1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
among
QUALITY MORTGAGE USA, INC.
CALMAC FUNDING
DLJ MORTGAGE CAPITAL, INC.
DLJ QUALITY PARTNERS, L.P.
XXXXXXX XXXXXXX
XXXXXXX XXXXXXX
and
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
October 9, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE 1 Purchase and Sale of the Assets . . . . . . . . . . . . 2
1.1 Purchase and Sale of the Assets . . . . . . . . . . . . 2
1.2 Consideration for Purchase and Sale . . . . . . . . . . 2
(a) Closing Payment . . . . . . . . . . . . . . . . . 2
(b) Buyer's Assumption of Liabilities . . . . . . . . 2
(c) Buyer's Assumption of Contracts . . . . . . . . . 2
1.3 The Company's Retention of Liabilities . . . . . . . . . 3
1.4 Allocation of Closing Payment . . . . . . . . . . . . . 3
1.5 Escrow for Purchase Price Adjustment . . . . . . . . . . 3
ARTICLE 2 Closing The Transaction . . . . . . . . . . . . . . . . 4
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Sellers' Deliveries at Closing . . . . . . . . . . . . . 5
(a) Xxxx of Sale . . . . . . . . . . . . . . . . . . 5
(b) Real Property . . . . . . . . . . . . . . . . . . 5
(i) Title Policies . . . . . . . . . . . . . . 5
(ii) Deeds, Etc. . . . . . . . . . . . . . . . 5
(iii) Surveys . . . . . . . . . . . . . . . . . 5
(c) Account Transfer Documents . . . . . . . . . . . 5
(d) Other Instruments . . . . . . . . . . . . . . . . 6
(e) Consents . . . . . . . . . . . . . . . . . . . . 6
(f) Closing Certificates . . . . . . . . . . . . . . 6
(g) Proceedings and Documents . . . . . . . . . . . . 6
(h) Good Standing Certificates . . . . . . . . . . . 6
(i) Certificates of No Tax Due . . . . . . . . . . . 6
(j) Estoppel Certificates . . . . . . . . . . . . . . 7
(k) Lien Releases . . . . . . . . . . . . . . . . . . 7
(l) Name Change . . . . . . . . . . . . . . . . . . . 7
(m) Opinions of Sellers' Counsels . . . . . . . . . . 7
(n) Certificates and Notes . . . . . . . . . . . . . 7
(o) Sales Tax Certification . . . . . . . . . . . . . 8
(p) Releases . . . . . . . . . . . . . . . . . . . . 8
(q) Articles, Resolutions, and Incumbency . . . . . . 8
(r) Corporate Records . . . . . . . . . . . . . . . . 8
(s) Other Instruments . . . . . . . . . . . . . . . . 8
2.3 Buyer's Deliveries at Closing. . . . . . . . . . . . . . 8
(a) The Closing Payment . . . . . . . . . . . . . . . 8
(b) Closing Certificate . . . . . . . . . . . . . . . 8
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TABLE OF CONTENTS (Cont'd)
Page(s)
(c) Consents. . . . . . . . . . . . . . . . . . . . . 8
(d) Opinion of Buyer's Counsel . . . . . . . . . . . . 8
(e) Articles, Resolutions and Incumbency . . . . . . . 9
(f) Payment for DLJ Lien Release . . . . . . . . . . . 9
(g) Other Instruments . . . . . . . . . . . . . . . . . 9
2.4 Related Agreements . . . . . . . . . . . . . . . . . . . . 9
(a) Assignment and Assumption Agreements . . . . . . . 9
(b) Noncompetition Agreements . . . . . . . . . . . . . 9
(c) Credit Agreement . . . . . . . . . . . . . . . . . 9
(d) Escrow Agreement . . . . . . . . . . . . . . . . 10
ARTICLE 3 Conditions To Consummating The Transaction . . . . . . . 10
3.1 Joint Conditions . . . . . . . . . . . . . . . . . . . . 10
(a) HSR Act . . . . . . . . . . . . . . . . . . . . . 10
(b) No Litigation . . . . . . . . . . . . . . . . . . 10
(c) Related Agreements . . . . . . . . . . . . . . . 10
3.2 Buyer's Conditions . . . . . . . . . . . . . . . . . . . 10
(a) Sellers' Representations True . . . . . . . . . . 10
(b) Sellers' Compliance with Agreement . . . . . . . 11
(c) Sellers' Consents . . . . . . . . . . . . . . . . 11
(d) Permits . . . . . . . . . . . . . . . . . . . . . 11
(e) Express Acquisition . . . . . . . . . . . . . . . 11
(f) Agent for Service of Process . . . . . . . . . . 12
(g) Corporate Records . . . . . . . . . . . . . . . . 12
3.3 Sellers' Conditions to Closing . . . . . . . . . . . . . 12
(a) Buyer's Representations True . . . . . . . . . . 12
(b) Buyer's Compliance with Agreement . . . . . . . . 12
(c) Buyer Consents . . . . . . . . . . . . . . . . . 12
ARTICLE 4 Joint Covenants to Satisfy Conditions and Consummate the
Transaction . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Defending the Agreement . . . . . . . . . . . . . . . . 12
4.2 Lifting Injunctions . . . . . . . . . . . . . . . . . . 13
4.3 Other Actions . . . . . . . . . . . . . . . . . . . . . 13
4.4 HSR Act Filings . . . . . . . . . . . . . . . . . . . . 13
4.5 Scheduled Closing . . . . . . . . . . . . . . . . . . . 13
4.6 Cooperation. . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 Termination . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Reasons for Termination . . . . . . . . . . . . . . . . 13
(a) By Mutual Consent . . . . . . . . . . . . . . . . 13
(b) By the Buyer . . . . . . . . . . . . . . . . . . 13
(c) By Sellers . . . . . . . . . . . . . . . . . . . 14
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TABLE OF CONTENTS (Cont'd)
Page(s)
(d) Drop-Dead Date . . . . . . . . . . . . . . . . . 14
5.2 Notice of Problems . . . . . . . . . . . . . . . . . . . 14
5.3 Buyer Termination Procedure . . . . . . . . . . . . . . 14
5.4 Sellers' Termination Procedure . . . . . . . . . . . . . 14
5.5 Effect of Termination . . . . . . . . . . . . . . . . . 15
ARTICLE 6 Representations and Warranties of Sellers . . . . . . . 15
6.1 Sellers; Entry Into Agreements . . . . . . . . . . . . . 15
(a) Organization and Good Standing . . . . . . . . . 15
(b) Corporate Power and Authority; Validity and
Authorization . . . . . . . . . . . . . . . . . 16
(c) Subsidiaries . . . . . . . . . . . . . . . . . . 17
(d) No Conflict . . . . . . . . . . . . . . . . . . . 17
(e) Sellers' Consents Required . . . . . . . . . . . 17
(f) HSR Act . . . . . . . . . . . . . . . . . . . . . 17
6.2 Financial Information . . . . . . . . . . . . . . . . . 18
(a) Financial Statements; Books and Records . . . . . 18
(b) Conduct of Business . . . . . . . . . . . . . . . 19
(c) No Adverse Change . . . . . . . . . . . . . . . . 20
(d) Acquired Assets . . . . . . . . . . . . . . . . . 20
6.3 Assets . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Personal Property . . . . . . . . . . . . . . . . 20
(i) Title . . . . . . . . . . . . . . . . . . 20
(ii) Notes and Accounts Receivable . . . . . . 21
(iii) Bank Accounts . . . . . . . . . . . . . . 21
(b) Real Property . . . . . . . . . . . . . . . . . . 21
(i) Fee Simple . . . . . . . . . . . . . . . . 21
(ii) Leases; Easements and Other Interests . . 21
(iii) Eminent Domain . . . . . . . . . . . . . . 22
(iv) Improvements . . . . . . . . . . . . . . . 22
(v) Real Property and Leased Premises Taxes . 23
(c) Intellectual Property . . . . . . . . . . . . . . 23
(i) Intellectual Property . . . . . . . . . . 23
(ii) Ownership . . . . . . . . . . . . . . . . 23
(iii) Trademarks . . . . . . . . . . . . . . . . 24
(iv) Trade Secrets . . . . . . . . . . . . . . 24
(d) Contracts . . . . . . . . . . . . . . . . . . . . 24
(e) Necessary Assets . . . . . . . . . . . . . . . . 25
6.4 Liabilities . . . . . . . . . . . . . . . . . . . . . . 25
(a) No Liabilities . . . . . . . . . . . . . . . . . 25
(b) Tax Matters . . . . . . . . . . . . . . . . . . . 25
(c) Litigation . . . . . . . . . . . . . . . . . . . 27
(d) Employee Liabilities . . . . . . . . . . . . . . 28
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TABLE OF CONTENTS (Cont'd)
Page(s)
6.5 Business . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Mortgage Banking Licenses and Qualifications . . 28
(b) Mortgage Loans . . . . . . . . . . . . . . . . . 28
(c) Enforceability . . . . . . . . . . . . . . . . . 29
(d) Title to Certain Mortgage Loans; Mortgage Loan
Conveyance Agreements . . . . . . . . . . 30
(e) No Recourse . . . . . . . . . . . . . . . . . . . 30
(f) Compliance with Mortgage Banking Regulations . . 31
(g) Physical Damage . . . . . . . . . . . . . . . . . 31
(h) Tax Identification . . . . . . . . . . . . . . . 32
(i) ARMs and Conversion Loans . . . . . . . . . . . . 32
(j) Mortgage Servicing . . . . . . . . . . . . . . . 32
(k) Subordinated and Residual Securitization
Certificates . . . . . . . . . . . . . . . . . . 33
(l) Insurance Operations . . . . . . . . . . . . . . 33
(m) Insurance . . . . . . . . . . . . . . . . . . . . 34
(n) Employees . . . . . . . . . . . . . . . . . . . . 34
(o) Worker's Compensation . . . . . . . . . . . . . . 35
(p) ERISA . . . . . . . . . . . . . . . . . . . . . . 35
(q) Affiliated Transactions . . . . . . . . . . . . . 35
(r) Legal Requirements . . . . . . . . . . . . . . . 35
(i) Compliance with Laws . . . . . . . . . . . 35
(ii) Certain Acts . . . . . . . . . . . . . . . 35
(iii) Bulk Sales . . . . . . . . . . . . . . . . 36
(s) Environmental Matters . . . . . . . . . . . . . . 36
(i) Compliance . . . . . . . . . . . . . . . . 36
(ii) Environmental Claims . . . . . . . . . . . 36
6.6 Other . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Documents Delivered . . . . . . . . . . . . . . . 37
(b) No Brokers Fees; No Commissions . . . . . . . . . 37
(c) Full Disclosure . . . . . . . . . . . . . . . . . 37
6.7 DLJ Stockholders' Knowledge . . . . . . . . . . . . . . 37
6.8 Calmac's and the Jedinaks' Knowledge . . . . . . . . . . 37
ARTICLE 7 Representations and Warranties of Buyer . . . . . . . . 38
7.1 Entry Into Agreements . . . . . . . . . . . . . . . . . 38
(a) Organization and Good Standing . . . . . . . . . 38
(b) Corporate Power and Authority; Validity and
Authorization . . . . . . . . . . . . . . . . . . 38
7.2 Conflicts and Consents . . . . . . . . . . . . . . . . . 38
(a) No Conflict . . . . . . . . . . . . . . . . . . . 38
(b) Buyer Consents Obtained . . . . . . . . . . . . . 38
7.3 No Brokers Fees; No commissions . . . . . . . . . . . . 39
7.4 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 39
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TABLE OF CONTENTS (Cont'd)
Page(s)
ARTICLE 8 Covenants of Sellers . . . . . . . . . . . . . . . . . . 39
8.1 Conduct of Businesses of the Company and the
Subsidiaries Pending Closing . . . . . . . . . . 39
8.2 Access to Information and Employees . . . . . . . . . . 40
8.3 No Solicitation . . . . . . . . . . . . . . . . . . . . 40
8.4 Financial Statements . . . . . . . . . . . . . . . . . . 40
8.5 Express Acquisition . . . . . . . . . . . . . . . . . . 40
8.6 Maintain Organization . . . . . . . . . . . . . . . . . 40
8.7 401k Plan Termination . . . . . . . . . . . . . . . . . 41
8.8 Cancellation of Jamboree Lease . . . . . . . . . . . . . 41
8.9 Assist in Obtaining Licenses, Etc . . . . . . . . . . . 41
8.10 Sellers' Consents . . . . . . . . . . . . . . . . . . . 41
8.11 Buyer Registration Statement . . . . . . . . . . . . . . 41
ARTICLE 9 Post-Closing Agreements . . . . . . . . . . . . . . . . 41
9.1 Further Actions . . . . . . . . . . . . . . . . . . . . 41
9.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . 42
9.3 Inspection of Records . . . . . . . . . . . . . . . . . 42
9.4 Agent for Service of Process . . . . . . . . . . . . . . 43
9.5 Use of Names . . . . . . . . . . . . . . . . . . . . . . 43
9.6 Employees . . . . . . . . . . . . . . . . . . . . . . . 43
9.7 Mortgage Loan Reporting . . . . . . . . . . . . . . . . 44
9.8 Maintain Insurance . . . . . . . . . . . . . . . . . . . 44
9.9 Non-Solicitation by Buyer . . . . . . . . . . . . . . . 44
9.10 Payment of Bonuses . . . . . . . . . . . . . . . . . . . 44
9.11 DLJ Stockholders' Nonsolicitation . . . . . . . . . . . 44
ARTICLE 10 Indemnification . . . . . . . . . . . . . . . . . . . . 45
10.1 Survival; Etc. . . . . . . . . . . . . . . . . . . . . . 45
(a) Contents of this Agreement . . . . . . . . . . . 45
(b) No Effect on Liability . . . . . . . . . . . . . 45
(c) Survival . . . . . . . . . . . . . . . . . . . . 46
(d) Commencing Actions . . . . . . . . . . . . . . . 46
(e) Allocation of Losses Among Sellers . . . . . . . 46
10.2 Indemnities . . . . . . . . . . . . . . . . . . . . . . 46
(a) Indemnification of Buyer and Buyerparent . . . . 46
(b) Indemnification of the Sellers . . . . . . . . . 47
(c) Duty to Mitigate; Insurance . . . . . . . . . . . 48
10.3 Limitations on Indemnities . . . . . . . . . . . . . . . 48
(a) Materiality . . . . . . . . . . . . . . . . . . . 48
(b) Cap . . . . . . . . . . . . . . . . . . . . . . . 49
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TABLE OF CONTENTS (Cont'd)
Page(s)
(c) Exclusions. . . . . . . . . . . . . . . . . . . . 49
10.4 Notice and Opportunity to Defend . . . . . . . . . . . . 49
(a) Notice, Etc . . . . . . . . . . . . . . . . . . . 49
(b) Defense Costs . . . . . . . . . . . . . . . . . . 50
(c) Third Party Claims . . . . . . . . . . . . . . . 50
10.5 Delays or Omissions . . . . . . . . . . . . . . . . . . 50
10.6 Governing Law; Attorneys' Fees . . . . . . . . . . . . . 50
10.7 Dispute Resolution . . . . . . . . . . . . . . . . . . . 51
(a) Arbitration . . . . . . . . . . . . . . . . . . . 51
(b) Emergency Relief . . . . . . . . . . . . . . . . 53
ARTICLE 11 Miscellaneous . . . . . . . . . . . . . . . . . . . . . 53
11.1 Successors and Assigns . . . . . . . . . . . . . . . . . 53
11.2 Entire Agreement; Amendment . . . . . . . . . . . . . . 53
11.3 Press Release . . . . . . . . . . . . . . . . . . . . . 53
11.4 Notices, Etc . . . . . . . . . . . . . . . . . . . . . . 54
11.5 No Third Party Beneficiary, Etc. . . . . . . . . . . . . 56
11.6 Reformation; Severability . . . . . . . . . . . . . . . 56
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 56
11.8 Titles and Subtitles . . . . . . . . . . . . . . . . . . 56
11.9 Power of Attorney . . . . . . . . . . . . . . . . . . . 56
11.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBIT 1.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 60
EXHIBIT 1.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 63
EXHIBIT 1.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
EXHIBIT 2.2(f)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 65
EXHIBIT 2.2(f)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 66
EXHIBIT 2.2(f)(3) . . . . . . . . . . . . . . . . . . . . . . . . . 67
EXHIBIT 2.3(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
October 9, 1996, by and among AMRESCO Residential Mortgage Corporation, a
Delaware corporation ("Buyer") (f/k/a "AMRESCO B&C, Inc."), on the one hand,
and Quality Mortgage USA, Inc., a California corporation (the "Company"); the
stockholders of the Company: Calmac Funding, a Nevada corporation ("Calmac"),
DLJ Mortgage Capital, Inc., a Delaware corporation ("DLJ") and DLJ Quality
Partners, L.P., a Delaware limited partnership ("DLJ Partners" and together
with DLJ, the "DLJ Stockholders"); and Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx,
residents of Las Vegas, Nevada and the sole stockholders of Calmac
(collectively, the "Jedinaks"), on the other hand. Calmac and the DLJ
Stockholders are sometimes collectively referred to herein as the
"Stockholders." The Company, the Stockholders and the Jedinaks are sometimes
collectively referred to herein as the "Sellers."
R E C I T A L S
A. Buyer desires to purchase and the Company desires to sell substantially
all of the assets, properties and rights of the Company used in, related
to or constituting the business of originating, purchasing, selling,
delivering and servicing residential mortgage loans as currently
conducted by the Company and the Subsidiaries (defined below) (said
business being the "Mortgage Business"). In connection therewith, Buyer
has agreed to assume certain liabilities and contractual obligations of
the Company.
B. Each Seller acknowledges that it has received adequate consideration for
entering into this Agreement and performing its obligations hereunder,
and that it will be benefitted by the transactions contemplated herein.
The parties acknowledge that Buyer would not have entered into this
Agreement without the participation, on the terms set forth herein, of
each Seller.
X. Xxxxxxx have delivered to Buyer a Disclosure Schedule (herein so called)
of even date herewith referred to herein. The Disclosure Schedule and
the Exhibits (herein so called) referred to herein are a part hereof.
A G R E E M E N T
Based on the recitals set forth above and the promises contained herein,
the parties agree as follows:
1
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ARTICLE 1.
Purchase and Sale of the Assets
1.1 Purchase and Sale of the Assets. Upon the terms and subject to
the conditions contained herein, and on the basis of the representations,
warranties, covenants and agreements set forth herein, at the Closing (defined
below), the Company shall sell, convey, transfer, assign and deliver to Buyer,
free and clear of Liens (defined below) and Retained Liabilities (defined
below), and Buyer shall purchase from the Company, substantially all of the
assets, properties and rights of the Company, whether or not reflected in the
Company Financial Statements (defined below) or the Express Financial
Statements (defined below) held by the Company or Express (defined below) at
the Closing Date (defined below) and used in, related to or constituting the
Mortgage Business (the "Acquired Assets"). The Acquired Assets include, but
are not limited to, the assets, properties and rights identified on Exhibit
1.1(a) to this Agreement. Notwithstanding the foregoing, the Acquired Assets
shall not include those assets identified on Exhibit 1.1(b) to this Agreement
or on an addendum to Exhibit 1.1(b) hereto executed by the parties hereto on or
prior to the Closing Date as "Retained Assets" (herein so called).
1.2 Consideration for Purchase and Sale.
(a) Closing Payment. At the Closing, as consideration for the
purchase and sale of the Acquired Assets, Buyer shall pay to the Company
$65,000,000 in immediately-available funds (the "Closing Payment"); provided,
however, that $62,000,000 of the Closing Payment will be paid in
immediately-available funds at the Closing and $3,000,000 of the Closing
Payment will be held in escrow as provided in Section 1.5 (Escrow for Purchase
Price Adjustment); provided further, that Buyer shall deliver by wire transfer
$1,520,518 of the Closing Payment (the "DLJ Fee") to an account designated in
writing by the DLJ Stockholders, which amount shall be deemed to be payment by
the Company to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ
Securities") of its obligations under the letter agreement dated March 18, 1996
among DLJ Securities and the Stockholders. The Closing Payment shall be
effected by wire transfer to an account or accounts designated in writing by
the Company to Buyer not later than the second business day prior to the
Closing Date.
(b) Buyer's Assumption of Liabilities. At the Closing, the
Company shall assign and Buyer shall assume only the liabilities specifically
set forth on Exhibit 1.2(b) to this Agreement (collectively, the "Assumed
Liabilities").
(c) Buyer's Assumption of Contracts. At the Closing, the
Company shall assign and Buyer shall assume the contracts listed on Exhibit
1.2(c) to this Agreement or on an addendum to Exhibit 1.2(c) executed by the
parties hereto on or prior to the Closing Date (collectively, the "Assumed
Contracts").
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1.3 The Company's Retention of Liabilities. Notwithstanding any
other provision of this Agreement, Buyer shall not assume, succeed to, be
liable for, be subject to or be obligated for, nor shall the Acquired Assets be
subject to, any liabilities, claims, contracts or obligations of any nature
whatsoever, whether known, unknown, absolute, accrued or contingent, or
otherwise which the Company is, or could become, subject to or liable for,
other than the Assumed Liabilities and the Assumed Contracts (the "Retained
Liabilities").
The Retained Liabilities are all liabilities, claims and obligations of
any nature whatsoever that are not specifically assumed by Buyer under this
Agreement or the Related Agreements (defined below), including but not limited
to liabilities, claims and obligations arising prior to Closing from or based
on contract, breach of contract, warranty, tort, strict liability, employment,
Environmental Claims (defined below), Taxes (defined below), law, violation of
law, the transfer of the Acquired Assets, or the operation of the Mortgage
Business. Notwithstanding Buyer's assumption of the Assumed Contracts, the
Retained Liabilities shall include any liabilities, claims or obligations based
on the Company's nonperformance or breach of, or misrepresentation under, the
Assumed Contracts prior to the Closing Date.
1.4 Allocation of Closing Payment. The Closing Payment (including
the assumption by Buyer of the Assumed Liabilities) shall be allocated among
the Acquired Assets for tax purposes in accordance with the Disclosure Schedule
to this Section, such Disclosure Schedule to be prepared by Buyer and approved
by Sellers prior to the Closing. Sellers and Buyer will follow and use such
allocation in all income, sales registration and other tax returns, filings or
other related reports made by them to any governmental agencies. To the extent
that disclosures of this allocation are required to be made by the parties to
the Internal Revenue Service ("IRS") under the provisions of Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any regulations
thereunder, Buyer and Sellers will disclose such reports to the other prior to
filing with the IRS.
1.5 Escrow for Purchase Price Adjustment. At the Closing, Buyer
shall deliver $3,000,000 (the "Escrow Amount") of the Closing Payment to an
escrow agent mutually satisfactory to Buyer and the Company (the "Escrow
Agent"), pursuant to that certain Escrow Agreement (herein so called) mutually
satisfactory to Buyer and the Company, and dated as of the Closing Date by and
among the Escrow Agent, Buyer and the Company. The Escrow Agreement shall
provide that after the determination of the Carrying Cost (defined below) any
of the Escrow Amount in excess of the Carrying Cost (plus accrued interest, if
any) shall be released by the Escrow Agent to the Company. For the purposes of
this Agreement, "Carrying Cost" shall mean the estimated net present value
(discounted at Buyer's cost of funds) of the interest expense payable on any
funds assumed to be borrowed by Buyer to pay income taxes while owning the R
Pieces (defined below) based on good faith, reasonable assumptions with respect
to the projected income and deductions, credits or losses over the lives of the
R Pieces and taking into consideration potential cash distributions or refunds
with respect to the R Pieces. For purposes of this Agreement, the "R Pieces"
collectively shall mean the subordinate and
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residual certificates from DLJ's securitizations of mortgage loans purchased
from the Company and the Subsidiaries prior to the Closing Date (excluding
those relating to the DLJ Mortgage Acceptance Corp. Mortgage Pass-Through
Certificates, Series 1996-QB and 1996-QJ, the S1994-13 Class I, II and III
Certificates and S1994-16 Class I, III and III Certificates). The Carrying
Cost does not include any taxes, penalties or interest assessed by any taxing
authority attributable to the R Pieces prior to the Closing (whether or not
paid, payable or refundable at the Closing Date), which taxes, penalties and
interest (if any) shall be deemed Retained Liabilities hereunder.
The Company agrees that if the Carrying Cost is greater than the Escrow
Amount, then (subject to the Company's right to retain the R Pieces as
described below) the Company shall pay such excess to Buyer in
immediately-available funds not later than the third business day after Buyer
notifies the Company in writing of the amount of the Carrying Cost. The
amounts paid by the Company pursuant to this Section (or by the Sellers
pursuant to Section 10.2(a) (Indemnification of Buyer and Buyerparent) if the
Company breaches its obligation to pay an amount in excess of the Escrow
Amount) shall not be subject to the one-time basket set forth in Section
10.3(a) (Materiality) or the limitation set forth in Section 10.3(b) (Cap).
After the Carrying Cost has been calculated, the Company may elect to
retain the R Pieces by delivering written notice to Buyer to that effect. If
the Company elects to retain the R Pieces, then the Escrow Amount shall be
delivered to the Company and the R Pieces then will be deemed for all purposes
to be and to have been Retained Assets hereunder at all times.
Buyer and the Company will mutually engage (at the Sellers' expense) an
accounting or other appropriate firm selected by Buyer and reasonably
acceptable to the Company (the "Auditor") to calculate the Carrying Cost. The
Auditor's calculation of the Carrying Cost shall be based on good faith
reasonable assumptions determined by the Auditor, which determination shall be
conclusive.
ARTICLE 2.
Closing The Transaction
2.1 Closing. On the third business day after the satisfaction or
waiver of the conditions (other than execution or delivery of agreements,
certificates, legal opinions or other instruments to be delivered at Closing)
contained herein, and unless this Agreement has been terminated pursuant to the
provisions of Article 5 (Termination), the consummation of the transactions
provided for herein (the "Closing") shall take place at the office of Xxxxxx &
Xxxxxxx, located at 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000 at 9:00 A.M., local time. The time and date of the Closing
are referred to herein as the "Closing Date."
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2.2 Sellers' Deliveries at Closing. At the Closing, the Sellers (as
indicated) shall deliver, or cause to be delivered, to Buyer the following
items:
(a) Xxxx of Sale. A xxxx of sale, duly executed by the
Company, in substantially the form attached as Exhibit 2.2(a) to this Agreement
(the "Xxxx of Sale"), dated as of the Closing Date, evidencing the transfer to
Buyer of those Acquired Assets that are not Real Property (defined below).
(b) Real Property.
(i) Title Policies. The Company shall deliver an
owner's title insurance policy with respect to each of the properties owned by
the Company that are located at 00000 Xxxxx Xxxxxx, 00000 Xxxxx Xxxxxx. and
00000 Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx (collectively, the "Irvine
Properties") in the customary form, insuring Buyer and issued as of the Closing
Date by a title insurance company reasonably satisfactory to Buyer, in such
amount as may be reasonably satisfactory to Buyer, showing fee simple title
thereto to be vested in Buyer, with such customary extended coverages or
endorsements as Buyer may reasonably request. Buyer shall pay the title policy
premiums incurred by the Company.
(ii) Deeds, Etc. The Company shall deliver grant deeds
for each piece of real property owned by the Company (including without
limitation the Irvine Properties), a certificate in compliance with the Foreign
Investment in Real Property Tax Act ("FIRPTA") certifying that the Company is
not a person or entity subject to withholding under FIRPTA, and all other
documents required by the title insurance company issuing the policies
referenced in the immediately-preceding paragraph, executed by the Company,
together with any necessary transfer declarations. The Company shall deliver
Phase I environmental audits on each of the Irvine Properties, conducted by an
environmental consulting firm reasonably satisfactory to Buyer. Buyer shall
pay the reasonable out of pocket expenses actually incurred by the Company to
obtain any new Phase I environmental audits.
(iii) Surveys. The Company shall deliver surveys of the
Irvine Properties, dated not earlier than 10 days prior to the Closing Date
prepared by a licensed surveyor, and certified to Buyer, Buyer's lenders and
the title insurance company as having been prepared in accordance with American
Land Title Association land survey standards, and showing all material
improvements to be within lot, sidelot, rearlot and setback lines, and showing
no material encroachments onto the Irvine Properties. Buyer shall pay the
reasonable out-of-pocket expenses actually incurred by the Company to obtain
the surveys described in this Section.
(c) Account Transfer Documents. The Company shall deliver
duly executed Powers of Attorney in substantially the form attached hereto as
Exhibit 2.2(c) and such other instruments as may be necessary to authorize
Buyer and its designees to become signatories on each of the bank accounts of
the Company and the Subsidiaries (defined below), including but
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not limited to the lockbox accounts and Custodial Accounts (defined below) of
the Company and the Subsidiaries (collectively, the "Accounts"), and letters
from the Company and the Subsidiaries to the institutions holding the Accounts
authorizing and directing such institutions to remove such signatories on the
Accounts as Buyer may direct.
(d) Other Instruments. Any other duly executed instruments of
assignment necessary to evidence the transfer to Buyer of the Acquired Assets,
along with the duly endorsed original instruments (if any) representing,
evidencing or constituting such Acquired Assets (including but not limited to
patent, trademark and copyright registrations and applications, certificates
of title, certificates of origin, instruments and transferrable Licenses
(defined below)) in recordable form where required and in the form required by
the applicable governmental agencies.
(e) Consents. The Sellers shall deliver copies of all
Sellers' Consents (defined below) obtained by Sellers.
(f) Closing Certificates. The Company shall deliver to Buyer
a closing certificate executed by the Company in the form attached hereto as
Exhibit 2.2(f)(1). The DLJ Stockholders shall deliver to Buyer a closing
certificate executed by the DLJ Stockholders in the form attached hereto as
Exhibit 2.2(f)(2). Calmac and the Jedinaks shall deliver to Buyer a closing
certificate executed by Calmac and the Jedinaks in the form attached hereto as
Exhibit 2.2(f)(3). The closing certificates referred to in this Section 2.2(f)
are collectively referred to herein as the "Stockholders' Closing
Certificates."
(g) Proceedings and Documents. The applicable Sellers shall
deliver copies, certified or otherwise identified to Buyer's satisfaction, of
all corporate documents that Buyer shall reasonably request, including
resolutions of the board of directors of the Company and resolutions of the
respective Stockholders, dated on or before the date hereof to authorize this
Agreement, the Related Agreements (defined below) and the transactions and
other acts contemplated either by this Agreement or the Related Agreements.
(h) Good Standing Certificates. The Company shall deliver
certificates (i) from the Secretaries of State of each respective jurisdiction
of organization, evidencing that the Company and the Subsidiaries are existing
and in good standing under the laws of their respective jurisdictions of
organization and (ii) from each state listed on the Disclosure Schedule to
Section 6.1(a) (Organization, Standing and Corporate Power and Authority)
evidencing that the Company and the Subsidiaries (defined below) are qualified
to do business and are in good standing as a foreign entity in such states.
(i) Certificates of No Tax Due. A certificate, letter or other
instrument from the Office of the Franchise Tax Board of the State of
California, dated within five days prior to
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the Closing Date, evidencing that the Company and each Subsidiary has paid all
franchise, sales and other state taxes due and owing.
(j) Estoppel Certificates. The Company shall deliver estoppel
certificates satisfactory to Buyer and dated not more than seven days prior to
the Closing Date, signed by Wendover Funding Inc. ("Wendover") and DLJ with
respect to any Assumed Contract or contract relating to an Acquired Asset to
which Wendover or DLJ is a party, in each case confirming that there are no
defaults, outstanding claims or demands against the Company or any Subsidiary
relating to (as applicable) the Special Servicing Agreement dated as of April
1, 1996 and the related letter agreement dated as of April 26, 1996 and Special
Servicing Agreement dated as of August 1, 1996 and the related letter agreement
dated as of August 29, 1996, each between the Company and Wendover, the Whole
Loan Master Repurchase Agreement dated as of January 17, 1992, as amended, the
Whole Loan Financing Program dated as of June 28, 1994, and the Master
Repurchase Agreement dated as of June 4, 1996, each between the Company and
DLJ, and any such Assumed Contract or agreement relating to an Acquired Asset.
(k) Lien Releases. Releases of all liens and other
encumbrances and security interests of any of the Sellers in any of the
Acquired Assets, including without limitation UCC-3 termination statements;
provided, however, that liens of DLJ on the mortgage loans that constitute
Acquired Assets shall be released upon Buyer's repayment of the amounts owed to
DLJ that relate to such liens.
(l) Name Change. An amendment to the articles of
incorporation of each of the Company and Quality Mortgage Acceptance Corp.
("QMAC") (and to each qualification to do business as a foreign corporation of
the Company and QMAC in those states where the Company or QMAC has obtained
such qualification) whereby each of the Company and QMAC has changed its name
to a name that is approved in advance in writing by Buyer and that is not
similar to "Quality Mortgage USA, Inc." and "Quality Mortgage Acceptance Corp."
(m) Opinions of Sellers' Counsels. Calmac shall deliver an
opinion of Xxxxx, Xxxxx & Xxxxx, counsel to Calmac and the Jedinaks, and the
DLJ Stockholders shall deliver an opinion of Xxxxxx & Xxxxxxx, counsel to the
DLJ Stockholders, each dated as of the Closing Date and in each case in form
and substance reasonably satisfactory to Buyer regarding the matters set forth
in Exhibit 2.2(m)(1) and Exhibit 2.2(m)(2), respectively.
(n) Certificates and Notes. The Company shall deliver
certificates representing all the shares of capital stock of the Subsidiaries
that constitute Acquired Assets, certificates representing interests in
securitizations that constitute Acquired Assets, and notes evidencing the
Mortgage Loans (defined below) that constitute Acquired Assets (other than
notes and certificates subject to finance agreements which notes are held by
the lender and cannot be delivered).
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(o) Sales Tax Certification. The Company shall deliver a
certificate signed by the Company, certifying that the Company and the
Subsidiaries have not within the past 12 months completed more than two sales
of assets within the meaning of Section 6006.5(b) of the California Tax Code
and the applicable regulations.
(p) Releases. Sellers shall deliver to Buyer fully effective
releases (the "Releases") executed by each Seller, releasing any and all claims
of such Sellers against or in respect of the Acquired Assets, including without
limitation the Subsidiaries, in a form substantially similar to Exhibit 2.2(p).
(q) Articles, Resolutions, and Incumbency. The Company shall
deliver (i) copies of its Articles of Incorporation and Bylaws, certified by
the Company's Secretary, (ii) copies of the resolutions of the Board of
Directors and shareholders of the Company authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement, and (iii) an incumbency certificate relating to each person
executing on behalf of the Company any document executed and delivered to Buyer
by the Company pursuant to the terms hereof.
(r) Corporate Records. The Company shall deliver the minute
books and stock transfer records for each Subsidiary (the "Corporate Records")
(s) Other Instruments. Such other instruments, documents or
information that Buyer reasonably requests in connection herewith and the
transactions contemplated hereby, in form and substance reasonably satisfactory
to Buyer.
2.3 Buyer's Deliveries at Closing. At the Closing, Buyer shall
deliver the following items to the applicable Sellers.
(a) The Closing Payment. The Closing Payment (less the Escrow
Amount and the DLJ Fee) to the Company and the Escrow Amount to the Escrow
Agent and the DLJ Fee to DLJ Securities.
(b) Closing Certificate. Buyer shall deliver to the Company a
closing certificate executed by Buyer (the "Buyer Closing Certificate") in the
form attached hereto as Exhibit 2.3(a).
(c) Consents. Copies of all Buyer Consents (defined below)
obtained by Buyer.
(d) Opinion of Buyer's Counsel. An opinion of L. Xxxxx
Xxxxxxxxx, Esq., General Counsel of Buyer, dated as of the Closing Date, in
form and substance reasonably satisfactory to the Stockholders regarding the
matters set forth in Exhibit 2.3(d) hereto.
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(e) Articles, Resolutions and Incumbency. Buyer shall deliver
(i) copies of its Articles of Incorporation and Bylaws, certified by Buyer's
Secretary, (ii) copies of the resolutions of the Board of Directors and sole
stockholder of Buyer authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement, and (iii) an
incumbency certificate relating to each person executing on behalf of Buyer any
document executed and delivered to the Company by Buyer pursuant to the terms
hereof.
(f) Payment for DLJ Lien Release. If not previously paid, all
amounts necessary to satisfy and release the Liens of DLJ in the Mortgage Loans
(defined below).
(g) Other Instruments. Such other instruments, documents or
information that any Seller reasonably requests in connection herewith and the
transactions contemplated hereby, in form and substance reasonably satisfactory
to such Seller.
2.4 Related Agreements. The parties, as appropriate, shall execute
and deliver at Closing, the following documents:
(a) Assignment and Assumption Agreements. Assignment and
assumption agreements, the form of which is attached hereto as Exhibit 2.4(a),
effective as of the Closing Date, between the Company on the one hand and Buyer
on the other hand, evidencing the assignment and assumption of the Assumed
Contracts.
If the Sellers fail to obtain the Sellers' Consent of any third party to
the assignment and assumption of any Assumed Contract, then such contract (an
"Unassignable Contract") shall not be an Assumed Contract and Buyer, at its
option, may require at the Closing that the Company take, whereupon the Company
shall take, such commercially reasonable steps on terms reasonably satisfactory
to the Company as may be necessary (including, without limitation, entering
into additional agreements and indemnities on terms reasonably satisfactory to
the parties thereto) to maintain such Unassignable Contract in full force and
effect and to provide to Buyer the economic benefits of such Unassignable
Contract and to cause Buyer to become liable for the Company's liabilities and
obligations thereunder, as if such Unassignable Contract had been assigned to
Buyer as an Assumed Contract.
(b) Noncompetition Agreements. Separate noncompetition
agreements, effective as of the Closing Date, between Buyer on the one hand and
Calmac, the Company and each of the Jedinaks, on the other hand, the form of
which is attached hereto as Exhibit 2.4(b) (the "Noncompetition Agreements");
and
(c) Credit Agreement. An agreement, effective as of the
Closing Date, between the Company and DLJ, pursuant to which DLJ will provide a
credit line in respect of those certain subordinate certificates that
constitute a part of the Acquired Assets, for at least
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90 days after the Closing Date, in the form of a standard master repurchase
agreement satisfactory to the parties thereto (the "Credit Agreement").
(d) Escrow Agreement. The Escrow Agreement.
The foregoing agreements, any attachments thereto, and any other
agreements executed in connection with this Agreement and named or described in
this Agreement are collectively referred to as the "Related Agreements."
ARTICLE 3.
Conditions To Consummating The Transaction
3.1 Joint Conditions. The obligations of each party to consummate
the transactions provided for in this Agreement and the Related Agreements are
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) HSR Act. The waiting period prescribed by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1974 and the rules and
regulations promulgated thereunder (the "HSR Act") shall have expired or been
terminated and Buyer and Sellers each shall have paid 50% of the HSR Act filing
fee required in connection with the HSR Act filing made by Buyer and Sellers
(or their "ultimate parent entities" (as such term is defined in the HSR Act))
in connection with Buyer's purchase of the Acquired Assets from the Company.
(b) No Litigation. No action, suit or proceeding (other than
such an action, suit or proceeding directly or indirectly instituted by a party
hereto seeking to terminate this Agreement) shall be threatened or pending, and
no injunction, order, decree or ruling shall be in effect, seeking to restrain
or prohibit, or to obtain damages or other relief in connection with, the
execution and delivery hereof or any Related Agreement or the consummation of
the transactions contemplated hereby or any Related Agreement.
(c) Related Agreements. The parties shall have entered into
the agreements identified in Section 2.4 (Related Agreements).
3.2 Buyer's Conditions. The obligations of Buyer to consummate the
transactions contemplated by this Agreement and the Related Agreements are
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions.
(a) Sellers' Representations True. The representations and
warranties made in this Agreement or any Related Agreement by the Company or
any other Seller shall be true and correct at the Closing Date, except as
affected by the transactions contemplated hereby, and the respective Sellers
shall have delivered Closing Certificates to that effect pursuant to Section
2.2(f) (Closing Certificates). Notwithstanding the foregoing, Buyer shall only
be permitted to terminate this Agreement based on a representation or warranty
of the Company or
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any Seller being untrue or incorrect if such breach or any fact giving rise to
such breach (together with all other breaches of such representations and
warranties) has caused or is reasonably likely to cause (individually or in the
aggregate) a material adverse change in the condition (financial or other),
results of operations or cash flows of the Mortgage Business (a "Material
Adverse Effect"). For purposes of this Agreement and the Related Agreements, a
Material Adverse Effect shall be deemed to have occurred only if such breach or
fact (together with all other breaches of such representations and warranties
or of Section 3.2(c) (Consents)) has caused or is reasonably likely to cause
(individually or in the aggregate) damage to the Mortgage Business in an amount
in excess of $5.0 million.
(b) Sellers' Compliance with Agreement. Sellers, in all
material respects, shall have performed each agreement, and shall have
complied with each covenant, to be performed or complied with by them, or any
of them, on or prior to the Closing Date under this Agreement or any Related
Agreement, and the Stockholders and the Jedinaks shall have delivered the
Stockholders' Closing Certificates to that effect; provided, however, that
notwithstanding the foregoing, Sellers' failure to perform or comply with
Section 8.4 (Financial Statements) or Section 8.6 (Maintain Organization) shall
fail to satisfy the condition set forth in this Section only if such failure to
perform or comply has, or is reasonably likely to, adversely affect the
Mortgage Business in a material respect.
(c) Sellers' Consents. Sellers shall have obtained the
Sellers' Consents. Notwithstanding the foregoing, only failures to obtain
Sellers' Consents that in the aggregate would have a Material Adverse Effect
shall fail to satisfy the condition set forth in this Section 3.2(c) and allow
Buyer to terminate this Agreement.
(d) Permits. Buyer shall have obtained all governmental
approvals, licenses and permits, or binding commitments from the United States
Department of Housing and Urban Development ("HUD"), the United States
Department of Veterans' Affairs ("VA"), and such states as Buyer deems
necessary to issue, transfer or consent to a change of control with respect to,
all governmental approvals, licenses and permits necessary for Buyer to conduct
the Mortgage Business in the manner that the Mortgage Business has been, and is
proposed to be, conducted (the "Permits"); provided, however, that if Buyer is
unable to obtain any one or more Permit, this condition shall be satisfied if
Buyer and the Company have entered into one or more subcontracting or loan
purchase arrangements, on terms reasonably satisfactory to the parties thereto,
under the Company's existing Permits.
(e) Express Acquisition. The Company shall have exercised its
rights under that certain Option and Agreement to Purchase dated as of
September 20, 1995 between the Company and Xxxxxx Xxxx (the "Express Option")
and shall have purchased pursuant to the Express Option all of the issued and
outstanding shares of capital stock of Express Funding, Inc., a Nevada
corporation ("Express").
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(f) Agent for Service of Process. On or prior to the Closing
Date, the Company, Calmac and each of the Jedinaks shall have duly and
irrevocably appointed, constituted and engaged The Corporation Trust Company of
Nevada in Reno, Nevada ("CT Corporation") as such individuals' agent for
service of process in accordance with Section 10.6 (Governing Law; Attorneys'
Fees).
(g) Corporate Records. The Corporate Records shall have been
completed, including without limitation by causing the appropriate individuals
to execute documents or instruments, by completing all minutes and records of
resolutions or other actions of the boards of directors, committees thereof, or
stockholders, and by completing all stock issuance and transfer records. Any
changes in the Corporate Records from those previously delivered or made
available to Buyer for review shall not contain disclosure regarding any matter
that has caused or is reasonably likely to cause a Material Adverse Effect.
3.3 Sellers' Conditions to Closing. The obligations of Sellers to
consummate the transactions contemplated by this Agreement and the Related
Agreements are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:
(a) Buyer's Representations True. The representations and
warranties made by Buyer herein shall be true and correct in all material
respects at the Closing Date except as affected by the transactions
contemplated hereby, and Buyer shall have delivered the Buyer Closing
Certificate to that effect.
(b) Buyer's Compliance with Agreement. Buyer, in all material
respects, shall have performed each agreement, and complied with each covenant
to be performed or complied with by it on or prior to the Closing Date under
this Agreement or any Related Agreement, and Buyer shall have delivered the
Buyer Closing Certificate to that effect.
(c) Buyer Consents. Buyer shall have obtained the Buyer
Consents.
ARTICLE 4.
Joint Covenants to Satisfy
Conditions and Consummate the Transaction
Each party shall use his, her or its commercially reasonable best
efforts to satisfy the conditions to the obligations of the parties hereunder,
and to consummate and make effective as promptly as practicable the
transactions provided for herein including:
4.1 Defending the Agreement. Defending lawsuits or other legal
proceedings challenging this Agreement or any Related Agreement or the
consummation of the transactions provided for in this Agreement or any Related
Agreement.
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4.2 Lifting Injunctions. Using commercially reasonable best efforts
to lift or rescind any injunction, restraining order or other order adversely
affecting the ability of the parties to consummate the transactions provided
for in this Agreement or any Related Agreement.
4.3 Other Actions. Taking such other commercially reasonable actions
that are necessary, appropriate or advisable, unless responsibility for taking
such actions has been delegated to certain parties in any other provision of
this Agreement.
4.4 HSR Act Filings. Sellers shall make their HSR Act filings
(including causing any filings by any ultimate parent entities as required
under the HSR Act) and provide any additional information that the Federal
Trade Commission or the Justice Department requests as promptly as practicable,
and perform all other acts required of them under the HSR Act. Buyer shall
make its HSR Act filings (including causing any filings by any ultimate parent
entities as required under the HSR Act) and provide any additional information
that the Federal Trade Commission or the Justice Department requests as
promptly as practicable, and perform all other acts required of it under the
HSR Act.
4.5 Scheduled Closing. The parties shall use commercially reasonable
efforts to cause the Closing to be held on the later of (a) October 15, 1996
and (b) the third business day (or earlier to the extent practicable) after the
date on which the waiting period prescribed by the HSR Act shall have expired
or been terminated.
4.6 Cooperation. The parties shall reasonably cooperate with one
another in connection with the foregoing.
ARTICLE 5.
Termination
5.1 Reasons for Termination. This Agreement may be terminated before
the Closing:
(a) By Mutual Consent. By the mutual written consent of the
parties.
(b) By the Buyer. Subject to the materiality standards (if
any) set forth in the subsections under Section 3.2 (Buyer's Conditions), by
Buyer after compliance with the procedure set forth in this Article, if (i) any
of the Sellers' representations or warranties contained herein is untrue or
incorrect as of the date this Agreement is executed or any of the Sellers'
representations and warranties contained herein becomes untrue or incorrect,
(ii) any Seller fails to perform any of his or its covenants or agreements
contained herein, or would be in breach of his or its covenants upon execution
of any Related Agreement or (iii) any of Buyer's conditions to the consummation
of the transactions provided for herein shall have become impossible to
satisfy.
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(c) By Sellers. By Sellers acting jointly, after compliance
with the procedure set forth in this Article, if (i) any of Buyer's
representations or warranties contained herein is or becomes untrue or
incorrect in any material respect or (ii) Buyer fails to perform its covenants
or agreements contained herein, or would be in breach of his or its covenants
upon execution of any Related Agreement, in any material respect.
(d) Drop-Dead Date. By Buyer, or by Sellers acting jointly,
if the Closing shall not have occurred by November 15, 1996; provided, however,
such date shall be extended by the number of days, if any, necessary to respond
to a second request for information under the HSR Act or to cure any matter
that is the subject of a notice under Section 5.3 (Buyer Termination Procedure)
or Section 5.4 (Sellers' Termination Procedure); provided further, that a party
may terminate this Agreement pursuant to this Section only if such party has in
all material respects performed such party's covenants or agreements to the
extent such covenants or agreements were required to be performed prior to the
date of such termination.
5.2 Notice of Problems. 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 (i) any of its representations or warranties contained
herein being or becoming materially untrue or incorrect, (ii) its material
failure to perform any of its covenants or agreements contained herein or (iii)
any of its Delegated Conditions, or any condition to the obligation of the
parties contained in Section 3.1 (Joint Conditions), being or becoming
impossible to satisfy.
No such notice shall affect the representations, warranties, covenants,
agreements or conditions of the parties hereunder, or prevent any party from
relying on the representations and warranties contained herein.
5.3 Buyer Termination Procedure. Subject to the materiality
standards (if any) set forth in the subsections under Section 3.2 (Buyer's
Conditions), if Buyer discovers, by reason of a notice given pursuant to this
Agreement or otherwise, that (i) any of Sellers' representations or warranties
is or has become untrue or incorrect, (ii) any Seller has failed to perform any
of his or its covenants or agreements contained herein or (iii) any of the
conditions to Buyer's obligations to consummate the transactions provided for
herein has become impossible to satisfy, then Buyer may deliver a notice to
Sellers of such event, specifying the factual basis therefor in reasonable
detail. Sellers shall have the right to cure any matter referred to in clause
(i) or (ii) of this Section within 10 business days following the date of
delivery of such notice. Upon such notice and, in the case of clause (i) or
(ii), upon Sellers' failure to cure, Buyer may terminate this Agreement by
giving a notice of termination to Sellers.
5.4 Sellers' Termination Procedure. If Sellers discover, by reason
of a notice given pursuant to this Agreement or otherwise, that (i) any of
Buyer's representations or warranties is
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or has become untrue or incorrect in a material respect or (ii) Buyer has
failed to perform any of its covenants or agreements contained herein in any
material respect, then the Sellers may deliver a notice to the Buyer of such
event, specifying the factual basis therefor in reasonable detail. Buyer shall
have the right to cure any matter referred to in clause (i) or (ii) of this
Section within 10 business days following the date of delivery of such notice.
Upon such notice and, in the case of clause (i) or (ii) upon Buyer's failure to
cure, Sellers acting jointly, may terminate this Agreement by giving a notice
of termination to Buyer.
5.5 Effect of Termination. Upon termination of this Agreement
pursuant to this Article, no party shall have any liability or continuing
obligation to another party arising out of this Agreement, or out of actions
taken in connection with this Agreement, except that Sections 10.5 (Delays or
Omissions, Etc.), 10.6 (Governing Laws; Attorneys' Fees), and 10.7 (Dispute
Resolution) and Article 11 (Miscellaneous) shall survive termination of this
Agreement. Notwithstanding the foregoing, termination of this Agreement shall
not relieve any party from its liability for (i) the failure, prior to
termination, of such party to perform or comply with its covenants or
agreements or (ii) the representations or warranties made by such party being
materially untrue or incorrect when made.
ARTICLE 6.
Representations and Warranties of Sellers
The Company has delivered a Disclosure Schedule (including exhibits
thereto) to Buyer setting forth certain information, the disclosure of which is
required or appropriate in relation to any or all of the following
representations and warranties. The mere inclusion of information in the
Disclosure Schedule shall not be deemed an admission by the Company that such
item would cause the representation or warranty to which it relates to be
untrue or incorrect, or that such information is material or evidence of
materiality for purposes of this Agreement. Specific information set forth in
the Disclosure Schedule (whether or not specific reference to a representation
or warranty is made) shall be deemed to be an exception to each applicable
representation and warranty set forth in this Article 6.
Except as set forth in Sections 6.1(b) (Corporate Power and Authority;
Validity and Authorization), 6.1(f) (HSR Act), 6.5(r) (Legal Requirements),
6.6(b) (No Brokers Fees; No Commissions), 6.7 (DLJ Stockholders' Knowledge) and
6.8 (Calmac's and the Jedinaks' Knowledge) below, the Company makes to Buyer
the following representations and warranties:
6.1 Sellers; Entry Into Agreements.
(a) Organization and Good Standing. The Company is a
corporation duly organized and validly existing under the laws of the State of
California and is in good standing under such laws. Express is a corporation
duly organized and validly existing under the laws of
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the State of Nevada and is in good standing under such laws. Save-More
Insurance Services, Inc. ("Save-More") is a corporation duly organized and
validly existing under the laws of the State of California and is in good
standing under such laws. Commonwealth Trust Deed Services, Inc.
("Commonwealth") is a corporation duly organized and validly existing under the
laws of the State of California and is in good standing under such laws.
Quality Trustee Services, Inc. ("Quality Trustee") is a corporation duly
organized and validly existing under the laws of the State of Missouri and is
in good standing under such laws. Quality Funding, Inc. ("Quality Funding") is
a corporation duly organized and validly existing under the laws of the State
of Hawaii and is in good standing under such laws. Express, Save-More,
Commonwealth, Quality Trustee and Quality Funding are sometimes collectively
referred to herein as the "Subsidiaries." The Company and the Subsidiaries have
all requisite corporate power and authority to own, lease and operate all
properties and assets owned or leased by it and to conduct their businesses as
previously and currently conducted by them. The Subsidiaries are qualified to
do business and are in good standing as a foreign corporation in each
jurisdiction in which they are required to be so qualified. The Disclosure
Schedule lists all jurisdictions in which any Subsidiary is qualified to do
business as a foreign corporation. Attached to the Disclosure Schedule are
complete and correct copies of the Certificate of Incorporation and the Bylaws
of each Subsidiary as currently in effect.
(b) Corporate Power and Authority; Validity and Authorization.
The Company has full corporate power and authority to execute, deliver and
perform this Agreement, the Related Agreements and the other instruments called
for by this Agreement to which it is a party. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
Each Stockholder represents that it has full corporate power and
authority to execute, deliver and perform this Agreement, the Related
Agreements and the other instruments called for by this Agreement to which such
Stockholder is a party and this Agreement has been duly authorized, executed
and delivered by such Stockholder; provided, however, that as to this sentence,
each Stockholder represents and warrants only as to such Stockholder's power
and authority. The Jedinaks represent and warrant that each has full power,
authority and capacity to execute, deliver and perform this Agreement and each
Related Agreement to which either Jedinak is a party. No Stockholder has
knowledge of any defect in any other Stockholder's or either Jedinak's power,
authority or capacity that could impair the enforceability of this Agreement
and the applicable Related Agreements against any other Stockholder or either
Jedinak. This Agreement has been duly executed and delivered by each Seller
and constitutes the legal, valid and binding obligation of each of the
foregoing, enforceable against them in accordance with its terms.
Each Seller represents that when the Related Agreements and the other
instruments called for by this Agreement to which such Seller is a party are
executed and delivered at the Closing,
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such agreements will have been duly authorized, executed and delivered by such
Seller pursuant to full requisite capacity to execute, deliver and perform such
Related Agreements and the other instruments called for by this Agreement to
which such Seller is a party and will constitute the legal, valid and binding
obligations of such Seller enforceable against such Seller with their terms.
(c) Subsidiaries. Except as set forth on the Disclosure
Schedule, the Company and the Subsidiaries do not own, control, or have voting
rights with respect to, directly or indirectly, any interest in any other
corporation, partnership, association or other business entity and neither the
Company nor any Subsidiary is a party to any agreement (other than this
Agreement) relating to the acquisition of such an interest.
(d) No Conflict. Except as set forth on the Disclosure
Schedule, neither the execution, delivery or performance of this Agreement or
the Related Agreements, nor the consummation of the transactions contemplated
hereby or thereby will (i) result in any violation of the terms of, (ii)
contravene or conflict with, (iii) accelerate the performance of the
obligations required under, (iv) constitute a default under, (v) give any right
of termination or cancellation under or (vi) give any right to make any change
in any of the liabilities or obligations under, the articles of incorporation
or bylaws of the Company or any Subsidiary, any Order (defined below), or any
Assumed Contract. Neither the execution, delivery and performance of this
Agreement or the Related Agreements by the Sellers, nor the consummation of the
transactions contemplated hereby or thereby by the Sellers, will result in the
creation of any Lien (defined below) upon any of the Acquired Assets.
(e) Sellers' Consents Required. The Disclosure Schedule lists
all consents, approvals or authorizations of third parties, required in
connection with each party's (other than Buyer's) valid execution, delivery or
performance of this Agreement and the Related Agreements or the consummation of
any of the transactions contemplated hereby or thereby on the part of any of
them (collectively, the "Sellers' Consents"), including but not limited to the
consents required under the Assumed Contracts (defined below) and the transfer
of Licenses (defined below). The Stockholders have taken all other corporate
or partnership action necessary for the consummation by the Company of the
transactions contemplated by this Agreement or the Related Agreements.
(f) HSR Act. Calmac, the Jedinaks and the Company have made
all filings required under the HSR Act, have fully complied with the provisions
of the HSR Act and the rules and regulations promulgated thereunder, and have
fully complied with all requests for information from the Federal Trade
Commission and the Department of Justice. The information contained in such
filings under the HSR Act is accurate and complete and such filings do not
include any incorrect statements or omit to include any information necessary
to make the statements therein not misleading. The copies of such filings
under the HSR Act that have been
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provided to Buyer are true and complete copies of such filings (except that
certain confidential financial information of Calmac and the Jedinaks has been
redacted from such copies).
6.2 Financial Information.
(a) Financial Statements; Books and Records. Included in the
Disclosure Schedule are true and correct copies of (i) the audited,
consolidated balance sheets for the Company and the Subsidiaries (other than
Express) at September 30, 1995, 1994 and 1993 and the related statements of
profit and loss and cash flows for the one-year periods then ended, (ii) the
unaudited, consolidated balance sheet for the Company and the Subsidiaries
(other than Express) at June 30, 1996 (together with related notes and
schedules, collectively, the "Preliminary Balance Sheet") and the related
statements of profit and loss and cash flows for the three-month and nine-month
periods then ended, (iii) the unaudited, consolidated balance sheets for the
Company and the Subsidiaries (other than Express) at July 31, 1996 and August
31, 1996 and the related statements of profit and loss and cash flows for the
one-month and fiscal year-to-date periods then ended, (iv) where applicable,
the foregoing presented on a divisional basis and (v) when delivered pursuant
to this Agreement, similar financial statements for each additional month
ending more than 15 days before the Closing (collectively with the Preliminary
Balance Sheet, the "Company Financial Statements").
The Company Financial Statements fairly present the financial position
of the Company and the Subsidiaries (other than Express) as of the dates
thereof and the results of the Company's operations and cash flows for the
periods then ended, in accordance with GAAP (as defined below), except for the
variances from GAAP set forth in the notes to the Company Financial Statements
or on the Disclosure Schedule (and except, in the case of the unaudited
financial statements, for normal year-end adjustments). The Company and each
Subsidiary maintains a standard system of accounting, including without
limitation internal controls, established and administered in accordance with
GAAP, except for the variances from GAAP set forth in the notes to the Company
Financial Statements or on the Disclosure Schedule.
Included in the Disclosure Schedule are true and correct copies of (i)
the audited, consolidated balance sheets for Express at December 31, 1995, 1994
and 1993 and the related statements of profit and loss and cash flows for the
one-year periods then ended, (ii) the unaudited, consolidated balance sheet for
Express at June 30, 1996 and the related statements of profit and loss and cash
flows for the three-month and six-month periods then ended and (iii) when
delivered pursuant to this Agreement, similar financial statements for each
additional month ending before the Closing (collectively, the "Express
Financial Statements"). The Express Financial Statements fairly present the
financial position of Express as of the dates thereof and the results of
Express' operations and cash flows for the periods then ended, in accordance
with GAAP, except for the variances from GAAP set forth on the Disclosure
Schedule.
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The Company's and each Subsidiary's books and records including without
limitation, all financial records and business records (i) are complete and
correct in all respects and all transactions to which the Company and each
Subsidiary is or has been a party are accurately reflected therein, (ii)
reflect all discounts, returns and allowances granted by the Company and each
Subsidiary with respect to the periods covered thereby, (iii) have been
maintained in accordance with customary and sound business practices in the
Company's and each Subsidiary's industry, (iv) form the basis for the Company
Financial Statements and Express Financial Statements, as applicable, and (v)
accurately reflect the assets, liabilities, financial position, results of
operations and cash flows of the Company and each Subsidiary. All
computer-generated reports and other computer output included in the Company's
and each Subsidiary's books and records are complete and correct and were
prepared in accordance with sound business practices based upon authentic data.
Each Subsidiary's management information systems are adequate for the
preservation of relevant information and the preparation of accurate reports.
"GAAP" shall mean those generally accepted accounting principles and
practices which are used in the United States and recognized as such by the
American Institute of Certified Public Accountants acting through its
Accounting Principles Board or by the Financial Accounting Standards Board or
through other appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the financial
position, results of operations and operating cash flow on a consolidated basis
of the Company, except that any accounting principle or practice required to be
changed by the Accounting Principles Board or Financial Accounting Standards
Board (or other appropriate board or committee) in order to continue as a
generally accepted accounting principle or practice may be so changed.
(b) Conduct of Business. Except as set forth in the
Disclosure Schedule, since June 30, 1996, neither the Company nor any
Subsidiary has (i) changed its authorized or issued capital stock; granted any
stock option or right to purchase shares of capital stock; issued any security
convertible into such capital stock; granted any registration rights;
purchased, redeemed, retired, or otherwise acquired any shares of any such
capital stock; or declared or paid any dividend, payment or distribution in
respect of shares of capital stock (other than the dividend of the office
building and property on Jamboree Boulevard in Irvine, California); (ii)
amended its organizational documents; (iii) sold or transferred any assets,
including without limitation mortgage loans, other than (x) sales of mortgage
loans that have been sold at auction to parties other than any Seller or any
affiliate of any Seller and that were sold in the ordinary course of business
and consistent with past practices or (y) any other asset sale not exceeding
$10,000 individually or $100,000 in the aggregate, in each case that were made
in the ordinary course of business and consistent with past practices; (iv)
mortgaged, pledged or subjected to any Lien or other encumbrance, any assets
(other than the mortgage loans pledged to DLJ); (v) incurred or become subject
to any debt, liability (including repurchase obligations) or lease obligation,
other than current liabilities incurred in the ordinary course of business
(other than such liabilities to DLJ) that do not exceed $100,000 individually
or $500,000 in the aggregate; (vi) incurred obligations or entered into
contracts outside of the ordinary course of business (except in
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connection with this Agreement and the Related Agreements); (vii) suffered any
damage, destruction or loss of any assets in the aggregate in excess of
$100,000, excluding losses on mortgage loans and real estate owned, which
losses were incurred in the ordinary course of business and consistent with
past loss experience; provided, however, that no such loss shall exceed $25,000
before reserves or other reductions; (viii) waived or relinquished any rights
or canceled or compromised any debt or claim owing to it, in either case
without adequate consideration or not in the ordinary course of business; (ix)
made any change in its accounting methods or practices; (x) made any change in
its billing and collection practices and procedures; (xi) paid any bonuses or
made any increase in the compensation, commissions or benefits payable or to
become payable to any of its officers, directors, employees or agents over the
amounts paid or payable as of such date (other than bonuses to the Company's
employees at July 31, 1996 (excluding the Jedinaks) that did not exceed 5% of
the quarterly payroll and that otherwise were in the ordinary course of
business and consistent with past practices), or entered into or terminated any
employment, deferred compensation, severance or bonus agreement with any of
such parties, or made any loan, or commitment to loan, monies to any such
parties, other than customary cash travel advances which do not exceed $5,000
in the aggregate; (xii) entered into any transaction with any Affiliate
(defined below) of the Company (other than borrowings from DLJ and mortgage
loan sales to, or securitizations with, DLJ that were in the ordinary course of
business and consistent with past practices); (xiii) made any capital
expenditures in excess of $5,000 on a single basis or $25,000 in the aggregate;
(xiv) paid any federal or state income tax liability other than in the ordinary
course of business and consistent with past practices, including without
limitation any liability in respect of the approximately $3.0 million phantom
income tax liability with respect to REMICs; or (xv) agreed to do any of the
foregoing.
(c) No Adverse Change. Since the date of the most recent
Company Financial Statements and Express Financial Statements delivered prior
to the date hereof, the Company and the Subsidiaries have conducted their
businesses only in the ordinary course consistent with past practice and there
has been no Material Adverse Effect.
(d) Acquired Assets. When conveyed to Buyer at the Closing
the Acquired Assets will include all assets set forth on Exhibit 1.1(a) held by
the Company on the date of this Agreement, subject only to subsequent
acquisitions and dispositions in the ordinary course of business or otherwise
as permitted in this Agreement.
6.3 Assets.
(a) Personal Property.
(i) Title. The Company or applicable Subsidiary has
good and marketable title to all assets that are personalty (the "Personal
Property") (other than the leased Personal Property described below). There is
no Lien on any of the Personal Property. With respect to any Personal Property
that is leased, the Company or applicable Subsidiary is in
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compliance with each such lease and is the sole holder of a valid and
subsisting leasehold interest, free and clear of any Liens. The Disclosure
Schedule lists all items of leased Personal Property (the "Equipment Leases").
(ii) Notes and Accounts Receivable. All notes
(excluding the Mortgage Loans) payable to, and accounts receivable of, the
Company and the Subsidiaries that are Acquired Assets (the "Accounts
Receivable") were created in the ordinary course of business and have been
collected or are collectible in the amounts thereof reflected in the books and
records of the Company and the Subsidiaries, net of reserves or contractual
allowances reflected in the Company Financial Statements or the Express
Financial Statements, as applicable. Payments to the Company and the
Subsidiaries in respect of Accounts Receivable are deposited, upon receipt,
directly into the Accounts and such amounts can only be withdrawn therefrom by
the Company and its duly authorized agents or Express and its duly authorized
agents, as the case may be. None of the Accounts Receivable is subject to any
counterclaim or set off. All of such Accounts Receivable arose out of bona
fide, arms-length transactions.
(iii) Bank Accounts. The Disclosure Schedule sets forth
the names of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company or any Subsidiary maintains
accounts of any nature (including but not limited to the Accounts, the numbers
of such accounts and the names of all persons authorized to draw thereon or to
make withdrawals therefrom.
(b) Real Property.
(i) Fee Simple. Except as set forth in the Disclosure
Schedule, the Company or applicable Subsidiary has good, indefeasible and
marketable title in fee simple to all real property owned by the Company or the
Subsidiaries that constitutes part of the Acquired Assets (the "Real
Property"), including but not limited to those properties reflected on the
Company Financial Statements and the Express Financial Statements, and to the
buildings, structures and improvements thereon, in each case free and clear of
all security interests, liens (xxxxxx or inchoate), encumbrances, mortgages,
pledges, equities, charges, assessments, easements, covenants, restrictions,
reservations, defects in title, encroachments and other burdens, whether
arising by contract or under law, other than (x) inchoate statutory liens for
amounts not yet payable and (y) the lien of DLJ with respect to foreclosed real
properties financed by DLJ (collectively, "Liens") and other than matters
customarily excepted from the coverage of an ALTA title insurance policy,
whether or not the same render the title to such Real Property unmarketable.
Neither the Company nor any Subsidiary has granted any leases on, and there are
no tenancies on, the Real Property. The Disclosure Schedule sets forth a
complete description by metes and bounds or lot, block and section of the
Irvine Properties.
(ii) Leases; Easements and Other Interests. The
Disclosure Schedule sets forth (A) a description of the land, premises,
buildings, structures and improvements covered
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by each lease of real property that constitutes part of the Acquired Assets and
(B) a list of all other contracts and instruments, whether or not in writing,
relating to or affecting real property that constitutes part of the Acquired
Assets. The interests described in items (A) and (B) above are collectively
referred to herein as the "Leased Premises" and the leases, easements,
concessions, contracts and instruments described in items (A) and (B) above are
referred to herein as the "Real Estate Contracts."
The Company or applicable Subsidiary is the sole holder of valid and
subsisting leasehold interests in the Leased Premises leased thereby free and
clear of any Liens. All lease or rental payments and other amounts due and
payable in connection with the Real Estate Contracts are current, there are no
defaults by the Company or any Subsidiary with respect thereto and no event has
occurred that with the passing of time or the giving of notice or both would
constitute a default thereunder. All options in favor of the Company or
applicable Subsidiary to purchase any of the Leased Premises, if any, are in
full force and effect. The Company or applicable Subsidiary has the right to
quiet enjoyment of the Leased Premises for the full term of the related Real
Estate Contract and any renewal option related thereto, and no leasehold or
other interest of the Company or applicable Subsidiary in such real property is
subject or subordinate to any Lien, whether or not the same renders the title
to such real property or lease unmarketable, except as specifically set forth
in the Disclosure Schedule.
(iii) Eminent Domain. Neither the whole nor any portion
of any Real Property or Leased Premises has been condemned, taken by right of
eminent domain, requisitioned or otherwise taken by any public authority, and
no such condemnation, taking by right of eminent domain, requisition or taking
has been overtly threatened or, to the Company's knowledge, contemplated, and
the Company has not received, and does not know of, any notice regarding any
such action.
(iv) Improvements. Except as set forth on the
Disclosure Schedule, none of the improvements included in the Irvine Properties
are (A) in violation of any building line or use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law, code
or ordinance or public utility or other easement or (B) encroaches on the
property rights of any other person or entity. Each facility located on the
Irvine Properties currently is served by gas, electricity, water, sewage and
waste disposal and other utilities adequate to operate such facility, and none
of the utility companies serving any such facility has overtly threatened the
Company or any Subsidiary with any reduction in service. Such utilities either
enter the Irvine Properties through adjoining public streets or, if they pass
through adjoining private land, do so in accordance with valid, permanent
public or private easements which, following the Closing, will inure to the
benefit of Buyer, its successors and assigns. All of said utilities are
installed and operating and all installation and connection charges have been
paid for in full. The continued maintenance and operation of the Irvine
Properties as currently maintained and operated is not dependent on facilities,
equipment or other assets located at property other than the Irvine
Properties, which facilities, equipment or assets may become
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unavailable. The continued maintenance and operation of any other property is
not dependent on facilities, equipment or other assets located on the Irvine
Properties. No building or other improvement not part of the Irvine Properties
relies on the Irvine Properties or any part thereof or any interest therein to
fulfill any governmental requirement. No building or other improvement on the
Irvine Properties relies on any property not included within the Irvine
Properties to fulfill any governmental requirement.
(v) Real Property and Leased Premises Taxes. There are
no challenges or appeals pending regarding the amount of the Taxes on, or the
assessed valuation of, the Real Property or the Leased Premises, and no special
arrangements or agreements exist with any governmental authority with respect
thereto (the representations and warranties contained in this paragraph (v)
shall not be deemed to be breached by any prospective general increase in real
estate tax rates). There is no tax assessment (in addition to the normal,
annual general real estate tax assessment) pending or overtly threatened with
respect to any portion of the Real Property or, to the extent the Company or
any Subsidiary is liable for payment therefor, the Leased Premises.
(c) Intellectual Property.
(i) Intellectual Property. The term "Intellectual
Property" shall include the names "Quality Mortgage USA, Inc.," "Express
Funding, Inc.,""Save-More Insurance Services, Inc.," "Commonwealth Trust Deed
Services, Inc.," "Quality Trustee Services, Inc." "Quality Funding, Inc.," and
"Quality Mortgage Acceptance Corp." and all fictitious business names, trade
names, registered and unregistered trademarks, service marks and applications
owned, used or licensed by the Company or any Subsidiary (collectively "Marks")
and all know-how, trade secrets, confidential information, software (including
without limitation the Quality Loan Processing System program, but including
licensed retail or "off-the-shelf" software only to the extent of the license
held by the Company) and all data used in connection therewith or processed
thereby, technical information, process technology, plans, drawings and blue
prints owned, used or licensed by the Company or any Subsidiary as licensee or
licensor (collectively "Trade Secrets"). The Intellectual Property also
includes all such rights and assets of the Company and the Subsidiaries under
the Assumed Contracts. Neither the Company nor any Subsidiary owns, licenses
(either as licensor or licensee) or uses any registered or unregistered
copyrights or any patent or patent application.
(ii) Ownership. Except as listed in the Disclosure
Schedule, the Company or a Subsidiary is the owner of all right, title and
interest in and to the Intellectual Property free and clear of all Liens.
Following Closing, Buyer shall be the sole owner of all right, title and
interest in the Intellectual Property free and clear of all liens. The
Intellectual Property includes all such property necessary for the operation of
the Mortgage Business of the Company and the Subsidiaries (x) as they currently
are or have been conducted and (y) without violating or infringing upon the
rights of any third party. Without limiting the foregoing, the
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Company and the Subsidiaries are properly licensed to use all computer software
(and copies thereof) used by them. Except as listed in the Disclosure
Schedule, no right, license or consent of, or payment to, any third party will
be required after consummation of the transactions contemplated by this
Agreement for the continued use of the Intellectual Property by the Company and
the Subsidiaries.
(iii) Trademarks. The Disclosure Schedule contains an
accurate and complete listing and summary of all material registered Marks,
including application and registration dates and numbers, and jurisdiction
thereof, if any. Except as set forth on the Disclosure Schedule, the Sellers
are not aware of any potentially interfering xxxx or application therefor of
any third party; no Xxxx is infringed or has been challenged or is or has been
overtly threatened in any way; and none of the Marks used by the Company or the
Subsidiaries infringe or are alleged in any legal proceeding to infringe any
business name, trade name, trademark or service xxxx of any third party.
(iv) Trade Secrets. The Company and the Subsidiaries
have taken all reasonable precautions to protect the secrecy, confidentiality
and value of the Trade Secrets. Except as set forth on the Disclosure
Schedule, no Trade Secret is subject to any adverse claim nor has any Trade
Secret been challenged or overtly threatened in any way. None of the Trade
Secrets infringe or are alleged to infringe any proprietary right of any third
party.
(d) Contracts.
(i) All of the Assumed Contracts are legal, valid and
binding on the parties thereto and in full force and effect. No party to any
of the Assumed Contracts is in violation of or default under any of the Assumed
Contracts. No event, occurrence or condition exists which, with the lapse of
time, the giving of notice, or both, or the happening of any further event or
condition, would become a violation or default by the Company or any
Subsidiary, or any other party thereto, under any Assumed Contract. There are
no outstanding, and to the Company's knowledge, overtly threatened disputes or
disagreements with respect to any of the Assumed Contracts. Neither the
Company nor any Subsidiary has released any rights under any Assumed Contract.
The Company and the Subsidiaries are not subject to any legal obligations to
renegotiate, nor is there any right to renegotiate, any Assumed Contract. The
Company and the Subsidiaries are not subject to any liability, or claim
therefor, for or with respect to price adjustment under any Assumed Contract
with the United States Government or any agency thereof, including any
liability for defective pricing.
(ii) Except as set forth on the Disclosure Schedule, the
Assumed Contracts constitute all of the contracts, leases and agreements
necessary for the conduct of the businesses of the Company and the Subsidiaries
in the manner and to the extent conducted by the Company and the Subsidiaries.
All rights of the Company and the Subsidiaries under the Assumed Contracts will
be enforceable by Buyer after the Closing without the consent or
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agreement of any other party, except consents and agreements specifically
described in the Disclosure Schedule.
(iii) The Sellers have delivered or made available to
Buyer true and complete copies of each Assumed Contract. There are no
unwritten amendments to, or waivers under, any Assumed Contract.
(e) Necessary Assets. The Acquired Assets constitute all of
the assets, rights, and properties used in, or reasonably necessary for, the
conduct of the Mortgage Business in the manner and to the extent currently
conducted by the Company and the Subsidiaries. The Acquired Assets are
adequate to enable Buyer to continue to conduct the Mortgage Business on the
Closing Date in the manner and to the extent currently conducted by the Company
and the Subsidiaries, and include all items of property that are located on the
Real Property, that are used as though owned, that the Company and the
Subsidiaries purport to own or that are reflected in the Company Financial
Statements or the Express Financial Statements. Notwithstanding the foregoing,
Buyer will need to obtain adequate warehouse and other finance lines and its
own Licenses and Permits in those states in which Buyer or the operating
affiliate of Buyer does not have its own Licenses and Permits.
6.4 Liabilities.
(a) No Liabilities. No Subsidiary has any debt, guaranty,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, whether due or to become due, and whether known or unknown, and
there is no basis for the assertion against it of any such debt, guaranty,
liability or obligation except (i) to the extent set forth or reserved against
in full in the Company Financial Statements or the Express Financial
Statements, as applicable, and (ii) current liabilities incurred in the
ordinary course of business since June 30, 1995.
(b) Tax Matters. Except as listed in the Disclosure Schedule:
(i) Each of the Company and Express has filed all Tax
Returns (defined below) that it was required to file on its behalf and on
behalf of the Subsidiaries. All such Tax Returns were correct and complete in
all respects. All Taxes due and payable by the Company or any Subsidiary
(whether or not shown on any Tax Return, whether known or unknown, asserted or
unasserted) on or before the Closing with respect to taxable periods ending on
or before the Closing have been paid or will be paid prior to Closing (except
as set forth in Section 6.2(b)(xiv)). Neither the Company nor any Subsidiary
is a party to any tax sharing or other agreement that will require any payment
with respect to Taxes. Neither the Company nor any Subsidiary currently is the
beneficiary of any extension of time within which to file any Tax Return.
Neither the Company nor any Subsidiary 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 or the collection of Taxes.
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(ii) No taxing authority or other governmental unit has
claimed, raised, discussed, proposed or overtly threatened any assessment,
deficiency, adjustment, dispute or claim concerning any Tax Return or any Tax
liability of any of the Company or any Subsidiary. There is no unpaid
assessment, deficiency or adjustment concerning any Tax Return or Tax liability
of any of the Company or any Subsidiary other than those for which an adequate
reserve has been established and which are reflected in the Company Financial
Statements. Except as disclosed on the Disclosure Schedule, none of the Tax
Returns of the Company or any Subsidiary have been selected for or are now
under audit or examination by any taxing authority or other governmental unit,
and there are no suits, actions, proceedings or investigations pending or
overtly threatened against the Company or any Subsidiary with respect to any
Taxes.
(iii) Except as disclosed on the Disclosure Schedule,
each of the Company and the Subsidiaries has withheld and timely deposited or
paid all Taxes required to have been withheld and reserved or paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(iv) None of the Company or any Subsidiary has filed a
consent under Sec. 341(f) of the Code concerning collapsible corporations.
None of the Company or any Subsidiary has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that would be
characterized as "excess parachute payments" under Code Sec. 280G of the Code.
None of the assets of the Company or any Subsidiary (A) is property which is
required to be treated as being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former Code Sec. 168(f)(8) of the
Code; (B) directly or indirectly secures any debt the interest on which is tax
exempt under Code Sec. 103(a) of the Code; or (C) is "tax-exempt use property"
within the meaning of Code Sec. 168(h) of the Code. Each of the Company and
the Subsidiaries has disclosed on its federal income Tax Returns or qualified
amended returns (or statements attached thereto) all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Sec. 6662. Neither the Company nor any Subsidiary
(A) is a party to any Tax allocation or sharing agreement; (B) has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company); or (C) has any
liability for the Taxes of any person (other than any of the Company and the
Subsidiaries) under Treas. Reg. sec. 1.1502-6 or any similar provision of
state, local or foreign law), as a member of a consolidated group, transferee
or successor, by contract or otherwise. Neither any Stockholder, the Company
nor any Subsidiary is a person other than a United States person within the
meaning of the Code and the transaction contemplated herein is not subject to
the withholding provisions of Code Sec. 3406 of the Code or subchapter A of
Chapter 3 of the Code.
(v) Any unpaid Taxes of the Company and the
Subsidiaries, including all Taxes not yet due for any and all periods through
the Closing Date, whether known or unknown, asserted or unasserted (A) do not
exceed the reserve for Tax liability (other than any
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reserve for deferred Taxes established to reflect timing differences between
book and Tax income) included in the Company Financial Statements and the
Express Financial Statements and (B) do not exceed those reserves as adjusted
for the passage of time through the Closing Date in accordance with GAAP and
the Company's customary accounting methods.
As used herein, the term "Taxes" means all federal, state, local,
foreign and other governmental net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, unemployment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatever, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, and the term "Tax" means any one of the foregoing Taxes; the term "Tax
Returns" means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes; the term "Code" means the
Internal Revenue Code of 1986, as amended (all citations to the Code, or to the
Treasury Regulations promulgated thereunder, shall include any amendments or
any substitute or successor provisions thereto).
(c) Litigation.
(i) Except as set forth on the Disclosure Schedule,
there is no pending action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative (including the
Equal Employment Opportunity Commission and similar state or federal agencies),
investigative or informal) (A) that has been commenced by or against the
Company or any Subsidiary in respect of, or that otherwise relates to or may
affect, any Subsidiary, the Acquired Assets, the Assumed Contracts, this
Agreement, any Related Agreement or the transactions contemplated herein or
therein or (B) that has been commenced by or against any Stockholder in respect
of, or that otherwise relates to or may affect any Subsidiary, the Acquired
Assets, the Assumed Contracts, this Agreement, any Related Agreement or the
transactions contemplated herein or therein (collectively, the "Proceedings").
No Proceeding has been overtly threatened. No event has occurred (including
without limitation the commission or omission of any act) that may give rise to
or serve as a basis for the commencement of any Proceeding.
(ii) Except as set forth on the Disclosure Schedule,
there is no award, decision, injunction, judgment, order, ruling, subpoena,
writ or verdict of any court, arbitrator or government agency or
instrumentality (A) to which any Subsidiary, the Acquired Assets, the Assumed
Contracts, this Agreement, any Related Agreement or the transactions
contemplated herein or therein is subject or by which any of the foregoing may
be affected or (B) to which any Stockholder is subject and that relates to or
may affect any Subsidiary, the Acquired Assets, the Assumed Contracts, this
Agreement, any Related Agreement or the transactions contemplated herein and
therein (collectively, the "Orders").
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(iii) The Disclosure Schedule sets forth a description of
each Proceeding pending or overtly threatened at the date hereof.
(d) Employee Liabilities. The Disclosure Schedule accurately
lists the base salary, hire date, accrued vacation and sick time the Company or
any Subsidiary owes to each employee or independent contractor of the Company
or any Subsidiary as of the date hereof.
6.5 Business.
(a) Mortgage Banking Licenses and Qualifications.
(i) The Subsidiaries have all certifications,
authorizations, licenses, permits, approvals, governmental licenses,
exemptions, classifications and registrations that are necessary to conduct the
Mortgage Business (collectively, the "Licenses"), to the extent such business
has been or is being conducted by or through the Subsidiaries. The Disclosure
Schedule lists every License held by the Subsidiaries that is in effect, has
been applied for or is pending and identifies those Licenses and applications
for Licenses that will be impaired as a result of Buyer's purchase of the
Acquired Assets (including the capital stock of the Subsidiaries) and describes
any action required to be taken to ensure that all such Licenses that are
transferrable will be enforceable by Buyer or the Subsidiaries after the
Closing. Sellers have made available to Buyer the originals, or if the
originals are not available, then true and complete copies of, all of the
Licenses held by the Subsidiaries.
(ii) All Licenses are in full force and effect. No
event has occurred that may constitute or result in a violation of a License,
or result in the revocation, suspension, modification or nonrenewal of any
License. Neither the Company nor any Subsidiary has received any notice of any
actual, alleged or potential violation, revocation, suspension, modification or
nonrenewal of any License. Each of the Subsidiaries has complied with all
Licenses, and there is no overtly threatened suspension, cancellation or
invalidation of, or penalties (including fines or refunds) under, any License.
(iii) Each broker or correspondent involved in the
origination of Mortgage Loans (defined below) had all such Licenses necessary
to conduct such activities at the time so conducted.
(iv) Each of the Company and the Subsidiaries is
approved and qualified and in good standing under all applicable federal, state
and local laws and regulations thereunder as a mortgage lender, eligible to
originate, purchase, hold, sell and service mortgage loans (to the extent
necessary to carry on the Mortgage Business).
(b) Mortgage Loans. The Disclosure Schedule lists as of the
most recent date practicable prior to the date of this Agreement and the
Closing Date each closed mortgage loan
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that constitutes part of the Acquired Assets (each a "Mortgage Loan"),
describing (in the form of a typical mortgage loan schedule) for each such
Mortgage Loan the borrower, original principal balance, funding date and
collateral location. Except as set forth on the Disclosure Schedule, all (A)
Mortgage Loans, (B) other mortgage loans for which any Subsidiary may be
subject to recourse under any whole loan sale, securitization, pooling and
servicing agreement, servicing agreement or other agreement, (C) mortgage loans
sold into securitizations wherein any Subsidiary has made representations and
warranties on which any Subsidiary has any continuing contingent liability and
(D) mortgage loans underlying the Acquired Assets consisting of the 1996 QB and
QJ subordinate residual certificates, the S1994-13 Class I, II and III
certificates and the S1994-16 Class I, II and III certificates (the items
described in (A) through (D) are referred to collectively herein as the
"Recourse Mortgage Loans") are (i) evidenced by a promissory note or notes, or
other evidence of indebtedness, with respect to such Mortgage Loan (a "Note"),
properly payable or endorsed to the Company or a Subsidiary or an assignee of
the Company or a Subsidiary (as applicable), secured by a mortgage, deed of
trust or other security instrument creating a lien on real property and any
other property described therein which secures such Note, together with any
assignment, reinstatement, extension, endorsement or modification thereof (a
"Mortgage") properly assigned to the Company or a Subsidiary or an assignee of
the Company or a Subsidiary (as applicable), (ii) duly secured by a Mortgage
in full force and effect, with customary terms in accordance with industry
practice, which grants the holder thereof a first priority lien or junior lien
on the subject property (including any improvements thereon), each such
Mortgage constituting a security interest that has been duly perfected and
maintained (or is in the process of perfection in due course) as a first lien
subject only to taxes and assessments not yet delinquent and to such other
matters as are evidenced by a lender's title insurance policy, (iii)
accompanied by a hazard insurance policy (and a flood insurance policy and
certification where required under the terms of the National Flood Insurance
Act of 1968 and the Flood Disaster Protection Act of 1973, each as amended)
covering improvements on the premises subject to such Mortgage, with a loss
payee clause in favor of the Company or a Subsidiary or an assignee of the
Company or a Subsidiary, such insurance policy covering such risks as are
customarily insured against in accordance with industry practice, and (iv)
evidenced by such other files and documents as are customary in industry
practice. Prior to the Closing Date, the Disclosure Schedule will be updated
to disclose (as of a date not more than 3 days prior to the Closing Date) for
each Mortgage Loan that constitutes part of the Acquired Assets (x) the
then-outstanding principal balance and (y) the payment status of each such
Mortgage Loan.
(c) Enforceability. All Recourse Mortgage Loans are valid and
legally binding obligations of the borrowers thereunder, have been duly
executed by a borrower of legal capacity, are enforceable in accordance with
their terms (except as enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding in equity or at law), (ii) state laws
requiring creditors to proceed against the collateral before pursuing the
borrower and (iii) state laws on deficiencies), and conform to all applicable
federal, state and local laws, rules and regulations with respect to the
origination,
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insuring, purchase, sale, pooling, servicing, subservicing, master servicing or
filing of claims in connection with a mortgage loan (collectively, the
"Regulations"). Neither the operation of any of the terms of any mortgage
loan, including without limitation mortgage loans that constitute part of the
Acquired Assets, nor the exercise of any right thereunder, has rendered or will
render the related Mortgage or Note unenforceable, in whole or in part, or
subject it to any right of rescission, setoff, counterclaim or defense, and no
such right of rescission, setoff, counterclaim or defense has been asserted
with respect thereto. The file or files containing the photostatic copy or
copies on other media, and to the extent required by the Regulations, original
documents of the Mortgage, the Note and other loan documents with respect to
each such mortgage loan, as well as the related credit and closing packages,
disclosures, custodial documents, and all other files, books, records, and
documents reasonably necessary or customary in accordance with industry
practice for the sale and servicing of such mortgage loan (the "Loan
Documents"), including without limitation mortgage loans that constitute a part
of the Acquired Assets are in compliance in all material respects with
applicable Regulations and are complete in all material respects.
(d) Title to Certain Mortgage Loans; Mortgage Loan Conveyance
Agreements. Except as set forth on the Disclosure Schedule, all Mortgage Loans
are owned by the Company or such Subsidiary, as the case may be, free and clear
of all Liens (other than a Lien in favor of DLJ, which shall be released at or
prior to Closing upon repayment by Buyer of the amounts owed to DLJ by the
Company on such Mortgage Loans). Such Mortgage Loans have been duly recorded
or submitted for recordation in due course in the appropriate filing office in
the name of the Company or such Subsidiary as mortgagee. Neither the Company
nor any Subsidiary has, with respect to any such Mortgage Loan, released any
security therefor, except upon receipt of reasonable consideration for such
release, or accepted prepayment of any such Mortgage Loan which has not been
promptly applied to such Mortgage Loan. The Disclosure Schedule lists all
agreements, contracts and other documents or instruments to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary is bound
to sell or convey any of the mortgage loans currently held by the Company or
any Subsidiary to any party or reacquire any mortgage loans under any
repurchase agreement, reverse repurchase agreement or similar agreement. Each
such agreement listed on the Disclosure Schedule shall be terminated prior to
the Closing without penalty, liability or other obligation of the Subsidiaries,
except for any agreements providing for the sale of Mortgage Loans to Buyer.
(e) No Recourse. No Subsidiary has any obligation to
repurchase, reimburse, indemnify or hold harmless any person based solely on
the default under or the foreclosure or sale of the collateral for, any
mortgage loan at any time originated, held, owned, sold, transferred or
otherwise conveyed by the Company or any Subsidiary, without regard to a breach
or default of any contractual representation, warranty, undertaking,
misfeasance or malfeasance by the Company or such Subsidiary, as the case may
be. The Disclosure Schedule describes each contract containing any
representation, warranty or undertaking by the Company or any
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Subsidiary that could obligate any Subsidiary to repurchase, reimburse,
indemnify or hold harmless any person in respect of any such mortgage loan.
(f) Compliance with Mortgage Banking Regulations. With
respect to each Recourse Mortgage Loan, the Company and each subsidiary and
each prior and current originator of any such loan, has been and is in
compliance in all material respects with all Regulations, orders, writs,
decrees, injunctions and other requirements of any court or governmental
authorities applicable to any of them, including without limitation any
applicable local, state or federal law or ordinance, and any regulations or
orders issued thereunder, governing or pertaining to fair housing or unlawful
discrimination in residential lending (including without limitation
anti-redlining, equal credit opportunity, and fair credit reporting),
truth-in-lending (including without limitation specific regulations relating to
Section 32 Loans), real estate settlement procedures, adjustable rate
mortgages, adjustable rate mortgage disclosures or consumer credit (including
without limitation the federal Consumer Credit Protection Act, the federal
Truth-in-lending Act and Regulation Z thereunder, the federal Real Estate
Settlement Procedures Act of 1974 and Regulation X thereunder, and the federal
Equal Credit Opportunity Act and Regulation B thereunder, all applicable usury
and interest limitations laws and all similar state laws (collectively,
"Consumer Credit Laws"). Without limiting the generality of the foregoing, the
Company and the Subsidiaries and each prior and current servicer and originator
of the Recourse Mortgage Loans, including without limitation mortgage loans
that constitute part of the Acquired Assets, has been and is in compliance in
all respects with all servicer and other requirements of HUD, FHA, VA and FNMA
which are applicable to it. No broker or correspondent involved in the
origination of Recourse Mortgage Loans, including without limitation mortgage
loans that constitute part of the Acquired Assets, has violated in any material
respect any Consumer Credit Laws, including without limitation servicer and
other applicable requirements of HUD, FHA, VA and FNMA.
No broker or correspondent involved in the origination of Mortgage Loans
has failed to remain in good standing with the Company and the Subsidiaries,
has failed to obtain all Licenses necessary to conduct the activities conducted
by such broker or correspondent in connection therewith or is subject to any
claim or administrative proceeding filed against such broker or correspondent
based upon the business activities conducted by such broker or correspondent in
connection therewith.
(g) Physical Damage. Except as set forth on the Disclosure
Schedule, to the Company's knowledge there exists no physical damage to the
collateral securing the Mortgage Loans, whether from fire, flood, windstorm,
earthquake, tornado, hurricane or any other similar casualty, which physical
damage is not substantially covered by effective insurance and which physical
damage would or would reasonably be expected to cause any such Mortgage Loan to
become delinquent or adversely affect the value or marketability of any such
Mortgage Loan or the collateral securing such Mortgage Loan.
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(h) Tax Identification. All tax identifications for the
individual mortgagor under a Mortgage Loan (or evidence that reasonable
attempts have been made to obtain such in accordance with applicable
regulations) are contained in the Loan Documents relating to each such Mortgage
Loan. All of such tax identifications are correct and complete in all material
respects, and property descriptions contained in any loan documents are legally
sufficient.
(i) ARMs and Conversion Loans. If the Loan Documents relating
to any Mortgage Loan grant the related mortgagor the right to convert the
Mortgage Loan to a fixed rate Mortgage Loan and the related mortgagor
previously has exercised such right, or if such Loan Documents provide that the
interest rate or installment or payment amount of the Note may be adjusted
prospectively, then: (i) all of the terms of the Loan Documents may be enforced
by the holder thereof, its successors and assigns, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity
(whether applied in a proceeding in equity or at law), (ii) any such
adjustments will not, or did not, affect the priority of the lien of the
related Mortgage or Note and (iii) all adjustments have been made (and the
resulting interest rates and payment amounts are correct), and the respective
mortgagors advised thereof, in accordance with the applicable regulations. No
mortgagor has made or overtly threatened to make, any claim or complaint that
any adjustment was inappropriately made or inappropriately omitted. All
adjustments were properly disclosed under, and are enforceable under, the
Regulations.
(j) Mortgage Servicing. The Disclosure Schedule lists all
mortgage loan servicing agreements and pooling and servicing agreements to
which any Subsidiary is a party (the "Mortgage Servicing Agreements"). The
Mortgage Servicing Agreements and the Regulations set forth all the terms and
conditions of each Subsidiary's rights against and obligations to the other
parties to such Mortgage Servicing Agreements with respect to mortgage loans,
and there are no written or oral agreements that modify or amend any such
Mortgage Servicing Agreement. All of the Mortgage Servicing Agreements are
valid and binding contracts of the applicable Subsidiary, are in full force and
effect, and are enforceable in accordance with their terms, except as
enforcement thereof may be limited by general principles of equity (whether
applied in a court of law or a court of equity) and by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally. There is no default or breach under, or dispute regarding
the material terms of, or claim of default or breach by any party under, any
Mortgage Servicing Agreement, and no event has occurred which with the passage
of time or the giving of notice of both would constitute a default or breach by
any party under any such Mortgage Servicing Agreement or would permit
termination, modification or acceleration of any such Mortgage Servicing
Agreement. There is no pending or overtly threatened cancellation of any
Mortgage Servicing Agreement, and the Company has not received indication that
any party intends to terminate or is considering terminating its servicing
relationship with any Subsidiary. No sanctions or penalties have been imposed
on any Subsidiary under any Mortgage Servicing Agreement or any Regulation.
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Each Subsidiary that services mortgage loans has full authority to
maintain Custodial Accounts for all of the mortgage loans, as required by
applicable law, and has established Custodial Accounts for all Escrow Funds
relating to any servicing rights. Such Custodial Accounts comply in all
respects with all laws and regulations and any terms of the mortgage loans.
Except as set forth on the Disclosure Schedule, there are no pooling,
participation, servicing or other agreements to which any Subsidiary is a party
which obligate it to make servicing advances with respect to defaulted or
delinquent mortgage loans. The Disclosure Schedule contains a true and correct
list of all of the audits and investigations of any Subsidiary by any agency,
investor or insurer commenced since October 1, 1992, the results of which
audits and investigations claimed a failure to comply with applicable laws,
regulations, guidelines or other standards.
"Custodial Accounts" shall mean all escrow, impound, suspense (loan
level and other) and custodial accounts maintained with respect to the mortgage
loans for purposes of receiving and disbursing payments of principal, interest,
taxes, insurance, assessments and similar charges (and interest, if any,
accrued on such funds for the benefit of mortgagors) relating to mortgage
loans.
"Escrow Funds" shall mean all amounts held in Custodial Accounts, with
respect to mortgage loans held for the purpose of paying property taxes, hazard
insurance premiums, assessments and other such items as provided in the
Mortgage and applicable laws and regulations.
(k) Subordinated and Residual Securitization Certificates.
All interests in securitized transactions that constitute part of the Acquired
Assets are owned by the Company or the Subsidiaries and are listed in the
Disclosure Schedule. The values reflected in the Company Financial Statements
and the Express Financial Statements for the subordinated and residual
securitization certificates that have been retained by the Company or any of
its Subsidiaries have been properly calculated in accordance with GAAP and
standard industry practices. The Company is the sole owner of the certificates
and is in possession of the originals thereof. No Lien exists against such
interests, except as set forth in the Disclosure Schedule.
(l) Insurance Operations. Each Subsidiary has all approvals,
certifications, authorizations, licenses, permits, governmental licenses,
exemptions, classifications and registrations (the "Insurance Approvals"),
necessary to conduct the business of insurance and insurance brokering, to the
extent such business has been or is being conducted by any Subsidiary. The
Disclosure Schedule lists every Insurance Approval that is in effect, has been
applied for or is pending and identifies those Insurance Approvals and
applications for Insurance Approvals that will be impaired as a result of
Buyer's purchase of the Acquired Assets (including the capital stock of the
Subsidiaries) and describes any action required to be taken to ensure that such
Insurance Approvals will be enforceable by Buyer or the Subsidiaries after the
Closing. Sellers have delivered to Buyer the originals, or if the originals
are not available, then true and complete copies of, all of the Insurance
Approvals. All Insurance Approvals are in full force and
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effect. No event has occurred that may constitute or result in a violation of
an Insurance Approval, or result in the revocation, suspension, modification or
nonrenewal of any Insurance Approval. No Seller or Subsidiary has received any
notice of any actual, alleged or potential violation, revocation, suspension,
modification or nonrenewal of any Insurance Approval. Each of the Company and
the Subsidiaries has complied with all Insurance Approvals, and the Company has
not received notice of any overtly threatened suspension, cancellation or
invalidation of, or penalties (including fines or refunds) under any Insurance
Approval.
(m) Insurance. Each Subsidiary (or the Company on behalf of
each Subsidiary) maintains insurance with financially sound and reputable
insurers on its assets, and upon its business and operations, against loss or
damage, risks, hazards and liabilities of the kinds customarily insured against
by corporations similarly situated and engaged in the same or similar
businesses in adequate amounts under valid and enforceable policies ("the
Policies"). The premiums due and owing with respect to the Policies have been
paid, premiums not yet due have been adequately accrued for, and no Seller or
Subsidiary has received any notice of cancellation or of intention not to renew
any such Policy. The Disclosure Schedule contains a list of the Policies,
copies of which have been provided to Buyer, and lists their term and premium,
and a brief description of each, as well as a description of each claim
currently pending under any such Policy or any Prior Policy (defined below).
The Disclosure Schedule sets forth a description of each other insurance policy
or insurance contract relating to the Company, the Subsidiaries and their
respective businesses, whether issued in the name of the Company or any
Subsidiary, pursuant to which any Subsidiary is or may hereafter be entitled to
assert claims for insurance coverage (the "Prior Policies"). The Company and
each Subsidiary has timely pursued all rights to recover under the Policies and
the Prior Policies; provided, however, the representation and warranty set
forth in this sentence shall not be deemed to be breached unless a Subsidiary
suffers any Loss in excess of $100,000 after the Closing and, because the
Sellers failed to timely preserve rights under such Policies or Prior Policies,
Buyer or the Subsidiary is unable to recover insurance under such Policies or
Prior Policies.
(n) Employees The Company and the Subsidiaries are not
subject to any collective bargaining agreement. No union representation
question exists and, to the best of the Company's knowledge, there has been no
union organization effort since October 1, 1994, respecting the employees of
the Company or any Subsidiary.
Except as set forth on the Disclosure Schedule, the employment of each
of the Subsidiaries' employees is terminable at will without cost to any
Subsidiary or severance obligations except for payment of accrued salaries or
wages and vacation pay. No employee of the Company or any Subsidiary is a
party with the Company or any Seller to any non-competition agreement or
similar agreement. No employee or former employee has any right to be rehired
by any Subsidiary prior to the hiring of a person not previously employed by
such Subsidiary.
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(o) Worker's Compensation. The Subsidiaries subscribe to, or
are otherwise insured under, the worker's compensation or similar statute in
each state in which any Subsidiary has any employees. The Disclosure Schedule
describes all claims filed by employees of any Subsidiary in respect of
employment-related injury or illness since October 1, 1994. Neither the
Company nor any Subsidiary has received any report or notice from the
Occupational Safety and Health Administration.
(p) ERISA. No Subsidiary is or has been a party to,
participant in or contributed to any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
except that employees of Subsidiaries may participate in the Quality Mortgage
USA, Inc. 401(K) Plan (the "401K Plan") on the terms specified therein.
(q) Affiliated Transactions. The Disclosure Schedule sets
forth a summary of (x) all transactions or series of transactions to which any
Subsidiary is party involving the payment or receipt of in excess of $10,000 in
value that are pending and (y) all assets or properties of the Company or any
Subsidiary, and in which, in either case, any Seller, Associate or Affiliate
(as such terms are defined in Rule 405 promulgated pursuant to the Securities
Act of 1933 (the "Securities Act")) has a financial interest, excluding the
Company's ownership of the stock of the Subsidiaries. Except as set forth on
the Disclosure Schedule, the Jedinaks do not, directly or indirectly, own any
interest in any entity that is a competitor, customer or supplier of, or has
any existing contractual relationship with, any Subsidiary.
(r) Legal Requirements.
(i) Compliance with Laws. Neither any Seller nor any
Subsidiary has violated any term of any judgment, writ, decree, order, law,
statute, rule or regulation to which he or it is subject or a party and which
pertains to the Mortgage Business, or by which any of the Acquired Assets
(including without limitation the Subsidiaries) are bound or affected
(collectively, "Legal Requirements"). No event has occurred that may
constitute or result in a violation of a Legal Requirement. No Seller or
Subsidiary has received notice of any actual, alleged or potential violation of
a Legal Requirement.
(ii) Certain Acts. Neither any Subsidiary nor any of
their former or current officers, directors, employees, agents or
representatives has made or agreed to make, directly or indirectly, with
respect to the businesses or assets of any Subsidiary and the Subsidiaries, any
(i) bribes or kickbacks, illegal political contributions, payments from
corporate funds not recorded on the books and records of the Company and the
Subsidiaries, or funds to governmental officials (or any such official's family
members or Affiliates) for the purpose of affecting their action or the action
of the government they represent, to obtain favorable treatment in securing
business or licenses or to obtain special concessions, or illegal payments from
corporate funds to obtain or retain business or (ii) payments from corporate
funds to
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governmental officials for the purpose of affecting their action or the action
of the government they represent, to obtain favorable treatment in securing
business or licenses or to obtain special concessions.
(iii) Bulk Sales This Agreement and the Related
Agreements and the transactions contemplated hereby and thereby are exempt from
Section 6101 et seq. (Bulk Sales) of the California Commercial Code.
(s) Environmental Matters.
(i) Compliance. The Company (in respect of the Irvine
Properties only) and each Subsidiary is in compliance with all applicable
Environmental Laws (defined below) and neither the Company nor any Subsidiary
has received any communication (written or oral), from any person that alleges
that the Company or any Subsidiary is not in compliance with applicable
Environmental Laws. As used herein, "Environmental Laws" mean all laws or
orders relating to the regulation or protection of human health, safety or the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), including, without
limitation, laws and regulations relating to releases or overtly threatened
releases of hazardous materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
recycling or handling of hazardous materials.
(ii) Environmental Claims. There is no Environmental
Claim (defined below) pending or overtly threatened or likely to be overtly
threatened (i) against the Company (in respect of the Irvine Properties only)
or any Subsidiary, (ii) against any person or entity whose liability for any
Environmental Claim the Company (in respect of the Irvine Properties only) or
any Subsidiary has or may have retained or assumed either contractually or by
operation of law, or (iii) against any real or personal property or operations
which are now or have been previously owned, leased, operated or managed, in
whole or in part, by the Company (in respect of the Irvine Properties only) or
any Subsidiary.
As used herein, "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, Liens, investigations, proceedings or notices of compliance
or violation (written or oral) by any person or entity (including any
governmental authority) alleging potential liability (including, without
limitation, potential liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or release or overtly
threatened release into the environment, of any hazardous material at any
location, whether owned, operated, leased or managed by the Seller with respect
to the business of the Company or any Subsidiary; or (b) circumstances
reasonably forming the basis of any violation, or alleged violation, of any
Environmental Law; or (c) any and all claims by any third
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party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or release of any
hazardous materials.
6.6 Other.
(a) Documents Delivered. The Corporate Records contain
records of all meetings held of, and corporate action taken by, the respective
boards of directors and stockholders of each Subsidiary, and any committee or
representative thereof and such records are accurate and complete in all
material respects. No meeting has been held and no action has been taken, by
any such board of directors or equity security holders for which accurate and
complete records have not been prepared and included in the Corporate Records.
At the Closing, all of the Corporate Records will be in the possession of the
Subsidiaries. The minute books and stock transfer records of the Company that
have been made available to Buyer and its agents are complete and correct in
all material respects.
(b) No Brokers Fees; No Commissions. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by Sellers directly with Buyer without any act by Sellers that would
give rise to any claim against Buyer, the Subsidiaries or any of their
Affiliates for a brokerage commission, finder's fee or other similar payment.
(c) Full Disclosure. Neither this Agreement nor any Related
Agreement, Exhibit or Disclosure Schedule delivered herewith contains any
untrue statement made by any Seller of a fact.
6.7 DLJ Stockholders' Knowledge. To the DLJ Stockholders' actual
knowledge, the representations and warranties made by the Company in this
Agreement are true and correct in all material respects, as supplemented by the
Disclosure Schedule. The DLJ Stockholders are not required to make any filing
under the HSR Act.
6.8 Calmac's and the Jedinaks' Knowledge. To Calmac's and the
Jedinaks' actual knowledge, the representations and warranties made by the
Company in this Agreement are true and correct in all material respects, as
supplemented by the Disclosure Schedule.
The phrase "in all material respects" as used in Sections 6.6(a), 6.7
and 6.8 shall be disregarded for all purposes under any other applicable
provision of this Agreement that includes a materiality modifier or its
equivalent.
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ARTICLE 7.
Representations and Warranties of Buyer
Buyer represents and warrants to Sellers as follows:
7.1 Entry Into Agreements.
(a) Organization and Good Standing. Buyer is a corporation
duly organized and validly existing under the laws of the State of Delaware and
is in good standing under such laws.
(b) Corporate Power and Authority; Validity and Authorization.
Buyer has full corporate power and authority to execute, deliver and perform
this Agreement and the Related Agreements. This Agreement has been duly
authorized, executed and delivered by Buyer. This Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
When the Related Agreements to which Buyer is a party are delivered at
the Closing, such agreements will have been duly authorized, executed and
delivered by Buyer, and will constitute the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
7.2 Conflicts and Consents.
(a) No Conflict. The execution, delivery and performance of
this Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby will not result in any violation
of the terms of and will not contravene, conflict with, accelerate the
performance of the obligations required under, or constitute a default under,
the Certificate of Incorporation or Bylaws of Buyer, or any agreement,
judgment, decree, order, law, rule or regulation or other restriction
applicable to it, or to which it is a party or by which Buyer or its property
or assets is bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of Buyer.
(b) Buyer Consents Obtained. Other than the approval referred
to in Section 3.1(a) (HSR Act) and except for the Permits, no consents,
approvals or authorizations of third parties are required in connection with
Buyer's valid execution, delivery, or performance hereof and the Related
Agreements or the consummation of any of the transactions contemplated hereby
or thereby on the part of it (collectively, the "Buyer Consents"), and has
taken all other action necessary for the consummation by Buyer of the
transactions contemplated by this Agreement or the Related Agreements.
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7.3 No Brokers Fees; No commissions. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried on by
Buyer directly with the Sellers without any act by Buyer that would give rise
to any claim against the Sellers or their Affiliates for a brokerage
commission, finder's fee or other similar payment.
7.4 HSR Act. Buyer has made all filings required under the HSR Act,
has fully complied with the provisions of the HSR Act and the rules and
regulations promulgated thereunder, and has fully complied with all requests
for information from the Federal Trade Commission and the Department of
Justice. The information contained in Buyer's filings under the HSR Act is
accurate and complete and such filings do not include any incorrect statements
or omit to include any information necessary to make the statements therein not
misleading. The copies of Buyer's filings under the HSR Act that have been
provided to Seller are true and complete copies of such filings.
ARTICLE 8.
Covenants of Sellers
From the execution hereof until the Closing, the Stockholders jointly
and severally, and until the Closing occurs the Company and Express jointly and
severally with the Stockholders, covenant and agree as follows:
8.1 Conduct of Businesses of the Company and the Subsidiaries Pending
Closing. Unless otherwise expressly contemplated by this Agreement or approved
in writing by Buyer, the businesses and operations of the Company and the
Subsidiaries shall be conducted only in, and the Company and the Subsidiaries
shall not take any action except in, the ordinary course of business and
consistent with past practices, including the payment, in accordance with past
payment practices, of all accounts payable of the Company or any of its
Subsidiaries. Without limitation, neither the Company nor the Subsidiaries
shall (i) dispose of any assets, including without limitation mortgage loans,
other than sales of mortgage loans at auction to parties other than any Seller
or any Affiliate of any Seller in the ordinary course of business and
consistent with past practices, (ii) incur or become subject to any debt,
liability (including repurchase obligations) or lease obligation, other than
current liabilities incurred in the ordinary course of business (other than
such liabilities to DLJ) that do not exceed $25,000 individually, or $500,000
in the aggregate, (iii) pay any bonuses to or alter the compensation or benefit
of any director, officer, employee, person or entity (other than bonuses to the
Company's employees (but not Calmac, the Jedinaks or any Affiliate of Calmac or
the Jedinaks) for the quarter ended September 30, 1996 that do not exceed 5% of
the quarterly payroll on an aggregate basis and that otherwise are in the
ordinary course of business and consistent with past practices), (iv) declare
any dividend or other distribution on the capital stock of the Company or any
Subsidiary, (v) enter into any transaction or agreement with any Affiliate or
associate of the Company or any Subsidiary, (vi) institute any planned
reduction in force, (vii) pay any federal or state income
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taxes in respect of the approximately $3.0 million phantom income tax liability
relating to the REMICs, (viii) close any branch office of the Company or any
Subsidiary, (ix) take any action that will cause any of the Company's
representations or warranties to be untrue or incorrect, or (x) omit any action
that the Company or any Subsidiary would take in the ordinary course of
business, which omission will cause the Company's representations or warranties
to be untrue or incorrect.
8.2 Access to Information and Employees. Sellers shall permit, upon
reasonable notice during normal business hours, Buyer and its Representatives
(defined below) to visit and inspect any of the properties of the Company or
the Subsidiaries, including books and records, and to discuss the affairs,
finances and accounts of the Company and the Subsidiaries and the Buyer's
prospects, plans and intentions with Company's and Subsidiary's officers,
employees, brokers and independent public accountants, as often as any such
person may deem necessary or desirable and reasonably request.
In this Agreement, "Representatives" means, collectively, a
party's directors, officers, employees, stockholders, partners, financial
parties in interest, agents, advisors, attorneys, accountants, consultants,
Affiliates, financing sources and representatives of any such source,
representatives, and any person or entity being considered for any such role.
8.3 No Solicitation. Sellers shall not, directly or indirectly,
through any Representatives or otherwise, solicit, accept, or entertain offers
from, negotiate with or in any manner encourage, accept or consider any
proposal of, or enter into any agreement with any person other than Buyer
relating to the acquisition of the Company or any Subsidiary or any stock,
business or substantial asset of the Company or any Subsidiary, whether through
purchase, merger, consolidation or other business combination. If any Seller
receives any contact, inquiry or proposal regarding the foregoing, then such
Seller shall notify the party making such proposal that the Sellers are
contractually prohibited from engaging in such discussions.
8.4 Financial Statements. The Company shall deliver to Buyer not
later than the 15th business day of each succeeding month, financial statements
of the Company and of Express of the kind described in Section 6.2 (Financial
Information) for the month ended September 30, 1996 and each subsequent month
before the Closing.
8.5 Express Acquisition. Sellers shall cause the Company to exercise
its rights under the Express Option.
8.6 Maintain Organization. Sellers shall cause the Company to take
such action as may be necessary to maintain, preserve, renew and keep in favor
and effect the existence, rights and franchises of the Mortgage Business and
will use its best efforts to maintain, preserve and renew the Mortgage Business
and the Acquired Assets (including without limitation the Subsidiaries) intact,
and to preserve, protect and maintain for Buyer the good will of the
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employees and brokers of the Mortgage Business, to keep available to Buyer the
present officers, employees and brokers of the Mortgage Business, and to
preserve for Buyer the present relationships with payors, suppliers, referral
sources, customers and clients of the Mortgage Business and others having
business relationships with the Mortgage Business. Sellers will consult with
Buyer on strategies for maintaining and preserving the Mortgage Business and
effecting an orderly transition to Buyer's ownership of the Mortgage Business
and the Acquired Assets.
8.7 401k Plan Termination. The Company shall terminate the 401k Plan
in accordance with applicable law.
8.8 Cancellation of Jamboree Lease. The Company shall effect the
termination of its lease in respect of the Jamboree Boulevard Property and the
return to the Company of the deposit in the amount of $40,000 held by the
landlord in respect of said lease on the Jamboree Boulevard property.
8.9 Assist in Obtaining Licenses, Etc. Sellers shall reasonably
assist Buyer in obtaining all Permits necessary for Buyer to operate the
Mortgage Business and, in lieu of obtaining any or all of said Permits, Sellers
shall reasonably assist Buyer in entering into satisfactory subcontracting or
loan purchase arrangements with the Company under the Company's existing
Permits, as determined by Buyer, on terms reasonably satisfactory to the
parties thereto.
8.10 Sellers' Consents. Sellers shall use commercially reasonable
efforts to obtain the Sellers' Consents.
8.11 Buyer Registration Statement. The Stockholders and the Jedinaks
shall reasonably cooperate, and shall cause their respective Representatives
(defined below) to cooperate, with Buyer and Buyerparent in connection with
Buyerparent's preparation and filing of a Registration Statement on Form S-3
and the consummation of a public offering of common stock of AMRESCO, INC.
("Buyerparent") pursuant to such Registration Statement.
ARTICLE 9.
Post-Closing Agreements
After the Closing, the respective Sellers (as indicated below) on the
one hand, and Buyer on the other, covenant and agree as follows:
9.1 Further Actions. The Sellers each shall execute and deliver at
their own expense, such further instruments of transfer and conveyance,
documents and certificates as may be reasonably requested by Buyer in order to
more effectively convey and transfer to Buyer the
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Acquired Assets, to aid and assist in reducing to possession or exercising
rights with respect to the Acquired Assets, or to consummate any of the
transactions contemplated by this Agreement.
Sellers shall as promptly as practical, but in no event later than three
business days after receipt deliver to Buyer any cash, checks, mail, packages,
notices and other similar communications they receive (in their respective
roles as Stockholders, directors, officers, employees or agents of the Company
or any Subsidiary) that relate to the Mortgage Business (other than the
Retained Assets) or constitute Acquired Assets. Each Seller shall endorse in
favor of Buyer any checks or other instruments of payment that by their terms
are payable to such Seller but that relate to the Mortgage Business (other than
the Retained Assets) or constitute Acquired Assets. Sellers shall immediately
forward to Buyer any telephone calls and any telecopy, telegraph or other
communications received by them in respect of the Mortgage Business (other than
the Retained Assets).
Buyer shall as promptly as practical, but in no event later than three
business days after receipt deliver to the Company any cash, checks, mail,
packages, notices and other similar communications Buyer receives that relate
to the Retained Assets. Buyer shall endorse in favor of the Company any checks
or other instruments of payment that relate to the Retained Assets. Buyer shall
immediately forward to the Company any telephone calls and any telecopy,
telegraph or other communications received by Buyer in respect of the Retained
Assets.
9.2 Cooperation. Sellers shall use their commercially reasonable
efforts to aid Buyer in establishing itself as the new owner and operator of
the Mortgage Business and, in connection therewith, shall use their best
efforts to maintain the goodwill and reputation of the Mortgage Business with
all suppliers, customers, distributors, creditors and others having business
relations with the Company and the Subsidiaries and in the business community
generally. Sellers shall reasonably cooperate, and shall cause their
respective Representatives to reasonably cooperate, with Buyer and Buyerparent
in connection with Buyerparent's preparation and filing of a Registration
Statement on Form S-3 and the consummation of a public offering of common stock
of Buyerparent pursuant to such Registration Statement. Buyer shall reasonably
cooperate, and shall cause its respective Representatives to reasonably
cooperate, with Sellers in connection with any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) arising after the Closing relating
to the business or operations of the Mortgage Business prior to the Closing,
including the business or operations of the Subsidiaries prior to the Closing.
9.3 Inspection of Records. The Company and Subsidiaries shall each
retain and make their respective books and records (including work papers in
the possession of their respective accountants) available for inspection and
copying by the other parties and their representatives, for reasonable business
purposes at all reasonable times during normal business hours, for a seven-year
period after the Closing Date, with respect to all transactions of the Company
and the Subsidiaries occurring prior to and those relating to the Closing, and
the historical financial
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condition, assets, liabilities, operations and cash flows of the Company and
the Subsidiaries for such periods. Buyer shall provide the Company's
Representatives reasonable access to books and records concerning the Company,
the Mortgage Business and the Acquired Assets in connection with the audit of
the Company's financial statements for periods prior to Closing and for other
reasonable purposes.
9.4 Agent for Service of Process. Until December 31, 2003, Calmac
and the Jedinaks shall maintain in full force and effect their respective
appointment of CT Corporation as their respective agent for service of process
in Reno, Nevada.
9.5 Use of Names. Sellers shall not use the names "Quality Mortgage
USA, Inc.," "Express Funding, Inc.,""Save-More Insurance Services, Inc.,"
"Commonwealth Trust Deed Services, Inc.," "Quality Funding, Inc.," and "Quality
Mortgage Acceptance Corp." (collectively, the "Names"), any name using the term
"Quality," any similar names or any other name ever used by the Company or any
Subsidiary in the conduct of the Mortgage Business or related activities of the
Company and the Subsidiaries. Sellers shall cooperate with Buyer in enabling
Buyer to utilize the Names.
9.6 Employees. The Company shall terminate its employees as of the
Closing Date. Buyer may, but shall not be obligated to, make offers of
employment to any of the employees of the Company as of the Closing Date.
Buyer and the Company shall coordinate the timing of the Company's notices of
termination and the Buyer's offers of employment to minimize the disruptive
effect thereof on the employees.
(a) With respect to any employees of the Company who accept
Buyer's offer of employment, Buyer shall hire such employees at their
then-current rate of compensation and shall assume and be responsible for all
costs and liabilities (including without limitation accrued but unused vacation
time, paid time off and severance pay) associated with such employees. For all
such employees who accept Buyer's offer of employment, such employment shall
commence as of the Closing Date and shall be deemed for all purposes to have
occurred with no interruption, break in service of termination of employment.
(b) With respect to any employees of the Company not employed
by Buyer as of the Closing Date, Buyer shall assume and be responsible for the
cost of all accrued but unused vacation time, paid time off and severance pay
associated with the termination of the employees by the Company, including
severance payments, if any, arising out of Sellers' failure to give notice
under the WARN Act (defined below).
(c) Buyer shall assume and be responsible for all liabilities
in connection with claims incurred under (i) the Company's Metrahealth health
benefits plan and the Company's dental and life insurance coverage plans for
employees, each as currently in effect or (ii) any Subsidiary's employee
welfare benefit plans (as defined in Section 3(1) of ERISA) to the extent
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any of such Subsidiaries' employee welfare benefit plans are continued after
the Closing Date by Buyer.
(d) Buyer and Sellers shall perform their respective
undertakings with respect to retention and severance payments as set forth in
the respective letter agreements with certain managers of the Company, which
letter agreements shall be in a form mutually satisfactory to Calmac, Buyer and
DLJ.
(e) The Company shall comply with all notice and other
requirements under the Workers Adjustment and Retraining Notification Act (the
"WARN Act").
9.7 Mortgage Loan Reporting. Buyer will use commercially reasonable
efforts to prepare and submit for all periods beginning on or after January 1,
1996 (a) Form 1098s, Form 1099s, Form W-2s and personal property tax reports
and (ii) all reports required pursuant to the Home Mortgage Disclosure Act. At
Buyer's request, the Company will reasonably cooperate with Buyer to assist
Buyer in preparing such forms and reports. Such reasonable cooperation may
include making the records identified as Retained Assets available to Buyer in
Orange County, California. Buyer will reasonably assist Sellers in completing
the financial statements and reports required to be filed with HUD.
9.8 Maintain Insurance. The Company shall reasonably cooperate with
Buyer to maintain the Company's existing health, dental and life insurance
coverage for employees in place through December 31, 1996 at Buyer's expense.
9.9 Non-Solicitation by Buyer. Buyer and its Affiliates shall not
solicit borrowers to refinance loans previously sold or securitized by the
Company; provided, however, that the limitation set forth in this Section shall
not apply to (a) solicitations that are directed to the general public at large
(including without limitation mass mailings based on commercially acquired
mailing lists and newspaper, radio and television advertisements) or (b)
responses to unsolicited requests or inquiries made by a borrower or an agent
of a borrower.
9.10 Payment of Bonuses. In the event that the Closing shall occur
prior to November 1, 1996 and the Company shall not have previously paid the
regular quarterly bonuses to employees for the quarter ended September 30,
1996, Buyer shall pay to the employees bonuses consistent in amount with past
practice (and in no event exceeding 5% of the quarterly payroll). Calmac may
furnish to the Company a list of proposed bonuses.
9.11 DLJ Stockholders' Nonsolicitation.
(a) For a period ending on the second anniversary of the
Closing Date (such period being the "Term"), the DLJ Stockholders shall not,
directly or indirectly, either for the DLJ Stockholders or any other person,
(A) induce or attempt to induce any employee of Buyer
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or any subsidiary of the Buyer to leave the employ of Buyer or any subsidiary
of Buyer, (B) in any way interfere with the relationship between Buyer or any
subsidiary of Buyer and any employee thereof, or (C) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any employee of
Buyer or any subsidiary of Buyer. Notwithstanding anything in this Agreement
to the contrary, the DLJ Stockholders shall not be prohibited from engaging in
general solicitations for employees by such means as, without limitation,
placing classified ads or other advertisements in newspapers or magazines in
general circulation or participating in job fairs, or hiring any employees of
Buyer or any subsidiary of Buyer responding to such general solicitations.
(b) The DLJ Stockholders acknowledge that (a) the businesses
of the Company and the Subsidiaries are national in scope; (b) their products
and services are marketed throughout the United States; (c) the Company and the
Subsidiaries compete with other residential mortgage origination businesses
that are or could be located in any part of the United States; (d) Buyer has
required that the DLJ Stockholders make the covenants set forth in this Section
as a condition to Buyer's acquisition of the Acquired Assets; (e) the
provisions of this Section are reasonable and necessary to protect and preserve
the Mortgage Business and the Acquired Assets of the Company and the
Subsidiaries; and (f) the Mortgage Business and the Acquired Assets would be
irreparably damaged if the DLJ Stockholders were to breach the covenants set
forth in this Section.
ARTICLE 10.
Indemnification
10.1 Survival; Etc.
(a) Contents of this Agreement. The representations,
warranties, covenants and agreements made in any Related Agreement, Exhibit or
Disclosure Schedule shall be deemed representations, warranties, covenants and
agreements made herein.
(b) No Effect on Liability. None of (i) the consummation of
the transactions contemplated by this Agreement or the Related Agreements, (ii)
the delay or omission of any party to exercise any of its rights under this
Agreement or any Related Agreement or (iii) any investigation or disclosure
that any party makes, any notice that any party gives, or any knowledge that
any party obtains as a result thereof, or otherwise, shall (A) affect the
liability of the parties to one another for Breaches (defined below) of this
Agreement or any Related Agreement or (B) prevent any party from relying on the
representations or warranties contained in this Agreement or any Related
Agreement.
As used herein, a party's "Breach" shall mean any representation or
warranty being untrue when made by such party, any breach of any of such
party's covenants or agreements or any
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other cause of action against such party arising from this Agreement, the
Related Agreements, any Exhibits hereto or thereto, the Disclosure Schedule or
the transactions contemplated in any such document.
(c) Survival. The representations and warranties of Buyer
and the Sellers made in this Agreement or any Related Agreement shall survive
the Closing and shall continue through April 30, 1998 except for the specific
representations and warranties and for the periods set forth in Section 10.1(d)
(Commencing Actions) below, which shall continue through the dates indicated
therein.
(d) Commencing Actions. If the Closing occurs, then any
action against any party to this Agreement for misrepresentations herein that
is not commenced pursuant to Section 10.7 (Dispute Resolution) on or before
April 30, 1998 shall be deemed waived, and no person shall have any remedy
against any party for any such misrepresentations; provided, however, that such
actions by Buyer or Buyerparent against the Sellers for misrepresentations (i)
in Section 6.4(b) (Tax Matters) shall be deemed waived if not commenced
pursuant to Section 10.7 (Dispute Resolution) on or prior to December 31, 2003,
and (ii) in Sections 6.4(c) (Litigation), 6.5(a) (Mortgage Banking Licenses and
Qualifications), 6.5(b) (Mortgage Loans), 6.5(c) (Enforceability), 6.5(d)
(Title to Certain Mortgage Loans; Mortgage Loan Conveyance Agreements), 6.5(e)
(No Recourse), or 6.5(f) (Compliance with Mortgage Banking Regulations) shall
be deemed waived if not commenced pursuant to Section 10.7 (Dispute Resolution)
on or before December 31, 1999.
(e) Allocation of Losses Among Sellers. Subject to the
limitations on Losses contained in Section 10.3 (Limitations on Indemnities)
herein, Calmac and the Jedinaks shall be responsible for paying (in the
aggregate) 55% of any Losses and the DLJ Stockholders shall be responsible for
paying 45% of any Losses; provided, however, that each Seller shall be 100%
responsible for any Losses that arise out of a breach of a representation or
warranty made by such Seller (other than the representations and warranties
also made by the Company) and the Sellers not making such representation or
warranty shall have no obligation with respect thereto. Without limiting the
foregoing, the Company shall be jointly and severally liable for 100% of any
Losses, subject to the limitations set forth in Section 10.3 (Limitations on
Indemnities). Any amounts paid by the Company with respect to any Losses shall
be deemed to have been paid 55% by the Jedinaks and 45% by the DLJ
Stockholders.
10.2 Indemnities.
(a) Indemnification of Buyer and Buyerparent. Subject to the
other provisions of this Article, after the Closing the Sellers shall jointly
(but not severally) defend, indemnify and hold Buyer and Buyerparent, together
with their respective directors, officers, employees, stockholders,
subsidiaries, agents, advisors, attorneys, accountants, consultants and
affiliates (collectively, the "Buyer Indemnitees"), harmless from and against,
and promptly reimburse the
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Buyer Indemnitees for, any loss, expense, damage, deficiency, liability, claim
or obligation, including investigative costs, costs of defense, settlement
costs (subject to approval as provided below) and attorneys' fees
(collectively, "Losses") that any Buyer Indemnitee incurs or to which any Buyer
Indemnitee becomes subject, which Losses arise out of or in connection with (i)
any Breach by any Seller of this Agreement or any Related Agreement, (ii) any
claim asserted by any third party that, assuming the truth thereof, would
constitute a Breach by any Seller of this Agreement or any Related Agreement,
(iii) the Proceedings, whether or not listed on the Disclosure Schedule to
Section 6.4(c) (Litigation), (iv) any violation by any Subsidiary of any
Consumer Credit Law on or prior to the Closing Date, or (v) the Retained
Liabilities (irrespective of whether the facts and circumstances giving rise to
any such Retained Liability are set forth on the Disclosure Schedule). Buyer
agrees that the indemnification provided by this Section 10.2(a) (as limited by
Section 10.3) shall be Buyer's sole and exclusive remedy for any Losses arising
out of or in connection with this Agreement and the Related Agreements.
The Sellers shall promptly pay to the Buyer Indemnitees the amount of
all Losses after the amount of any such Loss and such Seller's liability
therefor is established by (a) agreement in writing between Buyer and such
Seller, or (b) arbitration pursuant to Section 10.7 (Dispute Resolution) (any
Loss so determined is referred to herein as an "Established Loss"). If the
Sellers do not pay to the Buyer Indemnitees the amount of any Established Loss
on or before the 30th day after the determination described in item (a) or (b)
above, then on the 31st day after each determination, the amount of the
Established Loss payable by each delinquent Seller shall bear interest at a
rate of interest per annum that shall, from day to day, equal the lesser of (i)
the variable rate of interest published in the Money Rates section of the Wall
Street Journal (or the comparable section of such newspaper) as the prime rate
of interest on corporate loans at large United States money center commercial
banks plus five percent (5%) and (ii) the maximum rate allowed under applicable
law.
The parties hereto acknowledge and agree that the Sellers'
indemnification obligations under this Section are for the exclusive benefit of
Buyer and Buyerparent, enforceable only by them, and such indemnification
obligations shall not constitute rights or assets of any other person or
entity.
(b) Indemnification of the Sellers. Subject to the other
provisions of this Article and after the Closing, Buyer shall defend, indemnify
and hold the Sellers, together with their respective directors, officers,
employees, stockholders, subsidiaries, agents, advisors, attorneys,
accountants, consultants and affiliates (collectively, "Seller Indemnitees"),
harmless from and against, and promptly reimburse them for, any Losses that any
Seller Indemnitee incurs or to which any Seller Indemnitee becomes subject,
which Losses arise out of or in connection with (i) any Breach by Buyer of this
Agreement or any Related Agreement, (ii) any claim asserted by any third party
that, assuming the truth thereof, would constitute a Breach by Buyer of this
Agreement or any Related Agreement and (iii) the operation of the Mortgage
Business on or after the Closing.
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Buyer shall promptly pay to the Seller Indemnitees the aggregate amount
of all Losses after the amount of any such Loss and Buyer's liability therefor
is established by (a) agreement in writing between the Sellers and Buyer or (b)
arbitration pursuant to Section 10.7 (Dispute Resolution) (any Loss so
determined is referred to herein as an "Established Seller Loss"). If Buyer
does not pay to the Seller Indemnitees the aggregate amount of any Established
Seller Loss on or before the 30th day after the determination described in item
(a) or (b) above, then on the 31st day after such determination, the amount of
the Established Seller Loss shall bear interest at a rate of interest per annum
that shall, from day to day, equal the lesser of (i) the variable rate of
interest published in the Money Rates section of the Wall Street Journal (or
the comparable section of such newspaper) as the prime rate of interest on
corporate loans at large United States money center commercial banks plus five
percent (5%) and (ii) the maximum rate allowed under applicable law.
(c) Duty to Mitigate; Insurance. Buyer Indemnitees and Seller
Indemnitees shall use commercially reasonable efforts to mitigate Losses,
including without limitation by adjusting interest rates and terms of mortgage
loans to a commercially reasonable extent or by refinancing loans on
commercially reasonable terms under commercially appropriate circumstances.
Buyer shall use commercially reasonable efforts to recover insurance that may
be available to Buyer in request of Losses incurred by any Buyer Indemnitee;
provided, however, that Buyer shall not be required to delay recovering
indemnification hereunder by virtue of the possibility that such insurance
proceeds may be recovered. If any Seller indemnifies any Buyer Indemnitee for
any Loss that may be covered by insurance of Buyer, then upon such Seller's
reasonable request Buyer shall assign to such Seller (without warranty) Buyer's
right (if any) to recover under such insurance for such Loss (up to the amount
actually paid as indemnity by such Seller).
10.3 Limitations on Indemnities.
(a) Materiality. Notwithstanding anything to the contrary in
this Article, (i) neither the Buyer nor the Sellers shall have any
indemnification obligation for any individual Loss with a value of less than
$10,000 (provided, however, this limitation shall not apply to any such Loss in
respect of any Recourse Mortgage Loan) and (ii) neither Buyer nor the Sellers
shall have any indemnification obligations for individual Losses with values of
at least $10,000 (and Losses incurred by Buyer under $10,000 in respect of any
Recourse Mortgage Loan) until the beneficiaries of such indemnity collectively
have incurred such Losses with an aggregate value of at least $500,000. The
first $500,000 of such Losses described in Section 10.3(a)(ii) incurred by
Buyer shall be deemed a one-time basket for which Buyer and Buyerparent shall
not be entitled to seek indemnification from Sellers. The first $500,000 of
such Losses described in Section 10.3(a)(ii) incurred by the Sellers (excluding
Losses incurred by Sellers resulting from a breach by Buyer of subsections (a),
(b) or (c) of Section 9.6 (Employees), as to which the limitation in this
Section 10.3(a) shall not apply) shall be deemed a one-time basket for which
the Sellers shall not be entitled to seek indemnification from Buyer. For
purposes of this Article,
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all Losses from multiple claims in an action, arbitration, audit, hearing
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) shall be aggregated and the aggregate amount of such
Losses shall be deemed to be an individual Loss under this Section.
(b) Cap.
(i) Notwithstanding anything to the contrary in this
Article, the maximum aggregate indemnification obligation of the Sellers is
$10,000,000 (the "Maximum Indemnified Amount") allocated in accordance with
Section 10.1(e).
(ii) Notwithstanding anything to the contrary in this
Article (other than Section 10.3(c) (Exclusions) below), Buyer shall not have
any liability to the Sellers for indemnifiable Losses after Buyer has paid to
the Sellers in the aggregate the sum of $10,000,000 as indemnity pursuant to
claims made under Section 10.2(b) (Indemnification of the Sellers) for Losses
incurred by the Sellers.
(c) Exclusions. The limitations in this Section shall not
apply to claims for (i) Sellers' failure to deliver possession or title to the
Acquired Assets, as provided herein, (ii) fraud by any Seller in connection
with the consummation of the transactions described herein, which fraud is
determined by a trier of fact pursuant to Section 10.7 (Dispute Resolution)
below.
10.4 Notice and Opportunity to Defend.
(a) Notice, Etc. If any party (the "Indemnified Party")
receives notice of any third-party claim or commencement of any third-party
action or proceeding (an "Asserted Liability") with respect to which any other
party (an "Indemnifying Party") is obligated to provide indemnification
pursuant to Section 10.2(a) (Indemnification of Buyer and Buyerparent) or
Section 10.2(b) (Indemnification of the Sellers), the Indemnified Party shall
promptly give all Indemnifying Parties notice thereof. The Indemnified Party's
failure so to notify an Indemnifying Party shall not cause the Indemnified
Party to lose its right to indemnification under this Article, except to the
extent that such failure materially prejudices the Indemnifying Party's ability
to defend against an Asserted Liability that such Indemnified Party has the
right to defend against hereunder (and except as otherwise set forth in this
Article). Such notice shall describe the Asserted Liability in reasonable
detail, and if practicable shall indicate the amount (which may be estimated)
of the Losses that have been or may be asserted by the Indemnified Party. Each
of the Indemnifying Parties may defend against an Asserted Liability on behalf
of the Indemnified Party utilizing counsel reasonably acceptable to the
Indemnified Party, unless (i) the Indemnified Party reasonably objects to such
assumption on the grounds that counsel for such Indemnifying Parties cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest
or because there may be defenses available to the Indemnified Party that are
not available to such Indemnifying Parties, (ii) the Indemnifying Party is not
capable (by reason of insufficient
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financial capacity, bankruptcy, receivership, liquidation, managerial deadlock,
managerial neglect or similar events) of maintaining a reasonable defense of
such action or proceeding, or (iii) the action or proceeding seeks injunctive
or other equitable relief against the Indemnified Party.
(b) Defense Costs. If any Indemnifying Party defends an
Asserted Liability, it shall do so at its own expense and shall not be
responsible for the costs of defense, investigative costs, attorney's fees or
other expenses incurred to defend the Asserted Liability (collectively,
"Defense Costs") of the Indemnified Party (which may continue to defend, at its
own expense). Notwithstanding the foregoing, if the person or entity asserting
the Asserted Liability against the Indemnified Party claims or seeks amounts in
excess of the amount set forth in Section 10.3(b) (Cap), then the Indemnifying
Party shall remain liable for the Costs of Defense incurred by the Indemnified
Party, notwithstanding the limitation contained in Section 10.3(b) (Cap). If
the Indemnified Party assumes the defense of an Asserted Liability by reason of
clauses (i), (ii) or (iii) of Subsection (a) above, or because the Indemnifying
Party has not elected to assume the defense, then such Indemnifying Party shall
indemnify the Indemnified Party for its Defense Costs; provided, however, the
Indemnifying Parties shall not be liable for the costs of more than one counsel
for all Indemnified Parties in any one jurisdiction. An Indemnifying Party may
settle any Asserted Liability only with the consent of the Indemnified Party,
which consent shall not be unreasonably withheld.
(c) Third Party Claims. The parties shall reasonably
cooperate and cause their respective Representatives to reasonably cooperate
with each other with respect to the defense of any claims or litigation made or
commenced by third parties subsequent to the Closing Date with respect to which
indemnification is not available (for any reason) under this Article; provided
that the party requesting cooperation shall reimburse the other party for the
other party's reasonable out-of-pocket costs and expenses of furnishing such
reasonable cooperation.
10.5 Delays or Omissions, Etc.. Except as provided in Section 10.1
(Survival; Etc.) and Section 10.4(a) (Notice, Etc.), no delay or omission to
exercise any right, power or remedy inuring to any party upon any breach or
default of any party under this Agreement or any Related Agreement shall impair
any such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Neither the exercise of nor the failure
to exercise any remedy under this Agreement or any Related Agreement will
constitute an election of remedies or limit in any manner enforcement of any
remedies. All remedies either under this Agreement or any Related Agreement or
by law or otherwise afforded to the parties shall be cumulative and not
alternative.
10.6 Governing Law; Attorneys' Fees. This Agreement and the Related
Agreements shall be governed by, construed, interpreted and applied in
accordance with the laws of the State
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of California, without giving effect to any conflict of laws rules that would
refer the matter to the laws of another jurisdiction.
Subject to Section 10.7 (Dispute Resolution), each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court sitting in Orange County, California and, if such court does not have
jurisdiction, of the courts of the State of California in Orange County, for
the purposes of any action arising out of this Agreement or any of the Related
Agreements, or the subject matter hereof or thereof, brought by any other
party.
Calmac and the Jedinaks each agree that until December 31, 2003, service
of all writs, process and summonses in any suit, action arbitration or
proceeding brought in the United States under this Agreement or any Related
Agreement to which Calmac or either Jedinak is a party may be made upon CT
Corporation at its offices located at Xxx Xxxx Xxxxx Xxxxxx, Xxxx, Xxxxxx,
00000 (or any subsequent address of CT Corporation) and the Jedinaks each
hereby irrevocably appoint CT Corporation at its offices located at Xxx Xxxx
Xxxxx Xxxxxx, Xxxx, Xxxxxx, 00000 (or any subsequent address of CT Corporation)
their respective true and lawful attorney-in-fact in their name, place and
xxxxx to accept such service of any and all such writs, process and summonses,
and agree that the failure of CT Corporation to give each of Calmac and the
Jedinaks any notice of such service of process shall nor impair or affect the
validity of such service or of any judgment based thereon.
Subject to Section 10.7 (Dispute Resolution), to the extent permitted by
applicable law, each party hereby waives and agrees not to assert, by way of
motion, as a defense or otherwise in any such action, any claim (i) that it is
not subject to the jurisdiction of the above-named courts, (ii) that the action
is brought in an inconvenient forum, (iii) that it is immune from any legal
process with respect to itself or its property, (iv) that the venue of the
suit, action or proceeding is improper or (v) that this Agreement or any
Related Agreement, or the subject matter hereof or thereof, may not be enforced
in or by such courts.
The prevailing party in any action or proceeding relating to this
Agreement or any Related Agreement shall be entitled to recover reasonable
attorneys' fees and other costs from the non-prevailing parties, in addition to
any other relief to which such prevailing party may be entitled.
10.7 Dispute Resolution.
(a) Arbitration. All disputes and controversies of every kind
and nature between the parties hereto arising out of or in connection with this
Agreement (including without limitation this Article 10) or the Related
Agreements as to the construction, validity, interpretation or meaning,
performance, non-performance, enforcement, operation, or breach, shall be
submitted to arbitration pursuant to the following procedures:
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(i) After a dispute or controversy arises, either party
may, in a written notice delivered to the other party, demand such arbitration.
Such notice shall designate the name of the arbitrator (who shall be an
impartial person) appointed by such party demanding arbitration, together with
a statement of the matter in controversy.
(ii) Within 30 days after receipt of such demand, the
other party shall, in a written notice delivered to the other party, name such
party's arbitrator (who shall be an impartial person). If such party fails to
name an arbitrator, then the second arbitrator shall be named by the American
Arbitration Association (the "AAA"). The two arbitrators so selected shall
name a third arbitrator (who shall be an impartial person) within 30 days, or
in lieu of such agreement on a third arbitrator by the two arbitrators so
appointed, the third arbitrator shall be appointed by the AAA. If any
arbitrator appointed hereunder shall die, resign, refuse, or become unable to
act before an arbitration decision is rendered, then the vacancy shall be
filled by the methods set forth in this Section for the original appointment of
such arbitrator.
(iii) Each party shall bear its own arbitration costs and
expenses. The arbitration hearing shall be held in Orange County, California
at a location designated by a majority of the arbitrators. The Commercial
Arbitration Rules of the American Arbitration Association shall be incorporated
by reference at such hearing, the substantive laws of the State of California
(excluding conflict of laws provisions) shall apply.
(iv) The arbitration hearing shall be concluded within
ten (10) days unless otherwise ordered by the arbitrators and the written award
thereon shall be made within fifteen (15) days after the close of submission of
evidence. An award rendered by a majority of the arbitrators appointed
pursuant hereto shall be final and binding on all parties to the proceeding,
shall resolve the question of costs of the arbitrators and all related matters,
and judgment on such award may be entered and enforced by either party in any
court of competent jurisdiction.
(v) Except as set forth in Section 10.7(b) (Emergency
Relief), the parties stipulate that the provisions of this Section shall be a
complete defense to any suit, action or proceeding instituted in any federal,
state or local court or before any administrative tribunal with respect to any
controversy or dispute arising out of this Agreement or any of the Related
Agreements. The arbitration provisions hereof shall, with respect to such
controversy or dispute, survive the termination or expiration of this Agreement
or the Related Agreements.
Neither any party hereto nor the arbitrators may disclose the existence
or results of any arbitration hereunder without the prior written consent of
the other party; nor will any party hereto disclose to any third party any
confidential information disclosed by any other party hereto in the course of
an arbitration hereunder without the prior written consent of such other party.
Notwithstanding the foregoing, the parties acknowledge that Buyer and
Buyerparent may disclose the existence or results of an arbitration hereunder,
as well as information otherwise required to
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be disclosed by deposition, subpoena or other court or governmental action in
connection with Buyer's and Buyerparent's obligations under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, and in connection with Buyer's and Buyerparent's registration of
offerings of securities under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(b) Emergency Relief. Notwithstanding anything in this
Section 10.7 (Dispute Resolution) to the contrary and subject to the provisions
of Section 10.6 (Governing Law; Attorneys' Fees), either party may seek from a
court any provisional remedy that may be necessary to protect any rights or
property of such party pending the establishment of the arbitral tribunal or
its determination of the merits of the controversy.
ARTICLE 11.
Miscellaneous
11.1 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the permitted assigns, successors, heirs,
executors and administrators of the parties hereto. This Agreement may not be
assigned without the written consent of all other parties; provided, however,
Buyer may assign all of its rights and obligations hereunder to one of its
Affiliates with net a worth greater than or equal to that of Buyer; and further
provided that prior to the Closing no assignment may be made except to an
Affiliate with sufficient funds to satisfy Buyer's obligations under this
Agreement.
11.2 Entire Agreement; Amendment. This Agreement (including the
Schedules and Exhibits hereto) and the Related Agreements constitute the full
and entire understanding and agreement between the parties and supersede any
other agreement, written or oral, with regard to the subject matter hereof.
This Agreement supersedes (i) that certain Letter of Intent dated August 28,
1996 among certain of the parties hereto (the "Letter of Intent") and (ii) any
preexisting agreement regarding confidentiality between any of the parties
hereto. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the parties hereto.
11.3 Press Release. Prior to the Closing, none of the parties hereto,
nor any of their Representatives shall, without the prior written consent of
the others, which shall not be unreasonably withheld, make any statement,
public announcement or release to the press or any other third party with
respect to their discussions or this Agreement or permit any of its employees
or agents to make any such statement, announcement or release, until such time
as either party may be required by law, regulation or order to make disclosure.
The parties hereto also agree to notify each other promptly of any
disclosure with respect to such discussions or this Agreement which is required
by law, regulation or otherwise and to
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coordinate the disclosure of any information so required. If any party to this
Agreement becomes legally compelled by deposition, subpoena, or other court or
governmental action to disclose any of the information described in this
Section, then such party will give the other parties prompt notice to that
effect, and will cooperate with the other parties if the other parties seek to
obtain a protective order concerning the information described in this Section.
The legally compelled party will disclose only such information as its counsel
shall advise is legally required.
Notwithstanding the foregoing, the parties acknowledge that Buyer and
Buyerparent may disclose these discussions and this Agreement in connection
with Buyer's and Buyerparent's obligations under the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, and in
connection with Buyer's and Buyerparent's registration of offerings of
securities under the Securities Act, and the rules and regulations promulgated
thereunder.
11.4 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by certified or
registered mail, postage prepaid with return receipt requested, telecopy (with
hardcopy delivered by overnight courier service), or delivered by hand,
messenger or overnight courier service, and shall be deemed given when received
at the addresses of the parties set forth below, or at such other address
furnished in writing to the other parties hereto.
If to Calmac: X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
(000) 000-0000 (fax)
with a copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx
(000) 000-0000 (fax)
If to the DLJ Stockholders: c/o DLJ
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Counsel's Office
(000) 000-0000 (fax)
with a copy to: Xxxxxx & Xxxxxxx
Suite 5800
000 Xxxxx Xxxxxx Xxxxx
00
00
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxxxxx
(000) 000-0000 (fax)
and
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx Xxxxx, 00xx xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx
(000) 000-0000 (fax)
If to the Jedinaks: c/o Calmac Funding
X.X. Xxx 00000
Xxx Xxxxx, XX 00000
(000) 000-0000 (fax)
with a copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx
(000) 000-0000 (fax)
If to the Company (prior to Closing): 00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
(000) 000-0000 (fax)
If to the Company (after Closing): X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
(000) 000-0000 (fax)
and
x/x XXX
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Counsel's Office
(000) 000-0000 (fax)
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If to Buyer: x/x XXXXXXX, XXX.
Xxxxx 0000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
(000) 000-0000 (fax)
with a copy to: Xxxxxx and Xxxxx, LLP
Suite 3100
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Boeing
(000) 000-0000 (fax)
11.5 No Third Party Beneficiary, Etc. There shall be no third party
beneficiary of this Agreement, except that Buyerparent shall be entitled to the
benefits of this Agreement as though a party hereto. Neither the availability
of, nor any limit on, any remedy hereunder limit the remedies of any party
hereto against third parties. Buyer's assumption of the Assumed Contracts and
the Assumed Liabilities shall not create any right of third parties against
Buyer relating to events occurring prior to the Closing.
11.6 Reformation; Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, such provision shall be
reformed to best effectuate the intent of the parties and permit enforcement
thereof, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. If such
provision is not capable of reformation, it shall be severed from this
agreement and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; provided that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver
this Agreement. Any facsimile signature shall be replaced with an original
signature as promptly as practicable.
11.8 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement. References to "Sections"
herein are references to sections of this Agreement. The words "herein,"
"hereof," "hereto" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
11.9 Power of Attorney. Effective upon the Closing Date, the Company
hereby irrevocably constitutes and appoints Buyer and its successors, assigns
and designees as its true and lawful attorney-in-fact, with full power of
substitution, in the name of Buyer or Sellers, on
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behalf of and for the benefit of Buyer, to collect all accounts receivable and
other items being transferred, conveyed and assigned to Buyer as provided
herein; to endorse, without recourse, checks, notes and other instruments
relating to the Acquired Assets in the name of Sellers (subject to Article 10
hereof); to institute and prosecute, in the name of Sellers, all proceedings
which Buyer may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Acquired Assets; to defend and
compromise any and all actions, suits or proceedings in respect of any of the
Acquired Assets; and to do all such acts and things in relation to the Acquired
Assets as Buyer may deem advisable. Sellers agree that the foregoing powers
are coupled with an interest and shall be irrevocable by Sellers. Sellers
further agree that Buyer shall retain for its own account any amounts collected
pursuant to the foregoing powers. If Sellers receive any payments on account
of the Acquired Assets to which Buyer is entitled hereunder, Sellers shall
promptly notify Buyer thereof, hold such amounts to which Buyer is entitled in
trust for Buyer and promptly transfer and deliver to Buyer any cash or other
property received by Sellers, directly or indirectly, at any time after the
Closing Date in respect of any accounts receivable or otherwise relating to the
assets, properties, rights or businesses transferred, conveyed and assigned to
Buyer as provided herein. If Buyer receives any payments to which Sellers are
entitled hereunder, Buyer shall promptly notify the Sellers thereof, hold such
amounts to which Sellers are entitled in trust for the Sellers and promptly
transfer and deliver to the Sellers any such cash or other such property
received by Buyer.
11.10 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement, the Related Agreements and the transactions contemplated herein or
therein, including without limitation all fees and expenses of agents,
representatives, counsel and accountants. The Sellers shall not utilize assets
of the Company or any Subsidiary to pay such expenses.
* * * * *
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This Agreement has been executed and delivered as of the date first
written above.
The Company:
Quality Mortgage USA, Inc.
By: /s/ XXXX XXXXX
-----------------------------------
Xxxx Xxxxx
Vice President
The Stockholders:
----------------
Calmac Funding
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx
President
DLJ Mortgage Capital, Inc.
By: /s/ XXXX X. XXXXXXX
-----------------------------------
Xxxx X. Xxxxxxx
President
DLJ Quality Partners, L.P.
By: DLJ Mortgage Capital, Inc.,
General Partner
By: /s/ XXXX X. XXXXXXX
-----------------------------------
Xxxx X. Xxxxxxx
President
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The Jedinaks:
------------
Xxxxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXXX
---------------------------------
Spouse: /s/ XXXXXXX XXXXXXX
---------------------------------
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
---------------------------------
Spouse: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Xxxxxxx X. Xxxxxxx
Buyer:
-----
AMRESCO Residential Mortgage Corporation
By: /s/ XXXXX X. READING
---------------------------------
Xxxxx X. Reading
President
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EXHIBIT 1.1(a)
Acquired Assets. The Acquired Assets include, without limitation, the
following items:
A. the Subsidiaries (including Express), as evidenced by
certificates representing all the issued and outstanding
shares of capital stock of each such Subsidiary, duly
endorsed for transfer to Buyer;
B. the Mortgage Loans, with the underlying Notes duly
endorsed for assignment, with all servicing rights
released to Buyer held by the Company or any Subsidiary on
the Closing Date;
C. all furniture, furnishings, fixtures, equipment (including
office equipment), machinery, appliances, parts, computer
hardware, automobiles and trucks and all other tangible
personal property of every description and kind and all
replacement parts therefor, including without limitation
any of the foregoing that has been fully depreciated and
any such items stored or utilized at the Jamboree Property
(collectively, the "Equipment"), including, but not
limited to, the items referenced on Schedule 1.1C hereto
(which will be furnished prior to the Closing), and all
inventory of goods and supplies used or maintained in
connection with the Mortgage Business or located on any of
the Real Property or the Leased Premises, including, but
not limited to, order forms, loan applications, billing
forms, letterhead, consumables and office supplies;
D. all Real Property (including real estate owned),
including, but not limited to, the Real Property described
on Schedule 1.1D hereto (which will be furnished prior to
the Closing), including the structures and improvements
located therein and all fixtures and fixed assets attached
thereto or located therein, including machinery and
equipment situated thereon or forming a part thereof,
together with all appurtenances, easements, rights-of-way
and other rights or interests related thereto and the
leasehold interests and leasehold improvements in the
Leased Premises, including, but not limited to, the Leased
Premises described on Schedule 1.1D hereto;
E. all leasehold interests and leasehold improvements created
by all leases of personal property;
F. all Accounts Receivable, instruments and chattel paper;
G. all deposits (including the funds deposited in respect of
the Jamboree Property lease) and rights with respect
thereto;
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H. to the extent transferrable, all licenses (including
without limitation the Licenses, but excluding mortgage
lending licenses held by the Company), permits,
registrations, certificates, consents, accreditations,
approvals and franchises, together with assignments
thereof, if required, and all waivers, if any, of any
requirements pertaining to the above-listed items, to the
extent they are legally transferable by the Company;
I. the Intellectual Property;
J. the Assumed Contracts;
K. all customer lists, customer records and information;
L. all books and records, including without limitation
payroll, employee benefit, accounts receivable and
payable, maintenance, and asset history records, ledgers,
and books of original entry, all insurance records and
OSHA and EPA files;
M. all rights in connection with prepaid expenses with
respect to the Acquired Assets;
N. all letters of credit issued to the Company or any
Subsidiary;
O. all computer software and programs, including all
documentation, machine readable codes, printed listings of
codes, source codes with respect to such software and
programs and licenses and leases of software;
P. all sales and other data, policies and procedures, files
and records, manuals, invoices, customer lists, client
lists, broker lists, accounting records, business records,
operating data and other data, sales and promotional
materials, catalogues and advertising literature, but
excluding audio and video recordings of presentations in
which a Jedinak is a primary speaker;
Q. all telephone numbers of the Company and the Subsidiaries
and all lock boxes to which the Company's and the
Subsidiaries' account debtors remit payments;
R. all cash on hand and in banks, cash equivalents (exclusive
of letters of credit issued by customers of the Company
and the Subsidiaries), investments, and cash in transit
to the Company's and the Subsidiaries' bank accounts;
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S. any right (other than those relating to any Retained
Liability that does not also constitute a Loss that is
indemnifiable by the Sellers) the Company or any
Subsidiary has, had or may have to recover against persons
who are not parties to this Agreement for any event or
circumstance for which Buyer or Buyerparent could seek
indemnification pursuant to Section 10.2(a)
(Indemnification of Buyer and Buyerparent), including but
not limited to rights of the Company or any Subsidiary
under insurance policies, rights of indemnification,
rights of contribution, joint and several liability,
strict liability, contributory negligence or other rights
("Recovery Rights"). Recovery Rights include but are not
limited to rights to recover under insurance policies or
other contracts or from other parties for environmental
damages at the Real Property or Leased Premises, products
liabilities, failures of title, business interruptions or
warranty claims;
T. All subordinate and residual certificates from DLJ's
securitizations of mortgage loans purchased from the
Company and the Subsidiaries prior to the Closing Date;
U. special servicing rights and rights to prepayment
penalties on all Mortgage Loans serviced by Wendover;
V. prepayment penalties, late payment fees and other fees and
charges relating to the DLJ Mortgage Acceptance Corp.
Mortgage Pass-Through Certificates, Series 1996-QB and
1996-QJ;
W. all keys to any Real Property and Licensed Premises;
X. all plans and surveys, plats, specifications, engineer's
drawings and architectural renderings and similar items
related to the Acquired Assets, including, without
limitation, those relating to utilities, easements and
roads; and
Y. all accounts receivable in respect of advances by the
Company on loans held in securitizations or in
foreclosure;
Z. all accrued but unpaid interest receivable on Mortgage
Loans; and
AA. all funds held in escrow by the Company on serviced loans
in trust or otherwise.
3
70
EXHIBIT 1.1(b)
Retained Assets. The Retained Assets shall consist of the following:
A. The Company's corporate charter, minute and stock record
books, and corporate seal;
B. To the extent receivable after the Closing Date, all
prepayment penalties and late payment fees coming due on
all Mortgage Loans included in all of DLJ's
securitizations of Mortgage Loans purchased from the
Company and the Subsidiaries prior to the Closing Date,
excluding those relating to the DLJ Mortgage Acceptance
Corp. Mortgage Pass-Through Certificates, Series 1996-QB
and 1996- QJ;
C. any software for which a license is required and in
respect of which the Company or any Subsidiary does not
hold a proper license;
D. Any federal or state tax refunds relating to the Company's
tax returns or Express' tax returns for the periods ending
on or before the Closing Date.
E. Any insurance proceeds received by the Company or any of
the Subsidiaries with respect to any Retained Assets or
any of the Subsidiaries with respect to any Retained
Assets or Retained Liabilities.
F. All loan files for (i) mortgage loans which are funded and
sold or securitized prior to the Closing Date and (ii)
inactive and unfunded mortgage loans.
G. All files, bound volumes and closing binders relating to
closed mortgage loan sales and securitizations by DLJ
Mortgage Acceptance Corp. Copies of the files, bound
volumes and closing binders relating to the DLJ Mortgage
Acceptance Corp. - Mortgage Pass-Through Certificates,
Series 1996-QB and QJ will be provided to Buyer.
H. Records Management and Service Agreement dated as of May
12, 1993 by and between the Company and Iron Mountain.
71
EXHIBIT 1.2
Assumed Liabilities. The Assumed Liabilities shall consist of the
following:
A. All operating payables created in the ordinary course of
business (excluding payables in respect of Taxes incurred
or accrued prior to October 1, 1996) incurred or accrued
on or prior to the Closing Date (other than the
pre-Closing obligations excluded from item B below);
B. All obligations under the Assumed Contracts (other than
liabilities, claims, contracts or obligations of any
nature whatsoever, whether known, unknown, absolute,
accrued or contingent, or otherwise which the Company is,
or could become, subject to or liable for, that arise out
of the Company's nonperformance or breach of, or
misrepresentation under, the Assumed Contracts prior to
the Closing Date); and
C. All sales or transfer taxes payable with respect to the
transactions contemplated in this Agreement or the Related
Agreements to which Buyer is a party.
Assumed Contracts. The Assumed Contracts shall consist of the
following:
[see the attached list]
72
EXHIBIT 2.2(a)
GENERAL ASSIGNMENT AND XXXX OF SALE
GENERAL ASSIGNMENT AND XXXX OF SALE dated as of October ___, 1996,
from QUALITY MORTGAGE USA, INC., a California corporation (the "Seller") to
AMRESCO Residential Mortgage Corporation, a Delaware corporation ("Buyer").
RECITALS:
A. Seller, certain other parties and Buyer have previously
entered into an Asset Purchase Agreement dated as of October 9, 1996 (the
"Asset Purchase Agreement").
B. Pursuant to the Asset Purchase Agreement, Seller has agreed to
sell and convey to Buyer the Acquired Assets (herein so called) set forth on
Exhibit 1.1 attached hereto.
C. This Xxxx of Sale is executed and delivered pursuant to
Section 2.2(a) of the Asset Purchase Agreement.
W I T N E S S E T H
In consideration of the premises and agreements contained herein and
in the Asset Purchase Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
hereby act and agree as follows:
1. CONVEYANCE OF ASSETS. Seller hereby grants, bargains, sells,
conveys, transfers, assigns, sets over and delivers unto Buyer and its
successors and assigns the Acquired Assets that are not Real Property (as
defined and described in the Asset Purchase Agreement), TO HAVE AND TO HOLD the
Acquired Assets that are not Real Property and all rights, titles and interests
therein with all appurtenances thereto, unto Buyer, its successors and assigns
forever.
2. ADDITIONAL RIGHTS AND OBLIGATIONS OF THE PARTIES. Seller and
Buyer hereby agree and acknowledge that this Xxxx of Sale is being entered into
and delivered pursuant to and subject to the terms and conditions set forth in
the Asset Purchase Agreement, that additional rights and obligations of the
parties are expressly provided for therein, and that the execution and delivery
of this Xxxx of Sale shall not impair or diminish any of the rights or
obligations of any of the parties to the Asset Purchase Agreement, as set forth
therein.
3. COUNTERPARTS. This Xxxx of Sale may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; provided that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver
this Xxxx of Sale. Any facsimile signature shall be replaced with an original
signature as promptly as practicable.
73
4. DESCRIPTIVE HEADINGS. The titles of the paragraphs and
subparagraphs of this Xxxx of Sale are for convenience of reference only and
are not to be considered in construing this Xxxx of Sale. References to
"Sections" herein are references to sections of this Xxxx of Sale. The words
"herein," "hereof," "hereto" and "hereunder" and other words of similar import
refer to this Xxxx of Sale as a whole and not to any particular Article,
Section or other subdivision.
5. REASONABLE EFFORTS; COOPERATION. The parties shall use their
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the provisions
contained herein and to cooperate with each other in connection with the
foregoing.
6. FURTHER ASSURANCES. From time to time, as and when requested
by Buyer, Seller shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be taken,
such further or other actions as may be reasonably necessary to carry out the
purposes set forth herein, without unreasonable expense to Seller.
7. GOVERNING LAW. This Xxxx of Sale shall be governed by,
construed, interpreted and applied in accordance with the laws of the State of
California, without giving effect to any conflict of laws rules that would
refer the matter to the laws of another jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in Orange County,
California and, if such court does not have jurisdiction, of the courts of the
State of California in Orange County, for the purposes of any action arising
out of this Xxxx of Sale or the subject matter hereof, brought by any other
party.
To the extent permitted by applicable law, each party hereby waives
and agrees not to assert, by way of motion, as a defense or otherwise in any
such action, any claim (i) that it is not subject to the jurisdiction of the
above- named courts, (ii) that the action is brought in an inconvenient forum,
(iii) that it is immune from any legal process with respect to itself or its
property, (iv) that the venue of the suit, action or proceeding is improper or
(v) that this Xxxx of Sale or the subject matter hereof may not be enforced in
or by such courts.
The prevailing party in any action or proceeding relating to this Xxxx
of Sale shall be entitled to recover reasonable attorneys' fees and other costs
from the non-prevailing parties, in addition to any other relief to which such
prevailing party may be entitled.
8. BINDING EFFECT. The provisions hereof shall inure to the
benefit of, and be binding upon, the permitted assigns, successors, heirs,
executors and administrators of the parties hereto. This Xxxx of Sale may not
be assigned without the written consent of all other parties; provided,
however, Buyer may assign all of its rights and obligations hereunder to one of
its Affiliates.
9. DEFINITIONS. Capitalized terms not expressly defined in this
Xxxx of Sale shall have the meanings assigned to them in the Asset Purchase
Agreement.
* * * * *
2
74
This Xxxx of Sale has been executed as of the date first written
above.
Sellers:
-------
QUALITY MORTGAGE USA, INC.
By:
-------------------------------
Printed Name:
---------------------
Title:
----------------------------
Buyer:
-----
AMRESCO Residential Mortgage
Corporation
By:
-------------------------------
Printed Name:
---------------------
Title:
3
75
EXHIBIT 2.2(f)(1)
THE COMPANY'S CLOSING CERTIFICATE
This Closing Certificate (the "Certificate") is delivered pursuant to
Section 2.2(f) (Closing Certificates) of that certain Asset Purchase Agreement
(the "Agreement") entered into as of October 9, 1996, by and among AMRESCO
Residential Mortgage Corporation, a Delaware corporation ("Buyer"), on the one
hand, and Quality Mortgage USA, Inc., a California corporation (the "Company");
the stockholders of the Company: Calmac Funding, a Nevada corporation
("Calmac"), DLJ Mortgage Capital, Inc., a Delaware corporation ("DLJ") and DLJ
Quality Partners, L.P., a Delaware limited partnership ("DLJ Partners" and
together with DLJ, the "DLJ Stockholders"); and Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, residents of Las Vegas, Nevada and the sole stockholders of Calmac
(collectively, the "Jedinaks"), on the other hand. Calmac and the DLJ
Stockholders are sometimes collectively referred to herein as the
"Stockholders." The Company, the Stockholders and the Jedinaks are sometimes
collectively referred to herein as the "Sellers." The undersigned hereby
certifies, and represents and warrants to Buyer and AMRESCO, INC., a Delaware
corporation ("Buyerparent"), as follows:
1 Representations. The representations made by the Company in the
Agreement are true and correct in all respects as of the date hereof, except as
affected by the transactions contemplated by the Agreement or the Related
Agreements (as defined in the Agreement).
2 Covenants. The Sellers in all respects have performed or
complied with, and have caused the Company and the Subsidiaries to perform or
comply with, each covenant and agreement to be performed by each of them on or
prior to the Closing Date (as defined in the Agreement) under the Agreement or
any Related Agreement.
Executed as of , 1996.
--------- --
Quality Mortgage USA, Inc.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
76
EXHIBIT 2.2(f)(2)
DLJ STOCKHOLDERS' CLOSING CERTIFICATE
This Closing Certificate (the "Certificate") is delivered pursuant to
Section 2.2(f) (Closing Certificates) of that certain Asset Purchase Agreement
(the "Agreement") entered into as of October 9, 1996, by and among AMRESCO
Residential Mortgage Corporation, a Delaware corporation ("Buyer"), on the one
hand, and Quality Mortgage USA, Inc., a California corporation (the "Company");
the stockholders of the Company: Calmac Funding, a Nevada corporation
("Calmac"), DLJ Mortgage Capital, Inc., a Delaware corporation ("DLJ") and DLJ
Quality Partners, L.P., a Delaware limited partnership ("DLJ Partners" and
together with DLJ, the "DLJ Stockholders"); and Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, residents of Las Vegas, Nevada and the sole stockholders of Calmac
(collectively, the "Jedinaks"), on the other hand. Calmac and the DLJ
Stockholders are sometimes collectively referred to herein as the
"Stockholders." The Company, the Stockholders and the Jedinaks are sometimes
collectively referred to herein as the "Sellers." The undersigned hereby
certify, and represent and warrant to Buyer and AMRESCO, INC., a Delaware
corporation ("Buyerparent"), as follows:
1 Representations. The representations made by the DLJ
Stockholders in the Agreement are true and correct in all respects as of the
date hereof, except as affected by the transactions contemplated by the
Agreement or the Related Agreements (as defined in the Agreement).
2 Covenants. The Sellers in all material respects have performed
or complied with, and have caused the Company and the Subsidiaries to perform
or comply with, each covenant and agreement to be performed by each of them on
or prior to the Closing Date (as defined in the Agreement) under the Agreement
or any Related Agreement.
Executed as of , 1996.
---------- --
DLJ Mortgage Capital, Inc.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
DLJ Quality Partners, L.P.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
77
EXHIBIT 2.2(f)(3)
CALMAC'S AND THE JEDINAK'S CLOSING CERTIFICATE
This Closing Certificate (the "Certificate") is delivered pursuant to
Section 2.2(f) (Closing Certificates) of that certain Asset Purchase Agreement
(the "Agreement") entered into as of October 9, 1996, by and among AMRESCO
Residential Mortgage Corporation, a Delaware corporation ("Buyer"), on the one
hand, and Quality Mortgage USA, Inc., a California corporation (the "Company");
the stockholders of the Company: Calmac Funding, a Nevada corporation
("Calmac"), DLJ Mortgage Capital, Inc., a Delaware corporation ("DLJ") and DLJ
Quality Partners, L.P., a Delaware limited partnership ("DLJ Partners" and
together with DLJ, the "DLJ Stockholders"); and Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, residents of Las Vegas, Nevada and the sole stockholders of Calmac
(collectively, the "Jedinaks"), on the other hand. Calmac and the DLJ
Stockholders are sometimes collectively referred to herein as the
"Stockholders." The Company, the Stockholders and the Jedinaks are sometimes
collectively referred to herein as the "Sellers." The undersigned hereby
certifies, and represents and warrants to Buyer and AMRESCO, INC., a Delaware
corporation ("Buyerparent"), as follows:
1 Representations. The representations made by Calmac and the
Jedinaks in the Agreement are true and correct in all respects as of the date
hereof, except as affected by the transactions contemplated by the Agreement or
the Related Agreements (as defined in the Agreement).
2 Covenants. The Sellers in all material respects have performed
or complied with, and have caused the Company and the Subsidiaries to perform
or comply with, each covenant and agreement to be performed by each of them on
or prior to the Closing Date (as defined in the Agreement) under the Agreement
or any Related Agreement.
Executed as of , 1996.
--------- --
Calmac Funding, Inc.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
78
Xxxxxxx Xxxxxxx
--------------------------------------
Spouse:
------------------------------
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
--------------------------------------
Spouse:
------------------------------
Xxxxxxx Xxxxxxx
2
79
EXHIBIT 2.2(m)(1)
OPINION OF XXXXX, XXXXX & XXXXX TO SELLERS
The Opinion Letter may be governed by the Legal Opinion Accord of the
ABA Section of Business Law (1991). Capitalized terms used but not described
herein shall have the meanings assigned thereto in the Asset Purchase Agreement
(the "Agreement").
1. The Company, Calmac and each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own
its properties and to engage in its business as presently conducted or
contemplated. [Reference may be made to an agreed- upon description of the
business.]
2. The Agreement has been duly authorized by all necessary corporate
action on behalf of the Company and Calmac and has been duly executed and
delivered by the Company, Calmac, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx. Each
Related Agreement has been duly authorized by all necessary corporate action on
behalf of (as applicable) the Company and Calmac and has been duly executed and
delivered by (as applicable) the Company, Calmac, Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx. [Legal capacity of natural persons may be assumed.]
3. The Agreement is a valid and binding obligation of the Company,
Calmac, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx, enforceable against the Company,
Calmac, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx in accordance with its terms. Each
Related Agreement is a valid and binding obligation of the Company, Calmac,
Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx (as applicable), enforceable against the
Company, Calmac, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx in accordance with the
respective terms of such agreements.
4. The authorized capital stock of each Subsidiary consists of _____
shares of common stock, ____ par value, of which _____ shares are issued and
outstanding. All of the issued and outstanding shares of capital stock of the
Subsidiaries (the "Stock") have been duly authorized and validly issued and are
fully paid and nonassessable. None of the shares of the Stock were issued in
violation of preemptive rights of any person or entity. There are no
outstanding preemptive, conversion or other rights, or other options, warrants
or agreements granted by, issued by, or binding upon, any Subsidiary for the
issuance, purchase, redemption or acquisition of its equity securities. No
person or entity (including any holder of outstanding shares of capital stock
of any Subsidiary) has any preemptive or other rights to subscribe for or
otherwise acquire any shares of capital stock of any Subsidiary. [The first two
sentences may be based on counsel's review of the relevant corporate records.
The remainder may be based on such records and on officer's certificates signed
by senior executive officers of Quality Mortgage USA, Inc.]
5. The Company owns of record all of the Stock. Upon the delivery to
Buyer of certificates representing the Stock and upon consummation of the
transactions described in the Agreement, the Buyer will acquire good and valid
title to all of the Stock, free and clear of all adverse
80
claims. [The elements of Buyer's bona fide purchaser status and Buyer's lack of
knowledge of adverse claims may be assumed.]
6. Neither the execution and delivery of the Agreement or any Related
Agreement to which the Company, Calmac, Xxxxxxx Xxxxxxx or Xxxxxxx Xxxxxxx is a
party, nor the consummation of any or all of the transactions contemplated
thereby (a) violates any provision of the certificate of incorporation or
bylaws (or other governing instrument) of the Company, Calmac or any
Subsidiary, (b) after giving effect to the third-party consents obtained by the
Sellers and delivered to Buyer, (i) breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a breach or
default) under, or results in the termination of, or accelerates the
performance required by, or excuses performance by any person or entity of any
of its obligations under, or causes the acceleration of the maturity of any
debt or obligation pursuant to, any Assumed Contract [listed on a schedule to
such opinion], or (ii) results in a creation or imposition of any Lien upon the
Acquired Assets by operation of the terms of any such listed Assumed Contract,
or (c) violates any California or federal statute, law, regulation or rule, or
any judgment, decree or order of any court or governmental body known by such
counsel to be applicable to the Company, Calmac, any Subsidiary, Xxxxxxx
Xxxxxxx or Xxxxxxx Xxxxxxx. Following the consummation of the transactions
described in the Agreement and after giving effect to the third-party consents
obtained by the Sellers and delivered to Buyer, the Assumed Contracts will be
valid and enforceable in accordance with their terms by Buyer and the
applicable Subsidiaries to the same extent that they were enforceable by the
Company and the Subsidiaries prior to such consummation.
7. Except for requirements of the HSR Act, no consent, approval or
authorization of, or declaration, filing or registration with, any California
or federal governmental body is required in connection with the execution,
delivery and performance by Calmac, the Company or the Jedinaks of the
Agreement or any Related Agreements to which any such Seller is a party or the
consummation of the transactions contemplated in such agreements.
8. The Company, Calmac, the Subsidiaries, Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx have fully complied, to the extent applicable, with the Uniform
Commercial Code--Bulk Sales division of the California Codes in connection with
the transactions provided for in the Agreement and the Related Agreements.
9. Except as listed on a schedule to such opinion, there is no action,
suit, proceeding, litigation, or other investigation to the best of counsel's
knowledge after due inquiry, but without independent investigation, pending or
threatened (i) against the Company, Calmac, any Subsidiary, Xxxxxxx Xxxxxxx or
Xxxxxxx Xxxxxxx, or (ii) against any officers or directors of the Company or
any Subsidiary, with respect to any Subsidiary, the Acquired Assets, the
Assumed Contracts or the transactions contemplated by the Agreement and the
Related Agreements. Except as listed on a schedule to such opinion, such
counsel knows of no order, writ, injunction, judgment or decree of any court or
government agency or instrumentality to which the Company, Calmac, any
Subsidiary, Xxxxxxx Xxxxxxx or Xxxxxxx Xxxxxxx is a party relating to or
affecting any Subsidiary, the Acquired Assets, the Assumed Contracts or the
transactions contemplated by the Agreement and the Related Agreements.
- 2 -
81
Counsel need not express any opinion as to any provision of the
Agreement or any Related Agreement that purports to affect the jurisdiction or
venue of courts, to provide that remedies are cumulative, to provide that
decisions by a party are conclusive, to provide remedies inconsistent with the
Uniform Commercial Code (to the extent that the Uniform Commercial Code is
applicable thereto), to affect or establish evidentiary standards or limitation
periods or otherwise grant or limit rights or remedies of parties to such
agreements or of third parties in judicial, administrative or similar
proceedings, to sever unenforceable provisions, to require arbitration or to
provide for the award or payment of a party's attorneys' fees by another party.
- 3 -
82
EXHIBIT 2.2(m)(2)
OPINION OF XXXXXX AND XXXXXXX TO SELLERS
The Opinion Letter may be governed by the Legal Opinion Accord of the
ABA Section of Business Law (1991). Capitalized terms used but not described
herein shall have the meanings assigned thereto in the Asset Purchase Agreement
(the "Agreement").
1. Each of DLJ Mortgage Capital, Inc. and Xxxxxxxxx, Lufkin & Xxxxxxxx,
Inc. is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to own its properties and to engage in its business as presently
conducted or contemplated.
2. DLJ Quality Partners, L.P. is a limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with full power and authority to own its properties and to
engage in its business as presently conducted or contemplated.
3. The Agreement has been duly authorized by all necessary corporate or
other action on behalf of DLJ Mortgage Capital, Inc., DLJ Quality Partners,
L.P., and Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. and has been duly executed and
delivered by DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., and
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. Each Related Agreement has been duly
authorized by all necessary corporate or other action on behalf of (as
applicable) DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., and
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. and has been duly executed and delivered by
(as applicable) DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., and
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc.
4. The Agreement is a valid and binding obligation of DLJ Mortgage
Capital, Inc., DLJ Quality Partners, L.P., and Xxxxxxxxx, Lufkin & Xxxxxxxx,
Inc., enforceable against DLJ Mortgage Capital, Inc., DLJ Quality Partners,
L.P., and Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. in accordance with its terms.
Each Related Agreement is a valid and binding obligation of DLJ Mortgage
Capital, Inc., DLJ Quality Partners, L.P., and Xxxxxxxxx, Lufkin & Xxxxxxxx,
Inc. (as applicable), enforceable against DLJ Mortgage Capital, Inc., DLJ
Quality Partners, L.P., and Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. in accordance
with the respective terms of such agreements.
5. Neither the execution and delivery of the Agreement or any Related
Agreement to which the DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P.,
and Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. is a party, nor the consummation of any
or all of the transactions contemplated thereby (a) violates any provision of
the certificate of incorporation, bylaws, certificate of limited partnership,
agreement of limited partnership or other governing instrument of DLJ Mortgage
Capital, Inc., DLJ Quality Partners, L.P., or Xxxxxxxxx, Lufkin & Xxxxxxxx,
Inc., (b) after giving effect to the third- party consents obtained by the
Sellers and delivered to Buyer, (i) breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a breach or
default) under, or results in the termination of, or accelerates the
performance required by, or excuses performance by any person or entity of any
of its obligations under, or causes the acceleration of the maturity of any
debt or obligation pursuant to, any Assumed Contract, or (ii)
83
results in a creation or imposition of any Lien upon the Acquired Assets, or
(c) violates any statute, law, regulation or rule, or any judgment, decree or
order of any court or governmental body applicable to the Company, any
Subsidiary, DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., or
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., Following the consummation of the
transactions described in the Agreement and after giving effect to the
third-party consents obtained by the Sellers and delivered to Buyer, the
Assumed Contracts will be valid and enforceable in accordance with their terms
by Buyer and the applicable Subsidiaries.
6. Except for requirements of the HSR Act, no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
body is required in connection with the execution, delivery and performance of
the Agreement or any Related Agreements to which any Seller is a party or the
consummation of the transactions contemplated in such agreements.
7. There is no action, suit, proceeding, litigation, or other
investigation pending or, to the best of counsel's knowledge after due inquiry,
threatened (i) against DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P.,
or Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., or (ii) against any officers or
directors of DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., or
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., with respect to any Subsidiary, the
Acquired Assets, the Assumed Contracts or the transactions contemplated by the
Agreement and the Related Agreements. There is no order, writ, injunction,
judgment or decree of any court or government agency or instrumentality to
which DLJ Mortgage Capital, Inc., DLJ Quality Partners, L.P., or Xxxxxxxxx,
Lufkin & Xxxxxxxx, Inc. is a party relating to or affecting any Subsidiary, the
Acquired Assets, the Assumed Contracts or the transactions contemplated by the
Agreement and the Related Agreements.
Counsel need not express any opinion as to any provision of the
Agreement or any Related Agreement that purports to affect the jurisdiction or
venue of courts, to provide that remedies are cumulative, to provide that
decisions by a party are conclusive, to provide remedies inconsistent with the
Uniform Commercial Code (to the extent that the Uniform Commercial Code is
applicable thereto), to affect or establish evidentiary standards or limitation
periods or otherwise grant or limit rights or remedies of parties to such
agreements or of third parties in judicial, administrative or similar
proceedings, to sever unenforceable provisions, to require arbitration or to
provide for the award or payment of a party's attorneys' fees by another party.
2
84
EXHIBIT 2.2(p)
RELEASE
This RELEASE (the "Release") is made as of ____________ ___, 1996, by
and among QUALITY MORTGAGE USA, INC., a California corporation (the "Company"),
Calmac Funding, a Nevada corporation, DLJ Mortgage Capital, Inc., a Delaware
corporation, DLJ Quality Partners, L.P., a Delaware limited partnership, and
Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx, residents of Las Vegas, Nevada
(collectively, the "Sellers") to AMRESCO Residential Mortgage Corporation, a
Delaware corporation ("Buyer").
RECITALS:
A. Sellers and Buyer have previously entered into an Asset
Purchase Agreement dated as of October 9, 1996 (the "Asset Purchase
Agreement").
B. Pursuant to the Asset Purchase Agreement, the Company has
agreed to sell and convey to Buyer the Acquired Assets (as defined in the Asset
Purchase Agreement).
C. As an inducement to Buyer to enter into the Asset Purchase
Agreement and as a condition to Buyer's consummation of the Asset Purchase
Agreement, the Company has agreed to enter into and deliver this Agreement in
consideration of Buyer's entering into the Asset Purchase Agreement and the
significant consideration payable to the Company under the Asset Purchase
Agreement.
D. This Release is being delivered pursuant to Section 2.2(p) of
the Asset Purchase Agreement.
AGREEMENT:
In consideration of the premises and of the agreements contained
herein and in the Asset Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, and pursuant to the terms of the Asset Purchase Agreement, the
parties hereto agree as follows:
1. RELEASE.
(a) Sellers, individually and collectively, and for
themselves and their successors and assigns forever, do hereby
unconditionally and irrevocably compromise, settle, remise, acquit and
fully and forever release and discharge Buyer and its successors,
assigns, officers, directors, employees and agents, and the
Subsidiaries (as defined in the Asset Purchase Agreement) and their
successors, assigns, officers, directors, employees and agents
(collectively, the "Released Parties") from any and all claims,
counterclaims, set-offs, debts, demands, choses in action,
obligations, remedies, suits, damages and
85
liabilities (collectively, the "Sellers' Claims") arising from,
related to or in respect of the Acquired Assets, including without
limitation the Subsidiaries (as defined in the Asset Purchase
Agreement), whether now known, suspected or claimed, whether arising
under common law, in equity or under statute, which Sellers or their
successors or assigns ever had, now have, or in the future may claim
to have against the Released Parties and which may have arisen at any
time on or prior to the date hereof and may arise at any time in the
future, but excluding any claims in respect of any breach by the Buyer
of its obligations under the Asset Purchase Agreement or any Related
Agreement.
(b) Sellers covenant and agree never to commence,
voluntarily aid in any way, prosecute or cause to be commenced or
prosecuted against the Released Parties any action or other proceeding
based upon any of the released Sellers' Claims which may have arisen
at any time on or prior to the date hereof and may arise at any time
in the future.
(c) Sellers and Buyer hereby acknowledge that they
understand and agree that the execution of this Release does not
constitute in any manner whatsoever an admission of liability on the
part of any parties hereto for any matters covered by this Release,
but that such liability is specifically denied.
2. INTERCOMPANY INDEBTEDNESS. Sellers also specifically, without
limitation, acknowledge and agree, individually and collectively, that this
Release shall terminate any and all intercompany indebtedness, advances or
equivalent accounts owed by the Subsidiaries to any of the Sellers.
3. ADDITIONAL RIGHTS AND OBLIGATIONS. Sellers and Buyer hereby
agree and acknowledge that this Release is being entered into pursuant to and
subject to the terms and conditions set forth in the Asset Purchase Agreement
and that additional rights and obligations of the parties are expressly
provided for therein, and that the execution and delivery of this Release shall
not impair or diminish any of the rights or obligations of any of the parties
to the Asset Purchase Agreement as set forth therein.
4. COUNTERPARTS. This Release may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; provided that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver
this Release. Any facsimile signature shall be replaced with an original
signature as promptly as practicable.
5. DESCRIPTIVE HEADINGS. The titles of the paragraphs and
subparagraphs of this Release are for convenience of reference only and are not
to be considered in construing this Release. References to "Sections" herein
are references to sections of this Release. The words "herein," "hereof,"
"hereto" and "hereunder" and other words of similar import refer to this
Release as a whole and not to any particular Article, Section or other
subdivision.
2
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6. REASONABLE EFFORTS; COOPERATION. The parties shall use their
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the provisions
contained herein and to cooperate with each other in connection with the
foregoing.
7. FURTHER ASSURANCES. The parties agree to take such further
actions and execute and deliver such other documents, certificates, agreements
and other instruments as may be reasonably necessary or desirable in order to
consummate or implement this Release.
8. GOVERNING LAW. This Release shall be governed by, construed,
interpreted and applied in accordance with the laws of the State of California,
without giving effect to any conflict of laws rules that would refer the matter
to the laws of another jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in Orange County,
California and, if such court does not have jurisdiction, of the courts of the
State of California in Orange County, for the purposes of any action arising
out of this Release or the subject matter hereof, brought by any other party.
To the extent permitted by applicable law, each party hereby waives
and agrees not to assert, by way of motion, as a defense or otherwise in any
such action, any claim (i) that it is not subject to the jurisdiction of the
above- named courts, (ii) that the action is brought in an inconvenient forum,
(iii) that it is immune from any legal process with respect to itself or its
property, (iv) that the venue of the suit, action or proceeding is improper or
(v) that this Release or the subject matter hereof may not be enforced in or by
such courts.
The prevailing party in any action or proceeding relating to this
Release shall be entitled to recover reasonable attorneys' fees and other costs
from the non-prevailing parties, in addition to any other relief to which such
prevailing party may be entitled.
9. BINDING EFFECT. The provisions hereof shall inure to the
benefit of, and be binding upon, the permitted assigns, successors, heirs,
executors and administrators of the parties hereto. This Release may not be
assigned without the written consent of all other parties; provided, however,
Buyer may assign all of its rights and obligations hereunder to one of its
Affiliates.
10. DEFINITIONS. Capitalized terms not expressly defined in
this Release shall have the meanings assigned to them in the Asset Purchase
Agreement.
* * * * *
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This Release has been executed as of the date first written above.
Sellers:
QUALITY MORTGAGE USA, INC.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
Calmac Funding
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
DLJ Mortgage Capital, Inc.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
DLJ Quality Partners, L.P.
By: DLJ Mortgage Capital, Inc.
General Partner
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
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Xxxxxxx Xxxxxxx
----------------------------------------
Spouse:
---------------------------------
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
----------------------------------------
Spouse:
---------------------------------
Xxxxxxx Xxxxxxx
Buyer:
AMRESCO Residential Mortgage Corporation
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
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EXHIBIT 2.3(a)
BUYER CLOSING CERTIFICATE
This Closing Certificate (the "Certificate") is delivered pursuant to
Section 2.3(a) (Closing Certificate) of that certain Asset Purchase Agreement
(the "Agreement") entered into as of October 9, 1996, by and among AMRESCO
Residential Mortgage Corporation, a Delaware corporation ("Buyer"), on the one
hand, and Quality Mortgage USA, Inc., a California corporation (the "Company");
the stockholders of the Company: Calmac Funding, a Nevada corporation
("Calmac"), DLJ Mortgage Capital, Inc., a Delaware corporation ("DLJ") and DLJ
Quality Partners, L.P., a Delaware limited partnership ("DLJ Partners" and
together with DLJ, the "DLJ Stockholders"); and Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, residents of Las Vegas, Nevada and the sole stockholders of Calmac
(collectively, the "Jedinaks"), on the other hand. The undersigned hereby
certifies, and represents and warrants to the Company, as follows:
1 Representations. The representations made by Buyer in the
Agreement are true and correct in all respects as of the date hereof, except as
affected by the transactions contemplated by the Agreement or the Related
Agreements (as defined in the Agreement).
2 Covenants. Buyer in all material respects has performed or
complied with each covenant and agreement to be performed by Buyer on or prior
to the Closing Date (as defined in the Agreement) under the Agreement or any
Related Agreement.
Executed as of , 1996.
--------- --
AMRESCO Residential Mortgage Corporation
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
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EXHIBIT 2.3(d)
OPINION OF GENERAL COUNSEL OF BUYER
The Opinion Letter may be governed by the Legal Opinion Accord of the
ABA Section of Business Law (1991). Capitalized terms used but not described
herein shall have the meanings assigned thereto in the Asset Purchase Agreement
(the "Agreement").
1. Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to engage in its business as presently
conducted or contemplated.
3. The Agreement has been duly authorized by all necessary corporate
action on the part of Buyer and has been duly executed and delivered by Buyer.
Each Related Agreement to which Buyer it is a party has been duly authorized by
all necessary corporate action on the part of Buyer and has been duly executed
and delivered by Buyer.
4. The Agreement and each Related Agreement to which Buyer is a party is
enforceable against Buyer, subject to the General Qualifications.
8. Except for requirements of the HSR Act and except for the Permits, no
consent, approval or authorization of, or declaration, filing or registration
with, any governmental body is required in connection with the execution,
delivery and performance of the Agreement or any Related Agreements to which
Buyer is a party or the consummation of the transactions contemplated in such
agreements.
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EXHIBIT 2.4(a)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is made as
of October ___, 1996, by and among QUALITY MORTGAGE USA, INC., a California
corporation (the "Seller"), to AMRESCO Residential Mortgage Corporation, a
Delaware corporation ("Buyer").
RECITALS:
A. Seller, certain other parties and Buyer have previously
entered into an Asset Purchase Agreement dated as of October 9, 1996 (the
"Asset Purchase Agreement").
B. Pursuant to the Asset Purchase Agreement, Seller has agreed to
sell and convey to Buyer the Acquired Assets (as defined and described in the
Asset Purchase Agreement), which include certain assets, properties, or
interests of the Seller defined therein as the "Assumed Contracts."
C. Pursuant to the Asset Purchase Agreement, Buyer has agreed to
assume the Assumed Liabilities (as defined and described in the Asset Purchase
Agreement).
D. This Agreement is being delivered pursuant to Section 2.4(a)
of the Asset Purchase Agreement.
AGREEMENT:
In consideration of the premises and of the agreements contained
herein and in the Asset Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, and pursuant to the terms of the Asset Purchase Agreement, the
parties hereto agree as follows:
1. ASSIGNMENT. Seller, for itself and its successors and assigns
forever, hereby assigns, transfers and conveys to Buyer all of its rights in,
related to or arising out of, the Assumed Contracts.
2. ASSUMPTION. Buyer, for itself and its successors and assigns
forever, hereby accepts and assumes the due and punctual performance, discharge
and observation of, and shall perform, discharge and observe, all of Seller's
obligations in, related to, or arising out of the Assumed Contracts and the
Assumed Liabilities to the extent such obligations are required to be
performed, discharged or observed after the date hereof.
3. ADDITIONAL RIGHTS AND OBLIGATIONS. Seller and Buyer hereby
agree and acknowledge that this Agreement is being entered into pursuant to and
subject to the terms and conditions set forth in the Asset Purchase Agreement
and that additional rights and obligations
92
of the parties are expressly provided for therein, and that the execution and
delivery of this Agreement shall not impair or diminish any of the rights or
obligations of any of the parties to the Asset Purchase Agreement as set forth
therein.
4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; provided that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver
this Agreement. Any facsimile signature shall be replaced with an original
signature as promptly as practicable.
5. DESCRIPTIVE HEADINGS. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement. References to "Sections"
herein are references to sections of this Agreement. The words "herein,"
"hereof," "hereto" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
6. REASONABLE EFFORTS; COOPERATION. The parties shall use their
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the provisions
contained herein and to cooperate with each other in connection with the
foregoing.
7. FURTHER ASSURANCES. The parties agree to take such further
actions and execute and deliver such other documents, certificates, agreements
and other instruments as may be reasonably necessary or desirable in order to
consummate or implement this Agreement.
8. GOVERNING LAW. This Agreement shall be governed by,
construed, interpreted and applied in accordance with the laws of the State of
California, without giving effect to any conflict of laws rules that would
refer the matter to the laws of another jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in Orange County,
California and, if such court does not have jurisdiction, of the courts of the
State of California in Orange County, for the purposes of any action arising
out of this Agreement or the subject matter hereof, brought by any other party.
To the extent permitted by applicable law, each party hereby waives
and agrees not to assert, by way of motion, as a defense or otherwise in any
such action, any claim (i) that it is not subject to the jurisdiction of the
above- named courts, (ii) that the action is brought in an inconvenient forum,
(iii) that it is immune from any legal process with respect to itself or its
property, (iv) that the venue of the suit, action or proceeding is improper or
(v) that this Agreement or the subject matter hereof may not be enforced in or
by such courts.
The prevailing party in any action or proceeding relating to this
Agreement shall be entitled to recover reasonable attorneys' fees and other
costs from the non-prevailing parties, in addition to any other relief to which
such prevailing party may be entitled.
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9. BINDING EFFECT. The provisions hereof shall inure to the
benefit of, and be binding upon, the permitted assigns, successors, heirs,
executors and administrators of the parties hereto. This Agreement may not be
assigned without the written consent of all other parties; provided, however,
Buyer may assign all of its rights and obligations hereunder to one of its
Affiliates.
10. DEFINITIONS. Capitalized terms not expressly defined in this
Agreement shall have the meanings assigned to them in the Asset Purchase
Agreement.
* * * * *
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This Agreement has been executed as of the date first written above.
Seller:
------
QUALITY MORTGAGE USA, INC.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
Buyer:
-----
AMRESCO Residential Mortgage Corporation
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
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EXHIBIT 2.4(b)
[FORM FOR QUALITY, CALMAC AND THE JEDINAKS]
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is made as of October
__, 1996, by and between AMRESCO Residential Mortgage Corporation, a Delaware
corporation ("Buyer"), and Quality Mortgage USA, Inc., a California corporation
("Quality").
R E C I T A L S
A. Buyer, Quality and certain other parties have previously
entered into an Asset Purchase Agreement dated as of October 9, 1996 (the
"Asset Purchase Agreement").
B. Pursuant to the Asset Purchase Agreement, Quality and certain
other parties have agreed to sell and convey to Buyer the Acquired Assets.
C. As an inducement to Buyer to enter into the Asset Purchase
Agreement and as a condition to Buyer's consummation of the Asset Purchase
Agreement, Quality has agreed to enter into and deliver this Agreement in
consideration of Buyer's entering into the Asset Purchase Agreement and the
significant consideration payable to Quality under the Asset Purchase
Agreement.
D. This Agreement is being executed and delivered pursuant to
Section 2.4(b) of the Asset Purchase Agreement.
A G R E E M E N T
Based on the recitals set forth above and the promises contained in
this Agreement, the parties agree as follows:
1. Definitions.
Capitalized terms not expressly defined in this Agreement shall have
the meanings assigned to them in the Asset Purchase Agreement.
2. Acknowledgments by Seller.
Quality acknowledges that (a) as the owner of the assets being
conveyed to Buyer, Quality is familiar with the following, any and all of which
constitute confidential information of the Company or the Subsidiaries
(collectively the "Confidential Information"): (i) any and all trade secrets
specifically concerning the Mortgage Business and the Acquired Assets,
including data, know-how, formulae, compositions, processes, designs, graphs,
drawings, samples, inventions and ideas,
96
past, current and planned research and development, current and planned
marketing and sales methods and processes, customer lists, current or prior
loan applicants, broker lists, current or prior borrowers, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, compositions, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information) of Quality or the Subsidiaries and any other information,
whether or not documented in any manner, of Quality or the Subsidiaries that is
a trade secret within the meaning of applicable trade secret law; (ii) any and
all proprietary information concerning the businesses and affairs of Quality
and the Subsidiaries (other than historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials), however documented; and (iii) any and
all analyses, compilations, studies and summaries prepared by or for Quality or
the Subsidiaries containing or based, in whole or in part, on any information
included in the foregoing; (b) the businesses of Quality and the Subsidiaries
is national in scope; (c) their products and services are marketed throughout
the United States; (d) Quality and the Subsidiaries compete with other
single-family residential mortgage origination businesses that are or could be
located in any part of the United States; (e) Buyer has required that Quality
make the covenants set forth in Sections 3 and 4 hereof as a condition to
Buyer's acquisition of the Acquired Assets; (f) Sections 3 and 4 hereof are
reasonable and necessary to protect and preserve the Mortgage Business and the
Acquired Assets; and (g) the Mortgage Business and the Acquired Assets would be
irreparably damaged if Quality were to breach the covenants set forth in
Sections 3 and 4 hereof.
3. Confidential Information. Quality acknowledges and agrees that all
Confidential Information known or obtained by Quality, whether before or after
the date hereof, constitutes a part of the Mortgage Business being acquired by
Buyer and is an Acquired Asset. Therefore, Quality agrees that Quality shall
not, at any time, disclose to any unauthorized individual, corporation
(including any non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
labor union, governmental or quasi- governmental authority of any nature, or
other entity (collectively, a "Person") or use for its own account or for the
benefit of any third party any Confidential Information, whether or not such
information is embodied in writing or other physical form, without Buyer's
prior written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the
public other than as a result of Quality's fault or the fault of any other
Person bound by a duty of confidentiality to Buyer or the Subsidiaries;
provided, however, that if Quality becomes legally compelled by deposition,
subpoena or other court or governmental action to disclose any of the
Confidential Information, then Quality will give Buyer prompt notice to that
effect, and will cooperate with Buyer if Buyer seeks to obtain a protective
order concerning the Confidential Information. Quality will disclose only such
Confidential Information as its counsel shall advise is legally required.
Quality
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97
agrees to deliver to Buyer, at any time Buyer may request, all documents,
memoranda, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the Mortgage
Business or Acquired Assets.
4. Noncompetition.
As an inducement for Buyer to enter into and consummate the Asset
Purchase Agreement, Seller agrees that:
(a) For a period ending on the second anniversary of the
date hereof (such period being the "Term"):
(i) Quality shall not, directly or indirectly,
engage or invest in, own, manage, operate, finance, control,
or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or
in any manner connected with, lend Quality's name or any
similar name to, lend Quality's credit to, or render services
or advice to, any business whose products or activities
compete in whole or in part with the products or activities of
the Mortgage Business (including the conduct of a mortgage
conduit business or a mortgage telemarketing operation
targeted at brokers), anywhere within the United States.
Quality may engage through one office location in a retail
residential mortgage origination business that does not make
use of any of the Confidential Information. Quality agrees
that this covenant is reasonable with respect to its duration,
geographical area, and scope.
(ii) Quality shall not, directly or indirectly,
either for itself or any other person, (A) induce or attempt
to induce any employee of the Buyer or any subsidiary of the
Buyer to leave the employ of the Buyer or any subsidiary of
the Buyer, (B) in any way interfere with the relationship
between the Buyer or any subsidiary of the Buyer and any
employee thereof, (C) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person
known by Quality to be an employee of the Buyer or any
subsidiary of the Buyer, or (D) induce or attempt to induce
any broker, customer, supplier, licensee, or business relation
of the Buyer or any subsidiary of the Buyer to cease doing
business with the Buyer or any subsidiary of the Buyer, or in
any way interfere with the relationship between any broker,
customer, current or prior loan applicant, current or former
borrower, supplier, licensee, or business relation of the
Buyer or any subsidiary of the Buyer.
(iii) Quality shall not, directly or indirectly,
either for itself or any other person, do business with or
solicit the business of any person known to Quality to be a
customer of, or broker or potential broker for,
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98
the Mortgage Business, whether or not Quality had personal
contact with such person, with respect to products, services
or other business activities which compete in whole or in part
with the products, services or other business activities of
the Mortgage Business (other than the retail origination
business specifically permitted under Section 4(a)(i) hereof;
(iv) Quality shall not, directly or indirectly,
either for itself or any other person, solicit borrowers to
refinance loans previously sold or securitized by Buyer or its
Affiliates (including AMRESCO, INC. and its subsidiaries);
provided, however, that the limitation set forth in this
Section shall not apply to (a) solicitations that are directed
to the general public at large (including without limitation
mass mailings based on commercially acquired mailing lists and
newspaper, radio and television advertisements) or (b)
responses to unsolicited requests or inquiries made by a
borrower or an agent of a borrower.
(b) In the event of a material breach by Quality of any
covenant set forth in Subsection 4(a) of this Agreement, the term of
such covenant shall be extended by the period of the duration of such
breach;
(c) Quality shall not, at any time during or after the
Term, disparage Buyer, the Mortgage Business or any Subsidiary, or any
of their respective stockholders, directors, officers, employees,
brokers or agents; and
[(d) [Jedinaks only] Each of the Jedinaks shall, during
the Term, within ten days after accepting any employment, advise Buyer
and the Company of the identity of any employer of such Jedinak. Each
of the Jedinaks acknowledges that Buyer or the Company may serve
notice upon each such employer that such Jedinak is bound by this
Agreement and furnish each such employer with a copy of this Agreement
or relevant portions thereof.]
5. Compensation.
The consideration being paid to Quality pursuant to the Asset Purchase
Agreement includes consideration for this Agreement.
6. Remedies.
If Quality breaches the covenants set forth in Sections 3 and 4
hereof, then Buyer or any Subsidiary shall be entitled to the following
remedies:
(a) Damages from Quality;
(b) In addition to its right to damages and any other
rights it may have, to obtain injunctive or other equitable relief to
restrain any breach or threatened breach or otherwise to specifically
enforce the provisions of
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Sections 3 and 4 hereof, it being agreed that money damages alone
would be inadequate to compensate the Buyer or any Subsidiary and
would be an inadequate remedy for such breach; and
(c) The rights and remedies of the parties to this Agreement are
cumulative and not alternative.
7. Successors and Assigns.
The provisions hereof shall inure to the benefit of, and be binding
upon, the permitted assigns, successors, heirs, executors and administrators of
the parties hereto. This Agreement may not be assigned without the written
consent of all other parties; provided, however, Buyer may assign all of its
rights and obligations hereunder to one of its Affiliates.
8. Waiver.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.
9. Governing Law.
This Agreement shall be governed by, construed, interpreted and
applied in accordance with the laws of the State of California, without giving
effect to any conflict of laws rules that would refer the matter to the laws of
another jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in Orange County,
California and, if such court does not have jurisdiction, of the courts of the
State of California in Orange County, for the purposes of any action arising
out of this Agreement or the subject matter hereof, brought by any other party.
To the extent permitted by applicable law, each party hereby waives
and agrees not to assert, by way of motion, as a defense or otherwise in any
such action, any claim (i) that it is not subject to the jurisdiction of the
above- named courts, (ii) that the action is brought in an inconvenient forum,
(iii) that it is immune from
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100
any legal process with respect to itself or its property, (iv) that the venue
of the suit, action or proceeding is improper or (v) that this Agreement or the
subject matter hereof may not be enforced in or by such courts.
The prevailing party in any action or proceeding relating to this
Agreement shall be entitled to recover reasonable attorneys' fees and other
costs from the non-prevailing parties, in addition to any other relief to which
such prevailing party may be entitled.
10. Reformation.
If a court of competent jurisdiction determines that the limitations
as to time, geographical area or scope of activity to be restrained contained
in this Agreement are not reasonable and impose a greater restraint than is
necessary to protect the goodwill or other business interests of Buyer and the
Subsidiaries, then the parties agree that such court should (and Quality will
request such court to) reform this Agreement to the extent necessary to cause
the limitations contained in this Agreement as to time, geographical area and
scope of activity to be restrained to be reasonable and to impose a restraint
that is not greater than necessary to protect the goodwill or other business
interests of Buyer and the Subsidiaries and such court then shall enforce this
Agreement as reformed.
11. Entire Agreement.
This Agreement, the Asset Purchase Agreement (including the Schedules
and Exhibits thereto) and the other Related Agreements constitute the full and
entire understanding and agreement between the parties and supersede any other
agreement, written or oral, with regard to the subject matter hereof. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument
signed by the parties hereto.
12. Notices, Etc.
All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by certified or registered mail,
postage prepaid, return receipt requested, or delivered by hand, messenger,
scheduled overnight courier, or telecopy (hard copy to follow by scheduled
overnight courier) and shall be deemed given when received at the addresses set
forth below, or at such other address furnished in writing to the other parties
hereto.
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If to Quality: X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
(000) 000-0000 (fax)
and
x/x XXX Mortgage Capital
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Counsel's Office
(000) 000-0000 (fax)
with a copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx
(000) 000-0000 (fax)
If to Buyer: x/x XXXXXXX, XXX.
Xxxxx 0000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
(000) 000-0000 (fax)
13. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument. Any counterpart may be delivered by facsimile; provided
that attachment thereof shall constitute the representation and warranty of the
person delivering such signature that such person has full power and authority
to attach such signature and to deliver this Agreement. Any facsimile
signature shall be replaced with an original signature as promptly as
practicable.
14. Titles and Subtitles.
The titles of the paragraphs and subparagraphs of this Agreement are
for convenience of reference only and are not to be considered in construing
this Agreement. References to "Sections" herein are references to sections of
this Agreement. The words "herein," "hereof," "hereto" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
* * * * *
7
102
This Agreement has been executed and delivered as of the date first
written above.
AMRESCO Residential Mortgage Corporation
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
QUALITY MORTGAGE USA, INC.
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
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