EXHIBIT 10.1

LOAN PARTICIPATION

SALE AGREEMENT

 

THIS LOAN PARTICIPATION SALE AGREEMENT (the “Agreement”) is made and entered
into as of the 16th day of April, 2003, by and between CRESCENT MORTGAGE
SERVICES, INC., a Georgia corporation, whose address is 115 Perimeter Center
Place, Suite 285, Atlanta, Georgia 30346 (the “Seller”) and COLONIAL BANK, an
Alabama banking corporation, whose address is 201 East Pine Street, Suite 730,
Orlando, Florida 32801 (the “Buyer”).

 

BACKGROUND

 

The Seller originates, acquires, markets, sells and services one-to-four family,
residential real estate loans secured by a lien on the real property (and
improvements) encumbered pursuant to such loans (collectively, the “Mortgage
Loans”). The Seller wishes to sell, and the Buyer wishes to purchase, undivided
participation ownership interests (each, a “Participation Interest,” and
collectively, the “Participation Interests” in the Mortgage Loans identified in
the Participation Certificates(s) (as hereinafter defined) issued pursuant to
this Agreement. This Agreement is intended by the parties to govern the sale,
assignment and transfer by the Seller to the Buyer of such Participation
Interest(s) in the Mortgage Loans identified in such Participation
Certificate(s), including the percentage of the principal amount of such
Mortgage Loans representing the undivided interest sold, the purchase price, the
yield to be paid to the Buyer, and the Seller’s responsibilities for servicing
and other incidents, including those of agency, with respect to the resulting
Participation Interests. The purchase price to be paid by the Buyer for the
Participation Interest(s) sold under this Agreement will be set forth in the
Participation Certificate(s) issued by the Seller to the Buyer from time to time
pursuant to this Agreement.

 

AGREEMENT

 

1.    Sale and Identification of Loan Participation Interest.    The Seller
hereby agrees to sell to Buyer and the Buyer hereby agrees to purchase from the
Seller the Participation Interest(s) in the Mortgage Loans identified in the
Participation Certificate(s), in the form attached hereto as an Exhibit A,
issued by the Seller to the Buyer from time to time pursuant to this Agreement
(each, a “Participated Mortgage Loan,” and collectively, the “Participated
Mortgage Loans”). Each Participation Certificate shall specify, among other
things, the percentage of the principal amount of the Mortgage Loans
representing the undivided interest sold, the identification of the Mortgage
Loans in which the Buyer has purchased the Participation Interest, the purchase
price paid by the Buyer, and the yield to be paid to the Buyer. The Seller
hereby sells, assigns, transfers and delivers to the Buyer, the percentage
Participation Interest indicated in each Participation Certificate (as
applicable, the “Buyer’s Percentage” or “Percentage”) of the Seller’s ownership
rights in and to the Participated Mortgage Loans and the indebtedness,
promissory note or notes, collateral security (including, without limitation,
where such term is used herein, the mortgage, deed of trust, deed to secure debt
and any other form of security instrument used to create a lien or other
encumbrance upon real property as security for such promissory note or notes)
and all other documents and instruments evidencing, securing or otherwise
relating to such Participated Mortgage Loans.

 

2.    Ownership Interest.    The parties hereto agree that, upon payment of the
purchase price for the Buyer’s Percentage of the Participated Mortgage Loans,
the Buyer immediately shall become vested, to the extent of such Percentage,
with beneficial ownership of the Participated Mortgage Loans including, without
limitation, the indebtedness, promissory note or notes, collateral security and
all other documents and instruments evidencing, securing or otherwise relating
to said Participated Mortgage Loans, together with all of the rights, privileges
and remedies applicable thereto. Except as otherwise provided in this Agreement,
the Seller shall continue to hold legal title to the Participated Mortgage Loans
(in trust and as nominee for the benefit of the Buyer to the extent of the
Buyer’s Percentage therein), and the Buyer shall be the holder, subject to the
terms of this Agreement, of equitable title to the Buyer’s Percentage of such
Participated Mortgage Loans. The Seller shall not represent to any person that
the Seller owns any portion of the Participation Interest(s) sold to the Buyer
under this Agreement, and the Seller shall reflect the transaction(s) hereunder
on its balance sheet and other financial statements as a sale of assets by the
Seller and the purchase of assets by the Buyer.

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THIS LOAN PARTICIPATION IS INTENDED BY THE PARTIES TO BE AND CONSTITUTE A SALE
BY THE SELLER TO THE BUYER, AND A PURCHASE BY THE BUYER FROM THE SELLER. OF
PARTICIPATION INTERESTS IN THE ABOVE REFERENCED MORTGAGE LOANS INCLUDING,
WITHOUT LIMITATION. THE INDEBTEDNESS, PROMISSORY NOTE OR NOTES, COLLATERAL
SECURITY AND ALL OTHER DOCUMENTS AND INSTRUMENTS EVIDENCING, SECURING OR
OTHERWISE RELATING TO SAID MORTGAGE LOANS, AND NO AMOUNT PAID BY THE BUYER
HEREUNDER TO PURCHASE SUCH PARTICIPATION INTERESTS SHALL IN ANY WAY BE CONSTRUED
AS A LOAN OR AN EXTENSION OF CREDIT BY THE BUYER TO THE SELLER.

 

3.    Participation in Collateral.    The Participation Interest purchased by
the Buyer from the Seller in each Participated Mortgage Loan hereunder shall be
proportionately secured (in an amount equal to the Buyer’s Percentage) by any
collateral securing such Mortgage Loan in accordance with the provisions of the
applicable collateral security documents and, notwithstanding designation of the
Seller as the mortgagee or secured party thereunder, the Buyer shall have all
rights, privileges and benefits of the mortgagee or secured party, to the extent
of its Participation Interest, with respect to such Participated Mortgage Loans.
For purposes of the foregoing, the Seller, in its capacity as the mortgagee or
secured party, shall act as the representative and collateral agent for the
Buyer with respect to obtaining, perfecting, protecting and maintaining the
collateral security for the Participated Mortgage Loans.

 

4.    Requirements for Participated Mortgage Loans.    Each Mortgage Loan in
which the Buyer purchases a Participation Interest hereunder shall be fully
underwritten (using an automated underwriting system such as LP or DU) in
conformity with the underwriting standards of Fannie Mae or Freddie Mac in
effect at the time of such underwriting (i.e., a “conforming” Mortgage Loan”)
and shall meet each of the other requirements as set forth in Exhibit B attached
hereto. The Seller shall not sell, or offer to sell, a Participation Interest in
any Mortgage Loan to the Buyer hereunder unless such Mortgage Loan meets the
requirements set forth in this Section 4.

 

5.    Delivery of Loan Documentation.    Upon purchase by the Buyer of a
Participation Interest in any Mortgage Loans, the Seller concurrently therewith
shall deliver a Participation Certificate to the Buyer identifying the
particular Mortgage Loans in which the Buyer is purchasing a Participation
Interest and specifying the Buyer’s Percentage of such Mortgage Loans and the
other matters set forth in Section 1. Thereafter, the Seller shall deliver to
the Buyer the following documents and instruments pertaining to each such
Participated Mortgage Loan, (x) in the case of the documents and instruments
referenced in subsection A below (the “Required Documents”), as soon as said
documents and instruments are available, and (y) in the case of the documents
and instruments referenced in subsection B below (the “Additional Required
Documents”), upon request by the Buyer from time to time (provided, however,
within ten (10) business days following the date of purchase by the Buyer of its
Participation Interest in a Mortgage Loan, the Seller shall deliver to the Buyer
the documents and instruments referenced in paragraphs (ix) and (x) of
subsection B below):

 

A.    Required Documents.

 

(i)    Investor Commitment Certification (whole loan investor commitment
information or weekly secondary market report, if Mortgage Loan is sold in a
pool);

 

(ii)    Original promissory note or other evidence of debt signed by loan
debtor(s) (the “Obligor(s)”). endorsed in blank by the Seller, and, if
applicable, with an interim endorsement from originating mortgage company to the
Seller;

 

(iii)    Certified copies of the collateral security documents (including,
without limitation, the mortgage, deed of trust, deed to secure debt and any
other form of security instrument used to create a lien or other encumbrance
upon real property as security for such promissory note) including, with respect
thereto, any modification agreements;

 

(iv)    Certified copy of any interim assignments, if applicable;

 

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(v)    Original unrecorded assignment in blank of the collateral security
documents or, if applicable, MERS designation;

 

(vi)   Closing Agent certification (if required by the Buyer at any time); and

 

(vii)  Copies of other supporting documentation, if applicable (such as Power of
Attorney, Guardianship, Trust Agreement, etc. ).

 

B.    Additional Required Documents.

 

(i)     Original or certified copy of HUD-1 Settlement Statement;

 

(ii)    Copy of the title insurance binder or certificate (including an attorney
approval letter) covering at least the face amount of the promissory note, with
the original policy of title insurance insuring the mortgage (or deed of trust,
deed to secure debt, etc.) as a first lien on the real property and improvements
encumbered thereby (the “Property”) written by a title company and containing
exceptions satisfactory to the Buyer;

 

(iii)    Evidence of the applicable FHA commitment for insurance with respect to
each FHA-insured promissory note, or VA commitment for guaranty with respect to
each VA-guaranteed promissory note, and of the applicable commitment for private
mortgage insurance with respect to each conventional promissory note having a
loan-to-value ratio in excess of 80%;

 

(iv)    Evidence of fire and extended coverage insurance in an amount not less
than the lower of the following: (a) the amount of the Mortgage Loan, and (b)
100% of the insurable value of the Property. Such insurance shall be written by
a company satisfactory to the Buyer with form and content subject to the Buyer’s
approval. The Buyer reserves the right to obtain a loss payable endorsement in
favor of the Buyer if the Buyer so desires;

 

(v)      Evidence of Notice to Customer and Rescission required by the federal
Truth-in-Lending Law and Federal Reserve Regulation Z;

 

(vi)     Copy of the appraisal of the Property;

 

(vii)    Survey(s) of the Property;

 

(viii)   Termite treatment report of the Property;

 

(ix)     Copies of the Obligor(s) financial statement(s) and written credit
report(s);

 

(x)      Copy of underwriting summary (LP or DU approval, etc.); and

 

(xi)     Any other documentation as the Buyer reasonably may deem appropriate
including, without limitation, documentation necessary to fulfill the
requirements of investor commitments.

 

It is the understanding of the parties that the Seller shall retain possession
of all Additional Required Documents as collateral agent for the benefit of the
Buyer unless the Buyer requests, as aforesaid, that such Additional Required
Documents be delivered to and held by the Buyer, in which case, the Seller shall
promptly deliver same to the Buyer. To the extent that the Seller retains
possession of any documents hereunder relating to the Participated Mortgage
Loans, the Seller shall keep all such documents in segregated files
appropriately marked to show that a Participation Interest therein has been sold
to the Buyer. In addition, if required by the Buyer at any time in order to
maintain, preserve and protect its Participation Interest(s) in the Participated
Mortgage Loans, the Seller immediately shall record the assignment referenced in
subsection A(v) above of this Section 5 in favor of the Buyer in the applicable
recording office and pay all recording fees, charges and taxes in connection
therewith.

 

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6.    Expenses, Etc.    All out-of-pocket expenses for preparation and recording
of any documents including, without limitation, any assignments necessary to
reflect ownership by the Buyer of its Participation Interest(s) to the
Participated Mortgage Loans or any precautionary UCC-1 filings contemplated by
Section 22E hereof to reflect the transaction(s) hereunder, shall be borne by
Seller. The Seller shall prepare all documents including, without limitation,
the Participation Certificates, necessary to reflect the Buyer’s Participation
Interest(s) in the Participated Mortgage Loans.

 

7.    Record Inspection Rights.    The Buyer, or its agents or representatives
or, if applicable, the Buyer’s successors or assigns, and its examiners or
supervisory agents, shall have the right at any reasonable the during normal
business hours to request, have access to and examine, any and all books,
records and documents relating to any Participated Mortgage Loan or to any
matters covered by this Agreement.

 

8.    Servicing or Participated Mortgage Loans.

 

A.    Unless the Buyer has notified the Seller of the Buyer’s election to take
over servicing of the Participated Mortgage Loans as set forth in Section 9
hereof, the Seller shall be solely responsible for the servicing of the
Participated Mortgage Loans. All payments of principal and interest and all fees
and other income at any time received by the Seller with respect to a
Participated Mortgage Loan shall be held by the Seller in trust for the Buyer
and applied by the Seller in the manner set forth in Section 15. Upon request of
the Buyer from time to time with respect to any Participated Mortgage Loan, the
Seller shall promptly deliver to the Buyer a statement of such Mortgage Loans
current status as to scheduled periodic debt service payments.

 

B.    The Seller shall exercise due care and discretion in servicing the
Participated Mortgage Loans and in collecting the payments thereunder and shall
indemnify and hold the Buyer harmless from and against any loss or damage caused
by the Seller’s failure to properly service such Mortgage Loans.

 

C.    Except as otherwise set forth in Section 9, the Seller shall retain full
power and authority and the reasonable discretion to administer the Participated
Mortgage Loans and to take or omit to take any action whatsoever in respect
thereof as the Seller deems reasonably necessary or desirable to preserve the
value thereof and to maximize the proceeds to be realized therefrom; provided,
however, the Seller, in all cases. shall act in good faith and in accordance
with the usual practices employed by the Seller in the servicing of Mortgage
Loans for its own account; and further provided, however, the Seller shall not
without the prior consent of the Buyer:

 

(i)    make or consent to any amendments in the terms and conditions of any
Participated Mortgage Loan, or in the terms of the promissory note or notes
evidencing such Mortgage Loan, or in any collateral security documents securing
such Mortgage Loan;

 

(ii)    waive or release any claim against any Obligor and/or against any
co-maker, guarantor or endorser under any Participated Mortgage Loan;

 

(iii)    make or consent to any release, substitution, exchange or subordination
of any collateral for any Participated Mortgage Loan;

 

(iv)    accelerate payment under any Participated Mortgage Loan and/or under any
promissory note or notes evidencing such Mortgage Loan;

 

(v)    commence any type of collection proceeding against any Obligor and/or
against any co-maker, guarantor or endorser under any Participated Mortgage
Loan; and/or

 

(vi)    seize, sell. transfer, assign, foreclose or attempt to exercise any
other remedy against any collateral securing any Participated Mortgage Loan.

 

D.    Notwithstanding subsection C above of this Section S. if the Seller, in
its reasonable judgment, determines that it is necessary to take on an emergency
basis, any of the actions described is subsection (C)(iv) through (C)(vi) above
and is unable to obtain the Buyer’s prior consent in a timely manner, then the
Seller

 

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may take such action but shall simultaneously notify the Buyer of the action
taken and the reason(s) therefor, together with evidence of the Seller’s
attempt(s) to first obtain the Buyer’s prior consent to such action.

 

E.    If the Seller requests the consent of the Buyer to any action in respect
of a Participated Mortgage Loan, the Buyer shall respond within ten (10)
business days after the Seller’s request. If the Buyer fails to respond within
such time period, the Buyer shall be deemed to have agreed to the action
referenced in the Seller’s request. If the Buyer responds after the expiration
of such time period but prior to any action taken by the Seller, then the Seller
shall honor the Buyer’s response.

 

9.    Buyer’s Right to Service Participated Mortgage Loans.    At the election
of the Buyer exercised by the Buyer’s delivery of notice to the Seller, which
notice may be given by the Buyer at any time and for any reason whatsoever, the
Buyer may take over the servicing of the Participated Mortgage Loans and the
collection of all payments thereunder. Upon the exercise of such election by the
Buyer, the Seller shall immediately notify the Obligor(s), directing the
Obligor(s) to forward principal and interest payments under the Participated
Mortgage Loans directly to the Buyer, in sufficient amounts to satisfy the
Buyer’s then Percentage ownership interest in such Mortgage Loans. In addition,
the Seller shall deliver to the Buyer all mortgage files, computer programs,
tapes, discs, cards, accounting records and other books, records, information
and data of the Seller which are necessary or helpful to the Buyer in the
administration and servicing of such Participated Mortgage Loans. Unless
otherwise provided herein, the remaining terms and conditions of this Agreement
shall survive the election by the Buyer to take over the servicing of the
Participated Mortgage Loans. Such remaining terms and conditions of this
Agreement shall continue to apply until such time as each Participated Mortgage
Loan either is paid in full or the Buyer’s Participation Interest in such
Mortgage Loans is repurchased by the Seller as provided in Section 17 below.

 

10.    Representation and Warranties by the Seller.    The Seller represents and
warrants to the Buyer:

 

A.    The Seller is a corporation, duly organized and validly existing in good
standing under the laws governing its organization and has all licenses
necessary to carry on its business as now being conducted and, if required by
applicable law, is licensed, qualified and in good standing in each state where
it conducts business.

 

B.    The Seller has full power and authority to execute, deliver and perform
this Agreement, including authority to sell, assign and transfer and, if
applicable, to repurchase the Participation Interest(s) in the Mortgage Loans
hereunder.

 

C.    All necessary corporate, regulatory or other similar action has been taken
to authorize and empower the Seller, and the officers or representatives acting
on its behalf, to execute, deliver and perform this Agreement.

 

D.    The execution and delivery of this Agreement by the Seller and the
performance of or compliance with the terms and conditions hereof by the Seller
do not of will not conflict with or result in, as the case may be, a material
breach of any of the terms and conditions or provisions of the articles of
incorporation or organization, as applicable, or bylaws or operating agreement
(or regulations), as applicable, of the Seller or any provisions of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect to which the Seller or its properties or assets are
subject.

 

E.    The execution and delivery of this Agreement by the Seller and the
performance of or compliance with the terms and conditions hereof by the Seller
do not or will not conflict with or result in, as the case may be, at material
breach of any of the terms, conditions or provisions of or constitute a material
default under any indenture, loan or credit agreement or any other agreement, or
instrument to which the Seller is a party or by which it or its properties or
assets may be materially affected.

 

F.    Assuming due authorization, execution and delivery by the Buyer, this
Agreement constitutes a legal, valid and binding obligation of the Seller
enforceable against the Seller according to its terms and conditions set forth
herein.

 

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G.    No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Seller of or compliance by the Seller with this Agreement, the sale of the
Participation Interest(s) in the Participated Mortgage Loans to the Buyer or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the closing date.

 

H.    There is no action, suit, regulatory or other proceeding of any kind
pending or threatened against or materially affecting the Seller or the
properties or assets of the Seller before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to the Seller, would prohibit the Seller from
executing and delivering this Agreement and performing its obligations
hereunder.

 

I.    That as of the date the Buyer purchases a Participation Interest in a
Mortgage Loan pursuant hereto, such Mortgage Loan, as of the purchase date but
prior to such purchase, is 100% owned by the Seller, free and clear of all
liens, encumbrances and claims of any kind, and neither such Mortgage Loan nor
any interest therein previously has been sold, assigned, transferred, encumbered
or otherwise disposed of by the Seller.

 

J.    Each Participated Mortgage Loan has been made or acquired by the Seller
pursuant to and in compliance with all applicable federal and state laws, rules
and regulations, as from time to time in effect.

 

K.    The documents and instruments evidencing, securing or otherwise relating
to the Participated Mortgage Loans have been duly and validly executed and
delivered by the Obligor(s) as well as, to the extent applicable, by the
co-maker(s), guarantor(s) and/or endorser(s) under such Mortgage Loan.

 

L.    That each Participated Mortgage Loan meets all of the requirements set
forth in Section 4.

 

M.    The Seller has provided the Buyer with the originals or copies (certified,
where required), as applicable, of the Required Documents and, if requested by
the Buyer in accordance with Section 4, the Additional Required Documents,
relating to each Participated Mortgage Loan.

 

N.    The Seller, if requested by the Buyer, additionally has provided the Buyer
with copies of all relevant credit and other underwriting information currently
in the possession of the Seller that was used by the Seller as a basis for its
decision to make the Participated Mortgage Loan to the Obligor(s) and all such
information is accurate and complete in all material respects.

 

O.    To the extent required under applicable law, the Seller has taken (and/or
will take, and or will continue to take) whatever additional actions may be
necessary and proper to obtain, perfect, protect and maintain a valid and
enforceable lien on and security interest in the collateral securing each
Participated Mortgage Loan.

 

11.    Representations and Warranties by Buyer.    The Buyer represents and
warrants to the Seller.

 

A.    The Buyer is a corporation, duly organized and validly existing in good
standing under the laws governing its organization and has all licenses
necessary to carry on its business as now being conducted and, if required by
applicable law, is licensed, qualified and in good standing in each state where
it conducts business.

 

B.    The Buyer has full power and authority to execute, deliver and perform
this Agreement, including authority to purchase the Participation Interest(s) in
the Mortgage Loans hereunder.

 

C.    All necessary corporate, regulatory or other similar action has been taken
to authorize and empower the Buyer, and the officers or representatives acting
on its behalf, to execute, deliver and perform this Agreement.

 

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D.    The execution and delivery of this Agreement by the Buyer and the
performance of or compliance with the terms and conditions hereof by the Buyer
do not or will not conflict with or result in, as the case may be, a material
breach of any of the terms and conditions or provisions of the articles of
incorporation or bylaws of the Buyer or any provisions of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect to which the Buyer or its properties or assets are subject.

 

E.    The execution and delivery of this Agreement by the Buyer and the
performance of or compliance with the terms and conditions hereof by the Buyer
do not or will not conflict with or result in, as the case may be, a material
breach of any of the terms, conditions or provisions of or constitute a material
default under any indenture, loan or credit agreement or any other agreement, or
instrument to which the Buyer is a party or by which it or its properties or
assets may be materially affected.

 

F.    Assuming due authorization, execution and delivery by the Seller, this
Agreement constitutes a legal, valid and binding obligation of the Buyer
enforceable against the Buyer according to its terms and conditions set forth
herein.

 

G.    No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Buyer of or compliance by the Buyer with this Agreement, the purchase of the
Participation Interest(s) in the Participated Mortgage Loans by the Buyer or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the closing date.

 

H.    There is no action, suit, regulatory of other proceeding of any kind
pending or threatened against or materially affecting the Buyer or the
properties or assets of the Buyer before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to the Buyer, would prohibit the Buyer from
executing and delivering this Agreement and performing its obligations
hereunder.

 

I.    The Buyer is a sophisticated and knowledgeable financial institution, both
generally and with respect to investments of this type.

 

J.    The Buyer is purchasing its Participation lnterest(s) hereunder for its
own account in respect of a commercial transaction made in the ordinary course
of its commercial banking business and not with a view to or in connection with
any subdivision, resale or distribution thereof, and can bear the economic risk
related to the purchase of same.

 

12.    Covenants of Seller.    The Seller covenants and agrees with the Buyer as
follows:

 

A.    The Seller shall take all action necessary to obtain, properly perfect, by
recording or otherwise, protect and maintain all collateral security for the
Participated Mortgage Loans as a first priority lien on the Property encumbered
thereby.

 

B.    The Seller shall keep all collateral security for the Participated
Mortgage Loans insured against loss, damage, theft and other risks customarily
covered by insurance, and such other risks as the Buyer may reasonably request.

 

C.    The Seller shall do all acts that a prudent investor would deem necessary
or desirable to obtain, perfect, protect and maintain all collateral securing
the Participated Mortgage Loans.

 

D.    The Seller shall not knowingly use or permit to be used any collateral
security for the Participated Mortgage Loans unlawfully or in violation of any
provision of this Agreement or any applicable law, rule or regulation or any
policy of insurance covering such collateral security.

 

E.    The Seller shall appear and defend, at the Seller’s cost and expense, any
action or proceeding that may affect its title to or the Buyer’s Participation
Interest(s) in the Participated Mortgage Loans.

 

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F.    The Seller shall keep accurate and complete records of the Participated
Mortgage Loans and provide the Buyer with such records and such reports and
information relating to such Participated Mortgage Loans as the Buyer may
reasonably request from time to time.

 

G.    The Seller shall deliver to the Buyer copies of all material documents and
items received by the Seller pursuant to or in connection with the Participated
Mortgage Loans.

 

H.    The Seller shall notify the Buyer should the Seller learn or have any
knowledge of the following with respect to any Participated Mortgage Loan.

 

(i)    any change in the financial condition of the Obligor(s), or of any
co-maker, guarantor or endorser under the Participated Mortgage Loan, which may
have a material adverse affect upon continuation of payments under the
Participated Mortgage Loan or the ultimate collectibility thereof:

 

(ii)    any material change in the value of collateral securing the Participated
Mortgage Loan;

 

(iii)    any material change in lien status as affecting the collateral securing
the Participated Mortgage Loan;

 

(iv)    any request by the Obligor(s), of any co-maker, guarantor or endorser
under the Participated Mortgage Loan, for any change in terms and conditions of
the Participated Mortgage Loan, or in the terms of any note or notes evidencing
the Participated Mortgage Loan, or in any mortgage or security agreement or
instrument securing the Participated Mortgage Loan:

 

(v)    any request by the Obligor(s), or by any co-maker, guarantor or surety
under the Participated Mortgage Loan, for release, substitution or exchange of
any collateral securing the Participated Mortgage Loan;

 

(vi)    any request by the Obligor(s), or by any co-maker, guarantor or endorser
under the Participated Mortgage Loan for the release of any personal obligation
of any such party under the Participated Mortgage Loan;

 

(vii)    any failure by the Obligor(s) to pay principal and/or interest payments
under the Participated Mortgage Loan when due (considering applicable grace
periods, if any);

 

(viii)    any failure to carry hazard and flood insurance to keep the Property
fully insured and/or to pay taxes or assessments timely; and

 

(ix)    the occurrence of any other event which would constitute an event of
default under the Participated Mortgage Loan or under any collateral security
for the Participated Mortgage Loan.

 

I.    Further, as long as the Buyer continues to have a Participation Interest
in any Participated Mortgage Loan, upon request, the Seller agrees to provide
the Buyer with current credit related and other information concerning the
Obligor(s), the Participated Mortgage Loan and the collateral security for the
Participated Mortgage loan including, without limitations, copies of:

 

(i)    currant financial statements of the Obligor(s), as well as of all
co-makers, guarantors and sureties under the Participated Mortgage Loan;

 

(ii)    any other financial information submitted by the Obligor(s) to the
Seller in connection with the Participated Mortgage Loan:

 

(iii)    any information and/or documents in possession of the Seller applicable
to the existence, value and lien status of the collateral securing the
Participated Mortgage Loan; and

 

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(iv)    any additional information and/or documents in possession of the Seller
bearing upon the continuing credit worthiness of the Obligor(s).

 

13.    No Security.    The Buyer represents, warrants and agrees with the Seller
that the Buyer’s purchase of its Participation Interest(s) hereunder does not
constitute the “purchase” or “sale” of a “security” within the meaning of any
applicable securities law, rule or regulation.

 

14.    Sale of Participated Mortgage Loans.

 

A.    Upon written request of the Seller, the Buyer, in its sole discretion, may
release to the Seller documentation related to Participated Mortgage Loans
against a trust receipt executed by the Seller in form acceptable to the Buyer.
The Seller hereby represents and warrants to the Buyer that any request by the
Seller for release of Participated Mortgage Loans pursuant to this subsection A
shall be solely for the purposes of correcting clerical or other non-substantive
documentation problems in preparation for the ultimate sale or exchange of such
Participated Mortgage Loans.

 

B.    Further, upon written request of the Seller, the Buyer shall release
Participated Mortgage Loans to investors or other purchasers for purchase. Any
transmittal of documentation for Participated Mortgage Loans in the possession
of the Buyer in connection with the sale thereof to an investor or other
purchaser shall be under cover of a bailment letter in form acceptable to the
Buyer, except in connection with the sale thereof to Fannie Mae, Freddie Mac or
Ginnie Mae, in which case transmittal of such documentation shall be accompanied
by such other forms, duly executed, if necessary, by the Seller in lieu of the
foregoing that Fannie Mae, Freddie Mac or Ginnie Mac may require. In each case
of transmittal of documentation related to Participated Mortgage Loans pursuant
to this subsection B, the recipient thereof shall be required to return such
documentation to the Buyer if such Participated Mortgage Loans are not purchased
and the proceeds therefor paid in accordance with subsection C below within
forty-five (45) days after such recipient’s receipt of such documentation or, if
earlier, the expiration of the applicable investor commitment. In such case, the
Buyer shall promptly send a “bailee violation letter” to such investor or other
purchaser and, if the documentation is then not promptly returned to the Buyer
or the purchase and payment of such Participated Mortgage Loans is then not
promptly completed, the Seller, if required by the Buyer, shall immediately
repurchase such Participated Mortgage Loan in accordance with Section 17.

 

C.     All proceeds or other amounts payable on account of the sale of
Participated Mortgage Loans by the Seller shall be paid directly by the investor
or other purchaser (and the Seller shall so notify each investor and/or
purchaser, as applicable, of this requirement) by wire transfer to such account
maintained with the Buyer as may be designated by the Buyer for such purpose,
pursuant to the Buyer’s wire transfer instructions provided by the Buyer to the
Seller, accompanied by a copy of the investor’s or other purchaser’s, as
applicable, written purchase advice. Such wire, among other things, shall
specify the Obligor’s(s) name(s) and the loan number(s) for the applicable
Participated Mortgage Loan(s). Unless such wire is received by the Buyer on or
prior to 1:00 p.m. (Orlando time) on the date of closing of the sale of such
Participated Mortgage Loan(s), for purposes of calculation and payment or the
yield and/or interest due the Buyer on its Participation Interest, the proceeds
of such sale shall be deemed to have been received by the Buyer on the next
succeeding business day. All such proceeds or other amounts payable on account
of the sale of Participated Mortgage Loans by the Seller shall be applied in the
manner set forth in Section 15. The Seller hereby grants to the Buyer a security
interest in and lien upon the account referred to above in this subsection C and
in any and all funds at any time held therein as security for the repayment of
the Buyer’s Participation Interest in the Participated Mortgage Loans.

 

15.    Application of Payments.    All principal and interest payments and other
collections under any Participated Mortgage Loan hereunder and, except as
provided in the following sentence of this Section 15, all proceeds or other
amounts payable on account of the sale or other disposition of such Participated
Mortgage Loans shall be applied first, against that proportion owed to the Buyer
reflective of the Buyer’s Percentage interest in the Participated Mortgage Loan
and next, against the proportion owed to the Seller reflective of the Seller s
retained interest in such Participated Mortgage Loan (in each case with
appropriate provisions made for differences in yields and/or interest rates
between the Seller and the Buyer, if any). The Buyer and the Seller will share:
all fees and other income associated with the Participated Mortgage Loan on a
pro rata basis as they may arise subsequent to the date of participation, until
the Participation Interest is paid in full or, if applicable, is repurchased by
the Seller in accordance with Section 17.

 

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16.    Default Under Participated Mortgage Loan; Administration Alter Default.

 

A.    Upon the occurrence of any default under any Participated Mortgage Loan,
the Seller shall give prompt notice thereof to the Buyer and, time permitting
(i.e., absent the risk of imminent loss or diminution in value of the collateral
securing the Participated Mortgage Loan), shall consult with the Buyer to
determine a mutually acceptable course of action with respect to such default,
and then, shall promptly and diligently pursue such course of action; provided,
however, unless the Buyer otherwise agrees, in no event shall the Seller file
suit to foreclose the collateral security for such Participated Mortgage Loan or
accept a deed in lieu of foreclosure or other transfer of title to the Property
encumbered thereby or, following any such foreclosure or acceptance of a deed in
lieu of foreclosure or other transfer of title to said Property which has been
agreed to by the Buyer, sell, lease of otherwise dispose of such Property or
other collateral without, in each instance, giving the Buyer thirty (30) days
prior written notice of its intention to do so.

 

B.    In the event that time does not so permit, or if the Buyer and the Seller
cannot mutually agree upon what course of action to take then, for the benefit
of each party, the Seller shall exercise the rights, powers. privileges.
remedies and interests, if any, that reasonably may be exercised or otherwise
enforced under the circumstances in a manner consistent with and otherwise
permissible under the documents and instruments evidencing, securing or
otherwise relating to such Participated Mortgage Loan, with the Seller
determining in good faith the specific actions to take or omit to take from time
to time, subject, however, to the limitations placed on certain actions of the
Seller by Section 8C and, further, to the provisions of Section 18.

 

C.    All proceeds or other amounts realized from any sale or other disposition
of any of the Participated Mortgage Loans shall be applied first, to the
reimbursement of any reasonable costs and expenses of collection (including
reasonable attorneys’ fees and costs); second, to the repayment of the
Participated Mortgage Loans in the manner set forth in Section 15 hereof; third,
if legally permitted pursuant to the terms of the collateral security documents,
to the repayment of any other amounts then due and owing by the Obligor(s) to
the Seller, and fourth, if any such proceeds are remaining after application in
the manner set forth in clauses first, second and third above, to the applicable
Obligor(s). In the event any of the Property encumbered by a Participated
Mortgage Loan is acquired by the Seller through foreclosure, deed in lieu of
foreclosure or otherwise, the Seller and the Buyer each shall have an undivided
interest in the Property so acquired pursuant to their proportionate interest in
such Participated Mortgage Loan.

 

D.    Unless otherwise reimbursed to the Seller in accordance with the
provisions of subsection C of this Section 16, the Buyer shall pay its pro-rata
part, based on the Buyer’s Percentage, of all reasonable attorneys’ fees and
other expenses incurred by the Seller in connection with the enforcement of the
obligations of the Obligor(s) under any Participated Mortgage Loan, and the
Buyer shall be entitled to such pro rata part of any payments subsequently
received by the Seller with respect to such fees and expenses

 

17.    Repurchase of Participation Interest(s) by Seller.

 

A.    The Seller shall repurchase the Buyer’s Participation Interest in any
Participated Mortgage Loan at the Repurchase Price (as hereinafter defined)
within five (5) business days of the Seller’s receipt of the Buyer’s notice to
repurchase such Participation Interest, which notice may be given by the Buyer
to the Seller upon the occurrence of any of the following: (i) if any
Participated Mortgage Loan does not meet the requirements set forth in Section 4
at the time of sale by the Seller to the Buyer under this Agreement of a
Participation Interest therein: (ii) if any Participated Mortgage Loan proves to
be counterfeit, fraudulent, forged, fictitious, nonexistent or pledged or
assigned to any third party, (iii) if there is any material misrepresentation or
fraudulent conduct by the Seller or its servants, agents or employees. whether
of commission or omission, arising out of the making of any Participated
Mortgage Loan or the sale of any Participation Interest therein to the Buyer;
(iv) if the Obligor(s) default(s) in the first payment due and payable under any
Participated Mortgage Loan following the date of sale by the Seller to the Buyer
under this Agreement of a Participation Interest therein; or (v) if there is a
foreclosure or other similar action filed against the Property securing any
Participated Mortgage Loan within the first six (6) months following the
original date of closing thereof.

 

B,    Each repurchase of such Participation Interest by the Seller shall be
accomplished by the Seller’s payment to Buyer of the full amount of the
Repurchase Price. Such repurchase shall be without recourse

 

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and without any representation or warranty on part of the Buyer as the
re-seller, except that the Buyer shall represent and warrant to the Seller that
the Buyer has not previously sold, assigned or encumbered its Participation
Interest in such Participated Mortgage Loan. The term “Repurchase Price” shall
mean with respect to any such Participation Interest (i) one hundred percent
(100%) of the amount paid by the Buyer for such Participation Interest, plus
(ii) any accrued and unpaid interest at the rate owed to the Buyer for such
Participation Interest under this Agreement to the date of the repurchase, plus
(iii) any reasonable fees and expenses charged by third parties relating to the
reassignment or redelivery of the Participated Mortgage Loan, including
reasonable attorneys’ fees and costs.

 

C.    Upon any repurchase by the Seller of the Buyer’s Participation Interest in
a Participated Mortgage Loan hereunder, the Buyer shall reassign, deliver and
transfer to the Seller, the interest of the Buyer in such Participated Mortgage
Loan which, except as otherwise set forth in subsection B above of this Section
17, shall be without recourse and without representation or warranty of any
kind, by delivering to the Seller, (a) all of the documents and instruments
evidencing, securing or otherwise relating to such Participated Mortgage Loan
which are in the possession of the Buyer; and (b) deliver to the Seller the
original Participation Certificate and/or other evidence that the Participation
Certificate has been repurchased by Seller so as to vest the Seller with one
hundred percent (100%) of the interests in and to the reassigned Participated
Mortgage Loan. The Buyer shall execute such other documents and instruments as
may reasonably be necessary to accomplish such repurchase by the Seller.

 

18.    Purchase by Buyer of Seller’s Retained interest in Participated Mortgage
Loans.

 

A.    Notwithstanding any other provisions of this Agreement, the Buyer shall
have the absolute and unconditional right, but shall be under no duty or
obligation, to purchase at any time the retained interest of the Seller
hereunder in any Participated Mortgage Loan, exercisable upon written notice to
the Seller and effective upon payment to the Seller of its pro rata part of such
Participated Mortgage Loan, following which, the Seller shall no further rights
or interests in respect of said Participated Mortgage Loan. In such case, the
Seller shall assign the Participated Mortgage Loan and each and all of the
documents and Instruments evidencing, securing or otherwise relating to such
Participated Mortgage Loan to the Buyer, without recourse, unless any of the
matters set forth in clauses (i) through (v), inclusive, of subsection A of
Section 17 has occurred, in which case, the Seller shall indemnify the Buyer and
hold the Buyer harmless from and against any actual loss or expense suffered or
incurred by the Buyer resulting therefrom, and without representation or
warranty, except that the Seller shall represent and warrant to the Buyer each
of the matters set forth in subsections I through O, inclusive, of Section 10,
and further, shall represent and warrant to the Buyer the amount due on the
Participated Mortgage Loan and that the Seller has not previously sold, assigned
or encumbered its pro rata interest in such Participated Mortgage Loan.

 

B.    Upon any purchase by the Buyer of the Seller’s retained interest in a
Participated Mortgage Loan hereunder, the Seller shall endorse over, assign,
deliver and transfer to the Buyer the interests of the Seller in such
Participated Mortgage Loan which, except as otherwise set forth in subsection A
above of this Section 18, shall be without recourse and without representation
or warranty of any kind, by delivering to the Buyer, (a) each and all of the
documents and instruments evidencing, securing or otherwise relating to such
Participated Mortgage Loan with appropriate completed endorsements so as to vest
the Buyer with one hundred percent (100%) of the interests in and title to the
assigned Participated Mortgage Loan; and (b) deliver to the Buyer the Mortgage
Loan file relating to the Participated Mortgage Loan. The Buyer shall execute
such other documents and instruments as may reasonably be necessary to
accomplish the foregoing purchase by the Buyer.

 

19.    Retention of Counsel.    In the event of actual or threatened litigation
affecting any Participated Mortgage Loan hereunder or the collateral security
for the Participated Mortgage Loan with respect to which litigation the Buyer is
of the opinion that the services of an attorney should be retained for the
protection of the interest of the Buyer, the Buyer may, following five (5)
business days prior written notice to the Seller, employ counsel to represent
the Seller, and the Buyer with respect to such Participated Mortgage Loan.

 

20.    Dispute Resolution.    Any party may give the other party written notice
of any dispute that arises under this Agreement and is not resolved in the
normal course of business. Within fifteen (15) days after delivery of the
notice, the receiving party shall submit to the other a written response. The
notice and the response shall include (i) a statement of each party’s position
and a summary of arguments supporting that position, and (ii) the name and title
of the executive who will represent that party, as well as the name of any other
person who will accompany that executive. Within thirty (30) days after delivery
of the disputing party’s notice, the executives of both parties shall

 

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meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary to attempt to resolve the dispute. Consideration shall
be given to all reasonable requests for information made by one party to the
other.

 

21.    Arbitration.    Any dispute arising out of or relating to this Agreement
or the breach, termination or validity hereof that has not been resolved in the
manner set forth in Section 20 hereof within ninety (90) days of the giving of
notice as set forth in Section 20 hereof, shall be determined by binding
arbitration administered by the American Arbitration Association (“AAA”) in
accordance with the Commercial Arbitration Rules of AAA. Any arbitration shall
be conducted in the Orlando, Florida, area. The parties request that AAA
exercise its best efforts to select arbitrators with a basic understanding of
the mortgage lending industry. Any award of the arbitrators shall be accompanied
by a statement of the reasons upon which such award is based, a determination of
the prevailing party and an award of reasonable attorney’s fees and costs to the
prevailing party. Each side shall equally divide and shall be equally
responsible for the costs of arbitration. Any award in arbitration is deemed
binding upon the parties unless appealed within thirty (30) days to any court of
competent jurisdiction by filing a complaint disputing the arbitration award.

 

22.    Miscellaneous.

 

A.    Governing Law.    This Agreement shall be governed and construed under the
laws of the State of Florida.

 

B.    Binding Effect .    This Agreement shall be binding upon the parties
hereto, as well as their respective legal representatives, successors and
assigns.

 

C.    Notices.    All notices under this Agreement shall be in writing and
mailed to the respective parties at the following addresses:

 

As to Seller:

  

Crescent Mortgage Services, Inc.

115 Perimeter Center Place, Suite 285

Atlanta, GA 30346

Attention: Robert C. Ken Knight, President

As to Buyer:

  

Colonial Bank

201 East Pine Street

Orlando, FL 32801

Attention: Amy J. Nunneley, Senior Vice President

 

D.    Purchase of Additional Participation Interests.    Pursuant to
negotiations, the Seller may submit to the Buyer from time to time, at the
Seller’s option, additional Participation Interest(s), and supply the Buyer with
any Information requested with respect to those interests. When the parties come
to an agreement, a Participation Certificate in the form attached as Exhibit A,
shall be completely filled out by the Seller, executed by both parries and
delivered to the Buyer. The Buyer shall thereupon remit payment for its
Participation Interest in the principal amount of the Mortgage Loans as shown by
such Participation Certificate.

 

E.    Interpretation of Agreement.    Although the parties hereto reconfirm that
each transaction contemplated by this Agreement is intended to be and shall be
construed as a sale, the Seller and the Buyer hereby agree that to the extent
any such transaction is determined by a court of law as being a loan instead of
a sale, then it is a secured loan, with the Seller hereby granting to the Buyer
a security interest in the applicable Participated Mortgage Loan(s). THE SELLER
HEREBY AUTHORIZES THE BUYER TO FILE FROM TIME TO TIME IN ALL APPROPRIATE
JURISDICTIONS ANY AND ALL PRECAUTIONARY UCC-1 FINANCING STATEMENTS AND/OR UCC-3
AMENDMENTS DEEMED NECESSARY OR DESIRABLE BY THE BUYER TO REFERENCE THE
TRANSACTION(S) CONTEMPLATED HEREUNDER AND TO PERFECT, IF REQUIRED, THE INTEREST
OF THE BUYER IN SAID PARTICIPATED MORTGAGE LOANS.

 

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F.    Survival of Representations and Warranties.    Each of the
representations, warranties, covenants and agreements of the Seller and the
Buyer contained in this Agreement shall be absolute and unconditional, shall
survive the execution and delivery hereof, and shall remain and continue in full
force and effect until all Participation Interest(s) of the Buyer in all
Participated Mortgage Loans have been repurchased by the Seller of otherwise
paid in full to the Buyer.

 

G.    Indemnity.    In addition to any repurchase obligations the Seller may
have as set forth herein, the Seller hereby agrees, on demand, to defend,
indemnify, and hold harmless the Buyer and its affiliates, and their respective
employees, agents and representatives, from and against any all harm,
liabilities, judgments, damages, claims, demands, costs, expenses (including
reasonable legal fees and expenses) or losses (each, a “Claim”) suffered or
incurred by reason of any representation or warranty made by the Seller in this
Agreement having been untrue, incorrect, false or misleading in any material
respect when made or deemed made or the breach or alleged breach by the Seller
of any covenant or agreement made by it herein (whether or not the Seller had
knowledge (i) that such representation or warranty was untrue, incorrect, false
or misleading, or (ii) of the facts or circumstances giving rise to such breach
or alleged breach).

 

H.    Consent To Jurisdiction; Venue.    ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE CIRCUIT COURT OF ORANGE COUNTY,
FLORIDA OR THE UNITED STATES FOR THE MIDDLE DISTRICT OF FLORIDA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, SELLER AND BUYER EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. SELLER AND BUYER EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT. FURTHER, SELLER
AND BUYER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY FLORIDA LAW (OTHER
THAN BY PUBLICATION).

 

I.    Waiver of Jury Trial.    SELLER AND BUYER EACH WAIVES ITS RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT, RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
SELLER AND BUYER EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

J.    Assignability.    The rights and obligations of the Buyer and the Seller
under this Agreement are personal and cannot be assigned, unless with the
written approval of the other party.

 

K.    Effect of Article and Section Headings.    The Article and Section
headings herein are for convenience only and shall not affect the construction
of this Agreement.

 

L.    Counterparts.    This Agreement may be executed in counterparts, each of
which shall be an original and all of which shall constitute but one and the
same agreement.

 

M.    Document Contains Entire Agreement.    This document, together with each
Participation Certificate issued hereunder, contains the entire agreement
between the parties hereto and cannot be modified in any respect except by
mutual agreement in writing.

 

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N.    Reform.    Should any provision of this Agreement be deemed invalid or
unenforceable as contrary to applicable law, the parties hereto agree that such
provision shall automatically be deemed to be reformed as to be consistent with
applicable law.

 

[Signatures follow on next page]

 

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IN WITNESS WHEREOF:, each parry has caused this instrument to be signed in its
corporate name on its behalf by its proper officials duly authorized as of the
day and year first above written,

 

SELLER:

  

BUYER:

CRESCENT MORTGAGE SERVICES

  

COLONIAL BANK

By:

  

/s/    Robert C. KenKnight

--------------------------------------------------------------------------------

  

By:

  

/s/    Amy I. Nunneley

--------------------------------------------------------------------------------

Name:

  

Robert C. KenKnight

  

Name:

  

Amy I. Nunneley

Title:

  

President

  

Title:

  

Senior Vice President

 

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EXHIBIT A

 

PARTICIPATION CERTIFICATE

Number                

 

TO:    COLONIAL BANK, as Buyer (the “Buyer”)

 

FROM:    Crescent Mortgage Services, Inc., as Seller (the “Seller”)

 

THIS CERTIFIES that the Seller has received from the Buyer the purchase price in
the aggregate principal sum equal to         % of the par value of the following
Mortgage Loans and the Seller hereby sells, conveys, assigns, transfers, and
issues to the Buyer under the Loan Participation Sale Agreement (“Agreement”)
dated as of April 16, 2003, between the Seller and the Buyer, a         %
undivided participation interest in such Mortgage Loans subject to the terms and
conditions of said Agreement:

 

Sec Schedule attached hereto and made a part hereof

 

The total outstanding unpaid principal balance of said Mortgage Loan(s) as of
this date is/are $                .

 

It is agreed that the Buyer shall receive as to each Mortgage Loan a yield equal
to the PRIME Rate per annum, plus a loan fee of $10.00.

 

For purposes hereof, “Prime Rate” shall mean the rate per annum announced by the
Buyer from time to time as its Prime Rate (which interest rate is only a
benchmark, is purely discretionary and is not necessarily the best or lowest
rate charged borrowing customers of the Buyer).

 

The rights and obligations of the parties to this Participation Certificate are
governed by the above-described Agreement, which is fully incorporated herein by
reference.

 

This                  day of             , 200    .

 

SELLER:

  

BUYER:

CRESCENT MORTGAGE SERVICES

  

COLONIAL BANK

By:

  

--------------------------------------------------------------------------------

  

By:

  

--------------------------------------------------------------------------------

Name:

  

--------------------------------------------------------------------------------

  

Name:

  

--------------------------------------------------------------------------------

Title

  

--------------------------------------------------------------------------------

  

Title:

  

--------------------------------------------------------------------------------

 

16

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SCHEDULE OF MORTGAGE LOANS

 

Loan Number

--------------------------------------------------------------------------------

    

Mortgagor

--------------------------------------------------------------------------------

  

Note Date

--------------------------------------------------------------------------------

    

Note Amount

--------------------------------------------------------------------------------

  

Note Rate

--------------------------------------------------------------------------------

 

17

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EXHIBIT B

 

Participated Mortgage Loan Requirements

 

In order for a Mortgage Loan to qualify to be a Participated Mortgage Loan, such
Mortgage Loan must meet each of the following requirements:

 

a)    such Mortgage Loan is a binding and valid obligation of the Obligor(s)
thereon, is in full force and effect and is enforceable in accordance with its
terms;

 

b)    such Mortgage Loan is secured by a first priority mortgage (of deed of
trust) on the Property encumbered thereby;

 

c)    such Mortgage Loan is genuine, in all respects, as appearing on its face
or as represented in the books and records of Seller, and all information set
forth therein is true and correct;

 

d)    such Mortgage Loan is free of any default (other than as permitted in
subsection (e) below) of any party thereto (including Seller), counterclaims,
offsets and defenses and from any rescission, cancellation or avoidance, and all
rights thereof, whether by operation of law or otherwise;

 

e)    no payment under such Mortgage Loan is more than thirty (30) days past due
the payment due date set forth in the underlying promissory note and mortgage
(or deed of trust);

 

f)    such Mortgage Loan contains the entire agreement of the parties thereto
with respect to the subject matter thereof, has not been modified or amended in
any respect and is free of concessions or understandings with the obligor
thereon of any kind not expressed in writing therein;

 

g)    such Mortgage Loan is in all respects as required by and in accordance
with all applicable laws and regulations governing the same, including the
Federal Consumer Credit Protection Act and the regulations promulgated
thereunder and all applicable usury laws and restrictions; and all notices,
disclosures and other statements or information required by law or regulation to
be given, and any other act required by law or regulation to be performed, in
connection with such Mortgage Loan have been given and performed as required;

 

h)    all advance payments and other deposits on such Mortgage Loan have been
paid in cash, and no part of such sums has been loaned, directly or indirectly,
by Seller to the obligor thereon;

 

i)    at all times such Mortgage Loan will be free and clear of all liens,
encumbrances, charges, rights and interests of any kind (other than investor
commitments), except in favor of Buyer hereunder;

 

j)    the Property encumbered by such Mortgage Loan is insured against loss or
damage by fire and all other hazards normally included within standard extended
insurance coverage (including flood plain insurance if such Property is located
in a federally designated flood plain) in accordance with the provisions of such
Mortgage Loan with Seller named as a loss payee thereon;

 

k)    the Property encumbered by such Mortgage Loan is free and clear of all
liens except liens in favor of Seller, subject only to (i) liens junior in
priority to the lien of Seller; (ii) the lien of real property taxes and
assessments not yet due and payable; (iii) 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 originator of the Mortgage Loan and (A) referred to or
otherwise considered in the appraisal made for the originator of the Mortgage
Loan or (B) that do not materially adversely affect the appraised value of such
Property as set forth in such appraisal; and (iv) 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 Mortgage Loan or the
use, enjoyment, value or marketability of the related real property;

 

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l)    with respect to conventional Mortgage Loans, in the event the
loan-to-value ratio of such Mortgage Loan exceeds eighty percent (80%), such
Mortgage Loan is the subject of a private mortgage insurance policy issued in
favor of Seller by an insurer approved by Fannie Mae, Freddie Mac and Ginnie Mae
or an approved investor or other buyer issuing the investor commitment for such
Mortgage Loan;

 

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

 

n)    except for the existence of a commitment to sell such Mortgage Loan on a
servicing-released basis, such Mortgage Loan is not subject to any servicing
arrangement with any person other than Seller nor are any servicing rights
relating to such Mortgage Loan subject to any lien, claim, interest or negative
pledge in favor of any person other than as permitted hereunder.

 

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EXHIBIT A

 

Seller:    Crescent Mortgage Services, Inc.

Buyer:    Colonial Bank

 

This financing statement covers the following property and rights:

 

The Participation Interest(s) in the Mortgage Loans identified in the
Participation Certificate(s) issued by the Seller to the Buyer from time to time
pursuant to the Agreement (each a “Participated Mortgage Loan”, and
collectively, the “Participated Mortgage Loans”), which shall include the
percentage Participation Interest indicated in each Participation Certificate of
the Seller’s ownership rights in and to the Participated Mortgage Loans and the
indebtedness, promissory note or notes, collateral security (including, without
limitation, the mortgage, deed of trust, deed to secure debt and any other form
of security instrument used to create a lien or other encumbrance upon real
property as security for such promissory note or notes) and all other documents
and instruments evidencing, securing or otherwise relating to such Participated
Mortgage Loans.

 

The capitalized terms used above and not otherwise defined herein shall have the
following meanings:

 

“Agreement” shall mean that certain Loan Participation Sale Agreement dated as
of April 16, 2003 between Crescent Mortgage Services, Inc., as Seller, and
Colonial Bank, as Buyer, as the same may be modified, amended, supplemented or
restated from time to time.

 

“Mortgage Loans” shall mean one-to-four family, residential real estate loans
secured by a lien on the real property (and improvements) encumbered pursuant to
such loans.

 

“Participation Certificate” shall mean a participation certificate issued by the
Seller to the Buyer from time to time pursuant to the Agreement

 

“Participation Interest” shall mean an undivided participation ownership
interest in the Mortgage Loan(s) identified in a Participation Certificate.

 

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