INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated April 10, 2000 (the
"Agreement") among Prudential Securities Secured Financing Corporation, a
Delaware corporation (the "Depositor"), Prudential Securities Incorporated, a
Delaware corporation, as underwriter (the "Underwriter"), and Mortgage Lenders
Network USA, Inc., a Delaware corporation ("Mortgage Lenders Network").
WITNESSETH:
WHEREAS, Mortgage Lenders Network and the Depositor are parties to the
Pooling and Servicing Agreement (as defined herein);
WHEREAS, Mortgage Lenders Network stands to receive substantial financial
benefits in its capacity as servicer under the Pooling and Servicing
Agreement;
WHEREAS, the Underwriter and the Depositor have entered into an
Underwriting Agreement (as defined herein) pursuant to which the Underwriter
has agreed to underwrite the Offered Certificates;
WHEREAS, as an inducement to the Depositor to enter into the Pooling and
Servicing Agreement and the Underwriting Agreement and to the Underwriter to
enter into the Underwriting Agreement, Mortgage Lenders Network wishes to
provide for indemnification and contribution on the terms and conditions
hereinafter set forth;
WHEREAS, the Depositor and the Underwriter wish to provide
indemnification and contribution to Mortgage Lenders Network on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms shall have the meanings set forth below, unless the
context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
Agreement: This Indemnification and Contribution Agreement, as the same
may be amended in accordance with the terms hereof.
FSA Information: Any information to be contained in the Prospectus
Supplement under the headings: "The Note Insurance" and "Report of Experts"
and the sections of the Summary relating to the foregoing.
Mortgage Lenders Network Information: The numerical information (i) in
the Prospectus Supplement contained under the headings "The Mortgage Pool" and
"The Seller and Servicer" and (ii) concerning the characteristics of the
Mortgage Loans furnished by Mortgage Lenders Network in writing or by
electronic transmission that was used by the Underwriter in the preparation of
any Computational Materials or ABS Term Sheets (or amendments or supplements
thereof) included in an ABS Filing (or amendment or supplement thereof).
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement
dated as of April 1, 2000, between the Depositor and Mortgage Lenders Network.
Offered Certificates: Mortgage Lenders Network Home Equity Loan Trust
2000-1, Pass-Through Certificates, Series 2000-1, Classes X-0, X-0, X-0, X-0
and A-5 issued pursuant to the Pooling and Servicing Agreement.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pooling and Servicing Agreement: The Pooling and Servicing Agreement,
dated as of April 1, 2000, among the Depositor, Mortgage Lenders Network, as
seller and servicer, and Norwest Bank Minnesota, National Association, as
trustee.
Prospectus: The prospectus dated June 23, 1999 of Prudential Securities
Secured Financing Corporation.
Prospectus Supplement: The prospectus supplement dated April 10, 2000,
relating to the public offering by the Underwriter of the Offered
Certificates.
Underwriting Agreement: The Underwriting Agreement dated April 10, 2000,
between the Underwriter and the Depositor, relating to the Offered
Certificates.
Underwriter: Prudential Securities Incorporated.
1.2 Other Terms.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Underwriting Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and delivered by
such party; and
(c) assuming the due authorization, execution and delivery by each other
party hereto, this Agreement constitutes the legal, valid and binding
obligation of such party.
ARTICLE III.
INDEMNIFICATION
3.1 Indemnification by Mortgage Lenders Network, the Depositor, and the
Underwriter.
(a) Mortgage Lenders Network shall indemnify and hold harmless the
Depositor, the Underwriter, each of their respective directors, each of their
respective officers and each Person, if any, that controls the Depositor or
the Underwriter, as the case may be, within the meaning of the 1933 Act,
against any and all losses, claims, damages or liabilities to which the
Depositor, the Underwriter or any such director, officer or controlling Person
may become subject, under the 1933 Act or otherwise, to the extent that 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 thereto or in any ABS Filing or any amendment or supplement
thereof, 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 in which they were
made, not misleading, to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission relates to information set
forth in the Mortgage Lenders Network Information in the Prospectus Supplement
or ABS Filing, and Mortgage Lenders Network shall in each case reimburse the
Depositor and the Underwriter, as the case may be, and each such director,
officer or controlling Person for any legal or other expenses reasonably
incurred by the Depositor, the Underwriter, and each such director, officer or
controlling Person, in connection with investigating or defending any such
loss, claim, damage, liability or action. Mortgage Lenders Network's liability
under this Section 3.1 shall be in addition to any other liability that
Mortgage Lenders Network may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless Mortgage
Lenders Network, each of its directors, each of its officers and each Person,
if any, that controls Mortgage Lenders Network within the meaning of the 1933
Act, against any losses, claims, damages or liabilities to which Mortgage
Lenders Network or any such director, officer or controlling Person may become
subject, under the 1933 Act or otherwise, to the extent that such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement, 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 in which they were made, not misleading, to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission relates to written information provided by the Underwriter
specifically for use in connection with the preparation of the Prospectus
Supplement, or (ii) any Computational Materials or ABS Tern Sheets (or
amendments or supplements thereof) furnished to the Depositor by the
Underwriter pursuant to Section 10 or Section 11 of the Underwriting
Agreement, or directly by the Underwriter, to the extent that such materials
were delivered to investors by the Underwriter, and incorporated by reference
in the Prospectus Supplement or the Prospectus or any amendment or supplement
thereof (except that no such indemnity shall be available for any losses,
claims, damages or liabilities, or actions in respect thereof, resulting from
any Pool Error), and the Underwriter shall reimburse Mortgage Lenders Network
and each such director, officer or controlling Person for any legal or other
expenses reasonably incurred by Mortgage Lenders Network and any such
director, officer or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Underwriter's
liability under this Section 3.1 shall be in addition to any liability that
the Underwriter may otherwise have. Mortgage Lenders Network and the
Underwriter acknowledge and agree that the information set forth in [[(i) the
first sentence of the penultimate paragraph on the front cover of the
Prospectus Supplement and (ii) in the first sentence of the second and fourth
paragraphs under the caption "Underwriting" in the Prospectus Supplement]]
constitute the only information furnished in writing by the Underwriters for
use in connection with the preparation of the Prospectus Supplement, and the
Underwriters confirm that such statements are correct.
(c) The Depositor shall indemnify and hold harmless Mortgage Lenders
Network, each of its directors, each of its officers and each Person, if any,
that controls Mortgage Lenders Network within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities to which Mortgage Lenders
Network or any such director, officer or controlling Person may become
subject, under the 1933 Act or otherwise, to the extent that such losses,
claims, damage 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 the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission does not relate to (i) the Mortgage
Lenders Network Information, (ii) the FSA Information or (iii) the information
covered by subsection (b) above, and the Depositor shall reimburse Mortgage
Lenders Network and each such director, officer or controlling Person for any
legal or other expenses reasonably incurred by Mortgage Lenders Network and
any such director, officer or controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, that such payment by the Depositor shall not exceed the aggregate
proceeds to the Depositor from the sale of the Offered Notes. The Depositor's
liability under this Section 3.1 shall be in addition to any liability that
the Depositor may otherwise have.
(d) If the indemnification provided for in this Section 3.1 shall for any
reason be unavailable to an indemnified party under this Section 3.1, then the
party which would otherwise be obligated to indemnify with respect thereto, on
the one hand, and the parties which would otherwise be entitled to be
indemnified, on the other, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated herein
and incurred by the parties hereto in such proportions that are appropriate to
reflect the relative benefit to the Depositor, the Underwriter and Mortgage
Lenders Network from the issuance and sale of the Offered Certificates or if
such allocation is not permitted by a court of competent jurisdiction, then on
a basis appropriate to also recognize the relative fault of the Depositor, the
Underwriter and Mortgage Lenders Network in connection with the applicable
misstatements or omissions as well as any other relevant equitable
considerations. Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the 0000 Xxx) shall
be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. For purposes of this Section 3.1, (i) each
director of a party to this Agreement and each Person, if any, that controls a
party to this Agreement within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such party.
3.2 Notification; Procedural Matters.
Promptly after receipt by an indemnified party under Section 3.1 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party (or if a
claim for contribution is to be made against another party) under Section 3.1
hereof, notify the indemnifying party (or other contributing party) in writing
of the commencement thereof; but the-omission so to notify the indemnifying
party (or other contributing party) shall not relieve it from any liability it
may have to any indemnified party (or to the party requesting contribution)
otherwise than under Section 3.1 hereof. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, the indemnifying party elects to assume the defense
thereof, it may participate (jointly with any other indemnifying party
similarly notified) with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall reasonably have concluded that there may be legal defenses
available to it or them and/or other indemnified parties 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. Upon receipt of
notice from the indemnifying party to such indemnified party of its election
so to assume the defense of such action and approval by the indemnified party
of such counsel, the indemnifying party shall not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
(plus any local counsel) in connection with the assertion of legal defenses in
accordance with the proviso to the immediately preceding sentence, (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party
shall have authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. No party shall be liable for
contribution with respect to any action or claim settled without its consent,
which shall not be unreasonably withheld. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE IV.
GENERAL
4.1 Payment and Reimbursement of Expenses.
Mortgage Lenders Network shall:
(a) pay all expenses of printing all documents relating to the initial
offering;
(b) pay any expenses for accountants' letters obtained relating to the
Computational Materials and/or ABS Term Sheets (as each are defined in the
Underwriting Agreement ); and
(c) reimburse the Depositor for any payments (including all out-of-pocket
expenses and reasonable fees and disbursements of counsel) made by them
pursuant to Section 5(f) of the Underwriting Agreement.
Furthermore, if the sale of the Offered Certificates is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 of the Underwriting Agreement is not satisfied or because of any
refusal, inability or failure on the part of Mortgage Lenders Network to
perform any agreement herein or comply with any provision hereof or in the
Mortgage Loan Purchase Agreement other than by reason of a default by the
Underwriter or Depositor, Mortgage Lenders Network will reimburse the
Underwriter upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been reasonably incurred by
them in connection with the proposed purchase and sale of the Offered
Certificates.
4.2 Survival.
This Agreement and the obligations of the parties hereunder shall survive
the purchase and sale of the Offered Certificates.
4.3 Successors.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors and
controlling Persons referred to in Article III hereof and their respective
successors and assigns, and no other Person shall have any right or obligation
hereunder.
4.4 Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to principles of conflict
of laws.
4.5 Miscellaneous.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Agreement may be signed in any number of counterparts, each of which shall be
deemed an original, which taken together shall constitute one and the same
instrument.
4.6 Notices.
All communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered to (a) in the case of the Depositor,
Prudential Securities Secured Financing Corporation, Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: [[ ]]; (b) in the case of Mortgage Lenders
Network, Mortgage Lenders Network USA, Middlesex Corporate Center, 11th Floor,
000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxxx; (c) in the
case of the Underwriter, Prudential Securities Incorporated, Xxx Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: [[ ]].
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:__________________________________
Name:
Title:
MORTGAGE LENDERS NETWORK USA, INC.
By:__________________________________
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:__________________________________
Name:
Title:
