Consideration) and the Warehouse Line (which
will be released as to the loans thereunder being refinanced as contemplated
hereunder by the Purchaser), there are no Liens securing any indebtedness which
Encumber any of the Purchased Assets.
Section 4.18 Employee Benefits.
(a) Except as specifically listed and described in Schedule
4.18(a), none of the Sellers nor any of their Affiliates or Subsidiaries has,
maintains, contributes to, or has any direct, indirect or contingent obligation
or liability with respect to, any Employee Plan or Employee Commitment (each as
defined hereinbelow), maintained for the benefit of Employees. For purposes of
this Agreement, "BENEFIT PLANS" shall refer collectively to "Employee Plans" and
"Employee Commitments". Any Benefit Plan maintained for Employees who are
located or performing services outside of the U.S. will be referred to as a
"FOREIGN PLAN," and any and all such Foreign Plans will be specifically
identified as such in Schedule 4.18(a).
(i) "EMPLOYEE PLAN" means and includes, with respect
to Employees, each welfare plan, as defined in ERISA Section 3(1); each
employee pension benefit plan, as defined in ERISA Section 3(2); and
any other welfare benefit, hospitalization, medical, disability, life,
cafeteria (within the meaning of Code Section 125), insurance, bonus,
deferred compensation, pension, retirement, profit sharing, thrift,
stock ownership, stock appreciation rights, stock option, severance,
educational assistance, employee assistance, dependent care, retiree
benefits, vacation pay, sick leave or holiday pay plan, agreement,
arrangement, policy, practice or understanding, whether written or
oral, binding or non-binding, relating to any compensation,
remuneration or benefits or any nature whatsoever.
(ii) "EMPLOYEE COMMITMENT" shall mean and include
each agreement, arrangement, commitment or understanding of any kind
(other than an Employee Plan), whether written or oral, binding or
non-binding, with any Employee, pursuant to which payments may be
required to be made at any time following the Closing Date (including
any employment, deferred compensation, severance, termination, change
in control, consulting, brokerage, commission or independent contractor
agreement).
(b) Each Employee Plan that is intended to be qualified under
Code Section 401(a) is so qualified, and its related trust is tax-exempt under
Code Section 501. For each such plan, the Sellers or sponsoring Affiliates or
Subsidiaries have received from the Internal Revenue Service a favorable
determination letter to the effect that the plan in form satisfies the
requirements for qualification under Code Section 401(a) (taking into account
the provisions of the Tax Reform Act of 1986 and all subsequent legislation for
which such plan has been amended). No amendment to any such qualified Employee
Plan made since applying for such determination letter could cause a
disqualification of such plan. Any noncompliance or failure prior to the Closing
Date properly to maintain, operate or administer any such qualified Employee
Plan has
48
<PAGE> 56
not rendered and will not render: (i) such plan or its related trust or
Purchaser, the Sellers or any of their Affiliates or Subsidiaries subject to, or
liable (directly or indirectly) for, any taxes, penalties or liabilities to any
person or governmental agency; (ii) such plan subject to disqualification; or
(iii) the trust under such plan subject to any liability for taxes.
(c) Except as set forth in Schedule 4.18(c), the consummation
of the transaction contemplated by this Agreement shall not, either alone or in
combination with another event, (i) entitle any Employee to severance pay,
unemployment compensation or any other payment, except as expressly provided in
this Agreement; (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such Employee or (iii) result in any excess
parachute payment (within the meaning of Code Section 280G) or any compensation
in excess of the limit described in Code Section 162(m). Except as expressly
provided in this Agreement, if this transaction alone or in combination with any
event, present or future, should entitle an Employee to severance pay,
unemployment compensation or any other payment arising from an agreement,
contract or other arrangement entered into by Seller and Employee prior to
Closing, the Seller will be solely responsible for any such payment.
Section 4.19 Purchased Assets. Except as expressly set forth
in Section 4.8(h), the Sellers are, collectively, the exclusive legal and
equitable owners, in their sole name and stead, with good and marketable title
to, and the unconditional right to use, all of the Purchased Assets (real and
personal, tangible and intangible), and at the Closing will have the right,
subject to obtaining any applicable Consents, to convey and transfer to the
Purchaser, all of the Purchased Assets free and clear of all Encumbrances,
except for Encumbrances disclosed in Schedule 4.19 ("PERMITTED ENCUMBRANCES").
All of the tangible Purchased Assets and the assets leased or licensed under
Contracts which will be Purchased Assets have been maintained in accordance with
normal industry practice, are in good operating condition and repair, reasonable
wear and tear excepted, and are adequate for the purposes for which they
presently are being used. The Purchased Assets, taken together, include all
properties, assets, Contracts and rights which are being used in or are
necessary for the conduct of the Businesses as currently conducted and, in the
case of ACLP, to own the GSE Mortgage Loans, other than any Permits to be
obtained by Purchaser. Except with respect to the GSE Mortgage Loans and the
TIAA Loans (as to which Fannie Mae, Freddie Mac and TIAA, respectively, have the
rights described in Section 4.8) or as disclosed in Schedule 4.19, there does
not exist any right, option or agreement granting any Person the right to
purchase or otherwise acquire the Businesses or any Purchased Asset. Other than
the Transferred Leases and equipment leases described in Schedule 2.1(a)(v) or
2.1(a)(xvi), there are no leases with respect to the Purchased Assets, and all
Purchased Assets not covered by such leases (other than Third Party Software)
are owned by the Sellers or their Subsidiaries.
Section 4.20 Contracts. The Sellers have made available to the
Purchaser true and complete copies of all Purchased Contracts. The Purchased
Contracts are the only Contracts to which the Sellers or their Subsidiaries or
Affiliates are parties which relate to the Businesses, except for the Excluded
Assets or Excluded Liabilities. All Purchased Contracts are in full force and
effect and are valid, binding and enforceable obligations of the respective
Sellers and, to the Sellers' knowledge, of the other parties thereto (except
that determinations as to enforceability
49
<PAGE> 57
against such third parties are subject to equitable defenses). Except as set
forth in Schedule 4.20 or as otherwise disclosed in Schedules 2.1(a)(ii),
2.1(a)(v) or 2.1(a)(ix), none of the Purchased Contracts has been amended or
modified and no provision thereof has been waived or terminated. Subject to the
rights of other parties thereto to terminate such agreements pursuant to the
terms thereof, to the knowledge of the Sellers, all such Purchased Contracts
will continue to be valid, binding, enforceable and in full force and effect on
substantially identical terms following consummation of the transactions
contemplated hereby, subject to obtaining any necessary Consents. Except as set
forth in Schedule 4.20, none of the Sellers and, to the knowledge of the
Sellers, no third party to any material Purchased Contract is in breach of or
default under any such Contract and no event or condition exists which, with the
passage of time or giving of notice or both, could reasonably be expected to
constitute such a breach or default. Except as set forth on Schedule 4.20, none
of the Sellers has received any written notice that, and the Sellers have no
other knowledge that, any party to any Purchased Contract has determined to or
intends to terminate such agreement.
Section 4.21 Insurance. Schedule 4.21 contains a complete and
correct list of (i) all insurance policies under which any of the Sellers is a
named insured with respect to the Businesses or the Purchased Assets, or that
otherwise provide coverage with respect to the Businesses or the Purchased
Assets (the "INSURANCE POLICIES") and (ii) any outstanding claims under such
insurance policies related to the Businesses or the Purchased Assets. None of
the Sellers has received notice of cancellation of any such Insurance Policies.
Except as set forth on Schedule 4.21, all such Insurance Policies are on an
occurrence basis and will be outstanding and in full force and effect at the
Closing Date or the Sellers shall have replaced such Insurance Policies with
comparable policies providing substantially similar coverage with respect to the
Businesses and the Purchased Assets, and the consummation of the transactions
contemplated hereby will not cause a cancellation or reduction in the coverage
of such policies.
Section 4.22 Servicing Agreement Matters.
(a) Servicing Agreements. The Servicing Agreements set forth
all of the terms and conditions of the Sellers' rights and obligations relating
to the servicing of the Mortgage Loans and there are no other agreements,
written or oral, that modify or affect the Servicing Agreements in any material
respect. AMCI, ACLP, AMI, HFF and ASLP own the entire right, title and interest
in and to the Servicing Rights and the sole right to service the Mortgage Loans,
subject to the Servicing Agreements but free and clear of all Encumbrances,
except for the rights of sub-servicers as disclosed on Schedule 4.22(a) and
Permitted Encumbrances. Except as disclosed on Schedule 4.9, none of the Sellers
nor, to the Sellers' knowledge, any of the other parties thereto, is in default
under any Servicing Agreement to which such Seller is a party. Except as
disclosed in Schedule 4.22(a), none of the other parties to any of the Servicing
Agreements has notified any of the Sellers that such party will be terminating,
modifying or amending any of the Servicing Agreements (or otherwise seeking to
terminate, modify, amend or reduce the Sellers' benefits under any of the
Servicing Agreements), and none of the Sellers has any knowledge to the
contrary. The Servicing Agreements constitute all of the pooling and servicing
agreements, primary servicing agreements, sub-servicing agreements, special
servicing agreements, correspondent agreements, servicing agreements and related
agreements to which any of the
50
<PAGE> 58
Sellers or their respective Subsidiaries and Affiliates is a party as of the
date hereof, other than Excluded Assets.
(b) Compliance with Applicable Servicing Agreements. The
servicing of the Mortgage Loans has been performed by the applicable Sellers in
compliance with all provisions of the applicable Servicing Agreements.
(c) Custodial Accounts. All Custodial Accounts have been and
are being maintained by the applicable Sellers in all material respects in
accordance with applicable Law and in accordance with the Servicing Agreements
and related obligations. All balances paid to any of the Sellers for the account
of the Mortgagors or any Investors and required by the Servicing Agreements or
any other documents related to the Mortgage Loans to be held by such Sellers in
Custodial Accounts are on deposit in the appropriate Custodial Account. With
respect to each Escrow Account, the appropriate Seller has credited or caused to
be credited to the account of each Mortgagor all interest required to be paid to
a Mortgagor on any escrowed amounts in such Escrow Account in accordance with
all applicable requirements.
Section 4.23 Solvency. Both before and after consummation of
the transactions contemplated by this Agreement, including the transfer of the
Purchased Assets to the Purchaser, each of the Sellers and AMRESCO (a) owns and
will own assets the fair salable value of which is (i) greater than the total
amount of its liabilities (including the amount of contingent liabilities of
such Seller or AMRESCO (as applicable) estimated on a reasonable basis by such
Seller or AMRESCO (as applicable) based on the probability of incurrence and the
dollar magnitude, whether or not such liabilities meet the criteria for accrual
of liabilities under GAAP) and (ii) greater than the amount that will be
required to pay the probable liabilities of such Seller's or AMRESCO's (as
applicable) then existing debts as they become absolute and matured, (b) has
capital that is not unreasonably small in relation to such Seller's or AMRESCO's
(as applicable) businesses as presently conducted or after giving effect to the
consummation of the transactions contemplated hereby, and (c) will be able to
pay its debts and other liabilities (including the reasonably anticipated amount
of subordinated, unmatured, unliquidated and contingent liabilities) as they
become due.
Section 4.24 Foreign Practices Act Compliance. No Seller has,
directly or indirectly, in connection with the Businesses or the Purchased
Assets, made or agreed to make any payment to any person connected with or
related to any Governmental Authority, except payments or contributions required
or allowed by applicable Law. The internal accounting controls and procedures of
the Sellers are sufficient to cause them to comply with the Foreign Corrupt
Practices Act.
Section 4.25 Purchased Entities. Schedule 2.1(a)(xix) contains
a balance sheet which accurately reflects the assets and liabilities of each of
the Purchased Entities.Each of the entities in which any Purchased Entity holds
an interest, directly or indirectly, is accounted for as a purchased equity
investment on the balance sheet of the relevant Purchased Entity. To the extent
any assets directly or indirectly owned by any Purchased Entity (or any entity
in which any Purchased Entity holds an interest) are not specifically included
in the Purchased Assets,
51
<PAGE> 59
Owned Real Property, Contracts, Leased Premises and other assets referenced in
Section 2.1(a), the representations and warranties set forth in this Article IV
are true and accurate (or, if such entity is designated as a "Co-Investment
Entities" on Schedule 2.1(a)(xix) but is not directly or indirectly controlled
by any of the Sellers, to the Sellers' knowledge, true and accurate) with
respect thereto as if such assets were specifically included in the Purchased
Assets. Except as set forth in Schedule 2.1(a)(xix), none of the Purchased
Entities has any employees, and each of the Purchased Entities has been
established as a limited liability company under applicable Laws, and, to the
Sellers' knowledge, no Seller or Subsidiary of any Seller (other than the
Purchased Entity in question) is liable or responsible for the liabilities of
any Purchased Entity.
Section 4.26 AMRESCO Securities, Inc.
(a) ASI has fully and accurately disclosed on Form BD filed
with the NASD, the SEC and each state in which ASI is registered as a
broker-dealer all disciplinary history required to be disclosed by Form BD.
(b) There are no pending investigations of ASI, its
principals, registered representatives or employees by the SEC, the NASD, any
state securities agency or any other administrative agency or self-regulatory
organization having jurisdiction with respect to ASI's business operations.
(c) There are no investment-related complaints against ASI,
its principals, registered representatives or employees by customers or other
parties with whom ASI has engaged in brokerage transactions, involving an actual
or expected claim of damages in excess of $5,000, which have not been settled or
otherwise resolved.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as
follows:
Section 5.1 Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the requisite power and
authority to own, operate and lease its properties and assets and to carry on
its business as now being conducted.
Section 5.2 Power and Authority. The Purchaser has the
requisite power and authority to execute and deliver this Agreement and the
Related Documents to which it is or will be a party and to perform the
transactions contemplated hereby and thereby to be performed by it. All
corporate action on the part of the Purchaser necessary to approve or to
authorize the execution and delivery of this Agreement and the Related Documents
to which it is or will be a party and the performance of the transactions
contemplated hereby and thereby to be performed by it has been duly taken. This
Agreement is a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms.
52
<PAGE> 60
Section 5.3 No Conflicts. Except as set forth in Section 5.3
of the Purchaser's Disclosure Schedule (the "PURCHASER DISCLOSURE SCHEDULE"),
subject to the Purchaser obtaining the Permits and Consents required for it to
own and operate the Businesses, neither the execution or delivery by the
Purchaser of this Agreement or the Related Documents to which it is or will be a
party nor the performance by the Purchaser of the transactions contemplated
hereby or thereby to be performed by it shall:
(i) conflict with, result in a breach of, constitute
a default under or violate any provision of the certificate of
incorporation or bylaws of the Purchaser;
(ii) conflict with or violate any Law applicable to
the Purchaser or by which the Purchaser or any of its properties or
assets is bound; or
(iii) require any Approval or other order or action
of, or notice to, or declaration, filing or registration by the
Purchaser with any Governmental Authority or other third party.
Section 5.4 Litigation. Except as set forth in Section 5.4 of
the Purchaser Disclosure Schedule, there is no pending or, to the knowledge of
the Purchaser, threatened Litigation, by or before any Governmental Authority to
which the Purchaser is a party which may affect or delay the Purchaser's ability
to fulfill the terms of its obligations under this Agreement or to consummate
the transactions contemplated hereby.
Section 5.5 Brokers. The fees and expenses due any broker,
finder, financial advisor or other agent retained by the Purchaser are solely
the responsibility of the Purchaser.
Section 5.6 Financial Capability. The Purchaser has, and will
have at the Closing, funds sufficient to consummate the transactions
contemplated hereby, including the transactions contemplated by Article III, and
to pay the principal and interest payable to the Sellers under the Holdback Note
when due.
ARTICLE VI
EMPLOYEES AND EMPLOYEE-RELATED MATTERS
Section 6.1 Human Resources Transition. At the Closing of this
Agreement, the parties shall enter into a Human Resources Transition Agreement
substantially n the form of Exhibit K.
Section 6.2 Incentive Based Payment Program. At or prior to
Closing, the Purchaser shall establish the Incentive Based Payment Program.
Section 6.3 Additional Payments. At or prior to the Closing,
the Sellers shall pay to the Employees named in Schedule 6.3 the respective
amounts set forth in Schedule 6.3; provided, however, that, in the case of each
Employee who has not executed an Employment Agreement with the Purchaser as of
the date hereof, such Employee shall receive payment under this Section 6.3 only
if such Employee shall have executed an employment agreement with the
53
<PAGE> 61
Purchaser at or prior to the Closing which contains a non-compete covenant
(substantially similar to the non-compete covenant in the Employment Agreements
executed on the date hereof) by such Employee which by its terms survives
expiration of such employment agreement for 12 months. No Employee shall be
entitled to payment under this Section 6.3 unless such Employee shall have
executed such an employment agreement.
ARTICLE VII
CLOSING
Section 7.1 The Closing. Subject to the terms and conditions
hereof, the Closing shall take place at the offices of the Purchaser's counsel,
at 10:00 a.m., New York City time, on the second Business Day after the
conditions specified in Articles VIII and IX hereof are satisfied or expressly
waived (other than any condition to be satisfied or waived at the Closing), or
at such other place, time or date as may be mutually agreed upon in writing by
the parties. At the Closing, the appropriate parties shall take all actions
required under Section 7.2 and all other actions not previously taken but
required to be taken hereunder at or prior to the Closing.
Section 7.2 Closing Deliveries.
(a) At the Closing, the Sellers will deliver or cause to be
delivered to the Purchaser (or its designees):
(i) duly executed counterparts of the Bill of Sale,
the Assignment and Assumption Agreement, the Purchaser Servicing
Agreements, the Transition Services Agreement, the IT Services
Agreement, the Direct Lease (or, at the Purchaser's election, the
Sublease), the Seller Non-Exclusive Trademark License Agreement,
substantially in the form of Exhibit L hereto (the "SELLER
NON-EXCLUSIVE TRADEMARK LICENSE AGREEMENT"), the Purchaser
Non-Exclusive Trademark License Agreement, substantially in the form of
Exhibit M hereto (the "PURCHASER NON-EXCLUSIVE TRADEMARK LICENSE
AGREEMENT") the Seller Software License Agreement and any other Related
Document;
(ii) a true and complete list of all changes in the
Purchased Assets not reflected herein or in the Schedules hereto
(provided that the content of such list shall not alter the Purchaser's
rights with respect to any disclosed breach of representations,
warranties or covenants by the Sellers or otherwise reduce the
Purchaser's rights or remedies hereunder), as well as the other
schedules to be delivered at closing as provided in this Agreement
(including those schedules contemplated in Sections 2.1(a)(xii), 4.8(a)
and 4.8(b));
(iii) a general warranty deed in form and substance
reasonably acceptable to the Purchaser, conveying to the Purchaser good
and indefeasible fee simple title to the Owned Real Estate;
(iv) recordable Lease assignments (or, if assignments
are not possible, subleases) in form and substance reasonably
acceptable to the Purchaser that transfer,
54
<PAGE> 62
assign and convey to the Purchaser all of Sellers' right, title and
interest in the Transferred Leases;
(v) trademark, copyright and patent assignments, as
appropriate, in form and substance reasonably acceptable to the
Purchaser;
(vi) all previously received written instruments or
documents evidencing all Consents;
(vii) corporate or partnership resolutions of each of
the Sellers reasonably acceptable to the Purchaser authorizing the
execution, delivery and performance of this Agreement and the Related
Documents to which each is a party;
(viii) a title insurance policy, in form and
substance reasonably acceptable to the Purchaser (including, with
respect thereto, a customary seller's affidavit and such other
affidavits, agreements and instruments as may be required by the
applicable title insurance company in order to issue the Title Policies
(as defined below)), issued by a title insurance company reasonably
acceptable to the Purchaser, insuring the Purchaser's title to the
Owned Real Property in an amount equal to the fair market value thereof
(as reasonably determined by the Purchaser and the Sellers), subject
only to Permitted Encumbrances and standard exceptions, and with
evidence of payment of premiums (the "TITLE POLICIES");
(ix) The estoppel letters obtained in accordance with
Section 10.14(d);
(x) possession of originals (to the extent available)
or authentic copies of all Purchased Contracts and Transferred Leases,
including all amendments, supplements or modifications thereto;
(xi) possession of originals (to the extent
available) or authentic copies of all Permits transferred to Purchaser
pursuant to Section 2.1(a);
(xii) possession of originals (to the extent
available) or authentic copies of all Loan Documents included in the
Loan Files and any other Business Records listed on Schedule
2.1(a)(xiii);
(xiii) releases, in form and substance reasonably
acceptable to the Purchaser, from each of the parties to the agreements
listed on Schedule 7.2(a)(xiii) (the "RELEASES");
(xiv) possession of the Owned Real Property, the
Leased Premises, the Equipment, the Fixtures and Improvements, the
Inventories, the Computer Hardware, the Software and all other tangible
Purchased Assets;
(xv) the power of attorney, in form and substance
customary for such purposes, contemplated by Section 10.7(b);
55
<PAGE> 63
(xvi) the opinion of Sellers' counsel substantially
in the form of Exhibit G-1;
(xvii) the solvency opinion contemplated by Section
8.8;
(xviii) the written opinion of Goldman Sachs
contemplated by Section 8.9;
(xix) a tax certificate evidencing the payment of all
ad valorem taxes on the Owned Real Property for the prior year and the
year of Closing if the taxes are then due and payable;
(xx) a FIRPTA Certificate;
(xxi) evidence reasonably acceptable to the Purchaser
(which shall include termination letters certified by a senior
executive officer of AMRESCO, INC.) that the Sellers and their
Subsidiaries and Affiliates have terminated their employment of all of
the Employees who are offered employment by the Purchaser or its
designee, released any and all claims or rights they have or might have
as of such Closing Date against such Employees, paid in full to such
Employees any and all compensation and other amounts owing to such
Employees (other than the Employee Compensation Amount to be assumed by
the Purchaser), and resolved any outstanding disputes with any such
Employee;
(xxii) evidence reasonably acceptable to the
Purchaser of the payment in full of all outstanding indebtedness to the
lender under the Warehouse Line (which shall be satisfied by providing
to the Purchaser written releases (on terms acceptable to the
Purchaser) of all Encumbrances on Purchased Assets) and the payment in
full of all other creditors of the Subsidiaries of AMRESCO, INC. who
are Sellers (other than creditors under Assumed Liabilities), and of
the release by such lender and other creditors of their respective
Liens and other rights in or to the Purchased Assets;
(xxiii) evidence reasonably acceptable to the
Purchaser as to the payment in full of the earnout liabilities
described on Schedule 2.3(b)(xviii) and the release by the recipients
of such earnout payments of the Sellers and the Purchaser from any
related claims; and
(xxiv) all other previously undelivered Instruments
of Transfer, assets, agreements, instruments, certificates and
documents required hereunder to be delivered by the Sellers to the
Purchaser at or prior to the Closing in connection with the
transactions contemplated hereby or as, in the opinion of the
Purchaser, are reasonably necessary to vest in the Purchaser legal and
beneficial title to, and possession and control over, the Purchased
Assets (including any evidence reasonably acceptable to the Purchaser
of the release of any Encumbrance on the Purchased Assets, other than
Permitted Encumbrances).
56
<PAGE> 64
(b) At the Closing, the Purchaser will deliver to the Sellers:
(i) the Cash Consideration payable at the Closing and
the Holdback Note deliverable at Closing, in each case in accordance
with Section 3.1 hereof;
(ii) a duly executed counterpart of the Bill of Sale,
the Assignment and Assumption Agreement, the Purchaser Servicing
Agreements, the Transition Services Agreement, the IT Services
Agreement, the Seller Non-Exclusive Trademark License Agreement, the
Purchaser Non-Exclusive Trademark License Agreement, the Purchaser
Software License Agreement and any other Related Document;
(iii) the opinion of Purchaser's counsel
substantially in the form of Exhibit G-2;
(iv) corporate resolutions of the Purchaser
reasonably acceptable to the Sellers authorizing the execution,
delivery and performance of this Agreement and the Related Documents to
which it is a party;
(v) evidence reasonably acceptable to Sellers of the
establishment of the Incentive Based Payment Program;
(vi) all other previously undelivered agreements,
instruments, certificates and documents required hereunder to be
delivered by the Purchaser to the Sellers at or prior to the Closing in
connection with the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
TO CONSUMMATE THE TRANSACTION
The obligations of the Purchaser to be performed at the
Closing shall be subject to the satisfaction or waiver, at or prior to the
Closing, of the following conditions:
Section 8.1 Representations and Warranties; Compliance with
Covenants. There shall have been no material breach by any of the Sellers in the
performance of any of the Sellers' covenants, agreements or obligations herein
or in any Related Document required to be performed by Sellers on or prior to
the Closing Date. Ignoring for purposes of this sentence all qualifications as
to materiality, Material Adverse Effect or Material Adverse Change in all
representations and warranties, each of the representations and warranties
contained or referred to in Article IV hereof shall be true and correct in all
respects on the date hereof and on the Closing Date, and each of the
representations and warranties of the Sellers contained or referred to in any
Related Document shall be true and correct in all respects on the Closing Date,
in each case as though made on the Closing Date, except (i) for representations
and warranties that speak as of a specific date or time other than the Closing
Date (which need only be true and correct as of such date or time), (ii) where
any and all failures of such representations and warranties to be true and
correct in all respects as of the Closing Date (with all such failures
considered in the aggregate) would not have a Material Adverse Effect on the
Businesses or the Purchased Assets and (iii) for changes therein specifically
permitted by this Agreement. The Purchaser shall have received a certificate of
the President or Chief Executive Officer of AMRESCO, executed on behalf of the
Sellers, to the effect of the preceding two sentences. In addition, the
Purchaser shall have received a
57
<PAGE> 65
certificate from AMRESCO's Chief Financial Officer, executed on behalf of the
Sellers, that the representations and warranties in Sections 4.23(a), (b) and
(c) are true and correct in all respects on and as of the Closing Date as if
made on and as of the Closing Date.
Section 8.2 No Proceedings. No Litigation or other proceeding
shall have been instituted before a court of competent jurisdiction or any other
Governmental Authority, challenging or seeking to amend, modify, set aside or
enjoin, in whole or in part, this Agreement, any of its terms, conditions,
covenants or agreements or any of the transactions contemplated hereby, or
which, if determined adversely, could reasonably be expected to render the
Sellers unable to satisfy any of the conditions set forth in this Article VIII.
Section 8.3 Approvals. All Approvals required from any
Governmental Authority in order for the Sellers to consummate the transactions
contemplated by this Agreement and listed in Schedule 8.3 shall have been
obtained in form and substance reasonably acceptable to the Purchaser and all
applicable waiting periods under any applicable Laws, including the HSR Act,
shall have expired or been terminated without the imposition of any materially
burdensome restrictions or conditions on the Purchaser.
Section 8.4 Third Party Consents.
(a) (i) Each of the Consents listed on Schedule 8.4(a)
shall have been obtained in form and substance reasonably acceptable to
the Purchaser and each of the Rating Agencies shall have issued a "no
downgrade" letter with respect to the transactions contemplated hereby
in form and substance reasonably acceptable to the Purchaser.
(ii) AMRESCO, INC. shall have received and delivered
to the Purchaser the Lender Consents.
(b) The Sellers shall have obtained a number of the Consents
set forth on Schedule 4.3(b) such that (i) in the case of Consents required
under Servicing Agreements, the Sellers shall have obtained consents for
Servicing Agreements applicable to Mortgage Loans with outstanding balances
representing not less than 80% of the outstanding Mortgage Loan balances as of
the Closing Date; and (ii) after giving effect to the transactions contemplated
hereby and the reasonably expected impact on the business, financial condition,
operations or prospects of the Businesses of the failure to obtain any remaining
Consents, neither of the following shall be true: (x) the operating revenues of
the Businesses (as currently conducted) would not reasonably be expected to
decline by more than 20% in the twelve month period following the Closing from
the amount derived in the twelve month period preceding the Closing, and (y) the
expenses for the Businesses (as currently conducted) would not reasonably be
expected to increase by more than 20% in the twelve month period following the
Closing from the amount incurred in the twelve month period preceding the
Closing. Notwithstanding the foregoing, the satisfaction or waiver of this
condition shall not affect in any manner the Closing Date Adjustments
contemplated by Section 3.2(b).
58
<PAGE> 66
(c) The Sellers shall have obtained at least 80%, numerically,
of all other Consents listed on Schedule 4.3(b) not covered by paragraphs (a),
(b)(i) above.
Section 8.5 Opinion of Sellers' Counsel. The Purchaser shall
have received the opinions of Haynes and Boone, LLP, the Sellers' outside
counsel, and of the General Counsel of AMRESCO, INC., each dated as of the
Closing Date, in the forms attached as Exhibit G-1.
Section 8.6 Employment.
(a) Not more than 25% of the Persons identified on Schedule
8.6(a), in the aggregate, nor 50% or more of such Persons listed on Schedule
8.6(a) who are associated with any Business Unit, shall have (i) terminated (or
given notice of termination of) or breached such Persons' Employment Agreement
(if such Person shall have entered into an Employment Agreement) or shall for
any other reason be unable to perform their obligations under their respective
Employment Agreements (other than due to death or disability) at or prior to the
Closing Date, (ii) breached any material term or provision of such Persons'
existing employment, non-competition or compensation related agreement with any
of the Sellers, (iii) given notice (whether written or oral) or otherwise
informed any of the Sellers or the Purchaser of such Persons' intention to
terminate their employment with such Seller or the Purchaser, whether or not
such termination is expected take effect prior to the Closing, other than due to
death or disability, or (iv) otherwise failed to accept employment with the
Purchaser (or a subsidiary thereof) from and after the Closing.
(b) Not more than 50% of the officers or executives employed
at any one Business Unit comprising part of the Businesses on September 30, 1999
shall have (i) terminated their employment with the Sellers, (ii) breached any
material term or provision of such Persons' existing employment, non-competition
or compensation related agreement with any of the Sellers, (iii) given notice
(whether written or oral) or otherwise informed any of the Sellers or the
Purchaser of such Persons' intention to terminate their employment with such
Seller or the Purchaser, whether or not such termination is expected take effect
prior to the Closing, other than due to death or disability, or (iv) failed to
accept employment with the Purchaser (or a subsidiary thereof) from and after
the Closing.
(c) The Purchaser or an Affiliate thereof shall have entered
into employment agreements reasonably satisfactory to the Purchaser with (x) not
less than 75% of the Persons who are to receive payment under the Incentive
Based Payment Program and (y) not less than 50% of the other Persons named in
Schedule 8.6(c).
Section 8.7 Closing Deliveries. The Sellers shall have
delivered to the Purchaser all of the closing deliveries set forth in Section
7.2(a).
Section 8.8 Solvency Opinion. The Purchaser shall have
received, at the Sellers' sole cost and expense, a "solvency opinion", in
customary form, as to each of the Sellers and AMRESCO from a nationally
recognized business valuation expert reasonably acceptable to the Purchaser,
dated the Closing Date, addressed to AMRESCO, INC. and the Purchaser and
reasonably acceptable as to form and content to the Purchaser.
59
<PAGE> 67
Section 8.9 Fairness Opinion. The Sellers shall have received,
at their sole cost and expense, the written opinion, dated as of the date of
this Agreement, of Goldman Sachs that, as of the date of this Agreement, the
consideration to be received by the Sellers pursuant to this Agreement is fair
to AMRESCO, INC. from a financial point of view. At or prior to the Closing, the
Sellers shall deliver a copy of such fairness opinion to the Purchaser.
Section 8.10 No Material Adverse Change. From the date hereof
and prior to the Closing:
(a) There shall have been no Material Adverse Change to the
Businesses or the Purchased Assets.
(b) There shall not have occurred or exist any event or
circumstance that, in the reasonable good faith judgment of the Purchaser, could
be expected to result in the commencement of any involuntary case under the
Bankruptcy Code, or the occurrence of any Bankruptcy Action, involving any
Seller or any of its Subsidiaries.
Section 8.11 Illegality. There shall not be in effect any
statute, rule, regulation or order of any court or Governmental Authority which
prohibits or makes illegal the consummation of the transactions contemplated by
this Agreement.
Section 8.12 No Additional Liabilities or Encumbrances. No
claim or Action shall have been made or instituted, or to the Sellers'
knowledge, threatened, asserting that, after giving effect to the asset purchase
described herein, (i) the Businesses or any of the Purchased Assets would be
subject to any Encumbrance other than Permitted Encumbrances, or Assumed
Liabilities or (ii) that the Purchaser or any of its Subsidiaries or Affiliates
would be subject to or responsible for any Liability other than Assumed
Liabilities, which claim or Action, in the case of (i) or (ii) above, is in an
amount in excess of $1 million.
Section 8.13 Releases. Each of the Releases listed on Schedule
7.2(a)(xiii) shall have been obtained and delivered to the Purchaser.
Section 8.14 Sublease. The Sublease shall have been executed
and delivered by the appropriate Sellers, and the consent, estoppel and
non-disturbance agreement set forth therein shall have been executed by the
owner of the subleased premises named in the sublease, or a new lease for the
premises described in Exhibit I between the owner, as lessor, and the Purchaser,
as lessee, shall have been entered into on terms acceptable to the Purchaser
(the "DIRECT LEASE").
Section 8.15 Pavilion Fund. Section 12.13 of the Limited
Liability Company Agreement of The Pavilion Fund, LLC (the "PAVILION LLC
AGREEMENT"), dated as of September 29, 1998, shall have been amended to
eliminate any restrictions on the ability of any "Member" and any "Related
Person" (as each of those terms is defined in the Pavillion LLC Agreement) to
engage or invest, directly or indirectly, in any business venture or other
activity involving the acquisition of real estate within Thailand, and any other
restriction that would limit or restrict the
60
<PAGE> 68
ability of the Purchaser or any Affiliate thereof to operate its or their
respective businesses as currently being conducted or as same may in the future
be conducted.
Section 8.16 Decline in Ratings. Except as set forth on
Schedule 4.9, there shall not have occurred any downgrade in the rating of ASLP
or AMI, which rating decline constitutes a default under any Servicing Agreement
or gives rise to the right of any other party to a Servicing Agreement to
terminate any Servicing Agreement.
Section 8.17 Default Under Bonds. There shall not have
occurred any default relating to or arising out of any material representation,
warranty, covenant or agreement in any indenture, promissory note or loan
agreement of AMRESCO, INC. having an outstanding principal or loan amount in
excess of $1 million.
Section 8.18 Release of Encumbrances. All existing
Encumbrances on the Businesses or the Purchased Assets (other than Permitted
Encumbrances), including all Encumbrances upon the Purchased Assets arising
under the Bank Debt, shall have been released to the full satisfaction of the
Purchaser.
Section 8.19 Warehouse Line. The Purchaser shall have
refinanced and replaced the Warehouse Line with a non-recourse warehouse line on
terms reasonably acceptable to the Purchaser (the "REPLACEMENT WAREHOUSE
FACILITY").
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS
TO CONSUMMATE THE TRANSACTION
The obligations of the Sellers to be performed at the Closing
shall be subject to the satisfaction or waiver, at or prior to the Closing, of
the following conditions:
Section 9.1 Representations and Warranties; Compliance with
Covenants. Each of the representations and warranties contained or referred to
in Article V hereof shall be true and correct in all material respects on the
date hereof and on the Closing Date, and each of the representations and
warranties of the Purchaser contained or referred to in any Related Document
shall be true and correct in all material respects on the Closing Date, in each
case as though made on the Closing Date, except (i) for representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct as of such date or time), and (ii) for
changes therein specifically permitted by this Agreement. There shall have been
no material breach by the Purchaser in the performance of any of the Purchaser's
covenants, agreements or obligations herein or in any Related Document required
to be performed by Purchaser on or prior to the Closing Date.
The Sellers shall have received a certificate of the President or Chief
Executive Officer of the Purchaser to the effect of the preceding two sentences.
61
<PAGE> 69
Section 9.2 Illegality. There shall not be in effect any
statute, rule, regulation or order of any court or Governmental Authority which
prohibits or makes illegal the consummation of the transactions contemplated by
this Agreement.
Section 9.3 Approvals. All Approvals required from any
Governmental Authority in order for Purchaser to consummate the transactions
contemplated by this Agreement and listed in Schedule 9.3 shall have been
obtained and all applicable waiting periods under any applicable Laws shall have
expired or been terminated without the imposition of any materially burdensome
restrictions or conditions on the Sellers.
Section 9.4 Closing Deliveries. The Purchaser shall have
delivered to the Sellers the closing deliveries referred to in Section 7.2(b).
Section 9.5 Payment. The Purchaser shall have paid to the
Sellers, in immediately available funds, the Cash Consideration, shall have
delivered to the Sellers the Holdback Note, and shall have caused to be paid to
the lender under the Warehouse Line the amounts required by Section 3.1 hereto.
Section 9.6 Opinion of Purchaser's Counsel. The Sellers shall
have received the opinion of Akin, Gump, Strauss, Hauer & Feld, LLP, the
Purchaser's outside counsel, dated as of the Closing Date, in the form attached
as Exhibit G-2 (or such other counsel, including in-house counsel, reasonably
acceptable to the Sellers).
ARTICLE X
COVENANTS
Section 10.1 Actions to Consummate the Transactions;
Regulatory Filings and Consents.
(a) Prior to the Closing Date, subject to the terms and
conditions herein provided, each of the Sellers, on the one hand, and the
Purchaser, on the other hand, shall use its reasonable best efforts to take, or
cause to be taken, all actions, and shall do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, and shall cooperate
with the other in connection with the foregoing, including using its reasonable
best efforts (i) to obtain all Approvals and Consents from other parties to
Contracts necessary for the consummation of the transactions contemplated
hereby, (ii) to obtain all Approvals that are required to be obtained under any
federal, state, local or foreign Law, including filings under the HSR Act, and
to effect all necessary registrations and filings and submissions of information
requested or required by any Governmental Authority in connection with the
transactions contemplated hereby, (iii) to lift or rescind any injunction or
restraining order or other Judgment adversely affecting the ability of the
parties hereto to consummate the transactions contemplated hereby, and (iv) to
fulfill all conditions to this Agreement.
62
<PAGE> 70
(b) From the date hereof and through the Closing, the
Purchaser shall not take or permit any action which could reasonably be expected
to result in the failure of any of the conditions set forth in Article IX to be
satisfied.
Section 10.2 Antitrust.
(a) In furtherance and not in limitation of Section 10.1, the
Sellers and the Purchaser shall use their respective reasonable best efforts to
resolve such objections, if any, as may be asserted with respect to the
transactions contemplated hereby under any antitrust or trade regulatory laws of
any Governmental Authority ("ANTITRUST LAWS"). Anything herein to the contrary
notwithstanding, however, nothing in this Agreement shall require the Purchaser
or any of its subsidiaries or Affiliates to sell, hold separate or otherwise
dispose of or conduct its business in a specified manner, or agree to sell, hold
separate or otherwise dispose of or conduct its business in a specified manner,
or permit the sale, holding separate or other disposition of, any assets of the
Purchaser or its subsidiaries or Affiliates, whether as a condition to obtaining
any approval from a Governmental Authority or any other Person or for any other
reason.
(b) The Sellers, on the one hand, and the Purchaser, on the
other hand, shall promptly inform the other of any material communication from
the United States Federal Trade Commission, the Department of Justice or any
other Governmental Authority regarding any of the transactions contemplated
hereby. If any such party or any Affiliate thereof receives a request for
additional information or documentary material from any such Governmental
Authority with respect to the transactions contemplated hereby, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. The Purchaser will advise the Sellers promptly
in respect of any understandings, undertakings or agreements (oral or written)
which the Purchaser proposes to make or enter into with the Federal Trade
Commission, the Department of Justice or any other Governmental Authority in
connection with the transactions contemplated hereby; provided, that Purchaser
may not make any understandings, undertakings or agreements (oral or written)
with the Federal Trade Commission, the Department of Justice or any other
Governmental Authority in connection with the transactions contemplated hereby
without the prior written consent of the Sellers (which consent shall not be
unreasonably withheld, conditioned or delayed) if such understanding,
undertaking or agreement adversely alters or adversely modifies the rights,
duties, obligations or agreements of the parties to this Agreement; provided,
however, that the Sellers' right to reasonably withhold consent in accordance
with the foregoing proviso shall be subject to the Sellers' exercising the
requisite level of effort required under this Section 10.2 or otherwise under
this Agreement.
Section 10.3 Access to Information.
(a) Access to Information Prior to the Closing. Between the
date of this Agreement and the Closing Date, the Sellers shall, and shall cause
their respective Subsidiaries and Affiliates to, upon reasonable request by the
Purchaser, (i) provide the Purchaser and its advisors, accountants, counsel and
other authorized representatives access, during normal business hours and under
reasonable circumstances, to any and all premises, properties, Contracts,
63
<PAGE> 71
commitments, books, records and other information of or relating to the
Businesses or the Purchased Assets and to the officers, employees, consultants
and agents of the Businesses and (ii) cause its officers to furnish to the
Purchaser and its advisors, accountants, counsel and authorized representatives
any financial, environmental, health and safety, technical and operating data
and other information pertaining to the Businesses, as the Purchaser shall from
time to time reasonably request, including such information as shall be
necessary to enable the Purchaser or its advisors, accountants, counsel and
other authorized representatives to verify the accuracy of the representations
and warranties contained in Article IV, to verify that the covenants of the
Sellers in Section 10.4 or elsewhere herein have been complied with and to
determine whether the conditions set forth in Article VIII have been satisfied.
(b) Access to Owned Real Property. Between the date of this
Agreement and the Closing Date, the Sellers shall, and shall cause their
respective Subsidiaries and Affiliates to, provide to the Purchaser and its
advisors, counsel and other authorized representatives, the right of
investigation and inspection of the Owned Real Property to determine whether or
not the Owned Real Property is suitable for the Purchaser's intended use. The
Sellers agree to cooperate with the Purchaser in connection with the
investigation and inspection, agree to furnish the Purchaser with copies of any
and all surveys, engineering studies, environmental studies and other documents
relating to the Owned Real Property in the Sellers' possession or control (or to
which the Sellers have access) that might be necessary to complete such
investigation and inspection, and agrees to execute any and all documents that
might reasonably be required in order to obtain any Approval with respect to the
above-described matters; provided, that the Sellers shall not be required to
indemnify or hold harmless any Person engaged by Purchaser for the purpose of
performing any such investigation or inspection.
(c) Access to Records After the Closing. The Sellers and the
Purchaser recognize that subsequent to the Closing they may have information and
documents which relate to the Businesses, its employees, its properties, the
Purchased Assets, the Excluded Assets, the Assumed Liabilities, the Excluded
Liabilities and Taxes and to which the other party may need access subsequent to
the Closing. Each party shall provide the other parties access, during normal
business hours on reasonable advance notice, to all such information and
documents, and to such of its employees, which such other party reasonably
requests. The Purchaser, on the one hand, and the Sellers, on the other hand,
agree that prior to the destruction or disposition of any material documents or
any material books or records pertaining to or containing such information at
any time within six years (or, in any matter involving Taxes, until the later of
the expiration of all applicable statutes of limitations (including extensions
thereof) or the conclusion of all litigation (including exhaustion of all
appeals relating thereto) with respect to such Taxes) after the Closing Date,
each party shall provide not less than 30 calendar days prior written notice to
the other of any such proposed destruction or disposal. If the recipient of such
notice desires to obtain any such documents, it shall do so by notifying the
other party in writing at any time prior to the scheduled date for such
destruction or disposal. Such notice must specify the documents which the
requesting party wishes to obtain. The parties shall then promptly arrange for
the delivery of such documents. The requesting party shall pay all out-of-pocket
costs associated with the delivery of the requested documents.
64
<PAGE> 72
Section 10.4 No Extraordinary Actions by the Seller.
(a) Interim Operating Covenants. Except as (x) consented to or
approved by the Purchaser in writing, (y) as set forth on Schedule 10.4(a) or
(z) required or otherwise expressly permitted by this Agreement, from the date
hereof until the Closing, the Sellers (i) shall not take any action that would
be reasonably likely to cause the Sellers' representations and warranties herein
to be untrue in any material respect, (ii) shall conduct the Businesses only in
the Ordinary Course of Business, (iii) shall use their reasonable best efforts
to preserve intact the present business organization of the Businesses, keep
available the services of the Businesses' present management and employees and
preserve their relationships with clients, suppliers, customers, lenders and
others having business dealings with them (including, to the extent consistent
with the provisions of this Agreement, their respective Affiliates), (iv) shall
use their reasonable best efforts to maintain the Purchased Assets in the
Ordinary Course of Business consistent with past practice, reasonable wear and
tear excepted, and (v) shall not take or permit (to the extent within the
Sellers' control) any action that could reasonably be expected to result in (A)
a Material Adverse Change in respect of the Businesses or the Purchased Assets
or, which could reasonably be expected to result in the commencement of any
involuntary case under the Bankruptcy Code, or the occurrence of any Bankruptcy
Action, involving any Seller or any of their respective Subsidiaries, or (B)
which could reasonably be expected to result in the failure of any of the
conditions set forth in Article VIII to be satisfied. Without limiting the
foregoing, except as contemplated by this Agreement, including Schedule 10.4(a),
the Sellers shall not, and shall cause their respective Subsidiaries and
Affiliates not to, without the prior written consent of the Purchaser:
(i) permit or allow any of the assets that will be
Purchased Assets to be subjected to any Encumbrance, except for (x)
Permitted Encumbrances, (y) the Bank Debt and (z) Encumbrances that are
part of the Assumed Liabilities as of the date of this Agreement;
(ii) sell, transfer, license, lease or otherwise
dispose of or agree to dispose of (including by the granting of an
option, conditional sale agreement or otherwise), or acquire or agree
to acquire, any assets that would be Purchased Assets except in the
Ordinary Course of Business and then only to the extent such assets
have a value, individually or in the aggregate, not in excess of
$50,000, or sell, transfer, license, lease or otherwise dispose of or
agree to dispose of any Servicing Rights;
(iii) amend or modify their charter, bylaws or
partnership agreement, as the case may be, if such amendment or
modification would have an adverse affect on the Businesses, the
Purchased Assets or this Agreement and the transactions contemplated
hereby;
(iv) except as required by any Contract or applicable
Law, grant any increase or implement any decrease in the compensation
of Employees of the Businesses (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan
65
<PAGE> 73
or commitment) or grant any increase in the compensation payable or to
become payable to any officer or Employee of the Businesses;
(v) enter into any agreement (other than GSE Mortgage
Loans, TIAA Loans or Servicing Agreements (which specifically shall not
include capital outlays by any Seller without the Purchaser's prior
written consent), or commitments to do so, in the Ordinary Course of
Business) for, or modify, amend, terminate, fail to renew or perform or
cause a loss of its rights under any Contracts or other agreements
significantly relating to, the Businesses and involving aggregate
payments by or to any of the Sellers in excess of $100,000;
(vi) merge or consolidate with or sell all or
substantially all of the assets or equity securities of, or enter into
any other extraordinary transaction involving, any of the Sellers or
any their respective Subsidiaries (or enter into any agreement with
respect to any such transaction), in one transaction or a series of
related transactions, or adopt or consent to a plan of liquidation;
provided, however, that the foregoing shall not restrict, limit,
prohibit or require the consent of the Purchaser to any merger or
consolidation with or sale of all or substantially all of the assets
(other than Purchased Assets) or equity securities of AMRESCO, INC. or
its Subsidiaries who are not Sellers (or the entering into of any
agreement to merge or consolidate with or sell all or substantially all
of the assets (other than the Purchased Assets) or equity securities of
AMRESCO, INC. or its Subsidiaries who are not Sellers), if such
transaction or agreement (x) shall give effect to and provide for the
consummation of the transactions contemplated by this Agreement, (y)
shall expressly be subject to this Agreement and the transactions
contemplated hereby and shall not include or apply to any of the
Purchased Assets or the Businesses, and (z) shall not adversely affect
(A) the ability of any of the Sellers to consummate the transactions
contemplated by this Agreement or (B) the Businesses or the Purchased
Assets (such a permitted transaction or agreement, a "PERMITTED
AMRESCO BUSINESS COMBINATION");
(vii) alter in any material respect its practices and
policies relating to the payment and collection, as the case may be, of
accounts payable and accounts receivable relating to the Businesses or
the Purchased Assets, which, for avoidance of doubt, includes the
Servicing Agreements and the GSE Mortgage Loans;
(viii) (A) commence or seek to commence a voluntary
case under the Bankruptcy Code or consent to the entry of an order for
relief in an involuntary case or to the conversion of any involuntary
case to a voluntary case under any such law or consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property, (B) make any
assignment for the benefit of creditors or (C) adopt any resolution or
otherwise authorize action to approve any of the action referred to in
this subclause (viii) (collectively, "BANKRUPTCY ACTIONS");
(ix) adopt, amend in any material respect adverse to
the Sellers or terminate any Benefit Plan, severance plan or collective
bargaining agreement or make
66
<PAGE> 74
awards or distributions under any Benefit Plan to Employees of the
Businesses, except awards or distributions to any participant or
Employee in the Ordinary Course of Business or as required by the
terms of any such plan or agreement as in existence on the date hereof;
(x) hire any Person with an annual salary (excluding
bonuses) in excess of $45,000 who would become an Employee and who
would primarily provide services to the Businesses, or enter into or
amend any employment or consulting agreement;
(xi) remove any Equipment, Inventory, Fixtures and
Improvements or other assets from the Leased Premises or the Owned Real
Property or replace any such items unless such removal or replacement
occurs in the Ordinary Course of Business, and, in the case of any
removal, unless the removed item is replaced with an equivalent item in
the Ordinary Course of Business; or
(xii) agree, commit or resolve to do or authorize any
of the foregoing.
(b) No Solicitations. Except as consented to by the Purchaser,
from the date hereof until the Closing or the earlier termination of this
Agreement, the Sellers will not, and will cause their respective officers,
directors, employees, agents and other representatives not to, initiate contact
with, solicit any inquiries from, request or invite submission of any proposal
or offer from, or provide any confidential information to, or participate in any
negotiations or discussions with, any third party in connection with (x) any
possible proposal by such third party regarding a merger, consolidation,
business combination or sale of whatever nature of all or any portion of the
Businesses or the Purchased Assets or (y) the hiring, employment or other
engagement of any of the Persons (A) listed on Schedule 8.6 or (B) that could
result in the failure of the condition set forth in Section 8.6; provided,
however, that the foregoing shall not be deemed to restrict, limit, prohibit or
require the consent of the Purchaser to any Permitted AMRESCO Business
Combination.
(c) In the event the Sellers determine to request the
Purchaser's consent under Section 10.4 of this Agreement, the Purchaser hereby
designates the following individuals, at the addresses and telephone numbers
listed below, as lawful agents of the Purchaser, acting individually or
together, for receipt and approval of such consent requests:
Graham Bond
c/o Lend Lease Real Estate Investments, Inc.
787 Seventh Avenue
New York, New York 10019
Tel. No.: (212) 554-1607
Fax No.: (212) 554-1605
67
<PAGE> 75
Amber B. Degnan
c/o Lend Lease Real Estate Investments, Inc.
3424 Peachtree Road NE, Suite 800
Atlanta, Georgia 30326
Tel. No.: (404) 848-8640
Fax No.: (404) 848-8904
Section 10.5 Further Assurances.
(a) Except as otherwise expressly provided for in this
Agreement, (i) each of the Purchaser and the Sellers shall, and shall cause each
of their respective subsidiaries and Affiliates to, use reasonable best efforts
to obtain at the earliest practicable date, whether before or after the Closing
Date, all Approvals and Consents required to be obtained by it for the
performance of the transactions contemplated by this Agreement and the Related
Documents, (ii) the Sellers shall use reasonable best efforts to obtain
(including providing acceptable legal opinions of Sellers' counsel as may be
required by rating agencies, trustees and the like in connection with any
required Approvals or Consents), whether before or after the Closing Date, any
amendments, novations, releases, waivers, consents or other Approvals or
Consents with respect to all outstanding Contracts of the Sellers which are
necessary either to cure any material defaults thereunder existing immediately
prior to the Closing Date or for the consummation of the transactions
contemplated by this Agreement and the Related Documents, (iii) the Sellers
shall, and shall cause their respective Subsidiaries and Affiliates to, from
time to time, at the request of the Purchaser and without further cost or
expense to the Purchaser, execute and deliver such other necessary Instruments
of Transfer or other documents and to vest in the Purchaser all of the Seller's
right, title and interest to the Purchased Assets being transferred hereunder
and (iv) each party hereto shall execute and deliver such instruments,
certificates and other documents and take such other actions as any other party
hereto may reasonably request in order to carry out this Agreement or any of the
Related Documents and the transactions contemplated hereby and thereby;
provided, however, that in obtaining any such amendments, novations, releases,
waivers, consents or other Approvals, the Sellers shall not, and shall not
permit any of their respective Subsidiaries or Affiliates to, agree to any
amendment of any such instrument which imposes any obligation or liability on
the Purchaser, the Businesses or the Purchased Assets without the prior written
consent of the Purchaser.
(b) The Sellers and the Purchaser shall prepare and execute
all forms, documents and other information reasonably requested by the Sellers,
Purchaser, any Investor, rating agency or trustee or any other applicable
entities in connection with the transfer of the Servicing Rights, GSE Mortgage
Loans or Purchased Assets.
Section 10.6 Insurance Policies. The Sellers shall use their
reasonable best efforts to maintain all Insurance Policies (or comparable
policies providing substantially similar coverage with respect to the Businesses
and the Purchased Assets) in full force and effect at all times up to and
including the Closing Date and shall pay all premiums, deductibles and
retro-adjustment billings, if any, with respect thereto covering all periods,
and ensuring coverage of the Businesses, up to and including the Closing Date.
68
<PAGE> 76
Section 10.7 Mail Received After Closing; Power of Attorney.
(a) Following the Closing, (i) the Purchaser may receive and
open all mail addressed or directed to the Sellers at the offices of the
Businesses, (ii) to the extent that such mail and the contents thereof relate to
the Purchased Assets, the Businesses or to any of the Assumed Liabilities, the
Purchaser may deal with the contents thereof in its sole discretion and (iii)
the Purchaser shall promptly forward any other such mail to the Sellers. The
Sellers shall promptly transfer or deliver to the Purchaser any mail, other
communications, funds, cash, checks or other instruments of payment which relate
to the Businesses or the Purchased Assets or to which the Purchaser is otherwise
entitled.
(b) On the Closing Date, the Sellers shall furnish the
Purchaser with a Power of Attorney reasonably acceptable to the Purchaser to
enable the Purchaser to endorse any check or other instrument made payable to
the Sellers and generated by the operations of the Businesses.
Section 10.8 Confidentiality; Publicity.
(a) Except as expressly contemplated by this Agreement or any
Related Document, as necessary to obtain Approvals to the consummation of the
transactions contemplated by this Agreement or any Related Document or as
otherwise consented to in writing by the non-disclosing party prior to such
disclosure, each party shall hold, and shall cause its officers, directors,
employees, representatives, agents and advisors (including attorneys,
accountants, consultants, bankers and financial advisors) to hold, in strict
confidence and not to disclose to any other Person (including, with respect to
the Sellers, Persons not Affiliated with any Seller as of the date hereof), all
written and oral information furnished to the other party or any of its
officers, directors, employees, representatives, agents and advisors, whenever
furnished and regardless of the manner furnished, together with analyses,
compilations, studies or other documents or records prepared by the party
receiving such information (collectively, "CONFIDENTIAL INFORMATION"), except
that Confidential Information shall not include information which (i) is or
becomes generally available to the public other than as a result of disclosure
directly or indirectly by the party receiving such information or any of its
officers, directors, employees, representatives, agents and advisors, (ii) was
independently acquired or developed by the party receiving such information
without violating any of its obligations hereunder or (iii) becomes available to
the receiving party on a nonconfidential basis from a Person (other than the
disclosing party or its officers, directors, employees, representatives, agents
or advisors) who, to the receiving party's actual knowledge after due inquiry,
is not and was not bound by a confidentiality agreement with the disclosing
party or otherwise prohibited from transmitting the information to the receiving
party; provided, however, that the foregoing clauses (i) - (iii) shall not apply
in any way to restrict or limit, and are entirely subject to, the agreements
contained in Section 10.11. Notwithstanding the foregoing, a party may make such
disclosure necessary to avoid committing a violation of Law (including
specifically the Securities Act of 1933, as amended, or the Exchange Act) or of
any rule or regulation of any securities association, stock exchange or national
securities quotation system on which such party's securities are listed or
trade; provided, that, in such event, the disclosing party shall use its
reasonable best efforts to give advance notice to the other
69
<PAGE> 77
party of any potential disclosure, to consult with the non-disclosing party as
to the scope of the required disclosure and to limit (to the maximum extent
possible) the scope of the disclosure. After the Closing, the Purchaser shall be
free to disclose any information relating to the Businesses or the Purchased
Assets in the Purchaser's sole discretion.
(b) Before any public announcement is made with respect to
this Agreement or the transactions contemplated by this Agreement, to the extent
practicable, each party will use its reasonable best efforts to first provide
the other parties the content of all proposed disclosure, the reasons that such
disclosure is required by Law, and the time and place that the disclosure will
be made, and shall provide such other parties with a reasonable opportunity to
comment on such disclosure. The parties agree to cooperate, from time to time,
in connection with the preparation and release of press releases, analysts
reports and the like, except that, in all cases, Sellers shall use best efforts
not to disclose the terms or amounts of any employee compensation or benefits to
be paid to Employees before or after the Closing Date.
Section 10.9 Transition Services Agreement; IT Services
Agreement. Promptly after the date hereof, the Sellers and the Purchaser shall
seek to negotiate in good faith with each other forms of (i) a Transition
Services Agreement (the "TRANSITION SERVICES AGREEMENT"), (ii) an information
technology transition services agreement (the "IT SERVICES AGREEMENT"), (iii)
the Purchaser Software License Agreement, (iv) the Seller Software License
Agreement, and (v) a sublease of equipment leases listed on Schedule 2.1(a)(v)
to the extent the equipment under such lease is not a Purchased Asset, all on
terms reasonably acceptable to the Purchaser and AMRESCO, INC., . If the parties
shall fail to agree on such forms prior to the Closing Date, the subject matter
of such agreements shall be handled in a commercially reasonable manner (in lieu
of entry into such agreements). Failure to agree on such forms shall not be a
closing condition hereunder. The appropriate Sellers and Purchaser shall execute
and deliver, at or prior to the Closing, (a) the Transition Services Agreement,
in the form to be agreed upon by the parties in accordance with the previous
sentence, and (b) the IT Services Agreement, substantially in the form attached
hereto as Exhibit E.
Section 10.10 Other Agreements. Each of the appropriate
Sellers and the Purchaser shall execute and deliver at or prior to the Closing,
(a) the Purchaser Servicing Agreements, substantially in the form attached
hereto as Exhibits A-1 and A-2, respectively, (b) the Sublease, if applicable,
(c) the Seller Non-Exclusive Trademark License Agreement and (d) the Purchaser
Non-Exclusive Trademark License Agreement.
Section 10.11 Agreement Not to Compete; Non-Solicitation.
(a) The Sellers agree that during the period ending on the
third anniversary of the Closing Date, none of the Sellers, nor any of their
respective Subsidiaries or Affiliates (other than (i) directors or executive
officers who have ceased to be Affiliated with any Seller or any Subsidiary
thereof and (ii)non-employee directors of AMRESCO, INC., but only with respect
to the such non-employee directors' Affiliates (that are otherwise not
Affiliated with any Seller or any of their respective Subsidiaries) as of the
date hereof, shall:
70
<PAGE> 78
(i) engage or invest in (other than making Permitted
Investments), or own, control, manage or participate in the ownership,
control or management of, or render services or advice to (provided
that such services or advice relate to any business substantially
similar to, or which competes with, the Businesses), or lend its name
to, any business substantially similar to, or which competes with, the
Businesses, anywhere within the United States or in any other country
where the Businesses are currently conducted; provided, however, this
provision shall not apply to any bona fide third party acquiror of
AMRESCO pursuant to a Permitted AMRESCO Business Combination if all of
the following conditions shall have been satisfied: (a) none of the
Sellers' or their Subsidiaries' or Affiliates' existing businesses,
employees, officers, directors, properties, assets, intellectual
property, systems (computer, operating or other), Software or the like
are or will be used directly or indirectly (including solely as a
facilitator), by such acquiror in a line of business substantially
similar to, or which competes with, any of the Businesses; (b) such
bona fide third party acquiror will not hire until after the third
anniversary of the Closing Date any Employees of the Sellers who are
offered employment by the Purchaser as a result of the transactions
contemplated hereby, in such line or lines of business that are
substantially similar to or which compete with any of the Businesses;
and (c) such third party acquiror shall have entered into a written
agreement prior to the execution of a definitive transaction agreement
with respect to such acquisition, acknowledging and agreeing to, for
the benefit of the Purchaser, the foregoing matters.
(ii) with respect to any business substantially
similar to, or which competes with, the Businesses, solicit any Person
who is a customer, client, supplier, licensor or other business contact
of the Businesses as conducted prior to the Closing, use any list of
customers, clients, suppliers, licensors, brokers, correspondents or
other business contacts maintained by the Sellers or any of their
respective Affiliates in connection with the Businesses prior to the
Closing, or seek to license, acquire or otherwise utilize, whether by
solicitation of a third party licensor or otherwise, any Intellectual
Property (including computer systems, software, technology or
proprietary rights) relating to or used in the Businesses as conducted
prior to the Closing (other than as expressly contemplated by this
Agreement or any Related Document); provided, however, this provision
shall not apply to actions by a bona fide third party acquiror of
AMRESCO pursuant to a Permitted AMRESCO Business Combination if all of
the conditions sets forth in clause (i) above shall have been
satisfied;
(iii) solicit for employment or employ any Employee
of the Businesses, other than any such Employee who will not be or has
not been, at or before the Closing, offered post-closing employment by
the Purchaser or whose employment with the Sellers or the Purchaser has
otherwise been terminated by or at the request of the Purchaser,
whether voluntarily or involuntarily; provided, that this provision
shall not be violated by any general solicitation or advertising not
directed at any such employee or group of employees.
(b) Notwithstanding the provisions of Section 10.11(a), the
Sellers and their Subsidiaries shall be entitled to (i) service loans originated
by the AMRESCO Commercial
71
<PAGE> 79
Finance division's Franchise Lending, Small Business Association, Home Builders
and Telecapital businesses as conducted on the date hereof, (ii) originate loans
for AMRESCO Capital Trust, in the manner as currently conducted, pursuant to the
management agreement, dated as of May 12, 1998, between AMRESCO Capital Trust
and AMREIT Managers, L.P., as in effect on the date hereof, without amendment or
modification as to the nature or scope of activities conducted thereunder, or
(iii) own, operate, service or dispose of any Excluded Assets, including any
Rejected GSE Loans.
(c) Although the parties have, in good faith, used their best
efforts to make the provisions of this Section reasonable in substantive scope,
geographic area and duration, and the parties do not anticipate, or intend that
a court of competent jurisdiction would find it necessary to reform any such
provisions to make them reasonable in substantive scope, geographic area,
duration or otherwise, the parties understand and agree that if a court of
competent jurisdiction determines it necessary to reform the scope of this
Section in order to make it reasonable in substantive scope, geographic area,
duration or otherwise, with respect to any party, such provisions shall be
considered to be divisible in all respects, and such lesser scope as any such
court shall determine to be reasonable shall be effective, binding and
enforceable against such party. The Sellers acknowledge and agree that the
Purchaser's damages in event of any breach or threatened breach of any
applicable covenants set forth in this Section will be difficult to determine
and that without limiting any other right or remedy of the Purchaser, it shall
be entitled to appropriate injunctive or equitable relief from a court of
competent jurisdiction to prevent any breach or threatened breach.
Section 10.12 Updated Mortgage Loan Schedule; Rejected GSE
Loans.
(a) At the Closing, the Sellers shall deliver to the Purchaser
an updated copy of the Mortgage Loan Schedule as of the day immediately
preceding the Closing Date. The information set forth in such Updated Mortgage
Loan Schedule shall be complete, true and correct in all material respects as of
its date.
(b) The Purchaser shall have the sole, absolute and
unconditional right, from time to time, to re-transfer or otherwise re-convey
any Rejected GSE Loans back to the Sellers, at par and without cost on the part
of the Purchaser. Upon receipt of written notice from the Purchaser informing
the Sellers that any one or more of the GSE Mortgage Loans have been determined
to be Rejected GSE Loans, the Sellers shall promptly arrange, at their sole cost
and expense, to promptly reacquire such Rejected GSE Loans specified in the
Purchaser's written notice. Such reacquisition shall in any event be completed
no later than five (5) Business Days after the Purchaser's written notice
requesting such reacquisition is received by the Sellers. The reacquisition
price for each Rejected GSE Loan shall be paid in cash to the Purchaser (to an
account designated by the Purchaser) upon the date of reacquisition, whereupon
the Purchaser shall assign its rights to such Rejected GSE Loan to the Sellers,
without any representation or warranty. The Sellers hereby indemnify and release
the Purchaser with respect to all obligations or liabilities arising from or
relating to the Rejected GSE Loans, and the Sellers shall, at the time any such
reacquisition of a Rejected GSE Loan is required in accordance with this Section
10.12(b), provide the Purchaser with a release, in such form and having such
terms as shall be
72
<PAGE> 80
reasonably acceptable to the Sellers and the Purchaser, confirming the Sellers'
indemnification obligation to the Purchaser hereunder and releasing the
Purchaser from any liability or obligation arising from or related to such
Rejected GSE Loans and any corresponding loan amounts under the Warehouse Line,
as well as fees and expenses (including reasonable attorneys' fees) incidental
to such Rejected GSE Loans or the related loans under the Warehouse Line. Any
such liability or obligation asserted against the Purchaser in connection with
any such Rejected GSE Loan or commitment may be off-set against amounts due the
Sellers under the Holdback Note in accordance with Section 12.8.
Section 10.13 Notification. Each party will promptly give
written notice to the other parties when any of them becomes aware of the
occurrence or failure to occur, or the impending or threatened occurrence or
failure to occur, of any fact or event that would cause or constitute, or would
be likely to cause or constitute, (a) any of its representations or warranties
contained herein being untrue or incorrect, (b) its breach or failure to perform
any of its covenants or agreements contained herein or (c) any of the conditions
to Closing that it must satisfy being or becoming reasonably incapable of being
satisfied prior to the Walk-away Date (as defined in Section 13.1(b)). No such
notice shall affect the representations, warranties, covenants, agreements or
conditions of the parties hereunder or their liability therefor, or prevent any
party from relying on such representations and warranties contained herein or
making any claims thereunder.
Section 10.14 Real Property Matters.
(a) Environmental Review Report. Not less than (30) days prior
to the Closing Date, the Sellers shall have prepared and delivered to the
Purchaser, at the Sellers' sole expense, an environmental report reasonably
satisfactory to the Purchaser as to the absence of any evidence of noncompliance
with Environmental Laws that could materially and adversely affect the Owned
Real Property.
(b) Title Commitment and Survey. Within twenty-five (25)
Business Days after the date of this Agreement, the Sellers shall deliver or
cause to be delivered to the Purchaser (i) a commitment to issue the Title
Policies, and (ii) an ALTA certified survey of each Owned Real Property, in each
case, in form and substance reasonably acceptable to the Purchaser, all at the
Seller's sole cost and expense. The premium for the Title Policies shall be paid
by the Sellers at the Closing.
(c) Exclusion of Owned Real Property. If, at any time prior to
the Closing, any of the representations, warranties, covenants or agreements
relating to the Owned Real Property (including compliance with Environmental
Laws and the delivery of the items contemplated by this Section) shall have been
or become breached or otherwise violated, or shall fail to remain true and
correct in all respects, the Purchaser may, at its sole discretion, elect to
exclude the Owned Real Property from the Purchased Assets; and, thereafter, the
Owned Real Property shall be deemed an Excluded Asset. In the event the Owned
Real Property is determined pursuant to this Section to constitute an Excluded
Asset, the Purchase Price and the Cash Consideration will be adjusted in
accordance with Section 3.2(b) by reducing same by $1.0 million.
73
<PAGE> 81
(d) The Sellers shall use their reasonable best efforts to
obtain and deliver, at or prior to the Closing, an estoppel letter, in form and
substance reasonably acceptable to the Purchaser, addressed to the Purchaser for
each of the Transferred Leases and for each Purchased Contract listed on
Schedule 7.2(a)(ix)
Section 10.15 Intellectual Property. (a) Except consistent
with the Ordinary Course of Business or in connection with a Permitted AMRESCO
Business Combination, prior to Closing, the Sellers shall not, and shall cause
their respective Subsidiaries and Affiliates not to, provide or enable access by
any Person (other than the Purchaser and its Affiliates) to any material
technical and business information (including know-how, research and development
information, technical data, financial, marketing and business data, pricing and
cost information, business and marketing plans, business forms, and customer and
supplier lists and information) that is maintained, or reasonably expected to be
maintained, by Sellers in confidence and relating to Intellectual Property or
Seller Transferred Software to be conveyed, assigned and otherwise transferred
to Purchaser under this Agreement.
(b) The Sellers shall use their reasonable best efforts to
obtain the consents set forth on Schedule 10.15(b) in form and substance
reasonably acceptable to the Purchaser at or prior to the Closing Date.
Section 10.16 Entity Name and Survival.
(a) Entity Name. At or prior to the Closing, ACLP, ASLP, HFF
and ASI shall have approved, executed and delivered to Purchaser amendments to
their organizational documents in form suitable for filing with the applicable
Secretary of State, changing their partnership or corporate name, as the case
may be, to a name that does not include the words "AMRESCO" or "Holliday
Fenoglio Fowler" or any other name similar to that under which Purchaser intends
to conduct the Businesses after the Closing.
(b) Survival. Each of the Sellers shall preserve intact the
present business organization of each of the Sellers, after giving effect to
this transaction, including the continuation of the Sellers' conduit business,
and to ensure the continued corporate or partnership, as the case may be,
existence of each of the Sellers after the Closing Date for a minimum period of
at least 2 years. The parties agree that the foregoing covenant does not require
any Seller to continue to employ any employees it employs on the Closing Date or
to continue any operations that it conducts on the date hereof or the Closing
Date.
Section 10.17 Bank Debt. The Sellers shall cause the release,
at or prior to the Closing, of all Encumbrances on the Purchased Assets (other
than Permitted Encumbrances), including all Encumbrances upon the Purchased
Assets arising under the Bank Debt, which releases shall be evidenced in writing
and shall be on such terms as shall be reasonably satisfactory to the Purchaser.
Section 10.18 Release of Affiliate Claims. As of the Closing,
except as specifically set forth herein or in any Related Document, AMRESCO and
its Subsidiaries and Affiliates shall, and do hereby, release and forever waive
any and all claims or rights, of whatsoever
74
<PAGE> 82
nature, against, in or to the Businesses and the Purchased Assets (i) arising
prior to the Closing Date or (ii) under the agreements referenced in Schedule
4.10 other than such agreements that are Purchased Contracts (all of which shall
be terminated prior to the Closing, except the Purchased Contracts). The Sellers
shall deliver to the Purchaser such evidence and/or confirmatory agreements with
respect to the foregoing as the Purchaser may reasonably require.
Section 10.19 AMRESCO Securities, Inc. The Sellers shall use
their reasonable best efforts to cause the transfer of the assets, principals,
registered representatives and employees of AMRESCO Securities, Inc. to the
Purchaser (or its permitted designee) without breach or non-compliance of any
law, rule or regulation of or applicable to the NASD, the SEC or any state in
which AMRESCO Securities, Inc. is registered or in which its principals,
registered representatives or employees are registered.
Section 10.20 Letter of Credit. Purchaser shall use its
reasonable best efforts to induce the landlord under the Transferred Lease for
the Leased Premises at 245 Peachtree Center Avenue, Suite 1800, Atlanta, Georgia
30303, to release (i) the Lease Guaranty and (ii) AMRESCO's letter of credit
which is being held by such landlord under such Transferred Lease, including, if
necessary, providing a substitute letter of credit in the amount of $1.5
million.
ARTICLE XI
TAX MATTERS
Section 11.1 Section 338(h)(10) Election. At the Purchaser's
request, AMRESCO will join with the Purchaser in making an election under
Section 338(h)(10) of the Code (and any corresponding elections under state or
local tax law) (each, a "SECTION 338(h)(10) ELECTION") with respect to the
purchase and sale of the stock of each of the Purchased Entities hereunder to
which such election is applicable. AMRESCO will pay any and all Taxes
attributable to the making of the Section 338(h)(10) Election and will indemnify
Lend Lease, the Purchaser and the Purchased Entities against any Adverse
Consequences arising out of any failure to pay such Taxes. AMRESCO will also pay
any state or local Tax (and indemnify Lend Lease, the Purchaser and the
Purchased Entities against any Adverse Consequences arising out of any failure
to pay such Tax) attributable to an election under state or local law similar to
the election available under Section 338(g) of the Code (or which results from
the making of an election under Section 338(g) of the Code) with respect to the
purchase and sale of the stock of each of the Purchased Entities hereunder. Each
of AMRESCO and the Purchaser will, and will cause their respective Subsidiaries
and Affiliates to, treat each Section 338(h)(10) Election as valid, not take any
action inconsistent with such treatment and file all Tax Returns in a manner
consistent with the Section 338(h)(10) Election. As requested from time to time
(whether before, at or after the Closing), AMRESCO and the Purchaser shall
assist one another in, and shall provide (or cause to be provided) to one
another such information as is reasonably requested in connection with, the
preparation of any form or document required to effect a valid and timely
Section 338(h)(10) Election, including any schedules or attachments thereto
(collectively, "SECTION 338 FORMS").
Section 11.2 Purchase Price Allocation. The Purchase Price
shall be allocated among the Purchased Assets in accordance with a schedule to
be prepared by the Purchaser prior
75
<PAGE> 83
to the Closing (the "PURCHASE PRICE ALLOCATION"). The Purchase Price Allocation
shall be determined by the Purchaser and its accounting firm and reasonably
acceptable to the Sellers; provided, however, that the Sellers and the Sellers'
accounting firm agree to cooperate with the preparation of such allocation. The
Purchase Price Allocation shall be binding upon the Purchasers and Sellers. The
Purchaser and the Sellers shall each file Form 8594 (Asset Acquisition Statement
Under Section 1060) on a timely basis reporting the allocation of the Purchase
Price consistent with such Purchase Price Allocation. Except as may be required
by law, the Sellers and the Purchaser will (i) file, or cause to be filed, all
Tax Returns in a manner consistent with the Purchase Price Allocation, as
adjusted as a result of a substantial increase or decrease in the Purchase
Price, if any, and (ii) may not take any action inconsistent therewith.
Section 11.3 Allocation of Purchase Price for Purchased
Entities Assets. The Sellers and the Purchaser agree that the portion of the
Purchase Price allocated to the stock of Purchased Subsidiaries pursuant to
Section 11.2 shall be further allocated in the manner described in this Section.
With respect to each Section 338(h)(10) Election (or similar state or local
election) the Purchaser and the Sellers shall agree on (i) the MADSP and (ii)
the allocation of MADSP among the assets of each of the Purchased Entities for
which a Section 338(h)(10) Election is being made (collectively, the "ELECTION
ALLOCATIONS"). The Election Allocations shall be reasonable and shall be
determined in accordance with Section 338 of the Code and the applicable
Treasury Regulations thereunder. The Purchaser shall prepare, and Sellers will
join with Purchaser in signing and filing, as necessary, any Section 338 Form on
a timely basis reporting the allocation of the Purchase Price for Purchased
Entity Assets consistent with such Election Allocations. Except as may be
required by law, the Sellers and the Purchaser will (i) file, or cause to be
filed, all Tax Returns in a manner consistent with the Election Allocations and
(ii) not take any action inconsistent therewith.
Section 11.4 Tax Periods Ending on or Before the Closing Date.
Except as set forth in Section 11.5, the Seller shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Purchased
Entities (to the extent the Seller or its Affiliate had the obligation to do so)
for all taxable periods ending on or prior to the Closing Date which are filed
after the Closing Date. The Sellers shall permit the Purchaser for a period or
30 days to review and approve each such Tax Return prepared by the Sellers and
described in the preceding sentence prior to filing. The Sellers shall pay the
total of all Taxes of the Purchased Entities shown to be due on such Tax Returns
no later than the due date for payment of such Taxes and shall promptly provide
the Purchaser with proof of (x) payment of such Taxes and (y) filing of such Tax
Returns. No Tax Return prepared pursuant to this Section 11.4 shall be filed
unless it shall have been approved by the Purchaser unless the Purchaser fails
to disapprove such filing with the 30-day period permitted above. The Sellers
shall provide the Purchaser with an "as filed" copy of all such Tax Returns.
Section 11.5 Consolidated, Combined and Unitary Tax Returns.
AMRESCO will include the income of the Election Corporations (including any
deferred income triggered into income by Section 1.1502-13 and Section 1.1502-14
of the Treasury Regulations and any excess loss accounts taken into income under
Section 1.1502-19 of the Treasury Regulations) on the AMRESCO consolidated
federal income Tax Return and on any other consolidated, unitary and combined
Tax Returns consistent with past practice for all periods through the Closing
Date
76
<PAGE> 84
and will pay any Taxes attributable to such income. The Election Corporations
will furnish Tax information to AMRESCO for inclusion in AMRESCO's Tax Returns
for the period which includes the Closing Date in accordance with the Election
Corporations' past custom and practice. AMRESCO will allow Purchaser an
opportunity to review and comment upon such Tax Returns (including any amended
returns) to the extent that they relate to an Election Corporation and with
respect to a jurisdiction in which no Section 338(h)(10) Election pursuant to
this Agreement was made or recognized. AMRESCO will take no position on such Tax
Returns that relates to the Purchased Entities that is inconsistent with past
practice if it would materially and adversely affect Purchased Entities after
the Closing Date unless required as a result of changes in law. The income of
Election Corporations will be apportioned to the period up to and including the
Closing Date and the period after the Closing Date in accordance with Section
11.11.
Section 11.6 Carrybacks and Refunds. Purchaser shall cause the
Purchased Entities to elect, where permitted by law, to carry forward any net
operating loss or other item arising after the Closing Date that could, in the
absence of such an election, be carried back to a taxable period of a Purchased
Entity ending on or before the Closing Date in which the Purchased Entity was
included in a consolidated, combined or unitary group that includes an AMRESCO
Party. As soon as reasonably practicable, AMRESCO will pay to the Purchaser any
Tax refund (or reduction in Tax liability) resulting from a carryback (other
than a carryback described in the first sentence of this Section that a
Purchased Entity could have elected to carry forward) of a post-acquisition Tax
attribute of any of the Purchased Entities into a consolidated, combined or
unitary group that includes an AMRESCO Party, when such refund is received or
reduction is actually realized by an AMRESCO Party. AMRESCO will cooperate with
the Purchased Entities in obtaining such refunds (or reduction in Tax
liability), including through the filing of amended Tax Returns or refund
claims. The Purchaser agrees to indemnify AMRESCO for any Taxes resulting from
the disallowance of such post-acquisition Tax attribute on audit or otherwise.
Section 11.7 Tax Periods Beginning Before and Ending after the
Closing Date. The Purchaser shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Purchased Entities (to the extent the
Purchaser or its Affiliate has the obligation to do so) for a taxable period
which begins on or before the Closing Date and ends after the Closing Date (such
a taxable period, a "STRADDLE PERIOD"). The Purchaser shall permit the Sellers
to review and comment on each such Tax Return prepared by the Purchaser and
described in the preceding sentence prior to filing. The Sellers shall pay (or
cause to be paid) to the Purchaser an amount equal to the portion of such Taxes
which are allocated to the portion of such Taxable period ending on the Closing
Date no later than the date that is five days prior to the due date for payment
of such Taxes.
77
<PAGE> 85
Section 11.8 Tax Returns Prepared by the Purchaser. All Tax
Returns prepared by the Purchaser pursuant to Sections 11.4 and 11.7 related to
the Purchased Entities will be prepared in accordance with applicable Law.
Section 11.9 Cooperation on Tax Matters.
(a) The Purchaser and the Sellers shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Article and any audit, litigation or
other proceeding with respect to Taxes.
(b) The Purchaser and the Sellers further agree, upon request,
to use their reasonable best efforts to obtain any certificate or other document
from any Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including with
respect to the transactions contemplated hereby).
Section 11.10 Tax Indemnification.
(a) From and after the Closing Date, the Sellers shall pay or
cause to be paid, and shall indemnify each Purchaser Tax Indemnitee and protect,
save and hold each Purchaser Tax Indemnitee harmless from and against any
Adverse Consequences resulting from, arising out of, relating to, in the nature
of, or caused by:
(i) any Tax imposed upon or relating to the Sellers
for any period (whether before or after the Closing Date), including
any such Tax for which the Purchaser or a Purchased Entity may be
liable (w) under Section 1.1502-6 of the Treasury Regulations (or any
similar provision of state, local or foreign law), (x) as a transferee
or successor, (y) by contract or (z) otherwise;
(ii) any Tax resulting from a breach of any
representation contained in Section 4.15; and
(iii) any Tax allocable to the Pre-Closing period.
(b) From and after the Closing Date, the Purchaser shall pay
or cause to be paid, and shall indemnify each Seller Tax Indemnitee and protect,
save and hold each Seller Tax Indemnitee harmless from and against any Taxes of
the Purchased Entities allocable to the Post-Closing Period.
(c) Payment in full of any amount due from the Sellers or the
Purchaser under this Section 11.10 shall be made to the affected Purchaser Tax
Indemnitee in immediately available funds at least two Business Days before the
date payment of the Taxes to which such payment relates is due, or, if no Tax is
payable, within fifteen days after written demand is made for such payment.
78
<PAGE> 86
Section 11.11 Allocation of Certain Taxes.
(a) If a Purchased Entity is permitted but not required under
applicable state, local or foreign income tax laws to treat the Closing Date as
the last day of a taxable period, then the parties shall cause such Purchased
Entity to treat that day as the last day of a taxable period.
(b) In the case of Taxes arising in a taxable period of a
Purchased Entity that includes but does not end on the Closing Date, except as
provided in Section 11.11(c), the allocation of such Taxes between the
Pre-Closing Period and the Post-Closing Period shall be made on the basis of an
interim closing of the books as of the end of the Closing Date. For the
avoidance of doubt, for purposes of this Section 11.11(b), the taxable year of
each Purchased Entity that is a partnership or "flowthrough" entity, shall be
treated as if it ended at the close of business on the Closing date and Taxes
attributable to the income and gain of such entities through the close of
business on the Closing date shall be treated as Pre-Closing Period Taxes.
(c) In the case of (i) property Taxes and (ii) ad valorem
Taxes, in either case attributable to any taxable period that includes but does
not end on the Closing Date, the portion of such Taxes attributable to the
Pre-Closing Period shall be the amount of such Taxes for the entire taxable
period, multiplied by a fraction the numerator of which is the number of
calendar days in such taxable period ending on and including the Closing Date
and the denominator of which is the entire number of calendar days in such
taxable period, and the balance of such Taxes shall be attributable to the
Post-Closing Period; provided, however, that if any property, asset or other
right of the Sellers or their respective Subsidiaries is sold or otherwise
transferred prior to the Closing Date, then ad valorem Taxes pertaining to such
property, asset or other right shall be attributed entirely to the Pre-Closing
Period.
Section 11.12 Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including penalties and
interest) incurred in connection with this Agreement shall be paid by the
Sellers when due, and the Sellers shall file all necessary Tax Returns and other
documentation with respect to such transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees, bearing the expenses of such filing
and documentation, and, if required by applicable law, will cause their
Affiliates to, join in the execution of such Tax Returns and other
documentation.
Section 11.13 Termination of Tax Sharing Agreement. Any and
all Tax allocation or sharing agreements or other agreements or arrangements
relating to Tax matters between any Purchased Entity on the one hand and any
Seller or any Subsidiary of a Seller on the other hand shall be terminated with
respect to the Purchased Entity as of the day before the Closing Date and, from
and after the Closing Date, the Purchased Entity shall not be obligated to make
any payment to Seller or any Subsidiary of a Seller, Taxing Authority or other
person pursuant to any such agreement or arrangement for any past or future
period.
79
<PAGE> 87
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
Section 12.1 Survival.
(a) The representations and warranties in Article IV and
Article V hereof shall survive the Closing but shall terminate and be of no
further force and effect on the second anniversary of the Closing Date;
provided, that (i) the representations and warranties made in Sections 4.1, 4.2,
4.10, 4.13, 4.19, 4.22, 5.1, 5.2 and 5.5 shall survive the Closing and remain in
effect indefinitely and (ii) the representations and warranties made in Sections
4.12, 4.15 and 4.18 shall survive the Closing until 30 days after the expiration
of the applicable statute of limitations. No claim regarding a breach of any
such representation or warranty shall be made for the first time after the date
such representation or warranty expires. Notwithstanding the foregoing, any such
representation or warranty shall survive such expiration date for purposes of
that claim (i) if prior to such expiration date, the Sellers, on the one hand,
or the Purchaser, on the other hand, shall have been advised by such other party
in writing of an alleged breach thereof or (ii) if the party making such
representation or warranty made a fraudulent or Intentional misrepresentation in
connection with such representation or warranty.
(b) Unless a specific period is set forth in this Agreement
(in which event such specified period shall control), all other covenants and
agreements contained in this Agreement shall survive the Closing and remain in
effect indefinitely.
Section 12.2 Indemnification of the Purchaser. On the terms
and subject to the limitations set forth herein, the Sellers, jointly and
severally, shall indemnify, defend and hold harmless the Purchaser, each of its
subsidiaries and Affiliates and each of their respective past, present and
future directors, officers, employees, agents and representatives (together, the
"PURCHASER INDEMNITEES") from and against any and all Liabilities, obligations,
claims, Actions, damages, civil and criminal penalties and fines, out-of-pocket
costs and expenses, including any reasonable attorneys' and other professional
fees, without duplication ("INDEMNIFIABLE LOSSES"), relating to, resulting from
or arising out of the following:
(a) any breach of any representation, warranty, covenant,
agreement or undertaking by the Sellers contained in this Agreement or any
Related Document;
(b) any Excluded Liabilities;
(c) any claim of any Person related to the failure of the
Sellers to comply with the provisions of the "bulk sales" or similar laws of any
applicable jurisdiction (other than in respect of Assumed Liabilities) and all
bulk sales tax provisions in all states;
(d) any claim of any Person arising prior to the Closing Date
derived from or relating to any Intellectual Property or the Seller Transferred
Software; or
(e) any claim or obligation arising from or relating to the
Arizona Charlie's litigation of the Sellers.
80
<PAGE> 88
Section 12.3 Indemnification of the Sellers. On the terms and
subject to the limitations set forth herein, the Purchaser shall indemnify,
defend and hold harmless the Sellers, each of their respective Subsidiaries and
Affiliates and each of their respective past, present and future directors,
officers, employees, agents and representatives (together, the "SELLER
INDEMNITEES") from and against any and all Indemnifiable Losses, relating to,
resulting from or arising out of the following:
(a) any breach of any representation, warranty, covenant,
agreement or undertaking by the Purchaser contained in this Agreement or any
Related Document;
(b) any Assumed Liabilities; and
(c) any obligations under the Incentive Based Payment Program.
The items described in clauses (a) through (e) of Section 12.2
or (a) through (c) of this Section 12.3 are collectively referred to herein as
"CLAIMS".
Section 12.4 Procedures for Making Claims Against Indemnifying
Party.
(a) From time to time on or before the expiration, if any, of
the applicable indemnification obligation, the Indemnified Party may give notice
to the Indemnifying Party specifying in reasonable detail the nature and dollar
amount of any Claim under Section 12.2 or 12.3 of this Agreement; an Indemnified
Party may make more than one Claim (including any supplements thereto) with
respect to any underlying state of facts. If the Indemnifying Party gives notice
disputing any Claim (a "COUNTER NOTICE") within 30 days following receipt of
the notice regarding such Claim, such Claim shall be resolved as provided in
Section 12.4(b). If no Counter Notice is received by the Indemnified Party
within such 30-day period, then the dollar amount of the Claim as set forth in
the original notice shall be deemed established for purposes of this Agreement
and, at the end of such 30-day period, the Indemnifying Party shall make a
payment to the Indemnified Party in the dollar amount claimed in the Indemnified
Party's notice.
(b) If the Counter Notice is timely received with respect to a
Claim, the parties shall attempt in good faith to agree on resolution of the
disputed amount. The Indemnifying Party shall pay to Indemnified Party all
non-disputed amounts in accordance with the time period specified in Section
12.4(a). Any amount mutually agreed upon or awarded to the Indemnified Party
under a final and non-appealable Judgment shall be paid by the Indemnifying
Party within five Business Days following execution of such agreement or the
entering of such Judgment, as applicable.
Section 12.5 Defense of Claims.
(a) If an Indemnified Party shall receive written notice of
the assertion of any third party claim with respect to which an Indemnifying
Party is obligated under this Agreement to provide indemnification, such
Indemnified Party shall give the Indemnifying Party prompt notice thereof;
provided, however, that the failure of any Indemnified Party to give such notice
shall not relieve any Indemnifying Party of its obligations under this Article
XII, except to the
81
<PAGE> 89
extent that such Indemnifying Party is actually materially prejudiced by such
failure to give notice. Such notice shall describe the claim in reasonable
detail, and, if practicable, shall indicate the estimated amount of the
Indemnifiable Loss that has been or may be sustained by such Indemnified Party.
(b) An Indemnifying Party, at such Indemnifying Party's own
expense and through counsel chosen by such Indemnifying Party (which counsel
shall be reasonably satisfactory to the Indemnified Party), may elect to defend
any third party claim; and if it so elects, it shall, within 20 Business Days
after receiving notice of such third party claim (or sooner, if the nature of
such third party claim so requires), notify the Indemnified Party of its intent
to do so, and such Indemnified Party shall cooperate in the defense of such
third party claim. Such Indemnifying Party shall pay such Indemnified Party's
reasonable out-of-pocket expenses incurred in connection with such cooperation.
After notice from an Indemnifying Party to an Indemnified Party of its election
to assume the defense of a third party claim, such Indemnifying Party shall not
be liable to such Indemnified Party under this Article XII for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; provided, however, that such Indemnified Party shall
have the right to employ one counsel to represent such Indemnified Party and all
other Persons entitled to indemnification in respect of such claim hereunder
(which counsel shall be reasonably acceptable to the Indemnifying Party) if, in
such Indemnified Party's reasonable judgment (after consultation with counsel),
either a conflict of interest between such Indemnified Party and such
Indemnifying Party exists in respect of such Claim or there may be defenses
available to such Indemnified Party which are different from or in addition to
those available to such Indemnifying Party, and in that event (i) the reasonable
fees and expenses of such separate counsel shall be paid by the Indemnifying
Party and (ii) each of the Indemnifying Party and the Indemnified Party shall
have the right to direct its own defense in respect of such Claim. If any
Indemnifying Party elects not to defend against a third party claim, or fails to
notify an Indemnified Party of its election within a reasonable period of time,
such Indemnified Party may defend, compromise and settle such third party claim;
provided, however, that no such Indemnified Party may, without the prior written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld), settle or compromise any third party claim or consent to the entry of
any Judgment which does not include as an unconditional term thereof the
delivery by such third party to the Indemnifying Party of a written release from
all liability in respect of such third party claim. The Indemnifying Party may
defend, compromise and settle any third party claim on such terms as it deems
appropriate, provided, however, that no Indemnifying Party may, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise any third party claim or consent to
the entry of any Judgment which does not include as an unconditional term
thereof the delivery by such third party to the Indemnified Party of a written
release from all liability in respect of such third party claim. If any
Indemnifying Party elects to defend against a third party claim, no Indemnified
Party shall settle or compromise on such claim or consent to the entry of a
judgment without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
Section 12.6 Remedies Exclusive. After the Closing, the
remedies provided to the parties in this Article XII for the matters set forth
in this Article XII shall be exclusive and
82
<PAGE> 90
shall preclude assertion by them of all other rights and the seeking of all
other remedies for such matters against the other party thereto; provided, that
any Indemnified Party shall not be precluded from (i) seeking specific
performance or any other available remedy for a breach of a covenant or
agreement contained in this Agreement or in any Related Document, (ii) seeking
any other remedy explicitly provided by any other provision of this Agreement or
a Related Document or (iii) pursuing remedies under applicable law for fraud or
Intentional misconduct.
Section 12.7 Limitation of the Sellers' and the Purchaser's
Obligations to Indemnify.
(a) Sellers' Basket. Notwithstanding the other provisions of
this Article XII, the Sellers shall have liability to the Purchaser or any other
Purchaser Indemnitee with respect to any claims under this Agreement only if and
to the extent that the sum of the Purchaser's Indemnifiable Losses related to
such breaches exceed $750,000 in the aggregate (the "BASKET"), after which the
Purchaser Indemnitees shall be fully indemnified, subject to subsection (c)
below, for all such Indemnifiable Losses in excess of the Basket.
Notwithstanding the foregoing, the Basket shall not apply to, and the Purchaser
Indemnitees shall be entitled to indemnification without regard to satisfaction
of the Basket with respect to, the following: (i) Claims for fraud, Intentional
misrepresentation or Intentional breach of the representations or warranties of
the Indemnifying Party; (ii) any Claim covered by Section 12.2(e); or (iii) any
indemnification obligations of the Sellers pursuant to Sections 2.3(b)(xvi) or
10.12(b). The Purchaser or any other Purchaser Indemnitee shall be entitled to
assert any Claims for indemnification pursuant to this Article XII
notwithstanding that the existence of any such Claim or Claims did not
constitute a failure to satisfy the conditions set forth in Section 8.1.
(b) Purchaser's Basket. Notwithstanding the other provisions
of this Article XII, the Purchaser shall have liability to the Sellers or any
other Seller Indemnitee with respect to any claims under this Agreement only if
and to the extent that the sum of the Sellers' Indemnifiable Losses related to
such breaches exceed the Basket, after which the Seller Indemnitees shall be
fully indemnified, subject to subsection (d) below, for all such Indemnifiable
Losses in excess of the Basket. Notwithstanding the foregoing, the Basket shall
not apply to, and the Seller Indemnitees shall be entitled to indemnification
without regard to satisfaction of the Basket with respect to, Claims for fraud,
Intentional misrepresentation or Intentional breach of the representations or
warranties of the Indemnifying Party.
(c) Sellers' Indemnification Cap. Notwithstanding the other
provisions of this Article XII, the Sellers' aggregate liability pursuant to
this Article XII for breaches of representations and warranties shall, until the
first anniversary of the Closing Date, be limited to $100 million and,
thereafter, shall be limited to an amount (not to exceed $100 million) equal to
the sum of (x) $50 million, plus (y) the aggregate amount of all Indemnifiable
Losses asserted pursuant to Claims made by Purchaser Indemnitees prior to the
first anniversary of the Closing Date and not paid (including by Offset pursuant
to Section 12.8) as of the first anniversary of the Closing Date.
83
<PAGE> 91
(d) Purchaser's Indemnification Cap. Notwithstanding the other
provisions of this Article XII, the Purchaser's aggregate liability pursuant to
this Article XII for breaches of representations and warranties shall be limited
to $25 million.
Section 12.8 Offset Right. Any other provision herein
notwithstanding, the Purchaser's obligations hereunder and under the Holdback
Note, Transition Services Agreement, Purchaser Servicing Agreements and all
other Related Documents are subject to, and the Purchaser shall have the benefit
of, all defenses, counterclaims, rights of offset or recoupment or other claims
and rights, including the right to deduct payments due to any of the Sellers
under the Holdback Note, the Transition Services Agreement and any other Related
Documents (collectively, "OFFSETS") which the Purchaser may have at any time
against any of the Sellers or their Subsidiaries or Affiliates (or any of their
respective successors and assigns) or any transferee or assignee of any of the
Sellers' rights as against the Purchaser or any part thereof or interest
therein, whether the claim or right of the Purchaser relied upon for such
purpose is matured or unmatured, contingent or otherwise, and no transfer or
assignment of this Agreement or any other obligation of any of the Sellers, or
of any rights in respect thereof, pursuant to any plan of reorganization or
liquidation or otherwise shall affect or impair the availability to the
Purchaser of the Offsets; provided, that, with respect to the Asset Management
Agreement, no Offsets shall be permitted against any amounts in the Operating
Accounts or the Escrow Accounts (as such terms are defined in the Asset
Management Agreement) or against any amount required under the Asset Management
Agreement to be deposited into such accounts (other than fees due to the
Servicer (as defined thereunder) under the Asset Management Agreement pursuant
to the terms thereof).
Section 12.9 Duty to Mitigate. Each Indemnified Party agrees
to use commercially reasonable efforts, consistent with such party's normal
business practices, to mitigate any Indemnifiable Losses as a condition to
recovery under this Article XII.
Section 12.10 Net Indemnifiable Losses. The Purchaser agrees
that the amount of any Indemnifiable Loss shall not include the amount of any
reserve applicable to such Indemnifiable Loss that was included in the Net
Working Capital. Each Indemnified Party agrees that the amount of any
Indemnifiable Loss shall not include amounts collected by the Indemnified Party
in respect of such Indemnifiable Loss pursuant to any applicable insurance
coverage or third party indemnification rights. Each Indemnified Party further
agrees that, upon payment for any Indemnifiable Loss by the Indemnifying Party,
such Indemnified Party shall promptly assign to the Indemnifying Party the
portion of any insurance claims of the Indemnified Party relating to such
Indemnifiable Loss (provided such assignment does not otherwise adversely affect
such insurance or the Indemnified Party's rights thereunder) from which the
Indemnifying Party may reasonably expect reimbursement or indemnification under
in respect of such Indemnifiable Losses.
ARTICLE XIII
TERMINATION
Section 13.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual consent of the Purchaser and the Sellers;
84
<PAGE> 92
(b) by the Purchaser in the event that any condition set forth
in Article VIII shall not be satisfied and shall not be reasonably capable of
being remedied prior to the date that is 120 days from the later to occur of (i)
the date of this Agreement or (ii) the Preliminary Lender Consent Date (the
"WALK-AWAY DATE"); provided, that the failure of any such condition to be
satisfied shall not be the result of a breach of this Agreement by any
Purchaser;
(c) by the Sellers in the event that any condition set forth
in Article IX shall not be satisfied and shall not be reasonably capable of
being remedied prior to the Walk-away Date; provided, that the failure of any
such condition to be satisfied shall not be the result of a breach of this
Agreement by any Seller;
(d) by the Purchaser or the Sellers if the Closing shall not
have occurred on or before the Walk-away Date (or, if the Purchaser and the
Sellers shall have agreed to a later date pursuant to the terms of this
Agreement, on or before any such later date); provided, that the failure to
close prior to such date is not the result of a material breach of this
Agreement by the terminating party;
(e) by the Purchaser upon the commencement of any involuntary
case under the Bankruptcy Code involving any of the Sellers or the occurrence of
any Bankruptcy Action;
(f) by the Purchaser if there shall be any Material Adverse
Change in respect of the Businesses or the Purchased Assets or, which could
reasonably be expected to result in the commencement of any involuntary case
under the Bankruptcy Code, or the occurrence of any Bankruptcy Action, involving
any Seller or any of their respective Subsidiaries; or
(g) by the Purchaser if the Sellers should advise the
Purchaser that any of the Sellers has become aware of events or issues that
would lead to the reasonable belief that either the opinion set forth in Section
8.8 or in Section 8.9 may not be obtained by the Seller.
(h) by the Purchaser, no later than 5 p.m. EST on December 22,
1999,if the Sellers shall not have delivered to the Purchaser prior to 5 p.m.
EST on December 17, 1999 a letter from Bank of America, as administrative agent
under the credit agreement for the Bank Debt, consenting to the transactions
contemplated hereby and agreeing to release the Encumbrances securing the Bank
Debt at the Closing provided that no "Event of Default" shall have been declared
under such credit agreement, in form and substance reasonably acceptable to the
Purchaser (the date on which such letter is received being referred to herein as
the "PRELIMINARY LENDER CONSENT DATE"). In the event of a termination pursuant
to this paragraph (h), the terms of the Exclusive Dealings Agreement, dated as
of July 9, 1999, between AMRESCO, INC. and LLREI, as amended (the "EXCLUSIVITY
AGREEMENT"), with respect to expense reimbursement shall be reinstated and the
Sellers agree to promptly pay to the Purchaser all amounts owing under the
Exclusivity Agreement. The Sellers agree to exercise their reasonable best
efforts to obtain the consent letter referred to in this paragraph prior to the
Preliminary Lender Consent Termination Date.
85
<PAGE> 93
Section 13.2 Effect of Termination.
(a) In the event that (i) this Agreement is terminated
pursuant to Sections 13.1(b), (d) (except where the failure to close results
from a material breach by the Purchaser of its obligations hereunder), (e),
(f),(g) or (h) and (ii) within 12 months of the date of termination of this
Agreement any of the Sellers enters into one or more definitive agreements to
sell, transfer or otherwise dispose of all or a significant portion of the
Businesses or the Purchased Assets, to be acquired by any third party or to
enter into any other extraordinary transaction (whether by merger, business
combination, sale of securities or assets or otherwise) (each such transaction,
an "ALTERNATIVE TRANSACTION"), then, in any such case, the Sellers (jointly and
severally) shall, prior to the Termination Payment Date (as defined below), pay
to the Purchaser a fee of $10.0 million (the "TERMINATION FEE"); provided,
however, that only a Partial Termination Fee (as defined below) shall be payable
hereunder in the case of any one or more Alternative Transactions which involve
the sale, transfer or other disposition of only a portion of the Businesses or
Purchased Assets and which do not constitute a sale of or extraordinary
transaction in respect of AMRESCO, INC. (whether by merger, business
combination, sale of securities or assets, or otherwise) or a sale, transfer or
other disposition, directly or indirectly, of all or substantially all of the
Businesses or the Purchased Assets (any such Alternative Transaction a "PARTIAL
SALE"). The "PARTIAL TERMINATION FEE" owing with respect to each Partial Sale
shall be the greater of (x) five percent (5%) of the aggregate transaction value
(including debt, equity and other consideration) of such Partial Sale and (y)
either (A) $5.0 million, if the Termination Payment Date with respect to such
Partial Sale is prior to the date which is six months and one day after the
termination date of this Agreement, or (B) $3.0 million if the Termination
Payment Date with respect to such Partial Sale is subsequent to the date which
is six months and one day after the termination date of this Agreement, provided
that in no event shall any Partial Termination Fee exceed $10 million. A Partial
Termination Fee shall be payable in respect of each Partial Sale (if more than
one occurs), provided that the aggregate of all Partial Termination Fees payable
hereunder shall in no event exceed $10 million. The Termination Fee shall be
payable by wire transfer of immediately available funds to a bank account
designated by Purchaser.
The "TERMINATION PAYMENT DATE" means the date on which a
definitive transaction agreement for an Alternative Transaction is executed.
Anything herein to the contrary notwithstanding, in the event
that (i) the condition set forth in Section 8.4(a)(ii) shall not be satisfied
and shall not be reasonably capable of being remedied prior to the Walk-away
Date, (ii) the Purchaser elects to terminate this Agreement, and (iii) within 12
months of the date of termination of this Agreement any of the Sellers enters
into an Alternative Transaction, then the Sellers (jointly and severally) shall
within 2 Business Days, pay to the Purchaser a fee of $23.5 million.
(b) Each of the parties acknowledges that the agreements
contained in this Section 13.2 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, the
Purchaser would not enter into this Agreement; accordingly, if the Sellers fail
to promptly pay the termination fee due from them pursuant to this Section 13.2,
and in order to obtain such payment the Purchaser commences a suit which results
in a Judgment for
86
<PAGE> 94
the termination fee set forth in this Section 13.2, the Sellers shall be jointly
and severally obligated to pay to the Purchaser its costs and expenses
(including reasonable attorneys' fees) in connection with such suit.
(c) In the event that this Agreement shall be terminated
pursuant to Section 13.1, all obligations of the parties hereto under this
Agreement shall terminate and there shall be no liability of any party hereto to
any other party except (i) for the obligations with respect to confidentiality
and publicity contained in Section 10.8 hereof and (ii) as set forth in this
Section or in Section 13.3; provided, that nothing contained in this Section
shall relieve any party of liability for any breach of this Agreement, and the
parties shall be entitled to pursue any and all remedies available at law or in
equity in respect of any such breach, without any limitation. The termination
fee payable under this Section 13.2 is not intended to be, and shall not
constitute, liquidated damages, and any payment thereof to the Purchaser shall
not reduce or limit the Purchaser's rights or remedies in any respect.
Section 13.3 Fees and Expenses. Except as otherwise
specifically provided herein, each party hereto shall pay all of the fees and
expenses incurred by it in connection herewith.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Complete Agreement. This Agreement, and the
Related Documents, and the exhibits and schedules attached hereto and thereto
and the documents referred to herein and therein shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
Section 14.2 Waiver and Amendment. This Agreement may not be
released, waived, changed or modified in any manner, except by an instrument in
writing signed on behalf of each of the parties hereto by their duly authorized
representatives. The failure of any party hereto to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a waiver of
any such provision, nor in any way be construed to affect the validity of this
Agreement or any part thereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to be a waiver of any other or subsequent breach.
Section 14.3 Partial Invalidity. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but in case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
87
<PAGE> 95
Section 14.4 Notices. All notices, requests and demands to or
upon the respective parties hereto shall be in writing, including by telecopy,
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made (a) if delivered by hand (including by courier), when
delivered, (b) in the case of mail, three Business Days after deposit in United
States certified first class mail, postage prepaid and (c) in the case of
telecopy notice, when receipt has been confirmed by the transmitting telecopy
operator. In each case notice shall be sent to the address of the party to be
notified, as follows, or to such other address, telecopy number or Person's
attention as may be hereafter designated by the respective parties hereto in
accordance with these notice provisions:
(a) if to the Sellers:
AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
Attention: Chief Executive Officer
Fax No.: (214) 953-7757
with a copies to:
AMRESCO, INC.
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
Attention: General Counsel
Fax No.: (214) 953-7757
and
Haynes and Boone, LLP
901 Main Street
Suite 3100
Dallas, Texas 75202
Attention: William L. Boeing, Esq.
Fax No.: (214) 651-5940
(b) if to the Purchaser:
Lend Lease (US) Services, Inc.
787 Seventh Avenue
New York, New York 10019
Attention: Chief Executive Officer
Fax No.: (212) 554-1688
88
<PAGE> 96
with copies to:
Lend Lease (US) Services, Inc.
Monarch Tower
3424 Peachtree Road, Northeast
Atlanta, Georgia 30326
Attention: General Counsel
Fax No.: (404) 848-8904
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Robin Panovka, Esq.
Fax No.: (212) 403-2000
and
Akin, Gump, Strauss, Hauer & Feld, LLP
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: R. Terry Miller, Esq.
Fax No.: (214) 969-4343
Section 14.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflicts of laws.
Section 14.6 Consent to Jurisdiction. Each of the parties
hereto (i) consents to submit itself to the Personal jurisdiction of any federal
court sitting in the State of New York or any New York state court, in either
case, located in the New York City, in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that it
will not attempt to deny or defeat the jurisdiction of such courts by motion or
other request for leave from any such court, (iii) waives any claim that such
proceedings have been brought in an inconvenient forum, and (iv) agrees that it
will not bring any action relating to this Agreement in any court other than a
federal court sitting in the State of New York or a New York state court, in
either case, located in New York City.
Section 14.7 Headings. Titles and headings to Articles,
Sections, subsections and paragraphs herein are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
Section 14.8 Assignment; Successors and Assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other party, except that the Purchaser may from
89
<PAGE> 97
time to time assign or otherwise transfer, in whole or in part, any or all of
its rights or obligations hereunder to one or more wholly owned direct or
indirect subsidiaries of the Purchaser, provided that any such assignment or
transfer shall not relieve the Purchaser of any of its obligations hereunder.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors or assigns, heirs,
legatees, distributees, executors, administrators and guardians.
Section 14.9 Third Parties. Nothing in this Agreement, express
or implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 14.10 Interpretation. As used in this Agreement, (i)
the term "INCLUDES" and the word "INCLUDING" and words of similar import shall
be deemed to be followed by the words "WITHOUT LIMITATION"; (ii) "CONTROL"
(including its correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of a Person, whether through
the ownership of securities or partnership or other interests, by contract or
otherwise; (iii) references to "KNOWLEDGE" in this Agreement, or words of
similar import, shall mean the actual knowledge of the Persons named in Schedule
14.10(a) or such matters that, in the exercise of their respective duties, such
Persons would reasonably be expected to have knowledge of (where used herein
with respect to the Sellers or any one of them) and shall mean the actual
knowledge of the Persons named in Schedule 14.10(b) or such matters that, in the
exercise of their respective duties, such Persons would reasonably be expected
to have knowledge of (where used with respect to the Purchaser); (iv)
definitions contained in this Agreement apply to singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms; (v) words in the singular shall be held to include the
plural and vice versa, and words of one gender shall be held to include the
other gender as the context requires; (vi) the terms "HEREOF," "HEREIN," and
"HEREWITH" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, subsection, paragraph,
Schedule and Exhibit references are to the Articles, Sections, subsections,
paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified;
(vii) the word "OR" shall not be exclusive; (viii) the Purchaser's due diligence
activities with respect to the Businesses and the Purchased Assets, as well as
the preparation and review of any Schedules hereto, shall not relieve any of the
Sellers of any liability or obligation hereunder with respect to any
representation or warranty of the Sellers or otherwise, and the Purchaser shall
be deemed not to have relied on such due diligence, and (ix) provisions shall
apply, when appropriate, to successive events and transactions.
Section 14.11 Enforcement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any federal
court sitting in the State of New York or in any New York state court, in either
case, located in New York City, in addition to any other remedy to which any
party is entitled at law or in equity.
90
<PAGE> 98
Section 14.12 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties and delivered to each of the Sellers and the
Purchaser.
Section 14.13 Arbitration.
(a) Dispute Resolution. Except as otherwise expressly provided
herein, all controversies, disputes or claims arising among the parties in
connection with, or with respect to, any provision of this Agreement which has
not been resolved within twenty (20) days after either the Purchaser, on the one
hand, or the Sellers, on the other hand, have notified the other in writing of
such controversy, dispute or claim, shall be submitted for arbitration in
accordance with the rules of the American Arbitration Association or any
successor thereof. Arbitration shall take place at an appointed time and place
in New York, New York.
(b) Selection of Arbitrators. The Purchaser, on the one hand,
and the Sellers, on the other hand each shall select one arbitrator (who shall
not be counsel for such party), and the two so designated shall select a third
arbitrator. If either party shall fail to designate an arbitrator within seven
calendar days after arbitration is requested, or if the two arbitrators shall
fail to select a third arbitrator within 14 calendar days after arbitration is
requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. Judgment
upon any award of the majority of arbitrators shall be binding and shall be
entered in a court of competent jurisdiction. Subject to the provisions of this
Agreement, the award of the arbitrators may grant any relief that a court of
general jurisdiction has authority to grant, including, without limitation, an
award of damages and/or injunctive relief, and shall assess, in addition, the
cost of the arbitration, including the reasonable fees of the arbitrator,
reasonable attorneys' fees and costs of all prevailing parties, against all
non-prevailing parties.
(c) Temporary Injunctive Relief. Nothing herein contained
shall bar the right of any of the parties to seek and obtain temporary
injunctive relief from a court of competent jurisdiction in accordance with
applicable law against threatened conduct that will cause loss or damage,
pending completion of the arbitration, and the prevailing party therein shall be
entitled to an award of its reasonable attorneys' fees and costs.
(d) Arbitration Rules. All disputes and claims shall be
determined by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "RULES") in effect on the date hereof,
except that such Rules shall be modified by this Agreement.
(e) Arbitration Proceedings. All arbitration proceedings
arising under, or in connection with, this Agreement shall be governed by the
Federal Rules of Civil Procedure. Notwithstanding the previous sentence, the
arbitrators' award shall be made no later than ninety (90) days after their
appointment. Subject to the parties' right to be treated fairly, the arbitrators
may shorten the periods of time otherwise applicable to the arbitral proceedings
under the Rules
91
<PAGE> 99
or the Federal Rules of Civil Procedure to permit the award to be made within
the time limitation set forth in the previous sentence.
Section 14.14 Obligations of the Sellers. Anything herein to
the contrary notwithstanding, each of the Sellers (including AMRESCO, INC.)
shall be jointly and severally liable for any and all liabilities, obligations,
covenants and agreements of each other Seller hereunder and under the Related
Documents (regardless of which Seller is named as the party to any Related
Document).
92
<PAGE> 100
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representatives as of the day
and year first above written.
AMRESCO, INC.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chairman of the Board and
Chief Executive Officer
AMRESCO MANAGEMENT, INC.
By: /s/ ROBERT L. ADAIR III
----------------------------------------
Name: Robert L. Adair III
Title: Chief Executive Officer
AMRESCO SERVICES, L.P.
By: AMRESCO Mortgage Capital, Inc., its
General Partner
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO CAPITAL, L.P.
By: AMRESCO Mortgage Capital, Inc., its
General Partner
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
93
<PAGE> 101
HOLLIDAY FENOGLIO FOWLER, L.P.
By: AMRESCO Mortgage Capital, Inc., its
General Partner
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO COMMERCIAL FINANCE, INC.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO-INSTITUTIONAL, INC.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO MORTGAGE CAPITAL, INC.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO EQUITY INVESTMENTS II, INC.
By: /s/ ROBERT L. ADAIR III
----------------------------------------
Name: Robert L. Adair III
Title: President
94
<PAGE> 102
AMRESCO EQUITIES CANADA INC.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO SECURITIES, INC.
By: /s/ LOUIS DEREK DRIVER
----------------------------------------
Name: Louis Derek Driver
Title: President
AMRESCO PORTFOLIO INVESTMENTS, INC.
By: /s/ ROBERT L. ADAIR III
----------------------------------------
Name: Robert L. Adair III
Title: Chief Executive Officer
AMRESCO FINANCIAL I, L.P.
By: AMRESCO Principal Managers II, Inc.
By: /s/ ROBERT H. LUTZ, JR.
----------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chief Executive Officer
AMRESCO PRINCIPAL MANAGERS II, INC.
By: /s/ L. KEITH BLACKWELL
----------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
LEND LEASE (US) SERVICES, INC.
By: /s/ MATTHEW S. BANKS
----------------------------------------
Name: Matthew S. Banks
Title: President
95
