EXECUTION VERSION

 

LOAN PURCHASE AGREEMENT

by and between

FIRST BANK

and

VIOLET PORTFOLIO, LLC

 

 

Dated as of January 23, 2013

 

 

 

 

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS 1 Section 1.1 Definitions. 1 Section 1.2 Terms Generally.
11 Section 1.3 Incorporation by Reference. 11 ARTICLE 2 PURCHASE AND SALE OF THE
TRANSFERRED LOANS 12 Section 2.1 Agreement to Sell and Purchase the Transferred
Loans; Excluded Assets. 12 Section 2.2 Excluded Assets and Seller Retained
Liabilities. 13 Section 2.3 Release and Transfer of Servicing. 13 Section 2.4
Servicing Agreement. 13 Section 2.5 Escrow; Impound Amounts. 14 Section 2.6
Expenses. 15 Section 2.7 Transfer Taxes and Title Costs. 15 Section 2.8 Letters
of Credit. 15 ARTICLE 3 REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 16
Section 3.1 Organization. 17 Section 3.2 Authorization of Agreement. 17 Section
3.3 Conflicts; Consents of Third Parties. 17 Section 3.4 Litigation. 18 Section
3.5 Financial Advisors. 18 Section 3.6 Transferred Loans. 18 ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER 23 Section 4.1 Organization. 23 Section
4.2 Authorization of Agreement. 23 Section 4.3 Conflicts; Consents of Third
Parties. 23 Section 4.4 Litigation. 24 Section 4.5 Financial Advisors. 24
Section 4.6 No Other Representations. 24 ARTICLE 5 CLOSING OF PURCHASE OF
TRANSFERRED LOANS 24 Section 5.1 Payment of Estimated Purchase Price;
Post-Closing Adjustments. 24 Section 5.2 Assignment and Delivery of Loan
Documents. 26 Section 5.3 Additional Conditions to Closing. 27 ARTICLE 6
Indemnification 27 Section 6.1 Survival. 27 Section 6.2 Indemnification. 28
Section 6.3 Indemnification Procedures. 29 Section 6.4 Certain Limitations on
Indemnification. 31 Section 6.5 Exclusivity; Equitable Remedies. 32 ARTICLE 7
MISCELLANEOUS PROVISIONS 32 Section 7.1 Expenses. 32

 

i

 

 

 

Section 7.2 Submission to Jurisdiction; Consent to Service of Process. 32
Section 7.3 Entire Agreement; Amendments and Waivers. 33 Section 7.4 Governing
Law. 33 Section 7.5 Notices. 33 Section 7.6 Severability. 33 Section 7.7 Binding
Effect; Assignment. 34 Section 7.8 Specific Performance; Remedies. 34 Section
7.9 Non-Recourse. 34 Section 7.10 Counterparts. 34 Section 7.11 Waiver of Jury
Trial. 35 Section 7.12 Post-Closing Cooperation Related to Transition of Loans.
35 Section 7.13 Litigation Transition. 35 Section 7.14 Insurance Policies. 36
Section 7.15 Further Assurances. 36 Section 7.16 Nondisclosure. 36 Section 7.17
Disclosure Schedule. 37

 

EXHIBIT A – Purchase Commitment/Settlement

EXHIBIT B – Bill of Sale and Assignment and Assumption Agreement

EXHIBIT C – Closing Date Statement

 

 

ii

 

LOAN PURCHASE AGREEMENT

(Servicing Released)

THIS LOAN PURCHASE AGREEMENT, is made and entered into as of January 23, 2013,
(hereinafter referred to as the “Agreement”), by and between FIRST BANK, a North
Carolina chartered banking corporation, as seller (hereinafter referred to as
“Seller” or the “Bank”), and VIOLET PORTFOLIO, LLC, a Delaware limited liability
company, as buyer (hereinafter referred to as “Buyer”).

WITNESSETH

WHEREAS, Seller desires to sell, transfer and assign to Buyer, and Buyer desires
to acquire and assume from Seller, all of the Purchased Assets and Assumed
Obligations, all as more specifically provided herein; and

WHEREAS, in order to effect an orderly transition of the servicing of the
Purchased Assets following Buyer’s acquisition and assumption of the Purchased
Assets and the Assumed Obligations, Seller has agreed to service the Transferred
Loans during the Interim Servicing Period, as more specifically provided herein.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

ARTICLE 1
DEFINITIONS

Section 1.1 Definitions.

All words and phrases shall have the respective meanings specified in this
ARTICLE 1 for all purposes of this Agreement.

“Accepted Servicing Practices” means the policies, procedures and practices of
Seller applicable to the servicing of the Transferred Loans by Seller in effect
on the date of this Agreement, but using no less care and diligence than would
be considered commercially reasonable by prudent mortgage lenders, loan
servicers and asset managers servicing, managing and administering similar loans
and properties.

“Action” means any action, Claim, suit, arbitration, alternative dispute
resolution mechanism, complaint, inquiry, investigation, litigation or
proceeding (judicial, administrative or arbitral) before any Governmental Body
or arbitration or mediation authority.

“Accountant” has the meaning set forth in Section 5.1(d).

“Affiliate” means, when used with respect to a specified Person, another Person
that either directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person. For the purposes of this definition, the term

 

 

“control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the introductory paragraph hereto.

“Allocated Purchase Price” has the meaning given to such term in the definition
of Master Asset Transfer Schedule.

“Ancillary Documents” means the Master Asset Transfer Schedules, Bill of Sale
and Assignment and Assumption Agreement and Purchase Commitment/Settlement.

“Applicable Law” means any federal, state, county, local or foreign statute,
law, ordinance, Order or regulation or code of any Governmental Body of
competent jurisdiction relating to the Transferred Loans.

“Assignment of Mortgage” means, with respect to a Mortgage, an assignment of the
Mortgage in recordable form, notice of transfer, or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale and assignment of all of
Seller’s right, title and interest in and to the Mortgage to Buyer, to be
prepared and executed by Seller in connection with each Transferred Loan
purchased by Buyer hereunder that is secured by a Mortgage.

“Assignment of Security Document” means, with respect to a Security Document, an
assignment of the Security Document, notice of transfer, or equivalent
instrument sufficient under Applicable Law to reflect the sale and assignment of
all of Seller’s right, title, and interest in and to the related Collateral to
Buyer, to be prepared and executed by Seller in connection with each Transferred
Loan purchased by Buyer hereunder that is secured by Collateral.

“Assumed Obligations” has the meaning set forth in Section 2.1(b).

“Backstop Deposit” has the meaning set forth in Section 5.1(b).

“Bank” has the meaning set forth in the introductory paragraph hereto.

“Bill of Sale, Assignment and Assumption Agreement” means the Bill of Sale and
Assignment and Assumption Agreement in the form attached hereto as Exhibit B.

“Borrower” means, with respect to a Note, the person(s) obligated to repay and
perform any other obligations pursuant to the Note.

“Buyer” has the meaning set forth in the introductory paragraph hereto.

“Buyer Documents” shall have the meaning set forth in Section 4.2(a).

“Buyer Indemnified Parties” shall have the meaning set forth in Section 6.2(a).

2

 

“Cash Flow” means, for any period, the sum of (a) payments of principal,
interest, fees or penalties actually received by Seller in respect of any of the
Transferred Loans and related Servicing Rights, (b) proceeds actually received
by Seller under any insurance policies in respect of any of the Transferred
Loans, (c) proceeds actually received by Seller from the sale or other
disposition of any of the Transferred Loans, (d) recoveries actually received by
Seller in respect of any charged-off Transferred Loans, and (e) any other
amounts actually received by Seller or its Affiliates or Representatives on
account of the Transferred Loans.

“Claim” means any claim, demand, assertion, legal proceeding, cause of action
(whether tort, contract or any other basis), loss, penalty, fine, forfeiture,
judgment, order or decree in any legal or administrative proceedings (including,
without limitation, bankruptcy and foreclosure proceedings).

“close of business” means, with respect to any date, 5:00 pm Eastern Standard
Time.

“Closing” means, subject to the terms and conditions set forth in this
Agreement, the consummation of the purchase and sale of the Purchased Assets and
the assumption of the Assumed Obligations as provided herein.

“Closing Date” means the date on which the Closing occurs, but not later than
January 23, 2013; provided that the conditions set forth in ARTICLE 5 shall have
been satisfied or waived (other than those conditions to be satisfied at the
Closing but subject to the satisfaction or waiver of those conditions), by such
date.

“Closing Date Statement” means a statement, substantially in the form of Exhibit
C, which contains the Estimated Purchase Price.

“Collateral” means the underlying personal property, if any, securing a
Transferred Loan, including all proceeds thereof.

“Commercial Loan” means an individual commercial loan sold by Seller and
purchased by Buyer pursuant to this Agreement, provided that such loan is also
identified as such on the Master Asset Transfer Schedule attached to the
Purchase Commitment/Settlement delivered on or prior to the Closing Date.

“Credit Party” means any borrower, guarantor, surety, indemnitor or any other
party obligated (directly or indirectly) to Seller under any of the Loan
Documents or in connection with any of the Purchased Assets.

“Credit Party Affiliate” means (a) any Credit Party, (b) any Person that,
directly or indirectly, has an ownership interest in any Credit Party, or (c)
any Person that, directly or indirectly, is owned by, or is under common
ownership with, any Credit Party.

“Cut-Off Date” means December 14, 2012.

“Deposit Account” has the meaning set forth in Section 2.8(c).

3

 

“Document Defect” means, with respect to any Transferred Loan, that any one (1)
or more of the documents identified in clauses (i) through (iv) of Section
5.2(a) either (a) are not delivered to Buyer or such other Person as Buyer shall
designate to Seller in writing (notwithstanding the fact that Seller is only
obligated under Section 5.2(a) to deliver to Buyer or its designee such
documents to the extent such documents are in the possession or control of
Seller or an Affiliate or Representative of Seller) or (b) fail to meet the
applicable requirements of clauses (i) through (iv) of Section 5.2(a).

“Drawing” has the meaning set forth in Section 2.8(a).

“Environmental Laws” means, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq.,
(“CERCLA”) the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. §§ 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
§§ 6901 et seq., (“RCRA”)the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., and the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et seq., the
Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq., and all rules and
regulations promulgated pursuant to any of the above statutes, and any federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, decree, order, rule, regulation,
permit condition, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Body, in each case relating to Environmental Matters.

“Environmental Matters” means any matters arising out of or relating to health
and safety, or pollution or protection of the environment or workplace,
including, without limitation, the ambient and indoor air, surface and ground
waters, land and soils, buildings, and indoor workplaces, and any of the
foregoing relating to the use, generation, transport, treatment, storage, or
disposal of any Hazardous Substances.

“Estimated Purchase Price” means the Seller’s good faith estimate of the
Purchase Price as of the Closing Date.

“Excluded Asset” has the meaning set forth in Section 2.2.

“Expenses” means, with respect to Transferred Loans, the sum of all reasonable
and actual, out-of-pocket third party costs and expenses of Seller arising out
of or relating to the servicing and workout of the Transferred Loans; provided,
however, that in no event shall Expenses include any servicing fees, asset
management fees, costs of funds or any other amounts payable to Seller or any
Affiliate or Representative of Seller. Amounts included in Expenses shall be
pro-rated as applicable for amounts incurred in respect of periods beginning
prior to the beginning of the applicable period to which the Expenses relate or
ending after the end of the applicable period to which the Expenses relate.

“Final Closing Statement” has the meaning set forth in Section 5.1(c).

“Governmental Body” means any government or governmental, administrative or
regulatory body thereof or political subdivision thereof, or any governmental
department,

4

 

commission, board, bureau, agency or instrumentality or authority, whether
foreign, federal, state or local, or any court or arbitrator (public or
private).

“Hazardous Substance” means any hazardous waste, hazardous material, petroleum
or petroleum byproducts, asbestos and asbestos-containing materials, radioactive
material, polychlorinated biphenyls, pollutant, contaminant, or other material
or substance that is defined by or regulated under any Environmental Law.

“Impound Amounts” means, with respect to any Transferred Loan, the amounts held
by Seller for payment of Taxes, mortgage insurance premiums and fire and hazard
insurance premiums, insurance loss proceeds or any other amounts impounded or
reserves held by Seller pursuant to the Mortgage or Collateral or any other Loan
Document, together with any interest accrued on the funds so reserved or
impounded.

“Indemnification Claim” has the meaning set forth in Section 6.3(a).

“Indemnified Party” has the meaning set forth in Section 6.3(a).

“Indemnifying Party” has the meaning set forth in Section 6.3(a).

“Intellectual Property Right” means trade secrets, patents and patent
applications, trade marks (whether registered or unregistered and including any
goodwill acquired in such trade marks), service marks, trade names, business
names, internet domain names, e-mail address names, copyrights (including but
not limited to rights in computer software), moral rights, database rights,
design rights, rights in know-how, rights in confidential information, rights in
inventions (whether patentable or not) and all other intellectual property and
proprietary rights (whether registered or unregistered, and any application for
the foregoing), and all other equivalent or similar rights which may subsist
anywhere in the world.

“Interim Servicing Period” has the meaning set forth in Section 2.4.

“Law” means any foreign, federal, state, provincial or local law, statute, code,
ordinance, rule regulation or Order.

“Letters of Credit” has the meaning set forth in Section 2.8(a).

“Liability” means any and all debts, liabilities and obligations of any kind or
nature, whether accrued or fixed, absolute or contingent, matured or unmatured,
or determined or determinable.

“Lien” means any lien, encumbrance, equity, pledge, mortgage, deed of trust,
participation interest, security interest, claim, lease, charge, option, right
of first refusal, easement, servitude or transfer restriction or any other
security interest of any nature.

“Loan Documents” means with respect to a Transferred Loan, the originals or
certified copies of all of the agreements, certificates, legal opinions or other
documents evidencing or related to such Transferred Loan, including the original
Note, the original or certified copy of the recorded Mortgage and Assignment of
Mortgage (if the Transferred Loan is secured by a

5

 

Mortgage), the original or certified copy of all Security Document(s) and all
Assignment(s) of Security Document (if the Transferred Loan is secured by
Collateral), any other security documents, the Transferred Loan application, the
Borrower’s credit report, and the title report for the related Mortgaged
Property (if the Transferred Loan is secured by a Mortgage).

“Loan File” means, with respect to a Transferred Loan, the file containing the
Loan Documents listed in Section 5.2(a) below.

“Losses” has the meaning set forth in Section 6.2(a).

“Master Asset Transfer Schedule” means the schedule, either in written or
electronic form, attached to the related Purchase Commitment/Settlement and
delivered by Seller to Buyer, which identifies the Transferred Loans being sold
by Seller to Buyer pursuant to this Agreement, and includes certain information
regarding such Transferred Loans as of the Cut-Off Date specified therein. The
information to be provided shall include (a) the name of the Borrower, (b) the
unpaid principal balance of the Transferred Loan, (c) the property address of
the Mortgaged Property (including the state and county), (d) the priority of the
Mortgage (if the Transferred Loan is secured by a Mortgage), (e) a description
of the Collateral (if the Transferred Loan is secured by Collateral), (f)
Seller’s account number, (g) the monthly payment as of the Cut-Off Date, (h) the
origination date, (i) the maturity date as of the Cut-Off Date, (j) the date the
next loan payment is due as of the Cut-Off Date, (k) the portion of the Purchase
Price allocated to each Transferred Loan (such amount, expressed in U.S.
dollars, the “Allocated Purchase Price”), and (l) the Purchase Price Percentage
for each Transferred Loan.

“Mortgage” means, with respect to a Transferred Loan secured by a lien on real
property, the instrument, including a mortgage or deed of trust, securing such
Transferred Loan that creates a Lien on the related Mortgaged Property.

“Mortgaged Property” means the underlying real property, if any, securing a
Transferred Loan, including all improvements thereon.

“Note” means, with respect to a Transferred Loan, the promissory note or other
evidence of the obligation to repay such Transferred Loan.

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.

“Ordinary Course Transaction” means the modification or resolution of any
Transferred Loan in the ordinary course of business by Seller or its
Representatives (acting in the ordinary course of business) consistent with past
practice, Accepted Servicing Practices and Applicable Law.

 

“Performing Loans” means each Transferred Loan with respect to which, as of the
Cut-off Date:

 

(a)          all monthly payments due under the related Mortgage and Note
through and including the Cut-off Date, have been made;

6

 

(b)          no monthly payment required to be made under the related Mortgage
and Note has been paid more than thirty (30) days after its due date (excluding
any applicable grace period) during the twelve (12) month period immediately
preceding the Cut-off Date;

(c)          there is no, and during the twelve (12) months immediately
preceding Closing Date there has been no, event of acceleration or material
default, breach or violation existing under the Mortgage or the Note and no
event that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute such an event of acceleration or material
default, breach or violation, and Seller has not waived any such default,
breach, violation or event of acceleration;

(d)          if Seller requires Taxes and other governmental assessments
(including assessments payable in future installments) to be impounded, Taxes
and all other governmental assessments, if and to the extent shown on the
periodic Tax bill for the Mortgaged Property issued by the county or municipal
Tax collector, currently due and owing in respect of or affecting the related
Mortgaged Property, (A) have been paid or (B) are being contested in good faith
and (ii) if amounts for such Taxes or assessments are not impounded by Seller,
Seller has not received notice of nonpayment thereof;

(e)          if Seller requires insurance premiums to be impounded, all
insurance premiums required to be paid currently due and owing have been paid,
and if Seller has not required insurance premiums to be impounded and Seller has
received any notice of cancellation or non-renewal with respect to any insurance
coverage as may be required under the Loan Documents in respect of or affecting
the related Mortgaged Property, the related Mortgaged Property is under
force-placed insurance coverage;

(f)          Seller has not accelerated the Transferred Loan during the twelve
(12) months immediately preceding the Closing Date;

(g)          Seller has not advanced funds or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage or the Note;

(h)          Seller has not re-aged such Transferred Loan except in compliance
with Seller’s written policies and procedures applied on a consistent basis;

(i)           no payments of other charges or payments due Seller have been
capitalized under the Mortgage or the Note.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

“Permitted Lien” means (i) statutory landlord’s, mechanic’s, materialmen’s,
carrier’s, workmen’s, repairmen’s or other similar Liens arising or incurred in
the ordinary course of business for amounts which are not yet due and payable as
of the Closing Date and which are not, individually or in the aggregate,
material, (ii) Liens for Taxes not yet due and payable as of the Closing Date,
(iii) Liens arising from zoning ordinances which do not materially interfere

7

 

with the benefits intended to be provided by the Mortgaged Property, (iv) with
respect to any Mortgaged Property, easements, rights of way, reservations,
licenses, encroachments, variations or similar restrictions, charges and
encumbrances on title that do not secure monetary obligations and do not
materially impair the use of such property for its intended purposes or the
value thereof, (v) liens arising from unpaid property Taxes that constitute
Seller Retained Liabilities, and (vi) Liens described on the Seller Disclosure
Schedules.

“Protective Advances” means amounts advanced by Seller out of its own funds to
pay delinquent Taxes or insurance premiums with respect to the Transferred
Loans, which advances are ultimately reimbursable from the related Borrower
under the Loan Documents.

“Purchased Assets” has the meaning set forth in Section 2.1(a).

“Purchase Commitment/Settlement” means a settlement statement, substantially in
the form of Exhibit A attached hereto, by and between Seller and Buyer pursuant
to which Seller agrees to sell and Buyer agrees to purchase the Transferred
Loans pursuant to this Agreement that are identified on the Master Asset
Transfer Schedule attached to such settlement statement.

“Purchase Price” means the amount equal to the Purchase Price Percentage
multiplied by the aggregate Unpaid Principal Balance of the Transferred Loans as
of the Cut-Off Date; plus for any Performing Loan, accrued but unpaid interest
and accrued but unpaid fees due up to the Cut-Off Date but received after the
Cut-Off Date; plus Protective Advances and Expenses with respect to the
Transferred Loans paid by Seller following the Cut-Off Date and before the
Closing Date, minus all Cash Flow for the period following the Cut-Off Date and
before the Closing Date, minus the aggregate amount of the Related Escrow
Accounts and/or Impound Amounts, if any, pertaining to the Transferred Loans;
provided, however, that Seller may, with the consent of Buyer, where allowed by
applicable laws, statutes, rules, and regulations of all federal, state, local,
governmental, or quasi-governmental entities or authorities having jurisdiction,
wire transfer such amount from Seller to Buyer for the aggregate amount of the
Related Escrow Accounts and/or Impound Amounts in lieu of decreasing the
Purchase Price hereunder. In any event, Buyer and Seller shall comply with all
applicable laws, statutes, rules, and regulations of all federal, state, local,
governmental, or quasi-governmental entities or authorities having jurisdiction
with respect to the transfer of the Related Escrow Accounts and/or Impound
Amounts, and Buyer hereby assumes upon receipt of the credit to the Purchase
Price or the payment from Seller to Buyer for the Related Escrowed Accounts
and/or Impound Amounts held by the Seller all obligations and duties with
respect to the establishment, holding and management of the Related Escrow
Accounts and/or Impound Amounts from and after the Closing Date. Notwithstanding
the foregoing, in the event that any Related Escrow Accounts carry a negative
balance at Closing, Seller shall not, under any circumstances, be provided with
a credit at Closing for such negative escrow amounts; provided, that if such
negative escrow amounts are recovered during the Interim Servicing Period,
Seller shall be entitled to retain such amounts.

“Purchase Price Percentage” means, with respect to a Transferred Loan, and as
agreed to by Seller and Buyer, the price, expressed as a percentage, paid for
such Transferred Loan as set forth in the related Purchase
Commitment/Settlement, without any adjustment for any accrued interest, expenses
or fees.

8

 

“Qualified Assignee” means investment funds or accounts (or any subsidiary
thereof) managed by Oaktree Capital Management, L.P. or any Affiliate or
subsidiary of Oaktree Capital Management, L.P.

“Related Escrow Accounts” means all funds held by Seller or its Affiliates or
Representatives with respect to the Transferred Loans, if any, including, but
not limited to, all principal and interest funds and all buy down funds and all
tax and insurance funds and other mortgage escrow (including interest accrued
thereon for the benefit of the Borrowers under the Transferred Loans) maintained
by Seller relating primarily to the Servicing Rights.

“Representative” means, with respect to any Person, any and all directors,
officers, partners, employees, consultants, financial advisors, counsel,
accountants, servicers, asset managers and other agents of such Person.

“Residential Loan” means an individual residential loan governed under RESPA
sold by Seller and purchased by Buyer pursuant to this Agreement, provided that
such loan is also identified as such on the Master Asset Transfer Schedule
attached to the Purchase Commitment/Settlement delivered on or prior to the
Closing Date.

“RESPA” means the Real Estate Settlement Procedures Act.

“Seller” has the meaning set forth in the introductory paragraph hereto.

“Seller Disclosure Schedules” means the Disclosure Schedules delivered by Seller
to Buyer prior to the execution and delivery of this Agreement.

“Seller Documents” shall have the meaning set forth in Section 3.2(a).

“Security Document” means, with respect to a Transferred Loan secured by
Collateral, the security agreement and/or other documents and instruments, if
any, that grant and perfect a security interest in the Collateral to Seller.

“Seller Indemnified Parties” shall have the meaning set forth in Section 6.2(b).

“Seller Retained Liabilities” means (a) any Claims by any Borrower or any other
Person relating to any wrongful act or omission or violation of Applicable Law
or Accepted Servicing Practices, or alleged act or omission or violation of
Applicable Law or Accepting Servicing Practices, or error, of Seller or any
Affiliate or Representative of Seller, or any employee, agent or Representative
acting on their behalf, with respect to the origination, ownership,
administration or servicing of any of the Transferred Loans, or any document,
agreement or instrument contained therein or relating thereto, occurring on or
prior to the Closing Date, (b) any Claims by any Borrower or any other Person
relating to any breaches by Seller of any of the Loan Documents prior to the
Closing Date, and (c) any Claims involving property Taxes affecting any
Mortgaged Property, that are due and payable as of the Closing Date and remain
unpaid as of the Closing Date, and which are or may become a lien of priority
equal to or senior to the lien of the related Mortgage. Notwithstanding the
foregoing, Seller Retained Liabilities shall not include any Claims by any
Borrower or any other Person arising out of or related to any

9

 

action or omission of the Seller that was taken at the written direction or with
the prior written consent of the Buyer.

“Seller’s Knowledge” means the actual knowledge, after due inquiry, of Robert T.
Patterson and any other asset managers and/or loan officers employed by Seller
and/or its Affiliates and Representatives that are directly involved in the
servicing or management of the Transferred Loans.

“Servicer” means any party who has agreed to service the Transferred Loans on
behalf of Buyer.

“Servicing Transferred Loan File” means, with respect to a Transferred Loan, the
file containing originals or copies of all Loan Documents, except for those Loan
Documents included in the related Loan File, including, to the extent
applicable, all loan files, credit files and any other documentation,
instruments, correspondence and records, in any form, primarily related to the
Transferred Loan, the Mortgaged Property and/or the Collateral to the extent in
the possession or control of Seller or its Affiliates or Representatives,
including without limitation, all insurance policies, environmental site
assessments, valuations, appraisals, underwriting files, loan history and credit
memoranda.

“Servicing Rights” means, with respect to the Transferred Loans, the rights and
obligations to administer, collect the payments for the reduction of principal
and application of interest, collect payments on account of Taxes and insurance,
pay Taxes and insurance, remit collected payments, modify, waive or amend any
terms or provisions of the applicable Loan Documents, provide portfolio
management, foreclosure and default management services, and any other
obligations with respect to or in connection with such Transferred Loans,
together with (a)  rights in all documents or contracts creating, defining or
evidencing any such servicing rights to the extent they relate to such servicing
rights and all rights of a Seller thereunder (other than contracts with an
outside contractor, subcontractor or third-party vendor that Seller uses to
conduct the administration or servicing of the Transferred Loans), and (b) the
right to receive any fees arising from or connected to such Transferred Loans,
and all rights, powers and privileges incident to any of the foregoing.

“Servicing Transfer Date” means (a) the date on which the servicing functions
for Transferred Loans (other than the Residential Loans) shall be transferred
from Seller to Buyer, but in no event later than February 21, 2013 and (b) the
date on which the servicing functions for the Residential Loans shall be
transferred from Seller to Buyer, but in no event later than March 31, 2013.

10

 

“Tax” or “Taxes” means any and all taxes, assessments, levies, tariffs, duties
or other charges or impositions in the nature of a tax (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Body, including income, estimated
income, escheat, severance, gross receipts, profits, business, license,
occupation, franchise, capital stock, real or personal property, sales, use,
transfer, value added, employment or unemployment, social security, disability,
alternative or add-on minimum, customs, excise, stamp, environmental, commercial
rent or withholding taxes.

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including any information return, claim refund, amended return and declaration
of estimated Tax.

“Transferred Loan” means any Commercial Loan or Residential Loan.

“Transfer Taxes” has the meaning set forth in Section 2.7

“Unpaid Principal Balance” means, with respect to any Transferred Loan on any
date, the unpaid principal balance of such Transferred Loan, not including any
accrued but unpaid interest or, for any Performing Loan, accrued but unpaid
fees; provided, for the avoidance of doubt, that no loss reserves existing on
the books of Seller in connection with such Transferred Loan shall be taken into
account in determining the Unpaid Principal Balance of the Transferred Loan.

Section 1.2          Terms Generally.

For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

(a)          the terms defined in this Article have the meanings assigned to
them in this Article and include both the plural and the singular;

(b)          the words “herein,” “hereof” 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; and

(c)          the words “including” and “include” and other words of similar
import shall be deemed to be followed by the phrase “without limitation.”

Section 1.3          Incorporation by Reference.

All of the Exhibits hereto are incorporated by reference and shall be deemed to
be a part of this Agreement.

 

11

 

ARTICLE 2
PURCHASE AND SALE OF THE TRANSFERRED LOANS

Section 2.1          Agreement to Sell and Purchase the Transferred Loans;
Excluded Assets.

(a)          Upon the terms and subject to the conditions set forth in this
Agreement, at Closing, and in consideration for the payment of the Purchase
Price by Buyer to Seller by wire transfer of immediately available funds, Seller
agrees to sell, transfer, assign and convey to Buyer, and Buyer agrees to
purchase, acquire and accept from Seller, all of Seller’s rights, obligations,
title and interest in, to and under the Purchased Assets. The term “Purchased
Assets” shall mean the following assets of Seller:

(i)          the Transferred Loans, including the security interests created by
the related Mortgages and Security Documents, as applicable;

(ii)          all Cash Flow with respect to each Transferred Loan after the
Cut-Off Date;

(iii)          all rights and benefits of Seller with respect to any title,
flood and fire, hazard and extended coverage insurance policies that insure any
related Mortgaged Properties or Collateral, as applicable;

(iv)          the related Loan Documents, including the Loan Files and Servicing
Transferred Loan Files;

(v)          all Servicing Rights with respect to the Transferred Loans;

(vi)          any and all Claims that the Seller may have against any borrower,
any guarantor or any other obligor with respect to any Transferred Loan,
including any judgments obtained against any borrower, guarantor or other
obligor under any Transferred Loan prior to the date of this Agreement; and

(vii)          all proceeds in any way derived from any of the foregoing, all
upon the terms and conditions set forth herein.

Notwithstanding the foregoing, or anything else in this Agreement to the
contrary, the Purchased Assets shall not include any Seller Retained
Liabilities, all of which are retained by Seller.

(b)          On the Closing Date, and in consideration of the sale, transfer,
assignment, and conveyance of the Purchased Assets by Buyer, Buyer hereby agrees
to assume from, and discharge Seller of, all obligations to be performed and
Liabilities arising in connection with the Purchased Assets arising after the
Closing Date, including (subject to Section 2.4 below) the servicing of
Transferred Loans (the “Assumed Obligations”). Notwithstanding the foregoing,
Seller and Buyer acknowledge and agree that the Assumed Obligations do not (and
shall not) include any Seller Retained Liabilities, all of which are retained by
Seller.

12

 

(c)          All Cash Flow received by Seller or its Affiliates or
Representatives on account of the Transferred Loans after the Cut-Off Date shall
belong to Buyer and shall be sent by Seller to Buyer within fifteen (15)
calendar days of Seller’s (or Seller’s Affiliates or Representatives’) receipt
of any such Cash Flow.

(d)          From and after the date of this Agreement, and notwithstanding the
fact that this Agreement does not contain a final, comprehensive list of the
Transferred Loans to be transferred pursuant to this Agreement, Seller and Buyer
agree to work in good faith to finalize: (i) the Closing Date Statement and the
Master Asset Transfer Schedule generally in conformance with past discussions on
the Purchase Price and (ii) the list of Transferred Loans to be attached to the
Master Asset Transfer Schedule.

Section 2.2          Excluded Assets and Seller Retained Liabilities.

Nothing herein contained shall be deemed to sell, transfer, assign or convey the
Excluded Assets or the Seller Retained Liabilities to Buyer, and Seller shall
retain all right, title and interest to, in and under the Excluded Assets and
all liability for the Seller Retained Liabilities. The term “Excluded Assets”
shall mean all assets, properties, interests and rights of Seller other than the
Purchased Assets and shall include:

(a)          all minute books, organizational documents, stock registers and
such other books and records of Seller as pertain to ownership, organization or
existence of Seller;

(b)          all Intellectual Property Rights of Seller; and

(c)          all Tax Returns and any claim, right or interest of Seller in or to
any refund, rebate, abatement or other recovery for Taxes (other than Protective
Advances) in each case relating to Seller’s Business or the Purchased Assets for
all taxable periods (or portions thereof) ending on or prior to the Closing
Date, together with any interest due thereon or penalty rebate arising
therefrom. For the absence of doubt, Seller and Buyer acknowledge and agree that
Seller shall not be entitled to any reimbursement or recovery of any Protective
Advances or Expenses except for any deductions included in the calculation of
the actual Purchase Price.

Section 2.3          Release and Transfer of Servicing.

On the Closing Date, Seller shall sell and convey the Transferred Loans to Buyer
on a whole Transferred Loan basis with servicing released to Buyer as of the
applicable Servicing Transfer Date.

Section 2.4          Servicing Agreement.

During the period of time starting on the Cut-Off Date and ending at the close
of business on the applicable Servicing Transfer Date (such period, the “Interim
Servicing Period”), Seller shall service the Transferred Loans for the benefit
of Buyer and in accordance with Accepted Servicing Practices and Applicable Law
(including RESPA with respect to Residential Loans). In addition, Seller and
Buyer hereby agree to the following additional rules and guidelines for
servicing of the Transferred Loans during the Interim Servicing Period:

13

 

(a)          For Period from the Date of this Agreement Through Closing Date:

(i)          Seller shall (and shall cause its Affiliates and Representatives
to) (A) consult in good faith with Buyer and its designated Representatives
prior to entering into (or committing to enter into) any amendment,
modification, waiver, forbearance, disposition, sale, or any other action with
respect to any of the Transferred Loans or incurring any material expense with
respect to any Transferred Loan, and (B) provide to Representatives of Buyer
reasonable access during normal business hours to Seller’s employees engaged in
servicing the Transferred Loans and the Loan Files related to the Transferred
Loans;

(ii)          Seller shall not take or commit to take (and shall cause Seller’s
Affiliates and Representatives to not take or commit to take) any action with
respect to the Transferred Loans outside of Ordinary Course Transactions without
the prior written consent of Buyer in its discretion, which shall not be
unreasonably withheld; and

(iii)          with respect to Ordinary Course Transactions, Seller shall not
(and shall cause its Affiliates and Representatives to not) undertake or accept
(or commit to undertake or accept) any of the following actions without the
prior written consent of Buyer (which shall not be unreasonably withheld,
conditioned or delayed): (A) a discounted payoff of any Transferred Loan or a
sale of any Transferred Loan with an associated unpaid principal balance as of
the Cut-Off Date of $50,000 or more; (B) any amendment, modification, waiver or
forbearance of any of the terms or conditions of any Transferred Loan with an
associated unpaid principal balance as of the Cut-Off Date of $50,000 or more,
including without limitation, reductions of interest rate, changes to payment
terms from current cash pay to accrual or pay-in-kind or reductions to principal
balance; (C) taking or accepting title to any property which is collateral for a
Transferred Loan as a result of judicial or non-judicial foreclosure, assignment
or deed-in-lieu of foreclosure, power of sale, UCC sale or otherwise; or (D)
incurring any expense in connection with any Transferred Loan in excess of, on
an aggregate basis for each Transferred Loan during the Interim Servicing
Period, the lesser of (x) $5,000 or (y) 5% of the unpaid principal balance of
such Transferred Loan as of the Cut-Off Date.

(b)          For Period from Closing Date Through the applicable Servicing
Transfer Date:

(i)          Seller shall (and shall cause its Affiliates and Representatives
to) (A) consult in good faith with Buyer and its designated Representatives
prior to entering into (or committing to enter into) any amendment,
modification, waiver, forbearance, disposition, sale, or any other action with
respect to any of the Transferred Loans or incurring any material expense with
respect to any Transferred Loan, and (B) provide to Representatives of Buyer
reasonable access during normal business hours to Seller’s employees engaged in
servicing the Transferred Loans and the Loan Files related to the Transferred
Loans; and

(ii)          shall not take or commit to take (and shall cause Seller’s
Affiliates and Representatives to not take or commit to take) any action with
respect to the Transferred Loans without the prior written consent of Buyer in
its sole and absolute discretion.

Section 2.5          Escrow; Impound Amounts.

14

 

Except as set forth on Schedule 2.5, there are no Related Escrow Accounts or
Impound Amounts and Seller does not collect funds in connection with the
Transferred Loans that would constitute Related Escrow Accounts.

Section 2.6          Expenses.

Seller shall be responsible for all Expenses of servicing the Transferred Loans
until close of business on the Cut-Off Date; provided, however, that if any
assessments are amortized and capable of being paid in installments, Seller
shall only be responsible for the payment of installments due and payable
through the close of business on the Cut-Off Date. For the avoidance of doubt,
from and after the Cut-Off-Date, Buyer shall be solely responsible for all
Expenses relating to servicing the Transferred Loans, including without
limitation, all legal fees, property management fees and care and preservation
fees incurred after the Cut-Off Date and payable to third parties; provided,
however, that in no event shall Expenses include any servicing fees, asset
management fees, costs of funds or any other amounts payable to Seller or any
Affiliate or Representative of Seller. Amounts included in Expenses shall be
pro-rated as applicable for amounts incurred in respect of periods beginning
prior to the beginning of the applicable period to which the Expenses relate or
ending after the end of the applicable period to which the Expenses relate.

Section 2.7          Transfer Taxes and Title Costs.

Notwithstanding anything contained in this Agreement to the contrary, Buyer and
Seller shall each pay 50% of any and all documentary, sales, use, registration,
value added, transfer, stamp, registration and similar Taxes, fees and costs,
and all transfer, filing and recording fees otherwise required to be paid by
either Seller or Buyer in connection with the transactions contemplated hereby
(collectively, “Transfer Taxes”), and each of Buyer and Seller agrees to
indemnify and hold the other harmless from and against any and all claims,
liability, costs and expenses arising out of or in connection with the failure
of the either Buyer or Seller to pay their respective 50% shares of all such
amounts on a timely basis. In addition, Buyer and Seller shall each pay 50% of
the costs to obtain endorsements to existing title insurance policies (in the
case of Transferred Loans) in favor of Buyer or its designee; provided that
Seller shall not be required to obtain endorsements to existing title insurance
policies that contain successor language allowing such policies to be assigned
to Buyer or its designee.

Section 2.8          Letters of Credit.

(a)          Seller (or an Affiliate or any predecessor thereof) has issued
certain letters of credit (each a “Letter of Credit” and, collectively, the
“Letters of Credit”) set forth on Schedule 2.8 hereof. Prior to the expiration
of the Letters of Credit, Seller shall continue to honor any drawings under the
Letters of Credit made by the beneficiaries thereof in accordance with the terms
of each applicable Letter of Credit (referred to herein as a “Drawing”). Upon
the honoring by Seller of any such Drawing, Seller shall be entitled to
reimburse itself pursuant to a drawing by Seller against the Seller in its
capacity as escrow agent under the Backstop Deposit in the amount of such
Drawing. To the extent that Buyer has deposited cash with Seller, as escrow
agent, with respect to any Letters of Credit at Closing pursuant to this
Agreement, and any such Letters of Credit are not fully drawn prior to
expiration or other termination of such Letters of

15

 

Credit, Seller, as escrow agent, shall promptly pay to Buyer, by wire transfer
of immediately available funds to an account designated in writing by Buyer, any
amounts deposited by Buyer that represent undrawn amounts under such Letters of
Credit. Once all Letters of Credit have been terminated or released, any
remaining funds in the Backstop Deposit shall be promptly returned to Buyer.

(b)          Seller acknowledges and agrees that Buyer shall have no liability
or responsibility for any letters of credit, set aside letters or similar items
related to the Purchased Assets that are not set forth on Schedule 2.8 (or any
liability for amounts in excess of the amounts set forth on Schedule 2.8 for
Letters of Credit that are set forth on Schedule 2.8), even if Seller discovers
such items after the Closing Date and Seller agrees to assume and retain any
risk that Seller has not included any such letters of credit, set aside letters
or similar items related to the Purchased Assets on Schedule 2.8, or has not
included the full exposure of Seller with respect to Letters of Credit that are
set forth on Schedule 2.8. In addition, to the extent that any Letters of Credit
(or any letters of credit, set aside letters or similar items related to the
Purchased Assets that are not set forth on Schedule 2.8) are collateralized,
cross-collateralized or cross-defaulted with any of the Purchased Assets or the
Loan Documents, Seller hereby severs any such collateralization,
cross-collateralization and cross-default and agrees that Seller shall have no
right to exercise any rights under the Loan Documents or otherwise take any
action against any of the Purchased Assets, any Credit Party, any Credit Party
Affiliate or Buyer for repayment of any amounts drawn under Letters of Credit
set forth on Schedule 2.8 or any other letters of credit, set aside letters or
similar items related to the Purchased Assets that are not set forth on Schedule
2.8. Seller agrees to promptly execute and deliver to Buyer any documents or
instruments reasonably requested by Buyer in order to effect the severance of
any such cross-collateralization and/or cross default.

(c)          The Seller agrees to serve as escrow agent with respect to the
Backstop Deposit and agrees to deposit the Backstop Deposit in a segregated
account (the “Deposit Account”). The Seller, as escrow agent, (i) shall hold the
Backstop Deposit and the Deposit Account in trust, (ii) shall not take any
action that would reasonably be expected to cause the Backstop Deposit or the
Deposit Account to be subject to any lien, attachment, trustee process or any
other judicial process of any creditor of Seller, Buyer or Seller, as escrow
agent, and (iii) shall hold and safeguard the Backstop Deposit and the Deposit
Account in trust until the Backstop Deposit is released pursuant to the terms
and conditions of this Agreement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

As of the date of this Agreement and as of the Closing Date and as an inducement
to Buyer to purchase the Purchased Assets on such Closing Date, Seller
represents and warrants to Buyer that, except as otherwise set forth in the
Seller Disclosure Schedules, Seller hereby represents and warrants to Buyer that
the statements contained in this ARTICLE 3 are true and correct as of the date
of this Agreement and will be true and correct as of the Closing Date as though
made as of the Closing Date. Notwithstanding the foregoing, the Seller
Disclosure Schedules shall not include any exceptions to the representations and
warranties set forth in subsections (a), (b), (f), (m), (u), or (v) of Section
3.6.

16

 

Section 3.1          Organization.

Seller is (and has at all times during the time of its activities with respect
to the origination, making, selling and servicing of the Transferred Loans been)
a North Carolina chartered banking corporation, and Seller has (and all times
during the time of its activities with respect to the origination, making,
selling and servicing of the Transferred Loans has had) all requisite power and
authority to own, lease and operate its properties and to carry on its business.
Seller has (and had at the time of origination and servicing, as applicable) in
full force and effect all material licenses, registrations and qualifications in
all appropriate jurisdictions reasonably necessary to conduct all activities
performed with respect to the origination, making, acquiring, selling, pooling
and servicing of the Transferred Loans, if and to the extent it performed any
such functions.

Section 3.2          Authorization of Agreement.

(a)          Seller has full corporate power and authority to execute and
deliver this Agreement and each other agreement (including the Ancillary
Documents), document, instrument or certificate contemplated by this Agreement
to be executed by Seller in connection with the transactions contemplated hereby
and thereby (the “Seller Documents”) and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Seller of this Agreement and each Seller Document have been duly authorized by
all necessary corporate action on behalf of Seller. This Agreement has been, and
each Seller Document shall be at or prior to the Closing, duly executed and
delivered by Seller, and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes, and each
Seller Document when so executed and delivered shall constitute, the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, public policy, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

(b)          Seller can perform each and every applicable covenant and other
agreement contained in this Agreement, the Ancillary Documents delivered in
connection herewith and the Seller Documents.

Section 3.3          Conflicts; Consents of Third Parties.

(a)          None of the execution and delivery by Seller of this Agreement, the
consummation of the transactions contemplated hereby, or the compliance by
Seller with any of the provisions hereof, shall conflict with, or result in any
violation of or default (with or without notice or lapse of time or both) under,
or give rise to a right of termination or, cancellation under, any provision of
(i) the certificate of incorporation and by-laws (or other organizational and
governing documents) of Seller, (ii) any Order applicable to Seller or by which
any of the properties or assets of Seller are bound or (iii) any Applicable Law.

17

 

(b)          No consent, waiver, approval, Order, permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Seller in connection with the execution and delivery
of this Agreement or any agreement or certificate delivered in connection
herewith, the compliance by Seller with any of the provisions hereof or thereof
or the consummation of the transactions contemplated hereby or thereby.

Section 3.4          Litigation.

Except as set forth on Schedule 3.4, there are no Actions by any Person or
Governmental Body pending or, to Seller’s knowledge, threatened (and, to
Seller’s Knowledge, there is no reasonable basis for any of the foregoing),
against Seller or any of its Affiliates or Representatives, which Actions
(i) relate to the Purchased Assets or the Assumed Obligations, (ii) seek to
restrain, enjoin or delay the consummation of the transactions contemplated by
this Agreement or any of the Ancillary Documents or seek damages in connection
herewith or therewith or (iii) are reasonably likely to affect the legality,
validity or enforceability of this Agreement or the agreements or certifications
delivered in connection herewith, or Seller’s ability to perform its obligations
hereunder or thereunder.

Section 3.5          Financial Advisors.

Except for Morgan Keegan Mortgage Company, Inc., no Person has acted, directly
or indirectly, as a broker, finder or financial advisor for Seller in connection
with the transactions contemplated by this Agreement, to which is owed any fee
or commission or like payment in respect thereof, other than any fee, commission
or like payment for which Seller shall be solely responsible. Buyer shall have
no obligation to Morgan Keegan Mortgage Company, Inc. for any fee or commission
or like payment under this Agreement or otherwise relating to the transactions
contemplated by this Agreement.

Section 3.6          Transferred Loans.

(a)          Ownership of Transferred Loans. Seller has good and marketable
title to, and is the sole owner and holder of, the Transferred Loans (or the
proceeds thereof with respect to those Transferred Loans which have been paid
off in accordance with their terms or which have been disposed of by the Bank in
accordance with this Agreement), free and clear of any and all liens, pledges,
charges, or security interests of any nature other than Permitted Liens. The
transfer, assignment and delivery of the Transferred Loans in accordance with
the terms and conditions of this Agreement shall vest in Buyer all of the Bank’s
rights as owner of such Transferred Loans free and clear of any and all liens,
pledges, charges, or security interests of any nature, including, but not
limited to, those of Seller, except as otherwise set forth in this Agreement.
The sale, transfer and assignment of the Transferred Loans and the Loan
Documents are free and clear of any participation interest.

(b)          Authority to Transfer Transferred Loans. Seller has full right and
authority to sell, assign and transfer the Transferred Loans.

(c)          Title Insurance. The lien of the related Mortgage for all Mortgages
is insured by a mortgagee title insurance policy, or its equivalent as adopted
in the applicable

18

 

jurisdiction, issued by a nationally recognized title insurance company,
insuring the originator of such Transferred Loan, its successors and assigns, as
to the first priority lien or subordinated lien, as applicable, of the Mortgage
in the original principal amount of the Transferred Loan, subject only to
Permitted Liens. The Master Asset Transfer Schedule sets forth and accurately
reflects the lien priority as to each title insurance policy with respect to
each related Mortgage. Each title insurance policy is in full force and effect,
all premiums thereon have been paid and no material claims have been made
thereunder, no claims have been paid thereunder, and, to Seller’s Knowledge, no
prior holder of the related Transferred Loan, including Seller, has done, by act
or omission, anything which would impair the coverage of any such mortgage title
insurance policy.

(d)          Enforceability. Each Transferred Loan is evidenced by a Note and is
duly secured by a valid lien on the related Mortgaged Property, in each case, on
forms and pursuant to terms that are in compliance with all material
requirements of Applicable Laws at the time of origination. Each related Note
and each related Mortgage is the legal, valid and binding obligation of the
maker thereof (subject to any non-recourse provisions contained in any of the
foregoing agreements and any applicable state anti-deficiency or market value
limit deficiency legislation), enforceable in accordance with its terms, except
as such enforcement may be limited by Laws relating to or affecting the rights
of creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). To
Seller’s Knowledge, no Transferred Loan is subject to any right of rescission,
set-off, recoupment, counterclaim or defense, including the defense of usury,
that would render the Note or Mortgage unenforceable.

(e)          Disbursement. All draws required to be funded have been funded in
compliance with the terms and provisions of the Mortgage, Note and related loan
agreement, if any. The full original principal amount of each Transferred Loan
has been fully disbursed or credited to the Borrower under the related Note and
there is no requirement for any lender to make future advances thereunder. To
Seller’s Knowledge, all material costs, fees and expenses incurred in making,
closing or recording the related Mortgage were paid. Except for refunds or
amounts paid in accordance with Acceptable Servicing Practices, no Borrower is
entitled to any refund or any amounts paid or due to any lender pursuant to any
related Note or related Mortgage.

(f)          Priority of Lien. Each Mortgage has been duly acknowledged and
recorded, and is a valid, enforceable and subsisting, perfected first lien on
the Mortgaged Property therein described except as set forth on the Master Asset
Transfer Schedule, and the Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage instrument
except for Permitted Liens.

(g)          Insurance. Other than Transferred Loans with outstanding principal
amounts below $250,000 in the aggregate for which Seller does not monitor
insurance coverage, all buildings and improvements upon the related Mortgaged
Property are insured by a generally acceptable insurance carrier against loss by
a fire and extended perils policy providing coverage against loss or damage
included within the “all risk of physical loss” or the equivalent thereof and
such other hazards as are customarily insured against in the area where each
Mortgaged Property is located, in an amount (subject to a customary deductible)
at least equal to the

19

 

outstanding principal amount of such Transferred Loan. The Loan Documents
require the Borrower to maintain (or to cause the applicable tenant to maintain)
the insurance referred to in this paragraph in respect of the Mortgaged
Property. If any portion of the improvements on the related Mortgaged Property
is in an area identified in the Federal Register by the Federal Emergency
Management Agency as having “special flood hazards,” a flood insurance policy
meeting any requirements of the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (1) the outstanding
principal amount of such Transferred Loan, (2) the full insurable actual cash
value of such Mortgaged Property, (3) the maximum amount of insurance available
under the National Flood Insurance Act of 1968, as amended, and (4) 100% of the
replacement cost or value of the improvements located on such Mortgaged
Property. The Loan Documents require the Borrower to maintain (or to cause the
applicable tenant to maintain) the insurance referred to in this paragraph in
respect of the Mortgaged Property.

(h)          Waivers and Modifications. The terms of the related Mortgage and
the related Note have not been impaired, waived, altered or modified in any
material respect, except as specifically set forth in the related Loan File.
Seller has not: (a) agreed to any material modification, extension or
forbearance in connection with a Note or Mortgage; (b) released, satisfied or
canceled any Note or Mortgage in whole or in part; (c) subordinated any Mortgage
in whole or in part; or (d) released any Mortgaged Property in whole or in part
from the lien of any Mortgage, unless a written instrument necessary to effect
any of the foregoing is held in the related Loan File and otherwise satisfies
all Applicable Laws. Seller has not advanced its funds to cure a default or
delinquency with respect to any such Transferred Loans, except as specifically
set forth on the Master Asset Transfer Schedule. Between the Cut-Off Date and
the date hereof, Seller has not agreed to any material modification, extension
or forbearance in connection with any Note or Mortgage.

(i)          Related Escrow Accounts. Except as set forth on Schedule 2.5, there
are no Related Escrow Accounts maintained or established by Seller or any
Affiliate or Representative of Seller related to the Transferred Loans.

(j)          Application of Funds. All payments received by Seller with respect
to any Transferred Loan have been remitted and properly accounted for as
required by all Applicable Laws in all material respects. All funds received by
Seller in connection with the satisfaction of Transferred Loans, including, but
not limited to, foreclosure proceeds, condemnation proceeds and insurance
proceeds from hazard losses, have been deposited in the appropriate principal
and interest account or taxes and insurance account, and other than in the
ordinary course consistent with the past servicing practice of Seller, all such
funds have been applied to reduce the principal balance of the Transferred Loans
in question, or for reimbursement of repairs to the Mortgaged Property in
question, or as otherwise required by Applicable Laws. The unpaid principal
balances of the Transferred Loans are not less than the amount set forth on the
Master Asset Transfer Schedule.

(k)          Valid Assignment. The assignment of the Mortgage related to each
Transferred Loan, constitutes the legal, valid and binding assignment of such
mortgage from Seller to Buyer subject to the exceptions described in Section
3.6(d) above.

20

 

(l)          Loan File. Each and every Loan File relating to a Transferred Loan
contains (a) in all material respects, true, correct and complete copies of all
Loan Documents evidencing, securing, governing or otherwise relating to each
Transferred Loan, the originals of which were duly executed, original, genuine
and in due and proper form, (b) with respect to promissory notes and guarantees,
such documents and instruments are duly executed, original (except as provided
in Section 5.2(a)), genuine and in due and proper form, (c) in all material
respects, true, correct and complete copies of each of the documents and
instruments required to be maintained by all Applicable Laws and this Agreement,
the originals of which were duly executed, original, genuine and in due and
proper form, and (d) all other material documents and information relating to
such Transferred Loan in the possession or control of Seller or its Affiliates
or Representatives.

(m)          Loan Characteristics. The information set forth on the Master Asset
Transfer Schedule is true and correct in all material respects, except that the
unpaid principal balances set forth on the Master Asset Transfer Schedule shall
be true and correct in all respects.

(n)          Servicing. The servicing and collection practices used by Seller
and its Affiliates and Representatives with respect to the Transferred Loans
have at all times complied in all material respects with Applicable Law and
Accepted Servicing Practices.

(o)          Customary Remedies. The related Mortgage or Note, together with
Applicable Law, contains customary and enforceable provisions (subject to the
exceptions set forth in Section 3.6(d) above) such as to render the rights and
remedies of the holders thereof adequate for the practical realization against
the related Mortgaged Property of the principal benefits of the security
intended to be provided thereby.

(p)          Deed of Trust. If the related Mortgage is a deed of trust, to
Seller’s Knowledge, a trustee, duly qualified under Applicable Law to serve as
such, is properly designated and serving under such Mortgage.

(q)          Lien Releases. Except as otherwise set forth in the Loan Documents,
the related Note or Mortgage does not require the holder thereof to release all
or any portion of the Mortgaged Property from the lien of the related Mortgage,
except upon payment in full of all amounts due under such Transferred Loan which
have been allocated to such Mortgaged Property upon the payment of specified
release consideration.

(r)          Environmental. To Seller’s Knowledge, no Hazardous Substance has
been installed, placed, disposed of, released, identified or dealt with in any
manner in, on, under, around or at any Mortgaged Property. To Seller’s
Knowledge, no Mortgaged Property has been used for the release, storage,
treatment, generation or disposal of Hazardous Substances. To Seller’s
Knowledge, no Hazardous Substances are present in, on, under, around, at or
below any Mortgaged Property in such a manner or concentration as to violate any
law, regulation or guideline. To Seller’s Knowledge, no Mortgaged Property, by
itself or as part of any other property, has been identified by any government
agency as the site of a “release,” within the meaning of CERCLA or RCRA, of a
Hazardous Substance.

21

 

(s)          No Litigation. Except as set forth on Schedule 3.4, there is no
pending or, to Seller’s Knowledge, threatened in writing, litigation, court
action, administrative or regulatory action or arbitration proceeding against
Seller and/or with respect to any Transferred Loan.

(t)          Due-on-Sale Clauses. Each related Mortgage or Loan Document
contains provisions for the acceleration of the unpaid balance of such
Transferred Loan, if, without prior consent of lender or satisfaction of certain
conditions, the related Mortgaged Property is transferred, sold or encumbered in
connection with subordinate financing.

(u)          No Cross-Collateralization or Cross-Default. None of the
Transferred Loans are secured by the same property as any other loan held by
Seller or its Affiliates which is not being transferred pursuant to this
Agreement, and none of the Transferred Loans are cross-defaulted or
cross-collateralized with any loan or other obligation that is not being
transferred to Buyer as part of the Purchased Assets.

(v)          Deposit Account Collateral. To the extent that any of the
Collateral for any of the Transferred Loans is deposit accounts or cash
collateral accounts or similar (the “Account Collateral”), Seller has a
perfected security interest in the Account Collateral pursuant to Section 9-314
of the UCC by control of such Account Collateral pursuant to an authenticated
agreement among the applicable Borrower, Seller and the bank with which the
Account Collateral is maintained in accordance with the requirements of Section
9-104 of the UCC, and such security interest will remain perfected in favor of
Buyer from and after the transfer of the applicable Transferred Loan to Buyer
pursuant to this Agreement and the Seller Documents.

(w)          Impound Amounts. Except as set forth on Schedule 2.5, there are no
Impound Amounts related to the Transferred Loans.

(x)          Consumer Regulations. Each Residential Loan has complied in all
material respects with any and all requirements of Applicable Laws, including,
without limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, predatory lending, abusive lending, fair lending,
fair credit reporting, unfair collection practice, equal credit opportunity,
fair housing and disclosure laws and regulations, applicable to the
solicitation, origination, collection and servicing of such Residential Loan;
and any obligations of the holder of the Note, Mortgage and other Loan Documents
have been complied with in all material respects and the consummation of the
transaction contemplated hereby will not involve the violation of any such
Applicable Laws.

(y)          HOEPA. No Residential Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 ("HOEPA") as amended or has an
"annual percentage rate" or "total points and fees" payable by the mortgagor (as
each such term is defined under HOEPA) that equal or exceed the applicable
thresholds defined under HOEPA (Section 32 of Regulation Z, 12 C.F.R. Section
226.32(a)(1)(i) and (ii)) or is considered a "high cost," "predatory" or
"abusive" loan (or a similarly designated loan using different terminology)
under any Applicable Laws

22

 

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as of the Closing Date that:

Section 4.1          Organization.

Buyer is a duly organized limited liability company under the laws of the state
of its jurisdiction and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as currently conducted.

Section 4.2          Authorization of Agreement.

(a)          Buyer has full corporate power and authority to execute and deliver
this Agreement and each other agreement (including the Ancillary Documents),
document, instrument or certificate contemplated by this Agreement to be
executed by Buyer in connection with the transactions contemplated hereby and
thereby (the “Buyer Documents”) and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by Buyer of this
Agreement and each Buyer Document have been duly authorized by all necessary
limited liability company action on behalf of Buyer. This Agreement has been,
and each Buyer Document shall be at or prior to the Closing, duly executed and
delivered by Buyer, and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes, and each
Buyer Document when so executed and delivered shall constitute, the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, public policy, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

(b)          Buyer can perform each and every applicable covenant and other
agreement contained in this Agreement, the Ancillary Documents delivered in
connection herewith and the Buyer Documents.

Section 4.3          Conflicts; Consents of Third Parties.

(a)          None of the execution and delivery by Buyer of this Agreement, the
consummation of the transactions contemplated hereby, or the compliance by Buyer
with any of the provisions hereof, shall conflict with, or result in any
violation of or default (with or without notice or lapse of time or both) under,
or give rise to a right of termination or, cancellation under, any provision of
(i) the certificate of formation and limited liability company agreement (or
other organizational and governing documents) of Buyer, (ii) any Order
applicable to Buyer or by which any of the properties or assets of Buyer are
bound or (iii) any Applicable Law.

(b)          No consent, waiver, approval, Order, permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Buyer in connection with the execution and delivery
of this Agreement or any agreement or certificate delivered in connection
herewith, the compliance by Buyer with any of the

23

 

provisions hereof or thereof or the consummation of the transactions
contemplated hereby or thereby.

Section 4.4          Litigation.

There are no Actions by any Governmental Body pending or, to Buyer’s knowledge,
threatened (and, to Buyer’s knowledge, there is no reasonable basis for any of
the foregoing), against Buyer or any of its Affiliates, which Actions (i) relate
to the Purchased Assets or the Assumed Obligations, (ii) seek to restrain,
enjoin or delay the consummation of the transactions contemplated by this
Agreement or any of the Ancillary Documents or seek damages in connection
herewith or therewith or (iii) is reasonably likely to affect the legality,
validity or enforceability of this Agreement or the agreements or certifications
delivered in connection herewith, or Buyer’s ability to perform its obligations
hereunder or thereunder.

Section 4.5          Financial Advisors.

No Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Buyer in connection with the transactions contemplated by this
Agreement, to which is owed any fee or commission or like payment in respect
thereof, other than any fee, commission or like payment for which Buyer shall be
solely responsible.

Section 4.6          No Other Representations.

Buyer acknowledges that Seller makes no representation or warranty whatsoever in
connection with this Agreement or the transactions contemplated hereby,
including with respect to future performance of the Transferred Loans or any
other information or documents made available to Buyer or its counsel,
accountants or advisors with respect to the Purchased Assets, except as
expressly set forth in this Agreement, the Seller Documents and the Purchase
Commitment/Settlement. Buyer acknowledges that no employee or representative of
Seller has been authorized to make any statements or representations, other than
those specifically contained in this Agreement, the Seller Documents and the
Purchase Commitment/Settlement. Seller acknowledges that Buyer makes no
representation or warranty whatsoever in connection with this Agreement or the
transactions contemplated hereby except as expressly set forth in this
Agreement, the Buyer Documents and/or the Purchase Commitment/Settlement. Seller
acknowledges that no employee or representative of Buyer has been authorized to
make any statements or representations, other than those specifically contained
in this Agreement, the Buyer Documents and/or the Purchase
Commitment/Settlement.

ARTICLE 5
CLOSING OF PURCHASE OF TRANSFERRED LOANS

Section 5.1          Payment of Estimated Purchase Price; Post-Closing
Adjustments.

(a)          On the Closing Date, and in consideration of the sale of the
Purchased Assets by Seller on such Closing Date, Buyer shall pay to Seller the
amount of the Estimated Purchase Price (as set forth in the Closing Date
Statement delivered by Seller to Buyer, together with reasonable supporting
documentation, prior to the Closing Date) by wire transfer of immediately
available funds to the bank account that is designated by Seller in the related

24

 

Purchase Commitment/Settlement. The payment of such aggregate Purchase Price by
Buyer shall be subject to the satisfaction of all of the conditions precedent
set forth in Section 5.3 hereof.

(b)          Prior to or at Closing, Buyer shall deposit cash with Seller, as
escrow agent, in an amount sufficient to cover any draws on the Letters of
Credit identified on Schedule 2.8 (the “Backstop Deposit”). Seller acknowledges
and agrees that Buyer shall have no liability or responsibility for any letters
of credit, set aside letters or similar items related to the Purchased Assets
and the Transferred Loans that are not set forth on Schedule 2.8, even if Seller
discovers such items after the Closing Date and Seller agrees to assume and
retain any risk that Seller has not included any such letters of credit, set
aside letters or similar items on Schedule 2.8.

(c)          Within thirty (30) days after the Closing Date, Seller shall
deliver to Buyer (i) a final closing statement in the same form as the Closing
Date Statement, updated to reflect actual Protective Advances and Expenses with
respect to the Transferred Loans paid by Seller following the Cut-Off Date and
before the Closing Date and all Cash Flow for the period following the Cut-Off
Date and before the Closing Date (the “Final Closing Statement”), which shall be
in the same format as the Closing Date Statement and which shall set forth a
calculation (together with any reasonable supporting documentation requested by
Buyer) of the actual Purchase Price.

(d)          Within sixty (60) days after receipt of the Final Closing
Statement, Buyer shall advise Seller in writing if it believes that the Final
Closing Statement did not accurately reflect the items required to be included
therein, stating in reasonable detail each disagreement therewith and the basis
therefor. In the event Buyer delivers such an objection, Seller and Buyer shall
attempt in good faith to resolve their differences. In the event all differences
are not resolved within thirty (30) days after Seller’s receipt of Buyer’s
objections to the proposed Final Closing Statement, then the issues remaining
unresolved shall be determined by a mutually agreed, nationally recognized
accounting firm (the “Accountant”). The Accountant shall resolve all disputed
items in accordance with the provisions of this Agreement within thirty (30)
days of receipt of such dispute. In making its determination, the Accountant may
only consider those items and amounts as to which Buyer and Seller have
disagreed within the time periods and on the grounds specified. The Accountant’s
determination shall be conclusive and binding on Buyer and Seller absent
manifest error. Each party shall make available to the other parties hereto, and
to the Accountant, its and its accountant’s work papers (to the extent
possible), schedules and other supporting data as may be reasonably requested by
such other parties to enable them to verify the amounts set forth in the Final
Closing Statement. The fees of the Accountant shall be shared by Buyer, on the
one hand, and Seller, on the other hand, in proportion to the relative
differences between their respective calculations of the actual Purchase Price
and the amount determined by the Accountant.

(e)          If the Estimated Purchase Price exceeds the actual Purchase Price
(as finally determined under this Section 5.3), then Seller shall, within
fifteen (15) calendar days after the actual Purchase Price has been finally
determined, pay such excess by wire transfer of immediately available funds to
Buyer. If the Estimated Purchase Price is less than the actual Purchase Price
(as finally determined under this Section 5.3), then Buyer shall, within fifteen

25

 

(15) calendar days after the actual Purchase Price has been finally determined,
pay such deficiency by wire transfer of immediately available funds to Seller.

Section 5.2          Assignment and Delivery of Loan Documents.

(a)          Loan File. On the Closing Date, Seller shall deliver to Buyer, or
its designated custodian, the Loan File with respect to each Transferred Loan
sold to Buyer, which shall include the following Loan Documents:

(i)          The original Note, or, if not available, a lost note affidavit and
indemnity in form and substance acceptable to Buyer, endorsed to the order of
Buyer pursuant to an allonge or endorsement in form and substance acceptable to
Buyer and signed, by facsimile or manual signature, in the name of Seller by an
authorized officer of Seller;

(ii)          Original policy of title insurance and all applicable endorsements
thereto (or a true and correct copy thereof);

(iii)          Original guarantee, if any, or, if not available, a lost
guarantee affidavit and indemnity in form and substance acceptable to Buyer, for
each Mortgage and any Collateral;

(iv)          Originals of all modification or forbearance agreements (or true
and correct copies thereof), if any;

(v)          If the Transferred Loan is secured by a Mortgage: (A) the original
Mortgage, with evidence of recording thereon, or a copy of the Mortgage
certified by the public recording office in those instances where the original
recorded Mortgage has been lost or retained by the public recording office, and
(B) an original recorded Assignment of Mortgage from Seller to Buyer in form and
substance acceptable to Buyer;

(vi)          If the Transferred Loan is secured by Collateral: (A) all Security
Documents or, if any original Security Document has been lost, a copy of such
Security Document certified as being a true, correct and complete copy by an
authorized officer of Seller, (B) true, correct and complete originals of stock
certificates, certificates of deposit, etc. which make up the Collateral, and
(C) the original recorded Assignment of Security Document from Seller to Buyer
in form and substance acceptable to Buyer;

(vii)          If applicable, either: (A) originals of all recorded intervening
assignments, if any, showing the ultimate transfer of title from the originator
to Seller, (with evidence of recording thereon, if applicable), or (B) copies of
any recorded assignments certified by the public recording office in any
instances where the original recorded assignments have been lost or retained by
the public recording office;

(viii)          An assignment of each UCC-1 financing statement related to the
Transferred Loans conforming to applicable law and custom and acceptable in form
and substance to Buyer in its reasonably discretion; and

26

 

(ix)          On or prior to the applicable Servicing Transfer Date (and
otherwise in compliance with all Applicable Laws, including RESPA with respect
to Residential Loans), Seller shall send a letter advising each Borrower of the
assignment of the Transferred Loan to Buyer, in form and substance acceptable to
Buyer.

(b)          Servicing Transferred Loan File. On the applicable Servicing
Transfer Date, the Servicing Transferred Loan Files for the Transferred Loans
shall be shipped by Seller to Buyer, or to Buyer’s designated Servicer on behalf
of Buyer.

Section 5.3          Additional Conditions to Closing.

(a)          Buyer’s obligation to consummate the purchase of the Purchased
Assets shall be subject to the satisfaction of the following conditions:

(i)          The related Purchase Commitment/Settlement shall have been entered
into between Seller and Buyer; and

(ii)          Buyer shall have received the Master Asset Transfer Schedule and
any Seller Disclosure Schedules, and such Master Asset Transfer Schedule and
Seller Disclosure Schedules shall be in form and substance acceptable to Buyer.

(b)          Seller’s obligation to consummate the sale of the Purchased Assets
shall be subject to the satisfaction of the following conditions:

(i)          The related Purchase Commitment/Settlement shall have been entered
into between Seller and Buyer; and

(ii)          Seller shall have received the aggregate Purchase Price for the
Transferred Loans from Buyer.

(iii)          Buyer shall have deposited cash with Seller, as escrow agent, in
an amount equal to the Backstop Deposit.

ARTICLE 6
Indemnification

Section 6.1          Survival.

All of the representations and warranties of the parties hereto contained in
this Agreement or any Ancillary Document shall survive the Closing until the
date which is twelve (12) months following the Closing Date; provided, however,
that the representations and warranties contained in subsections (a), (b), (f),
(m), (u) and (v) of Section 3.6 shall survive for twenty-four (24) months
following the Closing Date. All of the covenants or other agreements of the
parties contained in this Agreement shall survive until fully performed or
fulfilled, unless and to the extent only that non-compliance with such covenants
or agreements is waived in writing by the party entitled to such performance.
Notwithstanding the foregoing, any breach of covenant, agreement, representation
or warranty in respect of which indemnity may be sought under this Agreement
shall survive the time at which it would otherwise terminate pursuant to

27

 

the preceding sentence, if (a) specific notice of the inaccuracy thereof giving
rise to such right of indemnity shall have been given in writing to the party
against whom such indemnity may be sought prior to such time; or (b) the breach
was a product of fraud or willful misrepresentation perpetrated by Seller.

Section 6.2          Indemnification.

Subject to Section 6.1, Section 6.4, and Section 6.5,

(a)          Indemnification by Seller. Seller hereby agrees, from and after the
Closing, to indemnify and hold Buyer and its directors, officers, employees,
Affiliates, agents, Representatives, successors and permitted assigns
(collectively, the “Buyer Indemnified Parties”) harmless from and against any
and all losses, Liabilities, Claims, demands, judgments, damages, fines,
Actions, costs and expenses (but in the case of costs and expenses of a party
hereto or its Affiliates, limited to the reasonable, actual out of pocket costs
and expenses of such party or its Affiliates) (individually, a “Loss” and
collectively, “Losses”) to the extent:

(i)          based upon or arising from the failure of any of the
representations or warranties made by Seller in this Agreement, any Ancillary
Document or any other Seller Documents to be true and correct in all respects;

(ii)          based upon or arising from any Document Defect; provided that
Seller shall have the option to cure such Document Defect within a period of
forty-five (45) days from the time it discovers or receives notice from Buyer of
the existence of such defect;

(iii)          based upon or arising from the breach of any covenant or other
agreement contained herein on the part of Seller;

(iv)          based upon or arising from any Seller Retained Liabilities;

(v)          based upon or arising from any Excluded Asset; and

(vi)          based upon or arising from any failure of Seller, as escrow agent,
to comply with its obligations under Section 2.8 of this Agreement, including
without limitation, any failure of Seller, as escrow agent, to promptly refund
to Buyer any amounts deposited at Closing with Seller, as escrow agent, with
respect to any Letters of Credit, to the extent such Letters of Credit have
expired or been terminated without being fully drawn.

(b)          Indemnification by Buyer. Buyer hereby agrees, from and after the
Closing, to indemnify and hold Seller and its directors, officers, employees,
Affiliates, agents, Representatives, successors and permitted assigns
(collectively, the “Seller Indemnified Parties”) harmless from and against any
and all Losses to the extent:

(i)          based upon or arising from the failure of any of the
representations or warranties made by Buyer in this Agreement, any Ancillary
Document or any other Buyer Documents to be true and correct in all respects;

28

 

(ii)          based upon or arising from the breach of any covenant or other
agreement contained herein on the part of Buyer; and

(iii)          based upon or arising from any Assumed Obligation.

(c)          Repurchase Option.

(i)          In the event that estimated Losses due to a breach of a
representation or warranty for any individual Transferred Loan exceed the
greater of $100,000 or twenty percent (20%) of the Unpaid Principal Balance of
such Transferred Loan, the Seller shall have the right to repurchase such
Transferred Loan from Buyer for an amount equal to (i) the Allocated Purchase
Price for such Transferred Loan, plus (ii) actual costs and Expenses incurred by
Buyer during the period Buyer owned such Transferred Loan; provided that at the
request of Seller, the Buyer shall provide Seller reasonable supporting
documentation of such costs and Expenses, minus (iii) in the case of a
Transferred Loan, collections of principal received with respect to such
Transferred Loan since the Cut-Off Date, but only to the extent that, in the
case of such Transferred Loan, such collections result in the reduction of the
outstanding principal balance of such Transferred Loan in accordance with the
provisions of the Loan Documents.

(ii)          Upon the repurchase of a Transferred Loan, Buyer shall convey to
Seller all of Buyer’s right, title and interest in and to such Transferred Loan
and Seller shall assume all liabilities and obligations with respect to such
Transferred Loan; provided that, in no event shall Seller assume any liabilities
or obligations with respect to such Transferred Loan that arise during the
period Buyer owned the Transferred Loan. Buyer shall endorse, transfer, convey
or assign to Seller the Transferred Loan and/ in the same manner as such Loan
Documents were transferred and assigned from Seller to Buyer by documentation in
the same form as that delivered from Seller to Buyer, but mutatis mutandis.
Seller shall be responsible for, and shall pay when due and payable, all
transfer, filing and recording fees and taxes, costs and expenses, and any state
or county documentary taxes, if any, with respect to the filing or recording of
any document or instrument contemplated hereby in connection with such
repurchase, and shall be responsible for recording any documents evidencing the
transfers contemplated in connection with such repurchase. After repurchase
hereunder, Buyer shall immediately endorse, assign over and deliver to Seller
any and all payments received after repurchase by Seller from or on behalf of
any obligor on the repurchased Transferred Loan.

Section 6.3          Indemnification Procedures.

(a)          Each Person entitled to indemnification under this Article 6 (the
“Indemnified Party”) shall give written notice to the Person required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
receives written notice of any claim, event or matter as to which indemnity may
be sought; provided that the failure of the Indemnified Party to give notice as
provided in this Section 6.3(a) shall not relieve any Indemnifying Party of its
obligations under ARTICLE 6, except to the extent that such failure materially
prejudices the rights of any such Indemnifying Party. If the Indemnified Party
makes a claim on account of a Loss which may be covered by third party
indemnification or insurance, the Indemnified Party shall undertake diligent and
good faith efforts to pursue recovery available under such third party
indemnification or insurance policy and shall keep the Indemnifying Party

29

 

reasonably informed of such efforts, but shall not be required to make any claim
or exhaust any remedies under any third party indemnification or insurance
policy as a condition to making a claim under this Agreement. The Indemnifying
Party shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the Indemnified
Party; and, if the Indemnifying Party agrees (without conceding responsibility
for indemnification hereunder) that the subject matter of such claim is within
the scope of the indemnification provisions under the terms of this Agreement
(an “Indemnification Claim”), the Indemnifying Party shall have the right to
defend against, negotiate, settle or otherwise deal with such Indemnification
Claim. If the Indemnifying Party elects to defend against, negotiate, settle or
otherwise deal with any Indemnification Claim, it shall within thirty (30) days
(or sooner, if the nature of the Indemnification Claim so requires) notify the
Indemnified Party of its intent to do so. If the Indemnifying Party elects not
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim, then the Indemnified Party may defend against, negotiate, settle or
otherwise deal with such Indemnification Claim. If the Indemnifying Party shall
assume the defense of any Indemnification Claim, then the Indemnified Party may
participate, at his or its own expense, in the defense of such Indemnification
Claim; provided that such Indemnified Party shall be entitled to participate in
any such defense with separate counsel at the expense of the Indemnifying Party
if (A) so requested by the Indemnifying Party to participate or (B) in the
written opinion of counsel to the Indemnified Party a conflict exists between
the Indemnified Party and the Indemnifying Party that the assumption of such
defense by the Indemnifying Party would be inappropriate; provided further that
the Indemnifying Party shall not be required to pay for more than one (1) such
counsel (plus any appropriate local counsel) for all Indemnified Parties in
connection with any Indemnification Claim. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such Indemnification Claim.

(b)          Notwithstanding anything in this Section 6.3 to the contrary,
neither the Indemnifying Party nor the Indemnified Party shall, without the
written consent of the other party, settle or compromise any Indemnification
Claim or permit a default or consent to entry of any judgment unless the third
party claimant and such party provide to such other party an unqualified release
from all Liability in respect of the Indemnification Claim and such other party
is not required to make any payment in connection with such settlement.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the Indemnifying Party notifies
the Indemnified Party in writing of the Indemnifying Party’s willingness to
accept the settlement offer and pay the amount called for by such offer, and the
Indemnified Party declines to accept such offer, then the Indemnified Party may
continue to contest such Indemnification Claim, free of any participation by the
Indemnifying Party, and the amount of any ultimate Liability with respect to
such Indemnification Claim that the Indemnifying Party has an obligation to pay
hereunder shall be limited to the lesser of (A) the amount of the settlement
offer that the Indemnified Party declined to accept plus, without duplication,
the aggregate reasonable out-of-pocket fees and expenses incurred by the
Indemnified Party in connection with the defense of such Indemnification Claim
through the date of its rejection of the settlement offer, to the extent such
fees would be due and payable pursuant to Section 6.3(a)(A) or (B), and (B) the
Losses suffered by the Indemnified Party in connection with such Indemnification
Claim. If the Indemnifying Party makes any payment on any Indemnification Claim,
then the Indemnifying Party shall be subrogated, to the

30

 

extent of such payment, to all rights and remedies of the Indemnified Party to
any insurance benefits or other claims of the Indemnified Party with respect to
such Indemnification Claim.

(c)          After any decision, judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction, or a settlement shall have been
consummated (in accordance with this ARTICLE 6, or the Indemnified Party and the
Indemnifying Party shall have arrived at a mutually binding agreement with
respect to an Indemnification Claim hereunder, the Indemnified Party shall
forward to the Indemnifying Party notice of any sums due and owing by the
Indemnifying Party pursuant to this Agreement with respect to such matter.

(d)          Each party shall reasonably cooperate, and cause their respective
Affiliates reasonably to cooperate, in the defense or prosecution of any
Indemnification Claim and shall furnish or cause to be furnished such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in connection
therewith, it being understood that the party requesting such cooperation shall
promptly reimburse the other party for any reasonable out-of-pocket expenses
incurred by the cooperating party (including reasonable out-of-pocket travel
expenses to and from and attending conferences, discovery proceedings, hearings,
trials or appeals).

Section 6.4          Certain Limitations on Indemnification.

(a)          Each of the parties hereto agrees to take all reasonable steps to
mitigate their respective Losses that are indemnifiable hereunder, but the
provisions of this Section 6.4 shall not require an Indemnified Party to exhaust
any remedies against a third party Indemnitor or insurance prior to making a
claim under this Agreement against an Indemnifying Party. If any party receives
an insurance payment or a recovery from a third party in respect of its Loss
after payment has been made under any indemnification provision of this
Agreement in respect of that Loss, the Indemnified Party shall pay to the
Indemnifying Party the amount of such insurance payment or third party recovery
received by the Indemnified Party (less the Indemnified Party’s reasonable costs
incurred to secure such insurance payment or third party recovery) within five
(5) business days after such insurance payment or third party recovery is
received; provided that, for the avoidance of doubt, Buyer shall not be required
to pay over to Seller any tax benefit by virtue of the foregoing provision.

(b)          Subject to Section 6.4(d) below, Seller shall not be liable for
Losses under Section 6.2(a)(i), and Buyer shall not be liable for Losses under
Section 6.2(b)(i) unless the amount of Losses under the applicable Section
exceeds five thousand dollars ($5,000) in the aggregate; provided, that in the
event Losses under either Section 6.2(a)(i) or Section 6.2(b)(i) exceed such
amount, then Seller or Buyer, as the case may be, shall be liable for all of
such Losses, including the first five thousand dollars ($5,000).

(c)          Subject to Section 6.4(d) below, Seller shall not be liable for
Losses under Section 6.2(a)(i), and Buyer shall not be liable for Losses under
Section 6.2(b)(i) to the extent such Losses exceed five percent (5.0%) of the
aggregate Purchase Price for all Transferred Loans. In furtherance of the
foregoing, Seller and Buyer acknowledge and agree that if any Transferred Loan
is repurchased by Seller pursuant to Section 6.2(c) above, fifty percent (50%)
of the amounts payable by Seller under Section 6.2(c) to repurchase the
applicable Transferred

31

 

Loan shall apply towards (and count against) the cap on maximum liability
contained in this Section 6.4(c); provided, however, any amounts payable by
Seller to repurchase a Transferred Loan related to a breach of the
representations and warranties contained in subsections (a), (b), (f), (m), (u)
and (v) of Section 3.6 shall not apply towards (or count against) the cap on
maximum liability contained in this Section 6.4(c).

(d)          Notwithstanding anything to the contrary contained herein, Losses
that result from (a) actual fraud or intentional misrepresentation by Seller or
its Affiliates or Representatives, (b) breaches of the representations and
warranties contained in subsections (a), (b), (f), (m), (u) and (v) of Section
3.6, (c) any Seller Retained Liabilities, or (d) any Assumed Obligations will
not be subject to any of the limitations contained in this Section 6.4 or
elsewhere in this Agreement, and any Losses related to the foregoing shall not
apply towards (or count against) the cap on maximum liability contained in
Section 6.4(c).

(e)          IN NO EVENT SHALL ANY PARTY HAVE ANY LIABILITY TO THE OTHER FOR ANY
SPECIAL OR PUNITIVE DAMAGES, LOST PROFITS, DIMINUTION IN VALUE NOT RELATED TO
COLLATERAL UNDERLYING THE TRANSFERRED LOANS, OR CONSEQUENTIAL DAMAGES; PROVIDED
THAT THE FOREGOING WILL NOT APPLY TO THE EXTENT THAT THE INDEMNIFYING PARTY IS
REQUIRED TO INDEMNIFY HEREUNDER FOR DAMAGES REQUIRED TO BE PAID TO A THIRD
PARTY.

Section 6.5          Exclusivity; Equitable Remedies.

Buyer and Seller agree that the rights of the parties hereto to indemnification
under this ARTICLE 6 shall be the exclusive rights and remedies of the parties
hereto for the recovery of any Losses for which a party may be entitled to
recover under this Agreement or in connection with the transactions contemplated
hereby; provided that nothing in this Agreement will preclude or prevent any
party hereto from seeking and obtaining equitable remedies or relief not
involving the recovery of money damages from any court of competent jurisdiction
(such as the remedies of injunctive relief or specific performance) for any
breach or violation of this Agreement or otherwise in connection with such
transactions.

ARTICLE 7
MISCELLANEOUS PROVISIONS

Section 7.1          Expenses.

Except as otherwise provided in this Agreement, each of Seller and Buyer shall
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby.

Section 7.2          Submission to Jurisdiction; Consent to Service of Process.

(a)          The parties hereby irrevocably submit to the non-exclusive
jurisdiction of any federal court located within the Middle District of North
Carolina over any dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby and each

32

 

party hereby irrevocably agrees that all claims in respect of such dispute or
any Action related thereto may be heard and determined in such courts. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by
Applicable Law, any objection which they may now or hereafter have to the laying
of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.

(b)          Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any Action by the delivery of a copy thereof
in accordance with the provisions of Section 7.5.

Section 7.3           Entire Agreement; Amendments and Waivers.

This Agreement and the Ancillary Documents (including any certificates referred
to herein or therein) represent the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and thereof. This
Agreement can be amended, supplemented or changed, and any provision hereof can
be waived, only by written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein. The waiver
by any party of a breach of any provision of this Agreement shall not operate or
be construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach. No failure on the part of any party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.

Section 7.4          Governing Law.

This Agreement shall be governed by and construed in accordance with the Laws of
the State of North Carolina applicable to contracts made and performed in such
State without giving effect to the choice of law principles of such State that
would require or permit the application of the Laws of another jurisdiction.

Section 7.5          Notices.

All notices and other communications under this Agreement shall be in writing
and shall be deemed given (i) when delivered personally by hand (with written
confirmation of receipt), (ii) when sent by facsimile transmission (with written
confirmation of transmission) or (iii) one (1) business day following the day
sent by overnight courier (with written confirmation of receipt), in each case
at the addresses and facsimile transmission numbers set forth on Schedule 7.5
(or to such other address or facsimile number as a party may have specified by
notice given to the other party pursuant to this provision).

Section 7.6          Severability.

33

 

If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms or
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

Section 7.7          Binding Effect; Assignment.

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any Person not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either Buyer or Seller, directly or indirectly (by operation of Law or
otherwise), without the prior written consent of the other party and any
attempted assignment without the required consents shall be void. No assignment
of any obligations hereunder shall relieve the parties hereto of any such
obligations. Notwithstanding the foregoing, upon written notice to Seller (but
without any requirement for Seller consent), Buyer shall have the right to (a)
assign its rights and obligations under this Agreement to a Qualified Assignee,
or (b) collaterally assign its rights under this Agreement to a lender in
connection with a loan or loans secured in whole or in part by the Transferred
Loans.

Section 7.8          Specific Performance; Remedies.

The parties hereto expressly recognize and acknowledge that immediate, extensive
and irreparable damage may result in the event that any provision of Agreement
is breached. Therefore, in addition to, and not in limitation of, any other
remedy available to the non-breaching party, the non-breaching party shall be
entitled to seek to enforce its rights under this Agreement in any court of
equity by decree of specific performance, and appropriate injunctive relief may
be sought in connection therewith. Such remedy of specific performance and any
and all other remedies provided for in this Agreement shall, except as provided
in Section 6.5, be cumulative in nature and not exclusive and shall be in
addition to any other remedies whatsoever that a non-breaching party may
otherwise have.

Section 7.9           Non-Recourse.

No past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of Seller,
Buyer or any of their respective Affiliates shall have any Liability for any
obligations or liabilities of Seller or Buyer (as applicable) under this
Agreement or the Ancillary Documents or for any claim based on, in respect of,
or by reason of, the transactions contemplated hereby and thereby.

Section 7.10         Counterparts.

34

 

This Agreement may be executed in one (1) or more counterparts, each of which
shall be deemed to be an original copy of this Agreement and all of which, when
taken together, shall be deemed to constitute one and the same agreement. Such
counterparts may be delivered by facsimile or other electronic transmission.

Section 7.11          Waiver of Jury Trial.

The parties hereto each hereby waive trial by jury in any judicial proceeding
involving, directly or indirectly, any matters (whether sounding in tort,
contract or otherwise) in any way arising out of, related to or connected with
this Agreement or the transactions contemplated hereby.

Section 7.12          Post-Closing Cooperation Related to Transition of Loans.

From and after the Closing, upon the reasonable written request of Buyer and at
no cost or expense to Buyer, Seller shall use its commercially reasonable
efforts to: (a) provide to Buyer a single point of contact at Seller which
contact shall be available upon reasonable notice and during normal business
hours for all reasonable servicing and IT questions and transition items for at
least twelve (12) months after the Closing; (b) as soon as is reasonably
practicable after the Closing, in addition to the notice to Borrowers required
pursuant to Section 5.2(a)(ix) (which notice shall be sent out prior to the
applicable Servicing Transfer Date at Seller’s expense), mail any customary
“good-bye” letters acceptable in form and substance to Buyer and conforming to
Applicable Law and RESPA requirements (if applicable); (c) provide Buyer with
all reasonably available vendor information for each Transferred Loan
(including, without limitation, insurance information, tax service contracts and
other information) for notification of the transfer of the Transferred Loan; (d)
produce any reasonably available data downloads for the Transferred Loans; (e)
prepare final reports reasonably necessary for transfer of the Transferred Loans
by Buyer or its servicer, such final reports to include, but not be limited to,
to the extent reasonably available, a trial balance, loan history, suspense
funds listing, collateral reconciliation, and tax and insurance reporting; (f)
as soon as is reasonably practicable assemble and deliver to Buyer’s servicer
any applicable and reasonably available records related to servicing, tax,
insurance, collateral, asset and origination; (g) provide to Buyer and its
servicer all applicable and reasonably available electronic/imaged documentation
with respect to the Transferred Loans in the possession or control of Seller or
its Affiliates and Representatives; and (h) promptly send trailing documents and
payments to Buyer or its servicer after the Closing.

Section 7.13          Litigation Transition.

Prior to Closing, Seller shall deliver written notification to Buyer of (i) the
Transferred Loans in litigation including the names, addresses, telephone
numbers and e-mail addresses of all parties involved in such litigation and (ii)
all documents related to such litigation. Within five (5) business days after
Closing, Seller shall (i) notify the clerk of the court and all counsel of
record involved in such litigation that ownership of the Transferred Loan in
question has been transferred from Seller to Buyer, (ii) through its attorney,
if requested by Buyer and in cooperation with Buyer’s attorney, file appropriate
pleadings with the court that will (x) substitute Buyer’s attorney for Seller’s
attorney, and (y) remove Seller as a party to the litigation and substitute
Buyer as the real party in interest. If Seller fails to substitute Buyer’s

35

 

attorney for Seller’s attorney or to remove Seller as a party in interest, then
Seller shall pay continued legal expenses in such litigation until such time as
the substitution is effected. In no event shall (i) Buyer be liable for any
contingency arrangements of Seller with Seller’s attorneys or (ii) such
substitution shall include (or be otherwise construed as) any assumption by
Buyer of any Seller Retained Liabilities; provided, that in the event any
settlement or other resolution of litigation involves or creates a Seller
Retained Liability, Buyer shall obtain Seller’s prior written consent to such
settlement or resolution, such consent not to be unreasonably withheld. Seller
consents to the engagement by Buyer of counsel to Seller in connection with any
litigation or other matter relating to the Transferred Loans or otherwise,
subject to appropriate limitations on the scope of such engagement, an agreement
between such counsel and Seller satisfactory to Seller, and maintenance of the
attorney-client privilege as to all communications between the Seller and such
counsel prior to the Closing; provided that (a) no such counsel shall represent
either Seller or Buyer in connection with any dispute under this Agreement or
between Seller and Buyer and (b) Buyer agrees that Seller may retain such
counsel for any new matters unrelated to such litigation or other matters.

Section 7.14          Insurance Policies.

To the extent the Loan Documents contain casualty insurance policies, credit
life or disability policies, private insurance guarantor policies, or other
similar types of documents (the “Policies”), Seller agrees to (a) deliver the
original Policies (or if original Policies are not available, copies of such
Policies) to Buyer on or before the applicable Servicing Transfer Date, (b)
prior to the applicable Servicing Transfer Date, notify each of the insurance
carriers of the sale of the applicable Transferred Loan to Buyer and cause the
applicable insurance carrier to substitute Buyer or its designee as the new loss
payee on each of the Policies as of the Closing Date to the extent required by
the terms of each such Policy, and (c) otherwise cooperate with Buyer (at no
cost or expense to Buyer) to substitute Buyer or Buyer’s designee as loss payee
for any Policies in which the Seller is listed as loss payee as of the Closing
Date.

Section 7.15          Further Assurances.

At any time, and from time to time hereafter, upon the reasonable request of
Buyer, Seller will do, execute, acknowledge and deliver, and will cause to be
done, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney, recordings and
assurances as may be reasonably required in order to assign, transfer, grant,
convey, assure and confirm to Buyer, or to permit Buyer to collect and reduce to
possession, any or all of the Transferred Loans sold hereunder and to effectuate
and evidence the assignment of judgments related thereto. All instruments
relating to the purchase and sale of the Transferred Loans pursuant to this
Agreement, and all proceedings taken in connection with this Agreement and the
transactions contemplated hereby, shall be in form and substance mutually
satisfactory to Buyer and Seller.

Section 7.16          Nondisclosure.

Buyer and Seller agree to maintain the Purchase Price Percentage for each
Transferred Loan and the portion of the Purchase Price allocated to each
Transferred Loan, any non-public information contained in the Disclosure
Schedule, and all negotiations relating to the subject

36

 

matter of this Agreement as confidential between the parties. Notwithstanding
anything to the contrary in this Agreement, any party (or its Affiliates) may
disclose such confidential information to its lenders, in the course of its (or
its Affiliates’) normal reporting practices to its (or their) regulators or
direct or indirect owners, or if required by applicable law or regulations,
including but not limited to federal securities laws and regulations, or any
rule of any stock exchange (in each case, including pursuant to a registration
statement or other document filed with a governmental authority under applicable
law) or if necessary for it to perform any of its duties or obligations
hereunder, all as determined by such party in its discretion. Notwithstanding
anything in this Agreement to the contrary, Buyer shall have the right to (x)
disclose to those Persons directly related to the Transferred Loans (for
example, Borrowers, title companies, tenants, etc.) that Buyer has purchased the
Transferred Loans and shall have the right without the consent of Seller or any
other Person to disclose such confidential information as may be necessary or
desirable to inform such Persons that Buyer is the owner of the Transferred
Loans and/or to enforce the Loan Documents; (y) Buyer and its agents and
Affiliates shall have the right to disclose confidential information that is
necessary or desirable in Buyer’s opinion to enforce its rights under the
Transferred Loans and related Loan Documents, and (z) Buyer shall have the right
to disclose to any potential lender, bondholder or rating agency such
confidential information as may be necessary or desirable to disclose in
connection with a secured or unsecured financing or securitization of the
Transferred Loans by Buyer or its Affiliates.

Section 7.17          Disclosure Schedule.

Seller has set forth information on the Disclosure Schedule in a section thereof
that corresponds to the section of this Agreement to which it relates. A matter
set forth in one section of the Disclosure Schedule need not be set forth in any
other section so long as its relevance to such other section of the Disclosure
Schedule or section of the Agreement is reasonably apparent on the face of the
information disclosed therein to the Person to which such disclosure is being
made. The parties hereto acknowledge and agree that (a) the Disclosure Schedule
may include certain items and information solely for informational purposes for
the convenience of Buyer and (b) the disclosure by Seller of any matter in the
Disclosure Schedule shall not be deemed to constitute an acknowledgment by
Seller that the matter is required to be disclosed by the terms of this
Agreement or that the matter is material.

[Signature page follows.]

37

 

IN WITNESS WHEREOF, each of the undersigned parties has caused to be duly
executed in its name by its duly authorized officer this Loan Purchase Agreement
as of the date set forth in the opening paragraph.

 

  SELLER:       FIRST BANK             By: /s/ Eric Credle     Eric Credle,
Chief Financial Officer                                 BUYER:            
VIOLET PORTFOLIO, LLC   By: Violet Loan Grand Avenue Partners, Ltd.   Its:
Managing Member     By: Oaktree Capital Management, L.P.     Its: Director      
                    By: /s/       Name:         Title:                          
  By: /s/       Name:         Title:  

 

 

(Signature Page to Loan Purchase Agreement)