Document:

exhibit_10-1.htm

Exhibit 10.1

 

AGREEMENT

 

This purchase Agreement (this "Agreement") is entered in to this 4th  day of May 2011 (the "Effective Date"), by and between WGM SERVICES LTD ("Win"), a corporation incorporated under the laws of Cyprus with its offices located at 48 Themistokli Dervi Avenue, Nicosia 1066, Cyprus; and VENICE TECHNOLOGIES LTD ("Venice"), a corporation incorporated under the laws of the state of Israel, with its offices located at Yonni Netanyahu 3, Or Yehuda, 60376.

 

WHEREAS, Venice is in the developer of a computerized program that enables registered participants/traders to trade/invest in binary options via an internet site using the internet domain EZTRADER.COM (the "Site")

 

WHEREAS, Win operates and owns two internet sites that use a different technology and that serve a similar purpose via the internet domains OPTIONS.CO.IL and GLOBALOPTION.COM.

 

WHEREAS, Venice whishes to sell to Win, and Win whishes to buy from Venice, the Acquired Assets, as set forth hereinafter.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

 

	
1.

	
Definitions

 

a.        "Acquired Assets" means the entirety of Venice's assets and rights in respect of online trading in binary options, including the software that enable the trading in binary options  and its source code, and all intellectual property held by Venice, technological infrastructure, the site and its mirror sites, option handling, risk management, CRM management platforms, debt collection operation, knowledge, reputation and goodwill, lists of customers/traders, and all of Venice's contracts with suppliers, service providers and site customers, for the period prior to the effective date, as of the effective date, provided all these assets are with respect to the site.

 

b.        "Customer/s" or "Site Customers" means all registered customers of the site. The complete list of customers and their complete details, the complete and individualized trading history and information including their contact information, as set forth in Exhibit A.

 

c.        "Employees" means the employees of Venice as of the effective date who are employed by Venice for the purpose of operating the site as set forth in Exhibit B.

 

d.        "Intellectual property" means (A) any and all computer software that was developed and/or written by and/or for Venice and/or is Venice's property and/or is in the use of Venice, in connection with the site (including all developments and computer software enhancements that are in the possession and use of the customers) including the source code. (B) any and all the documentation that has a connection to the implementation and instructions of operating the site. (C) Any and all information that is needed for the operation and maintenance of the site and its different interfaces. (D) the image of all the installation and data and codes that are needed for operating and maintaining the site.(E) any and all the unique knowledge and expertise and any other intellectual property that is connected to the site and that is held by Venice or its affiliates including all copy rights etc. any and all intellectual property that has been transferred/ allotted/licensed out including its employees, in connection with the site, its trade secrets and knowledge, developments, designs, processes, computer programs and technical information used by Venice.

 

  

  

  

 

e.        "Signing day" means the date that an authorized functionary in both parties signs this agreement.

 

f.         "Closing Day" means the 1st day of June 2011.

 

g.        "Withdrawal request" means a withdrawal request that has been registered by the site by any of the site customers prior to the closing Day.

 

h.        "Action" means any claim, action, cause of action or suit (whether in contract or tort or otherwise), litigation (whether at law or in equity and whether civil or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding to, from, by or before any Governmental Authority.

 

 "Affiliate" means, as to any specified entity at any time, each entity directly or indirectly controlling, controlled by or under direct or indirect common control with such specified entity at such time.

 

i.         "Contractual Obligation" means, with respect to any written contract, agreement, deed, mortgage, lease, license, commitment, undertaking, arrangement or understanding, or other document or written instrument, that bind Venice to any or all of its suppliers and/or the company's service providers and/or any third party in connection with the site and which are allotted and that converted to Win with the approval of each individual supplier and/or service provider and/or third party. The complete list of agreements/contracts is set forth in Exhibit C.

 

j.         "Governmental Authority" means any, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any arbitrator or arbitral body.

 

k.         "Legal Requirement" means state, local or any foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any order, judgment or decree of any Governmental Authority.

 

l.         "Liability" means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or not, whether liquidated or not).

 

m.       "Lien" means any mortgage, pledge, lien, security interest, charge, adverse or prior claim, encumbrance, restriction on transfer, conditional sale or other title retention device or arrangement (including without limitation a capital lease), transfer for the purpose of subjection to the payment of any Debt or other obligation, or restriction on the creation of any of the foregoing, whether relating to any property or right or the income or profits thereof' in connection with the Acquired assets;

 

n.        "Material Adverse Effect" means with respect to the Business, any change in, or effect on, the Acquired Assets that, when considered either singly or in the aggregate, would result in a material adverse effect on the condition (financial or otherwise) or operations of the Acquired Assets taken as a whole.

 

  

  

  

 

o.        "Ordinary Course of Business" means, with respect to the Business, the ordinary course of business consistent with past custom and practice of such Business.

 

p.        "Party/ies" has the meaning set forth in the preamble above.

 

q.        "Tax" or "Taxes" means any state, or local or any foreign income, gross receipts, license, payroll, employment, severance, profits, withholding, social security, value added, or other tax, including any interest, penalty, or addition thereto.

 

r.         "Transaction Documents" means this Agreement and all documents entered into in connection with this Agreement and all of its addendums.

 

s.        "Interim Period" in the period between the Signing Day and the Closing Day.

 

t.         "Third Party Claim" has the meaning set forth in article 6.4.

 

u.        "Confidential Information" means any and all information, disclosed by the Disclosing Party to the Receiving Party, whether in oral or in written form, including but not limited to documentation, software, product descriptions, technical or business information, ideas, discoveries, inventions, specifications, formulas, processes, programs, plans, drawings, models, network configuration and rights-of-way, requirements, standards, financial and non-financial data, marketing, trade secrets, know-how, customer lists, prices, including any and all intellectual property rights contained therein and/or in relation thereto, as well as any such information related to the customers, business partners, affiliates and other contacts of the Disclosing Party, their business, and their contact details. Notwithstanding, it is agreed that “Confidential Information” shall not include information which (i) is or becomes lawfully in the public domain other than through a breach of any non disclosure agreement or any a confidentiality obligation, (ii) was known to the Receiving Party prior to the disclosure, as evidenced by its business records, (iii) was independently developed by or for the Receiving Party without reference to or use of Confidential Information received from the Disclosing Party, (iv) was lawfully obtained by the Receiving Party from a third party without violation of a confidentiality obligation, (v) The Disclosing Party agrees in writing that it may be disclosed by the Receiving Party, or (vi) is required or compelled by law or legal authorities to be disclosed, provided that the Receiving Party gives reasonable prior written notice to the Disclosing Party to allow it to seek protective or other court orders. The Receiving Party shall have the burden of proving that any of the above exceptions apply by means of documentary evidence available at the time Receiving Party claims the exception first became applicable.

 

	
2.

	
ACQUISITION OF ASSETS BY WIN

 

	
  

	
Subject to the fulfillment of this agreement and the transfer of the agreed upon purchase price it is hereby agreed:

 

	
  

	
2.1. Purchase and Sale of Assets. Venice agrees to sell and transfer to Win, and Win agrees to purchase and acquire from Venice, and subject to and upon the other terms and conditions contained herein, all of Venice's rights, titles and interests in and to the acquired assets as set above.

 

	
  

	
2.3. Liabilities. Win will not assume or perform any Liabilities of Venice (each, a "Retained Liability"), with the exception of Venice's obligations towards site customers, including the obligation to pay back any Site Customer which submitted a withdrawal request after the signing of this agreement.

 

  

  

  

 

	
  

	
To avoid any doubts, it is clarified that Venice will be liable for any debt and/or liability, whether directly and/or indirectly, in connection with the Acquired Assets for the period preceding the Closing Day. Without derogating from the generality of the aforesaid and to avoid any doubts, it is clarified that even after the execution of this Agreement and the Closing Day,  Venice alone will be held responsible and bear all of its responsibilities and liabilities which are not included in the Acquired Assets.

 

	
  

	
Also, it is clarified that Win will be liable for any debt and/or liability, whether directly and/or indirectly, in connection with the Acquired Assets that may arise for the period commencing on the closing day.

 

	
  

	
Notwithstanding the foregoing Venice is liable, for any and all charge back's, fines, expenditures, expenses relating to the transfer of the Acquired Assets, for the period until the closing day. Win will assume liability to all the obligations connected to operating the site commencing on the closing day.

 

	
  

	
2.4 Timing of Title Transfer. Venice agrees to sell and transfer to Win, and Win agrees to purchase and acquire from Venice, the Acquired Assets pursuant to the terms of this Agreement. Subject to the foregoing, Win and Venice agree as follows:

 

	
  

	
(a) Acquired assets. All acquired assets will be transferred to Win by Venice on the Closing Day.

 

	
  

	
2.5 Purchase Price. Win agrees to purchase the Acquired Assets from Venice in consideration for the sum of US$625,000 that will be transferred to Venice on the closing day by wire transfer or by cashier's check.

 

	
  

	
2.6 Closing Conditions.  The obligations of Win with respect to the purchase of the Acquired Assets at the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions:

 

	
  

	
2.6.1 Representations and Warranties. The representations and warranties of Venice made in this Agreement and any certificate furnished hereunder shall be true, complete and correct in all material respects on and as of the Closing Day. As long as the due diligence proceedings does not result in findings that deviate from the abovementioned warranties by more than 20% and that a material adverse affect does not occur, Win will proceed to acquire the Acquired Assets, as set above in this agreement or else shall compensate Venice with the sum of US$50,000 that shall be considered as agreed compensation.

 

	
  

	
2.6.2 Material Adverse Effect.  Between the signing day and the closing day Venice agrees not to digress from the ordinary course of business, not to take any action that will result in a Material Adverse Effect on the acquired assets.

 

	
  

	
Notwithstanding the foregoing if during the interim period a material adverse effect does occur, Venice will be obliged to diverge this information to Win, as soon as Venice learns of the occurrence of the material adverse effect.

 

	
  

	
2.7. Confidentiality. During the interim period Win will hold this Agreement, its content and the conduct of the Evaluation and Examination, as well as any Confidential Information exchanged by and among the Parties in connection with this Agreement and the purpose thereof in the strictest confidence. Win shall not disclose, transfer, publish, copy or make available the Confidential Information or any portion thereof attained by and in connection with this agreement, to any unauthorized entity/ies, without the prior written consent of the Venice.

 

	
  

	
Without derogating from the foregoing, Win shall use the Confidential Information of the Company only for the purpose of Evaluation and Examination of the aforementioned Transaction.

 

  

  

  

 

	
  

	
All Confidential Information provided by Venice is provided ‘As Is’ and shall remain the sole property of the Venice. Upon the annulment of this agreement, Win will return to the Venice all documents and other materials which embody the Confidential Information that has been disclosed by Venice and no copies, extracts or other reproductions shall be retained by Win.

 

	
3.

	
REPRESENTATIONS AND WARRANTIES OF VENICE. Venice represents and warrants as follows:

 

	
  

	
3.1. Organization and Qualification. Venice is a corporation that is duly organized, validly existing, and in good standing under the laws of the State of Israel and has the requisite corporate power and authority to own and use its assets and carry on the Business as it is now being conducted, except where failure to have the aforementioned would not have a Material Adverse Effect upon the Acquired Assets. Venice is duly qualified to do business and is in good standing in each jurisdiction in which the properties are owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified and in good standing has not had, and is not reasonably likely to have, a Material Adverse Effect on the Acquired Assets.

 

	
  

	
3.2. Authorization of Transaction. Venice has all requisite corporate power to execute and deliver the Transaction Documents and has preformed all the necessary corporate actions needed to authorize the transactions contemplated by the Transaction Documents and the performance of its obligations contemplated by the Transaction Documents. Each of the Transaction Documents has been duly executed and delivered by Venice and is enforceable against Venice in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Legal Requirements relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law) (the "Enforceability Exceptions").

 

	
  

	
3.3. Non-contravention. Neither the execution and the delivery of this Agreement, nor the fulfillment of the transactions contemplated hereby, will (i) violate any material Legal Requirement to which Venice is subject to, (ii) result in a material breach or violation of, or default under, or constitute an event which would with the passage of time or the giving of notice or both constitute a default under, or give rise to a right to terminate, amend, modify, abandon or accelerate any material Contractual Obligation of and by Venice, (iii) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any entity under any material Contractual Obligation of Venice, or (iv) result in a breach or violation of, or default under, Venice's articles of incorporation or code of regulations.

 

	
  

	
3.4. Brokers' Fees. Venice does not have any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by the Transaction Documents for which Win could become liable or obligated to pay.

 

	
  

	
3.5. Assets. The Assets shall be transferred to Win in whatever condition they presently exist, AS IS and without any further warranty or representation other than the representations and warranties that are set forth expressly in this agreement. Venice has good and valid title to and the power to sell or transfer to Win, all of the Acquired Assets free and clear of any Liens.

 

	
  

	
3.6. Legal and Other Compliance. Venice specifically warrants that it has no knowledge whatsoever regarding its compliance or non-compliance with any Legal Requirements, world wide, relating to the Acquired Assets that are acquired by Win in their condition and current operation.

 

  

  

  

 

	
  

	
3.7. Governmental Approvals. Subject to Venice's warranty aforementioned in Section 3.6 and except for the filings and approvals which the failure to obtain will not have a Material Adverse Effect, Venice has no knowledge of any action by or in respect of, declaration, filing or registration with, or notice to, or authorization, consent or approval or permit of, any Governmental Authority is necessary or required for, or in connection with, the valid and lawful authorization, execution, delivery, and performance by Venice of each Transaction Document to which Venice is a party or the fulfillment by Venice of the transactions contemplated hereby.

 

	
  

	
3.8. Consents. Except for third-party notices and third-party consents, approvals and waivers which the failure to obtain would not have a Material Adverse Effect, and except for notices of any nature to the site customers, Venice has given all of the third-party notices and procured all third-party consents, approvals, and waivers necessary to permit the fulfillment by Venice of the transactions contemplated hereby as set forth on in this Agreement.

 

	
  

	
3.9. Litigation. There are no Actions related to the Business or Acquired Assets to which Venice is party to (either as a plaintiff or as a defendant) and/or pending. Subject to Venice's warranty aforementioned in Section 3.6 and to the best of its knowledge Venice is not threatened by an action, that, individually or collectively, would reasonably result in and/or cause a Material Adverse Effect, or that question the validity of the Transaction Documents or of any action taken or that will be taken pursuant to or in connection with the provisions of this Agreement. There are no outstanding verdicts, orders, decrees, citations, fines, penalties or written notices of violation against Venice and/or legislative procedure that affect or could affect the Business and/or the Acquired Assets under any Legal Requirement that, individually or collectively, would reasonably result in and/or cause a Material Adverse Effect.

 

	
  

	
3.10. Affiliated Transactions. No Affiliate of Venice owns or otherwise has any rights to or interests in any of the Acquired Asset.

 

	
  

	
3.11. Customers. The entirety of Venice's registered customers and/or subscribers in relation with the site as aforementioned in Exhibit A

 

	
  

	
3.12. Venice Financial Information. All financial Information relating to the Acquired Assets for the period of the last four months as attached to this agreement as Exhibit B are presented fairly in all material respects.

 

	
  

	
3.13. Contractual Obligations. Venice acknowledges Win's right to "pick and choose" which of Venice's contractual obligations it would keep and maintain. Win will notify Venice prior to the closing day which contractual obligation Venice must end. On the closing day Venice will supply Win with all documentation in regards to the contractual obligations that Win stated that it is maintaining.

 

	
  

	
3.14. Intellectual Property. Venice shall grant Win the sole ownership over the entirety of its intellectual property as described above. Venice declares that it has the sole ownership over the transferred intellectual property, and that it will supply Win with all the documentation in regards with the transferred intellectual property prior to the closing day, provided such documentation should exist on the signing day.

 

	
  

	
3.15. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 ARE THE ONLY REPRESENTATIONS AND WARRANTIES BEING MADE BY VENICE IN THIS AGREEMENT. EXCEPT AS SET FORTH IN THIS ARTICLE 3 OR IN ANY OTHER TRANSACTION DOCUMENT, NONE OF VENICE'S, AND/OR ANY OF ITS FUNCTIONARYS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATIONS OR WARRANTYS, EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR ANY OF THE ACQUIRED ASSETS, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR SUITABILITY FOR ANY PARTICULAR PURPOSE, (II) WARRANTY AGAINST INFRINGEMENT, (III) THE OPERATION OF THE BUSINESS BY WIN POST CLOSING OR (IV) THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS POST CLOSING, ALL OF WHICH ARE HEREBY DISCLAIMED.

 

  

  

  

 

	
4.

	
REPRESENTATIONS AND WARRANTIES OF WIN.

 

	
  

	
Win represents and warrants to Venice that:

 

	
  

	
4.1. Organization and Qualification of Win. Win is a corporation that is duly organized, validly existing, and in good standing under the laws of State of Nevada and has the requisite corporate power and authority to own and use its assets and carry on its business as it is now being conducted, except where the failure to have so would not have a material adverse effect on Win or the transactions described herein. Win is duly qualified to do business and is in good standing in each jurisdiction in which its properties are owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified and in good standing has not had, and is not reasonably likely to have, a material adverse effect on Win, or to the fulfillment of the transaction described herein.

 

	
  

	
4.2. Authorization of Transaction. Win has all requisite corporate power and authority to execute and deliver the Transaction Documents to which it is a party to and has taken all corporate action necessary to authorize the fulfillment of the transactions contemplated by the Transaction Documents to which it is party to and the performance of its obligations contemplated hereby. Each of the Transaction Documents to which it is party to has been duly executed and delivered by Win and will be, as applicable and enforceable against Win in accordance with their terms, subject to the Enforceability Exceptions.

 

	
  

	
4.3. Noncontravention. Neither the execution and the delivery of any Transaction Document, nor the fulfillment of the transactions contemplated hereby, will (i) violate any material Legal Requirement to which Win is subject, (ii) result in a material breach or violation of, or default under, or constitute an event which would with the passage of time or the giving of notice or both constitute a default under, or give rise to a right to terminate, amend, modify, abandon or accelerate any material Contractual Obligation of Win, (iii) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any entity under any material Contractual Obligation of Win, or (iv) result in a breach or violation of, or default under, Win's charter or bylaws.

 

	
  

	
4.4. Brokers' Fees. Win has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by the Transaction Documents for which Venice could become liable or obligated to pay.  

 

	
  

	
4.5. Consents. Win has given all of the third-party notices and procured all third-party consents, approvals, and waivers necessary to permit the fulfillment of the transactions contemplated by the Transaction Documents.

 

	
  

	
4.6. Available Funds. As of the closing day hereof, Win will have readily available funds sufficient to allow the fulfillment of the transactions contemplated herein.

 

  

  

  

 

	
  

	
4.7. Litigation. There are no Actions to which Win is a Party to (either as a plaintiff or as a defendant) or to which either of its assets are subject pending or, to Win's Knowledge, that question the validity of the Transaction Documents or of any action taken or to be taken pursuant to or in connection with the provisions of the Transaction Documents. No Action is pending wherein an unfavorable injunction would be reasonably likely to have a material adverse effect on Win, or the transactions described herein.

 

	
  

	
4.8. Win has the needed knowledge and experience in finance and business matters that the purchasing of the aforementioned Acquired Assets requires, it is capable of evaluating the merits and the risks involved in this transaction and it is able to bear the high risk involved in such a transaction.

 

	
  

	
In the event that Win does not terminate this agreement prior to the closing day, and upon the transferal of the Purchase price from Win to Venice, Win declares that it received from Venice, all the information and documentation it considers necessary or appropriate for deciding whether to purchase the Acquired Assets and has carefully examined the Acquired Assets thus completing the due diligence procedure.

 

	
  

	
4.9. Subject to Venice's warranties and representations set forth in section 3and subject to the Due Diligence review as set forth in paragraph 2.6.1, Win purchases the Acquired Assets in whatever condition they presently exist, on an As-Is basis. Subject to Venice's warranties and representations set forth in section 3 of this agreement, Win represents it has found the Acquired Assets suitable for its purposes.

 

	
5.

	
POST CLOSING COVENANTS.

 

	
  

	
5.1. Employees. The Parties acknowledge and agree that Win is not obliged to hire any employees of Venice or the Business in connection with the transactions contemplated by this Agreement or the Transaction Documents. Following the Closing, Venice shall remain and shall be solely responsible for all payments and obligations to all its employees employed in the Business, including, without limitation, any severance pay and other payments and expenses, that are due to be paid, and that incurred in connection with the termination of employment of its employees, as applicable and Venice shall comply with all applicable Legal Requirements in connection therewith.

 

	
  

	
Notwithstanding the foregoing Venice will take any reasonable action within its power to cause the site developers and programmers, Marat Griesman I.D. 319225181("Marat") and David Shpitzer I.D. 13696026 ("David") to transfer and be employed by Win according to the terms and conditions that have been agreed upon between those employees and Venice. In any event, Venice shall be solely responsible for all payments and obligations to all the employees formerly employed by Venice so that they shall start with a clean slate with Win.

 

	
  

	
In the event that Marat and David do sign an employment agreement with Win, Win shall assume full responsibility for operating the site and Venice shall be under no obligation whatsoever in providing Win with any further services, including maintenance.

 

	
  

	
 In the event that Venice will be unable to compel Marat and David to sign an employment agreement with Win, the development and services agreement presented in Exhibit D will be signed on the Closing Day.

 

	
  

	
5.2 Non-Compete.Neither Venice, nor any entity within its control (collectively, the "Restricted Parties" and each a "Restricted Party"), shall, directly or indirectly, and for a period of 24 months, compete with Win with respect to the operation of the site.

 

  

  

  

 

	
6.

	
INDEMNIFICATION.

 

	
  

	
6.1. Venice's Indemnification. Subject to the limitations set forth in this Article 6, Venice shall indemnify and hold harmless, Win, and its stockholders, members, managers, functionaries, directors, employees, agents and Affiliates (collectively, the "Win Indemnities") from, against and in respect of Losses arising from or related to any of the following:

 

	
  

	
(a) Any material breach or default in performance by Venice of any material covenant or agreement of Venice contained in this Agreement or any Transaction Document;

 

	
  

	
(b) Any material breach of, or inaccuracy in, any representation or warranty made by Venice in this Agreement or any Transaction Document, resulting in a material breach of the Agreement;

 

	
  

	
6.2. Win's Indemnification. Subject to the limitations set forth in this Article 6, Win shall indemnify and hold harmless, Venice, and its stockholders, members, managers, functionaries, directors, employees, agents and Affiliates (collectively, the "Venice Indemnities") from, against and in respect of Losses arising from or related to any of the following:

 

	
  

	
(a) Any material breach or default in performance by Win of any material covenant or agreement of Win contained in this Agreement or any Transaction Document;

 

	
  

	
(b) Any material breach of, or inaccuracy in, any representation or warranty made by Win in this Agreement or any Transaction Document, resulting in a material breach of the Agreement;

 

	
  

	
6.3. Time Limitations; Indemnity Baskets and Ceilings.

 

	
  

	
(a) No claim may be made or suit filed under Section 6.1(b) or 6.2(b) with regard to a representation and warranty in a Transaction Document after the close of business on the date that is (i) with regard to a claim made or suit filed under Section 6.1(b) or 6.2(b), twelve (12) months post the Closing Day, and (ii) with regard to a claim made or suit filed under a Transaction Document other than this Agreement, twelve (12) months after the termination of the applicable Transaction Document. Notwithstanding the foregoing, the twelve (12) month time limitation described herein shall not apply to Third Party Claims arising in connection with this Agreement or any Transaction Document, which Third Party Claims shall survive until the expiration of the applicable statute of limitations, and such Third Party Claims shall be handled as set forth in Section 6.5.

 

	
  

	
(b) Claims may be made or suits filed at any time if such claims or suits are based upon fraud or intentional misrepresentation or are under Section 6.1(a) or 6.2(b), (subject to any applicable statutes of limitation or express time limitation set forth herein or in any Transaction Document).

 

	
  

	
(c) For purposes of this Article 6, any claim for indemnification not involving a Third Party Claim (which shall be handled as set forth in Section 6 hereof) shall be duly made by delivering written notice of such claim describing with reasonable specificity (in light of the facts then known) the amount and basis of such claim to Win or Venice, as applicable, prior to the applicable limitation date specified in this Section 6.

 

  

  

  

 

	
  

	
6.4. Third Party Claims. Promptly after the receipt by either party that it is entitled to indemnification (the "Indemnified party") pursuant to this Article 6 of a notice of the assertion of a claim or the commencement of any Action against it by a third party (a "Third Party Claim"), the other party (the "Indemnifier party") shall, if a claim with respect thereto is to be made against the  and the  is obligated to provide indemnification pursuant to this Article 6, give the Indemnified party a written notice thereof in reasonable detail in light of the circumstances then known to the Indemnifier party. The failure to give such notice shall not relieve the Indemnifier party from any obligation hereunder except where, and then solely to the extent that, such failure actually and materially prejudices the rights of the Indemnifier party. The Indemnifier party shall have the right, at its sole discretion, to defend such a claim, on it own expense and with counsel of its own choice and that reasonably satisfies the Indemnified party, provided that the Indemnifier party conducts the defense of such a claim actively and diligently. If the Indemnifier party assumes the defense of such a claim, the Indemnified party agrees to reasonably cooperate so long as it is not materially prejudiced thereby and the Indemnifier party (a) irrevocably acknowledges in writing full responsibility for the outcome and agrees to fully indemnify the Indemnified party, and (b) furnishes satisfactory evidence of the financial ability to indemnify the Indemnified party. The Indemnified party may retain separate co-counsel at its own cost and expense and may participate in the defense of such a claim. the Indemnifier party will not consent to the entry of any judgment or enter into any settlement with respect to a Third Party Claim without the prior written consent of the Indemnified party, which consent will not be unreasonably withheld, provided that such consent shall be granted in connection with any settlement (i) containing a full release of the Indemnified party and (ii) in the case of a consent from the Indemnified party, involves only monetary damages. In the event that the Indemnifier party does not defend or ceases to conduct a defense of such Third Party Claim, (c) the Indemnified party may defend against, and, consent to the entry of any judgment or enter into any settlement with respect to, such Third Party Claim, (d) the Indemnifier party will reimburse the Indemnified party promptly and periodically for the costs of defending against such Third Party Claim, including reasonable attorneys' fees and expenses and (e) the Indemnifier party will remain responsible for any Losses the Indemnified party may endure as a result of such Third Party Claim to the full extent provided in this Article 6.

 

	
  

	
6.6. Information. Each Party hereby agrees to provide to the other Party on request all information and documentation in its possession or control that is not protected by attorney-client privilege, attorney work-product or otherwise protected and that is reasonably necessary to support and verify any Losses which give rise to a claim for indemnification pursuant to this Article 6 and to provide reasonable access to all books, records and personnel in their possession or under their control which would have a bearing on such claim.

 

	
7.

	
NON DISCLOSER, NON-COMPETE

 

	
  

	
7.1 Non discloser. Each Party shall hold the other Party’s Confidential Information in the strictest confidence and shall not disclose the other Party’s Confidential Information without the prior written consent of the other Party, which consent may be withheld at the other Party’s sole discretion. Each Party may disclose the other Party’s Confidential Information to the each Party’s employees on a need-to-know basis. Each Party agrees to take all reasonable precautions to protect the Confidential Information received from falling into the public domain or to the possession of persons other than those authorized to have the Confidential Information according to this Agreement, all precautions shall include the highest degree of care that such Party utilizes to protect its own information of a similar nature, but in no event not less than a reasonable degree of care.

 

  

  

  

 

	
  

	
This Agreement shall not prohibit either Party from disclosing Confidential Information of the other Party if legally required to do so by judicial or governmental order or in a judicial or governmental proceeding (“Required Disclosure”), provided that the discloser then shall (i) give the other Party prompt notice of such Required Disclosure prior to disclosure; (ii) cooperate with the other Party in the event that the other Party elects to contest such disclosure or seek a protective order with respect thereto, and/or (iii) in any event only disclose the exact Confidential Information, or portion thereof, specifically requested by the Required Disclosure.

 

	
  

	
All Confidential Information of a Disclosing Party is and shall remain the property of the Disclosing Party.  Nothing contained in this Agreement shall be construed as granting or conferring any rights by license or otherwise, either express, implied or by expressed, to any Confidential Information of a Disclosing Party, or under any patent, copyright, trademark or trade secret of the Disclosing Party.

 

	
  

	
7.3. Win shall take all necessary measures to ensure that its directors, employees, advisors and attorneys (“Consultants”) who have access to Venice's Confidential Information, shall not disclose any Confidential Information to third parties. Win shall be held accountable for any disclosure made by any of the Consultant to any third party.

 

	
  

	
7.2 Non compete. For the period of 2 years after the closing day, or by (the “Restriction Period”), Venice shall not directly or indirectly engage, nor assist any other person, corporation or any other entity to compete with the site worldwide.

 

	
8.

	
MISCELLANEOUS.

 

	
  

	
8.1. Press Releases and Public Announcements. Subject to this Section 8.1, no press release, publicity or other form of public written disclosure in relation to this Agreement shall be permitted by either party to be published or otherwise disclosed unless the other party has provided its consent to the form of release in writing, except for any disclosure as deemed necessary or advisable, in the reasonable judgment of the responsible party, to comply with national, federal or state laws or regulations with respect to regulatory reporting or disclosure obligations, including without limitation, under securities laws and stock exchange rules and regulations

 

	
  

	
8.2. Entire Agreement. This Agreement, including the Venice Disclosure Schedules and the other Transaction Documents, constitutes the entire agreement among the Parties hereto with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, with respect thereto. In the event of any conflict between the terms of this Agreement and any agreement or document entered into or delivered in accordance herewith, including any purchase order, terms and conditions of supply or any other document delivered in accordance herewith, the terms of this Agreement shall prevail.

 

	
  

	
8.3. Succession and Assignment; No Third-Party Beneficiary. This Agreement and the rights of the Parties hereunder may not be assigned by operation of law or otherwise. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and the successors and permitted assigns thereof. This Agreement is for the sole benefit of the Parties and their successors and permitted assignees and nothing herein expressed or implied will give or be construed to give any Person, other than the Parties and such successors and permitted assignees, any legal or equitable rights hereunder (other than the provision of Article 6 relating to indemnified parties).

 

	
  

	
8.4. Counterparts. This Agreement may be executed in any number of counterparts, (including by facsimile transmission or by electronic mail with scan or attachment signature) each of which will be deemed an original, but all of which together will constitute but one and the same instrument.

 

  

  

  

 

	
  

	
8.5. Headings. The headings contained in this Agreement are for convenience purposes only and will not in any way affect the meaning or interpretation hereof.

 

	
  

	
8.6. Notices. Any and all notices required hereunder shall be in writing and shall be (a) sent by certified, first-class mail, postage prepaid, (b) sent by national overnight courier or (c) delivered by facsimile (with the original promptly sent by any of the foregoing manners), to the addresses or facsimile numbers of the other Party as set forth below. The effective date of any notice hereunder shall be the date of receipt by the receiving Party:

 

	
  

	
8.7. Governing Law. This Agreement shall be governed in all respects by the laws of the State of Israel and all disputes hereunder shall be subject to the sole and exclusive jurisdiction of the applicable courts located in the Tel Aviv-Jaffa District.

 

	
  

	
8.8. Amendments and Waivers. No alternation, waiver, cancellation, or any other change or modification in any term or condition of this Agreement, or any agreement contemplated to be negotiated or reached pursuant to the terms of this Agreement, shall be valid or binding on either party unless made in writing and signed by duly authorized representatives of both Parties. Any waiver of breach or default pursuant to this Agreement shall not be a waiver of any other subsequent default. Failure or delay by either party to enforce any term or condition of this Agreement shall not constitute a waiver of such term or condition.

 

	
  

	
8.9. Severability. To the extent any provision of this Agreement is found by a court of competent jurisdiction to be invalid or unenforceable, that provision notwithstanding, the remaining provisions of this Agreement shall remain in full force and effect and such invalid or unenforceable provision shall be deleted.

 

	
  

	
8.10. Expenses. Each of Win and Venice will bear their own respective own costs and expenses (including legal and accounting fees and expenses) incurred in connection with this Agreement, the Transaction Documents and the transactions contemplated hereby.

 

	
  

	
8.11. Construction. This Agreement is the result of negotiation between the Parties and their respective counsel. This Agreement will be interpreted fairly in accordance with its terms and conditions and without any strict construction in favor of either Party. Any ambiguity shall not be interpreted against the drafting Party.

 

	
  

	
8.12. Incorporation of Schedules. The Exhibits identified in this Agreement are incorporated herein by reference and made a part hereof.

 

	
  

	
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the 4th day of May 2011.

	 	 	 	 	 
	 	
WGM SERVICES LTD

	  	
VENICE TECHNOLOGIES LTD

	 
	 	By:	
/s/ Shimon Citron

	  	By:	/s/ Shlomo Waldman      /s/ Shlomo Unger	 
	 	
Position in Company: Director

	  	
Position in Company: Directorsex10-3.htm

EXHIBIT 10.3

 

ASSET PURCHASE AND SALE AGREEMENT

 

 

This ASSET PURCHASE AND SALE AGREEMENT (as amended, restated, or otherwise modified and in effect from time to time, this “Purchase Agreement”), is dated as of April 18, 2011, between UNITED COMMUNITY BANK, a bank organized under the laws of the State of Georgia, as Seller (“Seller”), and CF SOUTHEAST LLC, a Delaware limited liability company (“CF Southeast”), and CF SOUTHEAST TRUST 2011-1, a Delaware statutory trust (“CF Trust”).

 

 

BACKGROUND

 

 

Seller wishes to sell, and CF Southeast and CF Trust wish to purchase, subject to the terms and conditions set forth in this Purchase Agreement, certain performing and non-performing commercial loans, consumer loans, commercial mortgage loans, residential mortgage loans and related property.

 

 

Now, therefore, in consideration of the premises and the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

 

SECTION 1. Usages and Definitions.  Capitalized terms used but not otherwise defined in this Purchase Agreement are defined in Appendix A. Appendix A also contains rules as to usage applicable to this Purchase Agreement. Appendix A is incorporated by reference into this Purchase Agreement.

 

SECTION 2. Purchase and Sale of Assets.

 

(a) Subject to the terms and provisions of this Purchase Agreement and the satisfaction of the conditions described herein, the Seller hereby agrees to sell, transfer, assign, set over and otherwise convey to Purchaser, and Purchaser agrees to purchase the Loans identified and described in the Asset List, together with any related property, including the related Loan Files (the “Assets”) on the Closing Date.

 

(b) The Assets sold are identified in the Asset List attached as Schedule 1 to the Bill of Sale to be executed between the Seller and the Purchaser simultaneously with the execution and delivery of this Purchase Agreement.  Subject to the terms and provisions of this Purchase Agreement and the Bill of Sale, the Seller will sell, transfer, set over and otherwise convey the Assets identified in Schedule 1 to the Bill of Sale (other than the Letter of Credit Obligations) to the Purchaser, including (1) all interest, principal, fees and other payments received with respect to such Assets after the Cut-off Date or received on or before the related Cut-off Date but not posted until after the Cut-off Date, whether or not due before or after the Cut-Off Date, (2) any Escrow Payments, other funds held in escrow, reserve or other accounts by the Seller with respect to such Assets; provided, however, that the Seller may retain all interest accrued prior to the Closing Date, to the extent paid on or after the Closing Date (but if paid after the Closing Date, only if paid prior to 30 days after the due date) with respect to the Loans listed on Schedule 2(b) (the “Performing Loan Interest”), (3) all rights as an additional insured under all related title, hazard, or other insurance policies of any nature pertaining to such Assets, as well as Seller’s right to any and all pending claims relating to such policies, (4) all documents related to the Assets, including the Loan Files, (5) the servicing rights appurtenant to such Assets, and (6) all proceeds derived in any way from any of the foregoing, all on the terms set forth in this Purchase Agreement and the applicable Bill of Sale, and agrees that it will from time to time execute and deliver to the Purchaser such instruments of further assurance and other instruments and will take such other action as the Purchaser may reasonably request in order to evidence the purchase evidenced by the Bill of Sale.  On the Closing Date, Purchaser shall pay the Estimated Purchase Price in accordance with Section 7.

 

  

  

  

 

(c) In connection with the Seller’s assignment of the Assets pursuant to subsection (b) above, the Seller will promptly release the Loan File for each Loan to the Purchaser.  Upon the sale of the Assets to Purchaser, the ownership of all related operative Notes, all related Mortgages and other Loan Documents, and all related Loan Files shall vest immediately in the Purchaser, and the ownership of all records and documents with respect to the Assets prepared by or which come into possession of the Seller shall vest immediately in the Purchaser.

 

(d) If the Seller cannot deliver, or cause to be delivered, as to each Loan File, the original or a copy of any of the documents or instruments referred to in clauses (c), (h), (l) or (m) of Exhibit B, with evidence of recording thereon, solely because of a delay caused by the public recording or filing office where such document or instrument has been delivered for recordation or filing, or because such original recorded document has been lost or returned from the recording or filing office and subsequently lost, as the case may be, the delivery requirements of Section 2(c) shall be deemed to have been satisfied as to such missing item, and such missing item shall be deemed to have been included in the related Loan File; provided, however, that a copy of such recorded document or instrument certified (which certificate may relate to multiple documents and/or in­struments) by the Seller to be a true and complete copy of the recorded original thereof submitted for recording or filing, as the case may be) has been delivered to or at the direction of the Purchaser, and either the original of such missing document or instrument, or a copy thereof, with evidence of recording or filing, as the case may be, thereon, is delivered to or at the direction of the Purchaser (or any subsequent owner of the affected Assets) within ninety (90) days of the Closing Date (or within such longer period after the Closing Date as the Purchaser (or such subsequent owner) may consent to, which consent shall not be unreasonably withheld so long as the Seller has provided the Purchaser (or such subsequent owner) with evidence of such recording or filing, as the case may be.  If the Seller cannot deliver, or cause to be delivered, as to the Assets, the original or a copy of the related lender’s Title Insurance Policy referred to in clause (k) of Exhibit B solely because such policy has not yet been issued, the delivery requirements of Section 2(c) shall be deemed to be satisfied as to such missing item, and such missing item shall be deemed to have been included in the related Loan File, provided that (i) the Seller has delivered to the Purchaser a commitment for title insurance “marked-up” at the Closing, and (ii) there are no conditions or requirements to be satisfied by the Seller or the related Borrower of such Loan prior to issuance of the Title Insurance Policy.  Seller shall, at no cost to Purchaser, deliver to or at the direction of the Purchaser (or any subsequent owner of the affected Asset), promptly following the receipt thereof, the Seller’s Title Insurance Policy (or a copy thereof).

 

(e) As to the Assets, the Purchaser shall be responsible for all costs associated with the recording or filing, as the case may be, of each Collateral Assignment referred to in clause (h) of Exhibit B including any UCC financing statement evidencing the assignment from Seller to Purchaser and Seller shall be responsible for all transfer, filing and recording fees and taxes, costs and expenses, and any state or county documentary taxes, if any, with respect to the filing or recording of any other document or instrument described in clause (c) (other than an assignment to the Purchaser), or any document or instrument described in clauses (h), (l) or (m) of Exhibit B (other than an assignment to the Purchaser) executed prior to or required to be filed prior to (or which a reasonably prudent loan servicer would have filed prior to) the Closing Date but not transferred, filed or recorded until after the Closing Date.

 

(f) All Escrow Payments, reserve funds and other comparable funds in the possession of the Seller (or under its control) with respect to the Assets shall be delivered by the Seller to the Purchaser on the Closing Date.

 

  

2

  

 

(g) Through the Closing Date, the Seller shall assume all risk of loss to the Mortgaged Properties and other Collateral Security.  From and after the Closing Date, the Purchaser will assume all risk of loss to the Mortgaged Properties and other Collateral Security.

 

(h) The Seller’s records will reflect the transfer of Assets to a Purchaser as a sale.

 

(i) Notwithstanding the foregoing or anything in this Purchase Agreement to the contrary, the Assets shall not include, and Seller shall retain sole responsibility for and shall pay, perform and discharge when due any and all obligations under existing letters of credit issued for the account of any Obligor on any Loan, whether such letters of credit were issued by Seller or Seller’s predecessors-in-interest (the “Letter of Credit Obligations”); provided that all obligations of any Obligor to pay or reimburse Seller for draws on any such letters of credit shall be included in the Assets, and Seller shall take all actions necessary to cause such payment or reimbursement obligations of such Obligors to be assigned and transferred to Purchaser, including the endorsement of any promissory note evidencing such payment or reimbursement obligation on or within five (5) Business Days after the Closing.  Within ten (10) Business Days written notice to Purchaser that Seller has funded a properly presented draw on any Letter of Credit Obligation, and provided that Seller has funded such draw in accordance with, and only as required by, the terms of the Loan Documents and the requirements of any such letter of credit, Purchaser shall deliver to Seller by wire transfer of immediately available funds to an account specified in writing by Seller, an amount equal to the amount funded by Seller with respect to such draw on such letter of credit.  Seller agrees to renew and permit to remain outstanding each such letter of credit unless Purchaser, by written notice to Seller, advises Seller at least five (5) Business Days prior to the then effective expiration date (assuming no renewal thereof prior to such expiration date) that Purchaser will no longer reimburse Seller for any draws on such letter of credit after the then effective expiration date (assuming no renewal thereof prior to such expiration date).

 

(j) Notwithstanding the foregoing or anything in this Purchase Agreement to the contrary, the Assets shall include, and Purchaser shall have sole responsibility for and shall pay, perform and discharge when due, with respect to any Loan, the commitments to make loan advances with respect to the Loans listed on Schedule 2(j)  after the Cut-off Date (collectively, the “Funding Obligations”); provided, that, Purchaser’s sole obligation with respect to any such advances made by Seller prior to the Closing Date shall be to reimburse Seller for 30.72% of such advances.  After the Closing Date, within ten (10) Business Days after written notice to Seller that Purchaser has funded a properly presented request for an advance on any Funding Obligation that currently exist, and provided that Purchaser has funded such request in accordance with, and only as required by, the terms of the Loan Documents, Seller shall deliver to Purchaser by wire transfer of immediately available funds to an account specified in writing by Purchaser, an amount equal to 69.28% of the amount funded by Purchaser with respect to such request for advance.  For the avoidance of doubt, the Seller shall have no obligation hereunder or otherwise with respect to any advance made by Seller following a renewal or extension of any Loan.

 

SECTION 3. Reserved.

 

SECTION 4. Representations, Warranties and Covenants of the Seller.

 

(a) The Seller hereby makes, as of the date hereof and the Closing Date (or as of such other date specifically provided in the particular representation or warranty), to and for the benefit of the Purchaser, and its successors and assigns, each of the representations and warranties set forth in Exhibits C-1 and C-2.

 

(b) In addition, the Seller, as of the Closing Date, hereby represents and warrants to, and covenants with, the Purchaser that:

 

  

3

  

 

(i) The Seller is duly incorporated and is validly existing in good standing as a state chartered bank under the laws of the State of Georgia.  The Seller is in compliance with the laws of each state in which any Assets are located to the extent necessary to perform its obligations under this Purchase Agreement.

 

(ii) The execution, delivery and performance of this Purchase Agreement have been duly authorized by all requisite corporate action and no further consent or authorization of the Seller, its Board of Directors or sole stockholder is required.

 

(iii) The Seller has full banking power and authority to (A) own and operate its properties and assets and execute and deliver this Purchase Agreement and the Bill of Sale, (B) perform its obligations hereunder and (C) carry on its business as presently conducted and as presently proposed to be conducted.  The Seller and its subsidiaries are duly licensed, qualified and authorized to do business and are in good standing in all jurisdictions in which the nature of their activities and of their properties (both owned and leased) makes such licensing, qualification or authorization necessary, except  for any jurisdiction where the failure to be so licensed, qualified or authorized would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

 

(iv) This Purchase Agreement has been duly executed and delivered by the Seller, and when this Purchase Agreement is duly authorized, executed and delivered by the Purchaser, will be a valid and binding agreement enforceable against the Seller in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity.

 

(v) Neither the execution and delivery by the Seller of this Purchase Agreement nor the performance by the Seller of any of its obligations hereunder violates, conflicts with, results in a breach of, or constitutes a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) or creates any rights in respect of any Person under (A) the articles of incorporation or bylaws (or other comparable documents) of the Seller or any of its Affiliates, (B) any decree, judgment, order, law, treaty, rule, regulation or determination of any court, governmental agency or body, or arbitrator having jurisdiction over the Seller or any of its Affiliates or any of their respective properties or assets, or (C) the terms of any bond, debenture, indenture, credit agreement, note or any other evidence of indebtedness, or any other similar plan, lease, mortgage, deed of trust or other instrument to which the Seller or any of its Affiliates is a party, by which the Seller or any of its Affiliates is bound, or to which any of the properties or assets of the Seller or any of its Affiliates is subject.

 

(vi) There is no pending or, to the Knowledge of the Seller, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Seller or any of its Affiliates that would affect the execution by the Seller of, or the performance by the Seller of any of its obligations under, this Purchase Agreement.

 

(vii) No consent, approval, authorization or order of any court, governmental agency or other body is required for execution and delivery by the Seller of this Purchase Agreement or any Bill of Sale or the performance by the Seller of any of its obligations hereunder.  No registration or filing with, or notice to, any governmental authority or court is required, under federal or state law (including, with respect to any bulk sale laws), for the execution delivery and performance of or compliance by the Seller with this Purchase Agreement or the consummation by the Seller of any transaction contemplated hereby, other than (1) the filing or recording of financing statements, instruments of assignment and other similar documents necessary in connection with the Seller’s sale of the Assets to the Purchaser, and (2) such consents, approvals, authorizations, qualifications, registrations, filings or notices as have been obtained or made.

 

  

4

  

 

(viii) If a third party (other than an Obligor of the related Loan), including a potential purchaser of the Assets, inquires, the Seller will promptly indicate that the Assets have been sold to a third party and the Seller will not claim any ownership interest in the Assets.

 

(ix) The Seller’s records (including for purposes of GAAP) will reflect the transfer of the Assets to the Purchaser as a sale.

 

(x) Promptly after Closing and in any event within ten (10) days after the Closing Date, the Seller shall deliver to each Obligor of such Asset (except that no such notice shall be given to an Obligor with respect to such Obligor’s Subject Residential Mortgage Loan; it being understood that if a Person that is an individual is an Obligor on a Loan other than a Subject Residential Mortgage Loan and an Obligor on a Subject Residential Mortgage Loan, Seller shall deliver such notice with respect to the Loans that are not Subject Residential Mortgage Loans but shall not deliver such notice to such Obligor with respect to the Subject Residential Mortgage Loan) an executed notice letter in the form attached hereto as Exhibit E-1 printed on the letterhead of the Seller and addressed to each such Obligor.  At least 15 days prior to the transfer of servicing by Seller of any Subject Residential Mortgage Loan and otherwise in accordance with applicable law, the Seller shall deliver to the Obligors on such Subject Residential Mortgage Loan an executed notice letter in the form attached hereto as Exhibit E-2 printed on the letterhead of the Seller and addressed to each such Obligor.

 

(xi) There are no receiverships with respect to Seller or with respect to any substantial part of Seller’s property and none of the Assets include any real estate owned by Seller or any of its Affiliates.  Immediately after giving effect to the consummation of the transactions contemplated hereby, (a) the fair value of the property of Seller is greater than the total amount of liabilities, including contingent liabilities, of Seller, (b) Seller does not intend to, and does not believe that it will, incur debts or liabilities beyond Seller’s ability to pay such debts and liabilities as they mature, (c) Seller is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which Seller’s property would constitute an unreasonably small capital, and (d) Seller is able to pay its debts and liabilities, contingent obligations and other commitments as they mature or arise in the ordinary course of business.

 

(xii) Neither the FDIC nor any other regulatory authority has issued a directive preventing the Closing contemplated by this Purchase Agreement.

 

(xiii) During the Interim Period, Seller has:

 

(a) serviced the Assets in accordance with the terms of the Loan Documents and all applicable federal, state and local laws, and in furtherance of and to the extent consistent with such terms and laws, in accordance with the same care, skill, prudence and diligence which it uses for other similar assets in its portfolio;

 

(b) Not, except as reflected in the Loan Files, (i) modified, solicited or discussed the modification of,  any Loan (including, without limitation, a release of any collateral or any party from liability on or with respect to any Loan), (ii) forgiven, or discussed the forgiveness of, principal in respect of  any Loan, (iii) solicited, discussed or accepted a deed-in-lieu of foreclosure with respect to  any Loan, (iv) solicited, discussed or conducted any short sale in respect of the Mortgaged Property, (v) commenced any foreclosure with respect to  any Loan or bankruptcy proceeding against the related Borrower, (vi) settled or compromised any condemnation or insurance claim or proceeding in respect of  any Loan, (vii) settled or compromised, or make any offers to settle or compromise, any existing litigation or other proceedings in respect of  any Loan, or (viii) taken any action to materially impair any interest of a Purchaser in any Loan; and

 

  

5

  

 

(c) should a Note relating to any Loan contain provisions for the adjustment of the interest rate and/or installment payments payable thereunder which require notice from the Seller in order to be effective, to the extent required by the terms of such Note or applicable law, on or before the Closing Date, notified, in writing, each Borrower under the Loans of any such adjustment scheduled to occur on or before the Closing Date and Seller shall deliver to Purchaser, at the Closing, evidence that Seller provided any such notifications in connection with the Loans.

 

(xiv)           The information set forth on the Asset List attached as Schedule 1 to the Bill of Sale is true and correct in all material respects.  In addition, the amount set forth on the Asset List attached as Schedule 1 of the Bill of Sale with respect to Delinquent Property Taxes, Escrow Payments, reserve funds, deposits and other comparable funds in the possession of the Seller (or under its control) with respect to each of the Assets is true and correct in all respects.  Seller is not in possession of any Escrow Payments, reserve funds or other comparable funds with respect to the Assets.

 

(xv)           At all times from and after January 1, 2011, Seller is and has been the sole servicer of the Assets.

 

(xvi)           As of the Closing Date, no Obligor has the right, pursuant to any Note or other Loan Document, to obtain additional loans from the Seller or to cause the Seller to extend additional credit in the form of a letter of credit or otherwise and except for the letters of credit set forth on Schedule 1 of the Bill of Sale,  if any, Seller is not the issuer of any letter of credit for the account of any Obligor.

 

SECTION 5. Representations, Warranties and Covenants of the Purchaser.

 

The Purchaser, as of the Closing Date, hereby represents and warrants to the Seller that:

 

(a) The Purchaser has been duly incorporated and is validly existing and in good standing under the laws of the state where it was organized or formed.  The Purchaser is in compliance with the laws of each state in which any Assets are located to the extent necessary to perform their obligations under this Purchase Agreement.

 

(b) The Purchaser has full power and authority to (A) own and operate its properties and assets and execute and deliver this Purchase Agreement and the Bill of Sale, (B) perform their obligations hereunder and (C) carry on their business as presently conducted and as presently proposed to be conducted.  The Purchaser and its subsidiaries are duly licensed, qualified and authorized to do business and are in good standing in all jurisdictions in which the nature of their activities and of their properties (both owned and leased) makes such licensing, qualification or authorization necessary, except for any jurisdiction where the failure to be so licensed, qualified or authorized would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

 

  

6

  

 

(c) This Purchase Agreement has been duly executed and delivered by Purchaser, and when this Purchase Agreement is duly authorized, executed and delivered by the Purchaser, will be a valid and binding agreement enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity.

 

(d) Neither the execution and delivery by the Purchaser of this Purchase Agreement nor the performance by the Purchaser of any of their obligations hereunder violates, conflicts with, results in a breach of, or constitutes a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) or creates any rights in respect of any Person under (A) the articles of incorporation or bylaws (or other comparable documents) of the Purchaser or any of their Affiliates, (B) any decree, judgment, order, law, treaty, rule, regulation or determination of any court, governmental agency or body, or arbitrator having jurisdiction over the Purchaser or any of its Affiliates or any of their respective properties or assets, or (C) the terms of any bond, debenture, indenture, credit agreement, note or any other evidence of indebtedness, or any other similar plan, lease, mortgage, deed of trust or other instrument to which the Purchaser or any of its Affiliates is a party, by which the Purchaser or any of its Affiliates is bound, or to which any of the properties or assets of the Purchaser or any of its Affiliates is subject.

 

(e) There is no pending or, to the Knowledge of the Purchaser, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Purchaser or any of its Affiliates that would affect the execution by the Purchaser of, or the performance by the Purchaser of any of its obligations under, this Purchase Agreement.

 

(f) No consent, approval, authorization or order of any court, governmental agency or other body is required for execution and delivery by the Purchaser of this Purchase Agreement or any Bill of Sale or the performance by the Purchaser of any of its obligations hereunder.  No registration or filing with, or notice to, any governmental authority or court is required, under federal or state law (including, with respect to any bulk sale laws), for the execution delivery and performance of or compliance by the Purchaser with this Purchase Agreement or the consummation by the Purchaser of any transaction contemplated hereby, other than such consents, approvals, authorizations, qualifications, registrations, filings or notices as have been obtained or made.

 

(g)            Immediately after giving effect to the consummation of the transactions contemplated hereby, (a) the fair value of the property of Purchaser is greater than the total amount of liabilities, including contingent liabilities, of Purchaser, (b) Purchaser does not intend to, and does not believe that it will, incur debts or liabilities beyond Purchaser’s ability to pay such debts and liabilities as they mature, (c) Purchaser is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which Purchaser’s property would constitute an unreasonably small capital, and (d) Purchaser is able to pay its debts and liabilities, contingent obligations and other commitments as they mature or arise in the ordinary course of business

 

SECTION 6. Repurchase of Assets.  Pursuant to Section 12, a Purchaser may require that the Seller repurchase an Asset as a result of the breach by Seller of certain of its representations and warranties under this Purchase Agreement for an amount equal to the Repurchase Price for that Asset. The Seller and the Purchaser shall execute and deliver any and all such additional assignments, deeds, instruments of transfer and other documents as may be reasonably required in order to complete such repurchase, in each case, without recourse or representation of any kind by Purchaser.  Seller shall be responsible for, and shall pay when due and payable, all transfer, filing and recording fees and taxes, costs and expenses, and any state or county documentary taxes, if any, with respect to the filing or recording of any document or instrument contemplated hereby in connection with such repurchase.  In connection with any repurchase of assets contemplated by Section 12, the Seller and the Purchaser shall tender promptly or cause to be tendered promptly to the other party, the related Loan File.

 

  

7

  

 

SECTION 7. Payment of Purchase Price.  On the Closing Date and subject to adjustment pursuant to Section 10(b), Purchaser shall deliver to Seller an amount equal to the Estimated Purchase Price by wire transfer of immediately available funds to the account specified below:

 

Bank: United Community Bank

 

Address:            125 Highway 515 East

Blairsville, GA  30514

 

ABA No.:  

 

Account No.:  

 

Name:  United Community Bank

 

Attention:  

 

SECTION 8. Closing; Conditions Precedent.

 

(a) The Closing shall be held at the offices of Kilpatrick Townsend & Stockton LLP, 1100 Peachtree Street, Suite 2800, Atlanta, Georgia 30309 at 10:00 a.m., Atlanta, Georgia time, on the date hereof, or on such other date or in such other manner as shall be mutually agreed to in writing by the parties hereto.  On the Closing Date, the Seller and the Purchaser shall each execute and deliver the Bill of Sale.

 

(b) The Closing shall be subject to each of the following conditions precedent:

 

(i) All of the representations and warranties of each party specified herein shall be true and correct in all material respects as of the Closing Date;

 

(ii) All documents and opinions specified in Section 9 (the Closing Documents) shall be duly executed and delivered by all signatories as required pursuant to the respective terms thereof;

 

(iii) The Seller shall have delivered and released to the Purchaser or the Purchaser’s designee, as the case may be, all documents required to be so delivered pursuant to Section 2;

 

(iv) All other terms and conditions of this Purchase Agreement required to be complied with on or before the Closing Date shall have been complied with, and the Seller shall have the ability to comply with all terms and conditions and perform all duties and obligations required to be complied with or performed after the Closing Date;

 

(v) The payment of the Purchase Price in accordance with Section 7 of this Purchase Agreement shall have been received; and

 

(vi) The Purchaser shall be satisfied that all of the conditions precedent described above have been satisfied.

 

  

8

  

 

SECTION 9. Closing Documents.

 

 

The “Closing Documents” to be delivered on the Closing Date shall consist of the following:

 

(a) This Purchase Agreement duly executed and delivered by the Seller and Purchaser;

 

(b) A certificate of good standing from the Secretary of State of the State of Georgia with respect to the Seller;

 

(c) The Loan File for each Loan;

 

(d) Assignments of all Loan Documents, duly executed by the Seller, evidencing the assignment to Purchaser of all of the Seller’s right, title and interest therein, including without limitation, the following documents and instruments:

 

(i) An allonge or other endorsement of the promissory note relating to each Loan, reflecting the Purchaser as the owner and holder of such promissory note or as otherwise requested by Purchaser, executed in blank and with it being understood that the representations warranties, covenants and agreements set forth in the Purchase Agreement apply to such Loans regardless of whether any reference to the Purchase Agreement is included in such allonge or endorsement;

 

(ii) An assignment of the deed of trust, mortgage or other similar security instrument, in form and substance satisfactory to Purchaser and suitable for recording in the appropriate public records reflecting the Purchaser as the mortgagee or beneficiary thereunder;

 

(iii) An assignment of the assignment of leases and rents or other similar instrument, if any, in form and substance suitable for recording in the appropriate public records, reflecting the Purchaser as the assignee thereunder;

 

(iv) An omnibus assignment of all other Loan Documents and, if applicable, any personal property security agreements and control agreements to the Purchaser;

 

(v) All original stock certificates and related stock powers executed in blank and all original promissory notes and other instruments that are Collateral Security for any Loan and any other Collateral Security which is perfected by possession; and

 

(vi) Evidence of the delivery of the notices described in Section 4(b)(xiii)(c).

 

(e) A certificate of the Seller substantially in the form of Exhibit F hereto, executed by an executive officer or authorized signatory of the Seller and dated as of the Closing Date, and upon which the Purchaser may rely;

 

(f) A written Opinion of Counsel for the Seller, substantially in the form of Exhibit G (general corporate opinion) and subject to such reasonable assumptions and qualifications as may be requested by counsel for the Seller and acceptable to counsel for the Purchaser, dated as of the Closing Date and addressed to the Purchaser;

 

  

9

  

 

(g) Prior to the Closing Date, Seller shall have sent to Purchaser a written statement setting forth as of April 11, 2011 (i) the then current principal balance of each Loan, (ii) the amount of accrued and unpaid interest thereon, (iii) the interest rate applicable to each Loan, (iv) the balance of each of the funds held pursuant to Escrow Payments, reserve funds and other comparable funds in the possession of the Seller, and/or funds, (v) the balance of any certificates of deposit and other deposits that are Collateral Security, (vi) the amount of any advances made by Seller or servicer on the Borrower’s behalf after the Cut-off Date which have not been repaid as of the Closing Date, (vii) the “paid to” date, (viii) the amount of per diem interest accruing, and (ix) the amount of the regular principal and interest installment payment.  The foregoing information is hereinafter collectively referred to as the “Trial Balance Information”;

 

(h) A list setting forth all (i) foreclosure or receivership proceedings currently pending or in process  (ii) bankruptcy proceedings and other litigation of which Seller has been served with notice thereof, with respect to any of the Assets and the contact information for Seller’s counsel with respect to each such proceeding;

 

(i) With respect to any Loan that is cross-collateralized with or shares a common Obligor with a Retained Loan, an executed Subordination Agreement with respect to such Retained Loan; provided that, in the event any such Subordination Agreements are not executed and delivered at Closing, Seller will comply with the terms thereof as if such Subordination Agreements had been executed at Closing.

 

(j) An affidavit or other recordable document evidencing the merger of any prior holder of any Note or Loan with and into Seller; and

 

(k) Such other certificates and documents as the Purchaser may reasonably request.

 

SECTION 10. Post Closing.

 

(a) As soon as reasonably practicable after the Closing Date:

 

(i) Purchaser and the Seller shall (A) with respect to Assets in litigation (including foreclosure), to the extent necessary or advisable, file appropriate pleadings with the court that will substitute Purchaser’s attorney for Seller’s attorney, and remove Seller as a party to the litigation and substitute Purchaser as the real party in interest, and (B) with respect to Loans with respect to which the related Obligor is in bankruptcy, mail to each of the Seller’s bankruptcy attorney, the Seller’s foreclosure attorney, the Obligor’s attorney and the bankruptcy trustee a letter advising such attorneys and the bankruptcy trustee that the Seller has sold the Loan on the Closing Date to the Purchaser.

 

(ii) Each Purchaser and the Seller shall file or cause to be filed, as and when required by law, all IRS forms 1099, 1099A, 1098 or 1041 and K-1 in relation to the ownership of the Loans for the portion of such year the Loans were owned by the Seller.

 

  

10

  

 

(b) Not later than one hundred eighty (180) days after the Closing Date, the Purchaser shall deliver to the Seller a statement setting forth any corrections to the amount of the Purchase Price (as compared to the Estimated Purchaser Price), together with the documentation relating to such corrections (the “Proposed Correction Statement”).  If Purchaser does not receive a written objection from Seller to the Proposed Correction Statement within thirty (30) days after Seller’s receipt of the Proposed Correction Statement, the Proposed Correction Statement shall become the Correction Statement for all purposes under this Purchase Agreement.  If the Seller objects to the Proposed Correction Statement within such thirty (30) day period, then Seller and Purchaser shall use their reasonable, diligent and good faith efforts to attempt to resolve Seller’s objections to the Proposed Correction Statement during the thirty (30) day period following the receipt by Purchaser of Seller’s objection (the “Mediation Period”).  If the parties are unable to agree on a Correction Statement during the Mediation Period, then as soon as practicable after the expiration of the Mediation Period, but in any event within ten (10) Business Days thereof, the determination of the Correction Statement shall be submitted for determination by a firm of independent certified public accountants of nationally recognized standing and acceptable to Seller and Purchaser.  Not later than the tenth Business Day following the determination of the Correction Statement, Purchaser shall pay to Seller, in cash, the amount by which the Purchase Price as set forth in the Correction Statement exceeds the Estimated Purchase Price paid at Closing, or, in the alternative, Seller shall pay to Purchaser, in cash, the amount by which the Estimated Purchase Price paid at Closing exceeds the Purchase Price as set forth in the Correction Statement.

 

(c) At any time, and from time to time after the Closing Date, upon the reasonable request of a party hereto, and at the expense of such party, the other party shall do, execute, acknowledge and deliver, and shall cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required in order to (i) better assign, transfer, grant, convey, assure and confirm to Purchaser, and to collect any or all of the Loans or to effectuate the purpose and carry out the terms of this Purchase Agreement; and (ii) allow Purchaser to defend against Obligor allegations or factual statements that (A) relate to the period before the Closing Date and (B) materially and adversely impede, delay or otherwise affect Purchaser’s ability to pursue its remedies under the Loan Documents.

 

(d) At any time and from time to time, the Seller, at the request of the Purchaser, shall provide to the Purchaser, upon reasonable prior notice from the Purchaser, the information reasonably necessary to verify the legal balances of the Loans evidenced by the Notes and, at the Purchaser’s expense, provide to the Purchaser copies of the books, records and other information relating to the determination of such legal balances of the Loans evidenced by the Notes.

 

(e) The Seller agrees that all cash collateral accounts, deposit accounts, securities accounts, investment property, certificates of deposit or other instruments which are maintained by any Obligor and pledged as Collateral Security with respect to any Loan will continue to be maintained by the Seller and promptly after Closing, but in any event within 10 days after the Closing Date, (i) the Seller will execute, and use commercially reasonable efforts to cause the owner and holder of each such deposit account, security account, investment property, certificate of deposit and instrument to execute, such documents as are necessary to perfect, or continue the perfection of, the security interest of the Purchaser in such deposit accounts, certificates of deposit or instruments, including, without limitation, a deposit account control agreement or other agreement in form acceptable to the Seller and the Purchaser; provided that Seller shall not be required to cause any Obligor to re-execute any agreements relating to deposit accounts, securities accounts, investment property or certificates of deposit which are already subject to an existing assignment agreement or other agreement, executed by the applicable owner or holder thereof and the Seller as depository bank, securities intermediary or secured party to the extent Purchaser, in its reasonable discretion, determines such existing agreement constitutes a “control agreement” for purposes of perfection of Seller’s lien in such Collateral Security which has been assigned pursuant to the omnibus assignment referenced in Section 9(d)(iv), and (ii) the Seller will take all actions reasonably necessary to maintain and continue the perfection of such security interest or lien in any such Collateral Security that may be perfected by notation on a certificate of title or other document for the benefit of Purchaser.

 

  

11

  

 

(f) Promptly upon the receipt thereof and in any event not later than three (3) Business Days after the receipt thereof, the Seller, at its expense, shall pay to the Purchaser any Collection received by the Seller after the Cut-Off Date (and including after the Closing Date) by deposit of such payments to the Collections Account or deliver such Collection to the Purchaser in the form received together with any necessary endorsement.

 

(g) In connection with the transfer of the servicing of the Assets, Seller and Purchaser each agree to cooperate in good faith with respect to such transfer and Seller agrees to promptly upon the receipt thereof, and in any event not later than five (5) days after the receipt thereof, at Seller’s expense, shall deliver to Purchaser, in the form received, any notices or other information concerning the Assets received or discovered by Seller on or after the Closing Date with respect to any Assets.

 

(h) Seller shall use its commercially reasonable efforts to cooperate with the Purchaser and its servicer in effecting the termination of Seller’s responsibilities and rights with respect to the Loans and to ensure a smooth transition of the Loans and the servicing responsibilities with respect to the Loans, including, without limitation, providing the Purchaser and its servicer all documents and records in its possession in electronic or other form requested by the Purchaser or such servicer to enable the Purchaser or such servicer to assume the Seller’s functions with respect to the Loans.

 

(i) Within ten (10) days after the Closing Date, Seller shall instruct each attorney engaged by Seller in connection with the Assets, to send all invoices to Seller, for fees, expenses and disbursements incurred through the Closing Date and payment of such invoices shall be the sole and exclusive obligation of Seller and Purchaser shall have no obligation for payment of such invoices.

 

(j)           In the event any Loan is cross-collateralized with or shares a common Obligor with a commercial loan, consumer loan, commercial mortgage loan or residential mortgage loan held by Seller or any of its Affiliates that is not included in the Assets, upon request from Purchaser, and in any event within ten (10) days of such request, Seller shall or shall cause its Affiliate, as applicable to execute and deliver a Subordination Agreement with respect to such loan held by Seller or such Affiliate, as the case may be.

 

SECTION 11. Other Expenses.  Each party will pay its own expenses (including the fees and expenses of its attorneys) in connection with the negotiations for, documenting of and closing of the transactions contemplated by this Purchase Agreement.

 

SECTION 12. Indemnification.

 

(a) The Seller shall indemnify and hold harmless Purchaser, its Affiliates and their respective successors and assigns and each of their respective directors, officers, partners, employees, agents and representatives (collectively, the “Purchaser Indemnified Parties”) from and against any and all Damages to the extent relating to, resulting from or arising out of:

 

(i) the acts or omissions of the Seller or any of its predecessors or any assignors of any Note or Loan during Seller’s or such predecessors’ or assignors’ ownership, management or servicing of any of the Loans on or prior to the Closing Date;

 

(ii) any breach of or failure by the Seller to perform any covenant or obligation set forth in this Purchase Agreement;

 

(iii) any breach of any warranty or representation made by the Seller in this Purchase Agreement;

 

  

12

  

 

(iv) the Letter of Credit Obligations; and

 

(v) the Purchaser’s first priority security interest in any certificate of deposit and other deposits or deposit accounts that are Collateral Security not being perfected for any reason.

 

(b) The Seller shall not have any indemnification obligation under Section 12(a)(iii), unless and until the aggregate amount of Damages incurred by the Purchaser Indemnified Parties in respect of such matters exceeds $100,000, whereupon the Purchaser Indemnified Parties shall be entitled to recover all such Damages from the Seller from the first dollar thereof; provided, however, that such $100,000 threshold shall not apply to any breach by Seller of the Excluded Threshold Representations.  Seller shall not be liable under Section 12(a)(i) for aggregate Damages in excess of $25,000,000.  Seller shall not be liable for breaches of representations and warranties with respect to Section 4(a) and any warranty and representation set forth in Exhibit C-1 and C-2 (excluding breaches of Excluded Cap Representations) for aggregate Damages in excess of $10,000,000.  With respect to any Asset, Seller shall not be liable for breaches of Excluded Cap Representations with respect to such Asset for aggregate Damages in excess of the Repurchase Price with respect to such Asset.  For purposes of determining the aggregate amount of Damages suffered by a Purchaser Indemnified Party, each representation and warranty contained in this Purchase Agreement and the Exhibits to this Purchase Agreement for which indemnification can be or is sought hereunder shall be read without regard to materiality qualifications that may be contained herein and therein.

 

(c) With respect to any breach of any representations or warranties in paragraph 11 of Exhibits C-1 and C-2 of this Purchase Agreement with respect to any Asset(s), the Purchaser may give written notice to the Seller of such breach, and the Seller shall have the right to cure such breach to the reasonable satisfaction of Purchaser during a period of sixty (60) days after receipt of such notice, and in the event the Seller fails to cure such breach to the reasonable satisfaction of Purchaser within such sixty (60) day period, the Seller shall repurchase such Asset(s) at the Repurchase Price (such repurchase to be as-is and without any recourse or representation of any kind by Purchaser, and Seller shall be responsible for and pay when due and payable, all transfer, filing and recording fees and taxes, costs and expenses and any state or county documentary taxes, if any, arising out of or in connection with each such repurchase).

 

(d) With respect to any breach of any representations or warranties in paragraph 31 of Exhibit C-2 with respect to any Subject Residential Mortgage Loans, the Purchaser shall give written notice to the Seller of such breach within fifteen (15) days after the Closing Date or, if applicable, within fifteen (15) days of the determination after the Closing Date that any other Loan is a Subject Residential Mortgage Loan and the Seller shall have the right to cure such breach to the reasonable satisfaction of Purchaser during a period of twenty (20) days after receipt of such notice, and in the event the Seller fails to cure such breach to the reasonable satisfaction of Purchaser within such twenty (20) day period, the Seller shall repurchase such Asset(s) at the Repurchase Price (such repurchase to be as-is and without any recourse or representation of any kind by Purchaser, and Seller shall be responsible for and pay when due and payable, all transfer, filing and recording fees and taxes, costs and expenses and any state or county documentary taxes, if any, arising out of or in connection with each such repurchase).  For the avoidance of doubt, the representation and warranty set forth in paragraph 31 of Exhibit C-2 shall survive for only fifteen (15) days after the Closing Date with respect to the Subject Residential Mortgage Loans listed on Exhibit A on the Closing Date and for fifteen (15) days after the determination after the Closing Date that any other Loan is a Subject Residential Mortgage Loan and Seller shall have no obligation or liability with respect to any breach of paragraph 31 of Exhibit C-2 unless notice of such breach is delivered to Seller by Purchaser within the fifteen (15) day period applicable thereto.

 

  

13

  

 

(e) With respect to any breach of any representations or warranties in paragraph 14 of Exhibit C-1 or paragraph 16 of Exhibit  C-2 of this Purchase Agreement with respect to any Asset(s), upon becoming aware of such breach, the Purchaser shall give written notice to the Seller of such breach together with reasonably satisfactory evidence of such Delinquent Property Taxes, and the Seller shall, within ten (10) Business Days of delivery of such notice, pay such Delinquent Property Taxes to the appropriate taxing authority and provide reasonably satisfactory evidence of such payment or, at Purchaser’s election pay to Purchaser an amount equal to such Delinquent Property Taxes.

 

(f) The Purchaser shall indemnify and hold harmless Seller, its Affiliates and their respective successors and assigns and each of their respective directors, officers, partners, employees, agents and representatives (collectively, the “Seller Indemnified Parties”) from and against any and all Damages to the extent relating to, resulting from or arising out of:

 

(i) the acts or omissions of the Purchaser or any of its successors by merger or other operation of law (other than assignment) during its or its successors ownership, management or servicing of any of the Loans after the Closing Date;

 

(ii) any breach of or failure by the Purchaser to perform any covenant or obligation set forth in this Purchase Agreement; and

 

(iii) any breach of any warranty or representation made by the Purchaser in this Purchase Agreement, including any representations and warranties set forth in Section 5.

 

(g) The Purchaser shall not have any indemnification obligation under Section 12(f)(iii), unless and until the aggregate amount of Damages incurred by the Seller Indemnified Parties in respect of such matters exceeds $100,000, whereupon the Seller Indemnified Parties shall be entitled to recover all such Damages from the Purchaser from the first dollar thereof.  Seller shall not be liable under Section 12(f)(i) for aggregate Damages in excess of $25,000,000.  For purposes of determining the aggregate amount of Damages suffered by a Seller Indemnified Party, each representation and warranty contained in this Purchase Agreement and the Exhibits to this Purchase Agreement for which indemnification can be or is sought hereunder shall be read without regard to materiality qualifications that may be contained herein and therein.

 

(h) Conduct of Third Party Claims.

 

(i) Whenever a claim for indemnification shall arise under this Section 12 as a result of a third-party claim, the party seeking indemnification (the “Indemnified Party”), shall notify the party from whom such indemnification is sought (the “Indemnifying Party”) in writing of the claim and the facts constituting the basis for such claim in reasonable detail and the amount thereof, to the extent known, along with copies of the relevant documents evidencing the claim and the basis for indemnification sought; provided that the failure to notify the Indemnifying Party will not relieve the Indemnifying Party of any liability that it may have to any Indemnified Party, except if and to the extent that the Indemnifying Party demonstrates that the defense of such claim is actually prejudiced by the Indemnified Party’s failure to give such notice and in such case, only to the extent of such prejudice.  Thereafter, the Indemnified Party shall deliver to the Indemnifying Party copies of all notices and documents (including court papers) received by the Indemnified Party relating to the claim.

 

  

14

  

 

(ii) Such Indemnifying Party shall have the right to retain the counsel of its choice in connection with such claim and to participate at its own expense in the defense of any such claim; provided, however, that counsel to the Indemnifying Party shall not (except with the consent of the relevant Indemnified Party) also be counsel to such Indemnified Party.  In no event shall the Indemnifying Party be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from its own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.

 

(iii) No Indemnifying Party shall, without the prior written consent of the Indemnified Parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification could be sought under this Section 12 unless such settlement, compromise or consent (A) includes an unconditional release of each Indemnified Party from all liability arising out of such litigation, investigation, proceeding or claim, and (B) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

 

SECTION 13. Notices.  All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered to or mailed, by certified mail, postage prepaid, by overnight mail or courier service, or transmitted by facsimile and confirmed by a similar mailed writing as follows:

 

If to Purchaser, to  such address or facsimile number as may now hereafter be furnished to the Seller in writing by Purchaser.

If to the Seller, to:

United Community Bank

125 Highway 515 East

Blairsville, GA 30514

Attn:  David Shearrow

Telephone:  (706) 781-2265

Fax:  (706) 781-6713

with a copy to:

Kilpatrick Townsend & Stockton LLP

1100 Peachtree Street

Suite 2800

Atlanta, GA  30309

Attn:  James W. Stevens

Telephone:  (404) 815-6500

Fax:  (404) 541-3400

 

or to such other address or facsimile number as the Seller may designate in writing to Purchaser.

 

  

15

  

 

 

SECTION 14. Representations, Warranties and Agreements to Survive Delivery.  Except for the Excluded Cap Representations, the representations and warranties set forth in paragraph 12 and 31 of Exhibit C-1, the representations and warranties set forth in paragraph 14 and 31 of Exhibit C-2, the representations and warranties set forth in Section 4(b) (other than Sections 4(b)(viii)-(x) and (xiii), (xiv) (except for the specific items on the Asset List included in Excluded Cap Representations), (xv) and (xvi)), and Section 5, all representations and warranties contained in this Purchase Agreement, incorporated herein by reference or contained in the certificates of officers of the Seller submitted pursuant hereto, shall remain operative and in full force and effect and shall survive delivery of the Assets by the Seller to the Purchaser or its designee for a period of eighteen (18) months.  The representations and warranties set forth in the Excluded Cap Representations, the representations and warranties set forth in paragraph 12 and 31 of Exhibit C-1, the representations and warranties set forth in paragraph 14 of Exhibit C-2, the representations and warranties set forth in Section 4(b) (other than Section 4(b)(viii)-(x) and (xiii), (xiv) (except for the specific items on the Asset List included in Excluded Cap Representations), (xv) and (xvi)) and Section 5, and the agreements and covenants set forth in this Purchase Agreement shall remain operative and in full force and effect and shall survive delivery of the Assets by the Seller to the Purchaser or its designee until the expiration of the statute of limitations applicable thereto.  Notwithstanding anything to the contrary in Section 12 or this Section 14, the obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the Person to be indemnified shall have, before the expiration of the applicable survival period, previously made a claim by delivering a written notice (stating in reasonable detail the basis of such claim) to the Indemnifying Party and such claim may be pursued and shall survive the expiration of the survival period until finally resolved.  For the avoidance of doubt, regardless of the termination of the survival period with respect to the representations and warranties set forth in Section 4(b)(xiv), the obligations of Seller with respect to Delinquent Property Taxes pursuant to Section 12(e) and the specific items on the Asset List included in Excluded Cap Representations shall survive until the expiration of the statute of limitations applicable thereto.

 

SECTION 15. Severability of Provisions.  Any part, provision, representation, warranty or covenant of this Purchase Agreement that is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.  Any part, provision, representation, warranty or covenant of this Purchase Agreement that is prohibited or unenforceable or is held to be void or unenforceable in any particular jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereto waive any provision of law which prohibits or renders void or unenforceable any provision hereof.

 

SECTION 16. Rights Cumulative; Waivers.  The rights of each of the parties under this Purchase Agreement are cumulative and may be exercised as often as any party considers appropriate.  The rights of each of the parties hereunder shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing.  Any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right.

 

SECTION 17. Headings.  The headings of the Sections contained in this Purchase Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Purchase Agreement or any provision hereof.

 

SECTION 18. Counterparts.  The parties may execute and deliver this Purchase Agreement as a single document or in any number of counterparts, manually, by facsimile or by other electronic means, including contemporaneous xerographic or electronic reproduction by each party’s respective attorneys.  Each counterpart shall be an original, but a single document or all counterparts together shall constitute one instrument that shall be the agreement.

 

SECTION 19. Entire Agreement.  This Purchase Agreement (along with the appendices, exhibits, schedules and other documents delivered pursuant to this Purchase Agreement) constitutes the entire agreement among the parties with respect to the subject matter of this Purchase Agreement and supersede all prior agreements, representations and understandings related to such subject matters.

 

  

16

  

 

SECTION 20. GOVERNING LAW.  THIS PURCHASE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPALS THEREOF, AND EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK CITY AND ANY COURT HEARING ANY APPEAL THEREFROM, OVER ANY SUIT, ACTION OR PROCEEDING AGAINST IT ARISING OUT OF OR BASED UPON THIS PURCHASE AGREEMENT (A “RELATED PROCEEDING”).  EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION TO ANY RELATED PROCEEDING IN SUCH COURTS WHETHER ON THE GROUNDS OF VENUE, RESIDENCE OR DOMICILE OR ON THE GROUND THAT THE RELATED PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

SECTION 21. WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS PURCHASE AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS PURCHASE AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

SECTION 22. Further Assurances.  The Seller and the Purchasers agree to execute and deliver such instruments and take such further actions as the other party may, from time to time, reasonably request in order to effectuate the purposes and to carry out the terms of this Purchase Agreement.

 

SECTION 23. Successors and Assigns.  This Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and, with respect to Section 12, will inure to the benefit of their respective officers, directors, employees, consultants, agents, attorneys, accountants and Affiliates and no other Person will have any right or obligation hereunder.  The rights and obligations of the Seller and a Purchaser under this Purchase Agreement shall not be assigned by either such party without the prior written consent of the other such party, which consent shall not be unreasonably withheld, conditioned or delayed, except that (a) any Person into which the Seller may be merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Seller is a party, or any Person succeeding to all or substantially all of the business of the Seller, shall be the successor to the Seller hereunder and (b) any Person into which a Purchaser may be merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which such Purchaser is a party, or any Person succeeding to all or substantially all of the business of such Purchaser, shall be the successor to such Purchaser hereunder.  Notwithstanding the foregoing, Purchaser may assign its rights and obligations under this Purchase Agreement to one or more Affiliates, in which event the assignor shall no longer have any rights, benefits, obligation, duties or liabilities with respect to this Purchase Agreement, except for the assigning Purchaser’s indemnity set forth in Section 12 with respect to the acts and omissions of such assigning Purchaser prior to such assignment which shall survive such assignment and the assignee shall be deemed to have assumed, and have the benefit of, all of such assignors rights, benefits, obligations, duties and liabilities under this Purchase Agreement.  Except as provided in this Section 23, this Purchase Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

 

  

17

  

 

SECTION 24. Reports of the Seller.  The Seller shall cooperate with and, upon request, provide to the Purchaser or to the then current owner such information as may be reasonably necessary to prepare or cause to be prepared any tax returns that may be required by applicable federal, state and local law.

 

SECTION 25. Confidentiality.  Prior to consummation of all of the transactions contemplated by this Purchase Agreement, the parties to this Purchase Agreement will provide one another with information which may be deemed by the party providing the information to be confidential.  Each party agrees that it will hold confidential and protect all information provided to it by the other party to this Purchase Agreement or such party’s Affiliates, except that the obligations contained in this Section 25 shall not in any way restrict the rights of any party or person to use information that:  (a) was known to such party prior to the disclosure by the other party; (b) is or becomes generally available to the public other than by breach of this Purchase Agreement; or (c) otherwise becomes lawfully available to a party to this Purchase Agreement on a non-confidential basis from a third party who is not under an obligation of confidence to the other party to this Purchase Agreement.  If this Purchase Agreement is terminated, upon request each party hereto agrees to return or destroy all documents, statements and other written materials, whether or not confidential, and all copies thereof, provided to it by or on behalf of the other party to this Purchase Agreement.  The provisions of this Section 25 shall survive until the later to occur of (i) one (1) year after final Closing or earlier termination of this Purchase Agreement, of this Purchase Agreement, and, without limiting the remedies of the parties hereto in the event of any breach of this Section 25, the parties hereto will be entitled to seek injunctive relief against the other party in the event of a breach or threatened breach of this Section 25.  Notwithstanding the foregoing, in the event that Purchaser engages in subsequent transactions involving a transfer of the Assets, Purchaser shall be entitled to share such information with prospective purchasers pursuant to a confidentiality agreement that is consistent with this Section 25.

 

SECTION 26. Press Releases; Filing.  Prior to the Closing, the parties to this Purchase Agreement shall each approve, in its sole and exclusive discretion, the form and substance of any press release or other public filing or disclosure materially related to this Purchase Agreement or any other transaction contemplated hereby; provided, however, that nothing in this Section 26 shall be deemed to prohibit any party from making any disclosure which its counsel deems necessary or advisable in order to satisfy such party’s disclosure obligations imposed by law.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

18

  

 

IN WITNESS WHEREOF, the Seller and Purchaser have caused their names to be signed hereto by their respective duly authorized officers as of the date first above written.

 

UNITED COMMUNITY BANK, a bank organized under the laws of the State of Georgia, as Seller

By: _/s/ Rex S. Schuette                                                                

Name:  Rex S. Schuette

Title:  Executive Vice President

CF SOUTHEAST LLC, a Delaware limited liability company,

as Purchaser

By: _/s/ Constantine M. Dakolias                                                      

Name:  Constantine M. Dakolias

Title:  President

CF SOUTHEAST TRUST 2011-1, a Delaware statutory trust

as Purchaser

By: _/s/ Constantine M. Dakolias                                                      

Name:  Constantine M. Dakolias

Title:  Administrator

 

 

[Signature Page to Asset Purchase and Sale Agreement]

 

  

19

  

 

Appendix A

 

 

USAGE AND SUPPLEMENTAL DEFINITIONS

 

 

Usage

 

 

The following rules of construction and usage apply to this Appendix, any agreement that incorporates this Appendix and any document made or delivered pursuant to any such agreement:

 

 

(a) The term “documents” includes any and all documents, agreements, instruments, certificates, notices, reports, statements or other writings however evidenced, whether in electronic or physical form.

 

 

(b) Accounting terms not defined or not completely defined in this Appendix will be construed in conformity with U.S. generally accepted accounting principles (“GAAP”) as in effect on the date of the document that incorporates this Appendix.

 

 

(c) References to “Section,” “Exhibit,” “Schedule” or another subdivision of or to an attachment are, unless otherwise specified, to an article, section, exhibit, schedule or subdivision of or an attachment to the document in which such reference appears.

 

 

(d) Any document defined or referred to in this Appendix or in any document that incorporates this Appendix means such document as from time to time amended, modified, supplemented or replaced, including by waiver or consent, and includes all attachments to and instruments incorporated in such document.

 

 

(e) Any statute defined or referred to in this Appendix or in any document that incorporates this Appendix means such statute as from time to time amended, modified, supplemented or replaced, including by succession of comparable successor statutes, and includes any rules and regulations promulgated under such statute and any judicial and administrative interpretations of such statute.

 

 

(f) Calculation of any amount on or as of any date will be determined at or as of the close of business on such day after the application of any monies, payments and other transactions to be applied on such day.

 

 

(g) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the word “to” means “to but excluding” and the word “through” means “to and including.”

 

 

(h) All terms defined in this Appendix apply to the singular and plural forms of such terms and the term “including” means “including without limitation.”

 

 

(i) Except as otherwise specified, references to a Person are also to its permitted successors and assigns.

 

 

(j) The appendices, schedules and exhibits to the Purchase Agreement shall be incorporated in and deemed part of the Purchase Agreement and all references to the Purchase Agreement shall include the appendices, schedules and exhibits to the Purchase Agreement.

 

 

  

Appendix A-1

  

 

Supplemental Definitions

 

 

Whenever used herein, the following words and phrases, unless the content otherwise requires, have the following meanings:

 

 

“Acceptable Insurer”: An insurance company which has a claims-paying ability rated at least “A-” by Fitch, Inc., at least “A2” by Moody’s Investors Service, Inc. or at least “A” by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

 

“Account”:  With respect to any Loan, any cash collateral account, escrow account or reserve account or similar account established pursuant to the related Mortgage or other Loan Document.

 

 

“Affiliate”:  With respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or under common control or ownership with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, relation to individuals or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

 

“Allocated Purchase Price”:  With respect to each Asset, the portion of the Purchase Price allocated by the Purchaser of such Asset to such Asset as set forth on a Purchase Price Allocation Schedule delivered by such Purchaser to Seller no later than (i) with respect to any Loan other than a Subject Residential Mortgage Loan, thirty (30) days after the Closing Date; provided that the Allocated Purchase Price for any such Loan shall not exceed eighty percent (80%) of the Unpaid Principal Balance of such Asset and (ii) with respect to any Subject Residential Mortgage Loan, ten (10) days after the Closing Date; provided that the Allocated Purchase Price for any Subject Residential Mortgage Loan shall not exceed eighty percent (80%) of the Unpaid Principal Balance of such Asset; provided further in respect of both clause (i) and clause (ii), the Allocated Purchase Price for any Loan required to be repurchased before the delivery of the Purchase Price Allocation Schedule applicable thereto, shall be the sum of 30.72% of the Unpaid Principal Balance for such Loan.

 

 

“ALTA”:  The American Land Title Association or any successor thereto.

 

 

“Appraisal”:  A narrative appraisal conducted by a Qualified Appraiser.

 

 

“Appraised Value”:  With respect to any Loan, the value of the related Mortgaged Property based upon the most recent Appraisal made.

 

 

“Asset List”:  The list of Assets prepared by the Seller and attached as Schedule 1 to the Bill of Sale, which shall set forth, as of the date reflected therein, the following information:

 

with respect to each Loan (if any):

 

 

	
(1)  

	
the relationship name;

 

 

	
(2)  

	
the Borrower’s name;

 

 

	
(3)  

	
each Guarantor’s name;

 

 

	
(4)  

	
the Loan identifying number;

 

  

Appendix A-2

  

 

	
(5)  

	
Loan principal balance at origination date or most recent renewal date (net of participations);

 

 

	
(6)  

	
the name and contact information of each participant in any Loan and the percentage of such Loan assigned to each participant;

 

 

	
(7)  

	
the net Unpaid Principal Balance (includes advances for taxes, insurance or other advances made prior to the Cut-off Date);

 

 

	
(8)  

	
bankruptcy / foreclosure indicator;

 

 

	
(9)  

	
Loan date or most recent renewal date;

 

 

	
(10)  

	
current interest rate (%);

 

 

	
(11)  

	
interest paid to date;

 

 

	
(12)  

	
next interest / payment due date;

 

 

	
(13)  

	
number days past due;

 

 

	
(14)  

	
maturity date;

 

 

	
(15)  

	
interest rate index code

 

 

	
(16)  

	
interest rate margin above index code;

 

 

	
(17)  

	
interest rate floor;

 

 

	
(18)  

	
interest rate ceiling;

 

 

	
(19)  

	
unpaid accrued interest;

 

 

	
(20)  

	
unpaid interest due on non-accrual loans;

 

 

	
(21)  

	
unpaid late charges due;

 

 

	
(22)  

	
interest rate periodic cap;

 

 

	
(23)  

	
amount of funds advanced by lender to protect and preserve collateral (i.e., property insurance and legal fees) after the Cut-off Date;

 

 

	
(24)  

	
collateral description;

 

 

	
(25)  

	
collateral lien position;

 

 

	
(26)  

	
to Seller’s Knowledge, the number of units remaining on condominiums / townhomes;

 

 

	
(27)  

	
to Seller’s Knowledge, the number of lots remaining on subdivisions;

 

  

Appendix A-3

  

 

	
(28)  

	
the amount, identified separately, of Escrow Payments, reserve funds, deposits and other comparable funds in the possession of the Seller (or under its control) with respect to the Assets; and

 

 

	
(29)  

	
any letter of credit issued by Seller or any of its predecessors  for the account of any Obligor on such Loan.

 

 

“Assets”:  The meaning specified in Section 2(a) of the Purchase Agreement.

 

 

“Assignment of Leases, Rents and Profits”:  With respect to any Mortgaged Property, any assignment of leases, rents and profits or similar agreement executed by the Borrower, assigning to the mortgagee all of the income, rents and profits derived from the ownership, operation, leasing or disposition of all or a portion of such Mortgaged Property, in the form which was duly executed, acknowledged and delivered, as amended, modified, renewed or extended through the date hereof and from time to time hereafter.

 

 

“Bill of Sale”:  A bill of sale substantially in the form attached hereto as Exhibit D.

 

 

“Borrower”:  With respect to each Loan, the named borrower under such Loan, together with its successor and assigns.

 

 

“Business Day”:  Any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in the New York, New York or the State of Georgia are authorized or obligated by law, regulation or executive order to close.

 

 

“CF Southeast”:  The meaning specified in the Preamble.

 

 

“CF Trust”:  The meaning specified in the Preamble.

 

 

“Closing”:  The payment of the Estimated Purchase Price and conveyance of the Assets as evidenced in a Bill of Sale and other documents required to be delivered by Seller under this Purchase Agreement.

 

 

“Closing Date”:  With respect to any Closing, the date specified in the Bill of Sale.

 

 

“Closing Documents”:  The meaning specified in Section 9 of the Purchase Agreement.

 

 

“Collateral Assignment”:  Each instrument assigning or otherwise transferring the Seller’s right, title and interest in and to a Mortgage and any other Collateral Security to the Purchaser, which instruments shall comply in form and substance with any requirements contained in a related Loan Document.

 

 

“Collateral Security”:  Any right, interest, document, instrument or property given as security for or in guaranty of the Loan (including, without limitation, the Mortgages, the Assignment of Leases, Rents and Profits, all Accounts maintained with respect to such Loan and the cash and investments credited thereto, the rights of the mortgagee under the Required Insurance Policies and Title Insurance Policies, any letter of credit, vehicle title, and any other security agreement), together with any supplement or amendment thereto and as amended from time to time hereafter.

 

  

Appendix A-4

  

 

“Collections” means all payments, proceeds and/or awards or other amounts, actually received by the specified holder of the Notes (or its agent or designee) in cash, securities or other property, including checks which have been reduced to good funds, for application to the liabilities, obligations or indebtedness, liabilities or obligations of the Obligor under the Loans, whether or not so applied and, if so applied, whether applied to principal, interest, fees or any other such liabilities or obligations or indebtedness.

 

 

“Collections Account” means an account of the Purchaser with the Seller opened by the Purchaser on or before the Closing Date.

 

 

“Condemnation Proceeds”:  All proceeds paid or awarded in connection with the full or partial condemnation of, or exercise of eminent domain with respect to, a Mortgaged Property, to the extent such proceeds are not applied to the restoration or repair of the related Mortgaged Property or released to the Borrower or any tenants or ground lessors.

 

 

“Correction Statement” means the final Correction Statement as determined pursuant to Section 10(b).

 

 

“Cut-off Date”:  February 28, 2011.

 

 

“Damages”:  means any and all damages, losses, liabilities, obligations, costs and expenses, and any and all claims, demands or suits (by any person or entity, including without limitation any court, government, governmental agency, authority, entity or instrumentality), including without limitation the costs and expenses of any and all actions, suits, proceedings, demands, assessments, judgments, settlements and compromises relating thereto and including reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim; provided, that neither party to this Purchase Agreement nor any Purchaser shall be liable to any other party for any consequential, special, indirect or punitive damages; provided, further, that Damages with respect to each Asset shall be calculated without regard to the Allocated Purchase Price with respect to such Asset.

 

 

“Default Interest”:  With respect to any Loan, interest at the applicable Default Rate and borne by the applicable Note following a Event of Default.

 

 

“Default Rate”:  With respect to any Loan, the “default rate”, “default interest rate” or other similar rate at which interest accrues during the continuance of a Event of Default as specified in the related operative Note, but only to the extent that such interest accrues at a rate in excess of the Interest Rate.

 

 

“Delinquent Property Taxes”:  Any unpaid real or personal property taxes or other governmental assessments, due and payable against any Mortgaged Property or any other Collateral Security or any penalties or interest thereon.  For purposes of this definition, real estate taxes will not be due and payable until the Business Day immediately preceding the date on which such taxes would become delinquent such that interest would accrue or penalties would become assessable thereon.

 

 

“Environmental Claim”:  Any written claim, action, cause of action, suit, proceeding, investigation, order, demand or notice by any Person alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or Release into the environment of, or exposure to, any Hazardous Substance at a Mortgaged Property, or circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

  

Appendix A-5

  

 

“Environmental Law”:  Any and all present federal, state and local laws, rules or regulations, any judicial or administrative orders, decrees or judgments thereunder, and any permits, approvals, licenses, registrations, filings and authorizations relating to the environment or the Release or threatened Release of Hazardous Substances into the indoor or outdoor environment including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata or otherwise relating to the release of Hazardous Substances.

 

 

“Escrow Payments”:  With respect to any Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, insurance premiums, fire and hazard insurance premiums, condominium and property owners association charges, and any other payments required to be escrowed by the Borrower with the mortgagee pursuant to the Mortgage or any other related document.

 

 

“Estimated Purchase Price”:  $86,519,414.84, which amount is an estimate of the Purchase Price to be paid by Purchaser on the Closing Date as determined by reference to the Trial Balance Statement.

 

 

“Excluded Cap Representations”:  Representations and warranties set forth in (a) Section 4 (other than Sections 4(b)(vii)-(x) and (xiii) –(xvi)), (b) paragraphs 1, 2, 3 (but only with respect to Asset List columns (2) through (4), (7), (23) and (25)), 4, 6 (with respect to counterclaims only), 11, 13, 14, 15, 21, 29 and 31 of Exhibit C-1 and (c) paragraphs 1, 2, 3 (but only with respect to Asset List columns (2) through (4), (7), (23) and (25)),4, 6 (with respect to counterclaims only), 8, 11, 12, 13, 15, 16, 17, 23 and 30 of Exhibit C-2.  It being understood that paragraphs 11 and 31 of Exhibit C-1 and paragraphs 11, 12, 13 and 31 of Exhibit C-2 are Excluded Cap Representations because the remedy for the breach of such representations and warranties is the repurchase by Seller of the Loan(s) related to such breach.

 

 

“Excluded Threshold Representations”: Representations and warranties set forth in paragraphs 11, 14 and 31 of Exhibit C-1 and paragraphs 11, 12, 13, 16 and 31 of Exhibit C-2.

 

 

“Event of Default”:  With respect to a Loan, an “event of default” as defined or described in the related Mortgage or other Loan Documents.

 

 

“FDIC”:  The Federal Deposit Insurance Corporation.

 

 

“Ground Lease”:  A ground lease of a Mortgaged Property.

 

 

“Guarantor”:  With respect to each Loan, a third party obligor on such Loan, together with its successors and assigns.

 

 

“Hazardous Substance”:  Other than any chemical, material or substance that is used or stored in a manner that is consistent with, and would not result in liability under, any applicable Environmental Law, collectively, (a) any petroleum, petroleum products or waste oils, explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, lead in drinking water, radon and lead-based paint, (b) any chemicals or other materials or substances which are now defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” “pollutants,” or words of similar import under any Environmental Law and (c) any other chemical or any other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Law.

 

  

Appendix A-6

  

 

“Independent”:  When used with respect to any specified Person, means such a Person who does not have any direct financial interest or any material indirect financial interest in any Borrower, the Seller or any of their respective Affiliates.

 

 

“Indemnified Party”:  The meaning specified in Section 12(h)(i) of the Purchase Agreement.

 

 

“Indemnifying Party”:  The meaning specified in Section 12(h)(i) of the Purchase Agreement.

 

 

“Insurance Proceeds”:  Proceeds of any title policy, hazard policy or insurance policy covering a Loan or relating to the collateral securing such Loan, if any, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Borrower in accordance with the terms of the related Mortgage.

 

 

“Interest Rate”:  With respect to any Loan, the “Mortgage Interest Rate,”  “Interest Rate.” “Applicable Interest Rate” or words of similar meaning as defined in the related Loan Documents (without giving effect to any Default Interest).

 

 

“Interim Period”:  With respect to any Asset, the period beginning on the Cut-off Date and ending on but excluding the Closing Date.

 

 

“Knowledge” an individual will be deemed to have Knowledge of a particular fact or other matter if:

 

 

(a)           that individual is actually aware of that fact or matter; or

 

 

(b)           a prudent individual could be reasonably expected to discover or otherwise become aware of that fact or matter in the course of conducting a commercially reasonable comprehensive investigation regarding the accuracy of any representation or warranty contained in this Purchase Agreement.

 

 

Seller will be deemed to have Knowledge of a particular fact or other matter if any of the following individuals who are serving as an officer of Seller has, or at any time had, Knowledge of that fact or other matter (as set forth in (a) and (b) above), and any such individual will be deemed to have conducted a reasonably comprehensive investigation regarding the accuracy of the representations and warranties made herein by Seller, including with respect to each Loan, inquiries of the loan officer or asset manager assigned to such Loan: Bob Head, Regional Credit Manager; Vickie Gilchrist, Credit Administration Manager; and David Shearrow, Chief Risk Officer.

 

 

“Letter of Credit Obligations”:  The meaning specified in Section 2(i) of the Purchase Agreement.

 

 

“Liquidation Proceeds”:  Cash (other than Insurance Proceeds or Condemnation Proceeds) received in connection with the liquidation of a Loan, whether through the sale or assignment of such Loan, judicial foreclosure, foreclosure sale, or otherwise, or the sale of the related Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the Loan, other than amounts required to be paid to the related Borrower pursuant to law or the terms of such Loan.

 

  

Appendix A-7

  

 

“Loan”:  A commercial loan, consumer loan, commercial mortgage loan or residential mortgage loan which is the subject of this Purchase Agreement as identified on the Asset List attached as Schedule 1 to a Bill of Sale, which Loan includes without limitation the Loan Documents, the Loan File, all payments received with respect to such loan, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, all liens and security interests securing payment of the Note and all other rights, benefits, proceeds and obligations arising from or in connection with such loan.

 

 

“Loan Documents”:  With respect to a Loan, the original operative Note (or if the original operative Note is missing, a lost note affidavit with customary indemnification) with applicable addenda and riders, the original related security instrument and all modifications and amendments thereto, including all Mortgages, any required addenda and riders, any related assignments and any intervening related assignments and the related Title Insurance Policy (other than any internal underwriting analysis of the Seller).

 

 

“Loan File”:  The meaning specified in Exhibit B to the Purchase Agreement.

 

 

“Material Adverse Effect”:  With respect to the Seller, Purchaser or the Purchasers, as applicable, any event, circumstance or set of events and circumstances which could reasonably be expected to have a material adverse effect with respect to (a) the business, properties, assets, operations, results of operations, revenues or condition, financial or otherwise, of such entity and its subsidiaries taken as a whole, (b) the legality, validity or enforceability of the Purchase Agreement, or (c) such entity’s ability  to perform fully on a timely basis its obligations under the Purchase Agreement.

 

 

“Mediation Period”:   The meaning specified in Section 10(b).

 

 

“Mortgage”:  The mortgage, deed of trust or other instrument and riders thereto securing a Note, which creates a first lien on an unsubordinated estate in fee simple in real property securing the Note or which secures the interest of a Borrower as a lessee under a Ground Lease.

 

 

“Mortgaged Property”:  The real property securing repayment of the debt evidenced by a Note.

 

 

“Note”:  The promissory note or other evidence of the indebtedness of a Borrower secured by a Mortgage and riders thereto.

 

 

“Obligor”:  means any maker and any co-maker of the any of the Notes and any guarantor, surety or other primary, secondary or other party obligated with respect to the Loans or any performance or payment obligation in connection therewith, and any other party who has granted collateral for or whose property or any part thereof is subject to any encumbrance securing the Loans or any performance or payment obligation in connection therewith

 

 

“Opinion of Counsel”:  A written opinion of counsel, who may be an employee of the Seller, reasonably acceptable to the Purchaser.

 

 

“Permitted Encumbrances”:  The meaning specified in paragraph 4 of Exhibit C-1 to the Purchase Agreement.

 

 

“Performing Loan Interest”:  The meaning specified in Section 2(b) of the Purchase Agreement.

 

 

“Person”:  Any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof.

 

  

Appendix A-8

  

 

“Principal Prepayment”:  Any payment or other recovery of principal on a Loan which is received in advance of its scheduled due date, including any prepayment penalty or premium thereon and which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

 

 

“Proposed Correction Statement”:  The meaning specified in Section 10(b).

 

 

“Purchase Agreement”:  The meaning specified in the Preamble.

 

 

“Purchase Price”:  With respect to any Assets, an amount equal to (a) the Unpaid Principal Balance of the Loans multiplied by 30.72%, minus (b) all Collections during the period from the Cut-off Date to the Closing Date other than Performing Loan Interest, minus (c) the aggregate amount of all Escrow Payments, other funds held in escrow, reserve or other accounts by the Seller with respect to the Assets, plus (d) amounts paid or incurred by the Seller after the Cut-off Date and prior to the Closing Date for (i) insurance premiums, (ii) attorneys’ fees (for foreclosure and bankruptcy attorneys, as contemplated by Section 4(b)(xiii)(a) of the Purchase Agreement) with respect to such Assets as set forth on the Asset List, plus (e) the amount of the Performing Loan Interest.  The Purchase Price paid on the Closing Date shall be determined based on the Trial Balance Information subject to Section 10(b).

 

 

“Purchaser”: With respect to the Subject Residential Mortgage Loans and the Single Family Commercial Loans, CF Trust, and, with respect to all other Assets, CF Southeast.

 

 

“Purchaser Indemnified Parties”:  The meaning specified in Section 12(a).

 

 

“Qualified Appraiser”:  An appraiser who is Independent, a member in good standing of the Appraisal Institute with an MAI membership designation and who is on the Seller’s approved appraiser list.

 

 

“Related Proceeding”:  The meaning specified in Section 20.

 

 

“Release”:  Any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata.

 

 

“Repurchase Price”:  With respect to any Asset, means the price to be paid by Seller for such Asset or Assets Seller must repurchase from Purchaser pursuant to the terms of this Purchase Agreement, which shall be computed as follows:

 

 

(a)           the Allocated Purchase Price for each such Asset paid by such Purchaser, plus interest at the rate of eight percent (8%) per annum for the period from the Closing Date to but excluding the date such Asset is repurchased by the Seller.

 

 

(b)           all (i) reasonable amounts paid to third parties to collect principal, interest and other amounts due under such Asset(s), and (ii) commercially reasonable advances made to third parties in order to protect the Collateral Security for such Assets and other advances made pursuant to the Loan Documents, in each case from the Closing Date to the repurchase date, minus any such amounts with respect to the foregoing clauses (i) and (ii) for which the Purchaser has been reimbursed by an Obligor.

 

  

Appendix A-9

  

 

“Required Insurance Policy”:  Any insurance policy which is required to be maintained from time to time under a Mortgage or other Loan Document.

 

 

“Retained Loan:”  A commercial loan, consumer loan, commercial mortgage loan or residential mortgage loan owned or held by Seller or any of its Affiliates which is not being sold to Purchaser pursuant to this Purchase Agreement, but which is cross-collateralized with or shares a common Obligor with a Loan identified on the Asset List attached as Schedule 1 to the Bill of Sale.

 

 

“Seller”:  The meaning specified in the Preamble.

 

 

“Seller Indemnified Parties”  The meaning specified in Section 12(f).

 

 

“Single Family Commercial Loans”:  The Loans identified as “Commercial Loans Secured by Single Family Homes” on Exhibit A.

 

 

“Subject Residential Mortgage Loans”: The Loans identified as “Residential Mortgage Loans” on Exhibit A.

 

 

“Subordination Agreement”:  With respect to a Retained Loan, the subordination agreement to be executed by Seller and Purchaser in the form attached hereto as Exhibit H.

 

 

“Title Insurance Policy”:  With respect to each Loan, the ALTA (or equivalent) form mortgagee title insurance policy or policies issued with respect to the Mortgaged Property for such Loan and insuring the first priority mortgage lien in favor of the Purchaser pursuant to the related Mortgage, subject only to encumbrances permitted pursuant to such Mortgage and containing certain endorsements and affirmative assurances.

 

 

“Trial Balance Information”:  The meaning specified in Section 9(g).

 

 

“Unpaid Principal Balance”:  With respect to each Loan, the net unpaid principal balance of such Loan as of the Cut-off Date as set forth in column (7) of the Asset List.

 

  

Appendix A-10

  

 

Exhibit C-1

 

 

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

REGARDING ASSETS OTHER THAN SUBJECT RESIDENTIAL MORTGAGE LOANS

 

 

With respect to the Assets other than Subject Residential Mortgage Loans, as of the Closing Date (except for the exceptions set forth on the Disclosure Schedule or the Asset List), the Seller represents and warrants as to such Assets:

 

1. Ownership of Assets.  Immediately prior to the transfer thereof to the Purchaser, the Seller had good and marketable title to, and was the sole owner and holder of, such Assets, free and clear of any and all liens, encumbrances and other interests on, in or to such Asset other than Permitted Encumbrances.

 

 

2. Authority to Transfer Assets.  The Seller has full right and authority to sell, assign and transfer such Assets.

 

 

3. Asset List.  The information pertaining to such Assets set forth in the Asset List is true and correct in all material respects as of the date specified therein.

 

 

4. Permitted Encumbrances.  Subject to the disclosures under the representation in paragraph 25 (Lien Releases) below, if any, the related Mortgage and other Collateral Security, including personal property constitutes, unless otherwise specifically and expressly identified as a second or third lien on the Disclosure Schedule, a valid first priority lien upon the related Mortgaged Property and other Collateral Security, including personal property and all buildings located thereon and all fixtures attached thereto for the current outstanding principal balance of the Loan secured thereby, such lien being subject only to:  (a) the lien of current real and personal property taxes, water rates, sewer rents and assessments or payments to the taxing authority in lieu thereof not yet due or payable, (b) covenants, conditions and restrictions, rights of way easements and other matters of public record or reflected on the related survey, (c) encumbrances and exceptions specifically referred to in any Title Insurance Policy or opinion issued with respect to the Mortgaged Property issued or, as evidenced by a “marked-up” commitment for title insurance (subject to Section 2(d)), to be issued in respect of the Mortgaged Property, (d) rights of tenants, if any, as tenants only and (e) where a Mortgaged Property is a condominium unit, the lien of a condominium association on such Mortgaged Property for unpaid maintenance or common expense assessments which in either case are not yet due and payable (“Permitted Encumbrances”).  The Permitted Encumbrances do not materially interfere with the security intended to be provided by the related Mortgage or the current use or operation of the related Mortgaged Property or any other Collateral Security.

 

 

5. No Waivers by Seller of Material Defaults. The Seller has not waived any material default, breach, violation or event of acceleration existing under the related Mortgage or Note.

 

 

6. No Offsets, Defenses or Counterclaims. There is no material valid offset, defense or counterclaim to such Loan and, except as otherwise disclosed in the Loan Files, or to Seller’s Knowledge, there are no actions, suits or proceedings by or before any governmental authority pending against Seller or any Obligor with respect to any Loan or other Asset.

 

 

7. Condition of Property; Condemnation. To the Seller’s Knowledge, the related Mortgaged Property is free and clear of any damage that would materially and adversely affect its value as security for such Loan unless there has been already escrowed 100% of the amounts required to make any necessary repairs to correct such material damage. There are no pending proceedings for the condemnation of all or any material portion of the related Mortgaged Property.

 

  

Exhibit C-1-1

  

 

8. Compliance with Certain Laws. Such Loan complies with, or is exempt from, all applicable usury laws in effect as of its date of origination or the Loan File contains an opinion to that effect. Such Loan complies with, and was originated in compliance with, the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), including the delivery of documentation and other information required to comply with the ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

 

9. Enforceability. Each related Note, related Mortgage and related Assignment of Leases, Rents and Profits (if any) is the legal, valid and binding obligation of the maker thereof (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency or market value limit deficiency legislation), enforceable in accordance with its terms, except as such enforcement may be limited by anti-deficiency, bankruptcy, insolvency, reorganization, receivership, moratorium, redemption, liquidation or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

 

10. Insurance.  To the Seller’s Knowledge, (i) the improvements upon the related Mortgaged Property are insured against loss by a fire and extended perils policy providing coverage against loss or damage included within the “all risk of physical loss” or the equivalent thereof, in an amount (subject to a customary deductible) at least equal to the lesser of (1) the outstanding principal amount of such Loan, (2) 100% of the full actual replacement cost or value of the improvements located on such Mortgaged Property (exclusive of costs of excavations, foundations and underground utilities and footings) and (3) the full insurable actual cash value of such improvements, and the related hazard insurance policy contains appropriate endorsements to avoid the application of co-insurance and does not permit reduction in insurance proceeds for depreciation. If any portion of the improvements on the related Mortgaged Property was, at the time of the origination of such Loan, in an area identified in the Federal Register by the Federal Emergency Management Agency as having “special flood hazards,” a flood insurance policy meeting any requirements of the then current guidelines of the Federal Insurance Administration is in effect with an Acceptable Insurer, in an amount representing coverage not less than the least of (1) the outstanding principal amount of such Loan, (2) the full insurable actual cash value of such Mortgaged Property, (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended, and (4) 100% of the full actual replacement cost or value of the improvements located on such Mortgaged Property.  The loan documents require the Borrower to maintain (or to cause the applicable tenant to maintain) the insurance referred to in this paragraph in respect of the Mortgaged Property, and all such insurance required by the loan documents to be maintained is in full force and affect and names the originator of such Loan as mortgagee, loss payee or additional insured. Each such insurance policy requires prior notice to the holder of the Mortgage of termination or cancellation, and no such notice has been received, including any notice of nonpayment of premiums, that has not been cured.

 

 

11. Environmental Conditions.  (i) There are no material adverse environmental conditions or circumstances affecting such Mortgaged Property; (ii) no Mortgaged Property is subject to a notice, Environmental Claim, request for information or order from or agreement with a government authority or any other Person respecting the Release or threatened Release of a Hazardous Substance; (iii) there has been no Release of Hazardous Substances on, at or under any Mortgaged Property which would reasonably be expected to result in the imposition of any material liability or any Environmental Claim; (iv) there are no judicial or administrative proceedings or any other Environmental Claims pending or threatened alleging any violation or failure to comply with any Environmental Law, or with respect to any release of any Hazardous Substance from any Mortgaged Property; and (v) none of the Mortgaged Properties are subject to any removal or remediation of any Hazardous Substances or are subject to notice to or approval from any governmental authority pertaining to environmental matters.

 

  

Exhibit C-1-2

  

 

12. Cross-Collateralization with Other Loans.  Such Loan may be cross-collateralized with or share a common Obligor with a commercial loan, consumer loan, commercial mortgage loan or residential mortgage loan held by Seller on the Closing Date that is not included in the Assets.   

 

 

13. Waivers and Modifications.  The terms of the related Mortgage and the related Note have not been impaired, waived, altered or modified in any material respect, except as specifically set forth in the related Loan File.

 

 

14. Taxes and Assessments.  There are no Delinquent Property Taxes affecting any Mortgaged Property, which are or may become a lien of priority equal or senior to the lien of the related Mortgage except such as have been paid.

 

 

15. Valid Assignment.  The assignment of the Mortgage and operative Note related to each Loan, constitutes the legal, valid and binding assignment of such Mortgage and such operative Note from the Seller to the Purchaser subject to the exceptions described in paragraph 9 (Enforceability) above.

 

 

16. Escrows.  There are no cash, escrow or reserve deposits relating to such Loan that are, as of the Closing Date, required to be deposited with the mortgagee or its agent.

 

 

17. No Material Encroachments.  As of the date of origination of a Loan, no improvement that was included for the purpose of determining the Appraised Value of the related Mortgaged Property at the time of origination of such Loan lay outside the boundaries and building restriction lines of such property to any material extent, and no improvements on adjoining properties encroached upon such Mortgaged Property to any material extent.  The improvements located on or forming part of such Mortgaged Property comply in all material respects with applicable zoning laws and ordinances (except to the extent that they may constitute legal nonconforming uses) or, if any such improvement does not comply, such noncompliance does not materially and adversely affect the value of the Mortgaged Property.

 

 

18. Inspection.  In connection with the origination of each Loan, the Seller inspected or caused to be inspected (either directly by the Seller, by its correspondent or by a third party) the Mortgaged Property.

 

 

19. No Equity Participation or Contingent Interest.  No Loan contains an equity participation by the Seller, or provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property. No Loan provides for negative amortization.

 

 

20. Licenses, Permits, Etc. All licenses, permits and authorizations required by applicable laws for the use of the related Mortgaged Property as it is currently operated have been obtained and maintained in accordance with applicable laws, except for such licenses, permits and authorizations the failure of which to obtain would not materially adversely affect the value, use or operation of the Mortgaged Property.

 

 

21. Servicing; Loan Files.  The servicing and collection practices used by the Seller and its designees with respect to each Loan have been in all material respects in compliance with all laws and the Loan Documents and have met customary standards utilized by commercial banks in the area in which the Mortgaged Property is located for servicing of commercial mortgage loans.  The Loan File for each Loan includes all documents material to the servicing and enforcement of such Loan, and true and correct copies of such documents were provided to the Purchaser prior to the date hereof.

 

  

Exhibit C-1-3

  

 

22. Customary Remedies. The related Mortgage or Note, together with applicable state law, contains customary and enforceable provisions (subject to the exceptions set forth in paragraph 9 (Enforceability) above) such as to render the rights and remedies of the holders thereof adequate for the practical realization against the related Mortgaged Property of the principal benefits of the security intended to be provided thereby.

 

 

23. Insurance and Condemnation Proceeds.  The related Mortgage or other related loan document provides that insurance proceeds and condemnation proceeds will be applied to either restore or repair the Mortgaged Property or repay the principal of the Loan, with, in some cases, the related Borrower (or the tenant or master lessee at the Mortgaged Property which maintains such insurance) being entitled to receive proceeds in excess of the amount utilized to restore or repair the Mortgaged Property.

 

 

24. Deed of Trust. If the related Mortgage is a deed of trust, to the Seller’s Knowledge, a trustee, duly qualified under applicable law to serve as such, is properly designated and serving under such Mortgage.

 

 

25. Lien Releases. The related Note or Mortgage does not require the holder thereof to release all or any portion of the Mortgaged Property from the lien of the related Mortgage, except upon payment in full of all amounts due under such Loan which have been allocated to such Mortgaged Property upon the payment of specified release consideration, satisfaction of a debt service coverage ratio test and subject to the satisfaction of certain customary criteria set forth in the related loan agreement.

 

 

26. Origination of Loans.  Other than approved exceptions, each Loan complies in all material respects with the Seller’s underwriting policies in effect as of such loan’s origination date.

 

 

27. Priority of Adjustable Rate Loans.  All terms of the loan documents pertaining to interest rate adjustments, payment adjustments and principal balance adjustments are enforceable and will not affect the priority of the mortgage lien.

 

 

28. Title Insurance Claims.  Seller has asserted no claims under a Title Insurance Policy relating to the priority or enforceability of its Mortgage.

 

 

29. Assignability of Loans.  The note and mortgage contain no provision limiting the right or ability of the Seller to assign, transfer and convey the note or mortgage to the Purchaser other than provisions that have been complied with.

 

 

30. Subordinate Financing. No Borrower is permitted to incur indebtedness subordinate to the related Loan and secured by the related Mortgaged Property.

 

 

31.  Consumer Regulations.  Except for the Subject Residential Mortgage Loans, none of the Loans are subject to any requirement of federal, state or local laws or regulations, regarding consumer protection, including , truth-in-lending, real estate settlement procedures, consumer credit protection, predatory lending, fair credit reporting, fair housing and consumer protection disclosure laws and regulations.

 

  

Exhibit C-1-4

  

 

EXHIBIT C-2

 

 

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

REGARDING ASSETS THAT ARE SUBJECT RESIDENTIAL MORTGAGE LOANS

 

 

With respect to the Assets that are Subject Residential Mortgage Loans (except for the exceptions set forth on the Disclosure Schedule and the Asset List), the Seller represents and warrants as to such Assets:

 

1.   Ownership of Assets.  Immediately prior to the transfer thereof to the Purchaser, the Seller had good and marketable title to, and was the sole owner and holder of, such Assets, free and clear of any and all liens, encumbrances and other interests on, in or to such Asset other than Permitted Encumbrances.

 

2. Authority to Transfer Assets.  The Seller has full right and authority to sell, assign and transfer such Assets.

 

 

3. Asset List.  The information pertaining to such Assets set forth in the Asset List is true and correct in all material respects as of the date specified therein.

 

 

4. Permitted Encumbrances.  Subject to the disclosures under paragraph 27 (Lien Releases) below, if any, the related Mortgage constitutes a valid first priority lien upon the related Mortgaged Property, including all buildings located thereon and all fixtures attached thereto for the current outstanding principal balance of the Loan secured thereby, such lien being subject only to Permitted Encumbrances. The Permitted Encumbrances do not materially interfere with the security intended to be provided by the related Mortgage or the current use or operation of the related Mortgaged Property.

 

 

5. No Waivers by Seller of Material Defaults. The Seller has not waived any material default, breach, violation or event of acceleration existing under the related Mortgage or Note.

 

 

6. No Offsets, Defenses or Counterclaims. There is no material valid offset, defense or counterclaim to such Loan and, except as otherwise disclosed in the Loan Files, or to Seller’s Knowledge, there are no actions, suits or proceedings by or before any governmental authority pending against Seller or any Obligor with respect to any Loan or other Asset.

 

 

7. Condition of Property; Condemnation. To the Seller’s Knowledge, the related Mortgaged Property is free and clear of any damage that would materially and adversely affect its value as security for such Loan unless there has been already escrowed 100% of the amounts required to make any necessary repairs to correct such material damage. There are no pending proceedings for the condemnation of all or any material portion of the related Mortgaged Property.

 

 

8. Compliance with Usury Laws. Such Loan complies with, or is exempt from, all applicable usury laws in effect as of its date of origination or the Loan File contains an opinion to that effect.  Such Loan complies with, and was originated in compliance with, the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), including the delivery of documentation and other information required to comply with the ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

  

  

  

 

9. Enforceability. Each related Note and each related Mortgage is the legal, valid and binding obligation of the maker thereof (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency or market value limit deficiency legislation), enforceable in accordance with its terms, except as such enforcement may be limited by anti-deficiency, bankruptcy, insolvency, reorganization, receivership, moratorium, redemption, liquidation or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

 

10. Insurance.  The improvements upon the related Mortgaged Property are insured against loss by a fire and extended perils policy providing coverage against loss or damage included within the “all risk of physical loss” or the equivalent thereof, in an amount (subject to a customary deductible) at least equal to the lesser of (1) the outstanding principal amount of such Loan, (2) 100% of the full actual replacement cost or value of the improvements located on such Mortgaged Property (exclusive of costs of excavations, foundations and underground utilities and footings) and (3) the full insurable actual cash value of such improvements, and the related hazard insurance policy contains appropriate endorsements to avoid the application of co-insurance and does not permit reduction in insurance proceeds for depreciation. If any portion of the improvements on the related Mortgaged Property was, at the time of the origination of such Loan, in an area identified in the Federal Register by the Federal Emergency Management Agency as having “special flood hazards,” a flood insurance policy meeting any requirements of the then current guidelines of the Federal Insurance Administration is in effect with an Acceptable Insurer, in an amount representing coverage not less than the least of (1) the outstanding principal amount of such Loan, (2) the full insurable actual cash value of such Mortgaged Property, (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended, and (4) 100% of the replacement cost or value of the improvements located on such Mortgaged Property.  The loan documents require the Borrower to maintain (or to cause the applicable tenant to maintain) the insurance referred to in this paragraph in respect of the Mortgaged Property, and all such insurance required by the loan documents to be maintained is in full force and affect and names the originator of such Loan as mortgagee, loss payee or additional insured. Each such insurance policy requires prior notice to the holder of the Mortgage of termination or cancellation, and no such notice has been received, including any notice of nonpayment of premiums, that has not been cured.

 

 

11. Environmental Conditions.  To the Seller’s Knowledge, (i) there are no material adverse environmental conditions or circumstances affecting such Mortgaged Property; (ii) no Mortgaged Property is subject to a notice, Environmental Claim, request for information or order from or agreement with a government authority or any other Person respecting the Release or threatened Release of a Hazardous Substance; (iii) there has been no Release of Hazardous Substances on, at or under any Mortgaged Property which would reasonably be expected to result in the imposition of any material liability or any Environmental Claim; (iv) there are no judicial or administrative proceedings or any other Environmental Claims pending or threatened alleging any violation or failure to comply with any Environmental Law, or with respect to any release of any Hazardous Substance from any Mortgaged Property; and (v) none of the Mortgaged Properties are subject to any removal or remediation of any Hazardous Substances or are subject to notice to or approval from any governmental authority pertaining to environmental matters.

 

 

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

 

  

  

  

 

13. HOEPA.  No Loan is subject to the provisions of the Homeownership and Equity Protection Act of 1994 (“HOEPA”) as amended or has an “annual percentage rate” or “total points and fees” payable by the mortgagor (as each such term is defined under HOEPA) that equal or exceed the applicable thresholds defined under HOEPA (Section 32 of Regulation Z, 12 C.F.R. Section 226.32(a)(1)(i) and (ii)) or is considered a “high cost,” “predatory” or “abusive” loan (or a similarly designated loan using different terminology) under any state, county or municipal laws or ordinances, including without limitation, the provisions of the Georgia Fair Lending Act or any other statute or regulation providing “assignee” or “originator” liability to holders of such mortgage loans.

 

 

14. Cross-Collateralization with Other Loans.  Such Loan may be cross-collateralized with a Loan held by Seller.  To the extent that any such resulting lien exists, Seller shall subordinate its lien to Purchaser.

 

 

15. Waivers and Modifications.  The terms of the related Mortgage and the related Note have not been impaired, waived, altered or modified in any material respect, except as specifically set forth in the related Loan File.

 

 

16. Taxes and Assessments.  There are no Delinquent Property Taxes affecting any Mortgaged Property which are or may become a lien of priority equal or senior to the lien of the related Mortgage except such as have been paid.

 

 

17. Valid Assignment.  The assignment of the Mortgage and the operative Note related to each Loan, constitutes the legal, valid and binding assignment of such Mortgage and such operative Note from the Seller to the Purchaser subject to the exceptions described in paragraph 9 (Enforceability) above.

 

 

18. Escrows.  There are no cash, escrow or reserve deposits relating to such Loan that are, as of the Closing Date, required to be deposited with the mortgagee or its agent.

 

 

19. No Material Encroachments.  As of the date of origination of a Loan, no improvement that was included for the purpose of determining the Appraised Value of the related Mortgaged Property at the time of origination of such Loan lay outside the boundaries and building restriction lines of such property to any material extent, and no improvements on adjoining properties encroached upon such Mortgaged Property to any material extent.  The improvements located on or forming part of such Mortgaged Property comply in all material respects with applicable zoning laws and ordinances (except to the extent that they may constitute legal nonconforming uses) or, if any such improvement does not comply, such noncompliance does not materially and adversely affect the value of the Mortgaged Property.

 

 

20. Inspection.  In connection with the origination of each Loan, the Seller inspected or caused to be inspected (either directly by the Seller, by its correspondent or by a third party) the Mortgaged Property.

 

 

21. No Equity Participation or Contingent Interest.  No Loan contains an equity participation by the Seller, or provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property. No Loan provides for negative amortization.

 

 

22. Licenses, Permits, Etc. All licenses, permits and authorizations required by applicable laws for the use of the related Mortgaged Property as it is currently operated have been obtained and maintained in accordance with applicable laws except for such licenses, permits and authorizations the failure of which to obtain would not materially adversely affect the value, use or operation of the Mortgaged Property.

 

  

  

  

 

23. Servicing; Loan Files.   The servicing and collection practices used by the Seller and its designees with respect to each Loan have been in all material respects in compliance with all laws and the Loan Documents and have met customary standards utilized by commercial banks in the area in which the Mortgaged Property is located for servicing of residential mortgage loans.  The Loan File for each Loan includes all documents material to the servicing and enforcement of such Loan, and true and correct copies of such documents were provided to the Purchaser prior to the date hereof.

 

 

24. Customary Remedies. The related Mortgage or Note, together with applicable state law, contains customary and enforceable provisions (subject to the exceptions set forth in paragraph 9 (Enforceability) above) such as to render the rights and remedies of the holders thereof adequate for the practical realization against the related Mortgaged Property of the principal benefits of the security intended to be provided thereby.

 

 

25. Insurance and Condemnation Proceeds.  The related Mortgage or other related loan document provides that insurance proceeds and condemnation proceeds will be applied to either restore or repair the Mortgaged Property or repay the principal of the Loan, with, in some cases, the related Borrower (or the tenant or master lessee at the Mortgaged Property which maintains such insurance) being entitled to receive proceeds in excess of the amount utilized to restore or repair the Mortgaged Property.

 

 

26. Deed of Trust. If the related Mortgage is a deed of trust, to the Seller’s Knowledge, a trustee, duly qualified under applicable law to serve as such, is properly designated and serving under such Mortgage.

 

 

27. Lien Releases. The related Note or Mortgage does not require the holder thereof to release all or any portion of the Mortgaged Property from the lien of the related Mortgage, except upon payment in full of all amounts due under such Loan which have been allocated to such Mortgaged Property upon the payment of specified release consideration, satisfaction of a debt service coverage ratio test and subject to the satisfaction of certain customary criteria set forth in the related loan agreement.

 

 

28. Origination of Loans.  Other than approved exceptions, each Loan complies in all material respects with the Seller’s underwriting policies effect as of such loan’s origination date.

 

 

29. Priority of Adjustable Rate Loans.  All terms of the Loan Documents pertaining to interest rate adjustments, payment adjustments and principal balance adjustments are enforceable and will not affect the priority of the mortgage lien.

 

 

30. Assignability of Loans.  The Note and Mortgage contain no provision limiting the right or ability of the Seller to assign, transfer and convey the note or mortgage to the Purchaser other than provisions that have been complied with.

 

 

31. Documentation Requirements.  The Loan File with respect to each Loan contains the following documents: (a) an original of the operative Note or a copy of the operative Note together with a lost note affidavit in form and substance reasonably acceptable to the Purchaser, (b) an executed endorsement or an allonge attached to the operative Note executed in blank, (c) originals or copies of all intervening endorsements necessary to show complete chain of title; (d) an original of the Mortgage securing the operative Note with evidence of recording or a copy of mortgage with recording information set forth thereon, (e)  an assignment of the Mortgage securing the operative Note executed in blank, and all intervening assignments necessary to show complete chain of title, (f)  a final title insurance policy, (g) an original of any guarantee of the operative Note (g) the original of any letter of credit issued for the benefit of Seller or any of its predecessors to secure the operative Note, (h) the final executed settlement statement with respect to the operative Note or as otherwise delivered at the original closing and (i) all final and executed (to the extent execution is required) notices, disclosure statements and similar items required in connection with the origination of a residential mortgage loan pursuant to federal, state and /or local law, rule and/or regulation.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}]]