EXECUTION COPY
PURCHASE AGREEMENT AND ASSIGNMENT
among
EMERGENT MORTGAGE HOLDINGS CORPORATION
as Purchaser
EMERGENT MORTGAGE CORP.
as Seller
and
EMERGENT GROUP, INC.
dated as of
August 10, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS ...................................................... 1
SECTION 1.1 GENERAL .................................................. 1
SECTION 1.2 SPECIFIC TERMS ........................................... 1
SECTION 1.3 USAGE OF TERMS ........................................... 2
SECTION 1.4 CERTAIN REFERENCES ....................................... 2
SECTION 1.5 NO RECOURSE .............................................. 3
SECTION 1.6 ACTION BY OR CONSENT OF CERTIFICATEHOLDERS ............... 3
SECTION 1.7 MATERIAL ADVERSE EFFECT .................................. 3
ARTICLE II CONVEYANCE OF THE MORTGAGE LOANS AND THE OTHER CONVEYED
PROPERTY ........................................................ 3
SECTION 2.1 CONVEYANCE OF INITIAL AND ADDITIONAL MORTGAGE LOANS ...... 3
SECTION 2.2 CONVEYANCE OF PRE-FUNDED MORTGAGE LOANS ................. 3
SECTION 2.3 PURCHASE PRICE ........................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES ................................. 4
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER ............. 4
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER .............. 7
SECTION 3.3 INDEMNIFICATION .......................................... 8
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF EMERGENT GROUP ......... 10
ARTICLE IV COVENANTS OF THE SELLER ......................................... 11
SECTION 4.1 PROTECTION OF TITLE OF PURCHASER, THE DEPOSITOR
AND THE TRUST ............................................ 11
SECTION 4.2 OTHER LIENS OR INTERESTS ................................. 12
SECTION 4.3 COSTS AND EXPENSES ....................................... 12
ARTICLE V REPURCHASES ...................................................... 13
SECTION 5.1 REPURCHASE OF MORTGAGE LOANS UPON BREACH OF WARRANTY ..... 13
SECTION 5.2 REASSIGNMENT OF PURCHASED MORTGAGE LOANS ................. 13
SECTION 5.3 WAIVERS .................................................. 14
ARTICLE VI MISCELLANEOUS ................................................... 14
SECTION 6.1 LIABILITY OF THE SELLER .................................. 14
SECTION 6.2 MERGER OR CONSOLIDATION OF ANY SELLER OR PURCHASER ....... 14
SECTION 6.3 LIMITATION ON LIABILITY OF THE SELLER AND OTHERS ......... 15
SECTION 6.4 AMENDMENT ................................................ 15
SECTION 6.5 NOTICES .................................................. 16
SECTION 6.6 MERGER AND INTEGRATION ................................... 16
SECTION 6.7 SEVERABILITY OF PROVISIONS ............................... 16
SECTION 6.8 INTENTION OF THE PARTIES ................................. 17
SECTION 6.9 GOVERNING LAW ............................................ 17
SECTION 6.10 COUNTERPARTS ............................................. 17
SECTION 6.11 CONVEYANCE OF THE MORTGAGE LOANS AND THE OTHER
CONVEYED PROPERTY TO THE TRUST ........................... 17
SECTION 6.12 NONPETITION COVENANT ..................................... 18
SECTION 6.13 MISCELLANEOUS ............................................ 18
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Schedules
Schedule A - Schedule of Mortgage Loans Conveyed
Schedule B - Schedule of Representations
ii
PURCHASE AGREEMENT AND ASSIGNMENT
THIS PURCHASE AGREEMENT AND ASSIGNMENT, dated as of August 10, 1997,
executed among Emergent Mortgage Holdings Corporation, a Delaware corporation
(the "Purchaser"), Emergent Mortgage Corp., a South Carolina corporation (the
"Seller") and Emergent Group, Inc., a South Carolina corporation ("Emergent
Group").
W I T N E S S E T H:
WHEREAS, Purchaser has agreed to purchase from Seller, and Seller,
pursuant to this Agreement, is transferring to Purchaser the Mortgage Loans and
Other Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, Purchaser and Seller, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General. The specific terms defined in this Article
include the plural as well as the singular. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Pooling and Servicing Agreement (defined
herein).
Section 1.2 Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Additional Mortgage Loans" means the mortgage loans listed on the
Schedule of Mortgage Loans Conveyed which were identified subsequent to August
10, 1997 but prior to the Closing Date.
"Agreement" shall mean this Purchase Agreement and Assignment and
all amendments hereof and supplements hereto.
"Initial Mortgage Loans" means the mortgage loans listed on the
Schedule of Mortgage Loans Conveyed 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 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
and Servicing Agreement.
"Other Conveyed Property" means all monies at any time paid or
payable on the Mortgage Loans or in respect thereof after the Cut-off Date
(including amounts due on or before the Cut-off Date but received by the Seller
after the Cut-off Date), the insurance policies relating to the Mortgage Loans
and all Insurance Proceeds, the Mortgage Files, and any REO Property, together
with all collections thereon and proceeds thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of August 10, 1997, among Prudential Securities Secured
Financing Corporation, as Depositor, Emergent Mortgage Corp. as Servicer, and
First Union National Bank, as Trustee, as the same may be amended, modified or
supplemented from time to time.
"Pre-Funded Mortgage Loans" has the meaning ascribed thereto in
Section 2.2.
"Purchaser" means Emergent Mortgage Holdings Corporation.
"Related Documents" means the Unaffiliated Seller's Agreement, the
Insurance Agreement and the Indemnification Agreement among the Seller, the
Purchaser, Prudential Securities Incorporated, the Depositor, Emergent Group and
Financial Securities Assurance Corporation relating to the Policy.
"Schedule of Mortgage Loans Conveyed" 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 Purchaser pursuant to Section 2.2.
"Schedule of Representations" means the Schedule of Representations
and Warranties attached hereto as Schedule B.
"Seller Repurchase Event" means with respect to the Seller, the
occurrence of a breach of any of Seller's representations and warranties under
Schedule B hereto.
"Seller" means Emergent Mortgage Corp.
Section 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Pooling and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
Section 1.4 Certain References. All references to the Stated
Principal Balance of a Mortgage Loan as of a Record Date shall refer to the
close of business on such day, or as of
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the first day of a Collection Period shall refer to the opening of business on
such day. All references to the last day of a Collection Period shall refer to
the close of business on such day
Section 1.5 No Recourse. Without limiting the obligations of Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of the
Seller, or of any predecessor or successor of any of the Seller.
Section 1.6 Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite Percentage Interest necessary to effect any
such action or consent has been obtained; provided, however, that, solely for
the purpose of determining whether the Trustee is entitled to rely upon any such
action or consent, only Certificates which the Trustee knows to be so owned
shall be so disregarded.
Section 1.7 Material Adverse Effect. Whenever a determination is to
be made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material adverse
effect on the Trust Fund or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Policy.
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
AND THE OTHER CONVEYED PROPERTY
Section 2.1 Conveyance of Initial and Additional Mortgage Loans.
Subject to the terms and conditions of this Agreement, the Seller hereby sells,
to Purchaser without recourse (but without limitation of its obligations in this
Agreement), and Purchaser hereby purchases, all right, title and interest of the
Seller in and to the Mortgage Loans, the Additional Mortgage Loans and the Other
Conveyed Property relating thereto. It is the intention of the Seller and
Purchaser that the transfer and assignment contemplated by this Agreement shall
constitute a sale of such Mortgage Loans and the Other Conveyed Property
relating thereto from the Seller to Purchaser, conveying good title thereto free
and clear of any Liens, and such Mortgage Loans and Other Conveyed Property
shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy or similar
law.
Section 2.2 Conveyance of Pre-Funded Mortgage Loans. (a) Subject to
the terms and conditions of this Agreement, the Seller hereby agrees to
sell, and the Purchaser agrees to purchase, additional mortgage loans
satisfying the requirements of Section 2.02(c) of the Pooling and
Servicing Agreement ("Pre-Funded Mortgage Loans"),
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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
Seller and Purchaser that the transfer and assignment contemplated by this
Agreement shall constitute a sale of such Pre-Funded Mortgage Loans and
Other Conveyed Property from the Seller to Purchaser, conveying good title
thereto free and clear of any liens, and such Mortgage Loans and Other
Conveyed Property shall not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy or similar law.
(b) The Seller shall be obligated to sell Pre-Funded Mortgage Loans
and Other Conveyed Property relating thereto pursuant to this Section 2.2
subject only to the availability thereof during the Pre-Funding Period
through the Seller's normal mortgage loan origination and acquisition
activities.
(c) In consideration of the Purchaser's delivery on the related
Pre-Funded Loan Transfer Dates to or upon the order of the Seller of the
purchase price therefor, the Seller shall sell, transfer, assign, set over
and convey to the Trustee without recourse but subject to terms and
provisions of this Agreement, all of the right, title and interest of the
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 Date, and all other assets in respect of the relevant Pre-Funded
Mortgage Loans included or to be included in the Trust Fund for the
benefit of the Certificateholders and the Certificate Insurer. In
connection with each such sale, the Seller and the Purchaser shall execute
and deliver an instrument of transfer substantially in the form of Exhibit
G to the Pooling and Servicing Agreement (the "Pre-Funded Mortgage Loan
Transfer Agreement").
Section 2.3 Purchase Price. (a) Simultaneously with the conveyance
of the Initial Mortgage Loans and Additional Mortgage Loans and the Other
Conveyed Property relating thereto to Purchaser, Purchaser has paid or
caused to be paid to or upon the order of Seller, as full consideration
therefor, $131,251,868.69 (which amount represents $170,130,436.68 less
the Original Pre-Funded Amount), less certain expenses, by wire transfer
of immediately available funds (representing the proceeds to Purchaser
from the sale of the Initial Mortgage Loans to the Depositor and the
Additional Mortgage Loans).
(b) On each Pre-Funded Loan Transfer Date, as full consideration for
Seller's sale to the Purchaser of the related Pre-Funded Mortgage Loans
and Other Conveyed Property relating thereto, the Purchaser will deliver
to the Seller an amount in cash equal to the sum of 100% of the aggregate
Stated Principal Balance of the Pre-Funded Mortgage Loans as of the
related Cut-off Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Seller. Seller
makes the following representations and warranties, on which Purchaser relies in
purchasing the Mortgage Loans and the Other
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Conveyed Property and in transferring the Mortgage Loans and the Other Conveyed
Property to the Depositor under the Unaffiliated Seller's Agreement, on which
the Depositor will rely in transferring the Mortgage Loans and the Other
Conveyed Property to the Trustee under the Pooling and Servicing Agreement and
on which the Certificate Insurer will rely in issuing the Policy. Such
representations are made (i) as of the execution and delivery of this Agreement
, (ii) as of the Closing Date and (iii) as of each Pre-Funded Loan Transfer
Date, but shall survive the sale, transfer and assignment of the Mortgage Loans
and the Other Conveyed Property hereunder, the sale, transfer and assignment
thereof by the Seller to the Depositor under the Unaffiliated Seller's Agreement
and the sale, transfer and assignment thereof by the Depositor to the Trustee
under the Pooling and Servicing Agreement. Seller and Purchaser agree that
Purchaser will assign to the Depositor all of Purchaser's rights under this
Agreement, the Depositor will assign to the Trustee all of Purchaser's rights
under this Agreement and that the Trustee will thereafter be entitled to enforce
this Agreement directly against the Seller in the Trustee's own name on behalf
of the Certificateholders and the Certificate Insurer.
(a) Schedule of Representations. The representations and warranties
made by the Seller and set forth on the Schedule of Representations are
true and correct.
(b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of South Carolina, with power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement.
(c) Due Qualification. The Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the Mortgage Loans and
Other Conveyed Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment to
Purchaser by all necessary corporate action and the execution, delivery
and performance of this Agreement has been duly authorized by the Seller
by all necessary corporate action.
(e) No False Statement. Neither this Agreement nor the information
contained in the Prospectus Supplement, other than under the captions "The
Insurer" and "Plan of Distribution," nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any
material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
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(f) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Mortgage Loans and the Other Conveyed Property, enforceable against
the Seller and creditors of and purchasers from the Seller, and this
Agreement constitutes the legal, valid and binding obligation of the
Seller enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement does
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Seller, or any
material indenture, agreement, mortgage, deed of trust or other instrument
to which the Seller is a party or by which it is bound or any of its
properties are subject, or result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement or violate any law, order, rule or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its
properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trustee in any Mortgage Loan, or affect the
Seller's ability to perform its obligations under this Agreement;
(h) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, (iv) involving the Seller or which
might adversely affect the federal income tax or other federal, state or
local tax attributes of the Certificates or (v) that could have a material
adverse effect on the Mortgage Loans. To the Seller's knowledge, there are
no proceedings or investigations pending or threatened against the Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties relating to the Seller which might adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates;
(i) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement except such consents as have been
obtained;
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(j) Approvals. All approvals, authorizations, orders or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing Date.
(k) Chief Executive Office. The chief executive office of Emergent
Mortgage Corp. is located at 00 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000.
Section 3.2 Representations and Warranties of Purchaser. Purchaser
makes the following representations and warranties, on which Seller relies in
selling, assigning, transferring and conveying the Mortgage Loans and the Other
Conveyed Property to Purchaser hereunder. Such representations are made (i) as
of the execution and delivery of this Agreement, (ii) as of the Closing Date,
and (iii) as of each Pre-Funded Loan Transfer Date, but shall survive the sale,
transfer and assignment of the Mortgage Loans and the Other Conveyed Property
hereunder, the sale, transfer and assignment thereof by Purchaser to the
Depositor under the Unaffiliated Seller's Agreement and the sale, transfer and
assignment thereof by the Depositor to the Trustee under the Pooling and
Servicing Agreement.
(a) Organization and Good Standing. Purchaser has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Delaware, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and has, full power, authority and legal right to acquire
and own the Mortgage Loans and the Other Conveyed Property, and to
transfer the Mortgage Loans and the Other Conveyed Property to the
Depositor pursuant to the Unaffiliated Seller's Agreement.
(b) Due Qualification. Purchaser is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Purchaser's ability to acquire the
Mortgage Loans or the Other Conveyed Property or the validity or
enforceability of the Mortgage Loans and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Related Documents.
(c) Power and Authority. Purchaser has the power, authority and
legal right to execute and deliver this Agreement and to carry out the
terms hereof and to acquire the Mortgage Loans and the Other Conveyed
Property hereunder; and the execution, delivery and performance of this
Agreement and all of the documents required pursuant hereto have been duly
authorized by Purchaser by all necessary action.
(d) No Consent Required. Purchaser is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such
as have been obtained, effected or made.
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(e) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(f) No Violation. The execution, delivery and performance by
Purchaser of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents do
not and will not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time)
a default under, the certificate of incorporation or bylaws of Purchaser,
or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which
Purchaser is a party or by which Purchaser is bound or to which any of its
properties are subject, or result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than the Unaffiliated Seller's Agreement, or violate any law, order, rule
or regulation, applicable to Purchaser or its properties, of any federal
or state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over Purchaser or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Purchaser, threatened against Purchaser,
before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality having jurisdiction over
Purchaser or its properties: (i) asserting the invalidity of this
Agreement or any of the Related Documents, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by Purchaser of
its obligations under, or the validity or enforceability of, this
Agreement or any of the Related Documents or (iv) that may adversely
affect the federal or state income tax attributes of, or seeking to impose
any excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Mortgage Loans and the Other Conveyed Property
hereunder or the transfer by Purchaser of the Mortgage Loans and the Other
Conveyed Property to the Depositor pursuant to the Unaffiliated Seller's
Agreement.
In the event of any breach of a representation and warranty made by Purchaser
hereunder, the Seller covenants and agrees that it will take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all pass-through
certificates or other similar securities issued by the Trust Fund, or a trust or
similar vehicle formed by Purchaser, have been paid in full. The Seller and
Purchaser agree that damages will not be an adequate remedy for such breach and
that this covenant may be specifically enforced by Purchaser or by the Trustee
on behalf of the Trust Fund.
Section 3.3 Indemnification. (a) The Seller shall defend, indemnify
and hold harmless Purchaser, the Depositor, the Trustee, the Certificateholders
and the Certificate
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Insurer from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from any breach of any of the
Seller's representations and warranties contained herein.
(b) The Seller shall defend, indemnify and hold harmless Purchaser,
the Depositor, the Trustee, the Certificateholders and the Certificate
Insurer from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or resulting, from the use,
ownership or operation by the Seller or any affiliate thereof of a
Mortgaged Property.
(c) The Seller will defend and indemnify Purchaser, the Depositor,
the Trustee, the Certificate Insurer and the Certificateholders against
any and all costs, expenses, losses, damages, claims and liabilities
arising out of or resulting from any action taken, or any action failed to
be taken that is required to be taken under this Agreement, by it in
respect of any portion of the Trust Fund other than in accordance with
this Agreement.
(d) The Seller agrees to pay, and shall defend, indemnify and hold
harmless Purchaser, the Depositor, the Trustee, the Certificateholders and
the Certificate Insurer from and against any taxes that may at any time be
asserted against Purchaser, the Depositor, the Trustee, the
Certificateholders or the Certificate Insurer with respect to the
transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege, or license taxes (but, not
including any taxes asserted with respect to, and as of the date of, the
sale, transfer and assignment of the Mortgage Loans and the Other Conveyed
Property to Purchaser, the conveyance of the Mortgage Loans or Other
Conveyed Property under the Unaffiliated Seller's Agreement and the
conveyance of the Trust Fund to the Trustee or the issuance and original
sale of the Certificates, or asserted with respect to ownership of the
Mortgage Loans and Other Conveyed Property or the Trust Fund which shall
be indemnified by each Seller pursuant to clause (e) below, or federal,
state or other income taxes, arising out of distributions on the
Certificates or transfer taxes arising in connection with the transfer of
Certificates) and costs and expenses in defending against the same,
arising by reason of the acts to be performed by the Seller under this
Agreement or imposed against such Persons.
(e) The Seller agrees to pay, and to indemnify, defend and hold
harmless Purchaser, the Depositor, the Trustee, the Certificateholders and
the Certificate Insurer from, any taxes which may at any time be asserted
against such Persons with respect to, and as of the date of, the
conveyance or ownership of the Mortgage Loans or the Other Conveyed
Property hereunder, the conveyance or ownership of the Mortgage Loans or
Other Conveyed Property under the Unaffiliated Seller's Agreement and the
conveyance or ownership of the Trust Fund under the Pooling and Servicing
Agreement or the issuance and original sale of the Certificates,
including, without limitation, any sales, gross receipts, personal
property, tangible or intangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including
franchise taxes, arising out of the transactions contemplated hereby or
transfer taxes arising in connection with the transfer of Certificates)
and costs and expenses in defending against
9
the same, arising by reason of the acts to be performed by each Seller
under this Agreement or imposed against such Persons.
(f) The Seller shall defend, indemnify, and hold harmless Purchaser,
the Depositor, the Trustee, the Certificateholders and the Certificate
Insurer from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon Purchaser,
the Depositor, the Trustee, the Certificateholders and the Certificate
Insurer through, the negligence, willful misfeasance, or bad faith of the
Seller in the performance of its duties under this Agreement or by reason
of reckless disregard of each Seller's obligations and duties under this
Agreement.
(g) The Seller shall indemnify, defend and hold harmless Purchaser,
the Depositor, the Trustee, the Certificate Insurer and the
Certificateholders from and against any loss, liability or expense
incurred by reason of the violation by the Seller of federal or state
securities laws in connection with the registration or the sale of the
Certificates.
(h) The Seller shall indemnify, defend and hold harmless Purchaser,
the Depositor, the Trustee, the Certificate Insurer and the
Certificateholders from and against any loss, liability or expense imposed
upon, or incurred by, Purchaser, the Depositor, the Trustee, the
Certificate Insurer or the Certificateholders as a result of the failure
of any Mortgage Loan, or the sale of the related Mortgage Property to
comply with all requirements of applicable law.
Indemnification under this Section 3.3 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive termination
of the Trust Fund. The indemnity obligations hereunder shall be in addition to
any obligation that the Seller may otherwise have.
Section 3.4 Representations and Warranties of Emergent Group.
Emergent Group hereby represents and warrants to the Purchaser as of the date of
execution of this Agreement, 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);
10
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by
Emergent Group with this Agreement or the consummation by it of any of the
transactions contemplated hereby or thereby, except such as have been made
on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the other transactions contemplated hereby, or the
fulfillment of or compliance with the terms and conditions of this
Agreement, (i) conflicts or will conflict with the charter or bylaws of
Emergent Group or conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any material indenture, deed of trust, contract or other
agreement or other instrument to which Emergent Group is a party or by
which it is bound and which is material to Emergent Group, or (ii) results
or will result in a violation of any law, rule, regulation, order,
judgment or decree of any court or governmental authority having
jurisdiction over Emergent Group.
ARTICLE IV
COVENANTS OF THE SELLER
Section 4.1 Protection of Title of Purchaser, the Depositor and the
Trust.
(a) At or prior to the Closing Date or relevant Pre-Funded Loan
Transfer Date, as the case may be, the Seller shall have filed or caused
to be filed a UCC-1 financing statement, executed by the Seller as seller
or debtor, naming Purchaser as purchaser or secured party and describing
the Mortgage Loans and the Other Conveyed Property being sold by it to
Purchaser as collateral, with the office of the Secretary of State of the
State of South Carolina and in such other locations as Purchaser shall
have required. From time to time thereafter, the Seller shall execute and
file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of
Purchaser under this Agreement, of the Depositor under the Unaffiliated
Seller's Agreement and of the Trustee under the Pooling and Servicing
Agreement in the Mortgage Loans and the Other Conveyed Property, as the
case may be, and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to Purchaser, the Depositor, the Trustee, and the
Certificate Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing. In the event that each Seller fails to perform its obligations
under this subsection, Purchaser, the Depositor or the Trustee may do so,
at the expense of the Seller.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing
statement or continuation statement filed by the Seller (or by Purchaser
or the Trustee on behalf of the Seller) in accordance with paragraph (a)
above seriously misleading within the meaning of ss. 9-402(7) of the UCC,
unless the Seller shall have given Purchaser, the Depositor, the Trustee
and the Certificate Insurer at least 60 days prior written notice thereof,
and shall
11
promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) The Seller shall give Purchaser, the Depositor, the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and the Trustee at least 60 days prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation
statement or of any new financing statement. The Seller shall at all times
maintain each office from which it services Mortgage Loans and its
principal executive office within the United States of America.
(d) The Seller shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Mortgage Loans to
Purchaser, the conveyance of the Mortgage Loans by Purchaser to the
Depositor and the conveyance of the Mortgage Loans by the Depositor to the
Trustee on behalf of the Certificateholders and the Certificate Insurer,
the Seller's master computer records (including archives) that shall refer
to a Mortgage Loan indicate clearly that such Mortgage Loan has been sold
to Purchaser and has been conveyed by Purchaser to the Depositor and by
the Depositor to the Trustee on behalf of the Certificateholders and the
Certificate Insurer. Indication of the Trustee's ownership of a Mortgage
Loan shall be deleted from or modified on each Seller's computer systems
when, and only when, the Mortgage Loan shall become a Deleted Mortgage
Loan, shall have been repurchased or shall have been paid in full.
(e) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in mortgage loans
to any prospective purchaser, lender or other transferee, the Seller shall
give to such prospective purchaser, lender, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that,
if they shall refer in any manner whatsoever to any Mortgage Loan shall
indicate clearly that such Mortgage Loan has been sold to Purchaser, sold
by Purchaser to the Depositor, and is owned by the Trust Fund.
Section 4.2 Other Liens or Interests. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on the
Mortgage Loans or the Other Conveyed Property or any interest therein, and the
Seller shall defend the right, title, and interest of Purchaser, the Depositor
and the Trustee in and to the Mortgage Loans and the Other Conveyed Property
against all claims of third parties claiming through or under the Seller.
Section 4.3 Costs and Expenses. The Seller shall pay all reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and its Related Documents.
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ARTICLE V
REPURCHASES
Section 5.1 Repurchase of Mortgage Loans Upon Breach of Warranty.
Upon the occurrence of a Seller Repurchase Event, the Seller shall, unless
such breach shall have been cured in all material respects, repurchase the
related Mortgage Loan from the Trustee within 60 days following discovery
or notice to the Seller of such breach pursuant to Section 2.04 of the
Pooling and Servicing Agreement and the Seller shall pay the Purchase
Price to the Trustee as provided in the Pooling and Servicing Agreement.
In lieu of repurchasing any such Mortgage Loan, the Seller may cause such
Mortgage Loan to be removed from the Trust Fund and substitute one or more
Qualified Substitute Mortgage Loans in the manner provided in Section 2.05
of the Pooling and Servicing Agreement. To the extent the Seller fails to
effect its repurchase obligation, Emergent Group shall repurchase the
related Mortgage Loan and pay the Purchase Price to the Trustee on such
date. The provisions of this Section 5.1 are intended to grant the Trustee
a direct right against the Seller to demand performance hereunder, and in
connection therewith the Seller and Emergent Group waive any requirement
of prior demand against the Depositor or Purchaser with respect to such
repurchase or substitution obligation. Any such purchase or substitution
resulting from a Seller Repurchase Event shall take place in the manner
specified in Section 2.05 of the Pooling and Servicing Agreement.
Notwithstanding any other provision of this Agreement or the Pooling and
Servicing Agreement to the contrary, the obligation of the Seller and
Emergent Group under this Section shall be performed in accordance with
the terms hereof notwithstanding the failure of the Servicer, the
Unaffiliated Seller and the Depositor to perform any of their respective
obligations with respect to such Mortgage Loan under the Pooling and
Servicing Agreement.
(b) In addition to the foregoing, the Seller shall promptly purchase
from Purchaser (or provide for the substitution of a Qualified Substitute
Mortgage Loan) any Mortgage Loan repurchased by Purchaser (in its capacity
as Seller under the Unaffiliated Seller's Agreement) upon the occurrence
of an Unaffiliated Seller Repurchase Event (as defined therein) involving
a breach by Purchaser (in its capacity as Seller under the Unaffiliated
Seller's Agreement) pursuant to Section 3.05 of the Unaffiliated Seller's
Agreement.
(c) In addition to the foregoing and notwithstanding whether the
related Mortgage Loan shall have been purchased by the Seller or Emergent
Group, the Seller shall indemnify the Trustee, the Depositor, the
Certificate Insurer and the Certificateholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by
any of them as a result of third party claims arising out of the events or
facts giving rise to a repurchase or substitution under Section 2.05 of
the Pooling and Servicing Agreement Section 3.05 of the Unaffiliated
Seller's Agreement or this Section 5.1 hereof.
Section 5.2 Reassignment of Purchased Mortgage Loans. Upon deposit
in the Collection Account of the Purchase Price of any Mortgage Loan repurchased
by the Seller or the
13
substitution of a Qualified Substitute Mortgage Loan under Section 5.1 hereof,
the Servicer and the Trustee shall take such steps as may be reasonably
requested by the Seller in order to assign to the Seller all of Purchaser's, the
Depositor's and the Trustee's right, title and interest in and to such
repurchased Mortgage Loan or Mortgage Loan for which substitution was made and
all security and documents and all Other Conveyed Property conveyed to
Purchaser, the Depositor and the Trustee directly relating thereto, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of Purchaser, the
Depositor or the Trustee. Such assignment shall be a sale and assignment
outright, and not for security. If, following the reassignment of a Mortgage
Loan, in any enforcement suit or legal proceeding, it is held that the Seller
may not enforce any such Mortgage Loan on the ground that it shall not be a real
party in interest or a holder entitled to enforce the Mortgage Loan, the
Servicer and the Trustee shall, at the expense of the Seller, take such steps as
the Seller deems reasonably necessary to enforce the Mortgage Loan, including
bringing suit in Purchaser's or the Trustee's name or the names of the
Certificateholders.
Section 5.3 Waivers. No failure or delay on the part of Purchaser,
the Depositor or the Trustee as assignee of Purchaser, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Liability of the Seller. The Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by the Seller and its representations and warranties.
Section 6.2 Merger or Consolidation of Any Seller or Purchaser. Any
corporation or other entity (i) into which the Seller, Purchaser or Emergent
Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Seller, Purchaser or Emergent Group is a party or
(iii) succeeding to the business of the Seller, Purchaser or Emergent Group, in
the case of Purchaser, which corporation has a certificate of incorporation
containing provisions relating to limitations on business and other matters
substantively identical to those contained in Purchaser's certificate of
incorporation, and in each of the foregoing cases such corporation shall execute
an agreement of assumption to perform every obligation of the Seller, Purchaser
or Emergent Group, as the case may be, under this Agreement, provided that,
whether or not such assumption agreement is executed, shall be the successor to
the Seller, Purchaser or Emergent Group, as the case may be, hereunder (without
relieving the Seller, Purchaser or Emergent Group of its responsibilities
hereunder, if it survives such merger or consolidation) without the execution or
filing of any document or any further act by any of the parties to this
Agreement. Notwithstanding the foregoing, so long as a Certificate Insurer
Default shall not have occurred and be continuing, Purchaser shall not merge or
consolidate with any other Person or permit any other Person to become the
successor to Purchaser's business without the prior written consent of the
Certificate Insurer. The Seller, Purchaser or Emergent Group shall promptly
inform the other party, the Trustee and, so long as a
14
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 3.1, 3.2 and 3.4 or covenant made pursuant to Section 3.3,
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction)
and no event that, after notice or lapse of time, or both, would become an event
of default under the Insurance Agreement, shall have occurred and be continuing,
(y) the Seller, Purchaser or Emergent Group, as applicable, shall have delivered
to the Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 6.2 and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with, and
(z) the Seller, Purchaser or Emergent Group, as applicable, shall have delivered
to the Trustee an Opinion of Counsel, stating, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trustee in the Trust Fund and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
Section 6.3 Limitation on Liability of the Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement or its Related Documents and that in its opinion may
involve it in any expense or liability.
Section 6.4 Amendment.
(a) This Agreement may be amended by the Seller, Purchaser and
Emergent Group, with the prior written consent of the Certificate Insurer
(so long as a Certificate Insurer Default shall not have occurred and be
continuing) but without the consent of the Trustee or any of the
Certificateholders (unless a Certificate Insurer Default shall have
occurred, in which event the consent of the Certificateholders with Voting
Rights equal to or in excess of 50% of the Voting Rights shall be
obtained) (i) to cure any ambiguity or (ii) to correct any provisions in
this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, Purchaser and Emergent Group with the prior written consent of the
Certificate Insurer (so long as a Certificate Insurer Default shall not
have occurred and be continuing) and with the consent of the Trustee and
Certificateholders having Voting Rights equal to or in excess of 50%, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in
any manner the rights of the Certificateholders; provided, however, that
no such amendment shall (i) increase or reduce in any manner the amount
of, or accelerate or delay the timing of,
15
collections of payments on Mortgage Loans or distributions that shall be
required to be made on any Certificate or the Pass-Through Rates or (ii)
reduce the aforesaid percentage required to consent to any such amendment
or any waiver hereunder, without the consent of the Holders of all
Certificates then outstanding.
(c) Prior to the execution of any such amendment or consent,
Emergent Group shall have furnished written notification of the substance
of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe, including the establishment of record dates. The
consent of any Holder of a Certificate given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate and
of any Certificate issued upon the transfer thereof or in exchange thereof
or in lieu thereof whether or not notation of such consent is made upon
the Certificate.
Section 6.5 Notices. All demands, notices and communications to any
of the Seller, Purchaser or Emergent Group hereunder shall be in writing,
personally delivered, or sent by telecopier (subsequently confirmed in writing),
reputable overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been given upon receipt (a) in the case
of the Seller, to Emergent Mortgage Corp., 00 Xxxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxx Xxxxx, (b) in the case of
Emergent Group, to Emergent Group, Inc., 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxx X. Xxxx, or (c) in the case
of Purchaser, to Emergent Mortgage Holdings Corporation, 00 Xxxx Xxxxxxxxxx Xxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Section 6.6 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement, the Pooling and Servicing Agreement and the
Related Documents set forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement, the Pooling and Servicing Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
Section 6.7 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants,
16
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 6.8 Intention of the Parties. The execution and delivery of
this Agreement shall constitute an acknowledgment by the Seller and Purchaser
that they intend that the assignment and transfer herein contemplated constitute
a sale and assignment outright, and not for security, of the Mortgage Loans and
the Other Conveyed Property conveying good title thereto free and clear of any
Liens, from the Seller to Purchaser, and that none of the Mortgage Loans and the
Other Conveyed Property shall be a part of the Seller's estate in the event of
the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to, the
Seller. In the event that such conveyance is determined to be made as security
for a loan made by Purchaser, the Depositor, the Trustee or the
Certificateholders to the Seller, as applicable, the parties intend that the
Seller shall have granted to Purchaser a security interest in all right, title
and interest in and to the Mortgage Loans and the Other Conveyed Property
conveyed pursuant to Section 2.1 hereof, and that this Agreement shall
constitute a security agreement under applicable law.
Section 6.9 Governing Law. This Agreement shall be construed in
accordance with, the laws of the State of New York without regard to the
principles of conflicts of laws thereof and the obligations, rights and remedies
of the parties under this Agreement shall be determined in accordance with such
laws.
Section 6.10 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 6.11 Conveyance of the Mortgage Loans and the Other Conveyed
Property to the Trust. The Seller acknowledges that Purchaser intends, pursuant
to the Unaffiliated Seller's Agreement, to convey the Initial Mortgage Loans,
the Additional Mortgage Loans and the Other Conveyed Property relating thereto,
together with its respective rights under this Agreement, to the Depositor on
the date hereof, and with respect to the Pre-Funded Mortgage Loans, on the
respective Pre-Funded Loan Transfer Dates therefor, and that the Depositor
intends, pursuant to the Pooling and Servicing Agreement, to convey such
Mortgage Loans and the Other Conveyed Property, together with its respective
rights under this Agreement, to the Trustee on the date hereof or, in the case
of such Pre-Funded Mortgage Loans, on such Pre-Funded Loan Transfer Dates, as
the case may be. The Seller acknowledges and consents to such conveyance and
waives any further notice thereof and covenants and agrees that the
representations and warranties of the Seller contained in this Agreement and the
rights of Purchaser hereunder are intended to benefit the Depositor, the
Certificate Insurer, the Trustee and the Certificateholders. In furtherance of
the foregoing, the Seller covenants and agrees to perform its duties and
obligations hereunder, in accordance with the terms hereof for the benefit of
the Depositor, the Certificate Insurer, the Trustee and the Certificateholders
and that, notwithstanding anything to the contrary in this Agreement, the Seller
shall be directly liable to the Trustee, the Certificate Insurer and the
Certificateholders (notwithstanding any failure by the Servicer or Purchaser to
perform its duties and obligations hereunder or under the Pooling and
17
Servicing Agreement) and that the Trustee may enforce the duties and obligations
of the Seller under this Agreement against the Seller for the benefit of the
Certificate Insurer, the Trustee and the Certificateholders.
Section 6.12 Nonpetition Covenant. Until one year and one day after
the termination of the Trust Fund, neither the Seller, nor Emergent Group nor
the Purchaser shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust Fund (or, in the case of the Seller and Emergent Group, against
Purchaser) under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust Fund (or Purchaser) or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Trust Fund (or Purchaser).
Section 6.13 Miscellaneous. The parties agree that each of the
Certificate Insurer, the Depositor and the Trustee is an intended third-party
beneficiary of this Agreement to the extent necessary to enforce the rights and
to obtain the benefit of the remedies of the Purchaser under this Agreement
which are assigned to the Depositor pursuant to the Unaffiliated Seller's
Agreement and to the Trustee for the benefit of the Certificateholders pursuant
to the Pooling and Servicing Agreement and to the extent necessary to obtain the
benefit of the enforcement of the obligations and covenants of the Seller under
Section 3.3 and 5.1 of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
EMERGENT MORTGAGE HOLDINGS
CORPORATION, as Purchaser
By:
----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President, CFO and Treasurer
EMERGENT MORTGAGE CORP., as Seller
By:
----------------------------------------
Name: J. Xxxx Xxx
Title: Executive Senior Vice President
EMERGENT GROUP, INC.
By:
----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President, CFO and Treasurer
19
SCHEDULE OF MORTGAGE LOANS CONVEYED
SCHEDULE A
A-1
SCHEDULE B
SCHEDULE OF REPRESENTATIONS
1. The information with respect to each Mortgage Loan set forth in
the Schedule of Mortgage Loans is true and correct as of the related Cut-off
Date;
2. All of the original or certified documentation required to be
delivered to the Trustee pursuant to the Pooling and Servicing Agreement
(including all material documents related thereto) with respect to each Mortgage
Loan has been or will be delivered to the Trustee in accordance with the terms
of such Pooling and Servicing Agreement. Each of the documents and instruments
specified to be included therein has been duly executed and in due and proper
form, and each such document or instrument is in a form generally acceptable to
prudent mortgage lenders that regularly originate or purchase mortgage loans
comparable to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans.
3. Each Mortgaged Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums, townhouses and
units in planned unit developments, or manufactured housing, but shall not
include cooperatives;
4. No Mortgage Loan had a Loan-to-Value Ratio in excess of 98.01%;
5. Each Mortgage is a valid and subsisting first lien of record on
the Mortgaged Property subject in all cases to the exceptions to title set forth
in the title insurance policy, with respect to the related Mortgage Loan, which
exceptions are generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
6. Immediately prior to the transfer and assignment herein
contemplated, the Seller held good and indefeasible title to, and was the sole
owner of, each Mortgage Loan conveyed by it subject to no liens, charges,
mortgages, encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Purchaser will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan subject to
no Liens, except Liens which will be released simultaneously with such transfer
and assignment and subordinate Liens on the related Mortgaged Property;
7. As of the related Cut-off Date, no 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.
B-1
8. There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is in
good repair;
9. There is no valid and enforceable right of rescission, offset,
defense or counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or interest
on such Mortgage Note or the defense of usury, nor will the operation of any of
the terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
10. There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph 12 below;
11. Each Mortgage Loan at the time it was made complied in all
material respects with all applicable state and federal laws and regulations,
including, without limitation, the federal Truth-in-Lending Act and other
consumer protection laws, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws;
12. With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard American Land Title Association form, or other form
acceptable in a particular jurisdiction by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, in an amount at least equal to the initial Stated Principal Balance of
such Mortgage Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first mortgage lien of record on the real property
described in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph 5 above, was effective on
the date of the origination of such Mortgage Loan, and, as of the Cut-off Date
such policy will be valid and thereafter such policy shall continue in full
force and effect;
13. The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy (which may be a blanket policy of the
type described in the related Pooling and Servicing Agreement) with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the
related Mortgage Loan and (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis;
14. If any Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, 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
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outstanding principal balance of the related Mortgage Loan and (B) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973;
15. Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan had full legal capacity to execute all documents relating to
such Mortgage Loan and convey the estate therein purported to be conveyed;
16. The Seller has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
servicer in any insurance policies applicable to any Mortgage Loans delivered by
the Seller including, to the extent such Mortgage Loan is not covered by a
blanket policy described in the Pooling and Servicing Agreement, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee rights in favor of
the servicer;
17. Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage have
been recorded (or are in the process of being recorded) in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
for the benefit of the Trustee, subject to the provisions of Section 2.03 of the
Pooling and Servicing Agreement;
18. The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the owners and
which has been delivered to the Trustee;
19. The proceeds of each Mortgage Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans have been paid;
20. Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note is not
and has not been secured by any collateral, pledged account or other security
except the lien of the corresponding Mortgage;
21. No Mortgage Loan was originated under a buydown plan;
22. No Mortgage Loan provides for negative amortization, has a
shared appreciation feature, or other contingent interest feature;
23. Each Mortgaged Property is located in the state identified in
the Schedule of Mortgage Loans and consists of one or more parcels of real
property with a residential dwelling erected thereon;
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24. Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
25. Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-off Date, have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term
reflected on the Schedule of Mortgage Loans. The consolidated principal amount
does not exceed the original principal amount of the related Mortgage Loan. No
Mortgage Note permits or obligates the Seller to make future advances to the
related Mortgagor at the option of the Mortgagor;
26. There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
27. All of the improvements of any Mortgaged Property lie wholly
within the boundaries and building restriction lines of such Mortgaged Property,
and no improvements on adjoining properties encroach upon such Mortgaged
Property, and, if a title insurance policy exists with respect to such Mortgaged
Property, are stated in such title insurance policy and affirmatively insured;
28. No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and such Mortgaged Property is lawfully occupied
under the applicable law;
29. With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Seller or the Trust Fund to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor;
30. Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption available which materially interferes with the
right to sell the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage;
31. There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event which,
with the passage of time
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or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration; and neither the Seller or
the Purchaser has waived any default, breach, violation or event of
acceleration;
32. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in whole
or in part;
33. The credit underwriting guidelines applicable to each Mortgage
Loan conform in all material respects to the Seller's underwriting guidelines;
34. All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage Note
and Mortgage have been duly and properly executed by such parties;
35. The Seller has no actual knowledge that there exist on any
Mortgaged Property any hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation;
36. None of the Mortgage Loans shall be due from the United States
of America or any State or from any agency, department, subdivision or
instrumentality thereof;
37. At the Cut-off Date, no Mortgagor had been identified by the
Seller as being the subject of a current bankruptcy proceeding;
38. By the Closing Date, the Seller will have caused the portions of
the Seller's servicing records relating to the Initial Mortgage Loans and the
Additional Mortgage Loans to be clearly and unambiguously marked to show that
such Mortgage Loans have been sold to the Trust Fund and are owned by the Trust
Fund in accordance with the terms of the Pooling and Servicing Agreement, and by
each Pre-Funded Loan Transfer Date, the Seller will have caused the portions of
the Seller's servicing 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 owned by the Trust in accordance with
the terms of the Pooling and Servicing Agreement;
39. No Mortgage Loan was originated in, or is subject to the laws
of, any jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Mortgage Loan under this Agreement or
pursuant to transfers of the Certificates. The Seller has not entered into any
agreement with any account debtor that prohibits, restricts or conditions the
assignment of any portion of the Mortgage Loans;
40. All filings (including, without limitation, UCC filings)
required to be made by any Person and actions required to be taken or performed
by any Person in any jurisdiction to give the Trustee a first priority perfected
lien on, or ownership interest in, the Mortgage Loans and the proceeds thereof
and the other property of the Trust Fund have been made, taken or performed;
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41. The Seller has not done anything to convey any right to any
Person that would result in such Person having a right to payments due under the
Mortgage Loan or otherwise to impair the rights of the Trust Fund and the
Certificateholders in any Mortgage Loan or the proceeds thereof;
42. No Mortgage Loan is assumable (without the Seller's consent
which consent has not been given) by another Person in a manner which would
release the Mortgagor thereof from such Mortgagor's obligations to the Seller
with respect to such Mortgage Loan;
43. With respect to the Initial Mortgage Loans as of the Cut-off
Date: the aggregated Stated Principal Balance was $64,502,306.83; each of the
Stated Principal Balances was at least $13,000.00 but no more than $348,300.00:
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 approximately
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
approximately 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; and
44. No selection procedures adverse to the Certificateholders or to
the Certificate Insurer have been utilized in selecting such Mortgage Loan from
all other similar Mortgage Loans originated by the Seller;
45. The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
46. There was no fraud involved in the origination of the Mortgage
Loan by the mortgagee or by the Mortgagor, any appraiser or any other party
involved in the origination of the Mortgage Loan; and
47. Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value of such
Mortgaged Property on the Mortgage Loan Schedule. Each appraisal has been
performed in accordance with the requirements of FNMA or FHLMC.
48. Each Mortgage Loan is a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code.
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