EXHIBIT 4.4
EXECUTION COPY
PURCHASE AGREEMENT AND ASSIGNMENT
among
EMERGENT MORTGAGE HOLDINGS CORPORATION
as Purchaser
EMERGENT MORTGAGE CORP.
as Seller
and
EMERGENT GROUP, INC.
dated as of
March 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................. 1
SECTION 1.1 General..................................................... 1
SECTION 1.2 Specific Terms.............................................. 1
SECTION 1.3 Usage of Terms.............................................. 2
SECTION 1.4 Certain References.......................................... 2
SECTION 1.5 No Recourse................................................. 3
SECTION 1.6 Action by or Consent of Certificateholders.................. 3
SECTION 1.7 Material Adverse Effect..................................... 3
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
AND THE OTHER CONVEYED PROPERTY........................... 3
SECTION 2.1 Conveyance of the Mortgage Loans and the Other
Conveyed Property......................................... 3
SECTION 2.2 Purchase Price.............................................. 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES.............................. 4
SECTION 3.1 Representations and Warranties of the Seller................ 4
SECTION 3.2 Representations and Warranties of Purchaser................. 6
SECTION 3.3 Indemnification............................................. 8
SECTION 3.4 Representations and Warranties of Emergent Group............ 10
ARTICLE IV
COVENANTS OF THE SELLER..................................... 12
SECTION 4.1 Protection of Title of Purchaser, the Depositor and the
Trust..................................................... 12
SECTION 4.2 Other Liens or Interests.................................... 13
SECTION 4.3 Costs and Expenses.......................................... 13
ARTICLE V
REPURCHASES................................................. 13
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SECTION 5.1 Repurchase of Mortgage Loans Upon Breach of
Warranty.................................................. 13
SECTION 5.2 Reassignment of Purchased Mortgage Loans.................... 14
SECTION 5.3 Waivers..................................................... 15
ARTICLE VI
MISCELLANEOUS............................................... 15
SECTION 6.1 Liability of the Seller..................................... 15
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser.......... 15
SECTION 6.3 Limitation on Liability of the Seller and Others............ 16
SECTION 6.4 Amendment................................................... 16
SECTION 6.5 Notices..................................................... 17
SECTION 6.6 Merger and Integration...................................... 17
SECTION 6.7 Severability of Provisions.................................. 17
SECTION 6.8 Intention of the Parties.................................... 18
SECTION 6.9 Governing Law............................................... 18
SECTION 6.10 Counterparts................................................ 18
SECTION 6.11 Conveyance of the Mortgage Loans and the Other
Conveyed Property to the Trust............................ 18
SECTION 6.12 Nonpetition Covenant........................................ 19
SECTION 6.13 Miscellaneous............................................... 19
SCHEDULE A -- Schedule of Mortgage Loans Conveyed
SCHEDULE B -- Representations and Warranties of Seller
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PURCHASE AGREEMENT AND ASSIGNMENT
THIS PURCHASE AGREEMENT AND ASSIGNMENT, dated as of March 1, 1997, executed
among Emergent Mortgage Holdings Corporation, a Delaware corporation (the
"Purchaser"), Emergent Mortgage Corp., a South Carolina corporation (the
"Seller") and Emergent Group, Inc., a South Carolina corporation ("Emergent
Group").
W I T N E S S E T H:
WHEREAS, Purchaser has agreed to purchase from Seller, and Seller, pursuant
to this Agreement, is transferring to Purchaser the Mortgage Loans and Other
Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt of which is acknowledged, Purchaser and Seller, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. The specific terms defined in this Article include the
plural as well as the singular. The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of and Schedules and Exhibits to this Agreement. Capitalized terms used
herein without definition shall have the respective meanings assigned to such
terms in the Pooling and Servicing Agreement (defined herein).
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Agreement" shall mean this Purchase Agreement and Assignment and all
amendments hereof and supplements hereto.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics liens and liens that
attach to a Mortgaged Property by operation of law.
"Other Conveyed Property" means all monies at any time paid or payable on
the Mortgage Loans or in respect thereof after the Cut-Off Date (including
amounts due on or before the Cut-Off Date but received by the Seller after the
Cut-Off Date), the insurance policies relating to the Mortgage Loans and all
Insurance Proceeds, the Mortgage Files, and any REO Property, together with all
collections thereon and proceeds thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of March 1, 1997, among Prudential Securities Secured
Financing Corporation, as Depositor, Emergent Mortgage Corp. as Servicer, and
First Union National Bank of North Carolina, as Trustee, as the same may be
amended, modified or supplemented from time to time.
"Purchaser" means Emergent Mortgage Holdings Corporation.
"Related Documents" means the Unaffiliated Seller's Agreement, the
Insurance Agreement and the Indemnification Agreement dated as of March 1, 1997
among the Seller, the Purchaser, Prudential Securities Incorporated, the
Depositor, Emergent Group and Financial Securities Assurance Corporation.
"Schedule of Mortgage Loans Conveyed" means the schedule of all mortgages
and mortgage notes sold and transferred pursuant to this Agreement which is
attached hereto as Schedule A.
"Schedule of Representations" means the Schedule of Representations and
Warranties attached hereto as Schedule B.
"Seller Repurchase Event" means with respect to the Seller, the occurrence
of a breach of any of Seller's representations and warranties under Schedule B
hereto.
"Seller" means Emergent Mortgage Corp.
SECTION 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Pooling and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
SECTION 1.4 Certain References. All references to the Stated Principal
Balance of a Mortgage Loan as of a Record Date shall refer to the close of
business on such day, or as of the first day of a Collection Period shall refer
to the opening of
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business on such day. All references to the last day of a Collection Period
shall refer to the close of business on such day.
SECTION 1.5 No Recourse. Without limiting the obligations of Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of the
Seller, or of any predecessor or successor of any of the Seller.
SECTION 1.6 Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite Percentage Interest necessary to effect any
such action or consent has been obtained; provided, however, that, solely for
the purpose of determining whether the Trustee is entitled to rely upon any such
action or consent, only Certificates which the Trustee knows to be so owned
shall be so disregarded.
SECTION 1.7 Material Adverse Effect. Whenever a determination is to be made
under this Agreement as to whether a given event, action, course of conduct or
set of facts or circumstances could or would have a material adverse effect on
the Trust Fund or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Policy.
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Mortgage Loans and the Other Conveyed
Property. Subject to the terms and conditions of this Agreement, the Seller
hereby sells, transfers, assigns, and otherwise conveys to Purchaser without
recourse (but without limitation of its obligations in this Agreement), and
Purchaser hereby purchases, all right, title and interest of the Seller in and
to the Mortgage Loans and the Other Conveyed Property. It is the intention of
the Seller and Purchaser that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Mortgage Loans and the Other Conveyed
Property from the Seller to Purchaser, conveying good title thereto free and
clear of any liens, and the Mortgage Loans and the Other Conveyed
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Property shall not be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy or similar
law.
SECTION 2.2 Purchase Price. Simultaneously with the conveyance of the
Mortgage Loans and the Other Conveyed Property to Purchaser, Purchaser has paid
or caused to be paid to or upon the order of Seller $74,879,657.42 (which amount
includes accrued interest of $373,649.29), less certain expenses, by wire
transfer of immediately available funds (representing the proceeds to Purchaser
from the sale of the Mortgage Loans to the Depositor).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Seller. Seller makes the
following representations and warranties, on which Purchaser relies in
purchasing the Mortgage Loans and the Other Conveyed Property and in
transferring the Mortgage Loans and the Other Conveyed Property to the Depositor
under the Unaffiliated Seller's Agreement, on which the Depositor will rely in
transferring the Mortgage Loans and the Other Conveyed Property to the Trustee
under the Pooling and Servicing Agreement and on which the Certificate Insurer
will rely in issuing the Policy. Such representations are made as of the
execution and delivery of this Agreement or other time specified in the Schedule
of Representations, but shall survive the sale, transfer and assignment of the
Mortgage Loans and the Other Conveyed Property hereunder, the sale, transfer and
assignment thereof by the Seller to the Depositor under the Unaffiliated
Seller's Agreement and the sale, transfer and assignment thereof by the
Depositor to the Trustee under the Pooling and Servicing Agreement. Seller and
Purchaser agree that Purchaser will assign to the Depositor all of Purchaser's
rights under this Agreement, the Depositor will assign to the Trustee all of
Purchaser's rights under this Agreement and that the Trustee will thereafter be
entitled to enforce this Agreement directly against the Seller in the Trustee's
own name on behalf of the Certificateholders.
(a) Schedule of Representations. The representations and warranties
made by the Seller and set forth on the Schedule of Representations are
true and correct.
(b) Organization and Good Standing. The Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of South Carolina, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times and now has,
power, authority and legal right to enter into and perform its obligations
under this Agreement.
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(c) Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the Mortgage Loans and
Other Conveyed Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment to
Purchaser by all necessary corporate action and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(e) No False Statement. Neither this Agreement nor the information
contained in the Prospectus Supplement, other than under the captions "The
Insurer" and "Plan of Distribution," nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any
material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
(f) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Mortgage Loans and the Other Conveyed Property, enforceable against
the Seller and creditors of and purchasers from the Seller, and this
Agreement constitutes the legal, valid and binding obligation of the Seller
enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(g) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement does not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Seller, or any material
indenture, agreement, mortgage, deed of trust or other instrument to which
the Seller is a party or by which it is bound or any of its properties are
subject, or result in the creation or imposition of any lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement or
violate any law, order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
any of its
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properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trustee in any Mortgage Loan, or affect the
Seller's ability to perform its obligations under this Agreement;
(h) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, (iv) involving the Seller or which might
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificates or (v) that could have a material
adverse effect on the Mortgage Loans. To the Seller's knowledge, there are
no proceedings or investigations pending or threatened against the Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties relating to the Seller which might adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates;
(i) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement except such consents as have been
obtained;
(j) Approvals. All approvals, authorizations, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation
of the transactions contemplated hereby have been or will be taken or
obtained on or prior to the Closing Date.
(k) Chief Executive Office. The chief executive office of Emergent
Mortgage Corp. is located at 00 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000.
SECTION 3.2 Representations and Warranties of Purchaser. Purchaser makes
the following representations and warranties, on which Seller relies in selling,
assigning, transferring and conveying the Mortgage Loans and the Other Conveyed
Property to Purchaser hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Mortgage Loans and the Other Conveyed Property hereunder,
the sale, transfer and assignment thereof by Purchaser to the Depositor under
the Unaffiliated Seller's
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Agreement and the sale, transfer and assignment thereof by the Depositor to the
Trustee under the Pooling and Servicing Agreement.
(a) Organization and Good Standing. Purchaser has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and has, full power, authority and legal right to acquire and own
the Mortgage Loans and the Other Conveyed Property, and to transfer the
Mortgage Loans and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
(b) Due Qualification. Purchaser is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Purchaser's ability to acquire the
Mortgage Loans or the Other Conveyed Property or the validity or
enforceability of the Mortgage Loans and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Related Documents.
(c) Power and Authority. Purchaser has the power, authority and legal
right to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Mortgage Loans and the Other Conveyed Property
hereunder; and the execution, delivery and performance of this Agreement
and all of the documents required pursuant hereto have been duly authorized
by Purchaser by all necessary action.
(d) No Consent Required. Purchaser is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as
have been obtained, effected or made.
(e) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(f) No Violation. The execution, delivery and performance by Purchaser
of this Agreement, the consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms
of this Agreement and the Related Documents do not and will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws
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of Purchaser, or conflict with or breach any of the terms or provisions of,
or constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument to
which Purchaser is a party or by which Purchaser is bound or to which any
of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than the Unaffiliated Seller's Agreement, or violate any law, order, rule
or regulation, applicable to Purchaser or its properties, of any federal or
state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over Purchaser or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Purchaser, threatened against Purchaser,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality having jurisdiction over Purchaser or its
properties: (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by Purchaser of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income tax
attributes of, or seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the Mortgage Loans and
the Other Conveyed Property hereunder or the transfer by Purchaser of the
Mortgage Loans and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
In the event of any breach of a representation and warranty made by Purchaser
hereunder, the Seller covenants and agrees that it will take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all pass-through
certificates or other similar securities issued by the Trust Fund, or a trust or
similar vehicle formed by Purchaser, have been paid in full. The Seller and
Purchaser agree that damages will not be an adequate remedy for such breach and
that this covenant may be specifically enforced by Purchaser or by the Trustee
on behalf of the Trust Fund.
SECTION 3.3 Indemnification.
(a) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any breach of any of the Seller's
representations and warranties contained herein.
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(b) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting, from the use, ownership or operation
by the Seller or any affiliate thereof of a Mortgaged Property.
(c) The Seller will defend and indemnify Purchaser, the Depositor, the
Trustee, the Certificate Insurer and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from any action taken, or any action failed to be taken that is
required to be taken under this Agreement, by it in respect of any portion of
the Trust Fund other than in accordance with this Agreement.
(d) The Seller agrees to pay, and shall defend, indemnify and hold harmless
Purchaser, the Depositor, the Trustee, the Certificateholders and the
Certificate Insurer from and against any taxes that may at any time be asserted
against Purchaser, the Depositor, the Trustee, the Certificateholders or the
Certificate Insurer with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but, not including any taxes asserted with respect to, and as of the date
of, the sale, transfer and assignment of the Mortgage Loans and the Other
Conveyed Property to Purchaser, the conveyance of the Mortgage Loans or Other
Conveyed Property under the Unaffiliated Seller's Agreement and the conveyance
of the Trust Fund to the Trustee or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Mortgage Loans and
Other Conveyed Property or the Trust Fund which shall be indemnified by each
Seller pursuant to clause (e) below, or federal, state or other income taxes,
arising out of distributions on the Certificates or transfer taxes arising in
connection with the transfer of Certificates) and costs and expenses in
defending against the same, arising by reason of the acts to be performed by the
Seller under this Agreement or imposed against such Persons.
(e) The Seller agrees to pay, and to indemnify, defend and hold harmless
Purchaser, the Depositor, the Trustee, the Certificateholders and the
Certificate Insurer from, any taxes which may at any time be asserted against
such Persons with respect to, and as of the date of, the conveyance or ownership
of the Mortgage Loans or the Other Conveyed Property hereunder, the conveyance
or ownership of the Mortgage Loans or Other Conveyed Property under the
Unaffiliated Seller's Agreement and the conveyance or ownership of the Trust
Fund under the Pooling and Servicing Agreement or the issuance and original sale
of the Certificates, including, without limitation, any sales, gross receipts,
personal property, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes, arising out of the transactions contemplated hereby or transfer
taxes arising in connection with the transfer of Certificates) and costs and
expenses in defending against the same, arising by reason of the acts to be
performed by each Seller under this Agreement or imposed against such Persons.
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(f) The Seller shall defend, indemnify, and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon Purchaser, the Depositor, the
Trustee, the Certificateholders and the Certificate Insurer through, the
negligence, willful misfeasance, or bad faith of each Seller in the performance
of its duties under this Agreement or by reason of reckless disregard of each
Seller's obligations and duties under this Agreement.
(g) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders from
and against any loss, liability or expense incurred by reason of the violation
by the Seller of federal or state securities laws in connection with the
registration or the sale of the Certificates.
(h) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders from
and against any loss, liability or expense imposed upon, or incurred by,
Purchaser, the Depositor, the Trustee, the Certificate Insurer or the
Certificateholders as a result of the failure of any Mortgage Loan, or the sale
of the related Mortgage Property to comply with all requirements of applicable
law.
Indemnification under this Section 3.3 shall include reasonable fees and
expenses of counsel and expenses of litigation and shall survive termination of
the Trust Fund. The indemnity obligations hereunder shall be in addition to any
obligation that the Seller may otherwise have.
SECTION 3.4 Representations and Warranties of Emergent Group. Emergent
Group hereby represents and warrants to the Purchaser as of the date of
execution of this Agreement and as of the Closing Date, that:
(a) Emergent Group is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina;
(b) Emergent Group has the corporate power and authority to execute,
deliver and perform, and to enter into and consummate all the transactions
contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by Emergent Group, and constitutes the legal, valid and binding
agreement of Emergent Group, enforceable against Emergent Group in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
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(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by Emergent Group with
this Agreement or the consummation by it of any of the transactions contemplated
hereby or thereby, except such as have been made on or prior to the Closing
Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the other transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts or
will conflict with the charter or bylaws of Emergent Group or conflicts or will
conflict with or results or will result in a breach of, or constitutes or will
constitute a default or results or will result in an acceleration under, any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or other instrument to which Emergent Group is a party or by
which it is bound and which is material to Emergent Group, or (ii) results or
will result in a violation of any law, rule, regulation, order, judgment or
decree of any court or governmental authority having jurisdiction over Emergent
Group.
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ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1 Protection of Title of Purchaser, the Depositor and the Trust.
(a) At or prior to the Closing Date, the Seller shall have filed or caused
to be filed a UCC-1 financing statement, executed by the Seller as seller or
debtor, naming Purchaser as purchaser or secured party and describing the
Mortgage Loans and the Other Conveyed Property being sold by it to Purchaser as
collateral, with the office of the Secretary of State of the State of South
Carolina and in such other locations as Purchaser shall have required. From time
to time thereafter, the Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of Purchaser under this Agreement, of the Depositor
under the Unaffiliated Seller's Agreement and of the Trustee under the Pooling
and Servicing Agreement in the Mortgage Loans and the Other Conveyed Property,
as the case may be, and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to Purchaser, the Depositor, the Trustee, and the
Certificate Insurer file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing. In the
event that each Seller fails to perform its obligations under this subsection,
Purchaser, the Depositor or the Trustee may do so, at the expense of the Seller.
(b) The Seller shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller (or by Purchaser or the Trustee on
behalf of the Seller) in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless the Seller
shall have given Purchaser, the Depositor, the Trustee and the Certificate
Insurer at least 60 days prior written notice thereof, and shall promptly file
appropriate amendments to all previously filed financing statements and
continuation statements.
(c) The Seller shall give Purchaser, the Depositor, the Certificate Insurer
(so long as an Insurer Default shall not have occurred and be continuing) and
the Trustee at least 60 days prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. The Seller shall at all times maintain each office from which it
services Mortgage Loans and its principal executive office within the United
States of America.
12
(d) The Seller shall maintain its computer systems so that, from and after
the time of sale under this Agreement of the Mortgage Loans to Purchaser, the
conveyance of the Mortgage Loans by Purchaser to the Depositor and the
conveyance of the Mortgage Loans by the Depositor to the Trustee on behalf of
the Trustee, the Seller's master computer records (including archives) that
shall refer to a Mortgage Loan indicate clearly that such Mortgage Loan has been
sold to Purchaser and has been conveyed by Purchaser to the Depositor and by the
Depositor to the Trustee on behalf of the Certificateholders and the Certificate
Insurer. Indication of the Trustee's ownership of a Mortgage Loan shall be
deleted from or modified on each Seller's computer systems when, and only when,
the Mortgage Loan shall become a Deleted Mortgage Loan, shall have been
repurchased or shall have been paid in full.
(e) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in mortgage loans to any
prospective purchaser, lender or other transferee, the Seller shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Mortgage Loan shall indicate clearly that such
Mortgage Loan has been sold to Purchaser, sold by Purchaser to the Depositor,
and is owned by the Trust Fund.
SECTION 4.2 Other Liens or Interests. Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on the Mortgage Loans
or the Other Conveyed Property or any interest therein, and the Seller shall
defend the right, title, and interest of Purchaser, the Depositor and the
Trustee in and to the Mortgage Loans and the Other Conveyed Property against all
claims of third parties claiming through or under the Seller.
SECTION 4.3 Costs and Expenses. The Seller shall pay all reasonable costs
and disbursements in connection with the performance of its obligations
hereunder and its Related Documents.
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Mortgage Loans Upon Breach of Warranty. (a) Upon
the occurrence of a Seller Repurchase Event, the Seller shall, unless such
breach shall have been cured in all material respects, repurchase the related
Mortgage Loan from the Trustee within 60 days following discovery or notice to
the Seller of such breach pursuant to Section 2.03 of the Pooling and Servicing
Agreement and the Seller shall pay the Purchase Price to the Trustee as provided
in the Pooling and Servicing Agreement. In lieu of repurchasing any such
Mortgage Loan, the Seller may cause such Mortgage Loan to be removed from the
Trust Fund and substitute one or more Qualified
13
Substitute Mortgage Loans in the manner provided in Section 2.03 of the Pooling
and Security Agreement. To the extent the Seller fails to effect its repurchase
obligation, Emergent Group shall repurchase the related Mortgage Loan and pay
the Purchase Price to the Trustee on such date. The provisions of this Section
5.1 are intended to grant the Trustee a direct right against the Seller to
demand performance hereunder, and in connection therewith the Seller and
Emergent Group waive any requirement of prior demand against the Depositor or
Purchaser with respect to such repurchase or substitution obligation. Any such
purchase or substitution resulting from a Seller Repurchase Event shall take
place in the manner specified in Section 2.03 of the Pooling and Servicing
Agreement. Notwithstanding any other provision of this Agreement or the Pooling
and Servicing Agreement to the contrary, the obligation of the Seller and
Emergent Group under this Section shall be performed in accordance with the
terms hereof notwithstanding the failure of the Servicer, the Unaffiliated
Seller and the Depositor to perform any of their respective obligations with
respect to such Mortgage Loan under the Pooling and Servicing Agreement.
(b) In addition to the foregoing, the Seller shall promptly
purchase from Purchaser (or provide for the substitution of a Qualified
Substitute Mortgage Loan) any Mortgage Loan repurchased by Purchaser (in its
capacity as Seller under the Unaffiliated Seller's Agreement) upon the
occurrence of an Unaffiliated Seller Repurchase Event (as defined therein)
involving a breach by Purchaser (in its capacity as Seller under the
Unaffiliated Seller's Agreement) pursuant to Section 3.05 of the Unaffiliated
Seller's Agreement.
(c) In addition to the foregoing and notwithstanding whether the related
Mortgage Loan shall have been purchased by the Seller or Emergent Group, the
Seller shall indemnify the Trustee, the Depositor, the Certificate Insurer and
the Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to a repurchase or substitution
under Section 2.03 of the Pooling and Security, Section 3.05 of the Unaffiliated
Seller's Agreement or this Section 5.1 hereof.
SECTION 5.2 Reassignment of Purchased Mortgage Loans. Upon deposit in the
Collection Account of the Purchase Price of any Mortgage Loan repurchased by the
Seller or the substitution of a Qualified Substitute Mortgage Loan under Section
5.1 hereof, the Servicer and the Trustee shall take such steps as may be
reasonably requested by the Seller in order to assign to the Seller all of
Purchaser's, the Depositor's and the Trustee's right, title and interest in and
to such repurchased Mortgage Loan or Mortgage Loan for which substitution was
made and all security and documents and all Other Conveyed Property conveyed to
Purchaser, the Depositor and the Trustee directly relating thereto, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of Purchaser, the
Depositor or the Trustee. Such assignment shall be a sale and assignment
outright, and not for security. If, following the reassignment of a Mortgage
Loan, in any enforcement
14
suit or legal proceeding, it is held that the Seller may not enforce any such
Mortgage Loan on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Mortgage Loan, the Servicer and the Trustee
shall, at the expense of the Seller, take such steps as the Seller deems
reasonably necessary to enforce the Mortgage Loan, including bringing suit in
Purchaser's or the Trustee's name or the names of the Certificateholders.
SECTION 5.3 Waivers. No failure or delay on the part of Purchaser, the
Depositor or the Trustee as assignee of Purchaser, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Liability of the Seller. The Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by the Seller and its representations and warranties.
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser. Any
corporation or other entity (i) into which the Seller, Purchaser or Emergent
Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Seller, Purchaser or Emergent Group is a party or
(iii) succeeding to the business of the Seller, Purchaser or Emergent Group, in
the case of Purchaser, which corporation has a certificate of incorporation
containing provisions relating to limitations on business and other matters
substantively identical to those contained in Purchaser's certificate of
incorporation, provided that in any of the foregoing cases such corporation
shall execute an agreement of assumption to perform every obligation of the
Seller, Purchaser or Emergent Group, as the case may be, under this Agreement
and, whether or not such assumption agreement is executed, shall be the
successor to the Seller, Purchaser or Emergent Group, as the case may be,
hereunder (without relieving the Seller, Purchaser or Emergent Group of its
responsibilities hereunder, if it survives such merger or consolidation) without
the execution or filing of any document or any further act by any of the parties
to this Agreement. Notwithstanding the foregoing, so long as a Certificate
Insurer Default shall not have occurred and be continuing, Purchaser shall not
merge or consolidate with any other Person or permit any other Person to become
the successor to Purchaser's business without the prior written consent of the
Certificate Insurer. The Seller, Purchaser or Emergent Group shall promptly
inform the other party, the Trustee and, so long as a Certificate Insurer
Default shall not have occurred and be continuing, the Certificate Insurer of
such merger, consolidation or purchase and assumption. Notwithstanding the
foregoing, as a condition to the consummation of the transactions referred to in
clauses (i), (ii) and (iii) above, (x) immediately after giving effect to such
15
transaction, no representation or warranty made pursuant to Sections 3.1, 3.2
and 3.4 or covenant made pursuant to Section 3.3, shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an event of default under the Insurance
Agreement, shall have occurred and be continuing, (y) the Seller, Purchaser or
Emergent Group, as applicable, shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
6.2 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Seller,
Purchaser or Emergent Group, as applicable, shall have delivered to the Trustee
an Opinion of Counsel, stating, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Trustee in the Trust Fund and reciting the details of the filings or (B)
no such action shall be necessary to preserve and protect such interest.
SECTION 6.3 Limitation on Liability of the Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement or its Related Documents and that in its opinion may
involve it in any expense or liability.
SECTION 6.4 Amendment.
(a) This Agreement may be amended by the Seller, Purchaser and Emergent
Group, with the prior written consent of the Certificate Insurer (so long as a
Certificate Insurer Default shall not have occurred and be continuing) but
without the consent of the Trustee or any of the Certificateholders (unless a
Certificate Insurer Default shall have occurred, in which event the consent of
the Certificateholders with Voting Rights equal to or in excess of 50% of the
Voting Rights shall be obtained) (i) to cure any ambiguity or (ii) to correct
any provisions in this Agreement; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Seller,
Purchaser and Emergent Group with the prior written consent of the Certificate
Insurer (so long as a Certificate Insurer Default shall not have occurred and be
continuing) and with the consent of the Trustee and Certificateholders having
Voting Rights equal to or in excess of 50%, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
16
collections of payments on Mortgage Loans or distributions that shall be
required to be made on any Certificate or the Pass-Through Rates or (ii) reduce
the aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Certificates then
outstanding.
(c) Prior to the execution of any such amendment or consent, Emergent Group
shall have furnished written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates. The consent of any Holder of a Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate.
SECTION 6.5 Notices. All demands, notices and communications to any of the
Seller, Purchaser or Emergent Group hereunder shall be in writing, personally
delivered, or sent by telecopier (subsequently confirmed in writing), reputable
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been given upon receipt (a) in the case of the Seller,
to Emergent Mortgage Corp., 00 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx
Xxxxxxxx 00000, (b) in the case of Emergent Group, to Emergent Group, Inc., 00
Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 or (c) in the
case of Purchaser, to Emergent Mortgage Holdings Corporation, 00 Xxxx Xxxxxxxxxx
Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Xx.
SECTION 6.6 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement, the Pooling and Servicing Agreement and the Related
Documents set forth the entire understanding of the parties relating to the
subject matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement, the Pooling and Servicing Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.7 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held
17
invalid, then such covenants, provisions or terms shall be deemed severable from
the remaining covenants, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this
Agreement.
SECTION 6.8 Intention of the Parties. The execution and delivery of this
Agreement shall constitute an acknowledgment by the Seller and Purchaser that
they intend that the assignment and transfer herein contemplated constitute a
sale and assignment outright, and not for security, of the Mortgage Loans and
the Other Conveyed Property conveying good title thereto free and clear of any
Liens, from the Seller to Purchaser, and that none of the Mortgage Loans and the
Other Conveyed Property shall be a part of the Seller's estate in the event of
the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to, the
Seller. In the event that such conveyance is determined to be made as security
for a loan made by Purchaser, the Depositor, the Trustee or the
Certificateholders to the Seller, as applicable, the parties intend that the
Seller shall have granted to Purchaser a security interest in all right, title
and interest in and to the Mortgage Loans and the Other Conveyed Property
conveyed pursuant to Section 2.1 hereof, and that this Agreement shall
constitute a security agreement under applicable law.
SECTION 6.9 Governing Law. This Agreement shall be construed in accordance
with, the laws of the State of New York without regard to the principles of
conflicts of laws thereof and the obligations, rights and remedies of the
parties under this Agreement shall be determined in accordance with such laws.
SECTION 6.10 Counterparts. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
SECTION 6.11 Conveyance of the Mortgage Loans and the Other Conveyed
Property to the Trust. The Seller acknowledges that Purchaser intends, pursuant
to the Unaffiliated Seller's Agreement, to convey the Mortgage Loans and the
Other Conveyed Property, together with its respective rights under this
Agreement, to the Depositor on the date hereof and that the Depositor intends,
pursuant to the Pooling and Servicing Agreement, to convey the Mortgage Loans
and the Other Conveyed Property, together with its respective rights under this
Agreement, to the Trustee on the date hereof. The Seller acknowledges and
consents to such conveyance and waives any further notice thereof and covenants
and agrees that the representations and warranties of the Seller contained in
this Agreement and the rights of Purchaser hereunder are intended to benefit the
Depositor, the Certificate Insurer, the Trustee and the Certificateholders. In
furtherance of the foregoing, the Seller covenants and agrees to perform its
duties and obligations hereunder, in accordance with the terms hereof for the
benefit of the Depositor, the Certificate Insurer, the Trustee and the
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement, the Seller shall be directly
18
liable to the Trustee and the Certificateholders (notwithstanding any failure by
the Servicer or Purchaser to perform its duties and obligations hereunder or
under the Pooling and Servicing Agreement) and that the Trustee may enforce the
duties and obligations of the Seller under this Agreement against the Seller for
the benefit of the Certificate Insurer, the Trustee and the Certificateholders.
SECTION 6.12 Nonpetition Covenant. Until one year and one day after the
termination of the Trust Fund, neither the Seller, nor Emergent Group nor the
Purchaser shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust Fund (or, in the case of the Seller, against Purchaser) under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust Fund (or Purchaser) or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust Fund (or
Purchaser).
SECTION 6.13 Miscellaneous. The parties agree that each of the Certificate
Insurer, the Depositor and the Trustee is an intended third-party beneficiary of
this Agreement to the extent necessary to enforce the rights and to obtain the
benefit of the remedies of the Purchaser under this Agreement which are assigned
to the Depositor pursuant to the Unaffiliated Seller's Agreement and to the
Trustee for the benefit of the Certificateholders pursuant to the Pooling and
Servicing Agreement and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Seller under Section 3.3 and
5.1 of this Agreement.
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
EMERGENT MORTGAGE HOLDINGS
CORPORATION, as Purchaser
By: /s/ Xxxxx X. Xxxx
---------------------
Name: Xxxxx X. Xxxx
Title: Vice President, CFO and Treasurer
EMERGENT MORTGAGE CORP., as Seller
By: /s/ J. Xxxx Xxx
---------------------
Name: J. Xxxx Xxx
Title: Executive Senior Vice President
EMERGENT GROUP, INC.
By: /s/ Xxxxx X. Xxxx
---------------------
Name: Xxxxx X. Xxxx
Title: Vice President, CFO and Treasurer
SCHEDULE A
SCHEDULE OF MORTGAGE LOANS CONVEYED
[See Schedule 1 to Exhibit 4.1]
A-1
SCHEDULE B
SCHEDULE OF REPRESENTATIONS
1. The information with respect to each Mortgage Loan set forth in the
Schedule of Mortgage Loans is true and correct as of the Cut-off Date;
2. All of the original or certified documentation required to be delivered
to the Trustee pursuant to the Pooling and Servicing Agreement (including all
material documents related thereto) with respect to each Mortgage Loan has been
or will be delivered to the Trustee in accordance with the terms of such Pooling
and Servicing Agreement. Each of the documents and instruments specified to be
included therein has been duly executed and in due and proper form, and each
such document or instrument is in a form generally acceptable to prudent
mortgage lenders that regularly originate or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans.
3. Each Mortgaged Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums, townhouses and units in
planned unit developments, or manufactured housing, but shall not include
cooperatives;
4. No Mortgage Loan had a Loan-to-Value Ratio in excess of 95%;
5. Each Mortgage is a valid and subsisting first lien of record on the
Mortgaged Property subject in all cases to the exceptions to title set forth in
the title insurance policy, with respect to the related Mortgage Loan, which
exceptions are generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
6. Immediately prior to the transfer and assignment herein contemplated,
the Seller held good and indefeasible title to, and was the sole owner of, each
Mortgage Loan conveyed by it subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Purchaser will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan subject to
no Liens, except Liens which will be released simultaneously with such transfer
and assignment and subordinate Liens on the related Mortgaged Property;
7. As of the related Cut-off Date, no Mortgage Loan is 30 or more days
delinquent;
B-1
8. There is no delinquent tax or assessment lien on any Mortgaged Property,
and each Mortgaged Property is free of substantial damage and is in good repair;
9. There is no valid and enforceable right of rescission, offset, defense
or counterclaim to any Mortgage Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note or the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
10. There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph 12 below;
11. Each Mortgage Loan at the time it was made complied in all material
respects with all applicable state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other consumer
protection laws, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws;
12. With respect to each Mortgage Loan, a lender's title insurance policy,
issued in standard American Land Title Association form, or other form
acceptable in a particular jurisdiction by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, in an amount at least equal to the initial Stated Principal Balance of
such Mortgage Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first mortgage lien of record on the real property
described in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph 5 above, was effective on
the date of the origination of such Mortgage Loan, and, as of the Cut-off Date
such policy will be valid and thereafter such policy shall continue in full
force and effect;
13. The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy (which may be a blanket policy of the type
described in the related Pooling and Servicing Agreement) with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the
related Mortgage Loan and (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis;
14. If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards,
B-2
a flood insurance policy (which may be a blanket policy of the type described in
the Pooling and Servicing Agreement) in a form meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan and (B) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of 1973;
15. Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan had full legal capacity to execute all documents relating to
such Mortgage Loan and convey the estate therein purported to be conveyed;
16. The Seller has caused and will cause to be performed any and all acts
required to be performed to preserve the rights and remedies of the servicer in
any insurance policies applicable to any Mortgage Loans delivered by the Seller
including, to the extent such Mortgage Loan is not covered by a blanket policy
described in the Pooling and Servicing Agreement, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the servicer;
17. Each original Mortgage was recorded or is in the process of being
recorded, and all subsequent assignments of the original Mortgage have been
recorded (or are in the process of being recorded) in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
for the benefit of the Trustee, subject to the provisions of Section 2.01 of the
Pooling and Servicing Agreement;
18. The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the owners and
which has been delivered to the Trustee;
19. The proceeds of each Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans have been paid;
20. Except as otherwise required by law or pursuant to the statute under
which the related Mortgage Loan was made, the related Mortgage Note is not and
B-3
has not been secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage;
21. No Mortgage Loan was originated under a buydown plan;
22. No Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature;
23. Each Mortgaged Property is located in the state identified in the
Schedule of Mortgage Loans and consists of one or more parcels of real property
with a residential dwelling erected thereon;
24. Each Mortgage contains a provision for the acceleration of the payment
of the unpaid principal balance of the related Mortgage Loan in the event the
related Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
25. Any advances made after the date of origination of a Mortgage Loan but
prior to the Cut-off Date, have been consolidated with the outstanding principal
amount secured by the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term reflected
on the Schedule of Mortgage Loans. The consolidated principal amount does not
exceed the original principal amount of the related Mortgage Loan. No Mortgage
Note permits or obligates the Seller to make future advances to the related
Mortgagor at the option of the Mortgagor;
26. There is no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding currently
occurring, and each Mortgaged Property is undamaged by waste, fire, earthquake
or earth movement, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
27. All of the improvements of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property, and,
if a title insurance policy exists with respect to such Mortgaged Property, are
stated in such title insurance policy and affirmatively insured;
28. No improvement located on or being part of any Mortgaged Property is in
violation of any applicable zoning law or regulation. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of each Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities and such Mortgaged Property is lawfully occupied under the
applicable law;
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29. With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Seller or the Trust Fund to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor;
30. Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption available which materially interferes with the
right to sell the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage;
31. There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and neither the Seller or the Purchaser has waived any default, breach,
violation or event of acceleration;
32. No instrument of release or waiver has been executed in connection with
any Mortgage Loan, and no Mortgagor has been released, in whole or in part;
33. The credit underwriting guidelines applicable to each Mortgage Loan
conform in all material respects to the Seller's underwriting guidelines;
34. All parties to the Mortgage Note and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such parties;
35. The Seller has no actual knowledge that there exist on any Mortgaged
Property any hazardous substances, hazardous wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation;
36. None of the Mortgage Loans shall be due from the United States of
America or any State or from any agency, department, subdivision or
instrumentality thereof;
37. At the Cut-Off Date, no Mortgagor had been identified by the Seller as
being the subject of a current bankruptcy proceeding;
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38. By the Closing Date, the Seller will have caused the portions of the
Seller's servicing records relating to the Mortgage Loans to be clearly and
unambiguously marked to show that the Mortgage Loans have been sold to the Trust
Fund and are owned by the Trust Fund in accordance with the terms of the Pooling
and Servicing Agreement;
39. No Mortgage Loan was originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the sale,
transfer and assignment of such Mortgage Loan under this Agreement or pursuant
to transfers of the Certificates. The Seller has not entered into any agreement
with any account debtor that prohibits, restricts or conditions the assignment
of any portion of the Mortgage Loans;
40. All filings (including, without limitation, UCC filings) required to be
made by any Person and actions required to be taken or performed by any Person
in any jurisdiction to give the Trustee a first priority perfected lien on, or
ownership interest in, the Mortgage Loans and the proceeds thereof and the other
property of the Trust Fund have been made, taken or performed;
41. The Seller has not done anything to convey any right to any Person that
would result in such Person having a right to payments due under the Mortgage
Loan or otherwise to impair the rights of the Trust Fund and the
Certificateholders in any Mortgage Loan or the proceeds thereof;
42. No Mortgage Loan is assumable (without the Seller's consent which
consent has not been given) by another Person in a manner which would release
the Mortgagor thereof from such Mortgagor's obligations to the Seller with
respect to such Mortgage Loan;
43. With respect to the Initial Mortgage Loans as of the Cut-off Date: the
aggregated Stated Principal Balance was $64,553,830.89; each of the Stated
Principal Balances was at least $4,405.31 but no more than $376,250.00: the
average Stated Principal Balance was $63,288.07; the Mortgage Rates were at
least 7.640% but no more than 15.990%; the weighted average Mortgage Rate was
11.006%; the original Loan-to-Value Ratios were at least 30% but no more than
95%; the weighted average original Loan-to-Value Ratio was 80.618%; the
remaining terms to stated maturity were at least 58 months but no more than 360
months; the weighted average remaining term to stated maturity was 208 months;
the original terms to stated maturity was at least 60 months but no more than
361 months; the weighted average original term to stated maturity was 209
months; and no more than 1.36% of the Mortgage Loans are secured by Mortgaged
Properties located in any one postal zip code area; and
44. No selection procedures adverse to the Certificateholders or to the
Certificate Insurer have been utilized in selecting such Mortgage Loan from all
other similar Mortgage Loans originated by the Seller;
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45. The related Mortgaged Property has not been subject to any foreclosure
proceeding or litigation;
46. There was no fraud involved in the origination of the Mortgage Loan by
the mortgagee or by the Mortgagor, any appraiser or any other party involved in
the origination of the Mortgage Loan; and
47. Each Mortgage File contains an appraisal of the Mortgaged Property
indicating an appraised value equal to the appraised value of such Mortgaged
Property on the Mortgage Loan Schedule. Each appraisal has been performed in
accordance with the requirements of FNMA or FHLMC.
48. Each Mortgage Loan is a "qualified mortgage" as defined in Section
860G(a)(3) of the Code.
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