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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):
MARCH 17, 2000
AMRESCO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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State of Delaware 0-8630 59-1781257
(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
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700 North Pearl Street, Suite 1900
Dallas, Texas 75201-7424
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (214) 953-7700
700 North Pearl Street, Suite 2400
Dallas Texas 75201-7424
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) 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 which
agreement was amended on March 17, 2000 (as amended, 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 encompassed both the
domestic and international operations of the Businesses, other than those
Business operations conducted in Europe. This sale was completed on March 17,
2000.
Purchase Price. The gross, unadjusted purchase price for the Businesses
was approximately $248.6 million (the "CONSIDERATION"). The Consideration was
increased by an amendment to the Purchase Agreement to reflect certain
additional investments made prior to closing that inure to the benefit of Lend
Lease. The Consideration is comprised of approximately $223.6 million of cash
payable at closing (subject to certain adjustments and holdbacks described
below) and an unsecured, non-negotiable promissory note of Lend Lease (the
"NOTE") aggregating $25.0 million. The Consideration received at closing was
adjusted for estimated increases or decreases in the net working capital of the
Businesses, decreases in the estimated revenues to be received by Lend Lease
pursuant to certain servicing agreements as a result of pre-closing asset sales
and estimated enumerated expenditures and investments made by the Company prior
to closing that inure to Lend Lease's benefit. The cash paid at closing, after
adjustments of $1.2 million and holdbacks of $50.0 million, was $202.7 million
(including an advance by Lend Lease of $4.0 million against the holdback which
advance was repaid effective March 22, 2000). 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 was 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 is 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. Lend Lease acquired substantially all of the assets
(the "PURCHASED ASSETS") used in the Businesses. The Purchased Assets include
the Businesses' real property,
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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 were conveyed as well as the equity interests of certain
co-investments related to the Businesses and certain foreign subsidiaries. Lend
Lease will assume certain liabilities associated with the Purchased Assets. With
certain exceptions, Lend Lease did not acquire 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 assumed 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 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 occurred
upon the satisfaction or waiver of various conditions to closing. Lend Lease's
closing conditions included, 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.
Covenants. The Purchase Agreement contains various pre-closing and
post-closing covenants customary for an asset sale. 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.
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
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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.
Management Agreement. At closing, Lend Lease entered into an Asset
Management and Servicing Agreement (the "MANAGEMENT AGREEMENT") with the
Company. Pursuant to the Management Agreement, Lend Lease will manage for the
Company various financial and other assets held by the Company, including
commercial and industrial loans, commercial and multi-family real estate
(including partnership and other equity interests therein) and commercial and
multi-family real estate loans. The assets were originated and managed by the
Businesses acquired by Lend Lease. The services provided by Lend Lease include
advisory, consultation, management, servicing and disposition services. The
Management Agreement is similar in its terms to the management agreements that
the Company previously entered into with third parties in respect of the same
type of assets. The Management Agreement has an initial term of three years
subject to automatic annual renewals at the Company's election.
Transition Agreements. Lend Lease and the Company also entered into a
Transition Services Agreement (the "TRANSITION AGREEMENT") and an Information
Technology Transition Services Agreement (the "IT Transition Agreement") at
closing. The Transition Agreement requires Lend Lease to provide general
administrative services to the Company, including mail and courier services,
copier support, office supplies, office building support and telephone and
travel services. Lend Lease will be paid a monthly fee of $17,500, plus any
out-of-pocket expenses incurred in providing the above services. The Transition
Agreement expires on December 31, 2000, unless earlier terminated by the Company
or extended by the Company, at its election, for up to an additional 10 months.
Under the IT Services Agreement, the Company and Lend Lease have agreed
to formulate a structured plan (the "SEPARATION PLAN") to separate the
intellectual property, computer software, computer hardware and other
information technology assets that were sold to Lend Lease from those items that
were retained by the Company. In order to address information technology needs
that are not adequately solved by the Separation Plan, either party may request
that the other party provide information technology services on an as-needed
basis. The IT Services Agreement will terminate, unless extended by Lend Lease,
at the earlier of the completion of the Separation Plan or 180 days from the
date of the IT Services Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
The pro forma financial information required by this item shall be
filed as soon as practicable by amendment to this Form 8-K, but in no
event later than May 31, 2000.
(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
Purchase Agreement Fenoglio Fowler, L.P., AMRESCO Commercial
Finance, Inc., AMRESCO-Institutional, INC., AMRESCO Mortgage
Capital, Inc., AMRESCO Equity
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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., filed as an exhibit to the
Company's Current Report on Form 8-K filed with the Securities
and Exchange Commission on January 11, 2000, which exhibit is
incorporated herein by reference.
2.2 Amendment No. 1 to Asset Purchase Agreement,
dated as of March 17, 2000, amending the Asset Purchase
Agreement dated as of December 8, 1999, among the Company,
certain of its subsidiaries and Lend Lease (US) Services, Inc.
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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: March 31, 2000 By: /s/ L. KEITH BLACKWELL
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Name: L. Keith Blackwell
Title: Senior Vice President, General
Counsel, and Secretary
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EXHIBIT INDEX
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Exhibit
Number Description
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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., filed as an exhibit
to the Company's Current Report on Form 8-K filed with
the Securities and Exchange Commission on January 11,
2000, which exhibit is incorporated herein by
reference.
2.2 Amendment No. 1 to Asset Purchase Agreement, dated as
of March 17, 2000, amending the Asset Purchase
Agreement dated as of December 8, 1999, among the
Company, certain of its subsidiaries and Lend Lease
(US) Services, Inc.
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EXHIBIT 2.2
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
This Amendment No. 1 to Asset Purchase Agreement (this "Amendment"), is
entered into as of March 17, 2000, by and among AMRESCO, INC., a Delaware
corporation ("AMRESCO"), 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").
RECITALS
A. Sellers, ASI, AEI and Lend Lease entered into that certain Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of
December 8, 1999, pursuant to which, among other things, Sellers agreed
to sell the Purchased Assets (as defined in the Asset Purchase
Agreement) to Lend Lease.
B. Sellers, ASI, AEI and Lend Lease desire to amend the terms of the Asset
Purchase Agreement as set forth in this Amendment.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained in this Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, intending to be legally bound, the parties hereby agree as
follows:
1. References; Defined Terms.
(a) Unless otherwise specifically defined herein, each term used
herein which is defined in the Asset Purchase Agreement has
the meaning assigned to such term in the Asset Purchase
Agreement. Each reference to "hereof", "hereunder", "herein",
"hereby" and each other similar reference and each reference
to "this Agreement" and each other similar reference contained
in the Asset Purchase Agreement shall from and after the
effectiveness of this Amendment refer to the Asset Purchase
Agreement as amended hereby, except in any instance in the
Asset Purchase Agreement where any such reference relates to
the date of the execution of the Asset Purchase Agreement, in
which instance such reference shall relate to the Asset
Purchase Agreement, without amendment hereby.
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(b) The definition of the term "Sellers" in Section 1.1 of the
Asset Purchase Agreement is hereby amended by deleting the
entities "ASI" and "AEI" from the second line thereof.
2. Purchase Price. In order to reflect (i) Amresco's acquisition of the
Norwest 99-5 loan portfolio purchased by Granite Equities, Inc. for
$1,008,000, and (ii) additional investments by Amresco Japan Portfolio
Investments, Inc. in the Asahi 99-001 loan portfolio in the amount of
$62,885, the parties hereby amend Section 3.1 of the Agreement as
follows:
(a) The aggregate Purchase Price amount in the second line thereof
is hereby changed from "$247.5 million" to "$248,570,885"; and
(b) The amount of the Cash Consideration in clause (ii) thereof is
hereby changed from "$222.5 million" to "$223,570,885".
3. Teachers. Notwithstanding anything contained in the Agreement or any
Schedule or Exhibit thereto to the contrary, the parties hereby agree
as follows:
(a) Item 2 on Schedule 4.3(b) is hereby deleted in its entirety
and, in lieu thereof, the following is hereby added to the
Agreement as new Section 3.2(c):
(c) TIAA Post-Closing Adjustment. The parties acknowledge and
agree that the consent required in connection with Sellers'
business relationship under the existing TIAA Private Label
Securitization Program, pursuant to which, among other things,
Sellers originate, underwrite, close and securitize loans for
TIAA (the "TIAA Private Label Program"), has not been obtained
prior to the Closing and, accordingly, (x) $6.4 million is
hereby deducted from the Purchase Price and the Cash
Consideration and (y) the TIAA Private Label Program shall
continue to be operated by Sellers subject to and in
accordance with the terms hereof until the sooner to occur of
June 30, 2000 or the date on which the securitization of
fourth "Pool" under the TIAA Private Label Program ("Pool IV")
shall have been finally completed and the TIAA Put Right (as
defined below) shall have expired or been exercised (as the
case may be, the "TIAA Expiration Date"). The parties further
agree that if, prior to the TIAA Expiration Date, Purchaser
and TIAA enter into a definitive written agreement (the "TIAA
Agreement") on terms mutually satisfactory to both TIAA and
Purchaser setting forth the terms of Purchaser's business
relationship with TIAA which will replace AMRESCO's existing
business relationship with TIAA under the TIAA Private Label
Program (including, among other things, the form thereof, the
volume thereunder, fee arrangements, and terms regarding
warehousing lines, representations and warranties and other
matters deemed appropriate by Purchaser), then (i) Purchaser
shall pay to ACLP $5 million (less the net present value of
all management incentive payments made to any TIAA Employees
under Section 6.2 of the Agreement) promptly after entering
into the TIAA Agreement and (ii) simultaneously with such
payment, Sellers shall assign and transfer to Purchaser any
contracts and other assets relating to the TIAA Program, the
TIAA Private
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Label Program and/or Pool IV which Purchaser shall request
(with any such transfer and assignment to be accomplished with
documentation in the same form as the documentation pursuant
to which other Purchased Assets are transferred and assigned
at Closing). The Sellers agree to cooperate with Purchaser in
connection with the negotiation between Purchaser and TIAA and
the execution of the TIAA Agreement and, at Purchaser's
reasonable request, shall use their reasonable best efforts to
take all actions that Purchaser shall deem necessary or
appropriate in connection therewith.
From and after the Closing until the TIAA Expiration
Date, AMRESCO shall (i) use its reasonable best efforts to
continue operating the TIAA Private Label Program in the
ordinary course of business, consistent with past practice and
(ii) receive all income, bear all costs and expenses, and be
responsible for all obligations and liabilities, associated
with the TIAA Private Label Program for the period between the
Closing Date and the TIAA Expiration Date. In furtherance of
the immediately preceding sentence, Purchaser shall promptly
pay over to AMRESCO any income received by Purchaser to which
AMRESCO is entitled pursuant to the immediately preceding
sentence, and AMRESCO shall indemnify Purchaser and its
affiliates against and promptly (and, in any event, prior to
the TIAA Expiration Date) reimburse to Purchaser any costs,
expenses and/or liabilities incurred by Purchaser or any of
its Affiliates (including salaries, benefits, occupancy costs
and other similar costs relating to the TIAA Employees (as
defined below), as further set forth below) which relate to
the operation of the TIAA Private Label Program prior to the
TIAA Expiration Date. Sellers shall make and be solely
responsible and liable for, and Purchaser shall have no
obligation or liability in connection with, all
representations and warranties to TIAA relating to TIAA Pool
IV. In addition, without limiting the generality of the other
provisions hereof, Sellers shall be solely responsible and
liable for, and Purchaser shall have no obligation to satisfy
nor any liability in connection with TIAA's one day put right
in connection with Pool IV which is set forth in the TIAA-CSFB
Mortgage Conduit Warehouse Program, Securities Purchase
Agreement, dated January 31, 1997 (the "TIAA Put Right").
After the Closing Date, Purchaser shall become the
employer of Seller's employees who prior to the Closing Date
have had responsibility for managing or supervising the
Sellers' TIAA Private Label Program, a list of which is
attached hereto as Schedule 3.2(c) (the "TIAA Employees"), if
Purchaser and the TIAA Employees can reach a mutually
satisfactory agreement on compensation and benefits. Purchaser
shall subcontract the TIAA Employees back to Sellers in order
that the TIAA Employees can continue to manage or supervise
the TIAA Private Label Program as operated by Sellers and as
contemplated by this Section 3.2(c). Purchaser will provide
the TIAA Employees to Sellers on such subcontracting basis
until the TIAA Expiration Date. Sellers shall be responsible
for reimbursing Purchaser within 30 days of receipt of a
reasonably itemized invoice or invoices therefor for all
employment-related costs associated with the TIAA Employees
during the time the TIAA Employees are subcontracted to
Sellers as described in this Section 3.2(c). This
reimbursement obligation shall
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include, but not be limited to, costs associated with all
compensation and benefits provided to the TIAA Employees,
occupancy costs and other similar costs relating to the TIAA
Employees. In addition, Sellers will indemnify Purchaser and
its affiliates for all costs and liabilities associated with
any and all legal claims that the TIAA Employees may bring
against Purchaser or any of its affiliates relating to or
arising from their subcontract work or termination of this
subcontract work for Sellers, including, but not limited to,
court costs and attorneys' fees. If a satisfactory agreement
cannot be reached between Purchaser and TIAA by the TIAA
Expiration Date, the TIAA Employees may either (1) terminate
their employment with Purchaser or (2) continue to work for
Purchaser in another capacity if Purchaser should decide to
continue to employ the TIAA Employees.
In the event that the TIAA Agreement is not entered
into by the TIAA Expiration Date, then Purchaser shall have no
obligation to make the $5 million payment (less the net
present value of all management incentive payments made to any
TIAA Employees under Section 6.2 of the Agreement) described
in this Section 3.2(c) and shall have no obligation, liability
or responsibility whatsoever with respect to TIAA or the TIAA
Private Label Program, and AMRESCO shall be solely responsible
for, and shall promptly pay, any severance or related costs to
the TIAA Employees which result from their termination by
Purchaser or its Affiliates. For avoidance of doubt, the
severance and related costs referred to in the preceding
sentence shall include amounts arising under Purchaser's or
its affiliates employee severance-related policies in effect
on the Closing Date, including, without limitation, any
severance costs or amounts arising from the transactions
contemplated hereby (collectively, "LL Existing Severance
Benefits"), but shall not include any other severance costs
that Purchaser or any of its affiliates may, after the Closing
Date, offer to any TIAA Employee in excess of the LL Existing
Severance Benefits.
Any and all costs, expenses or liabilities for which
AMRESCO is responsible or liable under this Section 3.2(c)
(including, without limitation, severance costs or other
payments to any TIAA Employees and any and all liabilities
under or relating to Pool IV or any representations made to
TIAA in connection therewith or the TIAA Put Right) shall be
deemed to be Excluded Liabilities against which Purchaser
shall be indemnified by Sellers pursuant to Section 12.2
hereof.
4. Thailand. Sellers agree that it shall be a condition to the transfer of
Sellers' Thailand assets which are part of the Purchased Assets, and
which assets are set forth on Schedule 2.1(a)(xix) (and, accordingly,
to Purchaser's obligation to pay the Closing Date Adjustment associated
therewith ($5 million), as set forth on Schedule 4.3(b)) that Sellers
cause each of the following to occur within the time period
contemplated by clause (i) of Section 3.2(b) of the Agreement: (i) all
servicing agreements to which Amresco (Thailand) Ltd. is a party shall
be transferred to Pavilion Asset Management, Ltd. , after which
transfer the transferred agreements shall be on the same terms as
currently in effect, without adverse effect to the terms thereof or the
rights being sought by Purchaser hereunder; and (ii) Sellers shall own
(and shall transfer to Purchaser or its designee) not
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less than 39% of the aggregate equity interests in Pavilion Asset
Management, Ltd. Sellers agree to use their respective reasonable best
efforts to cause the foregoing matters set forth in clauses (i) and
(ii) to occur as promptly as practicable after the Closing. Upon
satisfaction (or waiver by Purchaser in its sole discretion) of the
foregoing conditions, Sellers shall assign and transfer to Purchaser or
its designee all of Sellers' Thailand assets by executing transfer and
assignment documents substantially in the form of the transfer and
assignment documents pursuant to which other Purchased Assets are being
transferred and assigned to Purchaser at the Closing.
5. Japan. The parties acknowledge and agree that the consents required in
connection with the transfer of Sellers' Japanese assets (as set forth
under Item 4 on Schedule 4.3(b) to the Agreement), which assets are
included in the Purchased Assets, have not been obtained prior to the
Closing and, accordingly, $5 million is hereby deducted from the
Purchase Price and the Cash Consideration in accordance with the terms
of Section 3.2 of the Agreement until such time as all such consents
contemplated by Item 4 of Schedule 4.3(b) shall have been obtained by
the parties. In the event that the parties shall fail to obtain the
required consents prior to the first anniversary of the Closing Date
(as contemplated by clause (i) of Section 3.2(b) of the Agreement),
Purchaser shall reassign to Sellers the rights (subject to assumption
by Sellers of all associated liabilities) to Sellers' Japanese assets
which are being assigned to Purchaser (or its designee) at Closing;
provided, however, that in the event of such reassignment, Sellers
shall pay to Purchaser an amount in cash, by wire transfer to an
account to be designated by Purchaser in writing, equal to the sum of
(x) the amount of net working capital in respect of Sellers' Japanese
assets, which amount was included in the Net Working Capital for
purposes of the NWC Adjustment, plus (y) $1,362,000, representing the
amounts previously paid by Purchaser for Sellers' Japanese
Co-Investment Entities set forth on Schedule 2.1(a)(xix).
6. DUS Reserve. The following is hereby inserted into the Agreement as
Section 14.15 thereof:
Section 14.15. DUS Reserve. Without limiting any other
provision of this Agreement, Sellers shall pay to Purchaser within two
business days of Purchaser's demand therefor and shall indemnify
Purchaser against any and all costs, losses, damages or liabilities of
whatsoever nature incurred or suffered by Purchaser, directly or
indirectly and whether matured or contingent, in respect of DUS Loan
No. 40030543 (the so-called Overlook at Murray Hill loan) (the
"Overlook Loan") in excess of the $688,420 reserve existing as of the
date hereof in respect of the Overlook Loan. Notwithstanding any
provision hereof or of the Holdback Note to the contrary and without
limiting Purchaser's other remedies or the other provisions hereof, (x)
if Sellers shall fail to pay any such amount owing under this Section
when due, Purchaser shall be entitled to immediately offset such amount
against the indebtedness owing under the Holdback Note by deducting the
amount owing from the principal balance under the Holdback Note and (y)
the aforedescribed costs, losses, damages and liabilities shall
constitute Excluded Liabilities hereunder. Claims pursuant to the
indemnity provided by this Section shall not be made after the third
anniversary of the Closing Date.
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7. Intellectual Property. Section 10.15 is hereby amended by inserting the
following at the end thereof:
(c) The Purchaser desires to acquire from the Sellers, and the
Sellers desire to transfer to the Purchaser, all of the Sellers' rights
to use and exploit the additional software applications set forth on
Schedule 10.15(c). The Purchaser and the Sellers shall, until the first
anniversary of the Closing Date, use their reasonable best efforts to
obtain any and all consents necessary for Purchaser to use and exploit
such additional software applications; however, Sellers shall have no
obligation to obtain such consents at, prior to or after the Closing
Date.
8. Indemnification. Section 12.2 is hereby amended as follows:
(a) The "or" at the end of clause (d) is deleted;
(b) At the end of clause (e), replace the "." with "; or"; and
(c) Insert the following as new clause (f):
(f) Any loss or liability of Purchaser or any of its
affiliates owing to USL Capital Corporation, Mellon US
Leasing, a Division of Mellon Leasing Corporation or any of
their respective affiliates or assigns, or any other loss or
liability of whatever nature of Purchaser or any of its
affiliates arising by reason of the execution and delivery of
that certain Sublease, dated as of March 17, 2000, between
Amresco, Inc. , Mellon US Leasing and Lend Lease Real Estate
Investments, Inc. of that certain Master Lease Agreement,
dated as of December 18, 1995, between USL Capital Corporation
and Amresco, Inc., as amended by Amendment No. 1 thereto (the
"Sublease"), without the prior written consent of Mellon
Leasing Corporation. Notwithstanding anything herein to the
contrary, claims for indemnification under this clause (f)
shall not be subject to either the Basket under Section
12.7(a) or the Sellers' indemnification cap under Section
12.7(c).
9. Loan and Security Agreement. In consideration of Purchaser's loan in
such amount to Sellers, Sellers, for value received, hereby promise to
pay to Purchaser on March 1, 2001 or upon any earlier date upon which
Sellers or any of them may become the subject of a petition under the
Bankruptcy Code, Title 11 United States Code (the earlier of such
dates, the "Maturity Date"), $4,000,000.00 (the "Loan Amount") together
with interest on the Loan Amount at the rate of 7.5% per annum,
compounded monthly, in immediately available funds, in accordance with
the terms of this paragraph. Both before and after the Maturity Date,
Purchaser shall at its election be entitled to repayment of the Loan
Amount and interest accrued thereon from, and any amounts owing
hereunder shall, at Purchaser's election, be offset against and
deducted from, any amounts owing by Purchaser to Sellers or their
Affiliates under the Asset Purchase Agreement, the Holdback Note or any
other agreements or arrangements (including, without limitation, any
amounts which might be owing to Sellers after the Closing Date under
the provisions of this Amendment). If the Loan Amount shall not have
been paid in full by the Maturity
<PAGE> 7
Date or if Sellers shall not be in compliance with the covenant set
forth in the last sentence of this paragraph, Sellers shall be in
default hereunder and shall owe interest on the Loan Amount at the
lower of 18% per annum and the highest rate permitted under applicable
law, and Purchaser shall be entitled to exercise all remedies available
under the Asset Purchase Agreement or at law or in equity to collect
the amounts owing, including without limitation by enforcing its rights
under the security interests and liens granted pursuant to this
paragraph. Sellers hereby grant to Purchaser a security interest and
lien in all Purchased Assets which are not transferred to Purchaser on
the date hereof to secure the Loan Amount and agrees promptly to take
such actions as Purchaser may request to confirm and perfect such
security interest and lien.
10. No Liability. Notwithstanding anything contained in this Amendment,
neither Purchaser nor any of its affiliates shall have any liability
with respect to any Purchased Assets until such time as the Purchased
Assets are transferred to Purchaser in accordance with the Agreement
(as modified by this Amendment) and, upon such transfer, such
assumption of liability by Purchaser or any of its affiliates shall be
limited to Assumed Liabilities.
11. Reasonable Best Efforts. From and after the date hereof until the first
anniversary of the date hereof, Sellers shall exercise their reasonable
best efforts to cause all conditions to the transfer to the Purchaser
(or its designee) of all businesses and Purchased Assets that are the
subject of Closing Date Adjustments to be satisfied and, during the
period from and after the date hereof and prior to the transfer
thereof, Sellers shall operate such businesses or Purchased Assets in
the ordinary course of business, consistent with past practice.
12. No Other Changes; No Waiver. Except as expressly amended by the
foregoing, the Asset Purchase Agreement shall remain in full force and
effect. Nothing contained herein shall be construed as a release or
waiver of any provision of the Asset Purchase Agreement, nor in any way
be construed to affect the validity or enforceability of any provision
or part thereof, or the right of any party hereafter to enforce each
and every provision of the Asset Purchase Agreement (except as
expressly modified or amended by the foregoing).
13. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, and all of
which together shall constitute one and the same instrument.
14. Effectiveness. This Amendment shall become effective when each party
hereto shall have received counterparts hereof signed by all the other
parties hereto.
* * *
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed by its duly authorized representatives as of the day
and year first above written.
AMRESCO, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO MANAGEMENT, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO SERVICES, L.P.
By: AMRESCO Mortgage Capital, Inc.,
its General Partner
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO CAPITAL, L.P.
By: AMRESCO Mortgage Capital, Inc., its
General Partner
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
<PAGE> 9
HOLLIDAY FENOGLIO FOWLER, L.P.
By: AMRESCO Mortgage Capital, Inc., its
General Partner
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO COMMERCIAL FINANCE, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO-INSTITUTIONAL, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO MORTGAGE CAPITAL, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO EQUITY INVESTMENTS II, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO EQUITIES CANADA INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
<PAGE> 10
AMRESCO SECURITIES, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO PORTFOLIO INVESTMENTS, INC.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
AMRESCO FINANCIAL I, L.P.
By: AMRESCO Principal Managers II, Inc.
By: /s/ L.Keith Blackwell
---------------------------------------------
Name: L. Keith Blackwell
Title: Senior Vice President
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/ Pamela G. Griffin
---------------------------------------------
Name: Pamela G. Griffin
Title: Vice President
