Document:

EXECUTION COPY

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated April 1, 2005, between DLJ Mortgage Capital, Inc., a Delaware corporation (“Assignor”), and Credit Suisse First Boston Mortgage Securities Corp., a Delaware corporation (“Assignee”):

For and in consideration of the sum of TEN DOLLARS ($10.00) and other valuable consideration the receipt and sufficiency of which hereby are acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree as follows:

1.          The Assignor hereby grants, transfers and assigns to Assignee all of the right, title and interest of Assignor, as Purchaser, in, to and under (a) those certain Mortgage Loans listed on Exhibit A attached hereto (the “Mortgage Loans”) and (b) those certain agreements listed on Exhibit B attached hereto (the “Agreements”) with respect to the Mortgage Loans.

The Assignor specifically reserves and does not assign to the Assignee hereunder any and all right, title and interest in, to and under and all obligations of the Assignor with respect to any mortgage loans subject to the Agreements which are not the Mortgage Loans set forth on Exhibit A attached hereto and are not the subject of this Assignment and Assumption Agreement.

	
            2.
 	
            The Assignor warrants and represents to, and covenants with, the Assignee that:
 

(a)        The Assignor is the lawful owner of the Mortgage Loans with the full right to transfer the Mortgage Loans free from any and all claims and encumbrances whatsoever;

(b)        The Assignor has not received notice or, and has no knowledge of, any offsets, counterclaims or other defenses with respect to the Agreements or the Mortgage Loans;

(c)        The Assignor has not waived or agreed to any waiver under, or agreed to any amendment or other modification of, the Agreements or the Mortgage Loans, including without limitation the transfer of the servicing obligations under the Agreements.  The Assignor has no knowledge of, and has not received notice of, any waivers under or amendments or other modifications of, or assignments of rights or obligations under or defaults under, the Agreements, or the Mortgage Loans; and

(d)        Neither the Assignor nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner, or made by general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Mortgage Loans under the Securities Act of 1933 (the “1933 Act”) or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.

 

 

 

 

	
            3.
 	
            The Assignee warrants and represents to, and covenants with, the Assignor that:
 

(a)               The Assignee is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power and authority to acquire, own and purchase the Mortgage Loans;

(b)               The Assignee has full corporate power and authority to execute, deliver and perform under this Assignment and Assumption Agreement, and to consummate the transactions set forth herein.  The execution, delivery and performance of the Assignee of this Assignment and Assumption Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of the Assignee.  This Assignment and Assumption Agreement has been duly executed and delivered by the Assignee and constitutes the valid and legally binding obligation of the Assignee enforceable against the Assignee in accordance with its respective terms;

(c)               To the best of Assignee’s knowledge, no material consent, approval, order or authorization of, or declaration, filing or registration with, any governmental entity is required to be obtained or made by the Assignee in connection with the execution, delivery or performance by the Assignee of this Assignment and Assumption Agreement, or the consummation by it of the transactions contemplated hereby;

(d)               The Assignee agrees to be bound, as Purchaser, by all of the terms, covenants and conditions of the Agreements and the Mortgage Loans, and from and after the date hereof, the Assignee assumes for the benefit of the Assignor all of the Assignor’s obligations as Purchaser thereunder, with respect to the Mortgage Loans;

(e)               The Assignee understands that the Mortgage Loans have not been registered under the 1933 Act or the securities laws of any state;

(f)                The purchase price being paid by the Assignee for the Mortgage Loans is in excess of $250,000 and will be paid by cash remittance of the full purchase price within sixty (60) days of the sale;

(g)               The Assignee is acquiring the Mortgage Loans for investment for its own account only and not for any other person;

(h)               The Assignee considers itself a substantial, sophisticated institutional investor having such knowledge and financial and business matters that it is capable of evaluating the merits and the risks of investment in the Mortgage Loans;

(i)                The Assignee has been furnished with all information regarding the Mortgage Loans that it has requested from the Assignor;

(j)                Neither the Assignee nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, an interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage 

 

 

	
            2
 

 

 

Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Mortgage Loans under the 1933 Act or which would render the disposition of the Mortgage Loans a violation of Section 5 of the 1933 Act or require registration pursuant thereto, nor will it act, nor has it authorized or will it authorize any person to act, in such manner with respect to the Mortgage Loans; and

(k)               Either: (1) the Assignee is not an employee benefit plan (“Plan”) within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or a plan (also “Plan”) within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (“Code”), and the Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf of, investment manager of, as named fiduciary of, as Trustee of, or with assets of, a Plan; or (2) the Assignee’s purchase of the Mortgage Loans will not result in a prohibited transaction under section 406 of ERISA or Section 4975 of the Code.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

 

	
            3
 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption to be executed by their duly authorized officers as of the date first above written.

	
            DLJ MORTGAGE CAPITAL, INC.,

as Assignor
 	
            CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
 
	
             
 	
            as Assignee
 
	
             
 	
             
 
	
             
 	
             
 
	
            By:__________________________________
 	
            By:__________________________________
 
	
            Name:
 	
            Name:
 
	
            Title:
 	
            Title:
 
	
             
 	
             
 
	
            Taxpayer Identification Number: 13-3460798
 	
            Taxpayer Identification Number: 13-3320910
 
	
             
 	
             
 

 

 

 

 

EXHIBIT A

Mortgage Loan Schedule

 

[Attached as Schedule I to the Pooling and Servicing Agreement]

 

	
            A-1
 

 

 

 

EXHIBIT B

List of Agreements

 

[On file with Orrick, Herrington & Sutcliffe LLP]

 

 

 

	
            B-1EXHIBIT 4.1
                                                                     -----------

THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN
AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE APPLICABLE STATE SECURITY LAWS. THE WARRANT AND SUCH SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.

                              GLOBAL MATRECHS, INC.

                          COMMON STOCK PURCHASE WARRANT

                        Original Issue Date: May 12, 2005
                            Void After: May 12, 2010

                            This Warrant is Issued to
                             SOUTHRIDGE PARTNERS LP

(hereinafter called the "Holder," which term shall include the Holder's legal
representatives, heirs, successors and assigns) by Global Matrechs, Inc., a
Delaware corporation (hereinafter referred to as the "Company"). This Warrant
may be transferred by the Holder only in accordance with the provisions of
Section 12.

     1.       Exercise of Warrant. For value received and subject to the terms
and conditions hereinafter set forth, the Holder is entitled, upon surrender of
this Warrant at any time on or after May 12, 2005 and on or prior to May 12,
2010 (the "Exercise Date") (with the subscription form annexed hereto (the
"Subscription Form") duly executed) at the office of the Company at 90 Grove
Street, Suite 201, Ridgefield, Connecticut 06877, or such other office in the
United States of which the Company shall notify the Holder hereof in writing, to
purchase from the Company, at the purchase price hereinafter specified (as
adjusted from time to time, the "Exercise Price"), 5,000,000 shares (the
"Warrant Shares") (as adjusted from time to time) of the Common Stock, $0.0001
par value per share, of the Company (the "Common Stock"). The initial Exercise
Price shall be $0.025 per share.

     2.       Issuance of Stock Certificates. As promptly as practicable after
surrender of this Warrant and receipt of payment of the Exercise Price, the
Company shall issue and deliver to the Holder a certificate or certificates for
the shares purchased hereunder, in certificates of such denominations and in
such names as the Holder may specify.
<PAGE>

     3.       Payment of Exercise Price. Payment of the Exercise Price shall be
made by check made payable to the order of the Company or wire transfer of funds
to a bank account designated by the Company.

     4.       Cashless Exercise. The Holder may notify the Company in a
Subscription Form of its election to utilize cashless exercise, in which event
the Company shall issue to the Holder the number of Warrant Shares determined as
follows:

                    X = Y [(A-B)/A]

               where:

                    X = the number of Warrant Shares to be issued to the Holder.

                    Y = the number of Warrant Shares with respect to which this
                        Warrant is being exercised.

                    A = the average of the closing prices for the five trading
                        days immediately prior to (but not including) the
                        Exercise Date.

                    B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.

     5.       Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to insure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its affiliates and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder's for purposes of
Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of
issued and outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.

     6.       Adjustment for Dividends, Distributions, Subdivisions,
Combinations, Mergers, Consolidations or Sale of Assets.

              6.1      Manner of Adjustment.

                       (a) Stock Dividends, Distributions or Subdivisions. In
the event the Company shall issue shares of Common Stock in a stock dividend,
stock distribution or subdivision, the Exercise Price in effect immediately
before such stock dividend,

                                      -2-
<PAGE>

stock distribution or subdivision shall, concurrently with the effectiveness of
such stock dividend, stock distribution or subdivision, be proportionately
decreased and the number of shares of Common Stock purchasable by exercise of
this Warrant shall be proportionately increased.

                       (b) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Exercise Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased and the number of shares of Common
Stock purchasable by exercise of this Warrant shall be proportionately
decreased.

                       (c) Adjustment for Reclassification, Exchange or
Substitution. In the event that the class of securities issuable upon the
exercise of this Warrant shall be changed into the same or a different number of
shares of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than any event addressed by Sections
6.1(a), 6.1(b) or 6.1(d)), then and in each such event the Holder shall have the
right thereafter to exercise this Warrant for the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of the
class of securities into which such Warrant might have been exercisable for
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.

                       (d) Adjustment for Merger, Consolidation or Sale of
Assets. In the event that the Company shall merge or consolidate with or into
another entity or sell all or substantially all of its assets, this Warrant
shall thereafter be exercisable for the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Company deliverable upon exercise of this Warrant would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions set forth in this Section 6
with respect to the rights and interest thereafter of the Holder of this
Warrant, to the end that the provisions set forth in this Section 6 shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.

              6.2 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 6, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based.

              6.3 Closing of Books. The Company shall at no time close its
transfer books against the transfer of any shares of Common Stock issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely and proper issuance of such shares.

     7.       Covenants of the Company. During the period within which the
rights represented by this Warrant may be exercised, the Company shall at all
times have authorized and reserved for the purpose of issue upon exercise of the
rights evidenced hereby, a sufficient number of shares of the class of
securities issuable upon exercise of this Warrant to provide for

                                      -3-
<PAGE>

the exercise of such rights. All securities which may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof. Upon surrender for
exercise, this Warrant shall be canceled and shall not be reissued; provided,
however, that upon the partial exercise hereof a substitute Warrant of like
tenor and date representing the rights to subscribe for and purchase any such
unexercised portion hereof shall be issued.

     8.       Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or any other rights as a stockholder of the Company but upon
presentation of this Warrant with the Subscription Form duly executed and the
tender of payment of the Exercise Price at the office of the Company pursuant to
the provisions of this Warrant, the Holder shall forthwith be deemed a
stockholder of the Company in respect of the securities for which the Holder has
so subscribed and paid.

     9.       No Change Necessary. The form of this Warrant need not be changed
because of any adjustment in the Exercise Price or in the number of shares
issuable upon its exercise. A Warrant issued after any adjustment or any partial
exercise or upon replacement may continue to express the same Exercise Price and
the same number of shares (appropriately reduced in the case of partial
exercise) as are stated on this Warrant as initially issued, and that Exercise
Price and that number of shares shall be considered to have been so changed as
of the close of business on the date of adjustment.

     10.      Addresses for Notices. All notices, requests, consents and other
communications hereunder shall be in writing, either delivered in hand or mailed
by registered or certified mail, return receipt requested, or sent by facsimile,
and shall be deemed to have been duly made when delivered:

              (a) If to the Holder, to the Holder's address as shown on the
books of the Company; or

              (b) If to the Company, to the address set forth on the first page
of this Warrant.

     11.      Substitution. In the case this Warrant shall be mutilated, lost,
stolen or destroyed, the Company shall issue a new Warrant of like tenor and
denomination and deliver the same (a) in exchange and substitution for and upon
surrender and cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the
Company of the loss, theft, or destruction of such Warrant (including, without
limitation, a reasonably detailed affidavit with respect to the circumstances of
any loss, theft or destruction), and of indemnity (or, in the case of the
initial Holder or any other institutional holder, an indemnity agreement)
satisfactory to the Company.

     12.      Transfer Restrictions. This Warrant shall not be transferable by
the Holder and shall be exercisable only by the Holder. Without the prior
written consent of the Company, the Warrant shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any

                                      -4-
<PAGE>

attempted transfer, assignment, pledge, hypothecation or other disposition of
the Warrant or of any rights granted hereunder contrary to the provisions of
this Section 12, or the levy of any attachment or similar process upon the
Warrant or such rights, shall be null and void.

     13.      Taxes. The Company makes no representation about tax treatment to
the Holder with respect to receipt or exercise of the Warrant or acquiring,
holding or disposing of the Common Stock, and the Holder represents that the
Holder has had the opportunity to discuss such treatment with the Holder's tax
advisers.

     14.      Remedies. Each party stipulates that the remedies at law in the
event of any default or threatened default by the other party in the performance
or compliance with any of the terms of this Warrant are and shall not be
adequate, and that such terms may be specifically enforced by a decree for that
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

     15.      Governing Law. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York without
regard to its principles of conflicts of laws.

     16.      Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Holder and the Company.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -5-
<PAGE>

                                                   COMMON STOCK PURCHASE WARRANT

                                      * * *

         IN WITNESS WHEREOF, the parties have caused this Warrant to be executed
this 12th day of May, 2005.

                                       GLOBAL MATRECHS, INC.

                                       By:      /s/ Michael Sheppard
                                            --------------------------------
                                       Name:         Michale Sheppard
                                             -------------------------------
                                       Title:        President
                                              ------------------------------

                                      -6-
<PAGE>

                                SUBSCRIPTION FORM

                          (TO BE EXECUTED BY THE HOLDER
                        IN ORDER TO EXERCISE THE WARRANT)

                                                    Date:  ____________________

To:  Global Matrechs, Inc.
     90 Grove Street, Suite 201
     Ridgefield, CT  06877

     The undersigned, pursuant to the provisions set forth in the attached
Warrant hereby irrevocably elects to purchase _____ shares of the Common Stock
(the "Common Stock") covered by such Warrant and herewith makes payment of
$_________, representing the [full/partial] purchase price for such shares at
the price per share provided for in such Warrant.

     The undersigned hereby agrees to take such other action and execute and
deliver such other documents as Global Matrechs, Inc. may require, in connection
with the issue of shares of Common Stock to the undersigned as aforesaid, in
order to comply with the provisions of such Warrant.

     The undersigned is aware that the Common Stock has not been registered
under the Securities Act of 1933, as amended (the "Act") or any state securities
laws. The undersigned understands that the reliance by the Company on exemptions
under the Act is predicated in part upon the truth and accuracy of the
statements of the undersigned in this Subscription Form.

     The undersigned represents and warrants that (1) it has been furnished with
all information which it deems necessary to evaluate the merits and risks of the
purchase of the Common Stock; (2) it has had the opportunity to ask questions
concerning the Common Stock and the Company and all questions posed have been
answered to its satisfaction; (3) it has been given the opportunity to obtain
any additional information it deems necessary to verify the accuracy of any
information obtained concerning the Common Stock and the Company; and (4) it has
such knowledge and experience in financial and business matters that it is able
to evaluate the merits and risks of purchasing the Common Stock and to make an
informed investment decision relating thereto.

     The undersigned hereby represents and warrants that it is purchasing the
Common Stock for its own account and not with a view to the sale or distribution
of all or any part of the Common Stock.

     The undersigned understands that because the Common Stock have not been
registered under the Act, it must continue to bear the economic risk of the
investment for an indefinite time and the Common Stock cannot be sold unless the
Common Stock are subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.

     The undersigned agrees that it shall in no event sell or distribute or
otherwise dispose of all or any part of the Common Stock unless (1) there is an
effective registration statement under
<PAGE>

the Act and applicable state securities laws covering any such transaction
involving the Common Stock or (2) the Company receives an opinion of legal
counsel to the undersigned (concurred in by legal counsel for the Company)
stating that such transaction is exempt from registration or the Company
otherwise satisfies itself that such transaction is exempt from registration.

     The undersigned consents to the placing of a legend on its certificate for
the Common Stock stating that the Common Stock has not been registered and
setting forth the restriction on transfer contemplated hereby and to the placing
of a stop transfer order on the books of the Company and with any transfer
agents against the Common Stock until the Common Stock may be legally resold or
distributed without restriction.

     The undersigned has considered the Federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Common Stock.

                                       ________________________________________
                                       Signature

                                       ________________________________________
                                       Print name:

                                       ________________________________________
                                       Date:

                                      -2-

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