AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Execution Copy 

CUSTODIAL AND PAYING AGENCY AGREEMENT
 


by and among
 


AMTRUST CADC VENTURE, LLC,
 


FEDERAL DEPOSIT INSURANCE CORPORATION,
 


in its corporate capacity, as Purchase Money Notes Guarantor,
 


FEDERAL DEPOSIT INSURANCE CORPORATION 
 

in its capacity as Receiver for AmTrust Bank, as the initial NGPMN Agent,
 


FEDERAL DEPOSIT INSURANCE CORPORATION,
 


in its capacity as Receiver for AmTrust Bank, as Collateral Agent,
 


FEDERAL DEPOSIT INSURANCE CORPORATION,
 


in its capacity as Receiver for AmTrust Bank, as Advance Lender,
 


FEDERAL DEPOSIT INSURANCE CORPORATION,
 


in its capacity as Receiver for AmTrust Bank, as Initial Member,
 


PMO LOAN ACQUISITION VENTURE, LLC, as Private Owner,
 


and



WELLS FARGO BANK, N.A.
 


Dated as of July 21, 2010 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
TABLE OF CONTENTS
 


ARTICLE I DEFINITIONS AND CONSTRUCTION .................................................................3



Section 1.1 Definitions....................................................................................................3



ARTICLE II PAYING AGENT AND PURCHASE MONEY NOTES .......................................8



Section 2.1 Appointment of Paying Agent .....................................................................8



Section 2.9 Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money
 


Section 2.12 Notes Beneficially Owned by Persons Not Qualified Institutional 
 

Section 2.2 Delivery of Documentation..........................................................................8



Section 2.3 Duties ...........................................................................................................9



Section 2.4 Forms of Purchase Money Notes .................................................................9



Section 2.5 Authorized Amount; Denominations; Prepayment....................................11



Section 2.6 Execution, Delivery and Dating.................................................................11



Section 2.7 Registration, Registration of Transfer and Exchange or Conversion ........12



Section 2.8 Reissuance of Purchase Money Notes .......................................................20



Notes ..........................................................................................................21



Section 2.10 Payments with Respect to the Purchase Money Notes ..............................22



Section 2.11 Mandatory Exchange .................................................................................23



Buyers or Qualified Purchasers .................................................................24



Section 2.13 Withholding ...............................................................................................25



Section 2.14 Persons Deemed Owners ...........................................................................25



Section 2.15 Holder Voting ............................................................................................25



Section 2.16 Cancellation ...............................................................................................26



Section 2.17 Section 3(c)(7) Procedures.........................................................................26



Section 2.18 Transfer of Purchase Money Notes by Receiver.. .....................................27



Section 2.19 Conversion of Class of Non-Guaranteed Purchase Money Notes. ............28



ARTICLE III ACCOUNTS .........................................................................................................29



Section 3.1 Collection Account ....................................................................................29



Section 3.2 Distribution Account..................................................................................31



Section 3.3 Defeasance Account...................................................................................31



Section 3.4 Initial Member Development Funding Account. .......................................34



Section 3.5 Company Development Account...............................................................35



Section 3.6 Working Capital Reserve Account. ...........................................................36



Section 3.7 Excess Working Capital Advances............................................................38



Section 3.8 Discretionary Funding Advances...............................................................38



Section 3.9 Private Owner Pledged Account................................................................39



ARTICLE IV ADDITIONAL PROVISIONS RELATED TO THE ACCOUNTS.....................39



Section 4.1 Investment of Funds in Accounts ..............................................................39



Section 4.2 Interest........................................................................................................41



Section 4.3 Inadequately Identified Amounts...............................................................41



Section 4.4 Payment Procedures ...................................................................................41



ARTICLE V DISTRIBUTIONS ..................................................................................................41



Section 5.1 Priority of Payments ..................................................................................41



AmTrust Bank CADC Loan and REO Structured Transaction 2010
 


Custodial and Paying Agency Agreement
 


468-004/AGR/2644005.18
 

Section 5.2 Notices of Payment Failure........................................................................43



ARTICLE VI CUSTODIAL DOCUMENTS ..............................................................................44



Section 6.1 Delivery of Custodial Documents..............................................................44



Section 6.2 Examination of Custodian Files; Copies....................................................48



Section 6.3 Shipment of Custodial Documents ............................................................48



ARTICLE VII CUSTODIAN ......................................................................................................48



Section 7.1 Appointment of the Custodian ...................................................................48



Section 7.2 Obligations of the Custodian .....................................................................48



ARTICLE VIII FEES AND EXPENSES ....................................................................................51



Section 8.1 Fees and Expenses .....................................................................................51



ARTICLE IX REMOVAL OR RESIGNATION.........................................................................51



Section 9.1 Removal or Resignation of Custodian and Paying Agent .........................51



ARTICLE X REPRESENTATIONS, WARRANTIES AND COVENANTS ............................53



Section 10.1 Representations, Warranties and Covenants ..............................................53



Section 10.2 Insurance ....................................................................................................53



ARTICLE XI REPORTS .............................................................................................................54



Section 11.1 Custodian and Paying Agent Report ..........................................................54



Section 11.2 Additional Reports.....................................................................................54



Section 11.3 Company and Servicer Distribution Date Accounting ..............................55



Section 11.4 Distribution Date Instructions....................................................................56



Section 11.5 Books and Records ....................................................................................57



ARTICLE XII NO ADVERSE INTERESTS ..............................................................................57



Section 12.1 No Adverse Interests ..................................................................................57



ARTICLE XIII LIABILITY AND INDEMNIFICATION .........................................................57



Section 13.1 Liability; Indemnification ..........................................................................57



ARTICLE XIV CUSTODIAN AND PAYING AGENT ............................................................59



Section 14.1 Reliance of Custodian and Paying Agent ..................................................59



ARTICLE XV TAXES.................................................................................................................60



Section 15.1 Tax Reports ................................................................................................60



Section 15.2 Stamp and Other Similar Taxes .................................................................60



Section 15.3 Tax Characterization. .................................................................................60



Section 15.4 Back-Up Withholding. ...............................................................................61



ARTICLE XVI TERM.................................................................................................................61



Section 16.1 Term...........................................................................................................61



ARTICLE XVII AUTHORIZED REPRESENTATIVES ...........................................................61



Section 17.1 Authorized Representatives .......................................................................61



ii



AmTrust Bank CADC Loan and REO Structured Transaction 2010
 


Custodial and Paying Agency Agreement
 


468-004/AGR/2644005.18
 

ARTICLE XVIII NOTICES ........................................................................................................62
 


Section 18.1 Notices .......................................................................................................62



ARTICLE XIX MISCELLANEOUS...........................................................................................64
 


Section 19.1 Governing Law ..........................................................................................64 

Section 19.2 Waiver of Jury Trial ...................................................................................65 

Section 19.3 Jurisdiction; Venue and Service.................................................................65 

Section 19.4 Counterparts ...............................................................................................67 

Section 19.5 Severability ................................................................................................67 

Section 19.6 Compliance With Law ...............................................................................67 

Section 19.7 Entire Agreement .......................................................................................67 

Section 19.8 Assignment; Binding Effect.......................................................................68 

Section 19.9 Rights Cumulative .....................................................................................68 

Section 19.10 Amendments ..............................................................................................68



Section 19.11 Headings ....................................................................................................68



Schedule and Exhibits 

Exhibit A Asset Schedule 

Exhibit B-1 Form of Guaranteed Certificated Note 

Exhibit B-2 Form of Non-Guaranteed Certificated Note 

Exhibit B-3 Form of Guaranteed Global Note 

Exhibit B-4 Form of Non-Guaranteed Global Note 

Exhibit C-1 Form of Qualified Institutional Buyer and Qualified Purchaser Certification 

Exhibit C-2 Form of Certificate for the Acquisition of Regulation S Certificated Notes 

Exhibit C-3 Form of Certificate for the Acquisition of Rule 144A Certificated Notes 

Exhibit C-4 Form of Certificate for Transfer or Exchange of Certificated Notes to Rule 144A 

Global Notes 

Exhibit D Form of DTC Notice to Investors 

Exhibit E Form of Collateral Certificate 

Exhibit F Review Procedures 

Exhibit G Form of Supplemental Delivery Certificate 

Exhibit H Request for Release and Receipt of Custodial Documents 

Exhibit I Request for Release and Receipt of Debt Documents 

Exhibit J Fees and Expenses of Custodian and Paying Agent 

Exhibit K Custodian and Paying Agent Report 

Exhibit L Form of Lost Instrument Affidavit 

Exhibit M Authorized Representatives 

Exhibit N Form of Account Control Agreement 

Exhibit O Form of Investor Certification for Website Access 

Exhibit P Form of Conversion Certificate 

Exhibit Q Form of Private Owner Account Control Agreement 

iii 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

CUSTODIAL AND PAYING AGENCY AGREEMENT
 


THIS CUSTODIAL AND PAYING AGENCY AGREEMENT (as the same shall be 

amended, modified or supplemented in accordance with the terms hereof, this “Agreement”) is 

made and entered into as of July 21, 2010 (the “Closing Date”), by and among AmTrust CADC 

Venture, LLC, a Delaware limited liability company (the “Company”), the Federal Deposit 

Insurance Corporation (acting in any capacity, the “FDIC”), in its corporate capacity, as the 

guarantor of the Purchase Money Notes (as such term is defined below) (in such capacity, 

together with its successors and assigns, the “Purchase Money Notes Guarantor”), the FDIC in 

its capacity as the Receiver (as such term is defined below), as the initial NGPMN Agent, the 

FDIC in its capacity as the Receiver, as the Collateral Agent under the Reimbursement, Security 

and Guaranty Agreement (as such term is defined below) (in such capacity, or any successor 

collateral agent, the “Collateral Agent”), the FDIC in its capacity as Receiver, as the Initial 

Member with respect to the Company (in such capacity, or any successor or assign, the “Initial 

Member”), the FDIC, in its capacity as Receiver, as the Advance Lender, PMO Loan 

Acquisition Venture, LLC, as the Private Owner with respect to the Company (in such capacity, 

or any permitted successor or assign, the “Private Owner”), and Wells Fargo Bank, N.A., a 

national banking association (the “Bank”). 

RECITALS 

WHEREAS the FDIC has been appointed as the receiver for the Failed Bank (the FDIC, 

in its capacity as receiver for the Failed Bank, the “Receiver ”); and 

WHEREAS the Failed Bank previously owned the Assets described on the Asset 

Schedule attached to this Agreement as Exhibit A; and 

WHEREAS the Receiver and the Company have entered into the Contribution 

Agreement pursuant to which the Receiver, in its capacity as the Initial Member, transferred all 

of its right, title and interest in and to the Assets to the Company partly as a capital contribution 

and partly as a sale and, in consideration for the transfer of the Assets to the Company to the 

extent such transfer constitutes a sale, the Company has issued to the FDIC, as a Holder, (1) two 

Classes of Guaranteed Purchase Money Notes, dated as of the Closing Date, in the aggregate 

principal face amount of $233,851,000.00, inclusive of the Purchase Money Notes Issuance Fee, 

and (2) one Class of Non-Guaranteed Purchase Money Note, dated as of the Closing Date, in the 

principal face amount of $77,950,000.00, inclusive of the Purchase Money Notes Issuance Fee; 

and 

WHEREAS, to provide support for the payment and performance of the Company’s 

obligations pursuant to the Guaranteed Purchase Money Notes, the Purchase Money Notes 

Guarantor entered into a Purchase Money Note Guaranty; and 

WHEREAS the Non-Guaranteed Purchase Money Notes are convertible into one or more 

Classes of Guaranteed Purchase Money Notes and, which, upon the exercise by the Initial 

NGPMN Holder of the Conversion Right with the consent of the Purchase Money Notes 

Guarantor, to convert any Non-Guaranteed Purchase Money Note into to one or more Classes of 

Guaranteed Purchase Money Notes, the obligations with respect to each Converted Guaranteed 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Purchase Money Note shall be made subject to the guaranty of the Purchase Money Notes 

Guarantor pursuant to either an amendment and restatement of the Initial Purchase Money Notes 

Guaranty or a Subsequent Purchase Money Notes Guaranty (as the Purchase Money Notes 

Guarantor may elect in its sole and absolute discretion); and 

WHEREAS the Advance Lender has agreed to provide the Advance Facility to the 

Company to enable the Company to fund Working Capital Expenses, to replenish the Working 

Capital Reserve up to the Working Capital Reserve Target and to make payments for 

Substantially Complete Vertical Development, which funds shall be provided pursuant to, and in 

accordance with, the terms of the Advance Facility Agreement between the Advance Lender and 

the Company; 

WHEREAS, pursuant to the Reimbursement, Security and Guaranty Agreement, the 

Company has pledged the Assets and other underlying collateral to the Collateral Agent for the 

benefit of the Purchase Money Notes Guarantor and the Advance Lender, and the 

Reimbursement, Security and Guaranty Agreement requires that the Company retain a document 

custodian, meeting the requirements set forth in the Reimbursement, Security and Guaranty 

Agreement, to take possession of the Custodial Documents (as such term is defined below), in 

accordance with the terms and conditions hereof; and 

WHEREAS the Initial Member and the Private Owner have entered into the LLC 

Operating Agreement; and 

WHEREAS the Company wishes to open and maintain in its name at a branch of the 

Bank certain accounts into which amounts will be deposited and proceeds will be distributed as 

provided in this Agreement and to appoint the Bank as Custodian and Paying Agent to perform 

the services contemplated by this Agreement; and 

WHEREAS the Private Owner wishes to open and maintain in its name at a branch of the 

Bank an account into which the Qualifying Cash Collateral (as such term is defined below) will 

be deposited, which account will be subject to a security interest and pledge for the benefit of the 

Initial Member pursuant to the LLC Operating Agreement, and to appoint the Bank as Paying 

Agent to perform the services contemplated by this Agreement; and 

WHEREAS the Bank wishes to accept its appointment as Custodian and as Paying Agent 

to perform the services contemplated by this Agreement; and 

WHEREAS the Company, the Initial Member, the Purchase Money Notes Guarantor, the 

Advance Lender, the Collateral Agent, the Private Owner and the Bank wish to enter into this 

Agreement to, among other things, govern the allocation of the proceeds to be distributed from 

each account established pursuant to this Agreement and the performance of certain tasks by the 

Bank; 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and 

agreements contained herein, and for other good and valuable consideration the receipt and 

sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 

2 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

ARTICLE I
 


DE FI NI T I O NS AND C O NST RUCT I O N
 


Section 1.1 Definitions. For purposes of this Agreement, certain terms used in this 

Agreement shall have the meanings and definitions set forth in that certain Agreement of 

Common Definitions dated as of the Closing Date among the Initial Member, the Company and 

others. In addition, for purposes of this Agreement, the following terms shall have the meanings 

and definitions hereinafter respectively set forth below. 

“Accounts ” has the meaning given in Section 4.1(b). 

“Acquired Property Deed ” means, with respect to any Acquired Property, the 

instrument or document required by the law of the jurisdiction in which the Acquired Property is 

located to convey fee title. 

“Acquired Property Files ” means, with respect to each Acquired Property, to the extent 

applicable, the following: (i)(A) if the related Acquired Property Deed has been delivered for 

recordation, a copy thereof (which might be electronic) file-stamped with evidence of recording 

thereon in the name of the Ownership Entity, together with a certificate of the related Servicer or 

the foreclosure attorney certifying that such Acquired Property Deed is a true, correct and 

complete copy of the original document, or (B) if the related Acquired Property Deed has been 

delivered for recordation but not yet returned, a copy thereof (which might be electronic) 

together with a certificate of the Servicer or the foreclosure attorney certifying that such 

Acquired Property Deed is a true, correct and complete copy of the original document, and that 

the original Acquired Property Deed has been delivered to the proper recording office for 

recordation; (ii) as applicable, either (A) a copy of each Acquired Property Deed (which might 

be electronic) that is intervening between the lender that obtained title to such property assets as 

a result of foreclosure or deed in lieu of foreclosure of a mortgage or deed of trust and the 

Ownership Entity, with the same certification documentation required in clause (i)(A) above, or 

(B) the original or a copy of the assignment of foreclosure bid between the foreclosing lender 

and the Ownership Entity with respect to the related Acquired Property, and in the case of a 

copy, together with a certificate of the Servicer or the foreclosure attorney certifying that such 

assignment of foreclosure bid is a true, correct and complete copy of the original document, with 

the same certification documentation required in clause (i)(A) above; (iii) the original or copy 

policy of title insurance prior to foreclosure of the related mortgage loan accompanied by a title 

report procured upon foreclosure of the related mortgage loan, with respect to the Acquired 

Property; and (iv) for any Acquired Property that is subject to a lease, (A) a copy of the lease 

together with a certificate of the related Servicer certifying that such lease is a true, correct and 

complete copy of the original document, and (B) if required by the Purchase Money Notes 

Guarantor or the Advance Lender, the original assignment of such lease from the lessor 

thereunder to the Ownership Entity or a copy thereof, together with a certificate of the related 

Servicer certifying that such assignment is a true, correct and complete copy of the original 

document. 

“Agent Member” means the members of, or participants in, DTC and the Clearing 

Agencies. 

3 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

“Agreement ” has the meaning given in the preamble. 

“Asset Schedule and Exception List ” means a list of the Assets, identifying, with 

respect to each Asset, each Exception, and that details, with respect to any Asset that has been 

released by the Custodian, (i) the Borrower name and any identification number assigned to the 

Asset, (ii) the location to which the Custodial Documents with respect to such Asset were 

delivered by the Custodian, and (iii) the date on which such Custodial Documents were released 

by the Custodian. 

“Authorized Denominations ” has the meaning given in Section 2.5(b). 

“Authorized Representative ” means, with respect to any Person, each individual 

designated, in writing as required by Section 17.1, by such Person to the Custodian to act as an 

authorized representative of such Person for purposes of this Agreement. 

“Certificated Note” has the meaning given in Section 2.4(b). 

“Clearing Agency ” means an organization registered as a “clearing agency” pursuant to 

Section 17A of the Exchange Act. 

“Collateral Agent ” has the meaning given in the preamble. 

“Collateral Certificate ” has the meaning given in Section 6.1(b). 

“Company Principal Prepayment Amount ” means any voluntary amounts deposited 

into the Defeasance Account by the Company for the purposes of prepaying in whole or in part 

principal on any Class of Purchase Money Notes. 

“Conversion Certificate ” means the certificate in the form attached to this Agreement as 

Exhibit P, executed by the Initial NGPMN Holder, as consented to by the Purchase Money Notes 

Guarantor, evidencing the exercise of the Conversion Right with respect to all or a portion of a 

Non-Guaranteed Purchase Money Note. 

“Custodial Delivery Failure ” has the meaning given in Section 13.1(c). 

“Custodial Report ” means a report prepared by the Custodian, which shall be in a form 

acceptable to the Company and the Advance Lender, detailing, with respect to any Asset that has 

been released by the Custodian, the following: (i) the borrower name and any identification 

number assigned to the Asset, (ii) the location to which the Custodial Documents with respect to 

such Asset were delivered by the Custodian and (iii) the date on which such Custodial 

Documents were released by the Custodian. 

“Debt Agreements ” has the meaning given in Section 2.2(a). 

“Defeasance Account Required Deposit Amount” means with respect to any 

Distribution Date an amount equal to the lesser of (i) the amount of funds remaining in the 

Distribution Account for such Distribution Date after making the distributions provided under 

4 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

clauses (i) through (ix) of Section 5.1(b) of this Agreement and (ii) $311,801,000.00 less the sum 

of (a) any amounts payable by the Purchase Money Notes Guarantor pursuant to the Purchase 

Money Notes Guaranty in respect of the Guaranteed Obligations, (b) any Company Principal 

Prepayment Amounts, (c) any Excess Working Capital Advances deposited into the Defeasance 

Account to cure a Purchase Money Notes Trigger Event and (d) the greater of (x) the aggregate 

amount of all previous deposits made into the Defeasance Account pursuant to Section 5.1(b)(x) 

and (y) the sum of the amount on deposit in the Defeasance Account as of the related 

Determination Date and the Net Aggregate Purchase Money Notes Reduction Amount; provided, 

however, if on any Distribution Date the balance in the Defeasance Account is equal to or greater 

than the then outstanding principal balances of the Purchase Money Notes, the Defeasance 

Account Required Deposit Amount for all subsequent Distribution Dates shall be zero. 

“Depository” or “DTC” means the Depository Trust Company, its nominees, and their 

respective successors. 

“Exchange Act ” means the United States Securities Exchange Act of 1934, as amended. 

“Federal Reserve District ” means one of the twelve districts represented by a regional 

Federal Reserve Bank. 

“Global Note” has the meaning given in Section 2.4(b). 

“GPMN Holder ” means any Holder from time to time of a Guaranteed Purchase Money 

Note. 

“Guaranteed Certificated Note” has the meaning given in Section 2.4(b). 

“Guaranteed Global Note” has the meaning given in Section 2.4(b). 

“Guaranteed Purchase Money Note” means a Purchase Money Note originally issued 

with the guarantee of the Purchase Money Notes Guarantor pursuant to the Initial Purchase 

Money Notes Guaranty or a Converted Guaranteed Purchase Money Note that subsequently is 

made subject to the guarantee of the Purchase Money Notes Guarantor pursuant to either an 

amendment and restatement of the Initial Purchase Money Notes Guaranty or a Subsequent 

Purchase Money Notes Guaranty (as the Purchase Money Notes Guarantor may elect in its sole 

and absolute discretion). 

“Holder Percentage ” means, with respect to each Holder and each Class of Purchase 

Money Notes at any time, a fraction (expressed as a percentage, carried out to the ninth decimal 

place), (i) the numerator of which is the outstanding principal amount of such Class of Purchase 

Money Notes for which such Holder is registered as the owner on the Purchase Money Notes 

Register at such time and (ii) the denominator of which is the aggregate outstanding principal 

amount of such Class of Purchase Money Notes at such time. 

“Maturing Purchase Money Note ” has the meaning given in Section 2.8. 

“Maturity Date Report” shall have the meaning given in Section 11.3. 

5 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

“MERS Report ” means the schedule listing the MERS Designated Assets and other 

information. 

“Net Aggregate Purchase Money Notes Reduction Amount ” means, with respect to 

any Determination Date, the excess (if any) of (i) the aggregate principal payments that have 

already been made to reduce the balance of (or pay in full) the Purchase Money Notes, over (ii) 

the sum of (A) any Payments made by the Purchase Money Notes Guarantor pursuant to the 

Purchase Money Notes Guaranty in respect of the Guaranteed Obligations for the Guaranteed 

Purchase Money Notes, (B) any Company Principal Prepayment Amounts, (C) any Excess 

Working Capital Advances deposited into the Defeasance Account to cure a Purchase Money 

Notes Trigger Event and (D) the aggregate principal balance of the Reissued Purchase Money 

Notes (if any). 

“Net Loss on Investments” means as of any Purchase Money Notes Maturity Date (or 

any Distribution Date on which an acceleration payment or prepayment of principal is due and 

payable on the Purchase Money Notes) the excess (if any) of (i) the aggregate of all amounts 

previously deposited into the Defeasance Account (A) pursuant to Section 5.1(b)(x), (B) by the 

Purchase Money Notes Guarantor to cover any Net Loss on Investments or as payments made 

pursuant to the Purchase Money Notes Guaranty in respect of the Guaranteed Obligations, (C) by 

the Company as Company Principal Prepayment Amounts, (D) by the Company made as 

proceeds of any Reissued Purchase Money Note and (E) by the Manager as Excess Working 

Capital Advances deposited into the Defeasance Account to cure a Purchase Money Notes 

Trigger Event over (ii) the sum of (A) the balance then in the Defeasance Account, (B) amounts 

previously disbursed from the account to pay principal on the Purchase Money Notes and (C) 

amounts deposited as Net Loss on Investments pursuant to Section 3.3(e); provided, however, 

that if on any Purchase Money Notes Maturity Date or Distribution Date the balance in the 

Defeasance Account is equal to or greater than the then outstanding principal balances of the 

Purchase Money Notes (such Purchase Money Notes Maturity Date or Distribution Date to be 

referred to in this definition as the “Reference Date” and the amount in the Defeasance Account 

as of the Reference Date (less any amount deposited into the Distribution Account pursuant to 

Section 3.3(k)) to be referred to in this definition as the “Reference Amount”) then as of any 

subsequent Purchase Money Notes Maturity Date (or Distribution Date on which an acceleration 

payment or prepayment of principal is due and payable) the Net Loss on Investments shall mean 

the excess (if any) of (I) the Reference Amount plus any deposits into the Defeasance Account 

after the Reference Date (other than the deposit of investment earnings) over (II) the sum of the 

balance then in the Defeasance Account plus amounts disbursed from the account after the 

Reference Date to pay principal on the Purchase Money Notes. 

“Non-Guaranteed Certificated Note” has the meaning given in Section 2.4(b). 

“Non-Guaranteed Global Note” has the meaning given in Section 2.4(b). 

“Non-Guaranteed Purchase Money Note” means a Purchase Money Note originally 

issued without the guarantee of the Purchase Money Notes Guarantor pursuant to the Purchase 

Money Notes Guaranty but with respect to which the Initial NGPMN Holder, with the consent of 

6 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

the Purchase Money Notes Guarantor, has the right from time to time, in whole or in part, to 

convert such Non-Guaranteed Purchase Money Note to a Guaranteed Purchase Money Note. 

“Non-Permitted Holder ” has the meaning given in Section 2.12(b). 

“Office ” has the meaning given in Section 6.1(a). 

“Purchase Money Notes Register” and “Purchase Money Notes Registrar ” have the 

meanings given in Section 2.7(a). 

“Purchase Money Notes Trigger Event ” has the meaning given in the Reimbursement, 

Security and Guaranty Agreement. 

“Recording Office ” means the appropriate recording office of the jurisdiction in which 

the Mortgaged Property is located with respect to any given Asset (if such Asset is not Acquired 

Property) or in which the Acquired Property is located. 

“Regulation S Certificated Note ” has the meaning given in Section 2.4(d). 


“Reissued Purchase Money Note ” has the meaning given in Section 2.8(a). 


“Reissued Converted Purchase Money Note ” has the meaning given in Section 2.8(b). 


“Review Procedures ” has the meaning given in Section 6.1(d). 


“Similar Law ” has the meaning given in Section 2.7(o)(vi). 


“Supplemental Delivery Certificate ” has the meaning given in Section 6.1(d). 


“Termination ” has the meaning given in Section 8.1. 


“Transferee Certificate ” has the meaning given in Section 2.7(j). 


Section 1.2 Rules of Construction. This Agreement shall be construed and interpreted 


in accordance with the following: 

(a) References to “Affiliates” include only other Persons that from time to 

time constitute “Affiliates” of such specified Person, and do not include, at any particular time, 

other Persons that may have been, but at such time have ceased to be, “Affiliates” of such 

specified Person, except to the extent that any such reference specifically provides otherwise. 

(b) The term “or” is not exclusive. 

(c) A reference to a Law includes any amendment, modification or 

replacement to such Law. 

(d) References to any document, instrument or agreement (a) shall be deemed 

to include all appendices, exhibits, schedules and other attachments thereto and all documents, 

7 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
instruments or agreements issued or executed in replacement thereof, and (b) shall mean such 

document, instrument or agreement, or replacement thereto, as amended, modified and 

supplemented from time to time in accordance with its terms and as the same is in effect at any 

given time. 

(e) Unless otherwise specified, the words “hereof,” “herein” and “hereunder” 

and words of similar import shall refer to this Agreement as a whole and not to any particular 

provision of this Agreement. 

(f) The words “include” and “including” and words of similar import are not 

limiting, and shall be construed to be followed by the words “without limitation,” whether or not 

they are in fact followed by such words. 

(g) The word “during” when used with respect to a period of time shall be 

construed to mean commencing at the beginning of such period and continuing until the end of 

such period. 

(h) Unless the context otherwise requires, singular nouns and pronouns when 

used herein shall be deemed to include the plural and vice versa and impersonal pronouns shall 

be deemed to include the personal pronoun of the appropriate gender. 

ARTICLE II
 


PAYI NG AGE NT AND PURCH ASE MO NE Y NO T E S
 


Section 2.1 Appointment of Paying Agent. Subject to the terms and conditions of this 

Agreement, the Company, the Initial Member, the Advance Lender and the Private Owner 

hereby appoint the Bank to perform the duties of the Paying Agent specifically set forth 

hereunder, and the Bank hereby accepts such appointment. 

Section 2.2 Delivery of Documentation. 

(a) Executed original counterparts of the Purchase Money Notes, the Purchase 

Money Notes Guaranty, the Reimbursement, Security and Guaranty Agreement and the Account 

Control Agreement (the “ Debt Agreements”) have been delivered to the Paying Agent and the 

Paying Agent acknowledges receipt thereof. The Company agrees to deliver to the Paying Agent 

each of the Debt Agreements that is executed and delivered by it, or executed by the Purchase 

Money Notes Guarantor or the Collateral Agent and delivered to it, subsequent to the date of this 

Agreement promptly upon execution and delivery and to deliver each instrument amending or 

modifying any agreement previously delivered to the Paying Agent. Copies of the Contribution 

Agreement, the Advance Facility Documents and the LLC Operating Agreement (or portions 

thereof) as are necessary for the Paying Agent to be familiar with in order to perform its 

obligations hereunder have been delivered to the Paying Agent by the Company, and the Paying 

Agent acknowledges receipt thereof. An executed original counterpart of the Private Owner 

Pledged Account Control Agreement has been delivered to the Paying Agent, and the Paying 

Agent acknowledges receipt thereof. 

8 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

(b) The Paying Agent shall retain the Debt Agreements in its possession and 

custody at all times during the term hereof unless any one of the following events has occurred: 

(i) If the Paying Agent has resigned or has been removed in 

accordance with the provisions of Section 9.1, the Custodian shall deliver the Debt Agreements 

to the successor Paying Agent in accordance with Section 9.1. 

(ii) If the Paying Agent has received a Request for Release and 

Receipt of the Debt Agreements in the form attached to this Agreement as Exhibit I from an 

Authorized Representative of the FDIC, the Paying Agent shall deliver the Debt Agreements to 

the FDIC in accordance with the instructions provided in such notice. 

Section 2.3 Duties. The Paying Agent shall have no duties other than those 

specifically set forth or provided for in this Agreement and each Debt Agreement to which it is a 

party, and no implied covenants or obligations of the Paying Agent shall be read into this 

Agreement or any Debt Agreement or any related agreement to which it is a party. The Paying 

Agent shall have no obligation to inquire whether any request, instruction, certificate, direction, 

receipt, demand, consent, resolution, statement, instrument, opinion, report, notice, document, 

communication, statement or calculation is in conformity with the terms of the agreement 

pursuant to which it is given, except those irregularities or errors manifestly apparent on the face 

of such document or actually known to the Paying Agent. If, however, any remittance or 

communication received by the Paying Agent appears manifestly erroneous or irregular, the 

Paying Agent shall endeavor to make prompt inquiry to the Person originating such remittance or 

communication in order to determine whether a clerical error or inadvertent mistake has 

occurred. 

Section 2.4 Forms of Purchase Money Notes. 

(a) Guaranteed Purchase Money Notes and Non-Guaranteed Purchase Money 

Notes. In connection with the sale of the Assets to the Company, the Company as of the Closing 

Date has issued to the Receiver, as a Holder, (A) two Classes of Guaranteed Purchase Money 

Notes with the designations of (1) the Class A-1 Purchase Money Note in the principal face 

amount of $155,901,000.00 (inclusive of the Purchase Money Notes Issuance Fee) and (2) the 

Class A-2 Purchase Money Note in the principal face amount of $77,950,000.00 (inclusive of the 

Purchase Money Notes Issuance Fee) and (B) one Class of Non-Guaranteed Purchase Money 

Notes with the designation of Class NG Purchase Money Note in the principal face amount of 

$77,950,000.00 (inclusive of the Purchase Money Notes Issuance Fee). Pursuant to the terms of 

Section 2.19, the Non-Guaranteed Purchase Money Notes are convertible into one or more 

Classes of Guaranteed Purchase Money Notes and, which, upon the exercise by the Initial 

NGPMN Holder of the Conversion Right with the consent of the Purchase Money Notes 

Guarantor, the Class designation of the Converted Guaranteed Purchase Money Note shall be 

converted from a Class NG Purchase Money Note to a new Class designation in accordance with 

Section 2.19(b). 

(b) Forms Generally. The form of the Purchase Money Notes shall be as set 

forth in the applicable portion of Exhibit B attached to this Agreement. The Purchase Money 

9 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

Notes may have notations, legends or endorsements required by Law, stock exchange rule or 

usage. Any Purchase Money Note issued shall be initially sold to the Receiver and may be 

initially issued in the form of one or more (i) guaranteed certificated notes in definitive, fully 

registered form without interest coupons substantially in the form of Exhibit B-1 attached to this 

Agreement (each, a “Guaranteed Certificated Note”), (ii) non-guaranteed certificated notes in 

definitive, fully registered form without interest coupons substantially in the form of Exhibit B-2 

attached to this Agreement (each, a “Non-Guaranteed Certificated Note”; together with the 

Guaranteed Certificated Note, collectively, the “Certificated Notes”), (iii) guaranteed global 

notes in definitive, fully registered form without interest coupons substantially in the form of 

Exhibit B-3 attached to this Agreement (each, a “Guaranteed Global Note”) or (iv) nonguaranteed global notes in definitive, fully registered form without interest coupons substantially 

in the form of Exhibit B-4 attached to this Agreement (each, a “Non-Guaranteed Global Note; 

together with the Guaranteed Global Note, collectively, the “Global Notes”). The Certificated 

Notes shall be registered in the name of the owner or nominee thereof, duly executed by the 

Company as provided in this Agreement; and the Global Notes shall be (A) registered in the 

name of the Depository or its nominee, duly executed by the Company as provided in this 

Agreement, and (B) held by the Paying Agent as custodian for the Depository unless the 

Depository instructs otherwise. 

(c) Rule 144A Global Notes and Rule 144A Certificated Notes. Any 

Purchase Money Note sold to a Person whom the seller reasonably believes (i) is a Qualified 

Institutional Buyer purchasing for its own account or for the account of a Qualified Institutional 

Buyer in compliance with Rule 144A under the Securities Act and (ii) is a Qualified Purchaser 

purchasing for its own account or for the account of a Qualified Purchaser, will be issued in the 

form of (I) a beneficial interest in a Global Note, and such purchaser shall receive beneficial 

interests in one or more Global Notes (each, a “Rule 144A Global Note”), or (II) a Certificated 

Note (each, a “Rule 144A Certificated Note ”). 

(d) Regulation S Certificated Notes. Any Purchase Money Note sold or 

transferred to a Person that (i) is not a U.S. Person and is acquiring the Purchase Money Notes in 

an Offshore Transaction (as defined in Regulation S of the Securities Act) in compliance with 

Rule 903 or Rule 904 of Regulation S under the Securities Act and (ii) is a Qualified Purchaser 

purchasing for its own account or for the account of a Qualified Purchaser, will only be issued in 

the form of a Certificated Note (each, a “Regulation S Certificated Note ”). The Paying Agent 

shall require, prior the any sale or transfer of any Regulation S Certificated Note, that the 

prospective purchaser execute and deliver to the Paying Agent and the Company a certificate in 

the form of Exhibit C-2 attached to this Agreement or such other form as might be acceptable to 

the Paying Agent and counsel to the Company. 

(e) OID Legend. To the extent required by Sections 1272, 1273 and 1275 of 

the Code, and any regulations issued regarding such elections, each Purchase Money Note 

treated as issued at a discount to its stated redemption price at maturity for federal income tax 

purposes shall bear a legend in substantially the following form: 

FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 

OF THE INTERNAL REVENUE CODE OF 1986, AS 

10 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
AMENDED, THIS PURCHASE MONEY NOTE IS BEING 

ISSUED WITH ORIGINAL ISSUE DISCOUNT. YOU MAY 

CONTACT THE FEDERAL DEPOSIT INSURANCE 

CORPORATION AT 550 17TH STREET, N.W., ROOM F7014, WASHINGTON, D.C. 20429, ATTENTION: RALPH 

MALAMI, AND THE FDIC WILL PROVIDE YOU WITH 

THE ISSUE PRICE AND THE YIELD TO MATURITY OF 

THIS PURCHASE MONEY NOTE. 

Section 2.5 Authorized Amount; Denominations; Prepayment 

(a) Except for Purchase Money Notes executed and delivered upon 

registration of transfer of, or in exchange for, or in lieu of, or conversion of, other Purchase 

Money Notes pursuant to Section 2.7, 2.8, 2.9 or 2.19 of this Agreement, (i) the aggregate face 

amount of the Guaranteed Purchase Money Notes that may be executed and delivered pursuant 

to this Agreement is limited to $233,851,000.00 and (ii) the aggregate face amount of the NonGuaranteed Purchase Money Notes that may be executed and delivered pursuant to this 

Agreement is limited to $77,950,000.00. 

(b) The Purchase Money Notes shall be issuable in minimum denominations 

of $250,000 and integral multiples of $10,000 in excess thereof (except that one Purchase Money 

Note in each Class may be issued in a different amount, so long as such amount exceeds the 

minimum denomination of $250,000) (each such denomination, an “Authorized 

Denomination ”). Any interest in a Purchase Money Note equal to or in excess of the applicable 

minimum denomination at the time of the issuance thereof that ceases or fails to be such 

minimum or multiple as a result of the repayment of principal may be transferred only in its 

entirety. 

(c) The Company shall not prepay all or any portion of any Purchase Money 

Note without the prior written consent of the Required Consenting Parties (but shall be subject to 

mandatory prepayment to the extent required as a result of the acceleration of all or a portion of 

such Purchase Money Notes following the occurrence of an Event of Default). 

Section 2.6 Execution, Delivery and Dating 

(a) The Purchase Money Notes shall be executed on behalf of the Company 

by one of the Authorized Representatives of the Company. The signature of such Authorized 

Representative on the Purchase Money Notes may be manual or facsimile. 

(b) Purchase Money Notes bearing the manual or facsimile signatures of 

individuals who were at any time the Authorized Representative of the Company shall bind the 

Company, notwithstanding the fact that such individuals or any of them have ceased to hold such 

offices prior to the execution and delivery of such Purchase Money Notes or did not hold such 

offices at the date of issuance of such Purchase Money Notes. 

11 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

(c) Each Purchase Money Note executed and delivered by the Company or 

the Paying Agent on the Closing Date shall be dated as of the Closing Date. All other Purchase 

Money Notes that are executed and delivered after the Closing Date for any other purpose 

pursuant to this Agreement shall be dated the date of their execution. 

(d) Purchase Money Notes issued upon transfer, exchange or replacement of 

other Purchase Money Notes shall be issued in Authorized Denominations reflecting (except, for 

the avoidance of doubt, as otherwise specified in Section 2.19(a)) the original aggregate principal 

or face amount of the Purchase Money Notes so transferred, exchanged or replaced, but shall 

represent only the current outstanding principal or face amount of the Purchase Money Notes so 

transferred, exchanged or replaced. In the event that any Purchase Money Note is divided into 

more than one Purchase Money Note in accordance with this Article II, the original principal or 

face amount of such Purchase Money Note shall be proportionately divided among the Purchase 

Money Notes delivered in exchange therefor and shall be deemed to be the original aggregate 

principal or face amount of such subsequently issued Purchase Money Notes. In the event that 

any Purchase Money Notes are restructured or reissued pursuant to Section 13.5 of the LLC 

Operating Agreement or Section 2.8 of this Agreement, such Purchase Money Notes shall be 

issued in Authorized Denominations reflecting any adjustments to the original aggregate 

principal or face amount of the Purchase Money Notes so restructured or reissued. 

Section 2.7 Registration, Registration of Transfer and Exchange or Conversion. 

(a) The Company shall cause to be kept a register (the “ Purchase Money 

Notes Register”) in which, subject to such reasonable regulations as it might prescribe, the 

Company shall provide for the registration, and the registration of transfers or conversions, of 

Purchase Money Notes. The Paying Agent is hereby initially appointed the “Purchase Money 

Notes Registrar ” for the purpose of registering the Purchase Money Notes and transfers or 

conversions of such Purchase Money Notes as herein provided. Upon any resignation or 

removal of the Purchase Money Notes Registrar, the Company shall promptly appoint a 

successor. 

(b) If a Person other than the Paying Agent is appointed by the Company as 

Purchase Money Notes Registrar, the Company will give the Paying Agent prompt notice of the 

appointment of a Purchase Money Notes Registrar and of the location, and any change in the 

location, of the Purchase Money Notes Registrar, and the Paying Agent shall have the right to 

inspect the Purchase Money Notes Register at all reasonable times and to obtain copies thereof 

and the Paying Agent shall have the right to rely upon a certificate executed on behalf of the 

Purchase Money Notes Registrar by an officer thereof as to the names and addresses of the 

Holders of the Purchase Money Notes and the principal or face amounts and numbers of such 

Purchase Money Notes. Upon written request at any time, the Purchase Money Notes Registrar 

promptly shall provide to the Company or the Purchase Money Note Collateral Agent a current 

list of Holders as reflected in the Purchase Money Notes Register. 

(c) Subject to this Section 2.7, upon surrender to the Purchase Money Notes 

Registrar for registration of transfer of any Purchase Money Note, the Purchase Money Notes 

Registrar shall prepare and the Company shall execute and deliver, in the name of the designated 

12 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

transferee or transferees, one or more new Purchase Money Notes of any Authorized 

Denomination and of like terms and a like aggregate principal or face amount. The Company 

shall furnish a copy of the executed Purchase Money Note to the Purchase Money Notes 

Registrar. 

(d) At the option of a Holder, a Purchase Money Note may be exchanged for 

Purchase Money Notes of like terms, in any Authorized Denominations and of like aggregate 

principal or face amount upon surrender of the Purchase Money Note to be exchanged at such 

office or agency. Whenever any Purchase Money Note is surrendered to the Purchase Money 

Notes Registrar for exchange, the Purchase Money Notes Registrar shall prepare, and the 

Company shall execute and deliver, the Purchase Money Notes that the Holder making the 

exchange is entitled to receive and shall deliver a copy of such executed Purchase Money Note to 

the Purchase Money Notes Registrar. 

(e) All Purchase Money Notes issued upon any registration of transfer or 

exchange of such Purchase Money Notes shall be the valid obligations of the Company, 

evidencing the same debt (to the extent they evidence debt), and entitled to the same benefits 

pursuant to this Agreement, as the Purchase Money Notes surrendered upon such registration of 

transfer or exchange. 

(f) Every Purchase Money Note presented or surrendered for registration of 

transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of 

transfer in form satisfactory to the Company and the Purchase Money Notes Registrar duly 

executed by the Holder thereof or his attorney duly authorized in writing. 

(g) No service charge shall be made to a Holder for any registration of 

transfer or exchange of Purchase Money Notes, but the Company or the Paying Agent may 

require payment of a sum sufficient to cover any tax or other governmental charge payable in 

connection therewith. 

(h) No Purchase Money Note may be sold or transferred (including, without 

limitation, by pledge or hypothecation) unless such sale or transfer is exempt from the 

registration requirements of the Securities Act, would not require the registration of the 

Company under the Investment Company Act, would not cause the Company to become a 

“publicly traded partnership” (as such term is defined in Section 7704 of the Code) and is exempt 

under applicable state or foreign securities laws. 

(i) The Purchase Money Notes may only be sold or resold, as the case might 

be: (i) to a transferee that is a person whom the seller reasonably believes is a Qualified 

Institutional Buyer purchasing for its own account or for the account of a Qualified Institutional 

Buyer in compliance with Rule 144A under the Securities Act or (ii) to a transferee that is not a 

U.S. Person and is acquiring the Purchase Money Notes in an Offshore Transaction (as defined 

in Regulation S of the Securities Act) in compliance with Rule 903 or Rule 904 of Regulation S 

under the Securities Act and, in the case of both clauses (i) and (ii) of this Section 2.7(i), to a 

transferee that is a Qualified Purchaser purchasing for its own account or for the account of a 

Qualified Purchaser. 

13 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

(j) The Paying Agent shall require, prior to any sale or other transfer of a 

Purchase Money Note, that the prospective purchaser or transferee execute and deliver to the 

Paying Agent and the Company a certificate relating to such transfer in the form of the 

applicable portion of Exhibit C attached to this Agreement or such other form as may be 

acceptable to the Paying Agent and counsel to the Company (each, a “Transferee Certificate ”). 

The Paying Agent shall be entitled to rely conclusively on any Transferee Certificate and shall be 

entitled to presume conclusively the continuing accuracy thereof from time to time, in each case 

without further inquiry or investigation. 

(k) At any time when the Company is not subject to Section 13.1 or 15(d) of 

the Exchange Act or is exempt from reporting requirements pursuant to Rule 12g3-2(b) 

thereunder, upon the request of any Note Owner, the Paying Agent, on behalf of the Company, 

promptly shall furnish to such Note Owner or to a prospective purchaser of any Purchase Money 

Note designated by such Note Owner the information required to be delivered to Note Owners 

pursuant to Rule 144A(d)(4) under the Securities Act (“ Rule 144A Information”) (as 

determined by the Company in its sole discretion) in order to permit compliance by such Note 

Owner with Rule 144A in connection with the resale of such Purchase Money Note by such Note 

Owner. Upon request by the Company, the Paying Agent shall cooperate with the Company in 

mailing or otherwise distributing (at the Company’s expense) to such Note Owners or 

prospective purchasers, at and pursuant to the Company’s written direction, the foregoing 

materials prepared and provided by the Company; provided, however, that the Paying Agent 

shall be entitled to affix thereto or enclose therewith such disclaimers as the Paying Agent shall 

deem reasonably appropriate, at its discretion (such as, for example, a disclaimer that such Rule 

144A Information was assembled by the Company and not by the Paying Agent, that the Paying 

Agent has not reviewed or verified the accuracy thereof and that it makes no representation as to 

the sufficiency of such information under Rule 144A or for any other purpose). 

(l) Transfers and exchanges of Global Notes, in whole or in part, shall only 

be made in accordance with this Section 2.7(l). 

(i) Rule 144A Global Note to Certificated Note. If a Note Owner of a 

Rule 144A Global Note wishes at any time to transfer its interest in such Rule 144A Global Note 

to a Person who wishes to take delivery thereof in the form of a Certificated Note, or to exchange 

its interest in such Rule 144A Global Note for an interest in a Certificated Note, such Note 

Owner may, subject to the rules and procedures of the Depository, transfer or exchange, or cause 

the transfer or exchange of, such interest for an equivalent principal amount of one or more such 

Certificated Notes as described below. Upon receipt by the Purchase Money Notes Registrar of 

(A) instructions given in accordance with the Depository’s procedures from an Agent Member 

directing the Paying Agent to deliver one or more such Certificated Notes, designating the 

applicable registered name or names, address, payment instructions and principal amounts of the 

Certificated Notes to be executed and delivered (the aggregate outstanding principal amounts of 

such Certificated Notes being equal to the beneficial interest in the Rule 144A Global Note to be 

transferred), in Authorized Denominations, and (B) a certificate in the form of Exhibit C-2 

attached to this Agreement, in the case of Regulation S Certificated Notes, and Exhibit C-3 

attached to this Agreement, in the case of Rule 144A Certificated Notes, executed and delivered 

by the transferee of such beneficial interest, then the Purchase Money Notes Registrar shall 

14 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

instruct the Depository to reduce, or cause to be reduced, the applicable Rule 144A Global Note 

by the aggregate principal amount of the beneficial interest in such Rule 144A Global Note to be 

transferred or exchanged and the Purchase Money Notes Registrar shall record the transfer or 

exchange in the Purchase Money Notes Register in accordance with Section 2.7(a) and 

authenticate and deliver one or more Certificated Notes registered in the names and amounts 

specified in clause (A) above. 

(m) Transfers and exchanges of Certificated Notes, in whole or in part, shall 

only be made in accordance with this Section 2.7(m). 

(i) Certificated Note to Rule 144A Global Note. If a Holder of a 

Certificated Note wishes to transfer such Certificated Note to a Person who wishes to take 

delivery thereof in the form of an interest in a Rule 144A Global Note or to exchange such 

Certificated Note for an interest in a Rule 144A Global Note, such Holder may transfer or 

exchange, or cause the transfer or exchange of, such Certificated Note for an equivalent 

beneficial interest in a Rule 144A Global Note, provided that such proposed transferee or the 

Person requesting such exchange, as applicable, is a Qualified Institutional Buyer and a 

Qualified Purchaser. Upon receipt by the Purchase Money Notes Registrar of (A) such 

Certificated Note properly endorsed for such transfer and written instructions from such Holder 

directing the Purchase Money Notes Registrar to cause to be credited a beneficial interest in the 

Rule 144A Global Note in an amount equal to the principal amount of such Certificated Note, 

such instructions to contain information regarding the participant account with the Depository to 

be credited with such increase, (B) a certificate in the form of Exhibit C-4 to this Agreement 

executed and delivered by the Holder of such Certificated Note and stating that, in the case of an 

exchange, the Holder is a Qualified Institutional Buyer and also is a Qualified Purchaser or, in 

the case of a transfer, such Holder reasonably believes that the Person acquiring such interest in 

the applicable Rule 144A Global Note is a Qualified Institutional Buyer, is obtaining such 

beneficial interest in a transaction meeting the requirements of Rule 144A and in accordance 

with any applicable securities laws of any state of the United States or any other jurisdiction and 

is also a Qualified Purchaser and (C) in the case of a transfer, a certificate in the form of Exhibit 

C-1 to this Agreement executed and delivered by the proposed transferee stating that it is both a 

Qualified Institutional Buyer and a Qualified Purchaser, then the Purchase Money Notes 

Registrar shall cancel such Certificated Note in accordance with Section 2.16, record the transfer 

or exchange in the Purchase Money Notes Registrar in accordance with Section 2.7(a) and 

instruct the Depository to credit or cause to be credited to the securities account of the Person 

specified in such instructions a beneficial interest in the Rule 144A Global Note equal to the 

amount specified in the instructions received pursuant to clause (A) above. 

(ii) Certificated Note to Certificated Note. If a Holder of a Certificated 

Note wishes at any time to transfer such Certificated Note to another Person, such Holder may 

transfer, or cause the transfer of, such Certificated Note as provided below. Upon receipt by the 

Purchase Money Notes Registrar of (A) such Holder’s Certificated Note properly endorsed for 

assignment to the transferee and (B) a certificate in the form of Exhibit C-2 to this Agreement, in 

the case of transfer of Regulation S Certificated Notes, and Exhibit C-3 to this Agreement, in the 

case of transfer of Rule 144A Certificated Notes, executed and delivered by the proposed 

transferee, then the Purchase Money Notes Registrar shall cancel such Certificated Note in 

15 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
accordance with Section 2.16, record the transfer in the Purchase Money Notes Register in 

accordance with Section 2.7(a) and, upon execution by the Company, deliver one or more 

Certificated Notes endorsed for transfer, registered in the names specified in the assignment 

described in clause (A) above, in principal amounts designated by the transferee (the aggregate 

of such principal amounts being equal to the aggregate principal amount of the Certificated 

Notes surrendered by the transferor), and in Authorized Denominations. 

If a Holder of one or more Rule 144A Certificated Notes wishes at any time to 

exchange such Rule 144A Certificated Notes for one or more Rule 144A Certificated Notes of 

different outstanding principal amounts, or if a Holder of one or more Regulation S Certificated 

Notes wishes at any time to exchange such Regulation S Certificated Notes for one or more 

Regulation S Certificated Notes of different outstanding principal amounts, such Holder may 

exchange or cause the exchange of such Certificated Notes for Certificated Notes endorsed for 

exchange as provided below. Upon receipt by the Purchase Money Notes Registrar of (A) such 

Holder’s Certificated Notes properly endorsed for such exchange and (B) written instructions 

from such Holder designating the number and principal amounts of the Certificated Notes to be 

issued (the aggregate outstanding principal amounts being equal to the outstanding principal 

amount of the Certificated Notes surrendered for exchange), then the Purchase Money Notes 

Registrar shall cancel such Certificated Notes in accordance with Section 2.16, record the 

exchange in the Purchase Money Notes Register in accordance with Section 2.7(a) and, upon 

execution by the Company, deliver one or more Certificated Notes endorsed for exchange, 

registered in the same name as the Certificated Notes surrendered by such Holder, in different 

outstanding principal amounts designated by such Holder and in Authorized Denominations. 

If a Holder of one or more Rule 144A Certificated Notes wishes at any time to 

exchange such Rule 144A Certificated Notes for one or more Regulation S Certificated Notes, or 

if a Holder of one or more Regulation S Certificated Notes wishes at any time to exchange such 

Regulation S Certificated Notes for one or more Rule 144A Certificated Notes, such Holder may 

exchange or cause the exchange of such Certificated Notes for Certificated Notes endorsed for 

exchange as provided below. Upon receipt by the Purchase Money Notes Registrar of (A) such 

Holder’s Certificated Notes properly endorsed for such exchange, (B) written instructions from 

such Holder designating the number and principal amounts of the Certificated Notes to be issued 

(the aggregate outstanding principal amounts being equal to the outstanding principal amount of 

the Certificated Notes surrendered for exchange), and (C) a certificate in the form of Exhibit C-2 

to this Agreement, in the case of Regulation S Certificated Notes, and Exhibit C-3 to this 

Agreement, in the case of Rule 144A Certificated Notes, executed and delivered by the proposed 

transferee, then the Purchase Money Notes Registrar shall cancel such Certificated Notes in 

accordance with Section 2.16, record the exchange in the Purchase Money Notes Register in 

accordance with Section 2.7(a) and, upon execution by the Company, deliver one or more 

Certificated Notes endorsed for exchange, registered in the same name as the Certificated Notes 

surrendered by such Holder, in different outstanding principal amounts designated by such 

Holder and in Authorized Denominations. 

(n) If Purchase Money Notes are issued upon the transfer, exchange or 

replacement of Purchase Money Notes bearing the applicable legends set forth in the Exhibits 

attached to this Agreement and if a request is made to remove such applicable legend on such 

16 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

Purchase Money Notes, the Purchase Money Notes so issued shall bear such applicable legend, 

or such applicable legend shall not be removed, as the case may be, unless there is delivered to 

the Paying Agent and the Company such satisfactory evidence, which might include an opinion 

of counsel acceptable to them, as might be reasonably required by the Company (and which shall 

by its terms permit reliance by the Paying Agent), to the effect that neither such applicable 

legend nor the restrictions on transfer set forth therein are required to ensure that transfers 

thereof comply with the provisions of the Securities Act, the Investment Company Act, ERISA 

or the Code or any other applicable law. Upon provision of such satisfactory evidence, the 

Paying Agent, at the written direction of the Company and after due execution by the Company, 

shall deliver Purchase Money Notes that do not bear such applicable legend. 

(o) Each Note Owner of Rule 144A Global Notes will be deemed to have 

represented and agreed, and each Holder of Certificated Notes will be required to represent and 

agree, as follows: 

(i) In the case of Purchase Money Notes issued in reliance on Rule 

144A: it is aware that the sale of the Purchase Money Notes to it is being made in reliance on 

the exemption from registration provided by Rule 144A; and it is a Qualified Institutional Buyer 

and a Qualified Purchaser. 

(ii) In the case of Purchase Money Notes issued in reliance on 

Regulation S: it is aware that the sale of the Purchase Money Notes to it is being made in 

reliance on the exemption from registration provided by Regulation S; it is not, and will not be, a 

U.S. Person; it is a Qualified Purchaser; it is aware that in connection with a transfer of any 

Purchase Money Notes acquired in accordance with Regulation S, such Purchase Money Notes 

must be exchanged for a Rule 144A Certificated Note or beneficial interest in a Rule 144A 

Global Note; and its purchase of the Purchase Money Notes will comply with all applicable laws 

in any jurisdiction in which it resides or is located. 

(iii) It understands that the Purchase Money Notes will bear a legend 

set forth in the applicable exhibit attached to this Agreement. 

(iv) It (A) was not formed for the purpose of investing in the Company 

(except when each beneficial owner of the purchaser is a Qualified Purchaser), (B) has received 

the necessary consent from its beneficial owners if the purchaser is a private investment 

company formed before April 30, 1996, (C) is not a broker-dealer that owns and invests on a 

discretionary basis less than $25,000,000 in securities of unaffiliated issuers, (D) is not a 

pension, profit sharing or other retirement trust fund or plan in which the partners, beneficiaries 

or participants, as applicable, may designate the particular investments to be made, and in a 

transaction that may be effected without loss of any applicable Investment Company Act 

exemption, (E) will provide notice to any subsequent transferee of the transfer restrictions 

provided in the legend, (F) will hold and transfer Purchase Money Notes in an amount of not less 

than $250,000 for it or for each account for which it is acting, (G) will provide the Company and 

Paying Agent from time to time such information as they may reasonably request in order to 

ascertain compliance with this paragraph and (H) understands that the Company may receive a 

list of participants holding positions in its securities from one or more book-entry depositories. 

17 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

(v) It understands that such Purchase Money Notes are being offered 

only in a transaction not involving any public offering in the United States within the meaning of 

the Securities Act, such Purchase Money Notes have not been and will not be registered under 

the Securities Act and, if in the future it decides to offer, resell, pledge or otherwise transfer such 

Purchase Money Notes, such Purchase Money Notes may be offered, resold, pledged or 

otherwise transferred only in accordance with the provisions of this Agreement and the legend on 

such Purchase Money Notes. It acknowledges that no representation has been made as to the 

availability of any exemption under the Securities Act or any state securities laws for resale of 

the Purchase Money Notes. 

(vi) On each day from the date on which it acquires the Purchase 

Money Notes or interest therein through and including the date on which it disposes of its 

interests in such Purchase Money Note, either that (A) it is not, and is not acting on behalf of, or 

using the assets of, any employee benefit plan subject to Title I of ERISA or any plan, individual 

retirement account, Keogh plan or other arrangement subject to Section 4975 of the Code, or any 

entity whose underlying assets are considered to include “plan assets” of any such plan, account 

or arrangement or a governmental or other plan which is subject to any provisions under any 

non-U.S., federal, state or local law that is similar to the provisions of Section 406 of ERISA or 

Section 4975 of the Code (“Similar Law ”) or (B) its acquisition and holding and disposition of 

such Purchase Money Note (or any interest therein) will not constitute or result in a non-exempt 

prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case 

of a governmental or other plan, a violation of Similar Law). 

(vii) It understands that this Agreement permits the Company to 

demand that (A) any Note Owner of Rule 144A Global Notes (or Holder of Rule 144A 

Certificated Notes) who is determined not to be both a Qualified Institutional Buyer and a 

Qualified Purchaser at the time of acquisition of such Purchase Money Notes or (B) any Holder 

of Regulation S Certificated Notes who is determined not to be both a non-U.S. Person and a 

Qualified Purchaser at the time of acquisition of such Purchase Money Notes, in either such case 

sell the Purchase Money Notes (X) to a Person who is a Qualified Institutional Buyer in a 

transaction meeting the requirements of Rule 144A or another applicable exemption from the 

registration requirements of the Securities Act or (Y) to a Person who will take delivery in the 

form of a Regulation S Certificated Note and who is not a U.S. Person in a transaction meeting 

the requirements of Regulation S and, in the case of both clauses (X) and (Y), to a person that is 

a Qualified Purchaser, and if it does not comply with any such demand under clause (A) or (B) 

within 30 days thereof, the Company may sell the Note Owner’s or Holder’s Purchase Money 

Note or interest therein in accordance with and pursuant to the terms of this Agreement. 

(viii) It acknowledges that it is its intent and that it understands it is the 

intent of the Company that, for purposes of U.S. Federal income, state and local income and any 

other income taxes, the Company will be treated as a partnership and the Purchase Money Notes 

will be treated as indebtedness of the Company; it agrees to such treatment and agrees to take no 

action inconsistent with such treatment. 

18 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

(ix) If it is not a “U.S. person” as defined in Section 7701(a)(30) of the 

Code, it is not acquiring any Purchase Money Notes as part of a plan to reduce, avoid or evade 

U.S. Federal Income taxes owed, owing or potentially owed or owing. 

(x) It is aware that, except with respect to Certificated Notes, the 

Purchase Money Notes will be represented by one or more Rule 144A Global Notes and that the 

beneficial interests therein may be held only through the Depository or one of its nominees, as 

applicable. 

(xi) It agrees that it will not offer or sell, transfer, assign or otherwise 

dispose of any Purchase Money Notes or any interest therein except (A) pursuant to an 

exemption from, or in a transaction not subject to, the registration requirements of the Securities 

Act and any applicable state securities laws or the applicable laws of any other jurisdiction and 

(B) in accordance with the provisions of this Agreement, to which provisions it agrees it is 

subject. 

(xii) It understands that the Company, the Paying Agent and the 

Receiver, their respective Affiliates and their counsel will rely upon the accuracy and truth of the 

foregoing representations, and it consents to such reliance. 

(xiii) It will provide notice to each Person to whom it proposes to 

transfer any interest in the Purchase Money Notes of the transfer restrictions and representations 

set forth in this Section 2.7, including the Exhibits referenced herein. 

(p) Agent Members shall have no rights pursuant to this Agreement with 

respect to any Global Note held on their behalf by the Paying Agent, as custodian for the 

Depository, and the Depository may be treated by the Company, the Paying Agent and any agent 

of the Company or the Paying Agent as the absolute owner of such Global Note for all purposes 

whatsoever. Notwithstanding the foregoing, nothing in this Agreement shall prevent the 

Company, the Paying Agent or any agent of the Company or the Paying Agent from giving 

effect to any written certification, proxy or other authorization furnished by the Depository or 

impair, as between the Depository and its Agent Members, the operation of customary practices 

governing the exercise of the rights of a beneficial interest in any Global Note. 

(q) Notwithstanding any provision to the contrary in this Agreement, so long 

as a Purchase Money Note remains outstanding, transfers and exchanges of a Purchase Money 

Note, in whole or in part, shall only be made in accordance with this Section 2.7. 

(r) Any purported transfer or exchange of a Purchase Money Note not in 

accordance with this Section 2.7 shall be null and void ab initio and shall not be given effect for 

any purpose hereunder. 

(s) Nothing in this Section 2.7 shall be construed to limit any contractual 

restrictions on transfers of Purchase Money Notes or interests therein that might apply to any 

Person. 

19 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

(t) Notwithstanding anything contained in this Agreement to the contrary, 

neither the Paying Agent nor the Purchase Money Notes Registrar shall be responsible for 

ascertaining whether any transfer complies with the registration provisions of or any exemptions 

from the Securities Act, applicable state securities laws or the applicable laws of any other 

jurisdiction, ERISA, the Code or the Investment Company Act of 1940, as amended; provided, 

however, that if a certificate is specifically required by the express terms of this Agreement to be 

delivered to the Paying Agent by a holder or transferee of a Purchase Money Note, the Paying 

Agent shall be under a duty to receive and examine the same to determine whether or not the 

certificate substantially conforms on its face to the requirements of this Agreement and shall 

promptly notify the party delivering the same if such certificate does not comply with such 

terms. 

(u) Notwithstanding the foregoing, with the advice of counsel to the 

Company, the Company may adopt one or more other forms of transfer certificate with respect to 

the transfer of the Purchase Money Notes after the Closing Date. The Purchase Money Notes 

Registrar shall be notified of such action and, upon receipt of such notice and copies of such 

other forms of transfer certificate from the Company, shall be deemed to be directed by the 

Company to also adopt such alternate forms of transfer certificate. 

(v) If the Initial NGPMN Holder elects at any time to exercise its right to 

convert any portion of the Non-Guaranteed Purchase Money Note to a Guaranteed Purchase 

Money Note, then, in addition to satisfying the requirements for conversion set forth in the 

Purchase Money Notes Guaranty, the Initial NGPMN Holder must deliver a copy of any 

Conversion Certificate delivered pursuant to Section 2.19, as consented to by the Purchase 

Money Notes Guarantor, to the Purchase Money Notes Registrar, which shall reflect such 

conversion in the Purchase Money Notes Register. For all purposes of this Agreement, from and 

after such conversion the portion of the Non-Guaranteed Purchase Money Note will be and 

become a Guaranteed Purchase Money Note and will be treated thereafter for all purposes of this 

Agreement as a Guaranteed Purchase Money Note. 

Section 2.8 Reissuance of Purchase Money Notes. 

(a) Upon the maturity of any Guaranteed Purchase Money Note (a “ Maturing 

Purchase Money Note”), the Company, at the direction of the Purchase Money Notes 

Guarantor, shall reissue such Guaranteed Purchase Money Note (such reissued Guaranteed 

Purchase Money Note, a “Reissued Purchase Money Note”) to the Receiver with terms and 

conditions as are directed by the Receiver and substantially similar to the terms and conditions of 

the related Maturing Purchase Money Note (including not accruing interest) and a new maturity 

date satisfactory to the Purchase Money Notes Guarantor; provided, however, that (a)(i) the 

maturity date of such Reissued Purchase Money Note shall not be later than the seventh 

anniversary of the Closing Date and (ii) the outstanding principal amount of such Reissued 

Purchase Money Note at the time of its issuance shall equal to (A) the outstanding principal 

amount of the related Maturing Purchase Money Note minus (B) the amounts on deposit in the 

Defeasance Account to pay such Maturing Purchase Money Note (including the amount, if any, 

of any payments made pursuant to the Purchase Money Notes Guaranty) plus (C) the applicable 

Purchase Money Note Reissuance Fee with respect to such Reissued Purchase Money Note, and 

20 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

(b) no modification contained in such Reissued Purchase Money Note (other than the balance 

increase described in Section 2.8(a)(ii)(C) above) shall affect adversely (1) the amount or timing 

of distributions to the Initial Member or the Private Owner pursuant to the Priority of Payments 

or (2) any other rights or obligations of the Paying Agent, the Private Owner or the Initial 

Member pursuant to this Agreement or any Transaction Document (other than the Purchase 

Money Notes) in each case unless such adversely affected Paying Agent, Private Owner or Initial 

Member, as applicable, shall have consented to the applicable provisions resulting in such 

adverse effect. Simultaneously with the issuance of any Reissued Purchase Money Note, the 

Company shall pay the Purchase Money Notes Reissuance Fee to the Purchase Money Notes 

Guarantor in accordance with Section 8.20 of the Reimbursement, Security and Guaranty 

Agreement and deposit the balance of the proceeds of such Reissued Purchase Money Note into 

the Defeasance Account to repay the Holders of the related Maturing Purchase Money Note; 

provided, however, that for purposes of clause (a)(ii)(B) of this Section 2.8, proceeds from 

Reissued Purchase Money Notes deposited into the Defeasance Account shall not be included as 

amounts on deposit to pay such Maturing Purchase Money Note. Each reissued Purchase Money 

Note shall be subject to all of the terms and conditions of this Agreement. The reissuance of the 

Guaranteed Purchase Money Notes as described in this Section shall be at the cost and expense 

of the Company and shall be deemed a Servicing Expense except as provided otherwise in this 

Agreement. 

(b) In connection with Conversion of any portion of a Non-Guaranteed 

Purchase Money Note to a Guaranteed Purchase Money Note, the Purchase Money Notes 

Guarantor may direct the Company to reissue such Converted Guaranteed Purchase Money Note 

(such reissued Guaranteed Converted Purchase Money Note, a “ Reissued Converted Purchase 

Money Note”) to the respective NGPMN Holder with terms and conditions as are directed by 

the Initial NGPMN Holder with the consent of the Purchase Money Notes Guarantor and 

substantially similar to the terms and conditions of the Non-Guaranteed Purchase Money Note 

(including not accruing interest) and a new maturity date satisfactory to the Initial NGPMN 

Holder with the consent of the Purchase Money Notes Guarantor; provided, however, that (i) the 

maturity date of such Reissued Converted Purchase Money Note may be earlier than the original 

maturity date of the Non-Guaranteed Purchase Money Note but shall not be later than the 

seventh anniversary of the Closing Date and (ii) no modification contained in such Reissued 

Converted Purchase Money Note shall affect adversely (1) the amount or timing of distributions 

to the Initial Member or the Private Owner pursuant to the Priority of Payments or (2) any other 

rights or obligations of the Paying Agent, the Private Owner or the Initial Member pursuant to 

this Agreement or any Transaction Document (other than the Purchase Money Notes) in each 

case unless such adversely affected Paying Agent, Private Owner or Initial Member, as 

applicable, shall have consented to the applicable provisions resulting in such adverse effect. 

Section 2.9 Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money Notes. 

(a) If (i) any mutilated or defaced Purchase Money Note is surrendered to the 

Paying Agent, or if there shall be delivered to the Company and the Paying Agent evidence to 

their reasonable satisfaction of the destruction, loss or theft of any Purchase Money Note, and (ii) 

there is delivered to the Company and the Paying Agent such security or indemnity as might be 

required by them to save each of them and any agent of any of them harmless, then, in the 

21 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

absence of notice to the Company or such Paying Agent that such Purchase Money Note has 

been acquired by a bona fide purchaser, the Company shall execute and deliver, in lieu of any 

such mutilated, defaced, destroyed, lost or stolen Purchase Money Note, a new Purchase Money 

Note, of like tenor (including the same date of issuance) and equal principal or face amount 

registered in the same manner, dated the date of its authentication, bearing interest from the date 

to which interest has been paid on the mutilated, defaced, destroyed, lost or stolen Purchase 

Money Note and bearing a number not contemporaneously outstanding. 

(b) If, after delivery of such new Purchase Money Note, a bona fide purchaser 

of the predecessor Purchase Money Note presents for payment, transfer or exchange such 

predecessor Purchase Money Note, the Company, the Purchase Money Notes Registrar and the 

Paying Agent shall be entitled to recover such new Purchase Money Note from the Person to 

whom it was delivered or any Person taking therefrom and shall be entitled to recover upon the 

security or indemnity provided therefor to the extent of any loss, damage, cost or expense 

incurred by the Company and the Paying Agent in connection therewith. 

(c) In case any such mutilated, defaced, destroyed, lost or stolen Purchase 

Money Note has become due and payable, the Company may in its discretion, instead of issuing 

a new Purchase Money Note, pay such Purchase Money Note without requiring surrender thereof 

except that any mutilated Purchase Money Note shall be surrendered. 

(d) Upon the issuance of any new Purchase Money Note pursuant to this 

Section 2.9, the Company may require the payment by the Holder thereof of a sum sufficient to 

cover any tax or other governmental charge that might be imposed in relation thereto and any 

other expenses (including the fees and expenses of the Paying Agent) connected therewith. 

(e) Every new Purchase Money Note issued pursuant to this Section 2.9 in 

lieu of any mutilated, defaced, destroyed, lost or stolen Purchase Money Note shall constitute an 

original additional contractual obligation of the Company, and such new Purchase Money Note 

shall be entitled, subject to Section 2.9(b), to all the benefits of this Agreement equally and 

proportionately with any and all other Purchase Money Notes duly issued pursuant to this 

Agreement. 

The provisions of this Section 2.9 are exclusive and shall preclude (to the extent lawful) all other 

rights and remedies with respect to the replacement or payment of mutilated, defaced, destroyed, 

lost or stolen Purchase Money Notes. 

Section 2.10 Payments with Respect to the Purchase Money Notes. 

(a) All reductions in the principal amount of a Purchase Money Note (or one 

or more predecessor Purchase Money Notes) effected by prepayments of principal shall be 

binding upon all future Note Owners of such Purchase Money Note and of any Purchase Money 

Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, 

whether or not such payment is noted on such Purchase Money Note. Subject to the foregoing, 

each Purchase Money Note delivered under this Agreement and upon registration of transfer of 

22 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

or in exchange for or in lieu of any other Purchase Money Note shall carry the rights of unpaid 

principal or distributions that were carried by such other Purchase Money Note. 

(b) Payments in respect of principal of any Purchase Money Note shall be 

made by or on behalf of the Company, in U.S. dollars to the applicable Clearing Agency or its 

nominee with respect to a Global Note and to the Holder or its designee with respect to a 

Certificated Note, by wire transfer, as directed by such Clearing Agency or Holder, as applicable, 

in immediately available funds to a U.S. dollar account maintained by such Clearing Agency or 

its nominee with respect to a Global Note, and to the Holder or its designee with respect to a 

Certificated Note; provided, however, that (i) in the case of a Certificated Note, the Holder 

thereof shall have provided written wiring instructions to the Paying Agent on or before the 

related Record Date; and (ii) if appropriate instructions for any such wire transfer are not 

received at least 15 Business Days prior to the relevant Distribution Date, then such payment 

shall be made by check drawn on a U.S. bank mailed to the address of the Holder specified in the 

Purchase Money Notes Register. Upon final payment due on the maturity of a Purchase Money 

Note, the Holder thereof shall present and surrender such Purchase Money Note at the office of 

the Paying Agent on or prior to such maturity; provided, however, that if the Paying Agent and 

the Company shall have been furnished such security or indemnity as might be required by them 

to save each of them harmless and an undertaking thereafter to surrender such Purchase Money 

Note, then, in the absence of notice to the Company or the Paying Agent that the applicable 

Purchase Money Note has been acquired by a bona fide or protected purchaser, and upon written 

direction from the Company, such final payment shall be distributed by the Paying Agent 

without presentation or surrender; and provided further, however, that the foregoing provisos 

shall not apply to any class of Purchase Money Notes so long as such class of Purchase Money 

Notes remains in book-entry form, in which case all payments shall be made through the 

applicable Clearing Agency. All notices and communications to be given to the Note Owners 

and all payments to be made to Note Owners in respect of the Purchase Money Notes shall be 

given or made only to or upon the order of the registered Holders. Neither the Company nor the 

Paying Agent shall have any responsibility or liability for any aspects of the records maintained 

by the Depository or any of the Agent Members relating to or for payments made thereby on 

account of beneficial interests in a Global Note. 

Section 2.11 Mandatory Exchange. 

(a) A Global Note deposited with the Depository shall be exchanged for one 

or more Certificated Notes issued to the beneficial owners thereof if (i) either the Depository 

notifies the Company that it is unwilling or unable to continue as depository for such Global 

Note or (ii) at any time the Depository ceases to be a Clearing Agency registered under the 

Exchange Act and, in each case, a successor depository is not appointed by the Company within 

90 days after such notice; and provided that such exchange complies with Section 2.7. 

(b) Any Global Note that is exchanged for a Certificated Note pursuant to this 

Section 2.11 shall be surrendered by the Depository to the Paying Agent to be so transferred, in 

whole or from time to time in part, without charge, and the Company shall execute, and the 

Paying Agent shall deliver, upon such transfer of each portion of such Global Note, an equal 

aggregate principal amount of Certificated Notes in Authorized Denominations. Any 

23 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

Certificated Note delivered in exchange for an interest in a Global Note shall, except as 

otherwise provided by Section 2.7(n), bear the legends set forth in the applicable Exhibit to this 

Agreement and shall be subject to the transfer restrictions referred to in such legends. 

(c) Subject to the provisions of subsection (b) of this Section 2.11, the Holder 

of a Global Note may grant proxies and otherwise authorize any Person, including Agent 

Members and Persons that may hold interests through Agent Members, to take any action which 

a Holder is entitled to take pursuant to this Agreement or the Purchase Money Notes. 

(d) In the event of the occurrence of the event specified in subsection (a) of 

this Section 2.11, the Company promptly shall make available to the Paying Agent a reasonable 

supply of Certificated Notes in definitive, fully registered form without interest coupons. The 

Certificated Notes shall be in substantially the same form as the Exhibits to this Agreement with 

such changes therein as the Company and Paying Agent shall agree and the Company shall 

execute, and the Paying Agent shall deliver, in exchange for the Global Note or Global Notes, as 

the case may be, the same original aggregate principal amount of Certificated Notes of 

Authorized Denominations. 

Section 2.12 Notes Beneficially Owned by Persons Not Qualified Institutional Buyers 

or Qualified Purchasers. 

(a) Notwithstanding anything to the contrary elsewhere in this Agreement, 

any transfer of (i) a Rule 144A Global Note or a Rule 144A Certificated Note to a Person that is 

not both a Qualified Institutional Buyer and a Qualified Purchaser or (ii) a Rule 144A Global 

Note to any Person that is not a U.S. Person shall be null and void (other than any such transfers 

to the Receiver), and any such purported transfer of which the Company or the Paying Agent 

shall have notice may be disregarded by the Company and the Paying Agent for all purposes. 

(b) If (i) any Person that is not a Qualified Institutional Buyer and a Qualified 

Purchaser shall become a Note Owner of any Rule 144A Global Note or a Holder of a Rule 

144A Certificated Note or (ii)(A) any U.S. Person or (B) any non-U.S. Person that is not a 

Qualified Purchaser, shall become a Holder of a Regulation S Certificated Note (any such 

Person, a “Non-Permitted Holder”), the Company, or the Paying Agent acting on behalf of the 

Company and promptly after discovery that such Person is a Non-Permitted Holder by the 

Company or the Paying Agent (and notice by the Paying Agent to the Company), shall send 

notice to such Non-Permitted Holder demanding that such Non-Permitted Holder transfer its 

interest to a Person that is not a Non-Permitted Holder within 30 days of the date of such notice. 

If such Non-Permitted Holder fails to so transfer its interest, the Company shall have the right, 

without further notice to the Non-Permitted Holder, to sell such interest to a purchaser selected 

by the Company that is not a Non-Permitted Holder on such terms as the Company might 

choose. The Company, with the assistance of an independent investment bank of national 

reputation engaged at the expense of the Company, shall select the purchaser by soliciting one or 

more bids from one or more brokers or other market professionals that regularly deal in 

securities similar to the Purchase Money Notes and selling such interest to the highest such 

bidder. The Company however, may select a purchaser by any other means determined by it in 

its sole discretion. The Holder of each Purchase Money Note, the Non-Permitted Holder and 

24 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

 

 

 

 

each other Person in the chain of title from the Holder to the Non-Permitted Holder, by their 

acceptance of an interest in the Purchase Money Notes, agree to cooperate with the Company 

and the Paying Agent to effect such transfers. The proceeds of such sale, net of any 

commissions, expenses and taxes due in connection with such sale, shall be remitted to the NonPermitted Holder. The terms and conditions of any sale pursuant to this subsection shall be 

determined in the sole discretion of the Company, and the Company shall not be liable to any 

Person having an interest in the Purchase Money Notes sold as a result of any such sale or the 

exercise of such discretion. 

Section 2.13 Withholding. If any withholding tax is imposed on any payment made by 

the Company to any Note Owner, such tax shall reduce the amount otherwise payable to such 

Note Owner. The Company is hereby authorized to withhold from amounts otherwise payable to 

any Note Owner sufficient funds for the payment of any tax that is legally owed in connection 

therewith (but such authorization shall not prevent the Company from contesting any such tax in 

appropriate proceedings and withholding payment of such tax, if permitted by Law, pending the 

outcome of such proceedings). The amount of any withholding tax imposed with respect to any 

Note Owner shall be treated as cash paid to such Note Owner at the time it is withheld. If there 

is a possibility that withholding tax is payable with respect to a payment, the Company may, in 

its sole discretion, withhold such amounts in accordance with this Section 2.13. The Company 

shall not be obligated to pay any additional amounts to any Holder or Note Owner of Purchase 

Money Notes as a result of any withholding or deduction for, or on account of, any present or 

future taxes, duties, assessments or governmental charges imposed on payments in respect of the 

Purchase Money Notes. 

Section 2.14 Persons Deemed Owners. The Company, the Paying Agent and any agent 

of the Company or the Paying Agent shall treat the Person in whose name any Purchase Money 

Note is registered as the owner of such Purchase Money Note on the Purchase Money Notes 

Register on the applicable Record Date for the purpose of receiving payments of principal of and 

interest on or other distributions with respect to such Purchase Money Note and on any other 

date for all other purposes whatsoever (whether or not such payments are overdue), and neither 

the Company, the Paying Agent nor any agent of the Company or the Paying Agent shall be 

affected by notice to the contrary. 

Section 2.15 Holder Voting. 

(a) Guaranteed Purchase Money Notes. In any case in which consent of the 

GPMN Holders is required pursuant to this Agreement or the Transaction Documents, such 

consent requirement shall be satisfied if the GPMN Holders of more than fifty percent of the 

outstanding principal amount of the applicable Class of Guaranteed Purchase Money Notes 

consent. Notwithstanding the foregoing, with respect to each of the following, such consent 

requirement shall be satisfied only if each affected GPMN Holder of the applicable Class of 

Guaranteed Purchase Money Notes consents: 

(i) any amendment, waiver or other modification that would (i) extend 

the due date for, or reduce the amount of any scheduled repayment of principal of, any 

Guaranteed Purchase Money Note; (ii) affect adversely the interests, rights or obligations of any 

25 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

GPMN Holder individually in comparison to any other GPMN Holder; (iii) change any place of 

payment where, or the coin or currency in which, any Guaranteed Purchase Money Note is 

payable; (iv) amend or otherwise modify the definition of “Event of Default” as defined in any 

Guaranteed Purchase Money Note; or (v) amend, waive or otherwise modify this Section 2.15; 

and 

(ii) any amendment, waiver or other modification that would release 

the Purchase Money Notes Guarantor from all or any part of its obligation to make each and 

every payment under the Purchase Money Notes Guaranty. 

(b) Non-Guaranteed Purchase Money Notes. In any case in which consent of 

the NGPMN Holders is required pursuant to this Agreement or the Transaction Documents, such 

consent requirement shall be satisfied if the NGPMN Holders of more than fifty percent of the 

outstanding principal amount of the Class NG Purchase Money Notes consent. Notwithstanding 

the foregoing, with respect to any amendment, waiver or other modification that would (i) extend 

the due date for, or reduce the amount of any scheduled repayment of principal of, any NonGuaranteed Purchase Money Note; (ii) affect adversely the interests, rights or obligations of any 

NGPMN Holder individually in comparison to any other NGPMN Holder; (iii) change any place 

of payment where, or the coin or currency in which, any Non-Guaranteed Purchase Money Note 

is payable; (iv) amend or otherwise modify the definition of “Event of Default” as defined in any 

Non-Guaranteed Purchase Money Note; or (v) amend, waive or otherwise modify this Section 

2.15, such consent requirement shall be satisfied only if each affected NGPMN Holder consents. 

Section 2.16 Cancellation. All Purchase Money Notes surrendered for payment, 

registration or transfer, exchange or redemption, or deemed lost or stolen, shall, if surrendered to 

any Person other than the Paying Agent, be delivered to the Paying Agent, shall be promptly 

canceled by it and may not be reissued or resold. No Purchase Money Notes shall be issued in 

lieu of or in exchange for any Purchase Money Notes canceled as provided in this Section 2.16, 

except as expressly permitted by this Agreement. All cancelled Purchase Money Notes held by 

the Paying Agent shall be destroyed or held by the Paying Agent in accordance with its standard 

retention policy unless the Company shall direct that they be returned to it. 

Section 2.17 Section 3(c)(7) Procedures. 

(a) Depository Actions. The Company shall direct the Depository to take the 

following steps in connection with the Rule 144A Global Notes: 

(i) The Company shall direct the Depository to include the “3c7” 

marker in the Depository 20-character security descriptor and the 48-character additional 

descriptor for the Rule 144A Global Notes in order to indicate that sales are limited to Persons 

that are both Qualified Institutional Buyers and Qualified Purchasers. 

(ii) The Company shall direct the Depository to cause each physical 

Depository to deliver order ticket delivered by the Depository to purchasers to contain the 

Depository 20-character security descriptor and shall direct the Depository to cause each 

Depository deliver order ticket delivered by the Depository to purchasers in electronic form to 

26 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

contain the “3c7” indicator and a related user manual for participants, which shall contain a 

description of the relevant restrictions. 

(iii) The Company shall instruct the Depository to send a notice 

substantially in the form attached as Exhibit D hereto to all Depository participants in connection 

with the offering of the Rule 144A Global Notes. 

(iv) The Company shall advise the Depository that it is a Section 

3(c)(7) issuer and shall request the Depository to include the Rule 144A Global Notes in the 

Depository’s “Reference Directory” of Section 3(c)(7) offerings. 

(v) The Company from time to time shall (upon the request of the 

Paying Agent or the Purchase Money Notes Registrar) request the Depository to deliver to the 

Company a list of all Depository participants holding an interest in the Rule 144A Global Notes. 

(b) Bloomberg Screens, Etc. The Company from time to time shall request all 

third-party vendors to include on screens maintained by such vendors appropriate legends 

regarding Rule 144A and Section 3(c)(7) restrictions on the Rule 144A Global Notes. Without 

limiting the foregoing, the Company shall request Bloomberg, L.P. to include the following on 

each Bloomberg screen containing information about the Rule 144A Global Notes: 

(i) “Security Description” page 1 describing the security states: 

“144A/3c7 “ok”; Reg S/3c7 “ok”; 144A/DTC Book Entry; Reg S/Certificated; 

(ii) “Security Description” page 1 states: “See Page 3 for Comments”; 

(iii) “Security Description” page 3 states: “RESTRICTIONS: These 

securities are being offered under the Securities Act only (a) in book-entry and certificated form 

to “qualified institutional buyers” under Rule 144A and (b) in certificated form to non-U.S. 

Persons in offshore transactions under Regulation S, where (a) and (b) are also “qualified 

purchasers” within the meaning of Section 3(c)(7) of the U.S. Investment Company Act.” 

Notwithstanding the foregoing, in the event that Bloomberg is not able to include the language 

contained in subsections (b)(i) and (b)(ii) above, the purchaser will ensure as of the Closing Date 

that “Security Description” page 3 states: “144A/3c7 “ok”; Reg S/3c7 “ok”; 144A/DTC Book 

Entry; Reg S/Certificated” in addition to the language in subsection (b)(iii) above. 

(c) CUSIP. The Company shall cause each “CUSIP” number obtained for the 

Rule 144A Global Notes to have an attached “fixed field” that contains “3c7” and “144A” 

indicators. 

Section 2.18 Transfer of Purchase Money Notes by Receiver. Subject to the 

requirements and restrictions for the transfer of the Purchase Money Notes pursuant to this 

Agreement, the Receiver shall be permitted, without restriction, to assign, sell, transfer, 

participate, pledge, or otherwise hypothecate the Purchase Money Notes in whole or in part, to 

one or more subsequent purchasers. The Private Owner agrees to cooperate with and assist, and 

to cause the Company to so cooperate and assist, the Receiver in any such actual or proposed 

27 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

assignment, sale, transfer, participation, pledge, syndication, or hypothecation as requested by 

the Receiver, including by providing information required by securities disclosure laws and as 

would otherwise be provided customarily in connection with the issuance and sale of similar 

debt, and entering into a fiscal and paying agent agreement and other agreements with respect to 

the Purchase Money Notes or the assignment, sale, transfer, participation, pledge, syndication or 

hypothecation thereof. The Private Owner agrees to cooperate with, and to cause the Company 

to cooperate with, the Receiver as initial Holder of the Purchase Money Notes, to make any 

amendments to the Purchase Money Notes and other Transaction Documentation, and issue any 

applicable legal opinions of Company counsel, to effect any such assignment, sale, transfer, 

participation, pledge, syndication or hypothecation; provided that no such amendment will 

adversely affect in any material respect (i) the amount or timing of distributions to the Private 

Owner or the Initial Member pursuant to the Priority of Payments or (ii) any other rights or 

obligations of the Private Owner or the Initial Member pursuant to the transaction documents), in 

each case unless such adversely affected Private Owner or Initial Member, as applicable, shall 

have consented to the applicable provisions resulting in such adverse effect. The reasonable 

legal fees of outside counsel for the Company (excluding any legal fees of outside counsel 

performing services for the Private Owner or the Initial Member) in connection with the 

preparation and review of any such documents and issuance of such legal opinions shall be 

deemed a Servicing Expense and paid by the Company. 

Section 2.19 Conversion of Class of Non-Guaranteed Purchase Money Notes. 

(a) Subject to the requirements and restrictions for Conversion pursuant to 

this Agreement, the Initial NGPMN Holder shall have the right, with the consent of the Purchase 

Money Notes Guarantor, to cause the Conversion of a Non-Guaranteed Purchase Money Note 

from time to time, in whole or in part, into one or more Converted Guaranteed Purchase Money 

Notes. The Initial NGPMN Holder at any time may exercise the Conversion Right by delivery 

of a Conversion Certificate in the form of Exhibit P to the respective NGPMN Holder, the 

Company, the Paying Agent and the Collateral Agent, which Conversion Certificate must be 

consented to by the Purchase Money Notes Guarantor. Upon such election, the portion of the 

Non-Guaranteed Purchase Money Note so converted will be and become one or more Converted 

Guaranteed Purchase Money Notes pari passu and of even priority with all other Guaranteed 

Purchase Money Notes, the Company shall replace such Non-Guaranteed Purchase Money Note 

(to the extent of the Conversion) by reissuing one or more Converted Guaranteed Purchase 

Money Notes and making the related changes, modifications or amendments to this Agreement 

and the Transaction Documents as permitted therein and the Purchase Money Notes Guarantor 

shall issue its guaranty of such Converted Guaranteed Purchase Money Notes, pursuant to either 

an amendment and restatement of the Initial Purchase Money Notes Guaranty (which 

amendment and restatement is to include such Converted Guaranteed Purchase Money Notes 

among the Purchase Money Notes subject to the guaranty of the Purchase Money Notes 

Guarantor) or a Subsequent Purchase Money Notes Guaranty (as the Purchase Money Notes 

Guarantor may elect in its sole and absolute discretion). The Converted Guaranteed Purchase 

Money Notes will have terms and conditions substantially similar to the terms and conditions of 

the other Guaranteed Purchase Money Notes, except that the Initial NGPMN Holder with the 

consent of the Purchase Money Notes Guarantor (i) may elect to modify the maturity date of 

such Converted Guaranteed Purchase Money Note to such a date that is not later than the seventh 

28 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

anniversary of the Closing Date and (ii) may elect to modify the amount of the Converted 

Guaranteed Purchase Money Notes in such an amount so that the aggregate principal amount of 

the Converted Guaranteed Purchase Money Notes shall equal the then actual outstanding 

aggregate principal amount of the portion of the Non-Guaranteed Purchase Money Note that was 

the subject of the Conversion. 

(b) For all purposes of this Agreement, from and after Conversion each 

Converted Guaranteed Purchase Money Note will be treated thereafter for all purposes of this 

Agreement as a Guaranteed Purchase Money Note and the Class designation will be changed 

from the Class NG Purchase Money Note to a new Class designation. Such new Class 

designation of the Converted Guaranteed Purchase Money Note shall be the next Class of Series 

A that follows the sequential ordering of the existing Classes of Series A, commencing with 

Class A-3. Each such new Class of Series A Purchase Money Notes will be based upon the 

maturity date of the Purchase Money Notes in such Class, with Purchase Money Notes of like 

maturity date being classified in the same Class. Except as specified in clause (i) of Section 

2.19(a), no modification contained in a Converted Guaranteed Purchase Money Note, without 

the consent of Private Owner and the Initial Member, (i) shall increase the interest rate on, or 

accelerate the then maturity date of, the Converted Guaranteed Purchase Money Note (or any 

replacement promissory notes(s), impose additional prepayment obligations in respect of the 

Converted Guaranteed Purchase Money Notes or otherwise increase in any material respect the 

financial obligations of the Company pursuant to the Converted Guaranteed Purchase Money 

Note, the Reimbursement, Security and Guaranty Agreement and this Agreement, (ii) shall affect 

adversely any other rights or obligations of, or the need for any advances, contributions or 

payments from, the Private Owner, the Initial Member or its Affiliates or any permitted 

successor or assign pursuant to this Agreement or any other Transaction Document or otherwise 

or (iii) shall affect adversely the rights or interests of the Paying Agent or of any Holder or Note 

Owner of any other Purchase Money Notes or any owner of an interest therein. Prior to effecting 

any changes, amendments or modifications in connection with the Converted Guaranteed 

Purchase Money Notes, the Company shall notify each of the Private Owner and the Initial 

Member of any such contemplated changes, amendments or modifications, and the Private 

Owner and the Initial member agree that they will cooperate in good faith with the Company in 

effecting all such changes, amendments or modifications. 

AR TIC LE III
 


AC C O UNT S
 


Section 3.1 Collection Account. 

(a) On the date of this Agreement, the Company shall establish the Collection 

Account with the Paying Agent. For all Asset Proceeds with respect to any Group of Assets 

received by the Receiver during the Interim Servicing Period, the Receiver shall transfer any 

such Asset Proceeds, net of any Interim Servicing Expenses and Pre-Approved Charges then due 

and payable, no later than two (2) Business Days prior to the applicable Distribution Date to the 

Paying Agent for deposit into the Collection Account. For all Asset Proceeds with respect to any 

Group of Assets received after the Interim Servicing Period and for which the Servicing Transfer 

Date has occurred, the Company shall transfer, or cause the Servicer or Subservicer to transfer, 

29 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

all Asset Proceeds within two (2) Business Days of receipt of such funds to the Paying Agent for 

deposit into the Collection Account. No funds from any other source (other than Asset Proceeds, 

interest or earnings on the Asset Proceeds, funds transferred from the Working Capital Reserve 

Account pursuant to the LLC Operating Agreement and Section 3.6, funds advanced by the 

Manager as Excess Working Capital Advances pursuant to the LLC Operating Agreement and 

Section 3.7, loan proceeds from any Advance Loan made by the Advance Lender pursuant to the 

Advance Facility Documents and funds advanced by the Manager as Discretionary Funding 

Advances pursuant to the LLC Operating Agreement and Section 3.8) shall be commingled in 

the Collection Account. 

(b) Amounts on deposit in (or that are required to have been deposited into) 

the Collection Account (including interest and earnings thereon) shall be applied (i) first, to the 

repayment of any Discretionary Funding Advance that the Manager has made with respect to any 

Asset together with accrued and unpaid interest on such Discretionary Funding Advances, but 

only to the extent of Asset Proceeds from the Asset with respect to which the Discretionary 

Funding Advance was made; (ii) second, to the payment of the then-outstanding amount of 

Servicing Expenses and Pre-Approved Charges either then due and payable or subject to 

reimbursement; (iii) third, to fund any Required Funding Draws as agreed upon by the Initial 

Member and the Private Owner and otherwise permitted pursuant to any Asset Documents; (iv) 

fourth, to pay any Permitted Vertical Completion Expenses pursuant to Section 12.6 of the LLC 

Operating Agreement and (v) the balance, if any, to be transferred to the Distribution Account in 

accordance with Section 3.2; provided, however, that any Discretionary Funding Advances may 

be used to fund Substantially Complete Vertical Development only with respect to the Asset to 

which such Discretionary Funding Advances relate. 

(c) At any time during the Interim Servicing Period, the Initial Member is 

authorized to request the withdrawal of funds from the Collection Account to pay Interim 

Servicing Expenses and Pre-Approved Charges. The Manager will have authority to request the 

withdrawal of funds from the Collection Account at any time to pay Servicing Expenses and PreApproved Charges, to fund any Required Funding Draws and to pay any Permitted Vertical 

Completion Expenses, all in accordance with the terms of this Agreement and the Related 

Agreements, and if the Receiver, the Company, the Servicer or any Subservicer at any time 

erroneously deposits any amount into the Collection Account, the Manager will have authority to 

request the withdrawal of such amount and instruct the Paying Agent to pay such amount to the 

Receiver, the Company, the Servicer or any Subservicer, as applicable. The Manager shall 

provide such requests to the Paying Agent in accordance with Section 18.1. 

(d) The Paying Agent shall invest the amounts on deposit in the Collection 

Account in Permitted Investments in accordance with investment directions from the Company, 

but with a maturity that allows for their allocation and transfer to the Distribution Account in 

accordance with Section 3.2. 

(e) Upon instruction, the Paying Agent shall be authorized and directed to 

withdraw funds from the Collection Account only to pay the Interim Servicing Expenses, 

Servicing Expenses and Pre-Approved Charges, to fund any Required Funding Draws, to pay 

any Permitted Vertical Completion Expenses and to transfer funds to the Distribution Account 

30 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

pursuant to Section 3.2 and as otherwise set forth in this Agreement and not for any other 

purpose. The Collection Account (and all funds therein) shall be subject to the security interest 

granted to the Collateral Agent under the Reimbursement, Security and Guaranty Agreement and 

to the Account Control Agreement in substantially the form attached to this Agreement as 

Exhibit N. 

Section 3.2 Distribution Account. 

(a) On the date hereof, the Company shall establish the Distribution Account 

with the Paying Agent. The Paying Agent shall transfer from the Collection Account to the 

Distribution Account, for application pursuant to Section 5.1, not later than 12:00 p.m. New 

York time on the Business Day immediately preceding each Distribution Date, the amount 

specified in the Distribution Date instructions delivered pursuant to Section 11.4 for such 

Distribution Date as determined as of the close of business on the Determination Date with 

respect to the applicable Due Period . 

(b) No funds from any other source shall be commingled in the Distribution 

Account (other than interest or earnings on the funds held in the Distribution Account and 

funding from the Collection Account as described in this Section. Amounts on deposit in (or that 

are required to have been deposited into) the Distribution Account (including interest and 

earnings thereon) shall be allocated and may be withdrawn and disbursed only in accordance 

with the provisions of Section 5.1. 

(c) The Paying Agent shall be authorized and directed to withdraw funds from 

the Distribution Account only to make disbursements in accordance with this Agreement and not 

for any other purpose. The Distribution Account (and all funds therein) shall be subject to the 

security interest granted to the Collateral Agent under the Reimbursement, Security and 

Guaranty Agreement and to the Account Control Agreement. 

Section 3.3 Defeasance Account. 

(a) On the date hereof, the Company shall establish the Defeasance Account 

with the Paying Agent. The Paying Agent shall transfer funds to the Defeasance Account 

pursuant to the Priority of Payments. 

(b) The Purchase Money Notes Guarantor, in accordance with Section 17(a) 

of each Purchase Money Notes Guaranty, shall deposit any amounts payable pursuant to such 

Purchase Money Notes Guaranty in respect of the Guaranteed Obligations (as such term is 

defined in such Purchase Money Notes Guaranty) in the Defeasance Account by 12:00 p.m. New 

York time on the date that is one Business Day prior to any Distribution Date on which an 

acceleration payment with respect to any Class of Guaranteed Purchase Money Notes is due and 

payable or, in connection with the final payment of a Class of Guaranteed Purchase Money 

Notes on the applicable Purchase Money Notes Maturity Date, by 12:00 p.m. New York time on 

the date that is one Business Day prior to such Purchase Money Notes Maturity Date, in each 

case, for further distribution by the Paying Agent to the applicable Holders; provided that the 

Purchase Money Notes Guarantor has received written demand therefor from the applicable 

31 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

Holders or from the Paying Agent on such Holders’ behalf pursuant to Section 17(a) of the 

Purchase Money Notes Guaranty no later than 5:00 p.m. New York time on the date that is four 

Business Days prior to such Distribution Date or, in connection with the final payment of such 

Purchase Money Notes on the applicable Purchase Money Notes Maturity Date, such Purchase 

Money Notes Maturity Date. In addition, the Company may deposit any Company Principal 

Prepayment Amount in the Defeasance Account, provided that such amount is deposited in the 

Defeasance Account at least one Business Day prior to the related Distribution Date, to be 

applied by the Paying Agent as a principal prepayment (or a portion thereof) on such 

Distribution Date in accordance with the related Distribution Date Report or the Maturity Date 

Report. To the extent the Paying Agent receives amounts from the Purchase Money Notes 

Guarantor to be used to pay interest on overdue principal of any Purchase Money Notes, the 

Paying Agent shall deposit such amounts into the Defeasance Account and shall distribute such 

amounts to the Holders of the applicable Guaranteed Purchase Money Notes on the date the 

principal is paid to the Holders. Any overdue principal on the Guaranteed Purchase Money 

Notes and interest thereon may be paid to the Holders on any Business Day without regard to 

whether such day is a Distribution Date. If, on any Distribution Date on which an acceleration 

payment with respect to any Class of Guaranteed Purchase Money Notes is due and payable or 

on the Purchase Money Notes Maturity Date with respect to any Class of Guaranteed Purchase 

Money Notes, a payment is due from the Purchase Money Notes Guarantor but not timely 

received, then at such time as the Paying Agent does receive such payment together with any 

interest thereon as provided in Section 17(b) of the respective Purchase Money Notes Guaranty, 

the Paying Agent shall deposit such amounts into the Defeasance Account for further distribution 

by the Paying Agent to the applicable Holders. To the extent the Paying Agent otherwise 

receives amounts from the Purchase Money Notes Guarantor paid pursuant to Section 17(b) of 

such Purchase Money Notes Guaranty, the Paying Agent shall deposit such amounts into the 

Defeasance Account for further distribution by the Paying Agent to the applicable Holders. Any 

amounts deposited into the Defeasance Account pursuant to Section 17(b) of any Purchase 

Money Notes Guaranty shall not be included when calculating the balance in the account. 

(c) No funds from any other source (other than interest or earnings on 

amounts described in Section 3.3(d) and (i) amounts deposited pursuant to this Section 3.3, (ii) 

deposits made by the Purchase Money Notes Guarantor as described in this Section 3.3, (iii) 

deposits made by the Manager pursuant to Section 5.5(b)(y) of the LLC Operating Agreement or 

(iv) amounts deposited as Purchase Money Note Asset Value pursuant to Section 6.3 of the 

Contribution Agreement shall be commingled in the Defeasance Account. 

(d) The Paying Agent shall invest the amounts on deposit in the Defeasance 

Account in Permitted Investments in accordance with investment directions from the Initial 

Member. Income or gain from such investments will be available to be applied with other 

amounts in accordance with Sections 3.3(g) and (i). 

(e) If, on the Purchase Money Notes Maturity Date of any Guaranteed 

Purchase Money Note (or any Distribution Date on which an acceleration payment or 

prepayment of principal is due and payable on the Guaranteed Purchase Money Notes), there 

exists a Net Loss on Investments with respect to the Defeasance Account and the amount in the 

Defeasance Account is less than the amount required to pay all amounts owing to the GPMN 

32 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

Holders on such Purchase Money Notes Maturity Date or Distribution Date, then prior to any 

liquidation and payment described in the following provisions of this Section 3.3, the Purchase 

Money Notes Guarantor shall deposit into the Defeasance Account the lesser of (i) the amount of 

such Net Loss on Investments or (ii) the portion of such Net Loss on Investments that is required 

to increase the amount in the Defeasance Account to the amount owing to the GPMN Holders on 

such Purchase Money Notes Maturity Date or Distribution Date. 

(f) If the Manager in its discretion elects to provide Excess Working Capital 

Advances to cure a Purchase Money Notes Trigger Event as described in Section 3.7, the 

Manager shall direct the Paying Agent to deposit such Excess Working Capital Advances into 

the Defeasance Account. In addition, upon the repurchase of an Asset pursuant to Section 6.3 of 

the Contribution Agreement, the portion of the Repurchase Price constituting the Purchase 

Money Note Asset Value shall be deposited into the Defeasance Account. 

(g) On the Class A-1 Note Maturity Date and on any Distribution Date on 

which an acceleration payment or prepayment of principal with respect to the Class A-1 

Purchase Money Notes is due and payable, the Paying Agent shall, after making all 

disbursements required pursuant to Section 5.1, liquidate all or a portion of the Defeasance 

Account sufficient to pay all amounts owing to the Holders of the Class A-1 Purchase Money 

Note on the Class A-1 Note Maturity Date or such Distribution Date, as applicable, and pay all 

proceeds of such liquidation to the Holders of the Class A-1 Purchase Money Note in accordance 

with their Holder Percentages. On the Class A-2 Note Maturity Date and on any Distribution 

Date on which an acceleration payment or prepayment of principal with respect to the Class A-2 

Purchase Money Notes is due and payable, the Paying Agent shall, after making all 

disbursements required pursuant to Section 5.1, liquidate all or a portion of the Defeasance 

Account sufficient to pay all amounts owing to the Holders of the Class A-2 Purchase Money 

Note on the Class A-2 Note Maturity Date or such Distribution Date, as applicable, and pay all 

proceeds of such liquidation to the Holders of the Class A-2 Purchase Money Note in accordance 

with their Holder Percentages. On the stated Purchase Money Notes Maturity Date of any Class 

of Converted Guaranteed Purchase Money Notes and on any Distribution Date on which an 

acceleration payment or prepayment of principal with respect to such Class of Converted 

Guaranteed Purchase Money Notes is due and payable, the Paying Agent shall, after making all 

disbursements required pursuant to Section 5.1, liquidate all or a portion of the Defeasance 

Account sufficient to pay all amounts owing to the Holders of such Converted Guaranteed 

Purchase Money Notes in accordance with their Holder Percentages. On the Class NG Note 

Maturity Date and on any Distribution Date on which an acceleration payment or prepayment of 

principal with respect to the Class NG Purchase Money Note is due and payable, the Paying 

Agent shall, after making all disbursements required pursuant to Section 5.1, liquidate all or a 

portion of the Defeasance Account sufficient to pay all amounts owing to the NGPMN Holders 

on the Class NG Note Maturity Date or such Distribution Date, as applicable, and pay all 

proceeds of such liquidation to the NGPMN Holders. For the avoidance of doubt, any amounts 

distributed from the Defeasance Account pursuant to this Section 3.3 will be distributed to the 

Holders of each applicable Class of Purchase Money Notes on a pro rata basis. Notwithstanding 

any provisions in any Transaction Documents to the contrary, upon the acceleration of any Class 

of Purchase Money Notes and the declaration that the Purchase Money Notes are immediately 

due and payable, then any amounts distributed from the Defeasance Account pursuant to this 

33 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

Section 3.3 will be distributed in the following order of priority to the extent there are 

insufficient funds in the Defeasance Account to pay the Guarantor and the Holders the full 

amount to which it is entitled: (i) first, to the reimbursement of the Purchase Money Notes 

Guarantor on account of any Guaranty Payment, (ii) second, to the Holders of the Guaranteed 

Purchase Money Notes on a pro rata basis based on the respective amounts to which such 

Holder is entitled pari passu with all other Guaranteed Purchase Money Notes on account of the 

obligations of the related Guaranteed Purchase Money Note and (iii) third, to the NGPMN 

Holders on a pro rata basis based on the respective amounts to which such Holder is entitled, 

pari passu with all other Non-Guaranteed Purchase Money Notes on account of the obligations 

of the related Non-Guaranteed Purchase Money Notes. 

(h) If, pursuant to Section 2.8, a Reissued Purchase Money Note is issued 

upon the maturity of the related Maturing Purchase Money Note, the proceeds from such 

Reissued Purchase Money Note shall be deposited in the Defeasance Account to pay the related 

Maturing Purchase Money Note. This Section 3.3 shall apply to such Reissued Purchase Money 

Note following the full or partial liquidation of the Defeasance Account and payment of the 

Holders of the related Maturing Purchase Money Note and the issuance of such Reissued 

Purchase Money Note. 

(i) Following the maturity date of the last maturing Purchase Money Note 

(including any Reissued Purchase Money Note) and the payment in full of the Holders of such 

Purchase Money Note, the Paying Agent shall liquidate the Defeasance Account and deposit any 

and all proceeds of such liquidation in accordance with Section 3.3(k). 

(j) The Paying Agent shall be authorized and directed to withdraw funds from 

the Defeasance Account only to make disbursements in accordance with this Agreement and not 

for any other purpose. The Defeasance Account (and all funds therein) shall be subject to the 

security interest granted to the Collateral Agent pursuant to the Reimbursement, Security and 

Guaranty Agreement and to the Account Control Agreement. 

(k) If on the Distribution Date on which the final deposit is required to be 

made into the Defeasance Account under Section 5.1(b)(x), the actual deposit made into such 

account exceeds the amount that would have been required on such date had the earnings on the 

account since the related Determination Date been taken into account, then such excess deposit 

shall be removed from the Defeasance Account, deposited into the Distribution Account and on 

the next Distribution Date applied with other funds in accordance with the Priority of Payments. 

Section 3.4 Initial Member Development Funding Account. 

(a) On the date hereof, the Initial Member shall establish the Initial Member 

Development Funding Account with the Paying Agent. The Initial Member Development 

Funding Account shall be held in trust by the Paying Agent for the benefit of the Initial Member. 

The Initial Member Development Funding Account shall be funded with the Initial Member 

Development Account Funding Amount in accordance with the terms of Section 12.12 of the 

LLC Operating Agreement. The funds in the Initial Member Development Funding Account 

will be used by the Initial Member to fund the Initial Member Development Contribution. Upon 

34 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

the satisfaction of the conditions described in Sections 5.3 and 12.13 of the LLC Operating 

Agreement, the Paying Agent shall transfer the funds held in the Initial Member Development 

Funding Account pursuant to Section 3.4(c) below in such amounts as described in Section 

3.5(c) below to the Company Development Account, from which funds will be made available to 

pay for Permitted Horizontal Development pursuant to the LLC Operating Agreement. 

(b) The Paying Agent shall invest the amounts on deposit in the Initial 

Member Development Funding Account in Permitted Investments in accordance with investment 

directions from the Initial Member but with maturities that allow for their transfer to the 

Company Development Account. No funds from any other source (other than interest or 

earnings on the funds held in the Initial Member Development Funding Account and funding 

from the Initial Member as described in this Section) shall be commingled in the Initial Member 

Development Funding Account. 

(c) In accordance with this Agreement and the LLC Operating Agreement, the 

Paying Agent shall be authorized and directed to withdraw funds from the Initial Member 

Development Funding Account for transfer and deposit into the Company Development Account 

only after it has received notice of funding from or on behalf of the Initial Member; and the 

Private Owner has funded its pro rata share of the Private Owner Development Contributions 

into the Company Development Account. 

(d) On the earlier to occur of (i) the Purchase Money Notes Defeasance Date, 

(ii) three years from the Closing Date or (iii) any earlier date at the option of the Manager, any 

remaining funds in the Initial Member Development Funding Account will be released and paid 

to the Initial Member. 

Section 3.5 Company Development Account. 

(a) On the date hereof, the Company shall establish the Company 

Development Account with the Paying Agent. The Company Development Account shall be 

held in trust by the Paying Agent for the benefit of the Company. The Company Development 

Account shall be funded (i) with funds transferred from the Initial Member Development 

Funding Account in accordance with Section 3.4(c) above and Sections 5.3 and 12.13 of the LLC 

Operating Agreement and (ii) with Private Owner Development Contribution contributed by the 

Private Owner pursuant to Sections 5.3 and 12.13 of the LLC Operating Agreement. Upon the 

satisfaction of the conditions for the disbursements of the Development Contributions pursuant 

to Sections 5.3 and 12.13 of the LLC Operating Agreement, the Paying Agent shall distribute the 

funds held in the Company Development Funding to fund any Permitted Horizontal 

Development pursuant to Sections 5.3 and 12.13 of the LLC Operating Agreement. In 

accordance with Section 12.13 of the LLC Operating Agreement, the Paying Agent shall be 

authorized and directed to withdraw funds from the Company Development Account only after 

the Initial Member and the Private Owner have deposited their respective pro rata share of the 

Development Contribution into the Company Development Account and to make disbursements 

in accordance with this Agreement and the LLC Operating Agreement and not for any other 

purpose. 

35 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

(b) Upon satisfaction of the conditions described in Sections 5.3 and 12.13 of 

the LLC Operating Agreement, the Private Owner may elect to make the Private Owner 

Development Contributions from its owns funds at a ratio based on the pro rata LLC Interests at 

the time such Private Owner Development Contribution is made in accordance with the terms 

described in Sections 5.3 and 12.13 of the LLC Operating Agreement. The Private Owner 

Development Contributions are to be deposited into the Company Development Account, from 

which account the funds will be made available to fund any Permitted Horizontal Development 

pursuant to this Section 3.5 and the LLC Operating Agreement. 

(c) The Paying Agent shall invest the amounts on deposit in the Company 

Development Account in Permitted Investments in accordance with investment directions from 

the Company but with maturities that allow for their transfer in accordance with this Section 3.5. 

(d) No funds from any other source (other than interest or earnings on the 

funds held in the Company Development Funding Account and funding from the Initial Member 

Development Funding Account and the Private Owner Development Contribution as described 

in this Section) shall be commingled in the Company Development Funding Account. 

(e) The Company Development Account (and all funds therein) shall be 

subject to the security interest granted to the Collateral Agent pursuant to the Reimbursement, 

Security and Guaranty Agreement and to the Account Control Agreement. 

(f) The Initial Member shall instruct the Paying Agent to release any 

remaining funds in the Company Development Account with respect to any applicable Permitted 

Horizontal Development and to distribute such amounts to the Initial Member and the Private 

Owner in accordance with Sections 6.6(c) and 12.13 of the LLC Operating Agreement at the 

earlier to occur of (i) the completion of any applicable Permitted Horizontal Development or (ii) 

dissolution of the Company. 

Section 3.6 Working Capital Reserve Account. 

(a) On the date hereof, the Company shall establish the Working Capital 

Reserve Account with the Paying Agent for the purpose of paying the Working Capital Expenses 

and making payments for Permitted Vertical Completion Expenses, in each case, both during (i) 

the Advance Facility Availability Period, when Advance Loans may be made to pay Working 

Capital Expenses and Permitted Vertical Completion Expenses, and (ii) following the Advance 

Facility Availability Period, when Advance Loans no longer are able to be made. To the extent 

there are insufficient funds in the Collection Account with which to pay the outstanding amount 

of the Working Capital Expenses then due and payable, then (in addition to seeking any available 

draws pursuant to the Advance Facility) the Company may instruct the Paying Agent to release 

some or all of the funds from the Working Capital Reserve Account (in an amount that the 

Manager determines in the exercise of its reasonable discretion) and allocate and distribute such 

released funds to the Collection Account, from which the funds will be available to pay such 

Working Capital Expenses. In addition, if the Company elects to undertake any Substantially 

Complete Vertical Development, then (in addition to seeking any available draws pursuant to the 

Advance Facility) the Company may instruct the Paying Agent to release some or all of the funds 

36 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
in the Working Capital Reserve in an amount that the Manager determines in the exercise of its 

reasonable discretion and allocate and distribute such released funds to the Collection Account, 

from which such funds will be available to pay the related Permitted Vertical Completion 

Expenses. 

(b) The Working Capital Reserve Account shall be held in trust by the Paying 

Agent for the benefit of the Company and shall be established and maintained for the sole 

purpose of holding and distributing the Working Capital Reserve funds. The Working Capital 

Reserve Account shall be funded initially in accordance with Section 12.11 of the LLC 

Operating Agreement and thereafter replenished through (i) deposits made into the Working 

Capital Reserve Account in accordance with Section 5.1(b)(v) of this Agreement and (ii) 

deposits of the Advance Loan proceeds. 

(c) The Manager, in the exercise of its reasonable discretion, shall determine 

the Working Capital Reserve Target on deposit in the Working Capital Reserve Account as of a 

certain Distribution Date, which shall be in such an amount that is equal to or greater than the 

Working Capital Reserve Floor but not more than the Working Capital Reserve Replenishment 

Cap; provided, however, that the Manager, in the exercise of its reasonable discretion, may 

determine to release funds from the Working Capital Reserve Account and reduce the Working 

Capital Reserve to an amount below the Working Capital Reserve Floor if such funds are 

required to pay Working Capital Expenses then due and payable so long as the balance of the 

Working Capital Reserve Account is restored to the Working Capital Reserve Floor as soon 

thereafter as is practicable. 

(d) At the time of the Final Distribution, the Paying Agent shall allocate and 

distribute all remaining funds held in the Working Capital Reserve Account to the Collection 

Account, from which account the funds will be transferred to the Distribution Account and made 

available for distribution in accordance with the Priority of Payments pursuant to Section 5.1 of 

this Agreement and the LLC Operating Agreement. 

(e) In addition, if the Manager determines in the exercise of its reasonable 

discretion that the funds held in the Working Capital Reserve Account in excess of the Working 

Capital Reserve Target no longer are necessary to satisfy the purposes for which the Working 

Capital Reserve has been established, the Manager shall instruct the Paying Agent to release 

such excess funds from the Working Capital Reserve Account, and thereafter the Paying Agent 

shall allocate and distribute such excess funds to the Collection Account, from which account the 

funds will be transferred to the Distribution Account and made available for distribution in 

accordance with the Priority of Payments pursuant to Section 5.1 of this Agreement and the LLC 

Operating Agreement. 

(f) The Paying Agent shall invest the amounts on deposit in the Working 

Capital Reserve Account in Permitted Investments in accordance with investment directions 

from the Company but with maturities that allow for their transfer in accordance with this 

Section 3.6. No funds from any other source (other than interest or earnings on the funds held in 

the Working Capital Reserve Account and funding from the Members as described in this 

37 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Section) and the Advance Loan proceeds shall be commingled in the Working Capital Reserve 

Account. 

(g) The Paying Agent shall be authorized and directed to withdraw funds from 

the Working Capital Reserve Account only to make disbursements in accordance with this 

Agreement and not for any other purpose. The Working Capital Reserve Account (and all funds 

therein) shall be subject to the security interest granted to the Collateral Agent pursuant to the 

Reimbursement, Security and Guaranty Agreement and to the Account Control Agreement. 

Section 3.7 Excess Working Capital Advances. The Manager shall be required to 

make Excess Working Capital Advances to the Paying Agent from its own funds in accordance 

with the terms described in Section 5.5 of the LLC Operating Agreement and to the extent that 

there are insufficient funds available for drawing under the Advance Facility and insufficient 

funds in the Collection Account or the Working Capital Reserve Account (including, as 

applicable by a permitted release of such funds to the Collection Account or as otherwise 

permitted herein) with which to pay Working Capital Expenses. In addition, the Manager may, 

but shall not be required, to make Excess Working Capital Advances to the Paying Agent from 

its own funds (a) in accordance with the terms described in Section 5.5 of the LLC Operating 

Agreement to the extent there are insufficient funds in the Collection Account and also 

insufficient funds in the Working Capital Reserve Account (with such sufficiency of the 

Working Capital Reserve Account measured by funds in excess of the Working Capital Reserve 

Floor, and including, as applicable by a permitted release of such excess funds to the Collection 

Account or as otherwise permitted herein) to fund the Defeasance Account by such amount as 

might be required to cure a Purchase Money Notes Trigger Event and (b) in accordance with the 

terms described in Section 5.5 of the LLC Operating Agreement to the extent there are 

insufficient funds in the Collection Account and also insufficient funds in the Working Capital 

Reserve Account (with such sufficiency of the Working Capital Reserve Account measured by 

funds in excess of the Working Capital Reserve Floor, and including, as applicable by a 

permitted release of such excess funds to the Collection Account or as otherwise permitted 

herein) for a mandatory repayment of the Advance Facility on the Advance Facility Maturity 

Date. The Manager shall direct the Paying Agent to deposit any Excess Working Capital 

Advances (i) to pay Working Capital Expenses into the Collection Account (from which the 

funds will be available to pay such Working Capital Expenses), (ii) as might be required to repay 

the Advance Facility in full to the Advance Lender in accordance with the provisions of Section 

5.5 of the LLC Operating Agreement and (iii) as might be required to cure a Purchase Money 

Notes Trigger Event into the Defeasance Account. 

Section 3.8 Discretionary Funding Advances. Pursuant to Section 5.4 of the LLC 

Operating Agreement, the Manager may make, at its discretion, Discretionary Funding Advances 

from its own funds to fund Permitted Vertical Completion Expenses on an Asset-by-Asset basis 

to the extent that funds are not available in the Collection Account for such purpose, the 

Working Capital Reserve has reached the Working Capital Reserve Floor and no funds remain 

available for drawing under the Advance Facility. All Discretionary Funding Advances are to be 

designated as applicable only to the Asset to which such Discretionary Funding Advance relates. 

Any Discretionary Funding Advances are to be deposited into the Collection Account, from 

which the funds will be available to be disbursed to the Borrower (with respect to the Collateral) 

38 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

or used by the Company (with respect to the Acquired REO Property), as applicable, to pay the 

Permitted Vertical Completion Expenses relating to the specified Asset. 

Section 3.9 Private Owner Pledged Account. 

(a) On the date hereof, the Private Owner shall establish the Private Owner 

Pledged Account with the Paying Agent for the exclusive purpose of holding Qualifying Cash 

Collateral, whether such Qualifying Cash Collateral is delivered on the date hereof or subsequent 

to the date hereof in full and complete substitution for a Qualifying Letter of Credit pursuant to 

the LLC Operating Agreement or upon the liquidation or drawing down of a Qualifying Letter of 

Credit pursuant to the LLC Operating Agreement. The Private Owner Pledged Account (and all 

funds therein) shall be subject to the security interest granted for the benefit of the Initial 

Member pursuant to the LLC Operating Agreement, this Agreement and the Private Owner 

Pledged Account Control Agreement in substantially the form attached to this Agreement as 

Exhibit Q. In no event shall the Private Owner have any right or authority to withdraw any funds 

from the Private Owner Pledged Account except as expressly provided in Section 3.9(b) below. 

The Paying Agent shall invest the amounts on deposit in the Private Owner Pledged Account in 

Permitted Investments in accordance with investment directions from the Private Owner but with 

maturities that allow for their transfer in accordance with this Section 3.9. 

(b) From time to time, at the request of the Private Owner, the Paying Agent 

may release funds from the Private Owner Pledged Account to the Private Owner only to the 

extent that, after such release, the remaining balance of the Qualifying Cash Collateral on deposit 

in the Private Owner Pledged Account is not less than $6,500,000.00. Any such release shall be 

pursuant to applicable instructions and documentation satisfactory to, and executed by (or with 

the written consent of), both of the Initial Member and the Private Owner (and prepared at the 

sole cost and expense of the Private Owner). 

ARTICLE IV 

ADDI T I O NAL PRO VI SI O NS RE L ATE D T O T H E AC C O UNT S 

Section 4.1 Investment of Funds in Accounts. 

(a) The Company, the Initial Member, the Private Owner or the NGPMN 

Agent, as applicable, shall at all times direct the Paying Agent to, and, upon receipt of such 

investment direction, the Paying Agent shall, invest, pending deposit into the Collection 

Account, the Working Capital Reserve Account, the Defeasance Account, the Initial Member 

Development Funding Account, the Company Development Account and the Private Owner 

Pledged Account, as applicable, amounts received and retained in such accounts, as so directed 

in Permitted Investments. If the Company, the Initial Member, the Private Owner or the 

NGPMN Agent, as applicable, shall not have given any such investment directions, the Paying 

Agent shall seek investment directions from such Person. If the Company, the Initial Member, 

the Private Owner or the NGPMN Agent, as applicable, does not provide the Paying Agent with 

investment directions pursuant to Sections 3.1, 3.3, 3.4, 3.5, 3.6, 3.9 or 4.1, the balance standing 

to the credit of the Collection Account, the Working Capital Reserve Account or the Defeasance 

Account, the Initial Member Development Funding Account, the Company Development 

39 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Account and the Private Owner Pledge Account, as applicable, will remain uninvested with no 

liability for interest thereon. It is agreed and understood that the Paying Agent may earn fees 

associated with Permitted Investments. 

(b) Whenever the Paying Agent is directed or authorized in accordance with 

the terms hereof to make a transfer of funds among the Collection Account, the Working Capital 

Reserve Account, the Defeasance Account, the Initial Member Development Funding Account, 

the Company Development Account and the Private Owner Pledged Account (collectively, the 

“Accounts ”), after application of all other available funds, the Paying Agent shall allocate to the 

Account to which such funds are to be transferred a portion of any Permitted Investment that 

would otherwise have to be liquidated to accomplish such transfer in an amount corresponding to 

the amount to be so transferred. Whenever the Paying Agent is directed or authorized in 

accordance with the terms hereof to make a transfer of funds from the Accounts (unless such 

transfer is between the Accounts), if, after application of all other available funds, liquidation of 

a Permitted Investment is necessary to make any such transfer, the Paying Agent is authorized to 

liquidate such Permitted Investment. If any Permitted Investment so liquidated is then allocated 

to more than one Account, and it is not possible to liquidate only the portion of such Permitted 

Investment allocated to the Account from which such transfer is to be made, then the entire 

Permitted Investment shall be liquidated, and the proceeds of such liquidation shall be allocated 

to the Accounts involved in the same proportion as the allocation of such Permitted Investment, 

except that the net costs and expenses, if any, of such liquidation (including any loss of principal) 

shall be allocated entirely to the Account from which the transfer of funds was required to be 

made. The Paying Agent shall liquidate all those Permitted Investments that can be liquidated 

without interest cost or penalty before it shall liquidate any Permitted Investment, the liquidation 

of which would involve an interest cost or penalty. The Paying Agent shall have no liability with 

respect to any interest cost or penalty on the liquidation of any Permitted Investment pursuant to 

this Section 4.1. 

(c) The Paying Agent shall have no liability with respect to Permitted 

Investments (or any losses resulting therefrom) made at the direction of the Company, the Initial 

Member, the Private Owner or the NGPMN Agent, as applicable, pursuant to this Agreement. 

(d) All references in this Agreement to the Accounts and to cash, moneys or 

funds therein or balances thereof shall include the investments in which such moneys are 

invested. 

(e) The Paying Agent may execute any investment directions provided to it in 

respect of the Permitted Investments through its Affiliates, and neither the Paying Agent nor its 

Affiliates shall have a duty to monitor the investment rating of any such Permitted Investments. 

The Paying Agent will have no obligation to invest or reinvest any funds if all or a portion of 

such funds are deposited with the Paying Agent after 4:00 p.m. New York time on the day of 

deposit. Directions to invest or reinvest that are received after 4:00 p.m. New York time will be 

treated as if received on the following Business Day in New York. Subject to Section 4.1(b) 

above, the Paying Agent will have the power to sell or liquidate Permitted Investments whenever 

the Paying Agent will be required to make a transfer pursuant to the terms hereof. The Paying 

40 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Agent will have no responsibility for any investment losses resulting from the investment, 

reinvestment or liquidation of any funds in accordance with the terms of this Agreement. 

Section 4.2 Interest. Any interest or other earnings accrued on any balances in any 

Account or on any investment thereof, shall be credited to and accumulated in such Account and 

thereafter be applied without differentiation from other funds in such Account. 

Section 4.3 Inadequately Identified Amounts. If the Paying Agent receives any 

amount that is inadequately or incorrectly identified and the Paying Agent is unable to determine 

the Account into which such amount is to be credited, the Paying Agent shall notify the 

Company, the Initial Member, the Private Owner, the Purchase Money Notes Guarantor, the 

Collateral Agent, the NGPMN Agent and the Advance Lender of such event and shall request 

instructions as to the Account into which such amount should be credited. The Paying Agent 

shall credit such amount to the Collection Account until such time as it receives instructions 

from the Company (with the written consent of the Purchase Money Notes Guarantor, the 

Receiver, the Collateral Agent and the NGPMN Agent) and the Advance Lender stating that 

such amount should be credited to another Account in accordance with this Agreement, in which 

case it shall credit such amount, if still available, to the Account designated by the Company 

(with the written consent of the Purchase Money Notes Guarantor, the NGPMN Agent and the 

Collateral Agent) and the Advance Lender. 

Section 4.4 Payment Procedures. All amounts that from time to time are distributable 

by the Paying Agent from the Distribution Account or the Defeasance Account in accordance 

herewith shall be paid by the Paying Agent from amounts on deposit in such account on the 

related Distribution Date or on the Purchase Money Notes Maturity Date, as applicable, in 

immediately available funds (but not before such amounts become immediately available to it). 

All payments made by the Paying Agent shall be made to such account(s) as shall be designated 

in writing by the Company in accordance with the Distribution Date Report or the Maturity Date 

Report, as applicable, and this Agreement. 

ARTICLE V
 


DI ST RI BUT I O NS
 


Section 5.1 Priority of Payments. 

(a) Before each Distribution Date, the Paying Agent shall disburse amounts 

transferred to the Distribution Account from the Collection Account pursuant to Section 3.2 for 

application by the Paying Agent in accordance with the priorities set forth in Section 5.1(b) 

below (the “Priority of Payments”) and pursuant to the Distribution Date instructions contained 

in the Distribution Date Reports delivered pursuant to Section 11.3. Notwithstanding any 

provisions in this Agreement to the contrary, however, the Paying Agent shall take disbursement 

instructions from the Initial Member with respect to the distributions payable to the Private 

Owner pursuant to Section 5.1(b)(xi) below upon the delivery of written notice from the Initial 

Member to the Paying Agent providing that such distributions instead should be paid to the 

Initial Member pursuant to the terms of the LLC Operating Agreement. 

41 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

(b) On each Distribution Date, all funds in the Distribution Account as 

described in Section 11.3 will be distributed in the following order of priority except as 

otherwise provided in Section 5.2 of the Reimbursement, Security and Guaranty Agreement: 

(i) first, to pay the fees and expenses of the Custodian and Paying 

Agent, including any indemnification payments owing to the Custodian and Paying Agent 

pursuant to Section 13.1, in accordance with the terms of this Agreement; 

(ii) second, to pay the Verification Contractor Amounts payable to the 

Verification Contractor and any indemnification payments pursuant to Advance Facility 

Documents; 

(iii) third, (A) for each Due Period during the Interim Servicing Period, 

with respect to each Group of Assets, to pay to (1) the Initial Member the Interim Servicing Fee, 

together with any unpaid portion of the Interim Servicing Fee for any prior Due Period, and (2) 

the Manager the Interim Management Fee, together with any unpaid portion of the Interim 

Management Fee for any prior Due Period, and (B) for each Due Period following the Interim 

Servicing Period, with respect to such Group of Assets, to pay to the Manager an amount equal 

to the Management Fee, together with any unpaid portion of the Management Fee for any prior 

Due Period; 

(iv) fourth, to repay any Excess Working Capital Advances made by 

the Manager pursuant to Section 5.5 of the LLC Operating Agreement and Section 3.7 above; 

(v) fifth, subject to the provisions of Section 3.6 above, all of the 

remaining amount shall be utilized to replenish the Working Capital Reserve until the amount of 

funds held in the Working Capital Reserve Account is equal to the Working Capital Reserve 

Target; 

(vi) sixth, to pay the aggregate outstanding balance of all outstanding 

Protective Advances pursuant to the Advance Facility Documents until all outstanding Protective 

Advances have been repaid in full and satisfied; 

(vii) seventh, to pay the aggregate amount of interest accrued through 

and including the Determination Date for the applicable Due Period and unpaid pursuant to the 

Advance Facility Documents to the Advance Lender; 

(viii) eighth, to pay the aggregate outstanding balance, including any 

capitalized interest, of all outstanding Advance Loans (excluding any Protective Advances), and 

unpaid interest, fees and expenses pursuant to the Advance Facility Documents until all 

outstanding Advance Loans (excluding any Protective Advances) have been repaid in full and 

satisfied; 

(ix) ninth, to pay any reimbursement amounts, together with any 

accrued interest thereon, due and payable as of the Determination Date for the applicable Due 

Period to the Purchase Money Notes Guarantor pursuant to the Reimbursement, Security and 

42 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Guaranty Agreement for previous payments made by it pursuant to any Purchase Money Notes 

Guaranty; 

(x) tenth, an amount equal to the Defeasance Account Required 

Deposit Amount shall be deposited into the Defeasance Account; and 

(xi) finally, all remaining amounts shall be distributed to the Initial 

Member and the Private Owner in accordance with Section 6.6 of the LLC Operating Agreement; 

provided, however, in no event shall any distribution from the Distribution Account be made to 

the Initial Member and the Private Owner at any time (A) prior to the repayment in full of all 

payments due under the Advance Facility and the termination of the Advance Facility and (B) 

until the amounts on deposit in the Initial Member Development Funding Account have been fully 

utilized or otherwise released to the Initial Member and reduced to zero pursuant to Section 3.4 of 

this Agreement and Section 12.12 of the LLC Operating Agreement. Until the events as described 

in clauses (A) and (B) have occurred and/or satisfied, all distributions that would be otherwise 

distributable to the Initial Member and the Private Owner pursuant to this subsection from the 

Distribution Account shall instead be deposited into the Collection Account. 

(c) Any Repurchase Price proceeds shall be paid as follows: The amount of 

the Purchase Money Note Asset Value shall be deposited in the Defeasance Account as provided 

in Section 5.1(b)(x) above and the amount of the Equity Asset Value shall be paid to the Initial 

Member and the Private Owner in accordance with Section 6.6 of the LLC Operating Agreement 

as provided in Section 5.1(b)(xi) above. 

Section 5.2 Notices of Payment Failure. 

(a) The Paying Agent shall deliver prompt written notice to the Company, the 

Purchase Money Notes Guarantor, the NGPMN Agent, the Collateral Agent and the Advance 

Lender in the event that it fails to receive in full on the related Distribution Date or the Purchase 

Money Notes Maturity Date, as applicable (based on the applicable Distribution Date Report or 

Maturity Date Report), the amount required to be paid by the Company on any Distribution Date 

or the Purchase Money Notes Maturity Date, as applicable, which notice shall include a 

statement that the required payment was not made by the Company in full and shall set forth the 

amount of such required payment and in the case of receipt of a partial payment, the amount of 

such partial payment. 

(b) If the Paying Agent has actual knowledge of any actual payment failure in 

advance of the related Distribution Date or the Purchase Money Notes Maturity Date, as 

applicable, it will deliver written notice thereof to the Company, the Purchase Money Notes 

Guarantor, the NGPMN Agent, the Collateral Agent and the Advance Lender as soon as is 

practicable in accordance with the previous sentence. Upon the Paying Agent’s receipt from the 

Collateral Agent or the Purchase Money Notes Guarantor of written notice at its Office that an 

Event of Default pursuant to the Reimbursement, Security and Guaranty Agreement (and as such 

term is defined therein) has occurred, or to the extent it has actual knowledge of the occurrence 

of such an Event of Default, the Paying Agent shall deliver prompt written notice to the Holders 

of the occurrence of such Event of Default. 

43 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 


Custodial and Paying Agency Agreement 


468-004/AGR/2644005.18 

 

(c) If the Paying Agent receives notice from the Holders of any Class of 

Purchase Money Notes that such Class of Purchase Money Notes has been declared immediately 

due and payable in accordance with the terms of such Class of Purchase Money Notes no later 

than four Business Days prior to a Distribution Date, the Paying Agent shall determine the 

amount payable by the Purchase Money Notes Guarantor pursuant to the respective Purchase 

Money Notes Guaranty (based on the related Distribution Date Report) and shall make a demand 

therefor no later than Noon (Eastern Time) on the fourth Business Day prior to such Distribution 

Date to the Purchase Money Notes Guarantor on behalf of the applicable Holders in accordance 

with Section 17(a) of such Purchase Money Notes Guaranty. 

(d) If the Paying Agent receives any such notice from the Holders later than 

Noon (Eastern Time) on the fourth Business Day prior to a Distribution Date, the Paying Agent 

shall determine the amount payable by the Purchase Money Notes Guarantor pursuant to the 

respective Purchase Money Notes Guaranty (based on the Distribution Date Report for the 

immediately succeeding Distribution Date) and shall make a demand therefor no later than four 

Business Days prior to the immediately succeeding Distribution Date to the Purchase Money 

Notes Guarantor on behalf of the applicable Holders in accordance with Section 17(a) of such 

Purchase Money Notes Guaranty. 

ARTICLE VI
 


CUSTODIAL DO CUMENTS
 


Section 6.1 Delivery of Custodial Documents. 

(a) Delivery. As soon as practical after the date hereof, the Company shall 

deliver or cause to be delivered the Custodial Documents to the Custodian at the office of the 

Custodian at Wells Fargo Document and Custody, 1055 10th Avenue, SE, Minneapolis, 

Minnesota 55414, Attention: Kathy Marshall (the “Office ”). 

(b) Collateral Certificate; Exceptions. The Custodian shall make available 

during normal business hours, and at such other hours as might be reasonable in the 

circumstances, to the Company (and representatives of the Company and, if the Company so 

determines, the Receiver) an office space at the Office that is sufficient to accommodate up to six 

(6) people to review the Custodial Documents with representatives of the Custodian for a period 

of not more than ten (10) days prior to the delivery of possession of the same to the Custodian. 

Within forty-five (45) days after delivery of the Custodial Documents to the Custodian, the 

Custodian shall execute and deliver to the Company, the Purchase Money Notes Guarantor, the 

NGPMN Agent, the Collateral Agent and the Advance Lender a certificate, substantially in the 

form annexed to this Agreement as Exhibit E, to the effect that the Custodian has received and 

reviewed the Custodial Documents and including an Asset Schedule and Exception List 

(“Collateral Certificate”). In reviewing the documents provided with respect to an Asset, the 

Custodian shall examine the same in accordance with the procedures set forth on Exhibit F to 

this Agreement and determine, with respect to each such document, whether it (i) appears regular 

on its face (i.e., is not mutilated, damaged, torn, defaced or otherwise physically altered), (ii) 

relates to such Asset, (iii) has been executed by the named parties thereon, (iv) where applicable, 

purports to be recorded, and (v) appears to be what it purports to be. 

44 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

(c) Custodial Documents. For each Asset, to the extent applicable and 

available as provided in Section 6.1(e), the “Custodial Documents” shall include the following: 

(i) the original Note bearing all intervening endorsements and 

endorsed “Pay to the order of AmTrust CADC Venture, LLC, without recourse” and signed in 

the name of the Federal Deposit Insurance Corporation as Receiver, and an allonge providing for 

the endorsement of the Note and endorsed “Pay to the order of ______________, without 

recourse” and signed by the Company as the last endorsee; and in the event that the original Note 

is not available, a fully executed Assignment and Lost Instrument Affidavit in the form of 

Exhibit F to the Contribution Agreement; 

(ii) the original or a copy of the Mortgage with evidence of recording 

thereon, or a certified copy thereof from the applicable Recording Office, or a copy thereof 

together with an officer’s certificate of the related Borrower, title company, escrow agent or 

closing attorney certifying that such represents a true and correct copy of the original and that 

such original has been submitted for recordation in the applicable Recording Office; 

(iii) the originals or copies of all assumption, Modification, 

consolidation or extension agreements (if any) with evidence of recording thereon, or certified 

copies thereof from the applicable Recording Office, or copies thereof together with a 

certification by or other similar evidence from the applicable Recording Office or an officer’s 

certificate of the related Borrower, title company, escrow agent or closing attorney certifying that 

such represents a true and correct copy of the original and that such original has been submitted 

for recordation in the applicable Recording Office; 

(iv) Acquired Property Files; 

(v) except in the case of any MERS Designated Asset, the original 

Mortgage Assignment in blank for each Asset, in form and substance acceptable for recording 

and signed in the name of the Federal Deposit Insurance Corporation as Receiver for various 

failed financial institutions to the Company; 

(vi) except in the case of any MERS Designated Asset, the original 

Mortgage Assignment in blank for each Asset, in form and substance acceptable for recording 

and signed in the name of the Company to the Collateral Agent; 

(vii) except in the case of any MERS Designated Asset, the originals or 

copies of all intervening Mortgage Assignments (if any) with evidence of recording thereon, or 

certified copies thereof from the applicable Recording Office, or copies thereof together with an 

officer’s certificate of the related Borrower, title company, escrow agent or closing attorney 

certifying that such represents a true and correct copy of the original and that such original has 

been submitted for recordation in the applicable Recording Office; 

(viii) the original or a copy of the attorney’s opinion of title and abstract 

of title or the original mortgage title insurance policy or, if the original mortgage title insurance 

45 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

policy has not been issued, the irrevocable commitment to issue the same or a true and correct 

copy of the title policy from the issuing title company; 

(ix) the originals of all Collateral Documents executed in connection 

with the Asset, if available; 

(x) Uniform Commercial Code financing statements with recording 

information thereon from the Recording Offices if necessary to perfect the security interest of the 

Asset under the Uniform Commercial Code; 

(xi) if the equity interests of any Ownership Entity are certificated, the 

certificate representing such equity interest and the stock power executed in blank; and if the 

equity interests of any Ownership Entity are not certificated, an Assignment of LLC Interest 

similar in form to Exhibit I of the Contribution Agreement; 

(xii) any bailee letters regarding any Notes or other Custodial 

Documents held by the bailee; 

(xiii) solely with respect to each MERS Designated Asset, a MERS 

Report; 

(xiv) the REO Collateral Documents; and 

(xv) such other documents for each Asset as determined by the 

Company, the Purchase Money Notes Guarantor, the NGPMN Agent, the Collateral Agent or the 

Advance Lender. 

(d) Supplemental Deliveries. The Company agrees that it shall deliver or 

cause to be delivered to the Custodian (i) any and all additional Custodial Documents with 

respect to an Asset that is not Acquired Property within ten days following the execution and 

delivery of any such instrument and (ii) any and all Custodial Documents with respect to any 

Asset within ten days following receipt of any such instrument. All such deliveries of Custodial 

Documents pursuant to this Section 6.1(d) shall be accompanied by a certificate in the form of 

Exhibit G (a “Supplemental Delivery Certificate”), prepared by an Authorized Representative 

of the Company, itemizing the Custodial Documents being delivered to the Custodian in such 

delivery and identifying the Asset with respect to which each such Custodial Document relates. 

After the receipt thereof, the Custodian shall (A) examine the additional Custodial Documents 

provided with respect to an Asset in accordance with the review procedures set forth on Exhibit 

F (the “Review Procedures”) and, determine, with respect to each such document, whether it (i) 

appears regular on its face (i.e., is not mutilated, damaged, torn, defaced or otherwise physically 

altered), (ii) relates to such Asset, (iii) has been executed by the named parties thereon, (iv) 

where applicable, purports to be recorded, and (v) appears to be what it purports to be, and (B) 

ensure that all such Custodial Documents with respect to an Asset are placed in the file for the 

related Asset. In the event the Custodian determines that the Supplemental Delivery Certificate 

is inaccurate, the Custodian shall so notify the Company in writing no later than the first 

Business Day following its receipt of the Supplemental Delivery Certificate. Within seven 

46 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Business Days after the receipt of the additional Custodial Documents by the Custodian, the 

Custodian shall provide the Company (with a copy to the Purchase Money Notes Guarantor, the 

NGPMN Agent and the Collateral Agent) and the Advance Lender with a Collateral Certificate, 

to the effect that the Custodian has received and reviewed the additional Collateral Documents, 

and include a revised Asset Schedule and Exception List. 

(e) Asset Schedules; Exception Lists; Review Procedures. Each Asset 

Schedule and Exception List shall list all Exceptions using such codes as shall be in form and 

substance agreed to by the Custodian and the Company. Each Asset Schedule and Exception 

List delivered by the Custodian to the Company shall supersede and cancel the Asset Schedule 

and Exception List previously delivered by the Custodian to the Company hereunder, and shall 

replace the then existing Asset Schedule and Exception List to be attached to the Collateral 

Certificate. Notwithstanding anything to the contrary set forth herein, in the event that the Asset 

Schedule and Exception List attached to the Collateral Certificate is different from the most 

recently delivered Asset Schedule and Exception List, then the most recently delivered Asset 

Schedule and Exception List shall control and be binding upon the parties hereto. The delivery 

of each Asset Schedule and Exception List to the Company shall constitute the Custodian’s 

representation that, other than the Exceptions listed as part of the last delivered Asset Schedule 

and Exception List: (i) all documents required to be delivered in respect of an Asset pursuant to 

Section 6.1(c) of this Agreement have been delivered and are in the possession of the Custodian 

as part of the Custodial Documents, (ii) all such documents have been reviewed and examined by 

the Custodian in accordance with the review procedures specified on Exhibit F and in this 

Agreement and appear on their face to be regular and to relate to such Asset and to satisfy 

(except in the case of a MERS Designated Asset) the requirements set forth in Section 6.1(c) of 

this Agreement, (iii) subject to the provisions of Section 7.2(b), each Asset (except in the case of 

a MERS Designated Asset) identified on such Asset Schedule and Exception List is being held 

by the Custodian as the bailee for the Company and (iv) subject to the provisions of Section 

7.2(b), each MERS Designated Asset is being held by MERS® as the nominee for the Company. 

In connection with an Asset Schedule and Exception List delivered hereunder by the Custodian, 

the Custodian shall make no representations as to and shall not be responsible for verifying, 

except as set forth in Section 6.1(b) of this Agreement, (A) the validity, legality, enforceability, 

due authorization, recordability, sufficiency or genuineness of any of the Custodial Documents 

or (B) the collectability, insurability, effectiveness or suitability of any such Asset. To the extent 

that any of the documents or materials required to be provided by the Company to the Custodian 

pursuant to Sections 6.1(c)(ii), (iii), (vii) and (viii) are not available as originals or as certified 

copies and the absence of such item would not, in the reasonable judgment of the Company, 

affect the value of the Asset or the ability to enforce the rights of the mortgagee, the Company 

shall not be required to expend more than nominal funds to provide such original or certified 

copies unless or until they are necessary for the enforcement of such rights, or unless or until the 

Purchase Money Notes Guarantor, the NGPMN Agent, the Collateral Agent or the Advance 

Lender provide written notice to the Custodian that they require the Company to act to cure such 

exceptions, and all such matters shall remain as exceptions on the Asset Schedule and Exception 

List. 

47 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

Section 6.2 Examination of Custodian Files; Copies. 

(a) Upon reasonable prior written notice to the Custodian, the Company, the 

Collateral Agent, and the Purchase Money Notes Guarantor, the NGPMN Agent and the 

Advance Lender and their respective agents, accountants, attorneys and auditors, and any other 

Persons designated by the Company, the Collateral Agent, the Purchase Money Notes Guarantor, 

the NGPMN Agent and the Advance Lender, as applicable, in writing as authorized to access 

and review the Custodial Documents, shall be permitted during normal business hours to 

examine the Custodial Documents. 

(b) Upon the request of the Company, the Collateral Agent, the Purchase 

Money Notes Guarantor, the NGPMN Agent or the Advance Lender, and at the cost and expense 

of the requesting party, the Custodian shall provide copies of any requested Custodial 

Documents; provided, however, the requesting party shall reimburse the Custodian for the actual, 

reasonable and customary costs incurred in providing copies of such Custodial Documents. 

Section 6.3 Shipment of Custodial Documents. Prior to any shipment of any 

Custodial Documents pursuant to this Agreement, the Company shall deliver to the Custodian 

written instructions as to the method of shipment and the shipper that the Custodian is to utilize 

in connection with the transmission of such Custodial Documents. The Company shall arrange 

for the provision of such services at its sole cost and expense (or, at the Custodian’s option, 

reimburse the Custodian for all costs and expenses incurred by the Custodian consistent with 

such instructions) and will maintain such insurance against loss or damage to the Custodial 

Documents as the Company may deem appropriate. It is expressly agreed that in no event shall 

the Custodian have any liability for any losses or damages to any Person, including the 

Company, arising out of actions of the Custodian pursuant to this Section 6.3 consistent with the 

instructions of the Company. In the event that the Custodian does not receive such written 

instructions, the Custodian shall be authorized and shall be indemnified as provided in this 

Agreement to utilize a nationally recognized courier service. 

ARTICLE VI I
 


CUST ODIAN
 


Section 7.1 Appointment of the Custodian. Subject to the terms and conditions of this 

Agreement, the Company hereby appoints the Bank to perform the duties of the Custodian, and 

the Bank hereby accepts such appointment as Custodian, to act as the Company’s agent, 

custodian and bailee to hold and maintain custody of the Custodial Documents. 

Section 7.2 Obligations of the Custodian. 

(a) Maintenance of Custody. Subject to the provisions of Section 7.2(b), the 

Custodian shall (i) hold and maintain continuous custody of all Custodial Documents received by 

it in trust for and for the benefit of the Company in secure and fire resistant facilities, (ii) act with 

the same degree of care and skill that the Custodian exercises with respect to any loan files 

relating to similar loans owned, serviced or held as custodian by the Custodian and, in any event, 

in accordance with customary standards for such custody, (iii) reflect in its records the interest of 

48 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

the Company therein, (iv) make disposition of the Custodial Documents only in accordance with 

the provisions of this Agreement, and (v) subject to the provisions of Section 7.2(b), hold all 

Custodial Documents received by it for the exclusive use and benefit of the Company, and make 

disposition thereof only in accordance with written instructions furnished by the Company. 

(b) Pledge of Assets to the Collateral Agent. Pursuant to the terms and 

conditions of the Reimbursement, Security and Guaranty Agreement, the Company has pledged 

all of its rights, title and interest in and to the Assets and the Custodial Documents to the 

Collateral Agent for the benefit of the Advance Lender, the Purchase Money Notes Guarantor 

and the other Secured Parties (as such term is defined in the Reimbursement, Security and 

Guaranty Agreement) as security for certain obligations of the Company pursuant to Advance 

Facility Documents, the Non-Guaranteed Purchase Money Notes and the Purchase Money Notes 

Guaranty. Accordingly, notwithstanding anything to the contrary contained in this Agreement, 

the Custodian acknowledges and agrees that it holds possession of the Notes and the other 

Custodial Documents for the Collateral Agent’s benefit pursuant to Section 9-313(c) of the 

Uniform Commercial Code and as bailee for the Collateral Agent, and the Custodian shall mark 

its records to reflect the pledge of the Assets and the Custodial Documents by the Company to 

the Collateral Agent. The Custodian’s records shall reflect the pledge of the Assets and the 

Custodial Documents by the Company to the Collateral Agent until such time as the Custodian 

receives written instructions in the form of Exhibit H from the Company, including a 

certification that it is entitled pursuant to the Reimbursement, Security and Guaranty Agreement 

to request the release of the Custodial Documents being requested for release and that the Assets 

are no longer pledged by the Company to the Collateral Agent, at which time the Custodian shall 

change its records to reflect the release of the pledge of the Assets and the Custodial Documents 

and that the Custodian is holding the Assets and the Custodial Documents as custodian for, and 

for the benefit of, the Company; provided, however, that, subject to the provisions of Section 

7.2(d), such pledge shall not affect the right of the Custodian to rely on instructions from the 

Company hereunder. With respect to all Collateral Documents that are removed from the 

Custodian’s possession, the Custodian shall use commercially reasonable efforts to obtain the 

return of such removed Custodial Documents until such time as the Custodial Documents are 

returned and provide on a monthly basis to the Collateral Agent and the Company a report 

identifying the released (and unreturned) Custodial Documents. 

(c) Qualification to Conduct Business. Nothing contained in this Agreement 

shall be construed to require the Custodian to qualify to do business in any jurisdiction other than 

(i) any jurisdiction in which any Custodial Document is or may be held by the Custodian from 

time to time under this Agreement or (ii) any jurisdiction in which the ownership of its property 

or the conduct of its business requires such qualification and in which the failure to qualify could 

have a material adverse effect on the Custodian or its property or business or on the ability of the 

Custodian to perform its duties and obligations under this Agreement. 

(d) Events of Default pursuant to the Reimbursement, Security and Guaranty 

Agreement. Any term of this Agreement to the contrary notwithstanding, upon the Custodian’s 

receipt from the Collateral Agent, the Advance Lender or the Purchase Money Notes Guarantor 

of written notice at its Office that, or information leading it to conclude that, an Event of Default 

pursuant to the Reimbursement, Security and Guaranty Agreement (and as defined therein) has 

49 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

occurred and is continuing, the Custodian promptly shall notify the Collateral Agent in writing 

and seek instructions from (and take instructions only from) the Collateral Agent as to any action 

to be taken by the Custodian pursuant to this Agreement. 

(e) Third Party Demands. In the event that (i) the Company or the Custodian 

shall be served by a third party with any type of levy, attachment, writ or court order with respect 

to any Custodial Document or (ii) a third party shall institute any court proceeding by which any 

Custodial Document shall be required to be delivered otherwise than in accordance with the 

provisions of this Agreement, the party receiving such service shall promptly deliver or cause to 

be delivered to the other parties to this Agreement copies of all court papers, orders, documents 

and other materials concerning such proceedings. The Custodian shall, to the extent permitted 

by law, continue to hold and maintain all of the Custodial Documents that are the subject of such 

proceedings pending a final, nonappealable order of a court of competent jurisdiction permitting 

or directing disposition thereof. Upon final determination of such court, the Custodian shall 

release such Custodial Documents as directed by the Company, which shall give a direction 

consistent with such court determination. 

(f) Release of Custodial Documents. Subject to the provisions of Section 

7.2(e), the Custodian shall retain the Custodial Documents in its possession and custody at all 

times during the term hereof unless any one (1) of the following events has occurred: 

(i) If the Custodian has resigned or has been removed in accordance 

with the provisions of Section 9.1, the Custodian shall deliver the Custodial Documents to the 

successor Custodian in accordance with Section 9.1. 

(ii) If the Custodian has received a notice in the form of Exhibit H 

from an Authorized Representative of the Company stating that the Company has received all 

amounts due under an Asset, or a discounted payoff as payment in full of such Asset, the 

Custodian shall release the related Custodial Documents to the Company or to the Manager in 

accordance with the instructions provided in such notice. 

(iii) If the Custodian has received notice in the form of Exhibit H from 

an Authorized Representative of the Company that the Company or the Private Owner needs the 

Custodial Documents in order to foreclose on a Mortgaged Property, accept a deed in lieu thereof 

or modify or restructure the terms thereof, the Custodian shall release the related Custodial 

Documents to the Company or to the Manager in accordance with the instructions provided in 

such notice. 

(iv) If the Custodian has received notice in the form of Exhibit H from 

an Authorized Representative of the Company that the Company has agreed to sell an Asset or 

the Collateral, the Custodian shall deliver the related Custodial Documents to the Company or to 

the Manager in accordance with the instructions provided in such notice. 

(g) No Other Duties. The Custodian shall have no duties or responsibilities as 

Custodian except those that are specifically set forth herein and shall not be liable except for the 

50 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

performance of such duties and obligations. No implied covenants or obligations shall be read 

into this Agreement. 

(h) No Investigation. The Custodian shall be under no obligation to make any 

investigation into the facts or matters stated in any resolution, certificate, statement, 

acknowledgement, consent, order or other document that is included in the Custodial 

Documents. 

(i) Cooperation. The Company shall cooperate and use commercially 

reasonable efforts to provide any additional documentation or information reasonably requested 

by the Custodian in performing its duties and obligations hereunder. 

(j) Survival. The provisions of this Section 7.2 shall survive the resignation 

or removal of the Custodian and Paying Agent and the termination of this Agreement. 

AR TIC LE VIII
 


FE E S AND E XPE NSE S
 


Section 8.1 Fees and Expenses. The Bank shall charge such fees for its services and 

be reimbursed for such of its expenses pursuant to this Agreement as are set forth on Exhibit J, 

which fees and expenses must be reasonable and customary and which fees and expenses shall 

not include any attorneys’ or other professionals’ fees and expenses. The Company shall pay 

such fees and expenses. The Private Owner shall pay any fees and expenses in connection with 

the Private Owner Pledged Account. Upon the resignation or removal of the Bank as Custodian 

or Paying Agent or the termination or assignment (“Termination”) of this Agreement, all fees 

and expenses as described in this Section also shall terminate as of the date of Termination; 

provided, however, that the Bank will be entitled to receive fees and expenses accruing prior to 

the date of Termination. 

ARTICLE IX
 


RE MO VAL O R R E SI GNAT I O N
 


Section 9.1 Removal or Resignation of Custodian and Paying Agent. 

(a) Resignation. No resignation or removal of the Person serving as 

Custodian and Paying Agent pursuant to Section 9.1(a) or (b) shall be effective prior to the 

appointment of a successor Custodial and Paying Agent, the acceptance of such appointment by 

such successor Custodian and Paying Agent and the execution and delivery by such successor 

Custodian and Paying Agent of an Account Control Agreement in the form of Exhibit N to this 

Agreement or otherwise satisfactory to the Collateral Agent. Subject to the provisions of Section 

9.1(c), the Bank may at any time resign and terminate its obligations as the Custodian and Paying 

Agent pursuant to this Agreement upon at least sixty days’ prior written notice to the Company, 

the Initial Member, the Private Owner, the Purchase Money Notes Guarantor, the NGPMN 

Agent and the Collateral Agent and the Advance Lender. In the event the Bank resigns it must 

resign as both the Custodian and Paying Agent. Promptly after receipt of notice of the Bank’s 

resignation as the Custodian and Paying Agent, subject to the provisions of the LLC Operating 

51 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
Agreement and the Reimbursement, Security and Guaranty Agreement as they relate to the 

Company, the Company shall appoint, by written instrument, a successor Custodian and Paying 

Agent. In the event that no successor shall have been appointed as the Custodian and Paying 

Agent within such sixty (60) day period, the Bank may petition any court of competent 

jurisdiction to appoint a successor Custodian and Paying Agent. 

(b) Removal. Subject to the provisions of Section 9.1(c), the Company, the 

Collateral Agent or the Advance Lender may remove and discharge the Bank as the Custodian 

and Paying Agent (or any successor custodian and paying agent thereafter appointed) without 

cause from the performance of its obligations pursuant to this Agreement upon at least thirty 

days’ prior written notice to the Bank. Promptly after the giving of notice of removal to the 

Bank as the Custodian and Paying Agent, subject to the provisions of the LLC Operating 

Agreement and the Reimbursement, Security and Guaranty Agreement as they relate to the 

Company, the Company shall appoint, by written instrument, a successor Custodian and Paying 

Agent. 

(c) Effectiveness. Upon appointment of a successor Custodian and Paying 

Agent, the successor Custodian and Paying Agent shall execute, acknowledge and deliver an 

instrument accepting such appointment under, and agreeing to be bound by the terms of, this 

Agreement, at which time the resignation or removal of the predecessor Custodian and Paying 

Agent shall become effective and the successor Custodian and Paying Agent, without any further 

act, deed or conveyance, shall become fully vested with all rights, powers, duties and obligations 

of the Custodian and the Paying Agent pursuant to this Agreement, as if originally named the 

Custodian and Paying Agent hereunder. One original counterpart of such instrument shall be 

delivered to each of the Company, the Initial Member, the Private Owner, the NGPMN Agent, 

the predecessor Custodian and Paying Agent and the successor Custodian and Paying Agent. 

(d) Transfer of Documents. In the event of any removal or resignation as 

Custodian and Paying Agent, the Bank promptly shall transfer to the successor Custodian and 

Paying Agent, as directed, all Custodial Documents and funds deposited in the Accounts, and the 

Company and the Bank shall execute and deliver such instruments and do such other things as 

may reasonably be required for more fully and certainly vesting and confirming in the successor 

Custodian and Paying Agent all rights, powers, duties and obligations of the Bank as the 

Custodian and Paying Agent under this Agreement. 

(e) Costs. The Company shall be responsible for payment to the successor 

Custodian and Paying Agent of all fees and expenses of the successor Custodian and Paying 

Agent and any fees and expenses for transferring Custodial Documents and funds deposited in 

the Accounts to the successor Custodian and Paying Agent except with respect to the Private 

Owner Pledged Account, the fees and expenses with respect to which are to be paid by the 

Private Owner. 

52 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

ARTICLE X
 


RE PRE SE NT AT I O NS, W AR R ANT I E S AND CO VE NANT S
 


Section 10.1 Representations, Warranties and Covenants. 

(a) The Bank as the Custodian and Paying Agent, the Company, the Initial 

Member, the Advance Lender and the Private Owner, as applicable, represent and warrant to 

each other and to each of the parties to this Agreement as follows: 

(i) it has the requisite power and authority and the legal right to 

execute and deliver, and to perform its obligations under, this Agreement, and has taken all 

necessary corporate or other action to authorize its execution, delivery and performance of this 

Agreement; 

(ii) no consent or authorization of, filing with, or other act by or in 

respect of, any United States or non-United States national, federal, state, local or provincial or 

international government or any political subdivision of any governmental, regulatory or 

administrative authority, agency or commission, or judicial or arbitral body, and no consent of 

any other Person (including any stockholder or creditor) is required in connection with the 

execution, delivery, performance, validity or enforceability of this Agreement by it; 

(iii) this Agreement has been duly executed and delivered on behalf of 

it and constitutes a legal, valid and binding obligation of it enforceable in accordance with its 

terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, 

moratorium or similar Laws affecting the enforcement of creditors’ rights generally and by 

general principles of equity (whether enforcement is sought in a proceeding in equity or at law); 

and 

(b) The Bank as Custodian and Paying Agent represents and warrants to the 

Company, the Initial Member, the Private Owner and each of the other parties to this Agreement 

that the Bank is a Qualified Custodian and Paying Agent. 

Section 10.2 Insurance. At its own expense, the Custodian and Paying Agent shall 

maintain at all times and keep in full force and effect (a) fire and other casualty insurance, (b) 

fidelity insurance, (c) theft of documents insurance, (d) forgery insurance, and (e) errors and 

omissions insurance. All such insurance shall be in amounts, with standard coverage and subject 

to deductibles, as are customary for insurance typically maintained by financial institutions 

which act as paying agent and as custodian of collateral substantially similar to the Custodial 

Documents. Upon written request, the Company shall be entitled to receive a certificate of the 

respective insurer that such insurance is in full force and effect. 

53 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

ARTICLE XI
 


RE PO RT S
 


Section 11.1 Custodian and Paying Agent Report. 

(a) The Custodian and Paying Agent shall cause to be furnished to the Private 

Owner, the Initial Member, the Purchase Money Notes Guarantor, the NGPMN Agent, the 

Collateral Agent and the Advance Lender no later than 12:00 noon, New York City time, on each 

Distribution Date, a report for the applicable Due Period (the “ Custodian and Paying Agent 

Report ”) with respect to the Assets and Collateral (including the Accounts setting forth in 

reasonable detail the balances of and any investments in the Accounts as of such date and all 

deposits to and disbursements, including all Asset Proceeds or the Management Fee from such 

Accounts, including the date on which made, since the date of the previous report) held by the 

Custodian and Paying Agent pursuant to this Agreement and on such other information as may 

otherwise be agreed by the parties with respect to such Due Period, all as set forth on Exhibit K. 

The Custodian and Paying Agent shall follow the procedures and perform the calculations and 

reconciliations required to prepare the Custodian and Paying Agent Report, in each case as set 

forth on Exhibit K. The Custodian and Paying Agent also shall make such Custodian and Paying 

Agent Reports available to Note Owners each month in accordance with Section 2.7(k) via the 

Paying Agent’s internet website. Access to all information on the Paying Agent’s internet 

website will be restricted to Note Owners who provide the Paying Agent with a separate investor 

certification substantially in the form of Exhibit O attached to this Agreement. As a condition to 

accessing the Paying Agent’s internet website, the Paying Agent may require registration and the 

acceptance of a disclaimer. The Paying Agent will not be liable for the dissemination of 

information in accordance with this Agreement. 

(b) The Custodian and Paying Agent Report shall be based on information 

included in (i) the Manager’s Monthly Report for the applicable Due Period and certified by an 

Authorized Representative of the Manager, (ii) the Distribution Date Report for the applicable 

Due Period and (iii) such other information as might be agreed upon by the parties, all as set 

forth in Exhibit K. 

Section 11.2 Additional Reports. 

(a) Within two Business Days after receipt of a written request of the 

Company, the Collateral Agent, the Purchase Money Notes Guarantor or the NGPMN Agent or 

the Advance Lender for a Custodial Report or an updated Asset Schedule and Exception List, the 

Custodian and Paying Agent shall provide the requesting party with the Custodial Report or the 

updated Asset Schedule and Exception List, as applicable. 

(b) The Custodian and Paying Agent shall provide any additional information 

or reports relating to the Accounts and the transactions therein reasonably requested from time to 

time by the Company, the Collateral Agent, the Purchase Money Notes Guarantor or the 

NGPMN Agent or the Advance Lender in the case of any Account. 

54 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

Section 11.3 Company and Servicer Distribution Date Accounting. For each Due 

Period, the Company shall prepare and deliver or cause the Manager to prepare and deliver to 

the Paying Agent, the Initial Member, the Advance Lender, the Purchase Money Notes 

Guarantor and the NGPMN Agent a report which shall specify the amounts and recipients of all 

funds to be distributed by the Paying Agent on the relevant Distribution Date as determined as of 

the close of business on the applicable Determination Date and certified by an Authorized 

Representative (who shall be the chief financial officer (or an equivalent officer)) of the 

Company (the “Distribution Date Report”); provided, however, that (unless the Company and 

the Initial Member agree otherwise) the Initial Member will prepare and deliver to the Paying 

Agent, the Advance Lender, the Purchase Money Notes Guarantor and the NGPMN Agent the 

Distribution Date Report for all Due Periods ending on or before August 31, 2010. The 

Distribution Date Report shall be a portion of the Monthly Report to be provided to the Paying 

Agent, the Initial Member, the Advance Lender, the Purchase Money Notes Guarantor and the 

NGPMN Agent in accordance with the LLC Operating Agreement. The Distribution Date 

Report shall contain the following information: 

(a) the aggregate amount of Asset Proceeds as of the close of business on 

such Determination Date, after giving effect to Asset Proceeds received with respect to the 

applicable Due Period; 

(b) the amount of Asset Proceeds received during the applicable Due Period; 

(c) [Intentionally Omitted]; 

(d) for the Collection Account: 

(i) the amount to be transferred from the Collection Account to the 

Distribution Account which shall equal the sum of: (A) all Asset Proceeds received in the 

applicable Due Period plus (B) funds transferred from the Working Capital Reserve Account into 

the Collection Account during the applicable Due Period plus (C) Excess Working Capital 

Advances made by the Manager into the Collection Account during the applicable Due Period 

plus (D) any Discretionary Funding Advances deposited in the Collection Account plus (E) 

deposits of any Advance Loan proceeds less (F) the total amount of funds withdrawn from the 

Collection Account as permitted pursuant to Section 3.1 during the applicable Due Period; and 

(ii) the amounts payable from the Collection Account (through a 

transfer to the Distribution Account) pursuant to the Priority of Payments, specifically including: 

(A) The amount of fees and expenses, including any 

indemnification payments, payable to the Custodian and Paying Agent, 

(B) Verification Contractor Amounts payable to the 

Verification Contractor and any indemnification payments pursuant to the Advance Facility 

Documents, 

(C) For any Due Period during the Interim Servicing Period, 

the amount of the Interim Servicing Fee payable to the Initial Member and the Interim 

55 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

Management Fee payable to the Manager; and for any Due Period thereafter, the amount of the 

Management Fee payable to the Manager, 

to the Manager, 

(D) The amount of Excess Working Capital Advances payable 

Reserve Account, 

(E) The amount to be deposited into the Working Capital 

(F) The principal amount of Protective Advances payable to 

the Advance Lender pursuant to the Advance Facility Documents, 

(G) The amount of principal (excluding Protective Advances) 

and accrued and unpaid interest payable to the Advance Lender pursuant to Advance Facility 

Documents, 

(H) The reimbursement amounts and any accrued interest 

thereon payable to the Purchase Money Notes Guarantor for previous payments made by it under 

the Purchase Money Notes Guaranty, 

(I) The amount to be deposited in the Defeasance Account and 

(J) The amount payable as distributions to the Initial Member 

and to the Private Owner. 

(iii) With respect to the election by the Company to prepay any Class 

of Purchase Money Notes in full or in part in accordance with the terms of such Class of 

Purchase Money Notes, the related Company Principal Prepayment Amount. 

(e) Any other amounts or calculations required by Section 5.1. 

With respect to the Distribution Date immediately preceding the Purchase Money Notes Maturity 

Date for each Class of Purchase Money Notes, the Company shall prepare and deliver or cause 

the Manager to prepare and deliver to the Paying Agent, the Initial Member, the Purchase Money 

Notes Guarantor and the NGPMN Agent an additional report (the “Maturity Date Report ”), 

which report shall include the amount on deposit in the Defeasance Account to pay such 

applicable Class of Purchase Money Notes as of the Purchase Money Notes Maturity Date. 

Section 11.4 Distribution Date Instructions. Each Distribution Date Report shall 

contain instructions to the Paying Agent to withdraw on the related Distribution Date from the 

Distribution Account and the Defeasance Account, as applicable, and pay or transfer the amounts 

set forth in such report in the manner specified, and in accordance with the priorities established, 

in Sections 3.3 and 5.1 of this Agreement, including with respect to any distributions to be made 

to the applicable Holders following an acceleration of any Class of Purchase Money Notes prior 

to the related Distribution Date or on the Purchase Money Notes Maturity Date. 

56 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

Section 11.5 Books and Records. The Paying Agent shall maintain all such accounts, 

books and records as might be necessary to record properly all transactions carried out by it with 

respect to the Accounts, including the disbursement of all Asset Proceeds. The Paying Agent 

also shall maintain a complete and accurate set of files, books and records regarding the Assets 

and the Collateral. This obligation to maintain a complete and accurate set of records shall 

encompass all files in the Custodian and Paying Agent’s custody, possession or control 

pertaining to the Assets and the Collateral, including all Custodial Documents. The Paying 

Agent shall permit the Company, the Purchase Money Notes Guarantor, the NGPMN Agent, the 

Collateral Agent and the Advance Lender to examine such accounts, books and records that 

relate to any Account, and shall permit the Initial Member and the Private Owner to examine 

such accounts, books and records that relate to the Private Owner Pledged Account; provided, 

however, that any such examination shall occur upon reasonable prior notice and during normal 

business hours. 

ARTICLE XI I
 


NO ADVE RSE I NT E RE ST S
 


Section 12.1 No Adverse Interests. By execution of this Agreement, the Bank 

represents and warrants that it currently holds, and during the term of this Agreement shall hold, 

no adverse interest, by way of security or otherwise, in any Asset, and hereby waives and 

releases any such interest which it may have in any Asset as of the date hereof. The Assets shall 

not be subject to any security interest, lien or right to set-off by the Bank or any third party 

claiming through the Bank, and the Bank shall not pledge, encumber, hypothecate, transfer, 

dispose of, or otherwise grant any third party interest in, any of the Assets pursuant to this 

Agreement. 

ARTICLE XIII
 


L I ABI L I T Y AND I NDE MNI FI C AT I O N
 


Section 13.1 Liability; Indemnification. 

(a) Except with respect to the Private Owner Pledged Account and the 

Qualifying Cash Collateral on deposit in such Account, the Company shall indemnify and hold 

harmless the Custodian and Paying Agent and the directors, officers, agents and employees of 

the Custodian and Paying Agent against any and all liabilities, obligations, losses, damages, 

penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature 

whatsoever, including reasonable attorney’s fees and litigation costs, that may be imposed on, 

incurred by, or asserted against it or them in any way relating to or arising out of this Agreement 

or any action taken or not taken by it or them hereunder unless such liabilities, obligations, 

losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements were 

imposed on, incurred by or asserted against the Custodian and Paying Agent because of the 

breach by the Custodian and Paying Agent of its obligations pursuant to this Agreement, which 

breach was caused by negligence, lack of good faith or willful misconduct on the part of the 

Custodian and Paying Agent or any directors, officers, agents or employees of the Custodian and 

Paying Agent. The foregoing indemnification shall survive any resignation or removal of the 

Custodian and Paying Agent or the termination or assignment of this Agreement. 

57 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

(b) The Private Owner shall indemnify and hold harmless the Paying Agent 

and the directors, officers, agents and employees of the Paying Agent against any and all 

liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or 

disbursements of any kind or nature whatsoever, including reasonable attorney’s fees and 

litigation costs, that might be imposed on, incurred by or asserted against it or them in any way 

relating to or arising out of this Agreement with respect to the Private Owner Pledged Account or 

the Qualifying Cash Collateral on deposit in such Account or any action taken or not taken by it 

hereunder with respect to the Private Owner Pledged Account or the Qualifying Cash Collateral 

on deposit in such Account unless such liabilities, obligations, losses, damages, penalties, 

actions, judgments, suits, costs, expenses or disbursements were imposed on, incurred by or 

asserted against the Paying Agent because of the breach by the Paying Agent of its obligations 

pursuant to this Agreement with respect to the Private Owner Pledged Account or the Qualifying 

Cash Collateral on deposit in such Account, which breach was caused by negligence, lack of 

good faith or willful misconduct on the part of the Paying Agent or any directors, officers, agents 

or employees of the Paying Agent. The foregoing indemnification shall survive any resignation 

or removal of the Paying Agent or the termination or assignment of this Agreement. 

(c) In the event that the Custodian fails to produce a Custodial Document that 

was not identified as an Exception in the then controlling Asset Schedule and Exception List 

within two Business Days after required or requested by the Company, and such Custodial 

Document is not outstanding pursuant to a Request for Release and Receipt of the Custodial 

Documents in the form attached as Exhibit H (a “Custodial Delivery Failure ”), then (i) with 

respect to any missing Note with respect to which a Custodial Delivery Failure has occurred and 

has continued in excess of three Business Days, the Custodian promptly shall deliver to the 

Company upon request a Lost Instrument Affidavit in the form attached as Exhibit L (unless the 

original Note shall have been delivered prior to such time) and (ii) with respect to any missing 

document related to such Asset, including a missing Note, (A) the Custodian shall indemnify the 

Company, the Purchase Money Notes Guarantor, the NGPMN Agent and the Collateral Agent 

and the Advance Lender in accordance with Section 13.1(d) and (B) at the Company’s option, at 

any time the long term obligations of the Custodian are rated below the second highest rating 

category of Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Group, a division of 

McGraw-Hill Companies, Inc., the Custodian shall obtain and maintain an insurance bond 

naming the Company, the Purchase Money Notes Guarantor, the NGPMN Agent, the NGPMN 

Holder and the Collateral Agent and the Advance Lender, and their successors in interest and 

assigns as loss payees, insuring against any losses associated with the loss of such document, in 

an amount equal to the then outstanding principal balance of the related Asset or such lesser 

amount requested by the Company in the Company’s sole discretion. 

(d) The Custodian and Paying Agent hereby indemnifies and holds harmless 

the Company, the Purchase Money Notes Guarantor, the NGPMN Agent, the NGPMN Holder 

and the Collateral Agent and the Advance Lender and their respective directors, officers, 

employees, agents and designees, against any and all liabilities, obligations, losses, damages, 

penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature 

whatsoever, including reasonable attorneys’ fees and litigation costs, that may be imposed on, 

incurred by, or asserted against it or them in any way relating to or arising out of a Custodial 

Delivery Failure or the Custodian and Paying Agent’s negligence, lack of good faith or willful 

58 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

misconduct or any breach of any of the conditions, representations, warranties or obligations of 

the Custodian and Paying Agent contained in this Agreement; provided, however, that in no 

event shall the Custodian and Paying Agent or any directors, officers, agents or employees of the 

Custodian and Paying Agent have any liability with respect to any special, indirect, punitive or 

consequential damages suffered by the Company. The foregoing indemnification shall survive 

any termination or assignment of this Agreement. 

ARTICLE XI V
 


CUST O DI AN AND PAYI NG AGE NT
 


Section 14.1 Reliance of Custodian and Paying Agent. 

(a) Documents; Communications. The Custodian and Paying Agent may rely 

conclusively on any request, instruction, certificate, direction, receipt, demand, consent, 

resolution, statement, instrument, opinion, report, notice or other document or communication 

furnished to the Custodian and Paying Agent pursuant to this Agreement or any Asset Document 

that the Custodian and Paying Agent believes in good faith (i) to have been signed or presented 

by an Authorized Representative and (ii) conforms in form to the requirements of this 

Agreement; provided, however, that in the case of any request, instruction, certificate, direction, 

receipt, demand, consent, resolution, statement, instrument, opinion, report, notice or other 

document or communication which by any provision hereof is specifically required to be 

furnished to the Custodian and Paying Agent, the Custodian and Paying Agent shall be under a 

duty to examine the same in accordance with the requirements of this Agreement and any Asset 

Document. 

(b) Requested Instructions. Subject to the provisions of Section 7.2(d), in 

which case the Custodian and Paying Agent shall take instructions only from the Collateral 

Agent, if the Custodian and Paying Agent requests instructions from the Company, the Initial 

Member or the Private Owner, as applicable, with respect to any act, action or failure to act in 

connection with this Agreement, the Custodian and Paying Agent shall be entitled (without 

incurring any liability therefor to the Company, the Collateral Agent, the Purchase Money Notes 

Guarantor, the NGPMN Agent, the Advance Lender or any other Person) to refrain from taking 

such action and continue to refrain from acting unless and until the Custodian and Paying Agent 

shall have received written instructions from the Company, the Initial Member, the Private 

Owner, the Collateral Agent or the Advance Lender (as the case might be). 

(c) Certificates. Whenever the Custodian and Paying Agent shall deem it 

necessary or desirable that a matter be proved or established in connection with taking or 

omitting any action by it hereunder, such matter (unless other evidence in respect thereof be 

herein specifically prescribed) may, in the absence of gross negligence or willful misconduct on 

the part of the Custodian and Paying Agent, be deemed to be conclusively proved or established 

by a certificate of an Authorized Representative of the relevant Party delivered to the Custodian 

and Paying Agent. 

(d) Reliance on Experts. The Custodian and Paying Agent may consult with 

and obtain advice from reputable and experienced outside counsel, certified public accountants 

59 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

that are nationally recognized, or other experts and the advice or any opinion of such counsel, 

accountants or other experts shall be full and complete authorization and protection in respect of 

any action taken or omitted by it pursuant to this Agreement in good faith and in accordance with 

such advice or opinion of counsel, accountants or other experts. 

(e) Limited Risk. None of the provisions of this Agreement shall require the 

Custodian and Paying Agent to expend or risk its own funds or otherwise to incur any liability, 

financial or otherwise, in the performance of any of its duties pursuant to this Agreement, or in 

the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that 

repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured 

to it. 

(f) Merger or Consolidation. Any corporation into which the Custodian and 

Paying Agent may be merged or converted or with which it may be consolidated, or any 

corporation resulting from any merger, conversion or consolidation to which the Custodian and 

the Paying Agent shall be a party, or any corporation succeeding to the business of the Custodian 

and Paying Agent, except for any such Person who is or, upon consummation of such 

transaction, will be an Affiliate of the Company or any Servicer, shall be the successor of the 

Custodian and Paying Agent pursuant to this Agreement without the execution or filing of any 

paper with any party to this Agreement or any further act on the part of any of the parties to this 

Agreement except where an instrument of transfer or assignment is required by law to effect 

such succession, anything in this Agreement to the contrary notwithstanding; provided, however, 

that any such successor shall satisfy the representations, warranties and covenants set forth in 

Section 10.1 of this Agreement. The Custodian and Paying Agent or successor Custodian and 

Paying Agent shall provide the Company with written notice prior to or within ten days after the 

consummation of any such transaction. At no time shall an Affiliate of the Company or any 

Servicer be the Custodian and Paying Agent pursuant to this Agreement. 

ARTICLE XV
 


T AXE S
 


Section 15.1 Tax Reports. The Custodian and Paying Agent shall not be responsible 

for the preparation or filing of any reports or returns relating to federal, state or local income 

taxes with respect to this Agreement, other than in respect of the Custodian and Paying Agent’s 

compensation or for reimbursement of expenses. 

Section 15.2 Stamp and Other Similar Taxes. The Company agrees to indemnify and 

hold harmless the Custodian and Paying Agent from, and shall reimburse the Custodian and 

Paying Agent for, any present or future claim for liability for any stamp or other similar tax and 

any penalties or interest with respect thereto, which may be assessed, levied or collected by any 

jurisdiction in connection with this Agreement. The obligations of the Company pursuant to this 

Section 15.2 shall survive the termination of the other provisions of this Agreement. 

Section 15.3 Tax Characterization. Each Holder and Note Owner of a Purchase Money 

Note, by acceptance of such Purchase Money Note or its interest in such Purchase Money Note, 

60 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

 

shall be deemed to have agreed to treat, and shall treat, such Purchase Money Note as debt of the 

Company for U.S. federal income tax purposes except as otherwise required by law. 

Section 15.4 Back-Up Withholding. Each Holder and Note Owner of a Purchase 

Money Note, by acceptance of such Purchase Money Note or its interest in such Purchase Money 

Note, shall be deemed to understand and acknowledge that failure to provide the Company, the 

Custodian or the Paying Agent with an originally executed version of the applicable U.S. federal 

income tax certifications (generally, an Internal Revenue Service Form W-9 (or successor 

applicable form) in the case of a person that is a U.S. Person or an appropriate Internal Revenue 

Service Form W-8 (or successor applicable form) in the case of a person that is not a U.S. 

Person) may result in U.S. federal back-up withholding from payments in respect of such 

Purchase Money Note. 

ARTICLE XVI
 


TERM
 


Section 16.1 Term. This Agreement shall terminate upon (a) the first to occur of (i) the 

final payment or other liquidation of all of the Assets and (ii) disposition of all Collateral 

(including any Acquired Property), and (b) the release and delivery to the Company of all 

Custodial Documents held by or in the possession of the Custodian in accordance with the terms 

of this Agreement. Notwithstanding anything to the contrary herein, this Agreement may be 

terminated without cause upon at least thirty days’ prior written notice to the Custodian and 

Paying Agent, by any of the Company, the Purchase Money Notes Guarantor, the Collateral 

Agent or the Advance Lender; provided, however, that the Company shall have no right to 

terminate this Agreement if the Collateral Agent or the Advance Lender has provided the 

Company with a notice of an event of default pursuant to the Advance Facility Documents or any 

other Transaction Documents (as such term is defined in the Advance Facility Agreement). 

ARTICLE XVI I
 


AUT HORIZED RE PRESENTATIVE S
 


Section 17.1 Authorized Representatives. Each individual designated as an Authorized 

Representative of any Person is authorized to give and receive notices, requests and instructions 

and to deliver certificates and documents in connection with this Agreement on behalf of such 

Person, and the specimen signature for each such Authorized Representative, initially authorized 

pursuant to this Agreement, is set forth on Exhibit M. From time to time, any Person may, by 

delivering to the other parties hereto a revised copy of Exhibit M or any resolution, incumbency 

certificate or similar document setting forth the officers of such Person, which officers shall be 

deemed to be Authorized Representatives of such Person for purposes of this Agreement, change 

such Person’s Authorized Representatives (and amend this Agreement to so provide), but until a 

new Exhibit M or resolution, incumbency certificate or similar document with the information 

regarding the successor Authorized Representatives is delivered to a party in accordance with 

this Agreement, that party shall be entitled to rely conclusively on the Exhibit M or resolution, 

incumbency certificate or similar document, as applicable, last delivered hereunder. The parties 

acknowledge and agree that, unless and until the occurrence of an Event of Default pursuant to 

the LLC Operating Agreement and the removal of the Private Owner as the Manager pursuant to 

61 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
the LLC Operating Agreement, the Private Owner will have the right to designate Authorized 

Representatives of the Company and that notwithstanding any provisions in this Agreement to 

the contrary, however, upon the delivery of written notice to the Custodian and Paying Agent by 

the Initial Member of the occurrence of an Event of Default by the Private Owner pursuant to the 

LLC Operating Agreement and the removal of the Private Owner as the Manager pursuant to the 

LLC Operating Agreement, the Initial Member or the replacement Manager appointed pursuant 

to Section 3.13(a) of the LLC Operating Agreement will have the right to designate replacement 

Authorized Representatives of the Company. 

AR TIC LE XVIII
 


NO T I CE S
 


Section 18.1 Notices. All notices, requests, demands and other communications 

required or permitted to be given or delivered under or by reason of the provisions of this 

Agreement shall be in writing and shall be mailed or delivered to the applicable address or 

electronic mail address of the parties specified below for such Person or to such other address, 

electronic mail address or telephone number as shall be designated by such party in a notice to 

the other parties. All such notices and other communications shall be deemed to be given or 

made upon the earlier to occur of (i) actual receipt (or refusal thereof) by the relevant party 

hereto and (ii) (A) if delivered by hand or by nationally recognized courier service, when signed 

for (or refused) by or on behalf of the relevant party hereto; (B) if delivered by mail, four 

Business Days after deposit in the mails, postage prepaid; and (C) if delivered by electronic mail, 

when delivered. In no event shall a voice mail message be effective as a notice, communication 

or confirmation hereunder. From time to time, any Person may designate a new address for 

purposes of notice hereunder by notice to such effect to the other Persons identified below. 

If to the Bank for all purposes other than cancellation, presentment, transfer and/or 

exchange of Purchase Money Notes: 

Wells Fargo Bank, NA 

9062 Old Annapolis Road 

Columbia, Maryland 21045 

Attention: Client Services Manager 

Reference: AmTrust Bank CADC Loan and REO Structured Transaction 2010 

For purposes of cancellation and presentment of Purchase Money Notes: 

Wells Fargo Bank, NA 

6th Street & Marquette Avenue 

Minneapolis, Minnesota 55479 

Attention: Corporate Trust Services Bondholder Communications 

Reference: AmTrust Bank CADC Loan and REO Structured Transaction 2010 

62 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

For purposes of transfer and/or exchange of Purchase Money Notes: 

Wells Fargo Bank, NA

 6th Street & Marquette Avenue 

Minneapolis, Minnesota 55479 

Attention: Corporate Trust Services Transfer Agent Department 

Reference: AmTrust Bank CADC Loan and REO Structured Transaction 2010 

If to the Company: 

AmTrust CADC Venture, LLC
 


c/o Milestone Asset Resolution Company, LLC
 


1775 I Street, NW, 8th Floor 
 

Washington, D.C. 20006 
 

Attention: R. Patterson Jackson
 


E-mail Address:
 


with copies to: 

PMO Loan Acquisition Venture, LLC 

33 South Grand Avenue, 28th Floor 

Los Angeles, California 90071 

Attention: Cary Kleinman 

E-mail Address: 

Paul, Hastings, Janofsky & Walker LLP 

515 South Flower Street, 25th Floor 

Los Angeles, California 90071 

Attention: Derek E. Smith 

E-mail Address: 

If to the Purchase Money Notes Guarantor, the NGPMN Agent, the Collateral 

Agent, the Initial Member or the Advance Lender: 

Manager, National Sales – Resolutions and Receiverships 

Federal Deposit Insurance Corporation 

550 17th Street, N.W. 

Room F-7018 

Washington, D.C. 20429 

Attention: Ralph Malami 

E-mail Address: RMalami@fdic.gov 

63 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, Virginia 22226 

Attention: David Gearin 

E-mail Address: DGearin@fdic.gov 

If to the Private Owner: 

PMO Loan Acquisition Venture, LLC 
 

c/o Milestone Asset Resolution Company, LLC
 


1775 I Street, NW, 8th Floor 
 

Washington, D.C. 20006 
 

Attention: R. Patterson Jackson
 


Email: 
 

with copies to: 

PMO Loan Acquisition Venture, LLC
 


33 South Grand Avenue, 28th Floor 
 

Los Angeles, California 90071 
 

Attention: Cary Kleinman 
 

E-mail Address: 
 

Paul, Hastings, Janofsky & Walker LLP 
 

515 South Flower Street, 25th Floor 
 

Los Angeles, California 90071 
 

Attention: Derek E. Smith
 


E-mail Address: 
 

ARTICLE XI X
 


MI SCELLANE OUS
 


Section 19.1 Governing Law. Each party to this Agreement agrees and elects that, in 

accordance with Section 5-1401 of the General Obligations Law of the State of New York, this 

Agreement is to be governed by and construed in accordance the laws of the State of New York, 

excluding any conflict of laws rule or principle that might refer the governance or the 

construction of this Agreement to the law of another jurisdiction, and each party to this 

Agreement unconditionally and irrevocably waives any claim to assert that the laws of any other 

jurisdiction govern this Agreement. Nothing in this Agreement shall require any unlawful action 

or inaction by any party to this Agreement. 

64 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Section 19.2 Waiver of Jury Trial. EACH OF THE COMPANY, THE INITIAL 

MEMBER, THE PRIVATE OWNER, THE ADVANCE LENDER, THE PURCHASE MONEY 

NOTES GUARANTOR, THE NGPMN AGENT, THE COLLATERAL AGENT AND THE 

BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT 

MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING 

TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED 

BEFORE A JUDGE SITTING WITHOUT A JURY. 

Section 19.3 Jurisdiction; Venue and Service. 

(a) Each of the Company, the Initial Member, the Private Owner and the 

Bank, for itself and its Affiliates, hereby irrevocably and unconditionally: 

(i) consents to the jurisdiction of the United States District Court for 

the Southern District of New York and to the jurisdiction of the United States District Court for 

the District of Columbia for any suit, action or proceeding against it or any of its Affiliates 

commenced by the Purchase Money Notes Guarantor, any NGPMN Holder, the NGPMN Agent, 

the Collateral Agent or the Advance Lender arising out of, relating to, or in connection with this 

Agreement or any Transaction Document, and waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

court or dispute-resolution forum other than the court in which the Initial Member, the Purchase 

Money Notes Guarantor, any NGPMN Holder, the NGPMN Agent, the Collateral Agent or the 

Advance Lender, as applicable, files the suit, action or proceeding without the consent of the 

Initial Member, the Purchase Money Notes Guarantor, the NGPMN Holder, the NGPMN Agent, 

the Collateral Agent or the Advance Lender, as applicable; 

(B) assert that venue is improper in either the United States 

District Court for the Southern District of New York or the United States District Court for the 

District of Columbia; or 

(C) assert that the United States District Court for the Southern 

District of New York or the United States District Court for the District of Columbia is an 

inconvenient forum; 

(ii) consents to the jurisdiction of the Supreme Court of the State of 

New York for any suit, action or proceeding against it or any of its Affiliates commenced by the 

Initial Member, the Purchase Money Notes Guarantor, any NGPMN Holder, the NGPMN Agent, 

the Collateral Agent or the Advance Lender arising out of, relating to, or in connection with this 

Agreement or any Transaction Document (other than the LLC Operating Agreement), and 

waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

other court or dispute-resolution forum without the consent of the Initial Member, the Purchase 

Money Notes Guarantor, the NGPMN Holder, the NGPMN Agent, the Collateral Agent or the 

Advance Lender, as applicable; 

65 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

 

 

 

 

(B) assert that venue is improper in the Supreme Court of the 

State of New York; or 

(C) assert that the Supreme Court of the State of New York is 

an inconvenient forum. 

(iii) agrees to bring any suit, action or proceeding by the Company, the 

Bank, or its Affiliate against the Initial Member, the Purchase Money Notes Guarantor, any 

NGPMN Holder, the NGPMN Agent, the Collateral Agent or the Advance Lender in only either 

the United States District Court for the Southern District of New York or the United States 

District Court for the District of Columbia, and waives any right to remove or transfer such suit, 

action or proceeding to any other court or dispute-resolution forum without the consent of the 

Initial Member, the Purchase Money Notes Guarantor, the NGPMN Holder, the NGPMN Agent, 

the Collateral Agent or the Advance Lender, as applicable, and agrees to consent thereafter to 

transfer of the suit, action or proceeding to either the United States District Court for the 

Southern District of New York or the United States District Court for the District of Columbia at 

the option of the Initial Member, the Purchase Money Notes Guarantor, the NGPMN Holder, the 

NGPMN Agent, the Collateral Agent or the Advance Lender, as applicable; and 

(iv) agrees, if the United States District Court for the Southern District 

of New York and the United States District Court for the District of Columbia both lack 

jurisdiction to hear a suit, action or proceeding falling within Section 19.3(a)(iii), to bring that 

suit, action or proceeding in only the Supreme Court of the State of New York, and waives any 

right to remove or transfer such suit, action or proceeding to any other court or dispute-resolution 

forum without the consent of the Initial Member, the Purchase Money Notes Guarantor, the 

NGPMN Holder, the NGPMN Agent, the Collateral Agent or the Advance Lender, as applicable. 

(b) Each of the Company and the Bank, on behalf of itself and its Affiliates, 

hereby irrevocably and unconditionally agrees that any final judgment entered against it in any 

suit, action or proceeding falling within Section 19.3(a) may be enforced in any court of 

competent jurisdiction. 

(c) Subject to the provisions of Section 19.3(d), each of the Company and the 

Bank, on behalf of itself and its Affiliates, and each of the Initial Member, the Private Owner, the 

Purchase Money Notes Guarantor, the NGPMN Holders, the NGPMN Agent, the Collateral 

Agent and the Advance Lender hereby irrevocably and unconditionally agrees that service of all 

writs, process and summonses in any suit, action or proceeding pursuant to Section 19.3(a) or 

Section 19.3(b) may be effected by the mailing of copies thereof by registered or certified mail, 

postage prepaid, to it at its address for notices pursuant to Section 18.1 (with copies to such other 

Persons as specified therein); provided, however, that nothing contained in this Section 19.3(c) 

shall affect the right of any party to serve process in any other manner permitted by Law. 

(d) Nothing in this Section 19.3 shall constitute consent to jurisdiction in any 

court by the FDIC, other than as expressly provided in Section 19.3(a)(iii) and Section 

19.3(a)(iv), or in any way limit the FDIC’s right to remove, transfer, seek to dismiss, or 

otherwise respond to any suit, action, or proceeding against it in any forum. 

66 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

Section 19.4 Counterparts. This Agreement may be executed in two or more 

counterparts, each of which shall be deemed an original but all of which together shall constitute 

but one and the same agreement. This Agreement and any amendments hereto, to the extent 

signed and delivered by facsimile or other electronic means, shall be treated in all manner and 

respects as an original agreement and shall be considered to have the same binding legal effect as 

if it were the original signed version thereof delivered in person. No signatory to this Agreement 

shall raise the use of a facsimile machine or other electronic means to deliver a signature or the 

fact that any signature or agreement was transmitted or communicated through the use of a 

facsimile machine or other electronic means as a defense to the formation or enforceability of a 

contract and each such Person forever waives any such defense. 

Section 19.5 Severability. Any provision of this Agreement which is prohibited or 

unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as 

follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a 

particular Person or Persons and/or under any particular circumstance or circumstances, such 

provision shall be ineffective, but only in such jurisdiction and only with respect to such 

particular Person or Persons and/or under such particular circumstance or circumstances, as the 

case may be; (ii) without limitation of clause (i), such provision shall in any event be ineffective 

only as to such jurisdiction and only to the extent of such prohibition or unenforceability, and 

such prohibition or unenforceability in such jurisdiction shall not invalidate or render 

unenforceable such provision in any other jurisdiction; and (iii) without limitation of clauses (i) 

or (ii), such ineffectiveness shall not invalidate any of the remaining provisions of this 

Agreement. Without limitation of the preceding sentence, it is the intent of the parties to this 

Agreement that in the event that in any court proceeding, such court determines that any 

provision of this Agreement is prohibited or unenforceable in any jurisdiction (because of the 

duration or scope (geographic or otherwise) of such provision, or for any other reason) such 

court shall have the power to, and shall, (x) modify such provision (including, to the extent 

applicable, by limiting the duration or scope of such provision and/or the Persons against whom, 

and/or the circumstances under which, such provision shall be effective in such jurisdiction) for 

purposes of such proceeding to the minimum extent necessary so that such provision, as so 

modified, may then be enforced in such proceeding and (y) enforce such provision, as so 

modified pursuant to clause (x), in such proceeding. Nothing in this Section 19.5 is intended to, 

or shall, limit (1) the ability of any party to this Agreement to appeal any court ruling or the 

effect of any favorable ruling on appeal or (2) the intended effect of Section 19.1. 

Section 19.6 Compliance With Law. Except as otherwise specifically provided herein, 

each party to this Agreement shall, at its own cost and expense, obey and comply with all 

applicable Laws, as they may pertain to such party’s performance of its obligations hereunder. 

Section 19.7 Entire Agreement. This Agreement contains the entire agreement between 

the Company, the Initial Member, the Private Owner, the Advance Lender, the Purchase Money 

Notes Guarantor, each NGPMN Holder, the NGPMN Agent, the Collateral Agent and the Bank 

with respect to the subject matter hereof and supersedes any and all other prior agreements, 

whether oral or written. Notwithstanding the foregoing, however, the parties acknowledge that 

the Initial Member and the Private Owner are parties to this Agreement solely with respect to the 

Private Owner Pledged Account and the Qualifying Cash Collateral on deposit in such Account 

67 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
 

and that the Initial Member and the Private Owner have no rights, benefits, obligations or 

liabilities pursuant to this Agreement except with respect to the Private Owner Pledged Account, 

the Qualifying Cash Collateral on deposit in such account and the Bank’s performance of its 

duties as Paying Agent with respect to the Private Owner Pledged Account. 

Section 19.8 Assignment; Binding Effect. Except as is permitted pursuant to the 

provisions of this Agreement providing for successor Custodians and Paying Agents, the 

Custodian and Paying Agent shall not assign or delegate this Agreement or any of its rights or 

obligations hereunder without the prior written consent of the Company and any such purported 

assignment or delegation without such consent shall be void ab initio. This Agreement shall be 

binding on and inure to the benefit of the parties hereto and their respective successors and 

permitted assigns, and no other Person or Persons shall have any rights or remedies under or by 

reason of this Agreement. 

Section 19.9 Rights Cumulative. The rights, powers and remedies of the Custodian and 

Paying Agent, the Initial Member, the Private Owner, the Advance Lender, the Purchase Money 

Notes Guarantor, each NGPMN Holder, the NGPMN Agent, the Collateral Agent and the 

Company pursuant to this Agreement shall be in addition to all rights, powers and remedies 

given to the Custodian and Paying Agent, the Initial Member, the Private Owner, the Advance 

Lender, the Purchase Money Notes Guarantor, each NGPMN Holder, the NGPMN Agent, the 

Collateral Agent and the Company by virtue of any statute or rule of law, or any other 

agreement, all of which rights, powers and remedies shall be cumulative and may be exercised 

successively or concurrently. 

Section 19.10 Amendments. Subject to the requirements of the LLC Operating 

Agreement as they relate to the Company, this Agreement may be amended from time to time by 

written agreement signed by the Company, the Advance Lender, the Purchase Money Notes 

Guarantor, the NGPMN Agent, the Collateral Agent and the Custodian and Paying Agent or, if 

such written agreement relates to the Private Owner Pledged Account or the Qualifying Cash 

Collateral on deposit in such Account, the Initial Member, the Private Owner and the Paying 

Agent. 

Section 19.11 Headings. Paragraph titles or captions contained in this Agreement are 

inserted only as a matter of convenience and for reference and in no way define, limit, extend or 

describe the scope of this Agreement or the intent of any provisions hereof. All section and 

paragraph references contained herein shall refer to sections and paragraphs in this Agreement 

unless otherwise specified. 

(remainder of page blank) 

68 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005.18 
fN WITNESS WHEREOF, the Bank, the Purchase Money Notes Guarantor, the initial 

NGPl'vfN Agent, the Collateral Agent, the Initial Member, the Private Owner, the Advance 

Lender and the Company have each caused this Agreement to be executed as of the date first 

written above . 

AMTRUST CADC VENTURE, LLC, as the 

Company 

By: 	 PMO Loan Acquisition Venture, LLC, its 

Manager 

By: 	 PMO Investor, L.P ., its Managing 

Member 

N arne: l(.c.~ru.Kn l.4,' ~ 

Title: Authorized Signatory 

~ 

Authonzed Signatory 

FEDERAL DEPOSIT INSURANCE 

CORPORATION in its corporate capacity, as 

Purchase Money Notes Guarantor 

By: _______________________________ 


Name: 


Title: 


[Signature Pages to Custodial and Paying Age ncy Agreement] 

AmTrust Bank CADC Loan •md REO Structured Transaction 20 I 0 

Custodial ;md Paying Agency Agreemen t 

-1 68-004/AG R/2644005 
------------------------

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

fN WITNESS WHEREOF, the Bank, the Purchase Money Notes Guarantor, the initial 

NGPMN Agent, the Collateral Agent, the Initial Member, the Private Owner, the Advance 

Lender and the Company have each caused this Agreement to be executed as of the date first 

written above. 

AMTRUST CADC VENTURE, LLC, as the 

Company 

By: PMO Loan Acquisition Venture, LLC, its 

Manager 

By: 	 PMO Investor, L.P., its Managing 

Member 

By: 


Name: 


Title: Authorized Signatory 


By: 


Name: 


Title: Authorized Signatory 


FEDERAL DEPOSIT INSURANCE 

CORPORATION in its corporate capacity, as 

Purchase Money Notes Guarantor 

By: 

t't li Vi'\ 	 MA\tAA\ 1 

Attorney-in-Fact 

FEDERAL DEPOSIT INSURANCE 

CORPORATION in its capacity as Receiver for 

AmTrust Bank, as initial NGPMN Agent 

[Signature Pages to Custodial and Paying Agency Agreement] 

AmTrust Bank CADC Loan and REO Structured Transaction 20 10 

Custodial and Paying Agency Agreement 

468-004/ AG R/2644005 
FEDERAL DEPOSIT INSURANCE 

CORPORATION in its capacity as Receiver for 

AmTrust Bank, as Collateral Agent 

FEDERAL DEPOSIT INSURANCE 

CORPORATION in its capacity as Receiver for 

AmTrust Bank, as Initial Member 

FEDERAL DEPOSIT INSURANCE 

CORPORATION in its capacity as Receiver for 

AmTrust Bank, as Advance Lender 

[Signature Pages to Custodial and Paying Agency Ag reement] 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paymg Agency Agreement 

468-004i AGRJ1644005 
PMO LOAN ACQUISITION VENTURE, LLC, 

as the Private Owner 

By: PMO Investor, L.P., its Managing Member 

WELLS FARGO BANK, N.A., as the Bank 

By: _______________________________ 


Name: 


Title: 


[Signature Pages to Custodial <md Paying Agency Agreement] 

AmTrust Bank C ADC Loan and REO Structured Transaction 20 I 0 

Custodial and Paying Agency Agreement 

468-004/AG R/2644005. 
---------------------------------

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

PMO LOAN ACQUISITION VENTURE, LLC, 

as the Private Owner 

By: PMO Investor, L.P., its Managing Member 

By: 


Name: 


Title: 


By: 

Name: 

Title: 

WELLS FARGO BANK, N.A., as the Bank 

[Signature Pages to Custodial and Paying Agency Agreement] 

AmTrust Bank CADC Loan and REO Structured Transaction 2010 

Custodial and Paying Agency Agreement 

468-004/AGR/2644005. ­