EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
EMERGENT MORTGAGE HOLDINGS CORPORATION
Unaffiliated Seller
and
EMERGENT GROUP, INC.
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of August 10, 1997
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS ................................................... 1
Section 1.01. Definitions ........................................... 1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS ........... 4
Section 2.01. Agreement to Purchase Initial and Additional
Mortgage Loans ...................................... 4
Section 2.02. Agreement to Purchase Pre-Funded Mortgage Loans ....... 5
Section 2.03. Purchase Price ........................................ 7
Section 2.04. Delivery of Mortgage Loan Files ....................... 7
Section 2.05. Transfer of Mortgage Loans; Assignment of Agreement ... 7
Section 2.06. Examination of Mortgage Loan File ..................... 7
Section 2.07. Books and Records ..................................... 8
ARTICLE THREE REPRESENTATIONS AND WARRANTIES .............................. 8
Section 3.01. Representations and Warranties as
to the Unaffiliated Seller .......................... 8
Section 3.02. Representations and Warranties Relating
to the Mortgage Loans ............................... 10
Section 3.03. Covenants of the Unaffiliated Seller .................. 17
Section 3.04. Representations and Warranties of the Depositor ....... 18
Section 3.05. Repurchase Obligation for Breach of a
Representation or Warranty .......................... 19
Section 3.06. Reassignment of Purchased Mortgage Loans .............. 20
Section 3.07. Waivers ............................................... 20
Section 3.08. Representations and Warranties of Emergent Group ...... 20
ARTICLE FOUR THE UNAFFILIATED SELLER ...................................... 21
Section 4.01. Liability of the Unaffiliated Seller .................. 21
Section 4.02. Merger or Consolidation ............................... 21
Section 4.03. Costs ................................................. 22
Section 4.04. Servicing ............................................. 23
Section 4.05. Mandatory Delivery .................................... 23
Section 4.06. Indemnification ....................................... 23
ARTICLE FIVE CONDITIONS OF CLOSING ........................................ 26
Section 5.01. Conditions of Depositor's Obligations ................. 26
Section 5.02. Conditions of Unaffiliated Seller's Obligations ....... 28
Section 5.03. Termination of Depositor's Obligations ................ 29
ARTICLE SIX MISCELLANEOUS ................................................. 29
Section 6.01. Notices ............................................... 29
Section 6.02. Severability of Provisions ............................ 30
Section 6.03. Agreement of Unaffiliated Seller ...................... 30
Section 6.04. Survival .............................................. 30
Section 6.05. Effect of Headings and Table of Contents .............. 30
Section 6.06. Successors and Assigns ................................ 30
Section 6.07. Governing Law ......................................... 30
Section 6.08. Confirmation of Intent ................................ 31
Section 6.09. Execution in Counterparts ............................. 31
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Section 6.10. Amendments ............................................ 31
Section 6.11. Miscellaneous ......................................... 32
EXHIBITS
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Officer's Certificate
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This Unaffiliated Seller's Agreement, dated as of August 10, 1997, among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation (the
"Depositor"), EMERGENT MORTGAGE HOLDINGS CORPORATION, a Delaware corporation
(the "Unaffiliated Seller"), and EMERGENT GROUP, INC., a South Carolina
corporation ("Emergent Group").
W I T N E S S E T H:
WHEREAS, the Depositor has agreed to purchase from the Unaffiliated Seller
and the Unaffiliated Seller, pursuant to this Agreement, is selling to the
Depositor the Mortgage Loans and Other Conveyed Property;
WHEREAS, it is the intention of the Unaffiliated Seller and the Depositor
that simultaneously with the Unaffiliated Seller's conveyance of the Mortgage
Loans and Other Conveyed Property to the Depositor (a) the Depositor shall
deposit the Mortgage Loans and Other Conveyed Property in a trust pursuant to a
Pooling and Servicing Agreement to be dated as of August 10, 1997 (the "Pooling
and Servicing Agreement"), to be entered into by and among the Depositor, as
depositor, Emergent Mortgage Corp., as servicer, and First Union National Bank,
as trustee (the "Trustee") and (b) the Trustee shall issue certificates (the
"Certificates") evidencing beneficial ownership interests in the property of the
trust fund formed by the Pooling and Servicing Agreement (the "Trust Fund") to
the Depositor;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article:
"Additional Mortgage Loans" means the mortgage loans listed on the
Schedule of Mortgage Loans which were identified subsequent to August 10, 1997
but prior to the Closing Date.
"Agreement" means this Unaffiliated Seller's Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Certificate Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
"Commission" means the Securities and Exchange Commission and its
successors.
"Cut-off Date" means the close of business on August 10, 1997 for any
Initial Mortgage Loans and the respective origination dates thereof for any
Additional Mortgage Loans or any Pre-Funded Mortgage Loans.
"Cut-off Date Principal Balance" means as to each Mortgage Loan, its
unpaid principal balance as of the Cut-off Date.
"Depositor Information" shall have the meaning given to such term in
Section 4.06(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FSA Information" means any information furnished by the Certificate
Insurer in writing expressly for the use in the Offering Document, it being
understood that in respect of the initial Offering Document, the FSA Information
is limited to the information included under the caption "The Insurer" and the
financial statements of the Certificate Insurer incorporated by reference
therein.
"Initial Mortgage Loans" means the mortgage loans listed on the Schedule
of Mortgage Loans which were identified as of August 10, 1997.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics liens and any liens that
attach to a Mortgaged Property by operation of law.
"Mortgage Loans" means the Initial Mortgage Loans, the Additional Mortgage
Loans and the Pre-Funded Mortgage Loans and any mortgage loan substituting or
replacing a Mortgage Loan pursuant to the terms of the Pooling & Servicing
Agreement.
"Original Pool Balance" means the aggregate unpaid principal balance of
the Mortgage Loans as of the Cut-off Date.
"Originator" means Emergent Mortgage Corp., a South Carolina corporation.
"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 Originator, the
Unaffiliated Seller or the Depositor after the Cut-off Date), the insurance
policies relating to the Mortgage Loans and all Insurance Proceeds, rights of
the Unaffiliated Seller against the Originator under the Purchase Agreement and
Assignment, all items contained in the Mortgage Files, and any REO Property,
together with all collections thereon and proceeds thereof.
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"Pre-Funded Mortgage Loans" has the meaning ascribed thereto in Section
2.02.
"Prospectus" means the Prospectus dated June 10, 1997 relating to the
offering by the Depositor from time to time of its pass-through certificates
(issuable in series) in the form in which it was or will be filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Certificates.
"Prospectus Supplement" means the Prospectus Supplement dated September
17, 1997, relating to the offering of the Certificates in the form in which it
was or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Purchase Agreement and Assignment" means the Agreement dated as of August
10, 1997 among the Originator, the Unaffiliated Seller and Emergent Group, Inc.
"Registration Statement" means that certain registration statement on Form
S-3, as amended (Registration No. 333-27355) relating to the offering by the
Depositor from time to time of its pass-through certificates (issuable in
series) as heretofore declared effective by the Commission.
"Related Documents" means the Insurance Agreement and the Indemnification
Agreement dated as of August 10, 1997 among the Originator, the Unaffiliated
Seller, Emergent Group, the Depositor, Prudential Securities Incorporated and
Financial Security Assurance Inc.
"Schedule of Mortgage Loans" means the schedule of Initial Mortgage Loans
and Additional Mortgage Loans and related mortgage notes attached hereto as
Schedule A, which schedule shall be deemed to be amended to reflect any Mortgage
Loan Schedule relating to any Pre-Funded Mortgage Loans to be transferred to the
Depositor pursuant to Section 2.02.
"Securities Act" means the Securities Act of 1933, as amended.
"Termination Event" means the existence of any one or more of the
following conditions:
(a) A stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall
have been initiated or threatened by the Commission; or
(b) Subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating accorded any of
the debt securities or claims paying ability of any person providing any
form of credit
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enhancement for any of the Certificates, by any "nationally recognized
statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act; or
(c) Subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects
of the Certificate Insurer or the Unaffiliated Seller reasonably
determined by the Depositor to be material; or
(d) Subsequent to the date of this Agreement there shall have
occurred any of the following: (i) a suspension or material limitation in
trading in securities substantially similar to the Certificates; (ii) a
general moratorium on commercial banking activities in New York declared
by either Federal or New York State authorities; or (iii) the engagement
by the United States in hostilities, or the escalation of such
hostilities, or any calamity or crisis, if the effect of any such event
specified in this clause (iii) in the reasonable judgment of the Depositor
makes it impracticable or inadvisable to proceed with the public offering
or the delivery of the Certificates on the terms and in the manner
contemplated in the Prospectus Supplement.
"Unaffiliated Seller" means Emergent Mortgage Holdings Corporation, in its
capacity as Unaffiliated Seller of the Mortgage Loans under this Agreement and
any successor to Emergent Mortgage Holdings Corporation, whether through merger,
consolidation, purchase and assumption of Emergent Mortgage Holdings Corporation
or all or substantially all of its assets or otherwise.
"Unaffiliated Seller Repurchase Event" means the occurrence of a breach of
any of the Unaffiliated Seller's representations and warranties under Section
3.02 herein.
Capitalized terms used herein that are not otherwise defined shall have
the respective meanings ascribed thereto in the Pooling and Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Agreement to Purchase Initial and Additional Mortgage Loans.
Subject to the terms and conditions of this Agreement, the Unaffiliated Seller
hereby sells, transfers, assigns, and otherwise conveys to the Depositor without
recourse (but without limitation of its obligations and representations in this
Agreement), and the Depositor hereby purchases, all right, title and interest of
the Unaffiliated Seller in and to the Initial Mortgage Loans, the Additional
Mortgage Loans and the Other Conveyed Property relating thereto. It is the
intention of the Unaffiliated Seller and the Depositor that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the Initial
Mortgage Loans, the Additional Mortgage Loans and the Other Conveyed
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Property relating thereto from the Unaffiliated Seller to the Depositor,
conveying good title thereto free and clear of any Liens, and such Mortgage
Loans and Other Conveyed Property shall not be part of the Unaffiliated Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Unaffiliated Seller under any bankruptcy or similar law.
Section 2.02. Agreement to Purchase Pre-Funded Mortgage Loans. (a) Subject
to the terms and conditions of this Agreement, the Unaffiliated Seller hereby
agrees to sell to the Depositor without recourse (but without limitation of its
obligations and representations in this Agreement), and the Depositor hereby
agrees to purchase, all right, title and interest of the Unaffiliated Seller in
and to additional mortgage loans satisfying the requirements of Section 2.02(c)
of the Pooling and Servicing Agreement ("Pre-Funded Mortgage Loans"), having an
aggregate Stated Principal Balance as of their respective Cut-off Dates of up to
the Original Pre-Funded Amount, together with the Other Conveyed Property
relating thereto. It is the intention of the Unaffiliated Seller and the
Depositor that each such transfer and assignment of Pre-Funded Mortgage Loans
and the Other Conveyed Property relating thereto shall constitute a sale of such
Pre-Funded Mortgage Loans and Other Conveyed Property from the Unaffiliated
Seller to the Depositor, conveying good title thereto free and clear of any
liens, and such Pre-Funded Mortgage Loans and Other Conveyed Property shall not
be part of the Unaffiliated Seller's estate in the event of the filing of a
bankruptcy petition by or against the Unaffiliated Seller under any bankruptcy
or similar law.
(b) The Seller shall be obligated to sell Pre-Funded Mortgage Loans
and Other Conveyed Property relating thereto pursuant to this Section 2.02
subject only to the availability thereof to the Seller during the
Pre-Funding Period under the Purchase Agreement and Assignment. To the
extent Pre-Funded Mortgage Loans shall become available to the Seller
under the Purchase Agreement and Assignment during the Pre-Funded Period,
the Seller shall execute and deliver to the Depositor an Addition Notice,
accompanied by a Mortgage Loan Schedule with respect to such Pre-Funded
Mortgage Loans.
(c) Subject to the satisfaction of the conditions set forth in
paragraph (d) below, in consideration of the Depositor's delivery on the
related Pre-Funded Loan Transfer Dates to or upon the order of the
Unaffiliated Seller of the purchase price therefor, the Unaffiliated
Seller shall on such Pre-Funded Loan Transfer Dates sell to the Depositor
without recourse but subject to terms and provisions of this Agreement,
all of the right, title and interest of the Unaffiliated Seller in and to
the relevant Pre-Funded Mortgage Loans, including all principal
outstanding as of, and all interest due after, the related Cut-off Dates,
and all other assets included or to be included in the Trust Fund for the
benefit of the Certificateholders and the Insurer. In connection with each
such sale, the Originator, the Unaffiliated Seller, the Depositor and the
Trustee shall execute and deliver an instrument of transfer substantially
in the form of Exhibit G to the
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Pooling and Servicing Agreement (the "Pre-Funded Mortgage Loan Transfer
Agreement").
(d) The obligation of the Depositor to purchase Pre-Funded Mortgage
Loans and any other property and rights related thereto pursuant to this
Section 2.02 shall be subject to the satisfaction of each of the following
conditions on or prior to the related Pre-Funded Transfer Date:
(i) the Unaffiliated Seller shall have provided the Depositor,
the Trustee, the Rating Agencies and the Certificate Insurer with a
timely Addition Notice, which shall include a Mortgage Loan Schedule
listing such Pre-Funded Mortgage Loans, and shall have provided any
other information reasonably requested by any of the foregoing with
respect to the Pre-Funded Mortgage Loans;
(ii) the Originator and the Unaffiliated Seller shall have
executed and delivered a Pre-Funded Mortgage Loan Transfer Agreement
with respect to the Pre-Funded Mortgage Loans;
(iii) the Unaffiliated Seller shall have deposited in the
Collection Account all collections of (x) principal in respect of
the Pre-Funded Mortgage Loans received after the related Cut-off
Date and (y) interest due on the Pre-Funded Mortgage Loans after the
related Cut-off Date;
(iv) as of such Pre-Funded Loan Transfer Date, the
Unaffiliated Seller shall not be insolvent or aware of any pending
insolvency and the transfer of such Pre-Funded Mortgage Loans to the
Depositor on such Pre-Funded Loan Transfer Date shall not result in
the insolvency of the Unaffiliated Seller;
(v) such addition will not result in a material adverse tax
consequence to the Trust or the Holders of the Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the addition of such Pre-Funded Mortgage Loans shall not
result in any representation or warranty set forth in Section 3.02
being or becoming untrue or inaccurate and such Pre-Funded Mortgage
Loans shall satisfy the requirements of Section 2.02(c) of the
Pooling and Servicing Agreement;
(viii) the Unaffiliated Seller shall have delivered to the
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (d); and
(ix) there shall have been delivered to the Depositor, the
Certificate Insurer, the Rating Agencies and the Trustee,
independent
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Opinions of Counsel with respect to the transfer of the Pre-Funded
Mortgage Loans substantially in the form of the Opinions of Counsel
delivered to the Depositor, the Certificate Insurer and the Trustee,
respectively on the Closing Date (bankruptcy, corporate and tax
opinions).
Section 2.03. Purchase Price.
(a) On the Closing Date, as full consideration for the Unaffiliated
Seller's sale of the Initial Mortgage Loans and the Additional Mortgage
Loans and the Other Conveyed Property relating thereto to the Depositor,
the Depositor will deliver to the Unaffiliated Seller (i) an amount in
cash equal to $131,251,868.69 (which amount represents $170,130,436.68
less the Original Pre-Funded Amount), less certain expenses and (ii) the
Residual Certificate to be issued pursuant to the Pooling and Servicing
Agreement.
(b) On each Pre-Funded Loan Transfer Date, as full consideration for
the Unaffiliated Seller's sale of the Pre-Funded Mortgage Loans to be sold
to the Depositor on such Pre-Funded Loan Transfer Date and the Other
Conveyed Property relating thereto, the Depositor will deliver to the
Unaffiliated Seller an amount in cash equal to the sum of 100% of the
aggregate Principal Balance of the Pre-Funded Mortgage Loans as of the
related Pre-Funded Loan Cut-off Date.
Section 2.04. Delivery of Mortgage Loan Files. On or prior to the Closing
Date or Pre-Funded Loan Transfer Date, as the case may be, the Unaffiliated
Seller shall deliver or shall cause to be delivered to the Trustee (as assignee
of the Depositor pursuant to the Pooling and Servicing Agreement), the documents
listed in Section 2.03(a) of the Pooling and Servicing Agreement with respect to
each Mortgage Loan being sold to the Depositor on such date.
Section 2.05. Transfer of Mortgage Loans; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the
Trustee as may be required to effect the purposes of the Pooling and Servicing
Agreement, without further notice to, or consent of, the Unaffiliated Seller,
and the Trustee shall succeed to such of the rights and obligations of the
Depositor hereunder as shall be so assigned. The Depositor shall, pursuant to
the Pooling and Servicing Agreement, assign all of its right, title and interest
in and to the Mortgage Loans and its right to exercise the remedies created by
this Section 2.05 and Section 3.05 hereof to the Trustee for the benefit of the
Certificateholders. The Unaffiliated Seller agrees that, upon such assignment to
the Trustee, such representations, warranties, agreements and covenants will run
to and be for the benefit of the Trustee and the Trustee may enforce diligently,
without joinder of the Depositor, the repurchase obligations of the Unaffiliated
Seller set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
Section 2.06. Examination of Mortgage Loan File. Prior to the Closing Date
and each Pre-Funded Loan Transfer Date, as applicable, the Unaffiliated Seller
shall make the Mortgage Files available to the Depositor or its designee for
examination at the Unaffiliated Seller's offices or at such other place as the
Unaffiliated Seller shall
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reasonably specify. Such examination may be made by the Depositor or its
designee at any time on or before the Closing Date and each Pre-Funded Loan
Transfer Date, as applicable. If the Depositor or its designee makes such
examination prior to the Closing Date and each Pre-Funded Loan Transfer Date, as
applicable, and identifies any Mortgage Loans that do not conform to the
requirements of the Depositor as described in this Agreement, such Mortgage
Loans shall be deleted from the Schedule of Mortgage Loans. The Depositor may,
at its option and without notice to the Unaffiliated Seller, purchase all or
part of the Mortgage Loans without conducting any partial or complete
examination. The fact that the Depositor or the Trustee has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the rights of the Depositor or the Trustee to demand repurchase
or other relief as provided in this Agreement.
Section 2.07. Books and Records. The sale of each Mortgage Loan shall be
reflected on the Unaffiliated Seller's balance sheet and other financial
statements as a sale of assets by the Unaffiliated Seller. The Unaffiliated
Seller shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders and the Certificate Insurer.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Unaffiliated
Seller. The Unaffiliated Seller hereby represents and warrants to the Depositor,
as of the Closing Date, and as of each Pre-Funded Loan Transfer Date, that:
(a) Organization and Good Standing. The Unaffiliated Seller has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, 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 acquire,
own and sell the Mortgage Loans and the Other Conveyed Property
transferred to the Depositor.
(b) Due Qualification. The Unaffiliated 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.
(c) Power and Authority. The Unaffiliated Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Unaffiliated Seller has full power and authority to sell and
assign the Mortgage Loans and the Other Conveyed Property to be sold and
assigned to and deposited with the Depositor by it and has duly authorized
such sale and
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assignment to the Depositor by all necessary corporate action; the
execution, delivery and performance of this Agreement and the Related
Documents to which it is a party have been duly authorized by the
Unaffiliated Seller by all necessary corporate action; and this Agreement
has been duly and validly executed and delivered by the Unaffiliated
Seller.
(d) Valid Sale; Binding Obligations. This Agreement shall effect a
valid sale, transfer and assignment of the Mortgage Loans and the Other
Conveyed Property, enforceable against the Unaffiliated Seller and
creditors of and purchasers from the Unaffiliated Seller; and this
Agreement constitutes a legal, valid and binding obligation of the
Unaffiliated Seller enforceable in accordance with its 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.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement shall
not conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice, lapse of time or both) a default
under, the certificate of incorporation or by-laws of the Unaffiliated
Seller, or any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Unaffiliated Seller is a party or by which
it is bound, 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 Unaffiliated
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Unaffiliated Seller or any of its properties.
(f) No Proceedings. There are no material proceedings or
investigations pending or, to the Unaffiliated Seller's knowledge,
threatened against the Unaffiliated Seller, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Unaffiliated 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 Unaffiliated Seller of its obligations under, or the
validity or enforceability of, this Agreement, (iv) involving the
Unaffiliated Seller and 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.
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(g) Approvals. All approvals, authorizations, consents, 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 Unaffiliated 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.
(h) Chief Executive Office. The chief executive office of the
Unaffiliated Seller is at 00 Xxxx Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx.
Section 3.02. Representations and Warranties Relating to the Mortgage
Loans. The Unaffiliated Seller represents and warrants to the Depositor, as of
the Closing Date, as to each Initial Mortgage Loan and Additional Mortgage Loan,
and as of each Pre-Funded Loan Transfer Date, as to each Pre-Funded Mortgage
Loan, that immediately prior to the sale and transfer of the relevant Mortgage
Loans on such date by the Unaffiliated Seller to the Depositor:
(a) The information with respect to each Mortgage Loan set forth in
the Schedule of Mortgage Loans is true and correct as of the related
Cut-off Date;
(b) The information provided by the Unaffiliated Seller to the
Depositor in connection with a Pre-Funded Mortgage Loan is true and
correct in all material respects at the date or dates respecting which
such information was furnished and such Pre-Funded Mortgage Loans comply
with the requirements of Section 2.02(d);
(c) 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.
(d) 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;
(e) No Mortgage Loan had a Loan-to-Value Ratio in excess of 98.01%;
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(f) 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;
(g) Immediately prior to the transfer and assignment herein
contemplated, the Unaffiliated Seller held good and indefeasible title to,
and was the sole owner of, each Mortgage Loan conveyed by it subject to no
Liens, except Liens which will be released simultaneously with such
transfer and assignment and subordinate Liens on the related Mortgaged
Property;
(h) As of the related Cut-off Date, no Initial Mortgage Loan is 30
or more days delinquent and no Additional Mortgage Loan or Pre-Funded
Mortgage Loan is 60 or more days delinquent;
(i) 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;
(j) 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;
(k) 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 (m)
below;
(l) 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;
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(m) 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 (f) 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;
(n) 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;
(o) If any Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, 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;
(p) 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;
(q) The Unaffiliated 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 such Unaffiliated Seller including, to the
extent such
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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;
(r) 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 2.03 of the Pooling and Servicing Agreement;
(s) 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;
(t) 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;
(u) 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 has not been secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage;
(v) No Mortgage Loan was originated under a buydown plan;
(w) No Mortgage Loan provides for negative amortization, has a
shared appreciation feature, or other contingent interest feature;
(x) 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 thereon;
(y) 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;
(z) 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
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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 Originator to make future advances to the related Mortgagor at the
option of the Mortgagor;
(aa) 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;
(bb) 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;
(cc) 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;
(dd) 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 Originator 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;
(ee) 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;
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(ff) 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 Originator or the Unaffiliated
Seller has waived any default, breach, violation or event of acceleration;
(gg) 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;
(hh) The credit underwriting guidelines applicable to each Mortgage
Loan conform in all material respects to the Originator's underwriting
guidelines;
(ii) 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;
(jj) The Unaffiliated 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;
(kk) 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;
(ll) At the Cut-off Date, no Mortgagor had been identified on the
records of the Originator as being the subject of a current bankruptcy
proceeding;
(mm) By the Closing Date, the Unaffiliated Seller will have caused
the portions of the Unaffiliated Seller's records relating to the Initial
Mortgage Loans and the Additional Mortgage Loans to be clearly and
unambiguously marked to show that such Loans constitute part of the Trust
Fund and are owned by the Trust Fund in accordance with the terms of the
Pooling and Servicing Agreement, and by each Pre-Funded Loan Transfer
Date, the Unaffiliated Seller will have caused the portions of the
Unaffiliated Seller's records relating to the related Pre-Funded Mortgage
Loans to be clearly and unambiguously marked to show that such Mortgage
Loans constitute part of the Trust Fund and are owed by the Trust Fund in
accordance with the terms of the Pooling and Servicing Agreement;
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(nn) 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
Unaffiliated 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;
(oo) 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;
(pp) The Unaffiliated 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;
(qq) No Mortgage Loan is assumable (without the consent of the
Originator 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 Unaffiliated Seller with respect to such Mortgage Loan;
(rr) With respect to the Initial Mortgage Loans as of the Cut-off
Date: the aggregated Stated Principal Balance was $64,502,306.83; each of
the Stated Principal Balances was at least $13,000 but no more than
$348,300; the average Stated Principal Balance was $67,471.03; the
Mortgage Rates were at least 8.500% but no more than 14.890%; the weighted
average Mortgage Rate was 11.109%; the original Loan-to-Value Ratios were
at least 18.52% but no more than 98.01%; the weighted average original
Loan-to-Value Ratio was 77.67%; the remaining terms to stated maturity
were at least 60 months but no more than 360 months; the weighted average
remaining term to stated maturity was 201 months; the original terms to
stated maturity were at least 60 months but no more than 361 months; the
weighted average original term to stated maturity was 201 months; and no
more than 0.59% of the Mortgage Loans are secured by Mortgaged Properties
located in any one postal zip code area;
(ss) 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 Originator;
(tt) The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
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(uu) There was no fraud involved in the origination of the Mortgage
Loan by the mortgagee or the Mortgagor, any appraiser or any other party
involved in the origination of the Mortgage Loan; and
(vv) 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.
(ww) Each Mortgage Loan is a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code.
Section 3.03. Covenants of the Unaffiliated Seller. The Unaffiliated
Seller covenants to the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor and
the firm of independent certified public accountants retained with respect
to the issuance of the Certificates in making available all information
and taking all steps reasonably necessary to permit the accountants'
letters required hereunder to be delivered within the times set for
delivery herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be
satisfied on or prior to the Closing Date all of the conditions to the
Depositor's obligations set forth in Section 5.01 hereof that are within
the Unaffiliated Seller's (or its agents') control.
(c) The Unaffiliated Seller hereby agrees to do all acts,
transactions, and things and to execute and deliver all agreements,
documents, instruments, and papers by and on behalf of the Unaffiliated
Seller as the Depositor or its counsel may reasonably request in order to
consummate the transfer of the Mortgage Loans to the Depositor and the
subsequent transfer thereof to the Trustee, and the rating, issuance and
sale of the Certificates.
(d) The Unaffiliated Seller hereby agrees to arrange separately to
pay to the Trustee all of the Trustee's fees and expenses in connection
with the transactions contemplated by the Pooling and Servicing Agreement,
including, without limitation, all of the Trustee's fees and expenses in
connection with any actions taken by the Trustee pursuant to Section 8.10
thereof. For the avoidance of doubt, the parties hereto acknowledge that
it is the intention of the parties that the Depositor shall not pay any of
the Trustee's fees and expenses in connection with the transactions
contemplated by the Pooling and Servicing Agreement.
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Section 3.04. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Unaffiliated Seller,
as of the date of execution of this Agreement, as of the Closing Date and as of
each Pre-Funded Loan Transfer Date, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to purchase
each Mortgage Loan and 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 the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Unaffiliated Seller, constitutes the
legal, valid and binding agreement of the Depositor, enforceable against
the Depositor 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);
(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
the Depositor with this Agreement or the consummation by the Depositor of
any of the transactions contemplated hereby, except such as have been made
on or prior to the Closing Date;
(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b)
under the Securities Act;
(f) None of the execution and delivery of this Agreement, the
purchase of the Mortgage Loans from the Unaffiliated Seller, 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
the Depositor 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 indenture, deed of trust, contract or other agreement or other
instrument to which the Depositor is a party or by which it is bound and
which is material to the Depositor, 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 the Depositor.
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Section 3.05. Repurchase Obligation for Breach of a Representation or
Warranty. Each of the representations and warranties contained in Sections 3.01
and 3.02 shall survive the purchase by the Depositor of the Mortgage Loans and
the subsequent transfer thereof by the Depositor to the Trustee and shall
continue in full force and effect, notwithstanding any restrictive or qualified
endorsement on the Mortgage Loans and notwithstanding subsequent termination of
this Agreement or the Pooling and Servicing Agreement.
(a) Upon the occurrence of a breach of any of the Unaffiliated
Seller's representations and warranties under Section 3.02 hereof that
materially and adversely affects the related Mortgage Loan, the
Unaffiliated Seller shall, unless such breach shall have been cured in all
material respects or unless the Originator shall have repurchased such
Mortgage Loan directly from the Trustee, repurchase the related Mortgage
Loan from the Trustee within 60 days following discovery by or notice to
the Unaffiliated Seller of such breach pursuant to Section 2.04 of the
Pooling and Servicing Agreement, and, the Unaffiliated Seller shall pay
the Purchase Price to the Trustee pursuant to the Pooling and Servicing
Agreement. To the extent such Unaffiliated Seller fails to effect its
repurchase obligation, Emergent Group shall repurchase the related
Mortgage Loans and pay the Purchase Price to the Trustee on such date. The
provisions of this Section 3.05 are intended to grant the Trustee a direct
right against the Unaffiliated Seller and the Emergent Group to demand
performance hereunder, and in connection therewith, the Unaffiliated
Seller and Emergent Group waive any requirement of prior demand against
the Depositor with respect to such repurchase obligation. Any such
purchase resulting from the Unaffiliated Seller Repurchase Event shall
take place in the manner specified in Section 2.04 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 Unaffiliated Seller and Emergent Group under this Section shall be
performed in accordance with the terms hereof notwithstanding the failure
of the Depositor or the Servicer to perform any of their respective
obligations with respect to such Mortgage Loan under this Agreement or
under the Pooling and Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether the
related Mortgage Loan shall have been purchased by the Unaffiliated Seller
or Emergent Group, the Unaffiliated Seller shall indemnify the Depositor,
the Trustee, the Certificate Insurer, Emergent Group 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
Unaffiliated Seller Repurchase Events.
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Section 3.06. Reassignment of Purchased Mortgage Loans. Upon deposit in
the Collection Account of the Purchase Price of any Mortgage Loan repurchased by
the Unaffiliated Seller under Section 3.05 hereof, the Depositor and the Trustee
shall take such steps as may be reasonably requested by the Unaffiliated Seller
in order to assign to the Unaffiliated Seller all of the Depositor's and the
Trust Fund's right, title and interest in and to such Mortgage Loan and all
security and documents and all Other Conveyed Property conveyed to the Depositor
and the Trust Fund directly relating thereto, without recourse, representation
or warranty, except as to the absence of Liens created by or arising as a result
of actions of the Depositor or the Trustee. Such assignment shall be a sale and
assignment outright, and not for security. If, following the reassignment of a
Purchased Mortgage Loan, in any enforcement suit or legal proceeding, it is held
that the Unaffiliated 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 Depositor and the Trustee shall, at the expense
of the Unaffiliated Seller, take such steps as the Unaffiliated Seller deems
reasonably necessary to enforce the Mortgage Loan, including bringing suit in
the Depositor's or the Trustee's name or the names of the Certificateholders.
3.07. Waivers. No failure or delay on the part of the Depositor or the
Trustee as assignee of the Depositor, 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.
3.08. Representations and Warranties of Emergent Group. Emergent Group
hereby represents and warrants to the Depositor as of the date of execution of
this Agreement, as of the Closing Date and as of each Pre-Funded Loan Transfer
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);
20
(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 Emergent Group
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.
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Liability of the Unaffiliated Seller. The Unaffiliated
Seller shall be liable in accordance herewith only to the extent of the
obligations in this Agreement specifically undertaken by such Unaffiliated
Seller and its representations and warranties.
Section 4.02. Merger or Consolidation. The Unaffiliated Seller will keep
in full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation,
in each jurisdiction necessary to protect the validity and enforceability of
this Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any corporation or other entity (i) into which the Unaffiliated Seller or
Emergent Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Unaffiliated Seller or Emergent Group is a party or
(iii) succeeding to the business of the Unaffiliated Seller or Emergent Group,
which corporation has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantively identical to
those contained in the Unaffiliated Seller's certificate of incorporation, shall
execute an agreement of assumption to perform every obligation of the
Unaffiliated Seller 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 Unaffiliated Seller or Emergent Group, as the case may be,
hereunder (without relieving the Unaffiliated Seller or Emergent Group, as the
case may be, of its responsibilities hereunder, if it survives such merger or
consolidation) without the execution
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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, the Unaffiliated Seller shall
not merge or consolidate with any other Person or permit any other Person to
become the successor to the Unaffiliated Seller's business without the prior
written consent of the Certificate Insurer. The Unaffiliated Seller or Emergent
Group, as the case may be, 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 transaction, no
representation or warranty made pursuant to Sections 3.01, 3.02 and 3.08 or
covenant made pursuant to Section 3.03, 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 Unaffiliated Seller or Emergent
Group, as the case may be, 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
4.02 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Unaffiliated
Seller 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 4.03. Costs. In connection with the transactions contemplated
under this Agreement and the Pooling and Servicing Agreement, the Unaffiliated
Seller shall promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred): (i) the fees
and disbursements of the Unaffiliated Seller's counsel; (ii) the fees of the
Depositor's counsel, not to exceed $175,000; (iii) the fees and disbursements of
Ernst & Young, the Unaffiliated Seller's independent certified public
accountants, in rendering a comfort letter in connection with the Prospectus
Supplement and in comforting the Derived Information; (iv) the fees of Standard
& Poor's Ratings Group and Xxxxx'x Investors Service, Inc.; (v) the fees of the
Trustee, the fees and disbursements of the Trustee's counsel, if any and the
fees of the Trustee for custodial acceptance and loan deposit; (vi) expenses
incurred in connection with printing the Prospectus, the Prospectus Supplement,
any amendment or supplement thereto, any preliminary prospectus and the
Certificates; (vii) fees and expenses relating to the filing of documents with
the Securities and Exchange Commission (including without limitation periodic
reports under the Exchange Act); (viii) the shelf registration amortization fee
paid in connection with the issuance of Certificates; and (ix) to the extent not
covered above, all of the initial upfront expenses of the Depositor and the
Underwriter including, without limitation, legal fees and expenses, accountant
fees and expenses and expenses in connection with due diligence conducted on the
Mortgage Loan File. The Unaffiliated Seller also will promptly pay (or shall
promptly reimburse the
22
Depositor to the extent that the Depositor shall have paid or otherwise
incurred) all of the initial upfront expenses of the Certificate Insurer
including, without limitation, legal fees and expenses, accountant fees and
expenses and expenses in connection with due diligence conducted on the Mortgage
Loan File. All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expenses.
4.04. Servicing. The Mortgage Loans shall be serviced by the Servicer in
accordance with the Pooling and Servicing Agreement.
4.05. Mandatory Delivery. Each document specified in Section 2.03 of the
Pooling and Servicing Agreement for each Mortgage Loan shall be delivered to the
Depositor on or before the Closing Date or relevant Pre-Funded Loan Transfer
Date (except as otherwise provided in such Section 2.03).
4.06. Indemnification.
(a)(i) Emergent Group agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who have signed the
Registration Statement, Prudential Securities Incorporated and each of its
directors and each person or entity who controls the Depositor or
Prudential Securities Incorporated or any such person, within the meaning
of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Depositor,
Prudential Securities Incorporated or any such person or entity may become
subject, under the Securities Act or otherwise, and will reimburse the
Depositor, Prudential Securities Incorporated and each such controlling
person for any legal or other expenses incurred by the Depositor,
Prudential Securities Incorporated or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement or any amendment or supplement to
the Prospectus Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements in the Prospectus Supplement or any amendment or supplement
to the Prospectus Supplement, in light of the circumstances under which
they were made, not misleading, except insofar as such claims arise out of
or are based upon any untrue statement or omission in the FSA Information
or the Depositor Information. This indemnity agreement will be in addition
to any liability which Emergent Group may otherwise have.
(ii) Emergent Group agrees to indemnify and to hold each of the
Depositor, the Trustee, the Certificate Insurer and each Certificateholder
harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs,
fees and expenses that the Depositor, the Trustee, the Certificate Insurer
and any Certificateholder may sustain in any way related to (i) the
failure of the Unaffiliated Seller or Emergent Group to perform its
23
duties in compliance with the terms of this Agreement or (ii) the breach
by either the Unaffiliated Seller or Emergent Group of any of the
representations or warranties made by it in this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the
Unaffiliated Seller, each of its directors and each person or entity who
controls the Unaffiliated Seller or any such person, within the meaning of
Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Unaffiliated
Seller or any such person or entity may become subject, under the
Securities Act or otherwise, and will reimburse the Unaffiliated Seller
and any such director or controlling person for any legal or other
expenses incurred by the Unaffiliated Seller or any such director or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, any amendment or supplement to the Prospectus or
the Prospectus Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, but with respect to the Prospectus Supplement,
only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission relates to the information contained in
the Prospectus Supplement under the caption "Plan of Distribution" (the
information contained under the caption "Plan of Distribution" the
"Depositor Information"). This indemnity agreement will be in addition to
any liability which the Depositor may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 4.06 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 4.06, notify the indemnifying party
in writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any
liability which the indemnifying party may have to any indemnified party
hereunder except to the extent such indemnifying party has been prejudiced
thereby. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably satisfactory
to such indemnified party. After notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.06 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, if the defendants in
any such action
24
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall
not be liable for the expenses of more than one separate counsel.
(d) The Depositor agrees, assuming all Emergent Group-Provided
Information (defined below) is accurate and complete in all material
respects, to indemnify and hold harmless Emergent Group, its respective
officers and directors and each person who controls Emergent Group within
the meaning of the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they
may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in the Derived Information provided
by the Depositor, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability
or action as such expenses are incurred. The obligations of the Depositor
under this Section 4.06(d) shall be in addition to any liability which the
Depositor may otherwise have.
The procedures set forth in Section 4.06(c) shall be equally
applicable to this Section 4.06(d).
(e) For purposes of this Section 4.06, the term "Derived
Information" means such portion, if any, of the information used by the
Depositor for filing with the Commission on Form 8-K as: (i) is not
contained in the Prospectus without taking into account information
incorporated therein by reference; and (ii) does not constitute Emergent
Group-Provided Information. "Emergent Group-Provided Information" means
any computer tape furnished to the Depositor by Emergent Group or the
Originator concerning the assets comprising the Trust Fund.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 4.06 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party under
subsection(a) or subsection (b) of this Section 4.06 in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, the indemnifying party shall contribute to
25
the amount paid or payable by the indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered the
relative benefits received by Emergent Group and the Unaffiliated Seller
on the one hand, and the Depositor on the other, Emergent Group and the
Unaffiliated Seller's, Emergent Group's and the Depositor's relative
knowledge and access to information concerning the matter with respect to
which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations appropriate
in the circumstances. Emergent Group and the Unaffiliated Seller and the
Depositor agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. For
purposes of this Section 4.06, each director of the Depositor, each
officer of the Depositor who signed the Registration Statement, and each
person, if any who controls the Depositor within the meaning of Section 15
of the Securities Act, shall have the same rights to contribution as the
Depositor, and each director of the Unaffiliated Seller, and each person,
if any who controls the Unaffiliated Seller within the meaning of Section
15 of the Securities Act, shall have the same rights to contribution as
the Unaffiliated Seller.
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The obligations of
the Depositor to purchase the Initial Mortgage Loans and Additional Mortgage
Loans will be subject to the satisfaction, on the Closing Date, of the following
conditions. Upon payment of the purchase price for the Mortgage Loans, such
conditions shall be deemed satisfied or waived.
(a) Each of the obligations of the Unaffiliated Seller required to
be performed by it on or prior to the Closing Date pursuant to the terms
of this Agreement shall have been duly performed and complied with and all
of the representations and warranties of the Unaffiliated Seller and
Emergent Group under this Agreement shall be true and correct as of the
Closing Date and no event shall have occurred which, with notice or the
passage of time, would constitute a default under this Agreement, and the
Depositor shall have received a certificate to the effect of the foregoing
signed by an authorized officer of the Unaffiliated Seller.
(b) The Depositor shall have received a letter dated the date of
this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Ernst & Young, independent certified public
accountants, regarding the numerical information contained in the
Prospectus Supplement
26
under the caption "The Mortgage Pool."
(c) [This subsection is reserved.]
(d) The Depositor shall have received the following additional
closing documents, in form and substance satisfactory to the Depositor and
its counsel:
(i) the Schedule of Mortgage Loans;
(ii) the Pooling and Servicing Agreement and the Underwriting
Agreement, dated as of August 28, 1997, between the Depositor and
Prudential Securities Incorporated and all documents required
thereunder, duly executed and delivered by each of the parties
thereto other than the Depositor;
(iii) an officer's certificate, dated as of the Closing Date,
in the form of Exhibit B hereto, and attached thereto resolutions of
the board of directors of the Unaffiliated Seller and a copy of the
by-laws of the Unaffiliated Seller;
(iv) copy of the Unaffiliated Seller's and Emergent Group's
charter and all amendments, revisions, and supplements thereof,
certified as of a recent date by the Secretary of State of the State
of Delaware and the State of South Carolina, respectively;
(v) an opinion of the counsel for the Unaffiliated Seller and
Emergent Group as to various corporate matters (it being agreed that
the opinion shall expressly provide that the Trustee shall be
entitled to rely on the opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in forms
acceptable to the Depositor, its counsel, Standard & Poor's Ratings
Group and Xxxxx'x Investors Service, Inc. as to such matters as
shall be required for the assignment of a rating to the Class A
Certificates of "AAA" by Standard & Poor's Ratings Group, and "Aaa"
by Xxxxx'x Investors Service, Inc. (it being agreed that such
opinions shall expressly provide that the Trustee shall be entitled
to rely on such opinions);
(vii) a letter from Xxxxx'x Investors Service, Inc. that it
has assigned a rating of "Aaa" to the Class A Certificates;
27
(viii) a letter from Standard & Poor's Ratings Group that it
has assigned a rating of "AAA" to the Class A Certificates;
(ix) an opinion of counsel for the Trustee in form and
substance acceptable to the Depositor, its counsel, Xxxxx'x
Investors Service, Inc. and Standard & Poor's Ratings Group (it
being agreed that the opinion shall expressly provide that the
Unaffiliated Seller shall be entitled to rely on the opinion);
(x) an opinion or opinions of counsel for the Certificate
Insurer, in each case in form and substance acceptable to the
Depositor, its counsel, Xxxxx'x Investors Service, Inc. and Standard
& Poor's Ratings Group (it being agreed that the opinion shall
expressly provide that the Unaffiliated Seller shall be entitled to
rely on the opinion); and
(e) The Policy shall have been duly executed, delivered and issued
with respect to the Certificates.
(f) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be satisfactory
in form and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the Depositor with
such other certificates of its officers or others and such other documents
or opinions as the Depositor or its counsel may reasonably request.
Section 5.02. Conditions of Unaffiliated Seller's Obligations. The
obligations of the Unaffiliated Seller under this Agreement shall be subject to
the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of
this Agreement shall have been duly performed and complied with and all of
the representations and warranties of the Depositor contained in this
Agreement shall be true and correct as of the Closing Date, and the
Unaffiliated Seller shall have received a certificate to that effect
signed by an authorized officer of the Depositor.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents
required thereunder, in each case executed by the Depositor as
applicable;
28
and
(ii) a copy of a letter from Xxxxx'x Investors Service, Inc.
to the Depositor to the effect that it has assigned a rating of
"Aaa" to the Class A Certificates and a copy of a letter from
Standard & Poor's Ratings Group to the Depositor to the effect that
it has assigned a rating of "AAA" to the Class A Certificates.
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Agreement as
the Unaffiliated Seller may reasonably request.
Section 5.03. Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Unaffiliated Seller at any
time before delivery of and payment of the Purchase Price for the Initial
Mortgage Loans and Additional Mortgage Loans if: (i) any of the conditions set
forth in Section 5.01 are not satisfied when and as provided therein; (ii) there
shall have been the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller or Emergent Group, or for the winding up or liquidation
of the affairs of the Unaffiliated Seller; (iii) there shall have been the
consent by the Unaffiliated Seller or Emergent Group to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller or Emergent Group or of or relating to substantially all
of the property of the Unaffiliated Seller or Emergent Group; (iv) any purchase
and assumption agreement with respect to the Unaffiliated Seller or Emergent
Group or the assets and properties of the Unaffiliated Seller or Emergent Group
shall have been entered into; or (v) a Termination Event shall have occurred.
The termination of the Depositor's obligations hereunder shall not terminate the
Depositor's rights hereunder or its right to exercise any remedy available to it
at law or in equity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Prudential Securities Secured Financing
Corporation, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, if to the
Unaffiliated Seller, addressed to the Unaffiliated Seller at Emergent Mortgage
Holdings Corporation, 00 X. Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx or to such other address as the Unaffiliated
Seller may designate in writing to the Depositor and if to Emergent Group,
29
addressed to Emergent Group, Inc., 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000, Attention: Xxxxx X. Xxxx.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 6.03. Agreement of Unaffiliated Seller. The Unaffiliated Seller
agrees to execute and deliver such instruments and take such actions as the
Depositor may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 6.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Certificate Insurer; provided, however, that the Depositor may
assign its rights hereunder without the consent of the Unaffiliated Seller and
Emergent Group.
Section 6.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
30
Section 6.08. Confirmation of Intent. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Unaffiliated
Seller to the Depositor as contemplated by this Unaffiliated Seller's Agreement
be, and be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Mortgage Loans. It is, further, not the intention of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Unaffiliated Seller to the Depositor to secure a debt or other obligation of the
Unaffiliated Seller. However, in the event that, notwithstanding the intent of
the parties, the Mortgage Loans are held to continue to be property of the
Unaffiliated Seller then (a) this Unaffiliated Seller's Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
Uniform Commercial Code; (b) the transfer of the Mortgage Loans provided for
herein shall be deemed to be a grant by the Unaffiliated Seller to the Depositor
of a security interest in all of the Unaffiliated Seller's right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property; (c) the possession by the Depositor of Mortgage Loans and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Depositor pursuant to any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. The Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and would be maintained as such throughout the term of this
Agreement.
Section 6.09. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 6.10. Amendments. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof.
(a) This Agreement may be amended by the Unaffiliated Seller, the
Depositor 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
31
which event the consent of the Certificateholders with Voting Rights equal
to or in excess of 50% 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
Unaffiliated Seller, the Depositor 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, 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 6.11. Miscellaneous.
(a) The parties agree that each of the Certificate Insurer 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
32
Depositor under this Agreement which are assigned 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 Unaffiliated Seller
under Section 3.05 and 4.06 of this Agreement. The parties further agree
that Prudential Securities Incorporated and each of its directors and each
person or entity who controls Prudential Securities Incorporated or any
such person, within the meaning of Section 15 of the Securities Act (each,
an "Underwriter Entity") is an intended third-party beneficiary of this
Agreement to the extent necessary to obtain the benefit of the enforcement
of the obligations and covenants of the Unaffiliated Seller with respect
to each Underwriter Entity under Section 4.06 of this Agreement.
(b) The Depositor, Emergent Group and the Unaffiliated Seller intend
the conveyance by the Unaffiliated Seller to the Depositor of all of its
right, title and interest in and to the Mortgage Loans pursuant to this
Agreement to constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
33
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed by their respective officers thereunto duly authorized as of the date
first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:________________________________
Name: Xxxx Xxxxx
Title: Vice President
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By:________________________________
Name: Xxxxx X. Xxxx
Title: Vice President
EMERGENT GROUP, INC.
By:________________________________
Name: Xxxxx X. Xxxx
Title: Vice President, CFO
and Treasurer
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On September 24, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxx Xxxxx, personally known to
me (or proved to me on the basis of satisfactory evidence) to be Xxxx Xxxxx of
Prudential Securities Secured Financing Corporation, a Delaware corporation, the
corporation that executed the within Unaffiliated Seller's Agreement on behalf
of said corporation, and acknowledged to me that said corporation executed it.
----------------------------------
Notary Public
My Commission expires:
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On September 24, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxx X. Xxxx, personally known
to me (or proved to me on the basis of satisfactory evidence) to be Xxxxx X.
Xxxx of Emergent Group, Inc., the corporation that executed the within
Unaffiliated Seller's Agreement on behalf of said corporation, and acknowledged
to me that said corporation executed it.
----------------------------------
Notary Public
My Commission expires:
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On September 24, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxx X. Xxxx, personally known
to me (or proved to me on the basis of satisfactory evidence) to be Xxxxx X.
Xxxx of Emergent Mortgage Holdings Corporation, the corporation that executed
the within Unaffiliated Seller's Agreement on behalf of said corporation, and
acknowledged to me that said corporation executed it.
----------------------------------
Notary Public
My Commission expires:
EXHIBIT A
SCHEDULE OF MORTGAGE LOANS
EXHIBIT B
OFFICER'S CERTIFICATE
I, Xxxxx X. Xxxx, Vice President of EMERGENT MORTGAGE HOLDINGS CORPORATION
(the "Company") do hereby certify as follows:
(1) No financing statements or other filings have been filed naming the
Company as debtor or seller in any State of the United States of America to
perfect a sale, transfer or assignment of or lien, encumbrance, security
interest or other interest in, or which otherwise pertains to, the Mortgage
Loans other than those filed in connection with the Unaffiliated Seller's
Agreement and the Pooling and Servicing Agreement.
(2) The Company's chief executive office is located at 00 Xxxx Xxxxxxxxxx
Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Pooling and Servicing Agreement dated as
of August 10, 1997, among Prudential Securities Secured Financing Corporation,
as Depositor, Emergent Mortgage Corp., as Servicer, and First Union National
Bank, as Trustee.
IN WITNESS WHEREOF, I have set my hand this 24th day of September, 1997.
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By:_____________________________
Name: Xxxxx X. Xxxx
Title: Vice President
B-1
