Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

by and among

NEWSTAR EQUIPMENT FINANCE I, LLC,

NEWSTAR COMMERCIAL LEASE FUNDING I, LLC,

NEWSTAR COMMERCIAL LEASE FUNDING 2015-1 LLC,

AND, FOR LIMITED PURPOSES HEREIN, NEWSTAR FINANCIAL, INC.,

and

RADIUS BANK

Dated as of December 1, 2016

 

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS

     1   

Section 1.1

  

Certain Defined Terms

     1   

Section 1.1

  

Other Terms

     7   

ARTICLE II THE SALE AND PURCHASE OF THE TRANSFERRED ASSETS

     7   

Section 2.1

  

Sale and Purchase of Transferred Assets

     7   

Section 2.2

  

Excluded Assets

     8   

Section 2.3

  

Assumed Liabilities

     10   

Section 2.4

  

Excluded Liabilities

     10   

Section 2.5

  

Purchase Price

     10   

Section 2.6

  

Closing

     11   

Section 2.7

  

Post-Closing Purchase Price Adjustments

     12   

Section 2.8

  

Allocation of Purchase Price

     13   

Section 2.9

  

Non-assignable Assets

     13   

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS

     14   

Section 3.1

  

Organization and Qualification

     14   

Section 3.2

  

Authority

     14   

Section 3.3

  

No Conflict; Required Filings and Consents

     14   

Section 3.4

  

Transferred Assets

     15   

Section 3.5

  

Financial Statements

     15   

Section 3.6

  

Absence of Certain Changes or Events; No Undisclosed Liabilities

     16   

Section 3.7

  

Compliance with Laws and Governmental Authorizations

     16   

Section 3.8

  

Litigation

     16   

Section 3.9

  

Employee Plans

     16   

Section 3.10

  

Labor and Employment Matters

     17   

Section 3.11

  

Real Property

     17   

Section 3.12

  

Taxes

     17   

Section 3.13

  

Loans and Leases

     18   

Section 3.14

  

Contracts

     18   

Section 3.15

  

Bonds; Letters of Credit

     19   

Section 3.16

  

Transactions with Affiliates

     19   

Section 3.17

  

No Brokers

     19   

Section 3.18

  

Insurance

     19   

Section 3.19

  

Intellectual Property

     20   

Section 3.20

  

Portfolio Property

     20   

Section 3.21

  

Environmental Compliance

     20   

Section 3.22

  

Absence of Certain Business Practices

     21   

Section 3.23

  

No Other Representations or Warranties; Disclaimer

     21   

Section 3.24

  

Organization and Qualification

     21   

Section 3.25

  

Authority

     21   

Section 3.26

  

No Conflict; Required Filings and Consents

     22   

Section 3.27

  

Seller Parent Finances

     22   

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

     22   

Section 4.1

  

Organization and Qualification

     22   

Section 4.2

  

Authority

     22   

Section 4.3

  

No Conflict; Required Filings and Consents

     23   

 

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Section 4.4

  

Financing

     23   

Section 4.5

  

No Brokers

     23   

Section 4.6

  

Litigation and Claims

     23   

Section 4.7

  

Buyer Acknowledgement

     24   

Section 4.8

  

No Other Representations or Warranties

     24   

ARTICLE V COVENANTS

     24   

Section 5.1

  

Covenants Regarding Access and Information

     24   

Section 5.2

  

Employees

     25   

Section 5.3

  

Confidentiality

     26   

Section 5.4

  

Consents and Filings; Further Assurances

     26   

Section 5.5

  

Refunds and Remittances

     27   

Section 5.6

  

Public Announcements

     27   

Section 5.7

  

Tax Covenants

     27   

Section 5.8

  

Bulk Transfer Laws

     28   

Section 5.9

  

Noncompetition and Nonsolicitation

     28   

Section 5.10

  

Nonsolicitation of Seller Parent Employees

     29   

ARTICLE VI INDEMNIFICATION

     30   

Section 6.1

  

Survival

     30   

Section 6.2

  

Indemnification by Sellers and Seller Parent

     30   

Section 6.3

  

Indemnification by Buyer

     31   

Section 6.4

  

Procedures

     31   

Section 6.5

  

Limits on Indemnification

     32   

Section 6.6

  

Assignment of Claims

     34   

Section 6.7

  

Indemnification With Respect to Actual Credit Losses

     34   

Section 6.8

  

Exclusive Remedy

     38   

Section 6.9

  

Payments

     39   

ARTICLE VII GENERAL PROVISIONS

     39   

Section 7.1

  

Fees and Expenses

     39   

Section 7.2

  

Amendment and Modification

     39   

Section 7.3

  

Waiver

     39   

Section 7.4

  

Notices

     40   

Section 7.5

  

Interpretation

     41   

Section 7.6

  

Entire Agreement

     41   

Section 7.7

  

No Third-Party Beneficiaries

     41   

Section 7.8

  

Governing Law

     41   

Section 7.9

  

Consent to Jurisdiction

     42   

Section 7.10

  

Disclosure Generally

     42   

Section 7.11

  

Personal Liability: Non-Recourse

     42   

Section 7.12

  

Assignment; Successors

     43   

Section 7.13

  

Specific Performance

     43   

Section 7.14

  

Severability

     43   

Section 7.15

  

Waiver of Jury Trial

     43   

Section 7.16

  

Counterparts

     43   

Section 7.17

  

No Presumption Against Drafting Party

     43   

Section 7.18

  

Further Assurances

     44   

 

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Exhibits

 

Bill of Sale and Assignment and Assumption Agreement

  

Exhibit A

 

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) dated as of December 1, 2016,
is by and among NewStar Equipment Finance I, LLC, a Delaware limited liability
company (“Equipment Finance I”), NewStar Commercial Lease Funding I, LLC, a
Delaware limited liability company (“Lease Funding I”), NewStar Commercial Lease
Funding 2015-1 LLC, a Delaware limited liability company (“Lease Funding 2015-1”
and together with Equipment Finance I and Lease Funding I, each a “Seller” and
collectively the “Sellers”), Radius Bank, a federal savings association
organized under the laws of the United States (“Buyer”), and for purposes of
Section 3.24, Section 3.25, Section 3.26, Section 3.27, Section 5.9, Section
5.11 and Article VI, NewStar Financial, Inc., a Delaware corporation (“Seller
Parent”).

STATEMENT OF PURPOSE

A. Sellers are engaged in the business of equipment financing throughout the
United States (the “Business”).

B. Sellers have agreed to sell to Buyer, and Buyer has agreed to purchase, the
Transferred Assets (as defined below), on the terms and conditions set forth in
this Agreement.

C. Seller Parent is the ultimate parent entity of the Sellers and has agreed to
join this Agreement to serve as an additional responsible party with respect to
certain of Sellers’ obligations hereunder.

D. Concurrently with the execution of this Agreement, each of Steve O’Leary,
Mark Francesconi, and Neil Whitman (together, the “Key Employees”) has entered
into a severance, change in control and restrictive covenant agreement with
Buyer, effective at Closing.

In consideration of the foregoing and the mutual covenants and agreements
contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms. The following terms have the meanings
specified below or are defined in the Sections referred to below.

“Action” means any claim, action, suit, arbitration, or proceeding by or before
any Governmental Entity.

“Ad Valorem Taxes” is defined in Section 5.7(b).

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.

“Agreement” is defined in the opening paragraph.

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“Ancillary Agreements” means the Bill of Sale and Assignment and Assumption
Agreement and all other instruments and documents necessary for Sellers to
transfer its Transferred Assets and for Buyer to assume the Assumed Liabilities,
or otherwise executed and delivered pursuant to the terms of this Agreement.

“Assumed Liabilities” is defined in Section 2.3.

“Base Purchase Price” is defined in Section 2.5.

“Bill of Sale and Assignment and Assumption Agreement” means a Bill of Sale and
Assignment and Assumption Agreement substantially in the form attached hereto as
Exhibit A, pursuant to which Sellers shall transfer to Buyer all of its rights,
title and interest in and to the Transferred Assets owned and held by Sellers
and Buyer shall assume the Assumed Liabilities of Sellers.

“Books and Records” is defined in Section 2.1(d).

“Business” has the meaning set forth in the Statement of Purpose.

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in Boston,
Massachusetts.

“Business Employees” means, as of any date, all individuals employed by the
Sellers or Seller Parent on such date (including those on approved leaves of
absence) other than those employees of the Sellers or Seller Parent not
exclusively providing services to the Business.

“Business Intellectual Property” means each of the material registered
Intellectual Property Rights owned by the Sellers and used exclusively in the
conduct of the Business.

“Buyer” is defined in the opening paragraph.

“Buyer 401(k) Plan” is defined in Section 5.2(d).

“Buyer Benefit Plans” is defined in Section 5.2(b).

“Buyer Indemnified Parties” is defined in Section 6.2.

“Buyer Material Adverse Effect” means a change, occurrence, event or effect that
is materially adverse to the ability of Buyer to perform its obligations under
this Agreement or the Ancillary Agreements or to consummate the Transactions.

“Cap” is defined in Section 6.5(b)(iii).

“Claims Deadline” is defined in Section 6.1.

“Closing” is defined in Section 2.6(a).

“Closing Date” is defined in Section 2.6(a).

“Closing Time” means 12:01 a.m. in Boston, Massachusetts on the Closing Date.

 

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“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Competitive Business” means the business of entering into equipment loan and
lease arrangements as currently conducted by the Sellers as of the Closing Date,
expressly excluding any other business conducted by the Seller Parent or any of
its Affiliates.

“Confidential Information” is defined in the Confidentiality Agreement.

“Confidentiality Agreement” is defined in Section 5.3.

“Contract” means any legally binding agreement, contract, lease, sublease,
license, indenture, mortgage, collective bargaining agreement, purchase and
sales order, undertaking, evidence of indebtedness, binding commitment or
instrument to which Sellers are a party and related exclusively to the conduct
of the Business (other than the Licenses).

“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 a Person, whether through the
ownership of voting securities, as trustee or executor, as general partner or
managing member, by contract or otherwise.

“Copyright Act” means the Copyright Act of 1976, as amended, and the published
rules and regulations and decisions of the Copyright Office thereunder, as in
effect from time to time.

“Copyright Office” means the United States Copyright Office.

“Disclosure Schedules” is defined in Article III.

“Employee Plans” means all employee benefit plans of Sellers or Seller Parent or
any of its ERISA Affiliates, including all “employee benefit plans” within the
meaning of Section 3(3) of ERISA, all formal written plans and all other
compensation and benefit plans, contracts, policies, programs and arrangements
of Sellers or any of its ERISA Affiliates (other than routine administrative
procedures), in each case in connection with the Business in effect as of the
date hereof, including all pension, profit sharing, savings and thrift, bonus,
stock bonus, stock option or other cash or equity-based incentive or deferred
compensation, severance pay and medical and life insurance plans in which any of
the Business Employees or their dependents participate.

“Encumbrance” means any charge, claim, mortgage, deed of trust, lien,
hypothecation, option, pledge, security interest, right of first refusal or
other restriction of any kind.

“Environmental and Safety Requirements” is defined in Section 3.21(a).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations thereunder, as in effect from time to time.

“ERISA Affiliate” means, with respect to Sellers: (i) any corporation which at
any time on or before the Closing Date is or was a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as
Sellers; (ii) any partnership, trade or business (whether or not incorporated)
which at any time on or before the Closing Date is or was under common control
(within the meaning of Section 414(c) of the Code) with Sellers; (iii) any
entity, which at any time on or before

 

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the Closing Date is or was a member of the same affiliated service group (within
the meaning of Section 414(m) of the Code) as Sellers, any corporation described
in clause (i) above or any partnership, trade or business described in clause
(ii) above; and (iv) any entity which at any time on or before the Closing Date
is or was required to be aggregated with Sellers under Section 414(o) of the
Code.

“Escrow Agent” is defined in Section 5.11.

“Escrow Agreement” is defined in Section 5.11.

“Escrow Amount” is defined in Section 5.11.

“Escrow Notice” is defined in Section 5.11

“Estimated Purchase Price” is defined in Section 2.5(b).

“Excluded Assets” is defined in Section 2.2.

“Excluded Liabilities” is defined in Section 2.4.

“Financial Statements” is defined in Section 3.5.

“Final Closing Statement” is defined in Section 2.7(a).

“Fundamental Representations” means the representations and warranties set forth
in Section 3.1(a)(i) and (a)(ii) (Organization and Qualification), Section 3.2
(Authority), the first sentence of Section 3.4 (Title), Section 3.12 (Taxes),
Section 3.17 (No Brokers), Section 4.1 (Organization and Qualification), Section
4.2 (Authority), and Section 4.5 (No Brokers).

“GAAP” means United States generally accepted accounting principles as in effect
on the date hereof.

“Governmental Authorizations” means all permits, Licenses, certificates,
waivers, concessions, exemptions, orders and other authorizations and approvals
that are held by Sellers in the operation of the Business and issued or obtained
from a Governmental Entity.

“Governmental Entity” means any United States federal, state or local
governmental, regulatory or administrative authority, agency, division,
instrumentality or commission or any judicial or arbitral body.

“Hired Employee” means any Business Employee who becomes an employee of Buyer or
an Affiliate of Buyer on or after the Closing, including the Key Employees.

“Indemnified Party” is defined in Section 6.4(a).

“Indemnifying Party” is defined in Section 6.4(a).

“Independent Accountants” is defined in Section 2.7(a).

“Intellectual Property Rights” means all rights in and to the following: (i)
patents, patent applications and patent disclosures, (ii) trademarks, service
marks, trade dress, logos, Internet domain names, and registrations and
applications for registration thereof together with all of the goodwill

 

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associated therewith, (iii) copyrights (registered or unregistered) and
registrations and applications for registration thereof, (iv) computer software,
(v) mask works and registrations and applications for registration thereof, and
(vi) trade secrets, patentable inventions reduced to practice and know-how.

“Knowledge”, with respect to Sellers, means the actual knowledge of each of
Steve O’Leary, Neil Whitman and Mark Francesconi.

“Law” means any applicable common law, statute, law, ordinance, regulation,
rule, code, injunction, judgment, decree or order of any Governmental Entity.

“Leased Office Property” is defined in Section 3.11(b).

“Lender” is defined in Section 2.6(b)(vi).

“License” means any license, permit or other authorization issued by any
Governmental Entity, used primarily in the operation of the Business, together
with any amendments, supplements and other modifications thereto.

“Liquidity” means, as of any date of determination, the sum of (a) Seller
Parent’s cash available for use for general corporate purposes and not held in
any reserve account or legally or contractually restricted for any particular
purposes or subject to any lien (other than blanket liens), (b) amounts
available for advance to the Seller Parent in accordance with indebtedness
available to Seller Parent, (c) cash available for distribution to Seller Parent
from any consolidated subsidiary thereof and (d) amounts available for advance
to any consolidated direct or indirect subsidiary of Seller Parent in accordance
with indebtedness available to any such consolidated subsidiary which would be
available upon receipt by such consolidated subsidiary for distribution to
Seller Parent.

“Liquidity Notice” is defined in Section 5.11.

“Loans and Leases” is defined in Section 2.1(h).

“Loan and Lease Documents” means all documents and records with respect to a
Loan or Leases, including documents, applications, notes, credit agreements,
security agreements, equipment lease agreements, loan agreements, including
building agreements, guarantees, residual position insurance policies, sureties
and insurance policies, flood hazard certifications, and all modifications,
waivers and consents relating to any of the foregoing.

“Losses” is defined in Section 6.2.

“Material Adverse Effect” means a change, occurrence, event or effect that is
materially adverse to the assets, properties, operations, business, financial
condition or results of operations of the Business, taken as a whole; provided,
that none of the following (or the results thereof) shall be taken into account,
either alone or in combination in determining whether a Material Adverse Effect
has occurred: (a) any actual or proposed change in Law, regulations, accounting
rules or standards or interpretations thereof applicable to the Business; (b)
any change in international, national, regional, local or industry-wide
political, economic or business conditions (including financial and capital
market conditions); (c) changes within the industries in which the Business
operates (including (i) any federal or state governmental actions or (ii)
litigation matters) and competition in those industries; (d) changes in
technology; (e) acts of war (whether or not declared), sabotage or terrorism,
military actions or the escalation thereof, and natural disasters or other force
majeure events occurring after the date of this Agreement; (f) conditions
generally

 

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affecting or related to attributes of Buyer or its Affiliates or otherwise
attributable to actions taken by Buyer or its Affiliates, including any
violation of the terms of this Agreement by Buyer; (g) any adverse effect as a
result of the execution of this Agreement or the announcement of the sale
process by which Sellers are offering the Transferred Assets for sale or the
Transactions, or the taking of any action contemplated or required by this
Agreement; (h) any adverse change in or effect on the Business, the Transferred
Assets or Sellers that is cured before the earlier of (x) the Closing Date and
(y) the failure to meet any internal projections or estimates, including any
provided to Buyer.

“Material Contracts” is defined in Section 3.14(a).

“Net Investment in Receivables” means, with respect to the Loans and Leases, as
of the Closing Date, (a) the aggregate value of all receivables related to such
Loans and Leases (including all earned but unpaid interest), plus (b) the
aggregate value of all residual positions related to such Loans and Leases,
minus (c) the aggregate unearned income related to such Loans and Leases.

“Office Leases” means leases, subleases, licenses and other Contracts (including
any assignments, amendments or supplements thereto, or recorded notices or
memoranda thereof) for the Leased Office Property.

“Permitted Encumbrances” means (a) statutory liens for Taxes not yet due or
delinquent (or which may be paid without interest or penalties) or the validity
or amount of which is being contested in good faith by appropriate proceedings;
(b) mechanics’, carriers’, workers’, repairers’ and other similar liens arising
or incurred in the ordinary course of business relating to obligations as to
which there is no default on the part of Sellers, or the validity or amount of
which is being contested in good faith by appropriate proceedings, or other
Encumbrances securing the performance of bids, trade contracts, leases or
statutory obligations (including workers’ compensation, unemployment insurance
or other social security legislation); (c) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by any
Governmental Entity applicable to the real property; (d) in the case of any
Leased Office Property: (i) landlords’ liens, (ii) the rights of any lessor,
(iii) any Encumbrances granted by any lessor of such Leased Office Property or
any such lessor’s predecessors in title, and (iv) any other terms or provisions
in the Leases; and (e) any Encumbrance relating to or created in connection with
or pursuant to an Assumed Liability.

“Person” means an individual, corporation, partnership, limited liability
company, limited liability partnership, syndicate, person, trust, association,
organization or other entity, including any Governmental Entity, and including
any successor, by merger or otherwise, of any of the foregoing.

“Portfolio Property” means all property with respect to which a Seller is the
lessor, seller or secured party, as the case may be, pursuant to the terms of
any Loan and Lease Documents.

“Potential Contributor” is defined in Section 6.6.

“Preliminary Closing Statement” is defined in Section 2.5(b).

“Purchase Price” is defined in Section 2.5(a).

“Required Consent” means any authorization, approval or consent of any
Governmental Entity or other Person under any License, Contract, Lease or other
instrument that by Law or by its terms requires such third party action as a
condition for Sellers to assign or transfer control of such License, Contract,
Lease or other instrument in connection with the Transactions or otherwise to
consummate the Transactions.

 

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“Sellers” is defined in the opening paragraph.

“Seller 401(k) Plan” is defined in Section 5.2(d).

“Seller Indemnified Parties” is defined in Section 6.3.

“Tangible Personal Property” is defined in Section 2.1(j).

“Tax Return” means any return, declaration, report, claim for refund,
information return or other statement or document relating to Taxes (including
any schedule or attachment thereto and any amendment thereof) filed or required
to be filed with any taxing authority.

“Taxes” means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other taxes of any kind whatsoever, together with any interest, penalty, or
addition thereto.

“Third Party” is defined in Section 6.4(a).

“Third Party Claim” is defined in Section 6.4(a).

“Transfer Taxes” is defined in Section 5.7(a).

“Transferred Assets” is defined in Section 2.1.

“Transactions” means, collectively, the transactions contemplated by this
Agreement and the Ancillary Agreements.

Section 1.1 Other Terms. Other terms may be defined elsewhere in this Agreement,
and unless otherwise indicated, shall have such meaning throughout this
Agreement.

ARTICLE II

THE SALE AND PURCHASE OF THE TRANSFERRED ASSETS

Section 2.1 Sale and Purchase of Transferred Assets. Subject to the terms and
conditions of this Agreement, at the Closing Sellers shall sell, assign,
transfer and convey to Buyer, and Buyer shall purchase, acquire and accept from
Sellers, free and clear of all Encumbrances (except for Permitted Encumbrances),
all of Sellers’ right, title and interest as of the Closing Time in and to all
assets, properties and rights owned or leased by Sellers on the Closing Date,
whether real, personal or mixed, tangible or intangible, in electronic form or
otherwise, and relating primarily to the Business conducted or owned by Sellers,
including the assets, properties and rights identified below to the extent
relating primarily to the Business conducted or owned by Sellers, but excluding
the Excluded Assets of Sellers (collectively, the “Transferred Assets”):

 

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(a) all Contracts (including the Office Leases of Sellers), other than those
Contracts that constitute Excluded Assets;

(b) all prepaid expenses and deposits made or paid by Sellers to the extent
transferable;

(c) all lease receivables, notes receivable and other receivables due to
Sellers, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto;

(d) all books of account, general, financial and accounting records, files,
invoices, customers and suppliers lists, other distribution lists, marketing
materials, compilations of industry data, billing records, engineering records,
drawings, blueprints, schematics, copyright, regulatory records, manuals,
customer and supplier correspondence, and personnel records owned by Sellers
relating to employees that are Hired Employees as of the Closing Date, but
excluding personnel records relating to the Business Employees that are not
Hired Employees as of the Closing Date (the “Books and Records”);

(e) all guarantees, warranties, indemnities and similar rights in favor of
Sellers to the extent transferable;

(f) all telephone numbers and IP addresses assigned to Sellers, other than those
that constitute Excluded Assets;

(g) all advance payments to, or funds of third parties on deposit with, Sellers;

(h) the loans, leases in process, and lease lines/equipment financing leases,
all as set forth in Schedule 2.1(h) (the “Loans and Leases”), and all rights
(including all amounts due and payable) with respect thereto;

(i) cash and cash equivalents, to the extent constituting collateral or
supporting a guaranty of a lease included in the Loans and Leases, in each case
as set forth in Schedule 2.1(i) (the “Collateral Cash”);

(j) all Intellectual Property Rights of Sellers in or with respect to the Lease
Plus software system used in connection with the Business;

(k) Lease Funding 2015-1’s beneficial ownership in that certain “Trust Estate”
created under, and defined in, that certain Amended and Restated Trust Agreement
(S/N 1146) dated as of September 1, 2015, as amended by the Amendment No. 1 to
Amended and Restated Trust Agreement (S/N 1146) dated as of September 1, 2015,
between Lease Funding 2015-1 and Wells Fargo Bank Northwest, National
Association, not in its individual capacity, but solely as owner trustee, the
transfer of which beneficial ownership shall further be effected under that
certain Assignment and Assumption Agreement (N315RX), dated the date hereof,
between Lease Funding 2015-1 and Buyer; and

(l) any vehicles or equipment owned by any Seller that is subject to any Loan or
Lease (or available for lease), in each case together with any transferable
manufacturer or vendor warranties related thereto (the “Tangible Personal
Property”).

Section 2.2 Excluded Assets. Notwithstanding anything herein to the contrary,
Sellers shall retain, and the Transferred Assets shall not include any assets or
properties of any kind or nature, wherever located and whether real, personal or
mixed, tangible or intangible, in electronic form or otherwise, that do not
relate exclusively to the Business, including the assets, properties and
rights identified below (collectively, the “Excluded Assets”):

 

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(a) all cash, cash equivalents, checks, bank deposits and short-term investments
of any Seller, other than the Collateral Cash;

(b) all bank accounts, bank records and statements of Sellers;

(c) all stocks, certificates of deposit and similar investments, bonds,
guaranties in lieu of bonds, letters of credit and similar instruments obtained
or held by Sellers, and all rights relating thereto;

(d) Sellers’ books and records of internal corporate proceedings, personnel
records relating to the Business Employees other than Hired Employees, and books
and records that Sellers are required by Law to retain;

(e) all Tax Returns, Tax reports, Tax records and Tax work papers of Sellers;

(f) all accounting books and records and internal reports relating to the
business activities of Sellers to the extent unrelated to the Business or the
Transferred Assets, including all books and records relating to any Excluded
Asset or Excluded Liability;

(g) all Tax assets (including any interest in or right to any Tax refund or Tax
prepayments) relating to the Business, the Transferred Assets or the Assumed
Liabilities for, or applicable to, any taxable period (or portion thereof)
ending on or prior to the Closing Time of Sellers;

(h) all insurance policies and rights, claims or causes of action thereunder and
all insurance proceeds that Sellers are entitled to receive;

(i) all rights of Sellers under this Agreement and the Ancillary Agreements;

(j) all Contracts related to Sellers’ indebtedness for borrowed money;

(k) all routine local and state Governmental Authorizations held by Sellers in
connection with general business or employment activities or Tax matters;

(l) all Employee Plans and any assets relating thereto;

(m) all prepaid expenses and deposits made or paid by Sellers to the extent not
included in the Transferred Assets pursuant to Section 2.1(b);

(n) any Contracts and other assets or properties used exclusively in the
operation of the Sellers’ businesses other than the Business;

(o) all loans and equipment finance leases other than the Loans and Leases, all
related loan and equipment financing lease files that are not Loan and Lease
Documents, and all equipment subject to an equipment financing lease that is not
included in the Loans and Leases;

 

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(p) all Intellectual Property Rights not specifically included in the
Transferred Assets (including but not limited to all right, title and interest
in and to the name “NewStar Equipment Finance” or any derivative thereof); and

(q) those assets listed on Schedule 2.2(q).

Section 2.3 Assumed Liabilities. In connection with the purchase and sale of the
Transferred Assets pursuant to this Agreement, at the Closing, Buyer shall
assume and pay, discharge, perform or otherwise satisfy the following
liabilities and obligations of the Sellers relating to the Business (the
“Assumed Liabilities”):

(a) all liabilities and obligations of Sellers under any Contract (including the
Loan and Lease Documents) included among the Transferred Assets that arises or
is required to be performed after the Closing Date;

(b) any Taxes to be paid by Buyer pursuant to this Agreement;

(c) all liabilities and obligations assumed by Buyer pursuant to Section 5.3 or
relating to the hiring, employment or termination of any Hired Employee by Buyer
or any Affiliate of Buyer and that accrue after the Closing Date;

(d) obligations under the Loans and Leases, including the collateral for the
Loans and Leases, the Loan and Lease Documents and the servicing of the Loans
and Leases; and

(e) those liabilities and obligations listed on Schedule 2.3(e).

Section 2.4 Excluded Liabilities. Notwithstanding any other provision of this
Agreement to the contrary, Buyer is not assuming, and Sellers shall retain all
liabilities and obligations not expressly assumed pursuant to Section 2.3,
including the following liabilities and obligations (the “Excluded
Liabilities”):

(a) all Taxes arising from or with respect to the Transferred Assets or the
operation of the Business that are incurred in or attributable to any period, or
any portion of any period, ending on or prior to the Closing Date;

(b) any indebtedness of Sellers for borrowed money or guarantees thereof
outstanding as of the Closing Time; and

(c) all liabilities and obligations specifically retained by Sellers pursuant to
Section 5.3, including in respect of or relating to any Employee Plan; and

(d) any liability or obligation relating primarily to an Excluded Asset (for
clarity, not including deferred revenue liability).

Section 2.5 Purchase Price.

(a) The aggregate purchase price for the Transferred Assets shall be the Base
Purchase Price, plus the assumption of the Assumed Liabilities (collectively,
the “Purchase Price”). For purposes of this Agreement, “Base Purchase Price”
shall mean an amount in cash equal to the product resulting when the Net
Investment in Receivables is multiplied by 1.05.

 

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(b) Sellers delivered to Buyer their good faith estimate of the Base Purchase
Price (the “Estimated Purchase Price”), together with supporting schedules with
respect to Sellers’ calculation thereof, and payment instructions with respect
thereto (the “Preliminary Closing Statement”). The parties have proceeded to
Closing, subject to the terms and conditions set forth herein, utilizing the
information contained in the Preliminary Closing Statement and the calculation
of the Purchase Price set forth therein as revised to reflect any agreements of
the parties with respect thereto. A sample Preliminary Closing Statement,
reflecting adjustments made to the Purchase Price that would be required if the
Closing Date had been October 31, 2016, is attached hereto as Schedule 2.5.

(c) At the Closing, Buyer shall pay to Sellers the Estimated Purchase Price (as
adjusted if the Preliminary Closing Statement is adjusted in accordance with
Section 2.5(b)), and less any portion that may be directed to pay the Sellers’
transaction expenses, which portion shall be paid, at Sellers’ direction, to the
applicable service providers, by wire transfer of immediately available funds to
the bank account designated by Sellers in the Preliminary Closing Statement.

Section 2.6 Closing.

(a) The sale and purchase of the Transferred Assets and the assumption of the
Assumed Liabilities contemplated by this Agreement shall take place at the
offices of Locke Lord LLP, 111 Huntington Avenue, Boston, MA 02199, at 10:00
a.m. Eastern time, or by facsimile, electronic and overnight deliveries (the
“Closing”), on the date hereof (the “Closing Date”). Subject to the consummation
of the Closing on the Closing Date, the sale and purchase of the Transferred
Assets and the assumption of the Assumed Liabilities contemplated by this
Agreement will be deemed effective as of the Closing Time.

(b) At the Closing, Sellers shall cause to be delivered to Buyer or Buyer’s
representatives the following documents:

(i) duly executed copies of each of the Ancillary Agreements;

(ii) a receipt for the payment of the Estimated Closing Price, duly executed by
each Seller;

(iii) with respect to each of the Loans and Leases, the original Loan or Lease
(or an original lost note affidavit in a form reasonably acceptable to Buyer)
duly endorsed to the order of the Buyer;

(iv) an affidavit stating, under penalties of perjury, Sellers’ taxpayer
identification number and that none of the Sellers are considered a foreign
person in accordance with Section 1445(b)(2) of the Code; and

(v) copies of all Required Consents obtained prior to Closing.

(c) At the Closing, Buyer shall deliver or cause to be delivered to Sellers or
Sellers’ representatives the following documents, in form and substance
reasonably acceptable to Sellers:

(i) duly executed copies of each of the Ancillary Agreements.

 

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Section 2.7 Post-Closing Purchase Price Adjustments.

(a) Within sixty (60) days after the Closing Date, Buyer shall deliver to
Sellers the data, work papers and supporting schedules showing in reasonable
detail Buyer’s good faith calculation of the Base Purchase Price, computed in a
manner consistent with the example set forth in Schedule 2.5, and the final
Purchase Price based thereon (the “Final Closing Statement”). If Sellers dispute
any matter or item set forth in the Final Closing Statement, Sellers may, within
forty-five (45) days after receipt of the Final Closing Statement, provide to
Buyer a written statement (the “Dispute Notice”) of such disputes. If Sellers do
not deliver to Buyer any Dispute Notice concerning the Final Closing Statement,
then Sellers shall be deemed to have accepted the Final Closing Statement and
the amounts set forth in the Final Closing Statement shall be final and binding
on all parties to this Agreement. If Sellers timely deliver a Dispute Notice,
Buyer and Sellers shall use good faith efforts to jointly resolve such disputes
within thirty (30) days after Buyer’s receipt of the Dispute Notice, which
resolution, if achieved, shall be final and binding upon all parties to this
Agreement. If Buyer and Sellers cannot resolve such disputes to their mutual
satisfaction within such 30-day period, Buyer and Sellers shall, within the
following ten (10) days, jointly engage Ernst & Young LLP (the “Independent
Accountants”) to review the Final Closing Statement together with Sellers’
statement of disputes and any other relevant documents. The Independent
Accountants shall calculate the adjustments to the Base Purchase Price using the
items included in the Final Closing Statement that are not disputed by Buyer and
Sellers and shall make its own determination of any item that is disputed by
Buyer and Sellers, but otherwise in accordance with the provisions of this
Agreement; provided, however, in no event shall any such determination by the
Independent Accountants for any disputed item be outside the range therefor set
forth in the Final Closing Statement and the written statement of disputes. The
determination of the Independent Accountants shall be accompanied by a
certificate that its determination was prepared in accordance with this
Agreement with respect to such dispute. The Independent Accountants shall report
its conclusions as to such disputes and its determination of the adjustments to
the Base Purchase Price and the final Purchase Price based thereon pursuant to
this Section 2.7 no later than thirty (30) days after it is engaged by Buyer and
Sellers, which determination shall be final and binding on all parties to this
Agreement and not subject to further dispute or judicial review. If the Buyer
does not deliver to the Sellers a Final Closing Statement within sixty (60) days
after the Closing Date, then, within ninety (90) days after the Closing Date the
Sellers may, but shall not be obligated to, deliver to the Buyer a Final Closing
Statement, which shall be subject to the same review and adjustment process that
a Buyer-produced Final Closing Statement would have been subject to if Buyer had
delivered a Final Closing Statement, as set forth in this Section 2.7.

(b) The fees and expenses (including any related indemnity obligation to such
independent public accounting firm) of the Independent Accountants (the
“Aggregate Accounting Fees”) shall be allocated between Buyer, on the one hand,
and Sellers, on the other hand, as follows: a portion of the Aggregate
Accounting Fees equal to the product of the Aggregate Accounting Fees times a
fraction, the numerator of which is the aggregate dollar amount of the disputed
items resolved by the Independent Accountants in favor of Sellers and the
denominator of which is the aggregate dollar amount of all disputed items
submitted to the Independent Accountants for resolution, shall be allocated to
Buyer, and the remainder shall be allocated to Sellers (in each case as finally
determined by the Independent Accountants).

(c) Within five Business Days after the final determination of the Purchase
Price: (i) if the Purchase Price (as finally determined in accordance with
Section 2.8) exceeds the Estimated Purchase Price, Buyer will pay to Sellers (or
such other Person as designated by Sellers), by wire transfer of immediately
available funds to the bank account designated in writing by Sellers, the amount
of such excess; or (ii) if the Purchase Price (as finally determined in
accordance with Section 2.8) is less than the Estimated Purchase Price, Sellers
shall pay to Buyer, by wire transfer of immediately available funds to the bank
account designated in writing by Buyer, the amount of such deficit.

 

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(d) Sellers will provide to Buyer reasonable access during regular business
hours on reasonable advance notice to the Books and Records and to any other
information, to the extent necessary for Buyer to review the Preliminary Closing
Statement, to prepare the Final Closing Statement, to respond to Sellers’
objections to the Final Closing Statement (if any), and to prepare materials for
presentation to the Independent Accountants in connection with Section 2.7(a).
Buyer will provide to Sellers reasonable access to the Books and Records and to
any other information used by Buyer in preparing the Final Closing Statement,
including to any Hired Employees or other employees of Buyer, during regular
business hours and on reasonable advance notice, to the extent necessary for
Seller to review the Final Closing Statement, to prepare the Final Closing
Statement if Buyer has not delivered it within the timeframe specified in
Section 2.7(a), and to prepare materials for presentation to the Independent
Accountants in connection with Section 2.7(a). Each party will cooperate with
the Independent Accountants as may be reasonably necessary and will promptly
provide to such independent public accounting firm such information as may be
reasonably requested by the Independent Accountants.

Section 2.8 Allocation of Purchase Price. The Purchase Price (and other relevant
items for Tax purposes, including the Assumed Liabilities) will be allocated
among the Transferred Assets as provided in Schedule 2.8. Buyer and Sellers
agree (a) that any such allocation is consistent with the requirements of
Section 1060 of the Code, (b) to complete and file (and cause each of their
Affiliates to complete and file), all Tax Returns, reports and forms (including,
IRS Form 8594), and any amendments thereto, as and when required by applicable
Law in a manner consistent with such allocation, and (c) to take no position
inconsistent with the allocations set forth in Schedule 2.8 and otherwise
required by this Section 2.8 in any audit or examination by any taxing
authority.

Section 2.9 Non-assignable Assets.

(a) Notwithstanding anything to the contrary in this Agreement, and subject to
the provisions of this Section 2.9, to the extent that the sale, assignment,
transfer, conveyance or delivery, or attempted sale, assignment, transfer,
conveyance or delivery, to Buyer of any Transferred Asset would result in a
violation of applicable Law, or would require the consent, authorization,
approval or waiver of a Person who is not a party to this Agreement or an
Affiliate of a party to this Agreement (including any Governmental Authority),
and such consent, authorization, approval or waiver shall not have been obtained
prior to the Closing, this Agreement shall not constitute a sale, assignment,
transfer, conveyance or delivery, or an attempted sale, assignment, transfer,
conveyance or delivery, thereof; provided, however, that, subject to the
satisfaction or waiver of the conditions contained in Article VII the Closing
shall occur notwithstanding the foregoing without any adjustment to the Purchase
Price on account thereof. Following the Closing, Sellers and Buyer shall use
commercially reasonable efforts, and shall cooperate with each other, to obtain
any such required consent, authorization, approval or waiver, or any release,
substitution or amendment required to novate all liabilities and obligations
under any and all Contracts or other liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of all parties to
such arrangements, so that, in any case, Buyer shall be solely responsible for
such liabilities and obligations from and after the Closing Date; provided,
however, that neither Sellers nor Buyer shall be required to pay any
consideration or incur any unreasonable expense therefor. Once such consent,
authorization, approval, waiver, release, substitution or amendment is obtained,
Sellers shall sell, assign, transfer, convey and deliver to Buyer the relevant
Transferred Asset to which such consent, authorization, approval, waiver,
release, substitution or amendment relates for no additional consideration.
Applicable sales, transfer and other similar Taxes in connection with such sale,
assignment, transfer, conveyance or license shall be paid by Buyer.

 

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(b) To the extent that any Transferred Asset or Assumed Liability cannot be
transferred to Buyer following the Closing pursuant to this Section 2.9, Buyer
and Sellers shall use commercially reasonable efforts to enter into such
arrangements (such as subleasing, sublicensing or subcontracting) to provide to
the parties the economic and, to the extent permitted under applicable Law,
operational equivalent of the transfer of such Transferred Asset and/or Assumed
Liability to Buyer as of the Closing and the performance by Buyer of its
obligations with respect thereto. Buyer shall, as agent or subcontractor for
Sellers pay, perform and discharge fully the liabilities and obligations of
Sellers thereunder from and after the Closing Date. To the extent permitted
under applicable Law, Sellers shall, at Buyer’s expense, hold in trust for and
pay to Buyer promptly upon receipt thereof, such Transferred Asset and all
income, proceeds and other monies received by Sellers to the extent related to
such Transferred Asset in connection with the arrangements under this
Section 2.9. Sellers shall be permitted to set off against such amounts all
direct costs associated with the retention and maintenance of such Transferred
Assets.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth in the Disclosure Schedules attached hereto (collectively,
the “Disclosure Schedules”), Sellers hereby represent and warrant to Buyer as
follows in Sections 3.1 to 3.23:

Section 3.1 Organization and Qualification. Each Seller (i) is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, (ii) has all requisite corporate power and
authority to own, lease and operate its respective assets and to carry on the
Business as currently conducted, and (iii) is duly qualified to do business and
is in good standing as a foreign limited liability company in each jurisdiction
where the ownership or operation of its assets or its respective conduct of the
Business requires such qualification, except for failures to be so qualified or
in good standing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Seller is currently in default
under or in violation of any provision of the organizational documents of such
Seller, and each Seller has at all times been operated in compliance with all
provisions of its organizational documents, except where any failure to be in
compliance would not would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

Section 3.2 Authority. Each Seller has full corporate power to execute and
deliver this Agreement and each of the Ancillary Agreements to which it will be
a party, to perform its obligations hereunder and thereunder and to consummate
the Transactions. The execution and delivery by Sellers of this Agreement and
each Ancillary Agreement to which each will be a party and the consummation by
Sellers of the Transactions have been duly and validly authorized by all
necessary corporate action. This Agreement has been, and upon their execution
each of the Ancillary Agreements to which each Seller will be a party will have
been, duly executed and delivered by Sellers. This Agreement constitutes, and
upon the execution each of the Ancillary Agreements to which each Seller will be
a party will constitute, the legal, valid and binding obligations of Sellers,
enforceable against Sellers in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

Section 3.3 No Conflict; Required Filings and Consents.

(a) Except for the Required Consents set forth on Schedule 3.3, the execution,
delivery and performance by Sellers of this Agreement and each of the Ancillary
Agreements to which each Seller will be a party, and the consummation of the
Transactions, do not and will not:

(i) conflict with or violate the organizational documents of Sellers;

 

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(ii) conflict with or violate in any material respect any Law applicable to
Sellers, the Business, or any of the Transferred Assets or by which Sellers, the
Business, or any of the Transferred Assets may be bound or affected; or

(iii) conflict with, or violate in any material respect, result in any breach
of, constitute a default (or an event that, with notice or lapse of time or
both, would become a default) under, accelerate performance required by the
terms of or result in the termination, suspension, or modification of, result in
the creation or imposition of any Encumbrance (other than Permitted
Encumbrances), require any consent of any Person pursuant to, or give to others
any rights of termination, acceleration or cancellation of, any material
Contract (including any Material Contract included in the Purchased Assets), or
material Governmental Authorization, except in the case of this clause (iii) as
would not be reasonably expected to result in a Material Adverse Effect.

(b) Sellers are not required to file, seek or obtain any notice, authorization,
approval, order, permit or consent of or with any Governmental Entity in
connection with the execution, delivery and performance of this Agreement by
Seller and each of the Ancillary Agreements to which Seller will be a party or
the consummation of the Transactions or in order to prevent the termination of
any right, privilege, License or qualification of the Business, except (i) for
the Required Consents set forth on Schedule 3.3, (ii) where such consent,
approval, authorization or action, or such filing or notification, arises in
connection with the assignment or transfer of control of any immaterial
Governmental Authorization, any Excluded License, or any Contract that is not a
Material Contract, (iii) as may be necessary as a result of any facts or
circumstances relating to Buyer or any of its Affiliates or (iv) where the
failure to obtain such notice, authorization, approval, order, permit or consent
would not be reasonably expected to result in a Material Adverse Effect.

Section 3.4 Transferred Assets. Each Seller has good title to all of the
Transferred Assets, free and clear of all Encumbrances except Permitted
Encumbrances. Except as set forth on Schedule 3.4(a) the Transferred Assets
(i) include all assets used by Sellers to conduct the Business as it is
currently conducted, other than the assets and properties included in the
Excluded Assets, and (ii) are sufficient to permit Buyer to conduct the Business
immediately following the Closing in substantially the same manner as currently
being conducted by Sellers (subject to any modifications to the conduct of such
Business made in accordance with this Agreement and taking into account the
Excluded Assets). All material items of Tangible Personal Property included in
the Transferred Assets are, in the aggregate (and with due consideration for
reasonable wear and tear and the age of each specific item of Tangible Personal
Property), in sufficient operating condition and repair.

Section 3.5 Financial Statements.

(a) Attached to Schedule 3.5 are true and complete copies of the following
(collectively, the “Financial Statements”): (i) the unaudited internal operating
statement of the Business for the years ended December 31, 2014 and December 31,
2015 and (ii) the unaudited balance sheet and unaudited statement of income of
the Business as of and for the nine-month period ended September 30, 2016 (the
“Interim Financial Statements”).

(b) The Financial Statements (i) have been prepared based on the Books and
Records, (ii) have been prepared on a consistent basis throughout the periods
indicated, and (iii) fairly present, in all material respects, the contribution
margin of the Business as at the date thereof and for the respective periods
indicated therein.

 

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Section 3.6 Absence of Certain Changes or Events; No Undisclosed Liabilities.

(a) Since the date of the Interim Financial Statements: (i) Sellers have
conducted the Business, in all material respects, in the ordinary course of
business consistent with past practice except that prior to the Closing the
Sellers repaid amounts owing under their warehouse lines of credit in
anticipation of the Transactions, and (ii) there has not occurred any Material
Adverse Effect.

(b) Sellers do not have any liabilities with respect to the Business which would
be required to be disclosed on a balance sheet prepared in accordance with GAAP,
except for liabilities: (i) that are reflected or reserved for in the Financial
Statements, (ii) that are set forth on Schedule 3.6(b) as of the date hereof, or
(iii) that were incurred in the ordinary course of business after September 30,
2016.

Section 3.7 Compliance with Laws and Governmental Authorizations.

(a) Since December 31, 2013, Sellers have not received any written notice of any
noncompliance from any Governmental Entity, and to Sellers’ Knowledge each
Seller is in compliance, in each case, in all material respects with all
applicable Laws in connection with the conduct or operation of the Business and
the ownership or use of the Transferred Assets.

(b) All material Governmental Authorizations necessary for Sellers to operate
the Business are in full force and effect and constitute the valid, legal,
binding and enforceable obligation of Sellers. Each Seller is in compliance with
the material Governmental Authorizations that it holds and no suspension or
cancellation of any of such Governmental Authorizations is pending or, to
Sellers’ Knowledge, threatened, except as would not be reasonably expected to
result in a Material Adverse Effect.

Section 3.8 Litigation. Except as set forth on Schedule 3.8, as of the date
hereof, (a) there is no Action by or against Sellers in connection with the
Business pending, or to Sellers’ Knowledge, threatened in writing, except as
would not reasonably be expected to have a Material Adverse Effect; and
(b) there is no outstanding injunction, judgment, order, decree or ruling of any
Governmental Entity specifically naming Sellers that require Sellers to take any
action of any kind with respect to the Transferred Assets or the operation of
the Business, or to which Sellers, the Business, or the Transferred Assets are
subject or by which they are bound or affected.

Section 3.9 Employee Plans.

(a) Schedule 3.9(a) sets forth all material Employee Plans.

(b) There is no pending or, to Sellers’ Knowledge, threatened Action relating to
any current or former Business Employee under an Employee Plan (other than
ordinary course claims for benefits) that could reasonably be expected to be a
material liability of Buyer after the Closing Time.

(c) Except as described on Schedule 3.9(c), the Sellers do not maintain any
severance plan or policy with respect to the Business Employees.

(d) No liability has been incurred by Sellers or any of their ERISA Affiliates,
and, to Sellers’ Knowledge, no event has occurred and no condition exists, which
could reasonably be expected to subject Buyer to material liability after the
Closing Time under Title IV of ERISA, Section 302 of ERISA or Sections 412 or
4971 of the Code.

 

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(e) The representations and warranties contained in this Section 3.9 are the
only representations and warranties being made with respect to compliance with
or liability under Laws applicable to any of the Employee Plans, including ERISA
and the Code.

Section 3.10 Labor and Employment Matters.

(a) As of the date hereof: (i) Sellers are not signatory or party to, or
otherwise bound by, any collective bargaining or other labor union agreement
that covers any of the Business Employees; (ii) Sellers have not agreed to any
union or other collective bargaining unit with respect to any of the Business
Employees; and (iii) no union or other collective bargaining unit has been
certified as representing the Business Employees.

(b) Except as set forth on Schedule 3.10(b), as of the date hereof: (i) there
are no pending or, to Sellers’ Knowledge, threatened in writing, Actions
relating to any alleged material violation of any Law pertaining to labor
relations or employment matters relating to any of the Business Employees; and
(ii) there is no labor dispute or strike pending, or to Sellers’ Knowledge,
threatened in writing, against Sellers.

(c) Except as set forth on Schedule 3.10(c), there are no Contracts between any
Seller and any Business Employee, including employment agreements, loans or
promissory notes, change in control agreements, stay agreements and separation
pay agreements, nor are there any long term incentive arrangements, stock
options or stock purchase plans of any kind in favor of any Business Employees.

Section 3.11 Real Property.

(a) The Sellers do not own any parcel of real property relating to the Business.

(b) Schedule 3.11(b) lists each parcel of real property leased by any Seller
that constitutes a Transferred Asset (the “Leased Office Property”).

(c) Except as set forth on Schedule 3.11(c): (i) Each Seller has, or will have
as of the Closing Time, a valid leasehold estate in all material Leased Office
Property, free and clear of all Encumbrances other than Permitted Encumbrances;
(ii) to Sellers’ Knowledge, all Leases in respect of the material Leased Office
Property are in full force and effect; (iii) Sellers have not received any
written notice of a material breach or default thereunder, and to Sellers’
Knowledge, no event has occurred that, with notice or lapse of time or both,
would constitute a material breach or default thereunder; (iv) to Sellers’
Knowledge, there is no pending or written threat of condemnation or similar
proceeding affecting the Leased Office Property or any portion thereof; and
(v) there has not been any sublease or assignment entered into by any Seller in
respect of any Lease relating to the Leased Office Property.

Section 3.12 Taxes. Except as set forth on Schedule 3.12, each Seller has, in a
timely manner, filed all material Tax Returns and other material reports
required of it under all federal, state, local and foreign Tax laws in
connection with its operation of the Business. All such Tax Returns and reports
are correct and complete in all material respects. Except for Taxes being
contested in good faith by Sellers, Sellers have paid in full all Taxes or other
amounts shown due thereon, including all Taxes that Sellers are obligated to
withhold from amounts paid or payable to or benefits conferred upon employees,
creditors and third parties. To Sellers’ Knowledge: (a) there is no lien for
Taxes on any of the Transferred Assets as of the date hereof other than
Permitted Encumbrances; and (b) except as set forth on Schedule 3.12, there is
no material dispute or claim concerning any liability for Taxes paid, collected

 

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or remitted by Sellers with respect to the Business. Sellers have not been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. There are no current audits or
examinations of, and no notice of audit or examination of, any Tax Return of
Sellers, in all cases to the extent arising out of the Transferred Assets. No
Seller has given, nor has there been given on any Seller’s behalf, a waiver or
extension of any statute of limitations relating to the payment of Taxes, in all
cases to the extent arising out of the Transferred Assets. The representations
and warranties contained in this Section 3.12 are the only representations and
warranties being made with respect to compliance with or liability under
federal, state, local and foreign Tax laws in connection with the operation of
the Business by Sellers.

Section 3.13 Loans and Leases.

(a) With respect to the Loans and Leases: (i) each of the Loans and Leases
represents the valid and legally binding obligation of the lessee(s),
obligor(s), guarantor(s) or sureties thereunder, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of relating to or affecting
creditors’ rights and to general equity principles; (ii) each of the Loans and
Leases (A) was originated or purchased by Sellers, and (B) to the extent
secured, is secured by a valid and enforceable lien in the collateral therefor,
which lien is assignable and has the priority reflected in each Seller’s
records; (iii) each of the Loans and Leases complied at the time it was
solicited and originated in all material respects with all applicable
requirements of federal, state, and locals Laws; (iv) the servicing practices of
Sellers used with respect to each of the Loans and Leases have been in
accordance in all material respects with Sellers’ servicing policies and
applicable Laws; (v) to Sellers’ Knowledge, no claims, counterclaims, set-off
rights, or other rights exist with respect to any of the Loans and Leases which
could impair the collectability thereof; and (vi) each Seller has full power and
authority to hold the Loans and Leases and is authorized to sell and assign each
of the Loans and Leases to Buyer.

(b) Except as set forth in this Agreement, Sellers make no representation or
warranty of any kind to Buyer relating to any of the Loans and Leases including
with respect to (i) the sufficiency, value or collectability of any of the Loans
and Leases or any Loan and Lease Documents, including documents granting a
security interest in any collateral relating to any of the Loans and Leases,
(ii) any representation, warranty or statement made by a lessee, an obligor or
any other party in connection with any of the Loans and Leases, (iii) the
financial condition or creditworthiness of any primary or secondary lessee or
obligor under any of the Loans and Leases or any guarantor or surety or other
obligor thereof, (iv) the performance of the obligor or compliance with any of
the terms or provisions of any of the documents, instruments and agreements
relating to any of the Loans and Leases, or (v) inspecting any of the property,
books or records of any obligor.

Section 3.14 Contracts.

(a) Schedule 3.14 lists each of the following written Contracts (collectively,
the “Material Contracts”), excluding any Loan and Lease Documents, which are
governed exclusively by Section 3.13 and which are listed on Schedule 2.1(h):

(i) any Contract for the purchase, lease or use of real property or the
purchase, sale, lease or use of Tangible Personal Property or any option to
purchase real property or to purchase or sell Tangible Personal Property, in
each case, providing for aggregate payments by or to Sellers in an amount in
excess of $50,000;

 

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(ii) any installment sale Contract or liability for the deferred purchase price
of property with respect to any of the Transferred Assets involving payments
exceeding $50,000 under any individual Contract;

(iii) any Contract not otherwise required to be disclosed on Schedule 3.14
involving aggregate payments in an annual or one-time amount in excess of
$50,000 and that is not terminable without penalty to any Seller on thirty
(30) days’ notice or less; and

(iv) any Contract that contains an exclusivity, most favored nations,
non-competition, non-solicitation or other similar provisions.

(b) Except as set forth on Schedule 3.14: (i) each Material Contract is valid
and binding on each Seller party thereto, and, to Sellers’ knowledge, each other
party thereto, and is in full force and effect and enforceable against each
Seller party thereto, and, to Sellers’ knowledge, each other party thereto, in
accordance with its respective terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law); (ii) no
Seller, and to Sellers’ Knowledge, no other party, is in material breach of, or
material default under, any Material Contract to which it is a party; and
(iii) no Contract is being treated by Sellers as a capitalized lease under GAAP.
Sellers have made available to Buyer complete and accurate copies of each
Material Contract. Since September 30, 2016, there has been no material
modification, waiver, breach or termination of any Material Contract or any
material provision thereto. No Person that is a party to a Material Contract has
provided the applicable Seller with written notice (or to the Sellers’
Knowledge, verbal notice) of any material proposed modification, waiver, breach
or termination of any Material Contract that such Person will require, and
except as set forth on Schedule 3.3, no Material Contract is terminable or
cancelable as a result of the consummation of the transactions contemplated by
this Agreement.

Section 3.15 Bonds; Letters of Credit. No Seller has any construction, fidelity,
performance and other bonds, guaranties in lieu of bonds and letters of credit
posted by Sellers or their Affiliates in connection with the operation of the
Business.

Section 3.16 Transactions with Affiliates. Except as set forth on Schedule 3.16,
no Seller is a party to any Contract relating to the Business with any Affiliate
of Sellers, has any claim or right against any of such Persons, or has any
indebtedness owing to any of such Persons arising from or relating to the
operation of the Business, and no such Person has any claim or right against, or
any indebtedness owing, to any Seller arising from or relating to the operation
of the Business.

Section 3.17 No Brokers. Except for Houlihan Lokey, the fees of which shall be
paid by Sellers, no broker, agent, finder or investment banker that has been
retained by or is authorized to act on behalf of Sellers is entitled to any
brokerage, finder’s or other fee or commission in connection with the
Transactions.

Section 3.18 Insurance. Schedule 3.18 lists all insurance policies now in force
and held, maintained or owned by Sellers relating to the Transferred Assets, or
the operation of the Business, specifying the insurer, the amount of and nature
of coverage, and the risk insured against. Sellers have not been refused or
denied renewal of any of such insurance coverage or received any written
correspondence refusing or denying renewal of any such insurance coverage. None
of the Sellers nor, to Sellers’ knowledge, any other party thereto, is in
default with respect to its obligations under any such insurance policy. There
are no material claims pending under any such insurance policy.

 

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Section 3.19 Intellectual Property.

(a) Schedule 3.19 sets forth a true and complete list of all Business
Intellectual Property. Except as set forth on Schedule 3.19, the Sellers own and
possess good title to all Business Intellectual Property. To the Knowledge of
the Sellers, the Sellers own or have the right to use all Intellectual Property
Rights used in the operation of the Business, except where failure to own or
have such right to use such Intellectual Property Rights would not have a
Material Adverse Effect.

(b) No claims are pending in writing or, to the knowledge of the Sellers,
threatened in writing against the Sellers as of the date of this Agreement with
respect to the ownership, use or validity of any Business Intellectual Property,
other than claims which would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 3.19, since December 31, 2013,
the Sellers have not been sued or charged as a defendant in any claim, suit,
action, or proceeding which involves a claim of infringement of any Intellectual
Property Rights of any third party and which has not been finally terminated
prior to the date hereof, other than suits or charges which would not reasonably
be excepted to have a Material Adverse Effect.

(c) The Sellers have used reasonable efforts, consistent with customary
practices in the industry in which they operate, to preserve the confidentiality
of its trade secrets.

(d) Notwithstanding anything to the contrary in this Agreement, the
representations and warranties set forth in this Section 3.19 are the sole and
exclusive representations and warranties of the Sellers with respect to
Intellectual Property Rights matters, including laws applicable to Intellectual
Property Rights.

Section 3.20 Portfolio Property. Except as set forth on Schedule 3.20 or as
would not have a Material Adverse Effect, (i) each Seller has, with respect to
each item of Portfolio Property, either directly or indirectly, (A) good and
valid title to such Portfolio Property, free and clear of all Liens other than
Permitted Liens and the interests of obligors or purchasers under the applicable
Loan and Lease Documents, or (B) a valid, perfected first priority security
interest to the extent perfection and priority can be established by filing or
by noting such interest on a document of title or UCC financing statement; and
(ii) each item of Portfolio Property with respect thereto is described
accurately in the files of such Seller. No Seller has acted, or failed to act,
in a manner that would, to the Sellers’ Knowledge, materially alter or reduce
any of its rights or benefits under any manufacturers’ or vendors’ warranties or
guarantees relating to any Portfolio Property.

Section 3.21 Environmental Compliance.

(a) The Sellers have obtained and possess all material permits, licenses and
other authorizations required under federal, state and local laws and
regulations concerning occupational health and safety, pollution or protection
of the environment that were enacted and in effect on or prior to the date
hereof, including all such laws and regulations relating to the emission,
discharge, release or threatened release of any chemicals, petroleum,
pollutants, contaminants or hazardous or toxic materials, substances or wastes
into ambient air, surface water, groundwater or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any chemicals, petroleum, pollutants, contaminants or
hazardous or toxic materials, substances or waste (“Environmental and Safety
Requirements”), except where the failure to possess such licenses, permits and
authorizations would not have a Company Material Adverse Effect.

 

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(b) The Sellers are in material compliance with all terms and conditions of such
permits, licenses and authorizations and are also in material compliance with
all other Environmental and Safety Requirements or any notice or demand letter
issued, entered, promulgated or approved thereunder.

(c) None of the Sellers has received, within the two year period prior to the
date hereof, any notice of violations or liabilities arising under Environmental
and Safety Requirements, including any investigatory, remedial or corrective
obligation, relating to the Company, its Subsidiaries or their facilities and
arising under Environmental and Safety Requirements, the subject of which is
unresolved.

Section 3.22 Absence of Certain Business Practices. To Sellers’ knowledge, no
Seller nor any Affiliate, director, officer, employee or agent of any Seller,
nor to the Sellers’ Knowledge, any other Person acting on behalf of any Seller,
have given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other Person which would reasonably be
expected to subject the Transferred Assets or Buyer to any damage or penalty or
to increase the Assumed Liabilities in any civil, criminal or governmental
litigation or proceeding.

Section 3.23 No Other Representations or Warranties; Disclaimer. EXCEPT AS
EXPRESSLY PROVIDED IN THIS ARTICLE III, SELLERS MAKE NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, AND SELLERS
EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO ANY
PROJECTIONS OR FUTURE FINANCIAL OR OPERATIONAL PERFORMANCE OF THE BUSINESS OR AS
TO THE CONDITION, VALUE OR QUALITY OF THE BUSINESS OR THE TRANSFERRED ASSETS,
INCLUDING, ANY WARRANTY OF TITLE, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS
OF ANY ASSET FOR A PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS, ANY PART
THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT. THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET
FORTH IN THIS ARTICLE III ARE THE ONLY REPRESENTATIONS AND WARRANTIES OF SELLERS
TO BUYER WITH RESPECT TO THE ASSETS AND LIABILITIES OF SELLERS, THE BUSINESS,
THE SUBJECT MATTER OF THIS AGREEMENT AND THE TRANSACTIONS. BUYER SHALL RELY ON
ITS OWN EXAMINATIONS AND INVESTIGATIONS THEREOF.

Except as set forth in the Disclosure Schedules, Seller Parent hereby represents
and warrants to Buyer as follows in Sections 3.24 to 3.27:

Section 3.24 Organization and Qualification. Seller Parent (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and (ii) has all requisite corporate power and authority to
own, lease and operate its assets and to carry on its business as currently
conducted.

Section 3.25 Authority. Seller Parent has full corporate power to execute and
deliver this Agreement and each of the Ancillary Agreements to which it will be
a party, to perform its obligations hereunder and thereunder. The execution and
delivery by Seller Parent of this Agreement and each Ancillary Agreement to
which it will be a party has been duly and validly authorized by all necessary
corporate action. This Agreement has been, and upon execution each of the
Ancillary Agreements to which Seller Parent will be a party will have been, duly
executed and delivered by Seller Parent. This Agreement constitutes, and upon
the execution each of the Ancillary Agreements to which Seller Parent will be a
party will constitute, the legal, valid and binding obligations of Seller
Parent, enforceable against Seller Parent in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

 

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Section 3.26 No Conflict; Required Filings and Consents.

(a) Except for the Required Consents set forth on Schedule 3.3, the execution,
delivery and performance by Seller Parent of this Agreement and each of the
Ancillary Agreements to which Seller Parent will be a party, and the
consummation of the Transactions, do not and will not:

(i) conflict with or violate the organizational documents of Seller Parent;

(ii) conflict with or violate in any material respect any Law applicable to
Seller Parent or by which Seller Parent may be bound or affected; or

(iii) conflict with, violate in any material respect, result in any material
breach of, constitute a material default (or an event that, with notice or lapse
of time or both, would become a material default) under, accelerate performance
required by the terms of or result in the termination, suspension or
modification of, require any consent of any Person pursuant to, or give to
others any rights of termination, acceleration or cancellation of, any material
contract or agreement to which Seller Parent is a party or by which Seller
Parent or its assets is bound.

(b) Seller Parent is not required to file, seek or obtain any notice,
authorization, approval, order, permit or consent of or with any Governmental
Entity in connection with the execution, delivery and performance by Seller
Parent of this Agreement and each of the Ancillary Agreements to which Seller
Parent will be party or the consummation of the Transactions or in order to
prevent the termination of any right, privilege, license or qualification of
Seller Parent, except (i) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (ii) compliance with the requirements of the HSR Act if
applicable, (iii) as may be necessary to comply with disclosure requirements
under securities laws or stock exchange listing rules, or (iv) as may be
necessary as a result of any facts or circumstances relating to Buyer or any of
its Affiliates.

Section 3.27 Seller Parent Finances. Seller Parent currently has available
sufficient liquid funds in excess of the Actual Credit Losses Cap.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Sellers as follows:

Section 4.1 Organization and Qualification. Buyer is a federal savings
association duly organized, validly existing and in good standing under the laws
of the United States and has all requisite savings association power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted.

Section 4.2 Authority. Buyer has full savings association power and authority to
execute and deliver this Agreement and each of the Ancillary Agreements to which
it will be a party, to perform its obligations hereunder and thereunder and to
consummate the Transactions. The execution and delivery by Buyer of this
Agreement and each of the Ancillary Agreements to which it will be a party and
the

 

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consummation by Buyer of the Transactions have been duly and validly authorized
by all necessary savings association action. This Agreement has been, and upon
their execution each of the Ancillary Agreements to which Buyer will be a party
will have been, duly and validly executed and delivered by Buyer. This Agreement
constitutes, and upon their execution each of the Ancillary Agreements to which
Buyer will be a party will constitute, the legal, valid and binding obligations
of Buyer, enforceable against Buyer in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general principles of equity (regardless of whether considered in a
proceeding in equity or at law).

Section 4.3 No Conflict; Required Filings and Consents.

(a) The execution, delivery and performance by Buyer of this Agreement and each
of the Ancillary Agreements to which Buyer will be a party, and the consummation
of the Transactions, do not and will not:

(i) conflict with or violate the organizational documents (such as the
certificate of incorporation or bylaws or equivalent documents) of Buyer;

(ii) assuming the making of any required notices, filings or notifications as
described in Section 4.3(b) and the receipt of any approvals, authorizations,
permits, consents, or waiting period expirations or terminations as described in
Section 4.3(b), conflict with or violate in any material respect any Law
applicable to Buyer or by which any property or asset of Buyer is bound or
affected; or

(iii) conflict with, violate in any material respect, result in any material
breach of, constitute a material default (or an event that, with notice or lapse
of time or both, would become a material default) under, accelerate performance
required by the terms of or result in the termination, suspension or
modification of, require any consent of any Person pursuant to, or give to
others any rights of termination, acceleration or cancellation of, any material
contract or agreement to which Buyer is a party or by which Buyer or its assets
is bound.

(b) Buyer is not required to file, seek or obtain any notice, authorization,
approval, order, permit or consent of or with any Governmental Entity in
connection with the execution, delivery and performance by Buyer of this
Agreement and each of the Ancillary Agreements to which Buyer will be party or
the consummation of the Transactions or in order to prevent the termination of
any right, privilege, license or qualification of Buyer, except (i) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect, (ii) compliance
with the requirements of the HSR Act if applicable or (iii) as may be necessary
as a result of any facts or circumstances relating to Sellers or any of its
Affiliates.

Section 4.4 Financing. Buyer currently has available sufficient liquid funds for
payment of the Purchase Price at Closing.

Section 4.5 No Brokers. No broker, agent, finder or investment banker has been
retained by or is authorized to act on behalf of Buyer in connection with the
Transactions.

Section 4.6 Litigation and Claims. As of the date hereof, there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
proceedings or investigations pending or, to Buyer’s knowledge, threatened
against Buyer or any of its Affiliates that, individually or in the aggregate,
would impair or delay the ability of Buyer to effect the Closing. As of the date
hereof, neither Buyer nor

 

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any of its Affiliates is subject to any order, writ, judgment, award, injunction
or decree of any Governmental Entity of competent jurisdiction or any arbitrator
or arbitrators that, individually or in the aggregate, would impair or delay the
ability of Buyer to effect the Closing or would affect the legality, validity or
enforceability of this Agreement or any Ancillary Agreement or the consummation
of the Transactions.

Section 4.7 Buyer Acknowledgement. Except for the representations and warranties
of Sellers contained in Article III, Buyer acknowledges (a) that neither Sellers
nor any other Person on behalf of Sellers makes any other express or implied
representation or warranty with respect to Sellers, the Business, the
Transferred Assets, the Excluded Assets, the Assumed Liabilities or the Excluded
Liabilities, or with respect to any other information provided to Buyer in
connection with the Transactions contemplated by this Agreement and (b) that
neither Sellers nor any other Person will have or be subject to any liability or
indemnification obligation to Buyer or any other Person resulting from the
distribution to Buyer, or Buyer’s use of, any such information, including any
information, documents, projections, forecasts or other material made available
to Buyer in certain “data rooms” or management presentations or in any other
form in expectation of, or in connection with, the Transactions contemplated by
this Agreement. Buyer specifically disclaims any obligation or duty by Sellers
to make any disclosures of fact not required to be disclosed pursuant to the
specific representations and warranties expressly made by Sellers and set forth
in Article III of this Agreement. Buyer is acquiring the Transferred Assets on
an “AS IS, WHERE IS” basis, subject only to the specific representations and
warranties expressly made by Sellers and set forth in Article III of this
Agreement as further limited by the specifically bargained-for exclusive
remedies as set forth in Article VI, and the Buyer acknowledges and agrees that
it has not relied on any other representations and warranties.

Section 4.8 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of Buyer.

ARTICLE V

COVENANTS

Section 5.1 Covenants Regarding Access and Information.

(a) For a period of seven years after the Closing Date, Buyer shall (i) retain
the books and records relating to the Business relating to periods prior to and
including the Closing Date to the extent included in the Transferred Assets and
(ii) upon reasonable notice afford Sellers or their representatives reasonable
access (including the right to make, at Sellers’ sole expense, photocopies),
during normal business hours, to such books and records to the extent related to
the Business; provided, however, that Buyer shall not be so required to retain
any such books and records if Buyer shall notify Sellers in writing at least
thirty (30) days in advance of destroying any such books and records prior to
the seventh anniversary of the Closing Date in order to provide Sellers the
opportunity to copy such books and records in accordance with this Section
5.1(a).

(b) Notwithstanding anything to the contrary contained in this Agreement,
Sellers shall have the right to retain one copy of all Contracts, books,
records, literature, lists (other than customer lists, all of which shall be
delivered to Buyer), and any other written or recorded information constituting
Transferred Assets or which otherwise relates to the Business, or the Assumed
Liabilities (including the Books and Records), in each case for (i) the
administration by Sellers or their Affiliates of any Action relating to the
Business, (ii) the administration by the Sellers and their Affiliates of any
regulatory filing or matter or (iii) any other reasonable legal or business
purpose of Sellers and its Affiliates.

 

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(c) For a period of thirty (30) days following the Closing Date, Buyer shall
grant to Sellers and their representatives access to the hard drives and other
electronic information storage devices included in the Transferred Assets for
the purpose of obtaining copies thereof. Buyer shall not erase or otherwise
eliminate any material information contained on such hard drives and other
electronic information storage devices until the expiration of such 30-day
period. The parties shall reasonably cooperate in determining the manner and the
times of access by Sellers and their representatives so as not to interfere with
the normal operation of Buyer’s business.

Section 5.2 Employees.

(a) Business Employees. Prior to the date of execution of this Agreement,
Sellers have delivered to Buyer a list of all Business Employees by work
location as of a date not earlier than thirty (30) days prior to the execution
of this Agreement, showing the original hire date, the then-current positions
and rates of compensation, rate type (hourly or salary) and scheduled hours per
week, and whether the employee is (i) currently actively at work, and if not,
the last day the Business Employee was actively at work; and (ii) subject to an
employment agreement. Buyer has made offers of employment to all Business
Employees contingent upon the Closing.

(b) Service Credit. Buyer shall cause each benefit plan maintained, sponsored,
adopted or contributed to by Buyer or its Affiliates in which Hired Employees
are eligible to participate (collectively, the “Buyer Benefit Plans”), including
any severance benefit plan, to take into account for all purposes under the
Buyer Benefit Plans (but not for purposes of defined benefit pension accruals
under any defined benefit plan) the service of such employees with Sellers or
Seller Parent to the same extent as such service was credited for the applicable
purpose by Sellers or the applicable Affiliate.

(c) Paid Time-Off. As of the Closing Date, Sellers or Seller Parent shall, or
shall cause its appropriate Affiliate to, pay to each Hired Employee all accrued
obligations as of the Closing Date pursuant to any paid time-off program
covering such Hired Employee, including the accrued employee obligations earned
but not yet used by each such Hired Employee as of the Closing Date and
including all earned commissions and incentive compensation, in amounts which
are at the Sellers’ sole discretion.

(d) Rollover of 401(k) Plan Accounts and Loans. After the Closing Date, Sellers
and Buyer shall take any and all commercially reasonable actions as may be
required, including amendments to the 401(k) plan sponsored by Sellers covering
the Business Employees (the “Seller 401(k) Plan”) and/or the tax-qualified
defined contribution retirement plan designated by the Buyer (the “Buyer 401(k)
Plan”), to permit each Hired Employee to make rollover contributions of
“eligible rollover distributions” (within the meaning of Section 401(a)(31) of
the Code, including plan loans) in cash or notes (in the case of plan loans) in
an amount equal to the eligible rollover distribution portion of the account
balance distributed to such Hired Employee from the Seller 401(k) Plan to the
Buyer 401(k) Plan or other “eligible retirement plan” (within the meaning of
Section 401(a)(31) of the Code). In the case of a Hired Employee with an
outstanding plan loan balance under the Seller 401(k) Plan, Sellers and Buyer
shall take any and all commercially reasonable actions to permit the Hired
Employee to rollover such outstanding plan loan balance to the Buyer 401(k)
Plan.

 

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(e) No Third-Party Beneficiaries; No Plan Amendments. Nothing herein express or
implied by this Agreement shall confer upon any Business Employee, or legal
representative thereof, any rights or remedies, including any right to
employment or benefits for any specified period, of any nature or kind
whatsoever, under or by reason of this Agreement. In no event shall the terms of
this Agreement be deemed to (i) establish, amend, or modify any Employee Plan or
any “employee benefit plan” as defined in Section 3(3) of ERISA, or any other
benefit plan, program, agreement or arrangement maintained or sponsored by
Buyer, Sellers or any of their respective Affiliates; (ii) alter or limit the
ability of Buyer, Sellers or any of their respective Affiliates to amend, modify
or terminate any Employee Plan or any other benefit or employment plan, program,
agreement or arrangement after the Closing Date; or (iii) to confer upon any
current or former employee, officer, director or consultant, including any
Business Employee, any right to employment or continued employment or continued
service with the Business, or constitute or create an employment agreement with
any employee.

Section 5.3 Confidentiality. Each of the parties shall hold, and shall cause its
respective representatives to hold, in confidence all documents and information
furnished to it by or on behalf of the other party in connection with the
Transactions pursuant to the terms of the confidentiality and non-disclosure
agreement, dated June 14, 2016, between Buyer and Sellers (the “Confidentiality
Agreement”), which shall continue in full force and effect until the Closing
Date, at which time such Confidentiality Agreement and the obligations of the
parties under this Section 5.3 shall terminate only in respect of that portion
of the documents and materials referenced therein exclusively relating to the
Business or the Transferred Assets. The Confidentiality Agreement shall
otherwise continue in full force and effect with respect to all other
Confidential Information (as defined in the Confidentiality Agreement),
including the terms of this Agreement.

Section 5.4 Consents and Filings; Title Transfer; Further Assurances.

(a) Each of the parties shall use all commercially reasonable efforts to take,
or cause to be taken, all appropriate action to do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Transactions as promptly as practicable,
including to (i) obtain any Required Consents not obtained prior to the date
hereof, (ii) to transfer record title to Buyer with respect to any tangible
assets for which title is recorded at any applicable registrar or other office,
including without limitation the equipment and assets set forth on Schedule
5.4(a), and including by executing and filing any documents necessary to effect
such transfer, and (iii) promptly make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement required
under applicable Law. All fees to be paid and costs incurred in connection with
obtaining the Required Consents, transfer record title and making such filings
shall be borne equally by Sellers and Buyer unless otherwise specified herein
(including pursuant to Section 5.7).

(b) Buyer agrees that, if in connection with the process of obtaining any
Required Consent, a Governmental Entity or other Person purports to require any
condition or any change to a Governmental Authorization or Contract to which
such Required Consent relates that would be applicable to either Buyer or
Sellers as a requirement for granting such Required Consent, which condition or
change involves a monetary payment or monetary commitment to such Governmental
Entity or other Person, either Buyer or Sellers may elect, in their sole
discretion, to satisfy the full amount of such monetary payment or monetary
commitment (notwithstanding the obligation to equally share costs set forth in
Section 5.4(a)), in which case, the other party shall be deemed to accept such
condition or change to the extent so satisfied.

(c) Buyer shall promptly, but in no event more than ten (10) days after receipt
of such request, furnish to any Governmental Entity or other Person from which a
Required Consent is requested such accurate and complete information regarding
Buyer as such Governmental Entity or other Person may reasonably require in
connection with obtaining such Required Consent.

 

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Section 5.5 Refunds and Remittances. After the Closing: (i) if Sellers or any of
its Affiliates receive any refund or other amount that is a Transferred Asset or
is otherwise properly due and owing to Buyer in accordance with the terms of
this Agreement, Sellers promptly (but in no event later than five (5) Business
Days after receipt) shall remit, or shall cause to be remitted, such amount to
Buyer; and (ii) if Buyer or any of its Affiliates receive any refund or other
amount that is an Excluded Asset or is otherwise properly due and owing to
Sellers or any of its Affiliates in accordance with the terms of this Agreement,
Buyer promptly (but in no event later than five (5) Business Days after receipt)
shall remit, or shall cause to be remitted, such amount to Sellers.

Section 5.6 Public Announcements. Except as may be required by, or as may be
advisable under, any applicable Law or the rules or regulations of any
securities exchange, neither Sellers nor Buyer shall issue (and each shall cause
their Affiliates not to issue) any press release or other public statement or
announcement with respect to the Transactions without the consent of the other
party, such consent not to be unreasonably withheld, conditioned or delayed.
Sellers and Buyer will consult with each other concerning the means by which any
Business Employee, customer or supplier of the Business or any other Person
having any material business relationship with the Business will be informed of
the Transactions.

Section 5.7 Tax Covenants.

(a) Payment of Transfer Taxes. The party required by Law to file Tax Returns
with respect to transfer, documentary, sales, use, stamp, registration and other
similar Taxes and fees that may be imposed or assessed in connection with the
transfer of the Transferred Assets, including interest and penalties thereon
(the “Transfer Taxes”), shall, at its own expense, file such Tax Returns when
due. The other party shall, at its own expense, cooperate in the preparation of
and join in the execution of any such properly completed Tax Returns. Buyer and
Sellers (collectively) shall each be liable for 50% of any Transfer Taxes,
provided that Buyer’s liability for such Transfer Taxes shall not exceed
$500,000 (the “Transfer Tax Cap”) and therefore if the Transfer Taxes exceed
$1,000,000, Sellers and Seller Parent shall be responsible for all of such
Transfer Taxes, other than the $500,000 which is the responsibility of the
Buyer. The foregoing provisions of this Section 5.7(a) apply, regardless of the
party that is required by Law to file such Tax Returns or pay the Transfer
Taxes. Buyer and Sellers will cooperate (and cause each of their Affiliates to
cooperate), as and to the extent reasonably requested by any other party, in
connection with the filing and preparation of Tax Returns related to any
Transfer Taxes and any Tax audit or proceeding related thereto.

(b) Allocation of Ad Valorem Taxes. All personal property Taxes or ad valorem
obligations and similar recurring Taxes on the Transferred Assets (“Ad Valorem
Taxes”) will be prorated between Buyer and Sellers as of the Closing Date.
Sellers will be responsible for all such Taxes on the Transferred Assets to the
extent attributable to any period (or portion thereof) up to but not including
the Closing Date. Buyer will be responsible for all such Taxes on the
Transferred Assets to the extent attributable to any period (or portion thereof)
commencing on or after the Closing Date (including any revaluation or
reassessment as a result of this Transaction affecting Taxes after the Closing
or any subsequent transaction after the Closing Date). With respect to Ad
Valorem Taxes, Sellers shall prepare and timely file, or cause to be prepared
and timely filed, all Tax Returns of Sellers that are required to be filed for
all taxable periods ending on or before the Closing Date (“Pre-Closing Tax
Periods”) and shall control the defense and settlement of any audit or Action
relating to the Tax Returns for the Sellers for all Pre-Closing Tax Periods.
Buyer shall provide timely notice to Sellers of any communication from a taxing
authority that Buyer may receive with respect to any Pre-Closing Tax Period.
Buyer shall prepare and timely file, or cause to be prepared and timely filed,
all other Tax Returns with respect to Ad Valorem Taxes that are required to be
filed in respect of the Transferred Assets, including for all taxable periods

 

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beginning before and ending after the Closing Date (“Straddle Period”), and
shall control the defense and settlement of any audit or Action relating to the
Transferred Assets for such Straddle Periods. Seller shall provide timely notice
to Buyer of any communication from a taxing authority that Seller may receive
with respect to any Straddle Period. If one party remits to the appropriate
Governmental Entity payment for Taxes that are subject to proration under this
Section 5.7(b), and such payment includes the other party’s share of such Taxes,
such other party will promptly reimburse the remitting party for its share of
such Taxes.

Section 5.8 Bulk Transfer Laws. The parties hereby waive compliance with the
provisions of any so-called “bulk transfer laws” of any jurisdiction in
connection with the sale of the Transferred Assets to Buyer. This provision
shall not be deemed in any way to limit the indemnity provided for in Article VI
hereof.

Section 5.9 Noncompetition and Nonsolicitation.

(a) For a period commencing on the Closing Date and ending on the third
(3rd) anniversary of the Closing Date (the “Restricted Period”), Sellers and
Seller Parent covenant and agree that they shall not directly or indirectly
(A) engage in or assist others in engaging in a Competitive Business anywhere in
the United States (subject to the last sentence of this Section 5.9, the
“Territory”); or (B) have an interest in any Person engaged directly or
indirectly in a Competitive Business anywhere in the Territory in any capacity,
including as a partner, owner, member, employee, principal, agent, trustee,
financing source, advisor or consultant.

(b) During the Restricted Period, Sellers and Seller Parent covenant and agree
that they shall not, and shall not knowingly permit any of their respective
Affiliates to, directly or indirectly in any manner hire or solicit any Hired
Employee as of the Closing Date or encourage any such Hired Employee to leave
such employment or service of the Buyer or its Affiliates; provided that the
foregoing shall not prevent the Sellers or Seller Parent from (i) making any
general solicitation for employees (including through the use of employment
agencies) not specifically directed at any Hired Person or (ii) soliciting or
hiring Hired Employees who have not been employed by the Buyer or any of its
Affiliates during the six (6) months prior to such solicitation or hiring.

(c) Sellers and Seller Parent hereby acknowledge that a breach or threatened
breach of this Section 5.9 may cause irreparable harm to Buyer, for which
monetary damages may not be an adequate remedy, and hereby agrees that in the
event of such a breach or threatened breach by any Seller or Seller Parent of
its obligations pursuant to this Section 5.9, Buyer shall, in addition to any
and all other rights and remedies that may be available to it in respect of such
breach, be entitled to seek equitable relief, including a temporary restraining
order, an injunction, specific performance and any other relief that may be
available from a court of competent jurisdiction (without any requirement to
post bond). Sellers and Seller Parent acknowledge and agree that the
restrictions contained in this Section 5.9 are reasonable and necessary to
protect the legitimate interests of Buyer and constitute a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated by this Agreement. In the event that any covenant contained in this
Section 5.9 should ever be adjudicated to exceed the time, geographic, product
or service, or other limitations permitted by applicable Law in any
jurisdiction, then any court is expressly empowered to reform such covenant, and
such covenant shall be deemed reformed, in such jurisdiction to the maximum
time, geographic, product or service, or other limitations permitted by
applicable Law.

 

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Section 5.10 Nonsolicitation of Seller Parent Employees.

(a) During the Restricted Period, Buyer shall not, and Buyer shall cause its
Affiliates not to, directly or indirectly in any manner hire or solicit any
employee of Seller Parent or any of its Affiliates (other than any Hired
Employee) or encourage any employee of Seller Parent or any of its Affiliates
(other than any Hired Employee) to leave such employment or service of Seller
Parent or its Affiliates; provided that the foregoing shall not prevent Buyer
from (i) making any general solicitation for employees (including through the
use of employment agencies) not specifically directed at any employee of Seller
Parent or any of its Affiliates or (ii) soliciting or hiring any employee of
Seller Parent or any of its Affiliates who have not been employed by Seller
Parent or any of its Affiliates during the six (6) months prior to such
solicitation or hiring.

(b) Buyer hereby acknowledges that a breach or threatened breach of this
Section 5.10 may cause irreparable harm to Seller Parent, Sellers and their
respective Affiliates, for which monetary damages may not be an adequate remedy,
and hereby agrees that in the event of such a breach or threatened breach by any
Buyer or its Affiliates of the obligations pursuant to this Section 5.10, Seller
Parent and Sellers shall, in addition to any and all other rights and remedies
that may be available to them in respect of such breach, be entitled to seek
equitable relief, including a temporary restraining order, an injunction,
specific performance and any other relief that may be available from a court of
competent jurisdiction (without any requirement to post bond). Buyer
acknowledges and agrees that the restrictions contained in this Section 5.10 are
reasonable and necessary to protect the legitimate interests of Seller Parent
and its Affiliates and constitute a material inducement for Seller Parent and
Sellers to enter into this Agreement and consummate the transactions
contemplated by this Agreement. In the event that any covenant contained in this
Section 5.10 should ever be adjudicated to exceed the time, geographic, product
or service, or other limitations permitted by applicable Law in any
jurisdiction, then any court is expressly empowered to reform such covenant, and
such covenant shall be deemed reformed, in such jurisdiction to the maximum
time, geographic, product or service, or other limitations permitted by
applicable Law.

Section 5.11 Liquidity of Seller Parent. If at any time prior to the Actual
Credit Losses Claims Deadline, Seller Parent shall fail to maintain Liquidity of
at least $15,000,000 for more than three (3) consecutive Business Days, the
Seller Parent shall provide Buyer with notice of such failure within three
(3) Business Days (a “Liquidity Notice”). The Buyer shall maintain the existence
of any Liquidity Notice and the content thereof in the strictest confidence and
not disclose such existence and content to any other Person other than
representatives of Buyer who have a need to know such information for purposes
of this Section 5.11, which representatives shall also be instructed by Buyer to
maintain the existence of the Liquidity Notice and contents thereof in the
strictest confidence. Within fifteen (15) days after receipt of a Liquidity
Notice, the Buyer may deliver to Seller Parent a notice (an “Escrow Notice”)
informing the Seller Parent that the Buyer elects to enter into a customary
indemnity escrow agreement (the “Escrow Agreement”) with Seller Parent and
Delaware Trust Company (the “Escrow Agent”) under which Seller Parent shall
deposit with the Escrow Agent an amount equal to the then-current Actual Credit
Losses Cap (the “Escrow Amount”). Buyer shall draft, and Buyer and Seller Parent
shall in good faith mutually finalize and execute, an Escrow Agreement in
connection therewith. Upon the execution of the Escrow Agreement the Seller
Parent shall deposit the Escrow Amount with the Escrow Agent solely as a source
of recovery for the Buyer Indemnified Parties for Actual Credit Losses. Portions
of the Escrow Amount shall be delivered to the applicable Buyer Indemnified
Parties upon delivery of joint written instructions of Seller Parent and the
Buyer or a court order with respect to Actual Credit Losses, if any, that are
due and owing to Buyer Indemnified Parties under Section 6.7, it being
understood that such instructions shall be delivered to the Escrow Agent within
the timeframes contemplated by Section 6.7 with respect to Actual Credit Losses
that are payable by Seller Parent. The Escrow Agreement will provide that (i) if
the Escrow Amount being held by the Escrow Agent at any time exceeds the Actual
Credit Losses Cap, then the Buyer and Seller Parent shall deliver joint written

 

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instructions to the Escrow Agent instructing the Escrow Agent to deliver such
excess amount to the Seller Parent and (ii) at the Actual Credit Losses Claims
Deadline, the Escrow Agent shall deliver to the Seller Parent the then-remaining
Escrow Amount, less any portion of such amount that is subject to any claims for
Actual Credit Losses that remain pending or unpaid. Notwithstanding anything to
the contrary contained in this Section 5.11, if after the Escrow Amount is
deposited with the Escrow Agent, Seller Parent delivers evidence to the Buyer
that the Liquidity of Seller Parent has exceeded $15,000,000 for thirty
(30) consecutive days, then the Buyer and Seller Parent shall execute and
deliver join written instructions to the Escrow Agent instructing the Escrow
Agent to deliver the Escrow Amount to Seller Parent, it being understood and
agreed that if thereafter and before the expiration of the Actual Credit Losses
Claims Deadline, the Liquidity of Seller Parent again becomes less than
$15,000,000 for more than three (3) consecutive Business Days, the Seller Parent
shall provide a Liquidity Notice to the Buyer in the timeframe set forth above
and the provisions of this Section 5.11 (for clarity, including Buyer’s right to
deliver an Escrow Notice) shall apply. Each of the Buyer and Seller Parent shall
pay fifty percent (50%) of any escrow fees under the Escrow Agreement.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Survival. The representations, warranties, covenants and agreements
of Sellers and Buyer contained in this Agreement and the Ancillary Agreements
(other than the Fundamental Representations) and any certificate delivered
pursuant hereto or thereto, and a party’s ability to make claims with respect
thereto, shall survive the Closing for a period of fifteen (15) months after the
Closing Date (the “Claims Deadline”), and no claims (other than with respect to
the Fundamental Representations) may be made with respect thereto after the
Claims Deadline; it being understood that in the event notice of any claim for
indemnification under Section 6.2 or 6.3 hereof has been given (in accordance
with Section 6.4) on or prior to the Claims Deadline, the representations,
warranties and/or covenants that are the subject of such indemnification claim
shall survive with respect to such claim (and solely with respect to such claim)
until such time as such claim is finally resolved; provided further that the
Fundamental Representations and a party’s ability to make claims with respect
thereto shall survive the Closing until the fifth anniversary of the Closing.
For the avoidance of doubt, the parties acknowledge and agree that the Claims
Deadline is intended to shorten the period otherwise provided by Law during
which claims for breach of representations, warranties and covenants, can be
made, and that any such claims (other than with respect to Fundamental
Representations) must be made on or prior to the Claims Deadline or be forever
barred.

Section 6.2 Indemnification by Sellers and Seller Parent. From and after
Closing, Sellers and Seller Parent shall save, defend, indemnify and hold
harmless Buyer and its Affiliates, successors and assigns of each of the
foregoing (collectively, the “Buyer Indemnified Parties”) from and against any
and all losses, damages, liabilities, deficiencies, claims, interest, awards,
judgments, penalties, costs and expenses (including reasonable attorneys’ fees,
costs and other out-of-pocket expenses incurred in investigating or defending
any Third Party Claim, but excluding all such fees, costs and expenses to the
extent relating to the investigation, documentation and prosecution of claims
that are not Third Party Claims unless awarded to the Indemnified Party in
connection with the final determination of a disputed indemnification claim)
(hereinafter collectively, “Losses”) to the extent arising out of or resulting
from:

(a) any breach of any representation or warranty made by Sellers contained in
this Agreement or made by Sellers in any Ancillary Agreement or certificate
delivered in connection with this Agreement;

 

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(b) any breach of any covenant or other agreement by Sellers contained in this
Agreement or by Sellers contained in any Ancillary Agreement; and

(c) any Excluded Liability.

In addition, the Sellers and Seller Parent shall indemnify the Buyer Indemnified
Parties for Actual Credit Losses in accordance with Section 6.7. The Buyer, the
Sellers and the Seller Parent acknowledge and agree that the terms, conditions,
limitations and procedures set forth in Sections 6.1 through 6.6 do not apply to
Section 6.7, and the terms, conditions, limitations and procedures set forth in
Section 6.7 do not apply to any claim for indemnification under this Agreement
other than claims for Actual Credit Losses.

Section 6.3 Indemnification by Buyer. From and after Closing, Buyer shall save,
defend, indemnify and hold harmless Sellers and their Affiliates, direct and
indirect equity holders, owners, general partners, managers and members of
Sellers or its Affiliates, and their respective successors and assigns of each
of the foregoing (collectively, the “Seller Indemnified Parties”) from and
against any and all Losses to the extent arising out of or resulting from:

(a) any breach of any representation or warranty made by Buyer contained in this
Agreement or in any Ancillary Agreement or certificate of Buyer delivered in
connection with this Agreement;

(b) any breach of any covenant or agreement by Buyer contained in this Agreement
or in any Ancillary Agreement;

(c) any Assumed Liability; and

(d) any unsuccessful indemnification claim by Buyer against Sellers pursuant to
this Agreement or any Ancillary Agreement.

Section 6.4 Procedures.

(a) A Buyer Indemnified Party or Seller Indemnified Party (each, an “Indemnified
Party”) shall make each claim for indemnification under this Agreement or any
Ancillary Agreement in respect of, arising out of or involving a Loss, including
with respect to a claim or demand made by any Person other than Buyer, Sellers
or their respective Affiliates (a “Third Party”) against such Indemnified Party
(a “Third Party Claim”), by delivering written notice of such indemnification
claim to the party against whom indemnity is sought (the “Indemnifying Party”)
promptly after becoming aware of the Loss (if the claim is unrelated to a Third
Party Claim) or promptly after receipt by such Indemnified Party of written
notice of the Third Party Claim (if the claim relates to a Third Party Claim).
Such notice shall describe in reasonable detail the facts and circumstances
giving rise to any claim for indemnification hereunder, the amount and the
method of computation of the amount of such claim (if known) and such other
information with respect thereto as the Indemnifying Party may reasonably
request. The failure to provide such notice, however, shall not release the
Indemnifying Party from any of its obligations under this Article VI except to
the extent that the Indemnifying Party is prejudiced by such failure.

(b) The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party, to assume the defense thereof at the expense of the
Indemnifying Party with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. If the Indemnifying Party
assumes the defense of such Third Party Claim, the Indemnified Party shall have
the

 

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right to employ separate counsel and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Indemnified
Party; provided, however, that if in the reasonable opinion of counsel for the
Indemnified Party, there is a conflict of interest between the Indemnified Party
and the Indemnifying Party, the Indemnifying Party shall be responsible for the
reasonable fees and expenses of one counsel to such Indemnified Party in
connection with such defense. If the Indemnifying Party assumes the defense of
any Third Party Claim, the Indemnified Party shall reasonably cooperate with the
Indemnifying Party in such defense and, subject to Section 5.2(b), make
available to the Indemnifying Party all witnesses, pertinent records, materials
and information in the Indemnified Party’s possession or under the Indemnified
Party’s control relating thereto as is reasonably required by the Indemnifying
Party. Whether or not the Indemnifying Party assumes the defense of a Third
Party Claim, the Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, or offer to settle, compromise or
discharge, such Third Party Claim without the Indemnifying Party’s prior written
consent, which may be granted or withheld in the Indemnifying Party’s sole
discretion. The Indemnifying Party shall not, without the prior written consent
of the Indemnified Party, which may be granted or withheld in the Indemnified
Party’s sole discretion, settle, compromise or offer to settle or compromise any
Third Party Claim on a basis that would result in (i) the imposition of a
consent order, injunction or decree that would restrict the future activity or
conduct of the Indemnified Party, (ii) a finding or admission of a violation of
Law or violation of the rights of any Person by the Indemnified Party, (iii) a
finding or admission that would have an adverse effect on other claims made or
threatened against the Indemnified Party, or (iv) any monetary liability of the
Indemnified Party that shall not be promptly paid or reimbursed by the
Indemnifying Party. Notwithstanding anything in this Section 6.4(b) to the
contrary, Sellers shall control the defense and settlement of any audit or
Action relating to the Tax Returns for Sellers for all Pre-Closing Tax Periods.

(c) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim being
asserted against or sought to be collected from such Indemnified Party, the
Indemnified Party shall deliver notice of such claim promptly to the
Indemnifying Party, describing in reasonable detail the facts giving rise to any
claim for indemnification hereunder, the amount or method of computation of the
amount of such claim (if known) and such other information with respect thereto
as the Indemnifying Party may reasonably request. The failure to provide such
notice, however, shall not release the Indemnifying Party from any of its
obligations under this Article VI except to the extent that the Indemnifying
Party is prejudiced by such failure. The Indemnified Party shall reasonably
cooperate and assist the Indemnifying Party in determining the validity of any
claim for indemnity by the Indemnified Party and in otherwise resolving such
matters. Such assistance and cooperation shall include providing reasonable
access to and copies of information, records and documents relating to such
matters, furnishing employees to assist in the investigation, defense and
resolution of such matters and providing legal and business assistance with
respect to such matters.

Section 6.5 Limits on Indemnification.

(a) No claim may be asserted against either party for breach of any
representation, warranty, or covenant contained in this Agreement or the
Ancillary Agreements or any certificate delivered hereto or thereto, or with
respect to any Excluded Liability, unless written notice of such claim made in
accordance with Section 6.4(a) is received by such party on or prior to the
Claims Deadline, in which case such representation, warranty, covenant or claim
with respect to such Excluded Liability shall survive as to such claim until
such claim has been finally resolved.

 

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(b) Notwithstanding anything to the contrary contained in this Agreement:

(i) neither Sellers or Seller Parent, on the one hand, nor Buyer on the other
hand, shall be liable to any Buyer Indemnified Party or Sellers Indemnified
Party, as applicable, for any claim for indemnification relating to breaches of
representations or warranties (other than the Fundamental Representations)
unless and until the aggregate amount of indemnifiable Losses that may be
recovered from Sellers or Seller Parent under Section 6.2(a) or Buyer under
Section 6.3(a), as applicable, equals or exceeds $100,000, in which case Sellers
and Seller Parent or Buyer, as applicable, shall be liable for all such Losses;

(ii) the maximum aggregate amount of indemnifiable Losses that may be recovered
by Buyer Indemnified Parties (other than with respect to the Fundamental
Representations) shall be an amount equal to five percent (5%) of the Purchase
Price (the “Cap”);

(iii) no Losses may be claimed by any Buyer Indemnified Party under
Section 6.2(a) or any Seller Indemnified Party under Section 6.3(a) or shall be
reimbursable by or shall be included in calculating the aggregate Losses set
forth in clause (i) above other than Losses in excess of $5,000 resulting from
any single claim or aggregated claims arising out of the same facts, events or
circumstances; provided that the foregoing limitation shall not apply to any
claim based on a Fundamental Representation;

(iv) Sellers shall not be obligated to indemnify any Buyer Indemnified Party
with respect to any Loss to the extent that such Loss was included in the Final
Closing Statement (as finally determined pursuant to Section 2.7); and

(v) no party hereto shall have any liability under any provision of this
Agreement for any punitive, incidental, consequential, special or indirect
damages, including business interruption, loss of future revenue, profits or
income, or other damages calculated on the basis of any multiple relating to the
breach or alleged breach of this Agreement, or any other damages other than
damages that constitute actual damages.

(c) For all purposes of this Agreement, Losses shall be reduced by (i) any
insurance or other recoveries paid to the Indemnified Party or its Affiliates in
connection with the facts giving rise to the right of indemnification and
(ii) any Tax benefit actually realized by such Indemnified Party or its
Affiliates with respect to such Losses. Buyer shall seek full recovery under all
applicable insurance policies and other collateral sources covering any Loss to
the same extent as it would if such Loss were not subject to indemnification
hereunder and reimburse Sellers or Seller Parent for any such recovery (net of
any out of pocket expenses or costs incurred in procuring such recovery) up to
the extent of any indemnification payment received by Buyer for such Loss.
Nothing in this Section 6.5(c) shall delay an Indemnified Party’s ability to
make a claim for indemnification or an Indemnifying Party’s obligation to make
payment therefor. Any payment under this Article VI shall initially be made
without regard to this Section 6.5(c) and shall be reduced to reflect any such
Tax benefit only after the Indemnified Party has actually realized such benefit.
For purposes of this Agreement, the Indemnified Party shall be deemed to have
‘actually realized’ a net Tax benefit to the extent that, and at such time as,
the amount of Taxes required to be paid by the Indemnified Party is reduced
below the amount of Taxes that it would have been required to pay but for
deductibility of such Losses, in each case: (i) during the same Tax year as the
year in which the relevant Losses occurred and the immediately subsequent Tax
year; and (ii) calculated so that the items related to the Indemnifying Party’s
indemnification obligations are the last to be recognized in each such Tax year.

 

 

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(d) Buyer and Sellers shall cooperate with each other with respect to resolving
any claim or liability with respect to which one party is obligated to indemnify
the other party hereunder, including by making commercially reasonable efforts
to mitigate or resolve any such claim or liability. In the event that Buyer or
Seller shall fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding anything else to the
contrary contained herein, the other party shall not be required to indemnify
any person for any loss, liability, claim, damage or expense that could
reasonably be expected to have been avoided if Buyer or Sellers, as the case may
be, had made such efforts.

(e) Each Buyer Indemnified Party shall seek payment of any amount to which it
may be entitled under this Article VI from Sellers or Seller Parent.

(f) Notwithstanding anything to the contrary in this Agreement (i) the
limitations set forth in this Section 6.5 shall not be applicable to any Losses
incurred as a result of knowing and intentional breach of covenant committed by
or on behalf of Sellers, and (ii) no Person’s liability shall be limited in any
way for such Person’s intentional fraud under Delaware common law with respect
to such Person’s representations and warranties set forth in this Agreement.

Section 6.6 Assignment of Claims. If any Buyer Indemnified Party receives any
payment with respect to any Losses pursuant to Section 6.2 and Buyer Indemnified
Party could have recovered all or a part of such Losses from a third party (a
“Potential Contributor”) based on the underlying claim asserted against Sellers,
Buyer Indemnified Party shall assign, on a non-recourse basis and without any
representation or warranty, such of its rights to proceed against the Potential
Contributor as are necessary to permit Sellers to recover from the Potential
Contributor the amount of such payment. Any payment received in respect of such
claim shall be distributed: (i) first, to Buyer Indemnified Party in the amount
of any deductible or similar amount required to be paid by Buyer Indemnified
Party prior to Sellers being required to make any payment to Buyer Indemnified
Party; (ii) second, to Sellers in an amount equal to the aggregate payments made
by Sellers to Buyer Indemnified Party in respect of such Loss, plus costs and
expenses (including attorney’s costs and expenses) incurred in investigating,
defending or otherwise incurred in connection with addressing such claim; and
(iii) the balance, if any, to Buyer Indemnified Party.

Section 6.7 Indemnification With Respect to Actual Credit Losses.

(a) General. From and after the Closing and until the Actual Credit Losses
Claims Deadline, the Sellers and the Seller Parent shall save, defend, indemnify
and hold the Buyer Indemnified Parties harmless from Actual Credit Losses,
subject to the terms, limitations and conditions set forth in this Section 6.7
(including without limitation, the Actual Credit Losses Cap in effect from time
to time); provided that neither any Seller nor Seller Parent shall have any
responsibility with respect to Actual Credit Losses unless the Sellers and
Seller Parent were provided the opportunity to repurchase the applicable Covered
Asset in accordance with this Section 6.7, and the Sellers and Seller Parent
affirmatively elected to decline to repurchase such Covered Asset in accordance
with this Section 6.7 or the Exercise Period with respect to such Covered Asset
expired prior to the delivery by a Seller or the Seller Parent of an election to
repurchase such Covered Asset. For the avoidance of doubt, the parties
acknowledge and agree that the Applicable Credit Losses Claims Deadline is
intended to shorten the period otherwise provided by Law during which claims for
Actual Credit Losses can be made, and that any such claims must be made on or
prior to the Actual Credit Losses Claims Deadline, subject to the last sentence
of the definition of “Actual Credit Losses Cap”. Buyer, on behalf of all Buyer
Indemnified Parties, hereby acknowledges and agrees that sales by Buyer of
Covered Assets that are not Defaulted Covered Assets below par and discounted
payoffs or any other type of discretionary transactions with respect to Covered
Assets that are not Defaulted Covered Assets will not entitle the Buyer
Indemnified Parties to indemnification under this Section 6.7 or otherwise
unless agreed to in writing by Sellers or Seller Parent.

 

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(b) Definitions. For purposes of this Agreement, the following capitalized terms
shall have the following meanings:

(i) “Actual Credit Losses” means with respect to a Covered Asset the actual
charge-off with respect to a Defaulted Covered Asset calculated in accordance
with GAAP and applicable regulatory guidance (“Charge-Off”), in each case
occurring only at one or more of the following times: (A) 120 days after the
occurrence and only during the continuance of an uncured payment default with
respect to a Defaulted Covered Asset, (B) the sale of a Defaulted Covered Asset
to a third party resulting in a Charge-Off, (C) a Charge-Off resulting from
liquidation of the Defaulted Covered Asset to the extent such loss exceeds the
aggregate amount of Charge-Offs previously taken with respect to such Defaulted
Covered Asset, or (D) at such time that Buyer is, for any reason, directed by
any regulator with supervisory jurisdiction over Buyer to take a Charge-Off with
respect to a Defaulted Covered Asset. For the avoidance of doubt, Actual Credit
Losses shall include (x) any remaining valuation adjustments resulting from
purchase accounting, (y) all earned but unpaid interest, and (z) all reasonable
costs incurred by Buyer in connection with the resolution of the Defaulted
Covered Asset as of the date of the Actual Credit Loss Indemnification Notice.

(ii) “Actual Credit Losses Cap” means, initially, $10,000,000, but shall be
reduced each year as follows:

(A) on December 31, 2017, the remaining Actual Credit Losses Cap is reduced to
$8,000,000 unless more than $2,000,000 in aggregate claims (net of Repurchase
Reductions and net of Recoveries) have been made under Section 6.7 as of such
date, in which case the remaining Actual Credit Losses Cap as of such date will
be $10,000,000 less the aggregate amount of such prior claims (net of Repurchase
Reductions and net of Recoveries);

(B) on December 31, 2018, the remaining Actual Credit Losses Cap is reduced to
$5,000,000 unless more than $5,000,000 in aggregate claims (net of Repurchase
Reductions and net of Recoveries) have been made under Section 6.7 as of such
date, in which case the Actual Credit Losses Cap as of such date will be
$10,000,000 less the aggregate amount of such prior claims (net of Repurchase
Reductions and net of Recoveries);

(C) on December 31, 2019, the remaining Actual Credit Losses Cap is reduced to
$3,000,000 unless more than $7,000,000 in aggregate claims (net of Repurchase
Reductions and net of Recoveries) have been made under Section 6.7 as of such
date, in which case the remaining Actual Credit Losses Cap as of such date will
be $10,000,000 less the aggregate amount of such prior claims (net of Repurchase
Reductions and net of Recoveries); and

(D) on December 31, 2020, the Actual Credit Losses Cap is reduced to $0.

For the avoidance of doubt, upon the occurrence of (i) the payoff after Closing
of the entire Loans and Leases constituting Covered Assets, (ii) indemnification
payments in respect of Actual Credit Losses totaling $10,000,000 or (iii) the
expiration of the Actual Credit Losses Claims Deadline, neither the

 

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Sellers nor the Parent shall have any further obligation with respect to Actual
Credit Losses under Section 6.7 or otherwise. Any repurchase by any Seller or
Seller Parent of a Covered Asset shall reduce the remaining indemnification
obligation of Sellers and Seller Parent as of the date of such repurchase by the
amount that Buyer would have made subject to a Charge-Off in accordance with
GAAP if the Charge-Off occurred on the date of repurchase by any Seller or
Seller Parent (“Repurchase Reductions”). The remaining Actual Credit Losses Cap
as of the date of payment of any Recoveries by Buyer to Seller or Seller Parent
shall be increased by the amount of such payment (provided that no such increase
shall cause the remaining Actual Credit Losses Cap to exceed the amount of the
remaining Actual Credit Losses Cap as of the most recently passed reduction date
set forth above in Sections (A) through (D) of this definition). Any reduction
in the Actual Credit Losses Cap based solely on the passage of time shall not
apply to Actual Credit Losses with respect to Covered Assets that became
Defaulted Covered Assets prior to the date triggering such reduction (to the
extent the Actual Credit Losses Cap exceeded such Actual Credit Losses as of the
date any such Covered Asset became a Defaulted Covered Asset), but only if an
Actual Claim Loss Indemnification Notice is delivered to the Seller Parent with
respect to such Covered Asset within one hundred twenty (120) days after such
Covered Assets became Defaulted Covered Assets.

(iii) “Actual Credit Losses Claims Deadline” means December 31, 2020, subject to
the limitations applicable thereto (including the reduction of the Actual Credit
Losses Cap over time as set forth in the definition thereof, and subject to the
last sentence of the definition of “Actual Credit Losses Cap”);

(iv) “Charge-Off” has the meaning ascribed to such term in the definition of
Actual Credit Losses;

(v) “Covered Assets” means the Loans and Leases included in the Transferred
Assets at Closing, excluding any extensions of credit or increases to Loan or
Lease commitments made subsequently to Closing;

(vi) “Defaulted Covered Asset” means a Covered Asset under which the applicable
lessee or borrower is in default under the terms of the applicable Loan and
Lease Document; provided that if (A) an applicable lessee or borrower files for
bankruptcy protection, (B) the applicable Loan or Lease is affirmed in
connection with such proceeding and (C) the applicable lessee or borrower
continues to make payments required under the applicable Loan and Lease
Document, then such Loan and Lease shall not be deemed to constitute a Defaulted
Covered Asset under this Agreement unless the Buyer is directed by a regulator
to treat the applicable Covered Asset as being in default;

(vii) “Material Downgrade” means (i) a risk rating downgrade resulting from a
material deterioration in credit performance or (ii) a material underperformance
regarding collection and creditworthiness taken on the books and records of
Buyer with respect to a Covered Asset;

(viii) “Net Investment in Receivables” has the meaning given such term in
Section 1.1;

(ix) “Recoveries” shall mean cash recovered in respect of a Loan and Lease,
including, without limitation, any cash recovered as a consequence of the
receipt of residuals, that was the subject of a Charge-Off hereunder, net of
unpaid interest under the applicable Loan and Lease owed to Buyer and all
expenses and fees reasonably incurred by Buyer in connection with the resolution
of such Loan and Lease (including expenses and fees in connection with the
collection of such residuals, but excluding any expenses and fees already
included in the Actual Credit Loss), in each case not to exceed the amount of
any indemnity payment made to any Buyer Indemnified Party by any Seller or
Seller Parent in respect of such Loan and Lease.

 

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(c) Procedures.

(i) Buyer shall promptly provide Seller Parent with written notice of any
Material Downgrade and any fact, condition, change or circumstance which
individually or in the aggregate with previously existing facts, conditions,
changes or circumstances causes any Covered Asset to become a Defaulted Covered
Asset, such notice to be delivered no later than five (5) days after Buyer
becomes aware of the Material Downgrade or other such fact, condition, change or
circumstance. Buyer shall also notify Seller Parent in writing no later than
five (5) days after Buyer becomes aware of any bankruptcy or other insolvency
event affecting any lessee or borrower under any Covered Asset. Buyer shall
include with any notice delivered pursuant to this Section 6.7(c)(i) an asset
monitoring report that contains a comprehensive financial summary of the
Defaulted Covered Asset and any proposed workout and resolution strategy (it
being understood that no workout or resolution strategy may be available at such
time with respect to a Defaulted Covered Asset).

(ii) Buyer shall provide to Seller Parent written notice no later than five
(5) days after (A) Buyer becomes aware that a Covered Asset has become ninety
(90) days past due, indicating that such Covered Asset has been placed on
non-accrual status or (B) a Covered Asset becomes the subject of a Charge-Off,
which notice shall set forth the amount of the actual Charge-Off with respect to
such Covered Asset, together with comprehensive supporting documentation for the
calculation of the Charge-Off (each, a “Charge-Off Notice”). Buyer shall include
with any Charge-Off Notice an asset monitoring report that contains a
comprehensive financial summary of the Defaulted Covered Asset and any proposed
workout and resolution strategy (it being understood that no workout or
resolution strategy may be available at such time with respect to a Defaulted
Covered Asset).

(iii) If any Seller or Seller Parent does not exercise its right to repurchase a
Covered Asset under Section 6.7(d) below, then, if Buyer seeks indemnification
under this Section 6.7, Buyer shall provide prompt written notice to Seller
Parent of any Actual Credit Losses with respect to such Covered Asset, together
with a request for indemnification under this Section 6.7 (an “Actual Credit
Loss Indemnification Notice”), which, for the avoidance of doubt, may not be
delivered until the expiration of the applicable Exercise Period.

(iv) A Seller or Seller Parent shall pay Buyer any Actual Credit Loss with
respect to a Covered Asset no later than thirty (30) days after Seller Parent’s
receipt of an Actual Credit Loss Indemnification Notice, unless a Seller or
Seller Parent have elected to repurchase the applicable Covered Asset in
accordance with Section 6.7(d).

(v) Buyer shall, and shall cause its applicable Affiliates to, pay to Seller
Parent any Recoveries no later than thirty (30) days following receipt thereof.

(d) Repurchase Right. If (i) a Material Downgrade occurs, (ii) a Charge-Off
Notice is delivered to Seller Parent in accordance with Section 6.7(c)(ii), or
(iii) Buyer proposes selling a Defaulted Covered Asset (in each case that has
not already be subject to the repurchase right set forth in this Section 6.7(d))
at a price that would result in an indemnification claim for Actual Credit
Losses (in which case, the Buyer shall provide Seller Parent with notice of such
proposed sale, which notice shall include the price for such proposed sale and
the resulting Actual Credit Losses that would result therefrom), then in lieu of
making an indemnity payment for Actual Credit Loss, Seller Parent may, within 10
Business Days from the date of receipt of such notice (the “Exercise Period”),
provide written

 

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notice to Buyer of its intention to exercise its right to repurchase such
Defaulted Covered Asset at a price equal to the then-current Net Investment in
Receivables with respect to such Covered Asset (including any remaining
valuation adjustment resulting from purchase accounting but excluding any
accrued but unpaid late charges and fees that would have the effect of
increasing the calculation of Net Investment in Receivables). At its election,
Seller Parent may cause Covered Assets repurchased by any Seller or Seller
Parent to continue to be serviced and worked out by Buyer at market rates as
charged by on-the-run equipment finance asset-backed securitization issuers. In
the case of clause (iii) of this Section 6.7(d), if Seller Parent does not
notify Buyer of its intent to repurchase such Defaulted Covered Asset before the
expiration of the Exercise Period, Buyer may, during the subsequent seventy-five
(75)-day period, sell the applicable Defaulted Covered Asset and shall provide
Seller with an Actual Credit Loss Indemnification Notice in the amount of the
Actual Credit Loss resulting from such sale, and Seller shall make payment of
such amount within thirty (30) days of receipt thereof.

(e) Applicable Limitations; Mitigation. The provisions of Sections
6.5(b)(iv)-(v) and 6.5(c) are hereby incorporated into this Section 6.7 and
thereby made applicable to claims for Actual Credit Losses. In furtherance, and
not in limitation, of the foregoing, Buyer shall use reasonable best efforts to
follow its collection practices and procedures with respect to Covered Assets in
accordance with applicable regulatory and accounting standards.

(f) Ongoing Buyer Reporting Obligations. Buyer shall deliver to Seller Parent
quarterly Loan and Lease status reports regarding the Covered Assets, and Buyer
and Seller Parent shall conduct quarterly Covered Asset portfolio review
telephonic update calls (to be scheduled in advance and subject to cancellation
or postponement if both Buyer and Seller Parent mutually agree that such a call
is not necessary for any given quarter) and until the earlier to occur of the
expiration of the Actual Credit Loss Claims Deadline or the reduction of the
remaining Actual Credit Losses Cap to zero. The foregoing status reports shall
include with respect to the Covered Assets, among other items, notices of any
Material Downgrade, financial statements, financial projections, a summary
description of financial performance, financial and credit metrics, risk
ratings, risk rating migration, allowances and reserves, equipment descriptions,
depreciation curves, NOLVs, collateral coverage measures and any applicable
exit, disposition and/or workout strategies.

Section 6.8 Exclusive Remedy. After Closing the indemnification provisions
contained in this Article VI shall constitute the sole and exclusive recourse
and remedy of the parties for monetary damages for matters arising under this
Agreement, the Ancillary Agreements, and the Transactions, including with
respect to any breach of any of the representations, warranties, covenants or
agreements contained in this Agreement or any Ancillary Agreement, with respect
to any statements, communications, disclosures, failures to disclose,
representations or warranties not set forth in this Agreement, or with respect
to Losses resulting from, arising out of, or caused by Excluded Liabilities. All
representations and warranties set forth in this Agreement are contractual in
nature only and subject to the sole and exclusive remedies set forth herein. No
Person is asserting the accuracy of any representation and warranty set forth in
this Agreement; rather the parties have agreed that should any representations
and warranties of any party prove inaccurate, the other party shall, subject to
this Section 6.8, have the specific rights and remedies herein specified as the
exclusive remedy therefore, but that no other rights, remedies or causes of
action (whether in law or in equity or whether in contract or in tort) are
permitted to any party as a result of the inaccuracy of any such representation
and warranty. The provisions of this Section 6.8, together with the provisions
of Sections 3.23, 4.8 and 7.11 and the remedies and limitations specified in
Article VI and Section 7.13, were specifically bargained-for between Buyer and
Sellers and were taken into account by Buyer and Sellers in agreeing to the
amount of the Base Purchase Price, the adjustments thereto and the other terms
and conditions hereof. Sellers have specifically relied upon the provisions of
this Section 6.8, together with the provisions of Sections 3.23,

 

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4.8 and 7.11 and the remedies and limitations specified in Article VI and
Section 7.13, in agreeing to the Base Purchase Price, the adjustments thereto
and the other terms and conditions hereof, including in agreeing to provide the
specific representations and warranties set forth herein. The provisions of this
Article VI are in lieu and substitution of any other remedies, recourse or
entitlements that the parties may have, including common law claims and damages
and statutory rights of contribution, it being agreed that such other remedies,
recourse and entitlements are expressly waived and released by the parties to
the fullest extent permitted by law. The provisions of this Article VI will not,
however, restrict the right of any party to seek specific performance or other
equitable remedies in connection with any breach of any of the covenants
contained in this Agreement or any Ancillary Agreement.

Section 6.9 Payments ; Disputes. The Indemnifying Party shall pay all amounts
payable pursuant to this Article VI by wire transfer of immediately available
funds, promptly (and in any case within the applicable time periods set forth in
this Article VI) following receipt from an Indemnified Party of a written
payment request, together with all accompanying reasonably detailed back-up
documentation, for each Loss that is the subject of indemnification hereunder.
To the extent the Indemnifying Party in good faith disputes the Loss or a
portion thereof, in which event it shall so notify the Indemnified Party and
shall promptly make payment of the amount of such Loss that is not in dispute.
The parties shall endeavor in good faith to resolve any dispute within 30 days
of the delivery of such notice to the Indemnified Party. In any event, the
Indemnifying Party shall pay to the Indemnified Party (or as directed by the
Indemnifying Party), by wire transfer of immediately available funds, the amount
of any Loss for which it is liable hereunder no later than three business days
following any final determination of such Loss and the Indemnifying Party’s
liability therefor. A “final determination” shall exist when the parties to the
dispute have reached an agreement in writing, or a court of competent
jurisdiction shall have entered a final and non-appealable order or judgment.
The preceding sentences of this Section 6.9 shall not apply to Section 6.7,
which the parties acknowledge and agree provides for conditions to, and the
timing of, payment obligations with respect to Actual Credit Losses. All
payments made by an Indemnifying Party to an Indemnified Party under this
Article VI shall be treated as adjustments to the Purchase Price for Tax
purposes unless otherwise required by Law.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1 Fees and Expenses. Except as otherwise provided herein, all fees and
expenses incurred in connection with or related to this Agreement and the
Ancillary Agreements and the Transactions shall be paid by the party incurring
such fees or expenses, whether or not such transactions are consummated. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses shall be subject to the rights of such party arising from a breach
of this Agreement by the other.

Section 7.2 Amendment and Modification. This Agreement may not be amended,
modified or supplemented in any manner, whether by course of conduct or
otherwise, except by an instrument in writing signed on behalf of each party.

Section 7.3 Waiver. No failure or delay of either party in exercising any right
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, or any course of
conduct, preclude any other or further exercise thereof or the exercise of any
other right or power. Except as otherwise provided herein, the rights and
remedies of the parties hereunder are cumulative and are not exclusive of any
rights or remedies, which they would otherwise have hereunder. Any agreement on
the part of either party to any such waiver shall be valid only if set forth in
a written instrument executed and delivered by a duly authorized officer on
behalf of such party.

 

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Section 7.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or if by facsimile, e-mail or other electronic means reasonably
acceptable to both parties, upon written confirmation of receipt by facsimile,
e-mail or such other means, (b) on the first Business Day following the date of
dispatch if delivered utilizing a next-day service by a recognized next-day
courier or (c) on the earlier of confirmed receipt or the fifth Business Day
following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

 

  (a) if to Sellers or Seller Parent to:

NewStar Financial, Inc.

500 Boylston Street

Suite 1250

Boston, MA 02116

Phone: (617) 848-2500

E-mail: jbray@newstarfin.com]

Attention: John Bray

with a copy to (which shall not constitute notice) to:

Locke Lord LLP

111 Huntington Avenue

Boston, MA 02199

Phone: (617) 239-0357

E-mail: george.ticknor@lockelord.com

Attention: George Ticknor

 

  (b) if to Buyer, to:

Radius Bank

One Harbor Street, Suite 102

Boston, MA 02210

Attention: Michael A. Butler

E-mail: mbutler@radiusbank.com

 

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with a copy (which shall not constitute notice) to:

Hogan Lovells US LLP

Columbia Square

555 Thirteenth St., NW

Washington, DC 20004

Attention: Richard A. Schaberg, Esq.

Telephone: (202) 637-5671

E-mail: richard.schaberg@hoganlovells.com

Section 7.5 Interpretation. When a reference is made in this Agreement to a
Section, Article or Exhibit, such reference shall be to a Section, Article or
Exhibit of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement or in any Exhibit are for convenience of
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All words used in this Agreement shall be
construed to be of such gender or number as the circumstances require. Any
capitalized terms used in the Disclosure Schedules or any Exhibit but not
otherwise defined therein shall have the meaning as defined in this Agreement.
All Exhibits annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth herein. The word “including” and
words of similar import when used in this Agreement shall mean “including,
without limitation”, unless otherwise specified. All references to “dollars” or
“$” in this Agreement or any Ancillary Agreement refer to United States dollars,
which is the currency used for all purposes in this Agreement and any Ancillary
Agreement.

Section 7.6 Entire Agreement. This Agreement (including the Exhibits and
Disclosure Schedules hereto), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement, and supersede all prior written
agreements, arrangements, communications and understandings and all prior and
contemporaneous oral agreements, arrangements, communications and understandings
among the parties with respect to the subject matter of this Agreement. Neither
this Agreement nor any Ancillary Agreement shall be deemed to contain or imply
any restriction, covenant, representation, warranty, agreement or undertaking of
any party with respect to the Transactions other than those expressly set forth
herein or therein or in any document required to be delivered hereunder or
thereunder, and none shall be deemed to exist or be inferred with respect to the
subject matter hereof. Notwithstanding any oral agreement of the parties or
their representatives to the contrary, no party to this Agreement shall be under
any legal obligation to enter into or complete the Transactions unless and until
this Agreement shall have been executed and delivered by each of the parties.

Section 7.7 No Third-Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of each of the parties and their respective
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature under or by reason of this Agreement, except as
provided in Article VI or Section 7.11.

Section 7.8 Governing Law. THIS AGREEMENT AND ALL DISPUTES OR CONTROVERSIES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE LAWS OF ANY OTHER JURISDICTION THAT MIGHT BE
APPLIED BECAUSE OF THE CONFLICTS OF LAWS PRINCIPLES OF THE STATE OF DELAWARE.

 

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Section 7.9 Consent to Jurisdiction. Each of the parties irrevocably agrees that
any legal action or proceeding arising out of or relating to this Agreement or
for recognition and enforcement of any judgment in respect hereof brought by the
other party or its successors or assigns shall be brought and determined in
federal court sitting in the United States District Court for the District of
Delaware (or, if such court lacks subject matter jurisdiction, in the Delaware
Court of Chancery or the Delaware Superior Court), and each of the parties
hereby irrevocably submits to the jurisdiction of the aforesaid courts for
itself and with respect to its property, generally and unconditionally, with
regard to any such action or proceeding arising out of or relating to this
Agreement and the Transactions (and agrees not to commence any action, suit or
proceeding relating thereto except in such courts). Each of the parties further
agrees to accept service of process in any manner permitted by such courts. Each
of the parties hereby irrevocably and unconditionally waives, and agrees not to
assert, by way of motion or as a defense, counterclaim or otherwise, in any
action or proceeding arising out of or relating to this Agreement or the
Transactions: (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure
lawfully to serve process, (b) any claim that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by Law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper or (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.

Section 7.10 Disclosure Generally. Notwithstanding anything to the contrary
contained in the Disclosure Schedules or in this Agreement, the information and
disclosures contained in any Disclosure Schedule shall be deemed to be disclosed
and incorporated by reference in any other Disclosure Schedule as though fully
set forth in such Disclosure Schedule for which applicability of such
information and disclosure is reasonably apparent on its face. The fact that any
item of information is disclosed in any Disclosure Schedule shall not be
construed to mean that such information is required to be disclosed by this
Agreement. Such information and the dollar thresholds set forth herein shall not
be used as a basis for interpreting the terms “material” or “Material Adverse
Effect” or other similar terms in this Agreement. In addition, the fact that any
disclosure in the Disclosure Schedules is not required to be disclosed in order
to render the applicable representation or warranty to which it relates true, or
that the absence of such disclosure in the Disclosure Schedules would not
constitute a breach of such representation or warranty, shall not be deemed or
construed to expand the scope of any representation or warranty hereunder or to
establish a standard of disclosure in respect of any representation or warranty.
The information contained in the Disclosure Schedules is disclosed solely for
purposes of the Agreement, and no information contained in the Disclosure
Schedules shall be deemed to be an admission by any party to any third party of
any matter whatsoever (including any violation of applicable Law or breach of
contract).

Section 7.11 Personal Liability: Non-Recourse. This Agreement shall not create
or be deemed to create or permit any personal liability or obligation on the
part of any direct or indirect equity holder of Sellers or Buyer or any officer,
director, employee, representative, investor, lender (or agent thereof) of
either party hereto. In furtherance of the foregoing, Buyer agrees that no past,
present or future director, officer, employee, incorporator, member, partner,
stockholder, lender (or agent thereof), Affiliate, agent, attorney or
representative of Sellers or any of its Affiliates shall have any liability
(whether in contract or in tort) for any obligations or liabilities of Sellers
arising under, in connection with or related to this Agreement or for any claim
based on, in respect of, or by reason of, the Transactions, including any
alleged non-disclosure or misrepresentations made by Sellers.

 

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Section 7.12 Assignment; Successors. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be directly or
indirectly assigned or delegated, in whole or in part, by operation of law or
otherwise, by any party without the prior written consent of the other parties
(excluding the assigning party’s affiliates), and any such assignment without
such prior written consent shall be null and void; provided, that (a) Sellers
may assign any of their rights or interests in this Agreement, including the
right to receive the Purchase Price, to one or more Affiliates of Sellers and
(b) Sellers may collaterally assign their rights hereunder to its lenders (or
agent thereof), in each case without the prior consent of Buyer; and provided
further, that no assignment shall limit the assignor’s obligations hereunder.

Section 7.13 Specific Performance. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, each of the parties shall be entitled to specific performance of
the terms hereof, including an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in federal court sitting in the United States District Court for the
District of Delaware (or, if such court lacks subject matter jurisdiction, in
the Delaware Court of Chancery or the Delaware Superior Court), this being in
addition to any other remedy to which the parties are entitled at law or in
equity. Each of the parties further hereby waives (a) any defense in any action
for specific performance that a remedy at law would be adequate and (b) any
requirement under any law to post security as a prerequisite to obtaining
equitable relief. To the extent any party hereto brings any Action to enforce
specifically the performance of the terms and provisions of this Agreement when
expressly available to such party pursuant to the terms of this Agreement, the
Termination Date shall automatically be extended by (i) the amount of time
during which such Action is pending, plus twenty Business Days, or (ii) such
other time period established by the court presiding over such Action.

Section 7.14 Severability. Whenever possible, each provision or portion of any
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.

Section 7.15 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.

Section 7.16 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission or by means of portable document format
(pdf) transmission) in one or more counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.

Section 7.17 No Presumption Against Drafting Party. Each of Buyer and Sellers
acknowledge that each party to this Agreement has been represented by counsel in
connection with this Agreement and the Transactions. Accordingly, any rule of
law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the drafting party has no application and
is expressly waived.

 

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Section 7.18 Further Assurances. Each party covenants that at any time, and from
time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonable requested by the other
party to confirm, perfect or otherwise carry out the intent and purposes of this
Agreement and any Ancillary Agreement.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, Sellers, Buyer, and Seller Parent have caused this Asset
Purchase Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.

 

Seller: NEWSTAR EQUIPMENT FINANCE I, LLC By: NewStar Financial, Inc. as
Designated Manager By:   /s/ JOHN BRAY   Name: John Bray   Title: Chief
Financial Officer Seller: NEWSTAR COMMERCIAL LEASE FUNDING I, LLC By: NewStar
Financial, Inc. as Designated Manager By:   /s/ JOHN BRAY   Name: John Bray  
Title: Chief Financial Officer Seller: NEWSTAR COMMERCIAL LEASE FUNDING 2015-1
LLC By:   /s/ JOHN BRAY   Name: John Bray   Title: Chief Financial Officer
Seller Parent: NEWSTAR FINANCIAL, INC. By:   /s/ JOHN BRAY   Name: John Bray  
Title: Chief Financial Officer

[Signature Page Follows]

[Signature Page to Asset Purchase Agreement]

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Buyer: RADIUS BANK By:   /s/ MICHAEL A. BUTLER   Name: Michael A. Butler  
Title: President and Chief Executive Officer

[Signature Page to Asset Purchase Agreement]