PURCHASE AGREEMENT
Exhibit
10.14
This
Purchase Agreement (as it may be amended or otherwise modified from time
to time
in accordance with the terms hereof, this "Purchase
Agreement"),
dated
as of January 31, 2006, is made by and between Heritage Bank of Commerce,
having
an address at 000 Xxxxxxx Xxxxxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (the "Seller"),
and County Bank, having an address at 000 X. Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxx,
Xxxxxxxxxx 00000 ("Purchaser").
W I T N E S S E T H:
WHEREAS,
Purchaser desires to purchase and Seller desires to sell those certain loans
(collectively, the "Loans")
listed
on Exhibit A
annexed
hereto and other loan documents evidencing and securing the Loans (such loan
documents being collectively referred to as the "Loan Documents");
NOW
THEREFORE, in consideration of the premises and the mutual agreements set
forth
herein, the parties hereby agree as follows:
1. Purchase
of the Loans.
For
valuable consideration, the sufficiency of which is hereby acknowledged,
Seller
hereby agrees to sell, assign and convey to Purchaser and Purchaser hereby
agrees to purchase and accept from Seller, all of Seller's right, title and
interest in and to the Loans and the Loan Documents, subject to and in
accordance with the terms and provisions of this Purchase
Agreement.
2. Closing
Requirements.
(a) The
consummation of the purchase and sale of the Loans shall
take place at 5:01 p.m. on January 31, 2006
(the
"Closing"), at
the
offices of Heritage Bank of Commerce, 000 Xxxxxxx Xxxx, Xxx Xxxx, Xxxxxxxxxx
00000;
provided however, if the purchase and sale of the Loans are not consummated
by
January
31, 2006,
then
Seller shall permit further due diligence of the Loans by
Purchaser.
(b) Purchaser
shall pay to Seller an amount equal to the outstanding principal
amount,
also
referred to as the “active balance” within Distinctive Solutions
and such
amounts within Seller’s ITI systems,
of all
the Loans as of the Closing, plus accrued interest, fees and expenses (Exhibit
D) thereon (except the Purchase Price attributable to the Loan(s) to
***
shall
be
the net principal balance after all prior charge offs, which as of the date
hereof, equals ***
as
of
January 31, 2006]) less any unearned loan fees to be paid to Seller by wire
transfer of immediately available federal funds as Seller shall direct.
Seller
is
to be reimbursed for any reasonable costs after
the
Closing directly relating to the Loans; provided however, such costs shall
not
include any costs resulting from any breach of this Purchase Agreement by
Seller
or any costs which are Seller’s responsibility under this Purchase
Agreement.
(c) At
Closing, and as a condition of Seller's obligations under this Purchase
Agreement, any payments in respect of interest or other sums periodically
due on
the Loans which are paid or payable for the month in which the Closing
occurs
will be prorated as of the Closing.
(d) At
Closing, all escrows, if any, then held by Seller and any account records
reflecting amounts actually held in escrow by Seller at Closing, if any,
for
taxes, governmental assessments and insurance premiums, water, sewer and
municipal charges, deposits, transferable security deposits, replacement
reserves or other escrowed funds relating to the Loans shall be paid over
to
Purchaser.
(e) At
or
prior to Closing, Seller shall at its sole cost and expense prepare and mail
to
the insurer for the Loans, a notice of assignment and a request for an
endorsement of each policy of insurance deleting Seller and naming Purchaser
and
its successors and/or assigns as the loss payee and additional insured named
therein in a form satisfactory to Purchaser.
(f) At
Closing, with respect to each Loan, Seller shall:
(i) deliver
the original note for such Loan, endorsed without recourse by allonge in
blank
in substantially the form of Exhibit B
annexed
hereto, which allonge shall be firmly affixed to the note;
(ii) deliver
the original mortgage (or a true and complete photocopy thereof) related
to such
Loan and an executed assignment of such mortgage and the other recorded Loan
Documents in blank in substantially the form of Exhibit C
annexed
hereto, with such modifications as shall be customary and appropriate under
local laws for recording in the land records in the jurisdiction in which
the
related mortgaged property is located (the "Assignment");
(iii) authorize
assignments of UCC financing statements, if any, pertaining to the Loans;
(iv) with
respect to any depository accounts, certificates of deposit and investment
accounts which are a part of the collateral for any of the Loans, notify
any
depository bank or financial institution at which such depository accounts,
certificates of deposit and investment accounts are located,
that
Seller’s
rights
therein
have
been
assigned to Purchaser and request acknowledgement of same to Purchaser and
to
request the delivery of any lockbox control agreements, securities account
control agreements, operating account control agreements and deposit account
control agreements (or an assignment or amendment thereto) with respect to
any
operating or deposit account control agreement, in form and substance
reasonably
satisfactory to
Purchaser necessary to evidence Purchaser’s control of such accounts and arrange
for the orderly transfer of any accounts that are held at Seller to
Purchaser;
(v) deliver
to Purchaser an original counterpart of each other Loan Document (including
without limitation, any possessory collateral such as stock certificates,
notes,
instruments and/or title certificates for any motor vehicles (and/or cause
such
title certificates to be re-issued to evidence Purchaser’s security interest
therein) or, in the event that Seller is unable to locate an original
counterpart of any such Loan Document, a true and complete photocopy thereof;
and
(vi) deliver
to Purchaser copies of all records concerning the Loans.
(g) At
Closing, Purchaser shall:
(i) issue
a
back-up letter
of
credit
for the
benefit of Seller
to each
existing letter of credit issued by Seller for the benefit of any borrower
or
any other person or entity on account of or related to any obligation or
liability arising under the Loan Documents;
and
(ii) immediately
notify all account debtors, or cause account debtors to be notified, of
the
transfer
of the
Loans
hereunder
and to
cause remittance checks to be made payable to Purchaser.
3. Representations
and Warranties and Covenants.
(a) Seller
covenants, represents and warrants to Purchaser as follows:
(i) Seller
is
a banking corporation duly organized and validly existing in good standing
and
has all requisite power and authority to own its assets and carry on its
business as and where now being conducted. Seller has full power and authority,
and has taken all action necessary, to execute and deliver this Purchase
Agreement and any and all other documents required or permitted to be executed
or delivered by Seller in connection with this Purchase Agreement and to
fulfill
Seller's obligations under, and to consummate the transactions contemplated
by,
this Purchase Agreement, and no governmental authorizations or other
authorizations are required in connection therewith;
(ii) this
Purchase Agreement constitutes the legal, valid and binding obligation of
Seller
enforceable against Seller in accordance with its terms (subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally);
(iii) neither
the execution, delivery and performance of this Purchase Agreement nor the
consummation of the transactions contemplated hereby (1) is prohibited by,
or
requires Seller to obtain any consent, authorization, approval or registration
under any law, statute, rule, regulation, judgment, order, writ, injunction
or
decree which is binding upon Seller or (2) violates, conflicts with, results
in
a breach of, constitutes a default under, is prohibited by, or requires any
additional approval under any instrument or agreement to which Seller is
a party
or by which it is bound or which affects the Loans and the mortgaged
property;
(iv) at
any
time, and from time to time hereafter, upon the reasonable request of Purchaser,
and without payment of further consideration to Seller, Seller, its officers,
employees, affiliates and assignees each will (1) provide the assistance
of its
knowledgeable personnel to respond to inquiries from Purchaser, and (2) do,
execute, acknowledge, endorse, permit Purchaser to endorse on Seller’s behalf,
permit Purchaser to open any mail addressed to Seller in connection with
the
Loans, negotiate items and deliver, and cause to be done, executed,
acknowledged, endorsed, permitted, negotiated and delivered, all such further
acts, deeds, assignments (including without limitation, any notarized letters
from Seller and/or on Seller’s letterhead notifying any customers, borrower,
guarantors and account debtors thereof under the Loans of the sale of such
Loans
from Seller to Purchaser), remittance advise information, transfers,
conveyances, powers of attorney and assurances as may be required in order
to
better assign, service, transfer, grant, convey, assure and confirm to
Purchaser, or to collect and reduce to possession, the Loans and the collateral
as provided for herein;
(v) from
and
after the Closing , Seller shall promptly forward (but no later than
one
business day after receipt thereof) to Purchaser any and all payments received
by Seller from borrower
or any other person or entity on account of or related to any obligation
or
liability arising under the Loan Documents;
(vi) from
and
after the Closing, Seller shall promptly forward to Purchaser (at the address
specified herein for notices) originals of any and all bills, invoices,
insurance binders, policies or certificates, documents and other correspondence
it receives relating to the Loans, the mortgaged property or the Loan
Documents;
(vii)
to the
best
knowledge
of Seller,
there
is no litigation or action at law or in equity pending, with the exception
of
***
which
is
in bankruptcy, or
threatened against it and no proceeding of any kind is pending or threatened
by
any federal, state or local governmental or administrative body which will
or
might materially affect the Loans and the mortgaged property or Seller’s ability
to consummate the transactions contemplated hereby
(viii) except
for ***,
Seller
has not received any notice of, and Seller does not have actual knowledge
of any
default or condition, which upon the giving of notice, the passage of time,
or
both would constitute such a default, on the part of Seller or borrower under
any of the Loan Documents;
(ix) at
any
time, and from time to time hereafter, Seller will, in connection with the
Loans,
(A) Upon
receipt of written approval from Distinctive Solutions that they have approved
such, upload all necessary information (both SQL and CCM software) relating
to
the active Loans to Distinctive Solutions and allow for the transfer of Seller’s
rights to any Distinctive Solutions software to Purchaser;
(B) provide
Purchaser and its representatives access to the personnel, advisors, customers,
previous audits, invoices, historical collateral data (ie; agings, collateral,
UCC search reports, business credit reports, analysis, appraisals,
borrower/guarantor financial statements), properties, books and records
(including without limitation, loan files, tax notices, legal notices, account
debtor correspondence, copies of all ancillary documents and correspondence,
as
well as servicing records (in hard and soft/down-loadable formats, electronic
information in a format suitable for download onto Purchaser’s systems,
including without limitation, any and all assistance necessary to download
information relating to the Loans which are contained within the Distinctive
Solutions system);
(C) cooperate
with Purchaser to transition or cause (1) any
phone or
800 number and have such
phone or
800 number provider to forward any calls relating to the Loans to a number
designated by Purchaser, (2)
the
United States Postal Service to assign the secured dedicated post office
box
(1089 San Jose, California) located at the US Post Office, 000 Xxxxx
0xx
Xxxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000 (the “Dedicated PO Box”) for Purchaser’s benefit
(upon the assignment of the Dedicated PO Box to Purchaser, within 1 business
of
receipt, Purchaser shall deliver to Seller any mail not related to the
Loans),
(3)
the
existing courier service, Gold Rush Express, to pick up and deliver contents
of
the Dedicated PO Box to Purchaser’s
ABL
Group, and (4)
Trans
Box Courier Services to delivery client packages relating to the Loans, to
Purchaser’s new ABL location; and
(D) transfer
the following to Purchaser: electronic HCG back up data files
(but
excluding any
email
archives),
contents
of three 4 Lateral Drawer fireproof filing cabinets, six 4 Lateral Drawer
filing
cabinets and 3 Three Lateral Drawer filing cabinets, and copies of payroll
tax
files of any borrower or guarantor under the Loans;
(x) Seller
agrees not to solicit any banking
services
business (including
without limitation, loan and deposit services) from
the
borrowers,
guarantors any
obligation or liability arising under
the
Loans from the date hereof until 12 months after the date of this Purchase
Agreement;
(xi) as
to
each Loan, the following representations and warranties are true and correct
in
all material respects as of the date hereof, subject to the limitations set
forth in subsection (C) below;
(A) Exhibit F
annexed
hereto accurately sets forth, as of January 26, 2006, the outstanding principal
balance of such Loan, accrued interest, the maturity date, the date through
which interest has been paid, and the maximum amount of any commitment to
advance funds after the Closing.
(B) Seller
is
the sole owner of each Loan and has full right to sell and assign each Loan
anticipated to be sold by it hereunder without the consent of any third party,
except such consent as has been obtained or will be obtained and the Loans
are
free and clear of any and all liens, pledges, charges or security interests
of
any nature encumbering the Loans.
(C) All
documents delivered by Seller with respect to the Loans are true, complete
and
correct originals or copies thereof, and all information supplied by Seller
concerning the Loans is materially correct, except that Seller makes no
representation as to accuracy of information supplied by any borrower or
guarantor under the Loan Documents.
(D) Except
by
written instrument or other written documentation delivered to Purchaser
prior to
the execution of this Purchase Agreement,
neither
Seller nor any prior holder of the Loan has modified any related note or
mortgage securing a note or satisfied or canceled such note or mortgage in
whole
or in part.
(E) Based
upon the lender's title insurance policy or other evidence of title received
by
Seller with respect to a Loan, any mortgage or deed of trust assigned by
Seller
is a valid and enforceable first lien on the fee interest in the real property
encumbered thereby subject to the exceptions listed in such policy.
(F) The
note
relating to each Loan sold by Seller pursuant hereto and the related mortgage
are the
legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms
except
as such enforcement may be limited by bankruptcy, insolvency, reorganization
or
other similar laws affecting the enforcement of creditors' rights generally
and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(G) Except
as
otherwise set forth on Exhibit
E,
there
has been issued in connection with each mortgage relating to a Loan sold
by a
Seller pursuant hereto, (i) a valid and enforceable ALTA policy of title
insurance (or any amendment or supplement thereto or other form of title
insurance policy affording equivalent coverage and customarily accepted by
institutional lenders in the jurisdiction in which the mortgaged property
relating to a Loan sold by Seller pursuant hereto is located) (each a
"Title
Insurance Policy")
by a
title insurer in an amount equal to the lesser of (A) the principal amount
of
such Loan to the extent advanced and (B) the approximate fair market value
of
such mortgaged property as of the date of recording of the subject mortgage,
subject to the conditions and limitations set forth in such Title Insurance
Policy, or (ii) a title opinion from an attorney licensed to practice in
such
jurisdiction, or (iii) a title report or specimen policy from a title insurer
or
such other form of title assurance as was customarily employed in the relevant
jurisdiction (including blanket insurance coverage). If a title insurance
policy
was issued, such Title Insurance Policy is presently in full force and effect
and all premiums with respect thereto that are due and payable have been
paid in
full. In addition, as of the Closing each such Title Insurance Policy insures
such Seller that each of the mortgages relating to a Loan sold by the Seller
pursuant hereto is a valid lien on the property therein described with the
lien
priority disclosed on such policy.
(b) Purchaser
hereby represents and warrants to Seller as follows:
(i) Purchaser
has full power and authority, and has taken all action necessary, to execute
and
deliver this Purchase Agreement and any and all other documents required
or
permitted to be executed or delivered by Purchaser in connection with this
Purchase Agreement and to fulfill Purchaser's obligations under, and to
consummate the transactions contemplated by, this Purchase Agreement, and
no
governmental authorizations or other authorizations are required in connection
therewith;
(ii) this
Purchase Agreement constitutes the legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms (subject
to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally); and
(iii) neither
the execution, delivery and performance of this Purchase Agreement nor the
consummation of the transactions contemplated hereby is prohibited by, or
requires Purchaser to obtain any consent, authorization, approval or
registration under any law, statute, rule, regulation, judgment, order, writ,
injunction or decree which is binding upon Purchaser.
4. Brokers.
Each
party represents to the other that this Purchase Agreement was not brought
about
by a broker. Purchaser shall indemnify, defend and hold harmless Seller against
all claims, liabilities, costs, damages and expenses of any nature arising
out
of any claim, demand or liability to or asserted by any broker, agent or
finder,
licensed or otherwise, claiming to have acted on behalf of or to have dealt
with
Purchaser in connection with the transactions contemplated by this Purchase
Agreement. Seller shall indemnify, defend and hold harmless Purchaser against
all claims, liabilities, costs, damages and expenses of any nature arising
out
of any claim, demand or liability to or asserted by any broker, agent or
finder,
licensed or otherwise, claiming to have acted on behalf of or to have dealt
with
Seller in connection with the transactions contemplated by this Purchase
Agreement. The provisions of this Section 4 shall survive the
Closing.
5. Remedies
for Breach.
(a) Breach.
(i) If
for
any reason Seller or Purchaser materially breaches any representation, warranty
or agreement under this Purchase Agreement, then either party shall be entitled
to terminate this Purchase Agreement upon notice to the other party, and
upon
such termination, neither party shall thereafter have any further obligations
under this Purchase Agreement. In addition, Seller and Purchaser shall be
entitled to indemnification as provided in section 14 hereof
(ii) If
for
any reason Seller or Purchaser materially breaches any representation, warranty,
covenant or agreement under this Purchase Agreement, then, either party to
this
Purchase
Agreement
may
avail itself of any legal or equitable rights (including, without limitation,
the right of specific performance and/or money damages) which either party
may
have at law or in equity or under this Purchase Agreement.
(b) Survival
of Representations and Warranties.
Seller's and Purchaser’s representations, warranties, covenants and agreements
contained herein of this Purchase Agreement shall survive the Closing for
a
period (the "Survival
Period")
ending
on the date that is
12 months
following the Closing.
6. Governing
Law.
This
Purchase Agreement shall be governed by and construed in accordance with
the
laws of the State of California without regard to conflict of law
principles.
7. Notices.
All
communications among the parties or notices in connection with this Purchase
Agreement shall be in writing, hand-delivered or sent postage or shipping
prepaid by certified mail, return receipt requested, or by reputable overnight
courier, addressed to each party as follows:
To
Seller: Heritage
Bank of Commerce
Attention:
Xx. Xxx Xxxxxx, Executive Vice President
000
Xxxxxxx Xxxxxxxxx
Xxx
Xxxx,
XX 00000
and
To
Purchaser: County
Bank
Attn:
Xx
Xxxxx, President and COO
000
X.
Xxxx Xxxxxx
X.X.
Xxx
000
Xxxxxx,
Xxxxxxxxxx 00000
All
such
communications and notices shall be effective upon receipt.
8. Time.
Time is
of the essence for all provisions of this Purchase Agreement.
9. Interpretation.
The
headings of the various sections of this Purchase Agreement are for convenience
of reference only and shall not affect the meaning or construction of any
provisions hereof.
10. Counterparts.
This
Purchase Agreement may be executed in one or more counterparts, each of which
shall be an original but all of which, taken together, shall constitute one
and
the same instrument.
11. Successors
and Assigns.
This
Purchase Agreement, including, without limitation, the representations,
warranties and covenants contained herein, shall be binding upon and inure
to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
12. Costs
and Expenses.
Except
as otherwise set forth herein, each party shall be solely responsible for
their
own costs and expenses (including legal expenses) incurred with respect to
this
Purchase Agreement and the transactions contemplated hereby.
13. Entire
Agreement.
This
Purchase Agreement (together with the Exhibits annexed hereto) sets forth
the
entire agreement and understanding of the parties hereto with respect to
the
subject matter hereof, and supersedes all prior agreements and understandings
between the parties hereto with respect to the transactions contemplated
hereby.
14. Indemnification;
Hold Harmless.
(a) Seller
and Purchaser hereby agree to indemnify, defend and hold each other harmless
from and against any and all claims, causes of action, loss, cost or damage,
or
any nature including, without limitation, reasonable attorneys’ fees and
expenses (i) arising out of any act, error or omission, or alleged act, error
or
omission, of Seller or Purchaser or any employee, agent or representative
authorized to act and acting, or failing to act, on Seller’s or Purchaser’s
behalf with respect to the Loans or the collateral or any Loan Document
occurring prior to the Closing;
(ii)
arising out of Seller’s or Purchaser’s willful failure to perform any of its
obligations hereunder;
or
(iii)
arising out of any falsity, incorrectness or incompleteness in any material
respect of any representation or warranty made by Seller or Purchaser herein
or
otherwise in connection with this transaction.
15. Conflicts.
If and
to the extent there exists any conflict between the terms of the Exhibits
and
the terms of this Purchase Agreement, the terms of this Purchase Agreement
shall
govern.
IN
WITNESS WHEREOF, the undersigned have duly executed this Purchase Agreement
as
of the date first above written.
SELLER:
HERITAGE
BANK OF COMMERCE
By:____________________________
Name:
Title:
PURCHASER:
COUNTY
BANK
________________________________
By:______________________________
Name:
Title:
