WAREHOUSE LOAN PURCHASE AGREEMENT

Exhibit 10.1

 

WAREHOUSE LOAN

PURCHASE AGREEMENT

 

Dated as of March 23, 2005

 

THIS WAREHOUSE LOAN PURCHASE AGREEMENT (as amended, restated, supplemented and otherwise modified from time to time, this “ Agreement ”) is entered into among MWL FUNDING, INC., a Delaware corporation (the “ Seller ”), CAFCO, LLC, a Delaware limited liability company, CHARTA, LLC, a Delaware limited liability company, and CRC FUNDING, LLC, a Delaware limited liability company, as Conduit Purchasers (as defined herein), CITIBANK, N.A., as a Committed Purchaser (as defined herein), CITICORP NORTH AMERICA, INC., a Delaware corporation (“ CNAI ”), as program agent (the “ Program Agent ”) for the Conduit Purchasers and the Committed Purchaser and as a Group Agent, the other Conduit Purchasers, Committed Purchasers and Group Agents (each as defined below) from time to time party hereto, and COLONIAL BANK, N.A., a national banking association (“ Colonial Bank ”), as Servicer (as defined below) and as Facility Custodian (as defined below).

 

PRELIMINARY STATEMENT. The Seller has acquired, and may continue to acquire, Transferred Assets (as hereinafter defined) from the Originator (as defined below), either by purchase or by contribution to the capital of the Seller, as determined from time to time by the Originator and the Seller. The Seller wishes to sell interests in such Transferred Assets and the other Collateral (as defined below) to the Conduit Purchasers and the Committed Purchasers. The Conduit Purchasers may, in their respective sole discretion, make such purchases, and the Committed Purchasers are prepared to make such purchases, in each case on the terms set forth herein. Accordingly, the parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01. Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“ Account Control Agreement ” means an account control agreement in form and substance satisfactory to the Program Agent with respect to the Seller’s Account and each other deposit account in the name of the Seller, among the bank at which such deposit account is held, the Seller and the Program Agent, providing for, inter alia , the perfection of the Program Agent’s security interest in such deposit account, as such agreement may be amended, restated, supplemented and otherwise modified from time to time.

 

“ Adjusted Eurodollar Rate ” means, for any Fixed Period, a rate per annum equal to the rate per annum obtained by dividing (i) the Eurodollar Rate for such Fixed Period by (ii) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Fixed Period.

 

“ Advance ” means (i) each advance (consisting of all principal, interest, finance charges and any other amounts payable in connection with the enforcement of any of the foregoing) made to any Designated CNB Customer under a CNB Customer Loan Agreement

 

(other than a Syndicated Loan Agreement) and the related CNB Customer Note, and (ii) the pro-rata interest of the Originator (and the Seller, as assignee) in, and rights with respect to, any advance (consisting of all principal, interest, finance charges and any other amounts payable in connection with the enforcement of any of the foregoing) made to any Designated CNB Customer under a Syndicated Loan Agreement and the related CNB Customer Note, in each case whether constituting an account, chattel paper, instrument or general intangible.

 

“ Adverse Claim ” means a lien, security interest or other charge or encumbrance, or any other type of preferential arrangement.

 

“ Affected Person ” has the meaning specified in Section 2.08(a) .

 

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or is a director or officer of such Person.

 

“ Agency AOT Mortgage Pool ” means an AOT Mortgage Pool which has been designated pursuant to the related AOT Agreement as collateral for an AOT Security to be issued or guaranteed by FNMA, FHLMC or GNMA.

 

“ Agent ” means the Program Agent or any Group Agent and “Agents” means, collectively, the Program Agent and the Group Agents.

 

“ Agreement ” has the meaning specified in the preamble.

 

“ Alt-A Mortgage Loan ” means a Mortgage Loan that fully conforms to all underwriting and other requirements of FHLMC, FNMA or GNMA and which satisfies all requirements of an “A” rating under the Credit Quality Guidelines, other than with respect to the FICO Score of the Mortgagor thereof.

 

“ Alternate Base Rate ” means (a) for each Committed Purchaser or Conduit Purchaser in the Group which includes CAFCO, CHARTA and CRC, a fluctuating rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the highest of:

 

(i) the rate of interest announced publicly by Citibank in New York, New York, from time to time as Citibank’s base rate; and

 

(ii) 1/2 of one percent above the Federal Funds Rate; and

 

(b) for each Committed Purchaser or Conduit Purchaser in each other Group, a fluctuating rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the rate designated in such Group’s Assignment and Acceptance.

 

“ Amortization Period ” means the period commencing on the day following the last day of the Revolving Period and ending on the later of the Facility Termination Date and the date on which no Obligations shall be outstanding.

 

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“ AOT Agreement ” means an agreement in substantially the form attached hereto as Annex J , between the Originator and a Designated CNB Customer, or such other form as may be agreed upon between the Seller and the Program Agent from time to time, pursuant to which the Originator purchases interests in AOT Mortgage Pools and AOT Securities from such Designated CNB Customer.

 

“ AOT Concentration Excess Amount ” means, at any time, the aggregate, for all interests in AOT Mortgage Pools and AOT Securities, of the amount by which (i) the aggregate Outstanding Balance of all Pool Assets constituting interests in AOT Mortgage Pools and AOT Securities purchased from any CNB Customer, exceeds (ii) the AOT Concentration Limit for such CNB Customer. For the purpose of calculating the Net Conforming Pool Balance and the Net Non-Conforming Pool Balance, the AOT Concentration Excess Amount shall be allocated first , to Pool Assets which are included in clause (i) of the preceding sentence and relate to Non-Conforming Mortgage Loans, and second , to Pool Assets which are included in clause (i) of the preceding sentence and relate to Conforming Mortgage Loans.

 

“ AOT Concentration Limit ” has the meaning set forth on Annex I .

 

“ AOT Custodial Agreement ” means an agreement in substantially the form attached hereto as Annex K , or such other form as may be agreed upon between the Seller and the Program Agent from time to time, between the Originator, a Designated CNB Customer, and Colonial Bank, as “Custodian”, pursuant to which Colonial Bank acts as custodian with respect to certain documents related to AOT Mortgage Loans, interests in which are purchased by the Originator from such Designated CNB Customer.

 

“ AOT Mortgage Loan ” means a Mortgage Loan in which a 100% participation interest has been sold by a Designated CNB Customer to the Originator pursuant to an AOT Agreement.

 

“ AOT Mortgage Pool ” means each pool of AOT Mortgage Loans in which an interest has been purchased by the Originator from any Designated CNB Customer under an AOT Agreement (including all principal, interest, finance charges and any other amounts payable in connection with the enforcement of such AOT Mortgage Loans and the related AOT Participation Certificate).

 

“ AOT Participation Certificate ” means a certificate representing a 100% participation interest in an AOT Mortgage Pool (including all principal, interest, finance charges and any other amounts payable in connection with the enforcement of such AOT Mortgage Pool or any AOT Mortgage Loan therein).

 

“ AOT Securities Account ” means a securities account maintained at The Bank of New York (or another depository institution acceptable to the Program Agent) which is the subject of an AOT Security Custodial Agreement.

 

“ AOT Security ” means (i) a fully modified pass-through mortgage-backed certificate guaranteed by GNMA, (ii) a guaranteed mortgage pass-through certificate issued by FNMA, (iii) a mortgage participation certificate issued by FHLMC, or (iv) a pass-through certificate representing, or backed by an interest in, a pool of AOT Mortgage Loans established

 

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by a private issuer of mortgage-backed securities acceptable to the Program Agent that is not GNMA, FNMA or FHLMC, in each case, which has been issued with respect to an AOT Mortgage Pool in which an interest has been purchased from a Designated CNB Customer pursuant to an AOT Agreement (including all principal, interest, finance charges and any other amounts payable in connection with the enforcement of such AOT Security and the related AOT Participation Certificate and AOT Agreement).

 

“ AOT Security Custodial Agreement ” means an agreement in substantially the form attached hereto as Annex L , or such other form as may be agreed upon between the Seller and the Program Agent from time to time, among a CNB Customer, Colonial Bank and The Bank of New York (or another depository institution acceptable to the Program Agent), providing for, inter alia , the perfection of the Originator’s security interest in all AOT Securities deposited in an AOT Securities Account.

 

“ AOT Takeout Assignment ” means an agreement in substantially the form attached as Exhibit A to the form of AOT Agreement attached hereto as Annex J , or such other form as may be agreed upon between the Seller and the Program Agent from time to time, among a CNB Customer, the Originator and an Investor, providing for, inter alia , the assignment to the Originator of the Take-Out Commitment with respect to an AOT Security.

 

“ Appraised Value ” means, as to any Mortgaged Property with respect to any Mortgage Loan, the appraised value of such Mortgaged Property based upon the appraisal made at the time of the origination of the related Mortgage Loan.

 

“ Approved Private Investor ” means any Investor which has a Tangible Net Worth of no less than $500,000 and has been designated in writing by the Seller and approved in writing by the Program Agent as an “Approved Private Investor” and as to which the Program Agent has not notified the Seller that such Investor shall thereafter cease to be an Approved Private Investor due to a material adverse change (in the reasonable credit judgment of the Program Agent) in the ability of such Investor to perform its obligations under any Take-Out Commitment.

 

“ Asset ” means (i) each Advance, (ii) the participation interest of the Originator (and the Seller, as assignee) in each COLB Mortgage Loan, (iii) the participation interest of the Originator (and the Seller, as assignee) in each AOT Mortgage Pool, and (iv) the participation interest of the Originator (and the Seller, as assignee) in each AOT Security, in each case whether constituting an account, chattel paper, instrument, investment property, security or general intangible.

 

“ Asset Interest ” means, at any time, an undivided percentage ownership interest in (i) all then outstanding Pool Assets, (ii) all Related Security with respect to such Pool Assets, and (iii) all Collections with respect to, and other proceeds of, such Pool Assets. Such undivided percentage interest shall be computed at the times and in the manner specified in Section 2.03 as:

 

 

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where:

 

 

Each Asset Interest shall be determined from time to time pursuant to the provisions of Section 2.03 . Notwithstanding the foregoing, from and after the date on which the Termination Date shall have occurred for all Asset Interests and until each Asset Interest is reduced to zero in accordance with Section 2.03 , the percentage ownership interest represented by each Asset Interest shall be such percentage as calculated on the Business Day immediately preceding the Termination Date.

 

“ Asset Interest Excess ” means the excess, if any, of (i) the sum of the aggregate Capital of all Asset Interests plus the Loss Reserve over (ii) the Net Asset Pool Balance, in each case as of any Weekly Reporting Date or any other day for which such data is provided in an Asset Interest Report delivered hereunder.

 

“ Asset Interest Report ” means a report in substantially the form of Annex A hereto and containing such additional information as the Program Agent may reasonably request from time to time, furnished by the Servicer, pursuant to Section 6.02(h) .

 

“ Asset Turnover Days ” means, on any date of determination, an amount equal to the average number of days elapsed between the origination date of each then outstanding Pool Asset (excluding any interest in an AOT Mortgage Pool or AOT Security) and such date of determination.

 

“ Asset Purchase Agreement ” means (a) in the case of any Committed Purchaser other than Citibank, the asset purchase agreement entered into by such Committed Purchaser concurrently with the Assignment and Acceptance pursuant to which it became party to this Agreement, (b) in the case of Citibank, the secondary market agreement, asset purchase agreement or other similar liquidity agreement entered into by such Committed Purchaser for the benefit of its respective Conduit Purchasers, to the extent relating to the sale or transfer of interests in Asset Interests, and (c) in the case of any other Person providing liquidity to a Conduit Purchaser, the asset purchase agreement or other similar liquidity agreement entered into by such Person for the benefit of such Conduit Purchaser, in each case as amended, restated, supplemented or otherwise modified from time to time.

 

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“ Assignee Rate ” for any Fixed Period for any Asset Interest means a rate per annum equal to the Eurodollar Rate for such Fixed Period plus 1.25%; provided, however , that in the case of:

 

(a) any Fixed Period on or prior to the first day of which a Conduit Purchaser or Committed Purchaser shall have notified the Program Agent and each Group Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Conduit Purchaser or Committed Purchaser to fund such Asset Interest at the Assignee Rate set forth above (and such Conduit Purchaser or Committed Purchaser shall not have subsequently notified the Program Agent and each Group Agent that such circumstances no longer exist),

 

(b) any Fixed Period of one to (and including) 29 days (it being understood and agreed that this clause (b) shall not be applicable to a Fixed Period for which Yield is to be computed by reference to the Eurodollar Rate (i) that is intended to have a one-month duration but due solely to LIBOR interest period convention the duration thereof will be less than 30 days or (ii) that is the initial Fixed Period following the sale by a Conduit Purchaser to its Related Committed Purchasers or any other Liquidity Provider of its interest in Asset Interests pursuant to an Asset Purchase Agreement),

 

(c) any Fixed Period as to which the Program Agent and each Group Agent does not receive notice, by no later than 12:00 noon (New York City time) on the third Business Day preceding the first day of such Fixed Period, that the related Asset Interest will not be funded by a Conduit Purchaser through the issuance of Promissory Notes or commercial paper, as the case may be, or

 

(d) any Fixed Period for an Asset Interest the Capital of which allocated to the Conduit Purchasers or the Committed Purchasers is less than $500,000,

 

the “ Assignee Rate ” for such Fixed Period shall be a rate per annum equal to the Alternate Base Rate in effect from time to time during such Fixed Period; provided further that the Program Agent, the Group Agents and the Seller may agree in writing from time to time upon a different “ Assignee Rate ”.

 

“ Assignment and Acceptance ” means an assignment and acceptance agreement entered into by a Committed Purchaser, an Eligible Assignee, such Committed Purchaser’s Group Agent and the Program Agent, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Annex B hereto.

 

“ Bailee Concentration Excess Amount ” means, at any time, the aggregate, for all Investors, of the amount by which (i) the aggregate Outstanding Balance of all Pool Assets, the Mortgage Files with respect to which are held by an Investor as permitted pursuant to Section 6.09 (excluding Pool Assets in connection with Indirect Syndicated Mortgage Loans), exceeds (ii) the Bailee Concentration Limit for such Investor. For the purpose of calculating the Net Conforming Pool Balance and the Net Non-Conforming Pool Balance, the Bailee Concentration Excess Amount shall be allocated first , to Pool Assets which are included in clause (i) of the preceding sentence and relate to Non-Conforming Mortgage Loans, and second , to Pool Assets

 

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which are included in clause (i) of the preceding sentence and relate to Conforming Mortgage Loans.

 

“ Bailee Concentration Limit ” has the meaning set forth on Annex I .

 

“ Base Rate Asset Interest ” means all or a portion of an Asset Interest with respect to which Yield is determined on the basis of the Alternate Base Rate.

 

“ Beneficiary ” means, as of any date, the Conduit Purchasers, the Committed Purchasers, the Group Agents and the Program Agent.

 

“ Best-Efforts Take Out Commitment ” means a current, valid, binding, enforceable, mandatory (on the part of the Investor) written commitment which (i) is issued by an Investor to purchase, at a fixed price, one or more Mortgage Loans from the related CNB Customer prior to the date that is 120 days from the date that such Mortgage Loan was originated or acquired, (ii) is in form customarily used by the applicable Investor and (iii) is not subject to any term or condition that is not customary in commitments of like nature or that, in the reasonably anticipated course of events, cannot be fully complied with prior to the expiration thereof.

 

“ Business Day ” means any day on which (a) banks are not authorized or required to close in New York, New York and (b) if this definition of “Business Day” is utilized in connection with the Eurodollar Rate, dealings are carried out in the London interbank market.

 

“ CAFCO ” means CAFCO, LLC, a Delaware limited liability company, and any successor or assign thereof that is a receivables investment company which in the ordinary course of its business issues commercial paper or other securities to fund its acquisition and maintenance of receivables.

 

“ Capital ” of any Asset Interest means the original amount paid to the Seller for such Asset Interest at the time of its purchase by a Purchaser pursuant to this Agreement, as such amount may be divided or combined in accordance with Section 2.07 , in each case as reduced from time to time by Collections received by such Purchaser from distributions made pursuant to Section 2.04 on account of such Capital held by such Purchaser; provided that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution, as though it had not been received by such Purchaser.

 

“ Capital Lease ” means any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which, in accordance with GAAP, should be capitalized on the lessee’s balance sheet.

 

“ Capital Lease Obligation ” of any Person means the obligations of such Person to pay rent or other amounts under any Capital Lease, which obligations should be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

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“ Change in Control ” means the occurrence of any of the following: (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended), shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of 20% or more of the issued and outstanding Voting Stock of the Parent, (b) during any period of twelve consecutive Months, individuals who at the beginning of such period constituted the board of directors of the Parent (together with any new directors whose election by the board of directors of the Parent or whose nomination for election by the stockholders of the Parent was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose elections or nomination for election was previously so approved) cease for any reason other than death or disability to constitute the majority of the directors then in office, (c) the Parent shall cease to own and control all of the economic and voting rights associated with all of the outstanding Stock of the Originator, (d) the Originator shall merge with or into any other Person, or (e) the Originator shall cease to own and control all of the economic and voting rights associated with all of the outstanding Stock of the Seller.

 

“ CHARTA ” means CHARTA, LLC, a Delaware limited liability company, and any successor or assign thereof that is a receivables investment company which in the ordinary course of its business issues commercial paper or other securities to fund its acquisition and maintenance of receivables.

 

“ Charter Documents ” means, with respect to any corporation or limited liability company, such Person’s articles or certificate of incorporation or formation and such entity’s bylaws or operating agreement.

 

“ Citibank ” means Citibank, N.A., a national banking association, and its successors and assigns.

 

“ Closed-End Second Mortgage Loan ” means a loan, other than a HELOC, secured by a second lien on Mortgaged Property that is the primary residence of the related mortgagor and which satisfies all requirements of an “A” rating under the Credit Quality Guidelines.

 

“ CNAI ” has the meaning specified in the preamble.

 

“ CNB Account ” means each CNB Customer Deposit Account for which Colonial Bank is the account bank.

 

“ CNB Customer ” means a Person who, in the ordinary course of its business, originates or acquires Mortgage Loans which are secured by residential real estate.

 

“ CNB Customer Concentration Excess Amount ” means, at any time, the aggregate, for all Designated CNB Customers, of the amount by which (i) the Outstanding Balance of Pool Assets due or purchased from a Designated CNB Customer exceeds (ii) the CNB Customer Concentration Limit for such Designated CNB Customer. For the purpose of calculating the Net Conforming Pool Balance and the Net Non-Conforming Pool Balance, the CNB Customer Concentration Excess Amount shall be allocated first , to Pool Assets which are included in clause (i) of the preceding sentence and relate to Non-Conforming Mortgage Loans,

 

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and second , to Pool Assets which are included in clause (i) of the preceding sentence and relate to Conforming Mortgage Loans.

 

“ CNB Customer Concentration Limit ” has the meaning set forth on Annex I .

 

“ CNB Customer Deposit Account ” means each Master Advance Account, each Investor Funding Account and each Controlled Disbursement Account.

 

“ CNB Customer Loan Agreement ” means a loan agreement between a CNB Customer and the Originator (and, in the case of a Syndicated Loan Agreement, one or more other financial institutions) pursuant to which the Originator (and such financial institutions, if applicable) extends financing to such CNB Customer, all of the proceeds of which are used by such CNB Customer to originate or purchase Mortgage Loans, and the terms of which are in compliance with the Credit Policy.

 

“ CNB Customer Note ” means a promissory note executed by a CNB Customer in connection with a CNB Customer Loan Agreement (including, without limitation, any Syndicated Loan Agreement) evidencing Advances made to such CNB Customer pursuant to such CNB Customer Loan Agreement.

 

“ CNB Customer Transaction Documents ” means all CNB Customer Loan Agreements, CNB Customer Notes, Loan Participation Sale Agreements, COLB Participation Certificates, AOT Agreements, AOT Participation Certificates, AOT Custodial Agreements, AOT Security Custodial Agreements, AOT Takeout Assignments and all other agreements and documents delivered and/or related thereto, as each may be amended, restated, supplemented and otherwise modified from time to time.

 

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

 

“ COLB Mortgage Loan ” means a Mortgage Loan in which a participation interest has been sold by a Designated CNB Customer to the Originator pursuant to a Loan Participation Sale Agreement for a purchase price equal to the lesser of (i) (A) 99% of the Take-Out Price related to such Mortgage Loan, in the case of any Conforming Mortgage Loan, or (B) 98% of the Take-Out Price related to such Mortgage Loan, in the case of any Non-Conforming Mortgage Loan, or (ii) the principal balance of such Mortgage Loan (including all principal, interest, finance charges and any other amounts payable in connection with the enforcement of such Mortgage Loan and the related Loan Participation Sale Agreement).

 

“ COLB Participation Certificate ” means a certificate representing a participation interest in one or more COLB Mortgage Loans (including all principal, interest, finance charges and any other amounts payable in connection with the enforcement of such COLB Mortgage Loans).

 

“ Collateral ” has the meaning specified in Section 2.11 .

 

“ Collection Trigger Event ” means the occurrence of any of the following events: (a) a Servicer Default or other Termination Event shall have occurred and be continuing or (b) the Servicer shall have failed to maintain the Required Ratings.

 

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“ Collections ” means, collectively all Interest Collections and all Principal Collections.

 

“ Colonial Bank ” has the meaning specified in the preamble.

 

“ Commitment ” of any Committed Purchaser means, (a) with respect to Citibank, $510,000,000 or such amount as reduced or increased by any Assignment and Acceptance entered into among Citibank, another Committed Purchaser, the Group Agent for Citibank and the Program Agent, and (b) with respect to a Committed Purchaser that has become a party hereto pursuant to an Assignment and Acceptance, the amount set forth therein as such Committed Purchaser’s Commitment, in each case as such amount may be reduced or increased by an Assignment and Acceptance entered into among such Committed Purchaser, an Eligible Assignee, the Group Agent for such Committed Purchaser and the Program Agent, and as may be further reduced (or terminated) pursuant to the next sentence. Any reduction (or termination) of the Facility Amount below the aggregate amount of the Commitments of all Committed Purchasers pursuant to the terms of this Agreement shall reduce ratably (or terminate) each Committed Purchaser’s Commitment.

 

“ Commitment Termination Date ” means the earliest of (a) March 22, 2006, unless, prior to such date (or the date so extended pursuant to this clause), upon the Seller’s request, made not more than 45 days prior to the then Commitment Termination Date, each Conduit Purchaser and, with respect to each such Conduit Purchaser, one or more of its Related Committed Purchasers which, immediately after giving effect to such extension would have Commitments in an aggregate amount equal to such Conduit Purchaser’s ratable share of the Purchase Limit of its Group to be in effect immediately after giving effect to such extension, shall in their sole discretion consent, which consent shall be given not more than 30 days prior to the then Commitment Termination Date, to the extension of the Commitment Termination Date to the date occurring not more than 364 days after the then Commitment Termination Date; provided, however , that any failure of any Conduit Purchaser or Committed Purchaser to respond to the Seller’s request for such extension shall be deemed a denial of such request by such Committed Purchaser, (b) the Facility Termination Date, (c) the date determined pursuant to Section 7.01 , and (d) the date the Facility Amount permanently reduces to zero pursuant to Section 2.01(b) .

 

“ Committed Purchasers ” means Citibank and each Eligible Assignee that shall become a party to this Agreement pursuant to Section 11.03 .

 

“ Conduit Purchaser ” means CAFCO, CHARTA, CRC and all other owners by assignment or otherwise of an Asset Interest originally made by CAFCO, CHARTA or CRC, and, to the extent of the undivided interests so purchased, shall include any participants.

 

“ Conforming Mortgage Loan ” means each first-priority Conventional Mortgage Loan, Alt-A Mortgage Loan and Jumbo Mortgage Loan.

 

“ Construction Loan ” means a Mortgage Loan (other than a HELOC) provided to a Mortgagor for the primary purpose of constructing improvements on the related Mortgaged Property.

 

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“ Controlled Disbursement Account ” means, with respect to any CNB Customer, the deposit account of such CNB Customer which is a zero balance account used only to draw funds from the related Master Advance Account in connection with Mortgage Loan closings pursuant to the related CNB Customer Transaction Documents.

 

“ Conventional Mortgage Loan ” means a Mortgage Loan that conforms with all underwriting and other applicable requirements for purchase under a FHLMC, FNMA or GNMA standard form of conventional mortgage loan purchase contract and that conforms with each of the criteria for an “A” rating under the Credit Quality Guidelines.

 

“ CP Rate ” means for any Fixed Period and the related Asset Interest:

 

(a) with respect to CAFCO, CHARTA or CRC, the per annum rate equivalent to the weighted average of the per annum rates paid or payable by such Conduit Purchaser from time to time as interest on or otherwise (by means of interest rate hedges or otherwise) in respect of those Promissory Notes issued by such Conduit Purchaser that are allocated, in whole or in part, by such Conduit Purchaser’s Group Agent (on behalf of such Conduit Purchaser) to fund or maintain such Asset Interest during such Fixed Period as determined by such Group Agent (on behalf of such Conduit Purchaser) and reported to the Seller, the Program Agent and, if the Servicer is not the Seller, the Servicer, which rates shall reflect and give effect to the commissions of placement agents and dealers in respect of such Promissory Notes, to the extent such commissions are allocated, in whole or in part, to such Promissory Notes by such Group Agent (on behalf of such Conduit Purchaser); provided, however , that (i) if any component of such rate is a discount rate, in calculating the “ CP Rate ” for such Fixed Period such Group Agent shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum; (ii) the CP Rate with respect to Asset Interests funded by such Conduit Purchaser’s Participants shall be the same rate as in effect from time to time on Asset Interests or portions thereof that are not funded by one of its Participants; and (iii) if all of the Asset Interests maintained by such Conduit Purchaser are funded by its Participants, then the CP Rate shall be such Conduit Purchaser’s pool funding rate in effect from time to time for its largest size pool of transactions which settles monthly; and

 

(b) with respect to any other Conduit Purchaser, the per annum rate specified in such Conduit Purchaser’s Assignment and Acceptance.

 

“ CP Rate Asset Interest ” means all or a portion of an Asset Interest with respect to which Yield is determined on the basis of the CP Rate.

 

“ CRC ” means CRC Funding, LLC, a Delaware limited liability company, and any successor or assign thereof that is a receivables investment company which in the ordinary course of its business issues commercial paper or other securities to fund its acquisition and maintenance of receivables.

 

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“ Credit Policy ” means those credit and collection policies and practices of the Seller and the Originator in effect on the date of this Agreement and described in Schedule 1.01 hereto, as modified in compliance with this Agreement.

 

“ Credit Quality Guidelines ” means the credit quality guidelines set forth on Annex C .

 

“ Custodial Agreement ” means the Custodial Agreement dated as of the date of this Agreement among the Facility Custodian, the Seller, the Servicer and the Program Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“ Custodian ” means the Facility Custodian, each successor thereto, each Investor which holds the related Mortgage File with respect to any Mortgage Loan, and each Person appointed to hold the related Mortgage File with respect to any Indirect Syndicated Mortgage Loan.

 

“ Custodian Fee ” has the meaning specified in Section 2.05(b).

 

“ Debt ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Debt of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Adverse Claim on property owned or acquired by such Person, whether or not the Debt secured thereby has been assumed, (f) all Guarantees by such Person of Debt of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, surety bonds and letters of guaranty, (i) all obligations of such Person upon which interest charges are customarily paid, (j) obligations of such Person under any Hedging Agreement, and (k) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Debt of any Person shall include the Debt of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent of the terms of such Debt provide that such Person is not liable therefor. For purposes of this definition, the “principal amount” of the obligations of any Person in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time.

 

“ Dedesignation Certificate ” means a certificate in substantially the form attached as Annex D .

 

“ Deemed Collection ” means any amounts deemed to have been received by the Seller pursuant to Section 2.04(a) .

 

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“ Defaulted Asset ” means a Pool Asset, (i) in the case of any Advance or any interest in a COLB Mortgage Loan, that relates to a Defaulted Mortgage Loan, or that relates to any CNB Customer Loan Agreement or Loan Participation Sale Agreement, as applicable, under which an event of default, whether declared or undeclared, has occurred and is continuing, or (ii) in the case of any interest in an AOT Mortgage Pool or an AOT Security, that is the subject of a “Security Issuance Failure” as defined in the related AOT Agreement.

 

“ Defaulted Mortgage Loan ” means a Mortgage Loan (i) as to which any payment of principal or interest, or part thereof remains unpaid for more than ninety (90) days from the original due date for such payment, (ii) as to which the Mortgagor thereof has taken any action, or suffered any event to occur, of the type described in Section 7.01(d) or (iii) as to which any material non-payment obligation on the part of the Mortgagor thereof remains unperformed past any applicable period of grace.

 

“ Delinquent Asset ” means a Pool Asset that, solely in the case of any Advance or any interest in a COLB Mortgage Loan, relates to a Delinquent Mortgage Loan, or that relates to any CNB Customer Loan Agreement or Loan Participation Sale Agreement, as applicable, under which the performance of any obligation due by the related CNB Customer is delinquent.

 

“ Delinquent Mortgage Loan ” means a Mortgage Loan that is not a Defaulted Mortgage Loan, and as to which any payment, or part thereof, remains unpaid for 60 or more days from the original due date therefor.

 

“ Designated CNB Customer ” means, at any time, a CNB Customer listed on Schedule 2.14 and as listed by the Seller from time to time as a Designated CNB Customer on a Designation Certificate delivered by the Seller to, and approved by, the Program Agent pursuant to Section 2.14(a), unless such CNB Customer is dedesignated pursuant to Section 2.14(b) .

 

“ Designated for Delivery ” means a Mortgage Loan or an AOT Security that is designated for delivery under a Take-Out Commitment (it being agreed that the aggregate principal amount of Mortgage Loans or AOT Securities designated for delivery under a Take-Out Commitment cannot exceed the principal amount of the commitment of the applicable Investor under such Take-Out Commitment).

 

“ Designation Certificate ” means a certificate in substantially the form attached as Annex E .

 

“ E-Mail Report ” has the meaning specified in Section 6.02(h) .

 

“ Eligible Advance ” means, at any time, any Advance:

 

(i) the obligor of which is an Eligible Designated CNB Customer;

 

(ii) the proceeds of which have been used by the CNB Customer thereof solely to originate or acquire a single Mortgage Loan;

 

(iii) which is secured by a first priority perfected security interest in a single Eligible Mortgage Loan;

 

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(iv) which arises under a CNB Customer Loan Agreement under which no default, whether declared or undeclared, has occurred and is continuing and (A) the extension of the loan evidenced by such Advance has been made pursuant to and in substantial compliance with such CNB Customer Loan Agreement, and (B) such CNB Customer Loan Agreement, together with such Advance, has been duly authorized and is in full force and effect and constitutes the legal, valid and binding obligation of the related CNB Customer of such Advance, enforceable against such CNB Customer in accordance with its terms (subject to Enforceability Exceptions) and is not subject to any dispute, offset, counterclaim or defense whatsoever (including, without limitation, in connection with any litigation or arbitration);

 

(v) (A) which is either a “payment intangible” within the meaning of Section 9-102 of the UCC of all applicable jurisdictions, or the related CNB Customer Note under such Advance arose is a “promissory note” within the meaning of Section 9-102 of the UCC of all applicable jurisdictions, (B) for which the CNB Customer Note evidencing such Advance (other than any Advance made pursuant to an Indirect Syndicated Loan Agreement) has been delivered to the Facility Custodian pursuant to the requirements set forth in such Section 6.02(i) , (C) which is denominated and payable only in Dollars in the United States, and (D) no portion of which is payable on account of taxes; and

 

(vi) which arises in connection with a loan extended by the Originator to the CNB Customer of such Advance in its own name, and such loan was made by the Originator (or by the Originator and other financial institutions pursuant to a Syndicated Loan Agreement) in the ordinary course of the Originator’s mortgage warehouse lending business and substantially in accordance with the Credit Policy in effect on the date of the creation of such Advance and which, in any such case, was acquired by the Seller from the Originator pursuant to the Sale Agreement in the ordinary course of business.

 

“ Eligible AOT Mortgage Pool ” means, at any time, an AOT Mortgage Pool:

 

(i) in which a 100% participation interest has been purchased from an Eligible Designated CNB Customer;

 

(ii) comprised solely of AOT Mortgage Loans which are Eligible Mortgage Loans;

 

(iii) the interest of the Originator in which is evidenced by an AOT Participation Certificate which has been duly issued by the related Designated CNB Customer and authenticated by the AOT Custodian in accordance with the related AOT Agreement, and which has been delivered to the Facility Custodian;

 

(iv) the AOT Agreement with respect to which has been stamped with a legend in accordance with Section 6.02(l) ;

 

(v) which is the subject of a valid and binding Mandatory Take-Out Commitment which has been duly assigned to the Originator;

 

(vi) the interest of the Originator in which was acquired pursuant to an AOT Agreement, the form of which has been determined in an opinion of counsel in form and

 

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substance satisfactory to the Program Agent to result in the “true-sale” of such interest in the related AOT Mortgage Loans to the Originator with the effect that such interest would not constitute part of the bankruptcy estate of the related Designated CNB Customer in any proceedings related to the insolvency of such Designated CNB Customer;

 

(vii) (A) the interest of the Originator in which was acquired pursuant to, and in substantial compliance with, an AOT Agreement and AOT Custodial Agreement under which no default, whether declared or undeclared, has occurred and is continuing, and (B) such AOT Agreement and AOT Custodial Agreement, together with the related AOT Participation Certificate, have been duly authorized and are in full force and effect and constitute the legal, valid and binding obligations of the related Designated CNB Customer, enforceable against such Designated CNB Customer in accordance with their terms (subject to Enforceability Exceptions) and are not subject to any dispute, offset, counterclaim or defense whatsoever (including, without limitation, in connection with any litigation or arbitration);

 

(viii) the interest of the Originator in which is a “payment intangible” within the meaning of Section 9-102 of the UCC of all applicable jurisdictions, or the related AOT Participation Certificate is a “security” within the meaning of Section 8-102 of the UCC of all applicable jurisdictions, and in each case which is payable only in Dollars in the United States, and no portion of which is payable on account of taxes; and

 

(ix) the interest of the Originator in which was acquired from the related Designated CNB Customer in its own name, in the ordinary course of the Originator’s mortgage warehouse lending business and substantially in accordance with the Credit Policy in effect on the date of the acquisition of such interest in such AOT Mortgage Pool and which was acquired by the Seller from the Originator pursuant to the Sale Agreement in the ordinary course of business;

 

provided , however , that no AOT Mortgage Pool shall be an “Eligible AOT Mortgage Pool” until the Seller shall have delivered to the Program Agent (x) the forms of AOT Agreement, AOT Custodial Agreement and AOT Security Custodial Agreement to be attached hereto as Annexes J , K and L , respectively, and (y) an opinion of counsel as to the “true-sale” nature of each AOT Mortgage Pool to the Originator pursuant to such form of AOT Agreement, in each case, in form and substance satisfactory to the Program Agent as evidenced by the written approval of the Program Agent.

 

“ Eligible AOT Security ” means, at any time, an AOT Security:

 

(i) which has been issued with respect to an Eligible AOT Mortgage Pool and is held in an AOT Securities Account;

 

(ii) which is Designated for Delivery under a valid and binding Mandatory Take-Out Commitment issued by FNMA, FHLMC, GNMA or an Approved Private Take-Out Investor which has been duly assigned to the Originator;

 

(iii) which has been duly authorized and is in full force and effect and constitutes the legal, valid and binding obligation of the related issuer, enforceable against such issuer in accordance with its terms (subject to Enforceability Exceptions) and is not subject to

 

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any dispute, offset, counterclaim or defense whatsoever (including, without limitation, in connection with any litigation or arbitration); and

 

(iv) which is a “security” within the meaning of Section 8-102 of the UCC of all applicable jurisdictions, which is denominated and payable only in Dollars in the United States, and no portion of which is payable on account of taxes and which has been delivered to the “Custodian” under the applicable AOT Security Custodial Agreement;

 

provided , however , that no AOT Security shall be an “Eligible AOT Security” until the Seller shall have delivered to the Program Agent (x) the forms of AOT Agreement, AOT Custodial Agreement and AOT Security Custodial Agreement to be attached hereto as Annexes J , K and L , respectively, and (y) an opinion of counsel as to the “true-sale” nature of each related AOT Mortgage Pool to the Originator pursuant to such form of AOT Agreement, in each case, in form and substance satisfactory to the Program Agent as evidenced by the written approval of the Program Agent.

 

“ Eligible Asset ” means, at any time, a Pool Asset:

 

(i) which is (a) an Eligible Advance, (b) a participation interest in an Eligible COLB Mortgage Loan, (c) a participation interest in an Eligible AOT Mortgage Pool, or (d) a participation interest in an Eligible AOT Security;

 

(ii) the assignment of which (including, without limitation, the sale thereof), and the performance of the transactions contemplated by the Transaction Documents with respect thereto, does not contravene or conflict with any applicable laws, rules or regulations or any contractual or other restriction, limitation or encumbrance (including, without limitation, any restrictions or encumbrances contained in the related CNB Customer Transaction Documents);

 

(iii) which has not been compromised, adjusted or modified (including by extension of time or payment or the granting of a discount);

 

(iv) which is not a Delinquent Asset or a Defaulted Asset;

 

(v) which has not been outstanding for more than 120 days, and, at the time of the Seller’s acquisition thereof pursuant to the Sale Agreement, had never previously been a Pool Asset;

 

(vi) that, when added to all other Assets then constituting Pool Assets, would not cause the weighted average interest rate payable to the Originator on all Pool Assets (weighted according to the commitment amount of the Originator under the related CNB Customer Transaction Document) to be less than the Required Pool Interest Rate; and

 

(vii) which has not been selected for sale to the Seller in any manner adverse to the Purchasers or the Program Agent.

 

“ Eligible Assignee ” means (a) with respect to the Group which includes CAFCO, CHARTA and CRC, (i) CNAI or any of its Affiliates, (ii) any Person managed by Citibank,

 

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CNAI or any of their Affiliates or (iii) any financial or other institution the short-term debt of which is rated at least A-2 by S&P and P-2 by Moody’s and which is otherwise acceptable to the Group Agent for such Group, (b) with respect to any other Group, (i) the Related Committed Purchaser for such Group or any of its Affiliates, (ii) any Person managed by the Related Committed Purchaser for such Group or any of its Affiliates or (iii) any financial or other institution acceptable to the Group Agent for such Group, and (c) with respect to any Person, any other Conduit Purchaser or Committed Purchaser; it being understood and agreed that in the case of clauses (a)(iii) and (b)(iii) above, the relevant financial or other institution must also be approved by the Seller (which approval by the Seller shall not be unreasonably withheld or delayed and shall not be required if an Event of Termination or an Incipient Event of Termination has occurred and is continuing).

 

“ Eligible COLB Mortgage Loan ” means, at any time, a COLB Mortgage Loan:

 

(i) in which no less than a 98% participation interest has been purchased from an Eligible Designated CNB Customer;

 

(ii) which is an Eligible Mortgage Loan;

 

(iii) the interest of the Originator in which is evidenced by a COLB Participation Certificate which has been duly issued by the related Designated CNB Customer in accordance with the related Loan Participation Sale Agreement, and which has been delivered to the Facility Custodian;

 

(iv) (A) the interest of the Originator in which was acquired under, and in substantial compliance with, a Loan Participation Sale Agreement under which no default, whether declared or undeclared, has occurred and is continuing, and (B) such Loan Participation Sale Agreement, together with the related COLB Participation Certificate, have been duly authorized and are in full force and effect and constitute the legal, valid and binding obligations of the related Designated CNB Customer, enforceable against such Designated CNB Customer in accordance with their terms (subject to Enforceability Exceptions) and are not subject to any dispute, offset, counterclaim or defense whatsoever (including, without limitation, in connection with any litigation or arbitration);

 

(v) the Loan Participation Sale Agreement with respect to which has been stamped with a legend in accordance with Section 6.02(k) ;

 

(vi) the interest of the Originator in which is a “payment intangible” within the meaning of Section 9-102 of the UCC of all applicable jurisdictions, or the related COLB Participation Certificate is a “security” within the meaning of Section 8-102 of the UCC of all applicable jurisdictions, and in each case which is denominated and payable only in Dollars in the United States, and no portion of which is payable on account of taxes; and

 

(vii) the interest of the Originator in which was acquired by the Originator from a Designated CNB Customer in its own name, in the ordinary course of the Originator’s mortgage warehouse lending business and substantially in accordance with the Credit Policy in effect on the date of the acquisition of such interest in such COLB Mortgage

 

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Loan and which, in any such case, was acquired by the Seller from the Originator pursuant to the Sale Agreement in the ordinary course of business.

 

“ Eligible Designated CNB Customer ” means, at any time, a Designated CNB Customer:

 

(i) which is a United States resident, is not an Affiliate of the Seller and is not a government or a governmental subdivision or agency;

 

(ii) which has a Tangible Net Worth of at least $500,000;

 

(iii) which as of the date hereof, or at the time such CNB Customer is designated by the Seller pursuant to Section 2.14(a) hereof, has provided the Seller with three years of audited financial statements, or if such CNB Customer has been in existence for less than three years, such CNB Customer has provided audited financial statements to the Seller for each of such lesser number of full fiscal years and the president and the chief financial officer of such CNB Customer shall have had prior management experience for a corporation engaged in the business of extending loans secured by residential or commercial real estate;

 

(iv) which has a Risk Rating of “3”, “4” or “5” determined in accordance with the Credit Policy;

 

(v) which holds all registrations, approvals and licenses from all Governmental Authorities necessary to originate residential Mortgage Loans in each jurisdiction in which it originates such Mortgage Loans;

 

(vi) which is either (A) approved as a seller/servicer by FHLMC, FNMA or HUD, or (B) not approved as a seller/servicer by FHLMC, FNMA or HUD, but which has never had such approval rescinded by any of such entities (unless such CNB Customer is otherwise approved in writing by the Program Agent);

 

(vii) which has not taken any action, or suffered any event to occur, of the type described in Section 7.01(d) ; and

 

(viii) as to which the Program Agent has not notified the Seller that such Designated CNB Customer shall thereafter cease to be an Eligible Designated CNB Customer.

 

“ Eligible Mortgage Loan ” means a Mortgage Loan:

 

(i) which is a closed and funded Mortgage Loan and was originated or acquired by an Eligible Designated CNB Customer;

 

(ii) which has a maximum term to maturity of 30 years;

 

(iii) with respect to which the related CNB Customer has been granted or assigned and continues to hold (or, with respect to any Wet Funding Loan, will hold within ten Business Days of the origination thereof) a perfected first priority lien (or in the case of a Second Mortgage Loan, a perfected second priority lien) on residential real property consisting

 

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of land and any one of the following: (1) a detached one family dwelling, (2) a detached two-to-four family dwelling, (3) a one-family dwelling in a condominium project, (4) a detached one-family dwelling in a planned unit development, which, in each case, is completed and ready for owner occupancy, and none of which (x) is a cooperative or a mobile or manufactured home unless, in the case of a mobile or manufactured home, it is affixed to such real property and is encumbered by a first priority Mortgage both on such real property and such mobile or manufactured home that has priority over any other lien on such mobile or manufactured home, whether or not arising under applicable real property law, (y) does not constitute real property under applicable state law, or (z) contains any commercial operations (other than in the nature of an in-home office);

 

(iv) the Mortgaged Property with respect to which is free and clear of all Adverse Claims except the Adverse Claim in favor of the related CNB Customer, subject only to (1) junior liens in priority to the Adverse Claim of the related CNB Customer (and, in the case of any Second Mortgage Loan, the lien of the first mortgagee), (2) the lien of real property taxes and assessments not yet due and payable, (3) covenants, conditions and restrictions, rights of way, easements and other matters of public record, as of the date of recording, being acceptable to mortgage lending institutions generally and specifically referred to in a lender’s title insurance policy delivered to the related CNB Customer and (A) referred to or otherwise considered in the appraisal made for such CNB Customer or (B) that do not materially adversely affect the appraised value of such Mortgaged Property as set forth in such appraisal, and (4) other matters to which like properties are commonly subject that do not materially interfere with the benefits of the security intended to be provided by the related Mortgage or the use, enjoyment, value or marketability of such Mortgaged Property;

 

(v) which is (1) a Mortgage Loan (other than a Second Mortgage Loan) the Mortgaged Property related to which has been appraised in accordance with all FHLMC and FNMA guidelines or all requirements of the related Investor, and all requirements of law (including, without limitation, FIRREA) applicable to any Committed Purchaser; or (2) a Second Mortgage Loan which is supported by an underlying appraisal in compliance with all requirements of the related Investor;

 

(vi) which, if a Conventional Mortgage Loan, in the event the loan-to-value ratio of such Mortgage Loan exceeds eighty percent (80%), is the subject of a private mortgage insurance policy issued in favor of the related CNB Customer by an insurer approved by FNMA, FHLMC or GNMA or an Approved Private Investor;

 

(vii) which is genuine, in all respects, as appearing on its face or as represented in the books or records of the related CNB Customer, and all information set forth therein is true and correct;

 

(viii) for which there is only one Mortgage Note, which Mortgage Note is payable or endorsed to the order of the related CNB Customer and is denominated and payable only in Dollars in the United States;

 

(ix) with respect to which each of the Mortgage Documents related thereto constitutes the legal, valid and binding obligation of the Mortgagor thereof;

 

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(x) for which each of the original documents in the Mortgage File has been received (or with respect to a Wet Funding Loan, will be received within ten Business Days of the origination date thereof) by the Facility Custodian or another Custodian permitted in accordance with the terms of Section 6.09 ;

 

(xi) with respect to which the related Custodian is not in default under the Custodial Agreement or any other applicable bailment agreement or bailment letter;

 

(xii) with respect to which the related Mortgage Documents contain the entire agreement of the CNB Customer and the Mortgagor thereof with respect to the subject matter thereof;

 

(xiii) which is owned by the CNB Customer free and clear of any Adverse Claim other than the Adverse Claim in favor of the Originator under the CNB Customer Transaction Documents;

 

(xiv) which, together with the related Mortgage Documents, does not contravene in any material respect any laws, rules or regulations of any Governmental Entity applicable thereto (including, without limitation, the Real Estate Settlement Procedures Act of 1974, as amended, the Federal Consumer Protection Act, and all laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practice, privacy and other applicable federal and state consumer protection laws), and with respect to which no party to the related Mortgage Documents is in violation of any laws, rules or regulations of any Governmental Entity (or procedures prescribed thereby);

 

(xv) as to which the improvements on the related Mortgaged Property are insured by an insurance policy and such policy is in form and substance acceptable to (x) FNMA and FHLMC or (y) the applicable Investor, in each case under an insurance binder, letter, or certificate of insurance, with a standard loss payable endorsement (mortgagee form) in favor of the related CNB Customer and its successors and assigns, providing coverage against fire and extended coverage hazards (including flood insurance if the Mortgaged Property is located in a “Special Flood Hazard Zone” so designated by the Secretary of HUD, the community in which the Mortgaged Property is located is participating in the “National Flood Hazard Program” and “Special Flood Hazard Insurance” under such program is in, and will continue to be in full force and effect), and such additional insurance as may be required by the guidelines or requirement of the Investor purchasing or committed to purchase such Mortgage Loan, and having a policy amount equal to the lesser of the maximum insurable amount of such improvements or the original principal amount of such Mortgage Loan, without reduction by reason of any co-insurance, reduced rate contribution, or similar clause of the policy or binder;

 

(xvi) which is insured by a mortgagee’s policy of title insurance in an amount at least equal to the stated principal amount of the related Mortgage Note and such policy (1) is issued by a title insurer qualified to do business in the jurisdiction in which the related Mortgaged Property is located and is acceptable to (x) FNMA and FHLMC or (y) the applicable Investor, (2) remains in full force and effect, (3) insures the related CNB Customer and successor owners of the Mortgage Note and (4) provides for gap coverage extending from the date of

 

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execution of the related Mortgage Documents through and including the date of recordation of the related Mortgage;

 

(xvii) as to which the related Mortgage Note is not subject to any rights of setoff, counterclaim or defense in favor of the Mortgagor thereof;

 

(xviii) which was closed and funded no more than 90 days prior to the date the related Asset became a Pool Asset;

 

(xix) (1) which conforms with all underwriting requirements of the relevant Investor, (2) which has been pre-approved by the relevant Investor and which is Designated for Delivery under a Take-Out Commitment issued by FNMA, FHLMC, GNMA or an Approved Private Take-Out Investor, and (3) which shall be purchased and settled by the relevant Investor within 120 days after the funding thereof;

 

(xx) the Investor with respect to which has been instructed to pay the Take-Out Price with respect thereto to the Originator (or, in the case of any Indirect Syndicated Mortgage Loan, to the agent under the related Indirect Syndicated Loan Agreement);

 

(xxi) which if not Designated for Delivery under a Best Efforts Take-Out Commitment, is subject to an Interest Rate Hedge which fully hedges the Seller against changes in such Mortgage Loan’s value due to changes in interest rates;

 

(xxii) the Investor with respect thereto has neither rejected such Mortgage Loan nor asserted any right of setoff, counterclaim or defense under the relevant Take-Out Commitment, the relevant Take-Out Commitment has not expired, terminated, been forfeited or cancelled, and no default exists under the relevant Take-Out Commitment; provided , however , that such Mortgage Loan shall not cease to be an Eligible Mortgage Loan if it is Designated for Delivery under a new Take-Out Commitment within ten days of any of the foregoing events;

 

(xxiii) which has not been denied a guarantee by FNMA, FHLMC or GNMA;

 

(xxiv) which, if insured by the FHA or guaranteed by the VA, such insurance policy or guaranty is in full force and effect (or such Mortgage Loan is eligible for such insurance or guaranty and such insurance or guaranty has been, or will be, applied for within 30 days after the closing of such Mortgage Loan);

 

(xxv) which, except for the existence of a commitment to sell such Mortgage Loan on a servicing-released basis, is not subject to any servicing arrangement with any person other than the related CNB Customer nor are any servicing rights relating to such Mortgage Loan subject to any Adverse Claim other than as permitted hereunder;

 

(xxvi) with respect to which no payment is more than 30 days past due the payment date set forth in the underlying Mortgage Note and Mortgage;

 

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(xxvii) which is not a Delinquent Mortgage Loan or a Defaulted Mortgage Loan and is not otherwise subject to any bankruptcy, insolvency or foreclosure proceeding;

 

(xxviii) with respect to which the Designated CNB Customer has not breached any terms, covenants, representations or warranties made to, or for the benefit of, the Originator or the related Investor;

 

(xxix) which is either a Conforming Loan or a Non-Conforming Loan;

 

(xxx) all advance payments with respect to which have been paid in cash and no part of such sums has been loaned, directly or indirectly by the related CNB Customer to the Mortgagor thereon;

 

(xxxi) which is not a Construction Loan or a Foreclosure Loan; and

 

(xxxii) which, if an AOT Mortgage Loan, is an “Eligible Mortgage Loan” (as defined in the related AOT Agreement).

 

“ Enforceability Exceptions ” means exceptions to the enforceability of an obligation arising under bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally, and general principles of equity (regardless of whether considered in a proceeding at equity or at law).

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Parent, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Parent or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Parent or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by the Parent or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Parent or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h) the existence of any event or condition that could reasonably be

 

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expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

 

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“ Eurodollar Rate ” means, for any Fixed Period for any Eurodollar Rate Asset Interest, a rate per annum equal to the rate per annum appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Telerate Service, or any successor to or substitute for such Telerate Service, providing rate quotations comparable to those currently provided on such page of such Telerate Service, as determined by the Program Agent from time to time for purpose of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Fixed Period, as the rate for dollar purchases with a maturity comparable to such Fixed Period. In the event such rate is not available at such time for any reason, then the “ Eurodollar Rate ” with respect to such Eurodollar Rate Asset Interest for such Fixed Period shall be the rate rounded upwards, if necessary, to the next 1/100 of 1% at which dollar deposits of $5,000,000 and for a maturity comparable to such Fixed Period are offered by the principal office of the applicable Committed Purchaser (based on whether such Eurodollar Rate Asset Interest is funded by a member of the Group which includes such Committed Purchaser) in London, England in immediately available funds in the London interbank market at 11:00 A.M. (London Time) two Business Days before the commencement of such Fixed Period.

 

“ Eurodollar Rate Asset Interest ” means all or a portion of an Asset Interest with respect to which Yield is determined on the basis of the Eurodollar Rate.

 

“ Eurodollar Rate Reserve Percentage ” of any Conduit Purchaser or Committed Purchaser for any Eurodollar Rate Asset Interest means the reserve percentage applicable two Business Days before the first day of such Fixed Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) (or if more than one such percentage shall be applicable, the daily average of such percentages for those days in such Fixed Period during which any such percentage shall be so applicable) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Conduit Purchaser or Committed Purchaser with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Liabilities is determined) having a term equal to such Fixed Period.

 

“ Event of Termination ” has the meaning specified in Section 7.01 .

 

“ Facility Amount ” means $1,000,000,000, as such amount may be reduced pursuant to the immediately succeeding sentence or Section 2.01(b) . References to the unused portion of the Facility Amount shall mean, at any time, the Facility Amount, as then reduced pursuant to Section 2.01(b) , minus the then Facility Capital under this Agreement.

 

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“ Facility Capital ” means, at any time, the aggregate outstanding Capital of Asset Interests under this Agreement.

 

“ Facility Custodian ” means at any time the Person then authorized pursuant to the Custodial Agreement to hold the AOT Participation Certificates, COLB Participation Certificates, AOT Takeout Assignments and the related Mortgage Files with respect to the Mortgage Loans.

 

“ Facility Termination Date ” means the earliest of (a) March 12, 2010, (b) the date determined pursuant to Section 7.01 or (c) the date the Facility Amount permanently reduces to zero pursuant to Section 2.01(b) , and (d) the date (which shall correspond to the date in clause (a) of the definition of Commitment Termination Date as in effect from time to time) the Asset Purchase Agreement of any Committed Purchaser or other Liquidity Provider expires without being renewed or replaced.

 

“ Federal Funds Rate ” means, for any period, a fluctuating rate per annum equal for each day during such period to the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day on such transactions received by the relevant Group Agent from three Federal funds brokers of recognized standing selected by it.

 

“ Fee Agreement ” has the meaning specified in Section 2.05(d) .

 

“ Fees ” has the meaning specified in Section 2.05(d) .

 

“ FHA ” means the Federal Housing Administration, or any successor thereto.

 

“ FHLMC ” means the Federal Home Loan Mortgage Corporation, or any successor thereto.

 

“ FICO Score ” means the Fair Isaac & Company objective scoring model ascertaining a borrower’s credit reputation based on a scale of 350 to 900, where the lower the number, the greater the anticipated probability of default.

 

“ Financial Officer ” means the chief financial officer, chief accounting officer, treasurer or controller of the relevant Person.

 

“ FIRREA ” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

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“ Fixed Period ” means, with respect to any Asset Interest:

 

(a) in the case of any Fixed Period for any CP Rate Asset Interest or Base Rate Asset Interest, the period commencing on the date of this Agreement and ending on the last day of the Month in which this Agreement is executed and thereafter a period from the first day of each Month to the last day of such Month; and

 

(b) in the case of any Fixed Period for any Eurodollar Rate Asset Interest, each successive period commencing on the date of this Agreement and ending on the last day of the Month in which this Agreement is executed, and, thereafter, a period from the first day of each Month to the last day of such Month; provided, however , that the initial Fixed Period for any Eurodollar Rate Asset Interest following the sale by a Conduit Purchaser to its Related Committed Purchasers or other Liquidity Providers of its interest in Asset Interests pursuant to an Asset Purchase Agreement shall commence on the third Business Day following such sale and end on the last day of the Month in which such sale occurred.

 

“ FNMA ” means the Federal National Mortgage Association, or any successor thereto.

 

“ Foreclosure Loan ” means a Mortgage Loan the Mortgaged Property with respect to which is the subject of foreclosure proceedings.

 

“ Funding Rate ” has the meaning set forth on Annex I .

 

“ Funds Transfer Letter ” means a letter in substantially the form of Annex F hereto executed and delivered by the Seller to the Program Agent and the Group Agents, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“ GAAP ” means generally accepted accounting principles in the United States.

 

“ GNMA ” means the Government National Mortgage Association, or any successor thereto.

 

“ Governmental Entity ” means the United States of America, any state, any political subdivision of a state and any agency or instrumentality of the United States of America or any state or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Governmental Entity shall include, without limitation, each of FHLMC, FNMA, GNMA, FHA, HUD and VA.

 

“ Group ” means with respect to each Conduit Purchaser, such Conduit Purchaser, any other related Conduit Purchasers, its Group Agent and its Related Committed Purchasers.

 

“ Group Agent ” means (a) with respect to CAFCO, CHARTA and CRC and their Related Committed Purchasers, CNAI or any successor group agent designated by such parties, and (b) with respect to any other Conduit Purchaser and its Related Committed Purchasers, any group agent designated by such parties.

 

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“ Group Agent’s Account ” means with respect to each Group, such account that the related Group Agent may designate in writing from time to time to the Seller, the Servicer and the Program Agent.

 

“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Debt or other obligation of any Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Debt or obligation; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

“ Hedging Agreement ” means any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions.

 

“ HELOC ” means a revolving, open-end line of credit secured by a first or second lien on Mortgaged Property that is the primary residence of the related borrower and which satisfies all requirements of an “A” rating under the Credit Quality Guidelines.

 

“ HUD ” means the Department of Housing and Urban Development, or any successor thereto.

 

“ Incipient Event of Termination ” means an event that but for notice or lapse of time or both would constitute an Event of Termination.

 

“ Indemnified Amounts ” has the meaning specified in Section 6.07 .

 

“ Indemnified Party ” has the meaning specified in Section 6.07 .

 

“ Independent Director ” means, a Person who (a) is not a stockholder, director, officer, employee or associate, or any relative of the foregoing, of any Other Company, (b) has (i) prior experience as an independent director for a corporation whose Charter Documents required the unanimous consent of all independent directors or managers, as applicable, thereof before such corporation could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or

 

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placement services to issuers of securitization or structured finance instruments, agreements or securities, and (c) is otherwise reasonably acceptable to the Program Agent.

 

“ Indirect Syndicated Loan Account ” means a CNB Customer Deposit Account for which the account bank is the agent pursuant to an Indirect Syndicated Loan Agreement.

 

“ Indirect Syndicated Loan Agreement ” means a Syndicated Loan Agreement, the agent with respect to which is a financial institution other than the Originator.

 

“ Indirect Syndicated Mortgage Loan ” means a Mortgage Loan financed by the Originator and one or more other financial institutions pursuant to an Indirect Syndicated Loan Agreement.

 

“ Interest Collections ” means all cash collections and other cash Proceeds with respect to the Pool Assets other than Principal Collections (except Principal Collections deemed to be Interest Collections pursuant to Section 2.04(d)(iii) ), including, without limitation, interest paid with respect to such Pool Asset by the related CNB Customer or any other Person.

 

“ Interest Rate Hedge ” means a Hedging Agreement in the form of a rate swap transaction, basis swap, forward rate transaction, interest rate option, cap transaction, floor transaction, collar transaction or any other similar transaction entered into between the CNB Customer and a counterparty satisfactory to the Program Agent in order to mitigate the risk of interest rate fluctuations with respect to the related Mortgage Loan, AOT Mortgage Pool or AOT Security, in form and substance satisfactory to the Program Agent, and which has been assigned to the Originator and by the Originator to the Seller.

 

“ Investor ” means any Person (including, without limitation, any Approved Private Investor) approved by the Originator in accordance with the Credit Policy, as a purchaser of Mortgage Loans or AOT Securities from the Originator.

 

“ Investor Funding Account ” means, with respect to any CNB Customer, the deposit account of such CNB Customer, maintained at Colonial Bank (or the financial institution acting as agent pursuant to any Indirect Syndicated Loan Agreement), into which the proceeds of Take-Out Commitments are remitted as required pursuant to the related CNB Customer Transaction Documents.

 

“ Jumbo Mortgage Loan ” means a Mortgage Loan that conforms to FHLMC, FNMA or GNMA standards and which satisfies all requirements of an “A” rating under the Credit Quality Guidelines, other than with respect to the size of the original principal amount thereof; provided , however , that the size of the original principal amount of such Mortgage Loan is no greater than $1,000,000.

 

“ Liquidation Fee ” means, for (a) any Fixed Period for any CP Rate Asset Interest during which a reduction of Capital is made for any reason on any day or (b) any Fixed Period for any Eurodollar Rate Asset Interest during which a reduction of Capital is made for any reason on any day other than the last day of such Fixed Period, the amount, if any, by which (A) the additional Yield (calculated without taking into account any Liquidation Fee or any shortened duration of such Fixed Period pursuant to the definition thereof) which would have accrued from

 

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the date of such repayment to the last day of such Fixed Period (or, in the case of clause (a) above, the maturity of the underlying commercial paper tranches) on the reductions of Capital of the Asset Interest relating to such Fixed Period had such reductions remained as Capital, exceeds (B) the income, if any, received by the Conduit Purchasers or the Committed Purchasers which hold such Asset Interest from the investment of the proceeds of such reductions of Capital.

 

“ Liquidity Provider ” means any Person providing liquidity support to a Conduit Purchaser in connection with this Agreement pursuant to an Asset Purchase Agreement.

 

“ Loan Participation Sale Agreement ” means an agreement in substantially the form attached hereto as Annex G , between the Originator and a CNB Customer pursuant to which the Originator purchases participation interests in Mortgage Loans originated or acquired by such CNB Customer.

 

“ Loss Reserve ” has the meaning set forth on Annex I .

 

“ Loss Reserve Floor ” has the meaning set forth on Annex I .

 

“ Mandatory Take Out Commitment ” means a current, valid, binding, enforceable, mandatory (on the part of both the Investor and the related CNB Customer) written commitment which (i) is issued by an Investor to purchase, at a variable or market price, one or more Mortgage Loans or an AOT Security from the related CNB Customer prior to the date that is 120 days from the date that such Mortgage Loan was originated or acquired or the date such AOT Security is issued, respectively, (ii) is in form customarily used by the applicable Investor and (iii) is not subject to any term or condition that is not customary in commitments of like nature or that, in the reasonably anticipated course of events cannot be fully complied with prior to the expiration thereof.

 

“ Master Advance Account ” means, with respect to any CNB Customer, the deposit account of such CNB Customer into which Advances are deposited, or the purchase prices paid by the Originator with respect to COLB Mortgage Loans, AOT Mortgage Pools or AOT Securities are deposited, pursuant to the related CNB Customer Transaction Documents and from which fees are debited with respect thereto.

 

“ Material Adverse Change ” means, with respect to any Person, a material adverse change in the business, assets, operations, property, prospects or other condition (financial or otherwise) of such Person or such Person and its Subsidiaries, taken as a whole.

 

“ Material Adverse Effect ” means a material adverse effect on (a) the collectibility of the Pool Assets, (b) the ability of the Seller, the Servicer or the Originator to perform any of its respective material obligations under the Transaction Documents to which it is a party, (c) the legality, validity or enforceability of the Transaction Documents (including, without limitation, the validity, enforceability or priority of the security interests granted hereunder or thereunder) or the rights of or benefits available to the Group Agents, the Program Agent, the Conduit Purchasers or the Committed Purchasers under the Transaction Documents or (d) the business, assets, operations, condition (financial or otherwise), property, or prospects of Seller or the Originator and its Subsidiaries, taken as a whole.

 

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“ MERS ” means the system of electronic registration and record-keeping and the related recording of the mortgages established and operated by Mortgage Electronic Registration System, Inc.

 

“ Month ” means a calendar month.

 

“ Monthly Report ” means a report in substantially the form of Annex H hereto and containing such additional information as any Agent may reasonably request from time to time, furnished by the Servicer on each Monthly Reporting Date pursuant to Section 6.02(h) .

 

“ Monthly Reporting Date ” means the Business Day two Business Days prior to any Monthly Settlement Date.

 

“ Monthly Settlement Date ” means (a) the fifteenth day of each Month or if such day is not a Business Day, the next succeeding Business Day, and (b) if any amounts required to be paid hereunder on such Monthly Settlement Date are not paid in the amount so required on such date, each subsequent Business Day until such amounts are paid in full.

 

“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

 

“ Mortgage ” means a mortgage or deed of trust or other security instrument, on a standard form approved by FHA, FHLMC, FNMA or VA or other form satisfactory to the Program Agent.

 

“ Mortgage Documents ” means with respect to each Mortgage Loan, the documents, agreements and instruments required to be delivered pursuant to the applicable CNB Customer Loan Agreement, including, without limitation, each of the documents in the related Mortgage File.

 

“ Mortgage File ” means, with respect to each Mortgage Loan, the following documents:

 

(i) in the case of any Advance, a request for an Advance under the related CNB Customer Loan;

 

(ii) the original Mortgage Note, endorsed in blank without recourse by all intervening holders of such Mortgage Note from the originator of such Mortgage Loan through the related CNB Customer;

 

(iii) a copy of the original Mortgage;

 

(iv) except in the case of a Mortgage recorded in the name of MERS, an original assignment of Mortgage in favor of the Originator and in recordable form executed by the related CNB Customer; and

 

(v) copies of all intervening assignments of Mortgage.

 

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“ Mortgage Loan ” means a loan originated or acquired by a CNB Customer which is secured by a Mortgage.

 

“ Mortgage Note ” means a promissory note, substantially similar to one of the standard forms approved by the Originator.

 

“ Mortgaged Property ” means with respect to any Mortgage Loan, the real property encumbered by the related Mortgage(s) or other security documents securing the indebtedness under the related Mortgage Note(s).

 

“ Mortgagor ” means each Person obligated to make payments pursuant to any Mortgage Loan, including, without limitation, any guarantor thereof.

 

“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“ Net Asset Pool Balance ” means, at any time, an amount equal to the sum of (i) the Net Conforming Pool Balance at such time and (ii) the Net Non-Conforming Pool Balance at such time.

 

“ Net Conforming Pool Balance ” means at any time an amount equal to the aggregate Outstanding Balance of all Eligible Assets related to Conforming Loans which are Pool Assets at such time (including, without limitation, all Agency AOT Mortgage Pools and all AOT Securities related thereto) minus , without duplication, the sum of (i) the principal amount of all Assets related to Conforming Loans included in the Bailee Concentration Excess Amount at such time, (ii) the principal amount of all Assets related to Conforming Loans included in the CNB Customer Concentration Excess Amount at such time, (iii) the principal amount of all Assets related to Conforming Loans included in the AOT Concentration Excess Amount at such time, and (iv) the principal amount of all Assets related to Conforming Loans included in the Wet Funding Concentration Excess Amount at such time; provided , however , that for purposes of the foregoing calculation, the aggregate Outstanding Balance of all Eligible Assets related to Conforming Loans which are Pool Assets made pursuant to Indirect Syndicated Loan Agreements at any time shall be deemed to be the aggregate amount, for each such Indirect Syndicated Loan Agreement of the positive result, if any, of:

 

OB – [CO x MIML] – [CO x MNCML]

 

where:

 

 

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“ Net Non-Conforming Pool Balance ” means at any time an amount equal to the aggregate Outstanding Balance of all Eligible Assets related to Non-Conforming Loans which are Pool Assets at such time (including, without limitation, all Private Issuer AOT Mortgage Pools and all AOT Securities related thereto), minus , without duplication, the sum of (i) the principal amount of all Assets related to Non-Conforming Loans included in the Bailee Concentration Excess Amount at such time, (ii) the principal amount of all Assets related to Non-Conforming Loans included in the CNB Customer Concentration Excess Amount at such time, (iii) the principal amount of all Assets related to Non-Conforming Loans included in the AOT Concentration Excess Amount at such time, (iv) the principal amount of all Assets related to Non-Conforming Loans included in the Wet Funding Concentration Excess Amount at such time, and (v) the Non-Conforming Concentration Excess Amount at such time; provided , however , that for purposes of the foregoing calculation, the aggregate Outstanding Balance of all Eligible Assets related to Non-Conforming Loans which are Pool Assets made pursuant to Indirect Syndicated Loan Agreements at any time shall be deemed to be the aggregate amount, for each such Indirect Syndicated Loan Agreement of the positive result, if any, of:

 

 

where:

 

 

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“ Non-Conforming Concentration Excess Amount ” means, at any time, the amount by which the aggregate Outstanding Balance of all Pool Assets, the Mortgage Loans with respect to which are Non-Conforming Mortgage Loans, exceeds the Non-Conforming Concentration Limit.

 

“ Non-Conforming Concentration Limit ” has the meaning set forth on Annex I .

 

“ Non-Conforming Mortgage Loan ” means a Mortgage Loan which is a Sub-Prime Mortgage Loan, a HELOC or a Closed-End Second Mortgage Loan.

 

“ Obligations ” has the meaning specified in Section 2.11 .

 

“ Originator ” means Colonial Bank.

 

“ Originator Fee ” has the meaning specified in Section 2.05(c) .

 

“ Originator Fee Rate ” has the meaning specified in Fee Agreement.

 

“ Other Companies ” means the Originator, the Parent and all of their respective Affiliates except the Seller.

 

“ Other Taxes ” has the meaning specified in Section 2.10(b) .

 

“ Outstanding Balance ” of any Asset at any time means the outstanding principal balance thereof; provided , however , that solely for purposes of calculating any Asset Interest or any Asset Interest Excess at any time, the Outstanding Balance of an Asset shall be deemed to be the least of (a) the outstanding principal balance thereof, (b) the outstanding principal balance of the Mortgage Loan or Mortgage Loans securing or constituting such Asset (or the Seller’s pro-rata interest therein, as applicable), or (c) either (i) if such Asset is an Advance or an interest in a COLB Mortgage Loan, the Take-Out Price with respect to the Mortgage Loan securing or constituting such Asset (or the Seller’s pro-rata interest therein, as applicable), or (ii) if such Asset is an interest in an AOT Mortgage Pool or an AOT Security, the Seller’s pro-rata interest in the Take-Out Price with respect to such AOT Mortgage Pool or AOT Security.

 

“ Parent ” means The Colonial BancGroup, Inc., a Delaware corporation.

 

“ Participant ” has the meaning assigned to such term in Section 11.03(h) .

 

“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“ Percentage ” of any Committed Purchaser means, (a) with respect to Citibank, the percentage set forth on the signature page to this Agreement, or such amounts as reduced or increased by any Assignment and Acceptance entered into with an Eligible Assignee, and (b) with respect to a Committed Purchaser that has entered into an Assignment and Acceptance, the

 

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amount set forth therein as such Committed Purchaser’s Percentage, or such amount as reduced or increased by an Assignment and Acceptance entered into between such Committed Purchaser and an Eligible Assignee.

 

“ Person ” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Entity.

 

“ Plan ” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Parent or any ERISA Affiliate has any liability or is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“ Pool Asset ” means any Asset which has been acquired by the Seller from the Originator pursuant to the Sale Agreement.

 

“ Principal Collections ” means (without duplication), (i) all cash collections and other cash Proceeds with respect to the principal amounts of the Pool Assets, including, without limitation, all cash Proceeds of the Underlying Collateral with respect to such Pool Assets (including, without limitation, all proceeds of the related Take-Out Commitment, proceeds from any sale of the related Mortgage Loan or Mortgaged Property, proceeds of any Interest Rate Hedge and proceeds of insurance received in respect of the related Mortgaged Property), (ii) any Deemed Collections, (iii) any payments made by the Originator in respect of such Pool Assets pursuant to the Sale Agreement, (iv) all Interest Collections deemed to be Principal Collections pursuant to Section 2.04(c)(iv) , and (v) all other cash collections and other cash Proceeds of the Underlying Collateral.

 

“ Private Issuer AOT Mortgage Pool ” means an AOT Mortgage Pool which has been designated pursuant to the related AOT Agreement as collateral for an AOT Security to be issued by a Person other than FNMA, FHLMC or GNMA.

 

“ Proceeds ” means “proceeds” as defined in Section 9-102 of the UCC as in effect on the date hereof in the State of New York.

 

“ Process Agent ” has the meaning specified in Section 11.10 .

 

“ Program Agent ” has the meaning specified in the preamble.

 

“ Program Agent’s Account ” means account no. 4063-6695 in the name of CAFCO LLC maintained at Citibank, N.A., ABA #02100089, or such other deposit account that the Program Agent may designate in writing from time to time to the Seller and the Servicer.

 

“ Promissory Notes ” means, collectively, (i) promissory notes issued by any Conduit Purchaser and (ii) participations sold by any Conduit Purchaser pursuant to Section 11.03(h) ; provided that the term “ Promissory Notes ” shall not include the interests sold by a Conduit Purchaser to a Committed Purchaser or other Liquidity Provider, or any designee thereof, under an Asset Purchase Agreement.

 

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“ Purchase Limit ” means (a) with respect to the Group consisting of CAFCO, CHARTA, CRC and their Related Committed Purchasers, $1,000,000,000, and (b) with respect to any other Group, the amount designated as the Purchase Limit in such Group’s Assignment and Acceptance. Any reduction (or termination) of the Facility Amount pursuant to the terms of this Agreement shall reduce ratably (or terminate) each Group’s Purchase Limit.

 

“ Purchaser ” means any Conduit Purchaser or Committed Purchaser.

 

“ Ratable Share ” means, at any time in respect of any Committed Purchaser, the percentage obtained by dividing the amount of such Committed Purchaser’s Commitment at such time by the aggregate amount of the Commitments of all the Committed Purchasers in such Committed Purchaser’s Group at such time.

 

“ Records ” means all documents, books, records and other information (including without limitation, computer programs, tapes and disks, maintained with respect to Pool Assets and the related CNB Customers.

 

“ Register ” has the meaning specified in Section 11.03(c) .

 

“ Related Committed Purchaser ” means (a) with respect to CAFCO, CHARTA and CRC, Citibank, each Committed Purchaser which has entered into an Assignment and Acceptance with Citibank and each assignee (directly or indirectly) of any such Committed Purchaser, which assignee has entered into an Assignment and Acceptance, and (b) with respect to each other Conduit Purchaser, each Person designated in writing to the Program Agent as such Conduit Purchaser’s “Related Committed Purchaser”, each Committed Purchaser which has entered into an Assignment and Acceptance with such Related Committed Purchaser, and each assignee (directly or indirectly) of any such Related Committed Purchaser, which assignee has entered into an Assignment and Acceptance.

 

“ Related Security ” means, with respect to a Pool Asset, the following (or the pro-rata interest of the Originator (and the Seller, as assignee) therein, as applicable):

 

(i) all security, letters of credit, guaranties, Hedging Agreements and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Pool Asset and the related Underlying Collateral pursuant to contract or otherwise;

 

(ii) all accounts, general intangibles and other rights or claims for money due or to become due under the CNB Customer Transaction Documents relating to such Pool Asset;

 

(iii) the Take-Out Commitment relating to such Pool Asset;

 

(iv) the Records relating to such Pool Asset and the Underlying Collateral;

 

(v) the related Underlying Collateral, the Mortgage and the Mortgage Documents relating to such Pool Asset;

 

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(vi) all right, title and interest of the Seller in and to the Sale Agreement, including all rights to indemnification and all recourse rights arising thereunder, howsoever and whensoever arising, and the assignment to the Program Agent on behalf of the Purchasers of all UCC financing statements filed pursuant to the Sale Agreement;

 

(vii) all insurance policies and proceeds and premium refunds thereof;

 

(viii) the Interest Rate Hedge, if any, relating to such Pool Asset and the related Underlying Collateral;

 

(ix) the AOT Participation Certificate or COLB Participation Certificate, if any, representing such Pool Asset; and

 

(x) all Proceeds of the foregoing.

 

“ Release ” means a release of Collections to the Seller pursuant to Section 2.04(c)(vi) or Section 2.04(d)(v) .

 

“ Replacement Party ” has the meaning specified in Section 2.16 .

 

“ Required Committed Purchasers ” means one or more Committed Purchasers which have Percentages in the aggregate greater than 50.0%.

 

“ Required Pool Interest Rate ” has the meaning set forth on Annex I .

 

“ Required Ratings ” means, with respect to the Servicer, (i) long-term senior unsecured debt ratings of BBB- or higher by S&P and Baa3 or higher by Moody’s and (ii) short-term senior unsecured debt ratings of A-2 or higher by S&P and P-2 or higher by Moody’s.

 

“ Revolving Period ” means the period beginning on the date on which this Agreement becomes effective and terminating on the close of business on the Business Day immediately preceding the Termination Date for all Asset Interests.

 

“ Risk Rating ” means, for any Person, the “Risk Rating” applicable to such Person in accordance with the Credit Policy.

 

“ S&P ” means Standard and Poor’s, a division of The McGraw-Hill Companies, Inc., and its successors.

 

“ Sale Agreement ” means the Warehouse Loan Sale Agreement dated as of the date of this Agreement among the Originator, as seller, and the Seller, as purchaser, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Second Mortgage Loan ” means a Mortgage Loan which is secured by a perfected Mortgage which is a second priority Mortgage.

 

“ Seller ” has the meaning specified in the preamble.

 

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“ Seller’s Account ” means the account in the name of the Seller, designated pursuant to the Funds Transfer Letter, which shall be subject to an Account Control Agreement.

 

“ Servicer ” means at any time the Person then authorized pursuant to Section 6.01 to administer and collect the Pool Assets.

 

“ Servicer Default ” means the occurrence of any of the following events with respect to the Servicer:

 

(i) (a) The Servicer shall fail to perform or observe any term, covenant or agreement hereunder (other than as referred to in clauses (b) or (c) below) and such failure shall remain unremedied for ten Business Days, (b) the Servicer shall fail to make any payment or deposit to be made by it hereunder when due with respect to the payment of the Capital of the Asset Interests or any Yield or Fees or (c) the Servicer shall fail to make any other payment or deposit to be made by it hereunder when due and such failure shall remain unremedied for two Business Days; or

 

(ii) Any representation or warranty made or deemed to be made by the Servicer (or any of its officers) under or in connection with this Agreement, any Monthly Report or Asset Interest Report or other information or report delivered pursuant hereto shall prove to have been false or incorrect when made; or

 

(iii) The Servicer shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted against the Servicer or by the Servicer seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, solely in the case of an involuntary proceeding, such involuntary proceeding shall remain undismissed for sixty days; or the Servicer shall take any corporate action to authorize any of the actions set forth in above in this clause (iii) ; or

 

(iv) An Event of Termination shall have occurred; or

 

(v) The Servicer shall fail to maintain ratings of its long-term senior unsecured debt (a) of at least BB+ by S&P and at least Baa3 by Moody’s, or (b) at least BBB- by S&P and at least Ba1 by Moody’s; or

 

(vi) The Servicer shall fail to pay any principal of or premium or interest on any of its Debt which is outstanding in a principal amount of at least $70,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration

 

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of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof.

 

“ Servicer Fee ” has the meaning specified in Section 2.05(a) .

 

“ Servicer Fee Rate ” has the meaning specified in Fee Agreement.

 

“ Settlement Date ” means each Weekly Settlement Date and each Monthly Settlement Date.

 

“ Solvent ” shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its Debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur Debts or liabilities beyond such Person’s ability to pay as such Debts and liabilities mature; (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital; and (e) such Person generally is not paying its Debts or liabilities as such Debts or liabilities become due. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“ Stock ” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company, trust or equivalent entity, whether voting or non-voting.

 

“ Subsidiaries ” means any corporation or other entity of which securities having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Seller, the Originator or the Parent, as the case may be, or one or more Subsidiaries, or by the Seller, the Originator, or the Parent, as the case may be, and one or more Subsidiaries.

 

“ Sub-Prime Mortgage Loan ” means a Mortgage Loan with respect to a one-to-four family dwelling that does not (for reasons other than the size of the original principal amount of such Mortgage Loan) conform to FHLMC, FNMA and GNMA standards but which satisfies all requirements of a “B” or “C” rating under the Credit Quality Guidelines.

 

“ Syndicated Loan Agreement ” means a CNB Customer Loan Agreement pursuant to which the Originator and other financial institutions have agreed to extend financing to the related CNB Customer.

 

“ Syndicated Mortgage Loan ” means any Mortgage Loan funded pursuant to a Syndicated Loan Agreement.

 

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“ Take-Out Commitment ” means either a Best-Efforts Take-Out Commitment or a Mandatory Take-Out Commitment.

 

“ Take-Out Price ” means, on any date of determination, (i) with respect to any Mortgage Loan subject to a Best Efforts Take-Out Commitment, the price the related Investor has agreed to pay for such Mortgage Loan, (ii) with respect to any Mortgage Loan subject to a Mandatory Take-Out Commitment, the weighted average of all prices the related Investor has agreed to pay to the related CNB Customer with respect to existing Mortgage Loans pursuant to outstanding Mandatory Take-Out Commitments, as most recently reported to the Servicer, and (iii) with respect to any AOT Mortgage Pool or AOT Security, the price the related Investor has agreed to pay for such AOT Mortgage Pool or AOT Security pursuant to the related Mandatory Take-Out Commitment.

 

“ Tangible Net Worth ” means, for any Person, the excess of all of such Person’s assets (excluding any value for goodwill, trademarks, patents, copyrights, organization expense and other similar intangible items) over all of its liabilities, as determined on a consolidated basis and computed in accordance with GAAP.

 

“ Taxes ” has the meaning specified in Section 2.10(a) .

 

“ Termination Date ” for any Asset Interest means (a) in the case of an Asset Interest owned by a Conduit Purchaser, the earlier of (i) the Business Day which the Seller or the Group Agent for such Conduit Purchaser so designates by notice to the other (with a copy to the Program Agent and the Group Agents) at least one Business Day in advance for such Asset Interest and (ii) the Facility Termination Date and (b) in the case of an Asset Interest owned by a Committed Purchaser, the earlier of (i) the Business Day which the Seller so designates by notice to the Program Agent and the Group Agents at least one Business Day in advance for such Asset Interest and (ii) the Commitment Termination Date.

 

“ Third-Party Lender Deposit Account ” means a CNB Customer Deposit Account the account bank for which is a financial institution other than the Originator, which is the subject of an intercreditor agreement between such financial institution and the Originator.

 

“ Transaction Document ” means any of this Agreement, the Sale Agreement, the Custodial Agreement, the Account Control Agreements, the Fee Agreement, each Assignment and Acceptance, each Monthly Report, each Asset Interest Report, all other agreements and documents delivered and/or related hereto or thereto, as each may be amended, restated, supplemented and otherwise modified from time to time.

 

“ Transferred Assets ” means all Pool Assets, Related Security and Collections.

 

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

 

“ Underlying Collateral ” means, with respect to any Asset, the Mortgage Loans or pool of Mortgage Loans, and the Mortgaged Property or pool of Mortgaged Properties, constituting or securing such Asset, as the case may be.

 

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“ VA ” means the Department of Veterans Affairs, or any successor thereto.

 

“ Voting Stock ” means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or other controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency).

 

“ Weekly Reporting Date ” means the Business Day one Business Day prior to any Weekly Settlement Date.

 

“ Weekly Settlement Date ” means (a) each Monday of each week or if such day is not a Business Day, the next succeeding Business Day, and (b) if any amounts required to be paid hereunder on such Weekly Settlement Date are not paid in the amount so required on such date, each subsequent Business Day until such amounts are paid in full.

 

“ Wet Funding Concentration Excess Amount ” means, at any time, without duplication, the sum of (a) the amount by which (i) the aggregate Outstanding Balance of all Pool Assets due or purchased from any Designated CNB Customer, the Mortgage Loans with respect to which are Wet Funding Loans, exceeds (ii) the Wet Funding Concentration Limit plus (b) the amount by which (i) the aggregate Outstanding Balance of all Pool Assets due or purchased from all Designated CNB Customers, the Mortgage Loans with respect to which are Wet Funding Loans, exceeds (ii) the Wet Funding Pool Concentration Limit. For the purpose of calculating the Net Conforming Pool Balance and the Net Non-Conforming Pool Balance, the Wet Funding Concentration Excess Amount shall be allocated first , to Pool Assets which are included in clause (a)(i) or (b)(i) of the preceding sentence and relate to Non-Conforming Mortgage Loans, and second , to Pool Assets which are included in clause (a)(i) or (b)(i) of the preceding sentence and relate to Conforming Mortgage Loans.

 

“ Wet Funding Concentration Limit ” has the meaning set forth on Annex I .

 

“ Wet Funding Loan ” means a Mortgage Loan with respect to which the applicable Custodian has not received each of the documents in the related Mortgage File.

 

“ Wet Funding Pool Concentration Limit ” has the meaning set forth on Annex I .

 

“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

 

“ Yield ” means for each Asset Interest for each Fixed Period:

 

(a) for each day during each Fixed Period to the extent a Conduit Purchaser will be funding its portion of such Asset Interest through the issuance of Promissory Notes, commercial paper or other promissory notes, as the case may be,

 

IR x C x ED + LF

360

 

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(b) for each day during such Fixed Period to the extent (i) a Conduit Purchaser will not be funding its portion of such Asset Interest through the issuance of Promissory Notes, commercial paper or other promissory notes, as the case may be, or (ii) a Committed Purchaser will be funding its portion of such Asset Interest,

 

AR x C x ED + LF

360

 

where:

 

 

provided that no provision of this Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by applicable law; and provided further that Yield for any Asset Interest shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason; and provided further that Yield for any Asset Interest shall also include any additional Yield payable pursuant to Section 2.09 ; and provided, further , should an Event of Termination occur and be continuing, Yield shall be at a rate equal to 2% per annum above the Alternate Base Rate.

 

SECTION 1.02. Other Terms and Constructions . Under this Agreement, all accounting terms not specifically defined herein shall be construed in accordance with GAAP, and all accounting determinations made and all financial statements prepared hereunder shall be made and prepared in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. The words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Agreement as a whole, including the exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented and not to any particular section, subsection, or clause contained in this Agreement, and all references to Sections, Annexes and Schedules shall mean, unless the context clearly indicates otherwise, the Sections hereof and the Annexes and Schedules attached hereto, the terms of which Schedules are hereby incorporated into this Agreement. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the

 

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provisions of this Agreement. Each of the definitions set forth in Section 1.01 hereof shall be equally applicable to both the singular and plural forms of the defined terms.

 

SECTION 1.03. Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE PURCHASES

 

SECTION 2.01. Purchase Facility .

 

(a) On the terms and conditions hereinafter set forth, each Conduit Purchaser may, in its sole discretion, ratably in accordance with the Purchase Limit of its Group, purchase Asset Interests from the Seller and if and to the extent any Conduit Purchaser does not make a purchase, the Related Committed Purchasers for such Conduit Purchaser shall, ratably in accordance with their respective Commitments, purchase Asset Interests from the Seller from time to time during the period from the date hereof to the Facility Termination Date (in the case of the Conduit Purchasers) and to the Commitment Termination Date (in the case of the Committed Purchasers). Under no circumstances shall the Conduit Purchasers make any such purchase, or the Committed Purchasers be obligated to make any such purchase, if an Asset Interest Excess would occur after giving effect to such purchase.

 

(b) The Seller may at any time upon at least fifteen days’ notice to the Program Agent and the Group Agents, terminate the facility provided for in this Agreement in whole or, from time to time, reduce in part the unused portion of the Facility Amount; provided that each partial reduction shall be in the amount of at least $100,000,000 or an integral multiple of $50,000,000 in excess thereof.

 

(c) Until the Termination Date for an Asset Interest, the Collections attributable to such Asset Interest shall be automatically reinvested pursuant to (and subject to the priority of payments set forth in) Section 2.04 in additional undivided percentage interests in the Pool Assets by making appropriate readjustment of such Asset Interest.

 

SECTION 2.02. Making Purchases .

 

(a) Each purchase of an Asset Interest by any of the Conduit Purchasers or the Committed Purchasers shall be made on at least two Business Days’ notice from the Seller to the Program Agent and each Group Agent. Each such notice of a purchase of an Asset Interest shall specify (i) the amount requested to be paid to the Seller (such amount, which shall not be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, being referred to herein as the initial “Capital” of the Asset Interest then being purchased), (ii) the allocation of such amount among each of the Groups (which shall be proportional to the Purchase Limit of each Group), and (iii) the date of such purchase (which shall be a Business Day). Each Conduit Purchaser shall promptly notify the Program Agent whether such Conduit Purchaser has determined not to make the requested purchase on the terms specified by the Seller. The

 

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Program Agent shall promptly thereafter notify the Seller whether the Conduit Purchasers have determined not to make the requested purchase of Asset Interests.

 

If any Conduit Purchaser has determined not to make the entire amount of a proposed purchase requested to be made by it, the Group Agent for such Conduit Purchaser shall promptly send notice of the proposed purchase to all of the Related Committed Purchasers for such Conduit Purchaser concurrently by telecopier, telex or cable specifying the date of such purchase, the aggregate amount of Capital of the Asset Interest to be purchased by such Related Committed Purchasers (which amount shall be equal to the portion of the initial Capital of the Asset Interest which such Conduit Purchaser determined not to purchase), each such Related Committed Purchaser’s portion thereof (determined ratably in accordance with their respective Commitments), and the duration of the Fixed Period for such Asset Interest (which shall be one day if the Seller has not selected another period and such Asset Interest is to be funded at the Alternate Base Rate).

 

(b) On the date of each such purchase of an Asset Interest, the applicable Conduit Purchasers and/or Committed Purchasers, as the case may be, shall, upon satisfaction of the applicable conditions set forth in this Article II and Article III , make available to the Seller in same day funds, at the account set forth in the Funds Transfer Letter, an aggregate amount equal to the initial Capital of such Asset Interest; provided, however , if such purchase is being made by the applicable Committed Purchasers following the designation by the Group Agent for a Conduit Purchaser of a Termination Date for an Asset Interest owned by such Conduit Purchaser pursuant to clause (a)(i) of the definition of Termination Date and any Capital of such Asset Interest is outstanding on the date of the requested purchase, the Seller hereby directs the applicable Committed Purchasers to pay the proceeds of such purchase (to the extent of the outstanding Capital of, and accrued Yield on, such Asset Interest of such Conduit Purchaser) to the relevant Group Agent’s Account, for application to the reduction of the outstanding Capital of, and accrued Yield on, such Asset Interest of such Conduit Purchaser.

 

(c) Effective on the date of each purchase pursuant to this Section 2.02 and each reinvestment pursuant to Section 2.04 , the Seller hereby sells and assigns to the Program Agent, for the benefit of the Purchasers making such purchase or reinvestment, an undivided percentage ownership interest, to the extent of the Asset Interest then being purchased or in respect of which the reinvestment is being made, in each Asset then existing and in the Related Security and Collections with respect thereto.

 

(d) Notwithstanding the foregoing, (i) no Conduit Purchaser shall make any purchase under this Section 2.02 at any time in an amount which would exceed the Purchase Limit of such Conduit Purchaser’s Group and (ii) no Committed Purchaser shall be obligated to make purchases under this Section 2.02 at any time in an amount which would exceed such Committed Purchaser’s Commitment less the sum of (A) the aggregate outstanding and unpaid amount of the Capital of any Asset Interests purchased by such Committed Purchaser under such Committed Purchaser’s Asset Purchase Agreement plus (B) such Committed Purchaser’s Ratable Share of the aggregate outstanding portion of Capital of Asset Interests held by the Conduit Purchasers in such Committed Purchaser’s Group (whether or not any portion thereof has been assigned under an Asset Purchase Agreement), after giving effect to reductions of the Capital of the Asset Interests held by the Conduit Purchasers in such Committed Purchaser’s Group to be

 

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made on the date of such purchase (whether from the distribution of Principal Collections or from the proceeds of Asset Interests purchased by such Committed Purchaser). Each Committed Purchaser’s obligation shall be several, such that the failure of any Committed Purchaser to make available to the Seller any funds in connection with any purchase shall not relieve any other Committed Purchaser of its obligation, if any, hereunder to make funds available on the date of such purchase, but no Committed Purchaser shall be responsible for the failure of any other Committed Purchaser to make funds available in connection with any purchase.

 

SECTION 2.03. Asset Interest Computation . Each Asset Interest shall be initially computed on its date of purchase. Thereafter until the Termination Date for such Asset Interest, such Asset Interest shall be recomputed on each Weekly Reporting Date and each other day as of which an Asset Interest Report or any other written notification containing a calculation of the such Asset Interest is delivered hereunder. Any Asset Interest, as computed as of the day immediately preceding the Termination Date for such Asset Interest, shall thereafter remain constant. Each Asset Interest shall become zero when Capital thereof and Yield thereon shall have been indefeasibly paid in full, and all Fees and other Obligations are indefeasibly paid in full.

 

SECTION 2.04. Settlement Procedures .

 

(a) Deemed Collections . If on any day (i) the Outstanding Balance of any Pool Asset or the amount owing under any Mortgage Loan related thereto is either (x) reduced or adjusted as a result of any discount or any other adjustment made or performed by the Seller or any other Person or (y) reduced or canceled as a result of any dispute, claim, offset or defense (other than the discharge in bankruptcy of the CNB Customer thereof or of the Mortgagor under the related Mortgage Loan) of the CNB Customer or of the Mortgagor under any related Mortgage Loan, against the Seller or any other Person (whether such dispute, claim, offset or defense arises out of the same or a related transaction or an unrelated transaction), or (ii) any of the representations or warranties contained in Section 4.01(h) is no longer true with respect to any Pool Asset, the Seller shall be deemed to have received on such day a Principal Collection of such Pool Asset in the amount of such reduction, cancellation or adjustment or, in the case of clause (ii) above, the full amount of such Pool Asset.

 

(b) Collections . On each day on which Interest Collections or Principal Collections are received (or deemed received) by the Seller or the Servicer, the Seller or the Servicer, as applicable, shall allocate such Collections in the following manner:

 

(i) first , set aside and hold in trust for the benefit of the Agents and the Purchasers, an amount equal to the product of (x) the aggregate of the Asset Interests, expressed as a percentage, and (y) the amount of such Interest Collections or Principal Collections, as the case may be, on such day, which amount shall be applied in accordance with Section 2.04(c) or (d) below, as applicable; and

 

(ii) second , pay the balance of such Interest Collections or Principal Collections to the Seller for application in accordance with Section 2.04(j) below.

 

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Prior to the occurrence of a Collection Trigger Event, the Servicer shall not be required to deposit Principal Collections into the Program Agent’s Account and shall be permitted to disburse Principal Collections pursuant to subsections (c) and (d) below in accordance with the terms of this Agreement. From and after the occurrence of a Collection Trigger Event, on each Business Day, prior to 11:00 a.m. (New York City time), the Seller shall, or shall cause the Servicer to, remit all Principal Collections received (or deemed received) on or before the immediately preceding Business Day to the Program Agent’s Account and the Program Agent shall make the allocations set forth in clauses (i) and (ii) above.

 

(c) Daily Disbursements of Interest Collections . On each Business Day, prior to 12:00 p.m. (New York City time), the Seller shall, or shall cause the Servicer to, disburse all Interest C