EXHIBIT 4.4
EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
EMERGENT RESIDUAL HOLDING CORP.
Sponsor
and
EMERGENT GROUP, INC.
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of December 1, 1997
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS..................................................... 1
Section 1.01. Terms Defined in Sale and Servicing Agreement............. 1
Section 1.02. Specific Terms............................................ 1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS............. 4
Section 2.01. Agreement to Purchase Initial and Additional Mortgage
Loans................................................... 4
Section 2.02. Agreement to Purchase Pre-Funded Mortgage Loans........... 4
Section 2.03. Purchase Price............................................ 6
Section 2.04. Satisfaction and Discharge of Warehouse Liens............. 6
Section 2.05. Delivery of Mortgage Loan Files........................... 6
Section 2.06. Transfer of Mortgage Loans; Assignment of Agreement....... 7
Section 2.07. Examination of Mortgage Loan File......................... 7
Section 2.08. Books and Records......................................... 7
ARTICLE THREE REPRESENTATIONS AND WARRANTIES................................ 8
Section 3.01. Representations and Warranties as to the Sponsor.......... 8
Section 3.02. Representations and Warranties Relating to the Mortgage
Loans................................................... 9
Section 3.03. Covenants of the Sponsor.................................. 16
Section 3.04. Representations and Warranties of the Depositor........... 17
Section 3.05. Repurchase Obligation for Breach of a Representation or
Warranty................................................ 18
Section 3.06. Reassignment of Purchased Mortgage Loans.................. 19
Section 3.07. Waivers................................................... 19
Section 3.08. Representations and Warranties of Emergent Group.......... 19
ARTICLE FOUR THE SPONSOR.................................................... 21
Section 4.01. Liability of the Sponsor.................................. 21
Section 4.02. Merger or Consolidation................................... 21
Section 4.03. Costs..................................................... 22
Section 4.04. Servicing................................................. 22
Section 4.05. Mandatory Delivery........................................ 22
Section 4.06. Indemnification........................................... 22
ARTICLE FIVE CONDITIONS OF CLOSING.......................................... 26
Section 5.01. Conditions of Depositor's Obligations..................... 26
Section 5.02. Conditions of Sponsor's Obligations....................... 28
Section 5.03. Termination of Depositor's Obligations.................... 28
(i)
ARTICLE SIX MISCELLANEOUS................................................... 29
Section 6.01. Notices................................................... 29
Section 6.02. Severability of Provisions................................ 29
Section 6.03. Agreement of Sponsor...................................... 29
Section 6.04. Survival.................................................. 30
Section 6.05. Effect of Headings and Table of Contents.................. 30
Section 6.06. Successors and Assigns.................................... 30
Section 6.07. Governing Law............................................. 30
Section 6.08. Confirmation of Intent.................................... 30
Section 6.09. Execution in Counterparts................................. 31
Section 6.10. Amendments................................................ 31
Section 6.11. Miscellaneous............................................. 32
EXHIBITS
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Officer's Certificate
(ii)
This Unaffiliated Seller's Agreement, dated as of December __, 1997, among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation (the
"Depositor"), EMERGENT RESIDUAL HOLDING CORP., a Delaware corporation (the
"Sponsor"), and EMERGENT GROUP, INC., a South Carolina corporation ("Emergent
Group").
W I T N E S S E T H:
WHEREAS, the Depositor has agreed to purchase from the Sponsor and the
Sponsor is selling to the Depositor, pursuant to this Agreement, the Mortgage
Loans and Other Conveyed Property;
WHEREAS, it is the intention of the Sponsor and the Depositor that
simultaneously with the Sponsor's conveyance of the Mortgage Loans and Other
Conveyed Property to the Depositor (a) the Depositor shall deposit the Mortgage
Loans and Other Conveyed Property, pursuant to a Sale and Servicing Agreement to
be dated as of December 1, 1997 (the "Sale and Servicing Agreement"), to be
entered into by and among the Depositor, as depositor, Emergent Mortgage Corp.,
as servicer, and First Union National Bank, as indenture trustee (the "Indenture
Trustee") into the Emergent Home Equity Loan Trust 1997-4 (the "Trust") created
pursuant to the Trust Agreement dated as of November 26, 1997 (the "Trust
Agreement") between the Sponsor and Wilmington Trust Company, as owner trustee
(the "Owner Trustee"), (b) the Indenture Trustee shall issue notes (the "Notes")
evidencing beneficial ownership interests in the Trust to or upon the written
order of the Depositor;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Terms Defined in Sale and Servicing Agreement. Capitalized
terms used herein without definition shall have the respective meanings
specified in the Sale and Servicing Agreement.
Section 1.02. Specific Terms. Whenever used in this Agreement, the
following terms and phrases, unless the context requires otherwise, shall have
the following meanings:
"Agreement" means this Unaffiliated Seller's Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Commission" means the Securities and Exchange Commission and its
successors.
"Contribution Agreements" means the Originator/Contributor Contribution
Agreement and the Contributor/Sponsor Contribution Agreement.
"Cut-off Date Principal Balance" means as to each Mortgage Loan, its
unpaid principal balance as of the Cut-off Date.
"Depositor Information" shall have the meaning given to such term in
Section 4.06(b).
"FSA Information" means any information furnished by the Insurer in
writing expressly for the use in the Offering Document, it being understood that
in respect of the initial Offering Document, the FSA Information is limited to
the information included under the caption "The Insurer" and the financial
statements of the Insurer incorporated by reference therein.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics liens and any liens that
attach to a Mortgaged Property by operation of law.
"Other Conveyed Property" means all monies at any time paid or payable on
the Mortgage Loans or in respect thereof after the Cut-off Date (including
amounts due on or before the Cut-off Date but received by the Originator, the
Sponsor or the Depositor after the Cut-off Date), the insurance policies
relating to the Mortgage Loans and all Insurance Proceeds, rights of the Sponsor
against the Originator under the Purchase Agreement and Assignment, all items
contained in the Mortgage Files, and any REO Property, together with all
collections thereon and proceeds thereof.
"Prospectus" means the Prospectus dated June 10, 1997 relating to the
offering by the Depositor from time to time of its pass-through certificates or
notes (issuable in series) in the form in which it was or will be filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Notes.
"Prospectus Supplement" means the Prospectus Supplement dated December 4,
1997, relating to the offering of the Notes in the form in which it was or will
be filed with the Commission pursuant to Rule 424(b) under the Securities Act
with respect to the offer and sale of the Notes.
"Registration Statement" means that certain registration statement on Form
S-3, as amended (Registration No. 333-27355) relating to the offering from time
to time of pass-through certificates or notes (issuable in series) as heretofore
declared effective by the Commission.
"Related Documents" means the Insurance Agreement and the Indemnification
Agreement.
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"Schedule of Mortgage Loans" means the schedule of Initial Mortgage Loans
and Additional Mortgage Loans and related mortgage notes attached hereto as
Schedule A, which schedule shall be deemed to be amended to reflect any Mortgage
Loan Schedule relating to any Pre-Funded Mortgage Loans to be transferred to the
Depositor pursuant to Section 2.02.
"Securities Act" means the Securities Act of 1933, as amended.
"Termination Event" means the existence of any one or more of the
following conditions:
(a) A stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall
have been initiated or threatened by the Commission; or
(b) Subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating accorded any of
the debt securities or claims paying ability of any person providing any
form of credit enhancement for any of the Notes, by any "nationally
recognized statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Securities Act; or
(c) Subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects
of the Insurer, the Contributor or the Sponsor reasonably determined by
the Depositor to be material; or
(d) Subsequent to the date of this Agreement there shall have
occurred any of the following: (i) a suspension or material limitation in
trading in securities substantially similar to the Notes; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the engagement by the
United States in hostilities, or the escalation of such hostilities, or
any calamity or crisis, if the effect of any such event specified in this
clause (iii) in the reasonable judgment of the Depositor makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Notes on the terms and in the manner contemplated in the
Prospectus Supplement.
"Sponsor Repurchase Event" means the occurrence of a breach of any of the
Sponsor's representations and warranties under Section 3.02 herein.
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ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Agreement to Purchase Initial and Additional Mortgage Loans
. Subject to the terms and conditions of this Agreement, the Sponsor hereby
sells, transfers, assigns, and otherwise conveys to the Depositor without
recourse (but without limitation of its obligations and representations in this
Agreement), and the Depositor hereby purchases, all right, title and interest of
the Sponsor in and to the Initial Mortgage Loans, the Additional Mortgage Loans
and the Other Conveyed Property relating thereto. It is the intention of the
Sponsor and the Depositor that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Initial Mortgage Loans, the Additional
Mortgage Loans and the Other Conveyed Property relating thereto from the Sponsor
to the Depositor, conveying good title thereto free and clear of any Liens
(other than the Warehouse Liens to be satisfied and discharged as provided in
Section 2.04), and such Mortgage Loans and Other Conveyed Property shall not be
part of the Sponsor's estate in the event of the filing of a bankruptcy petition
by or against the Sponsor under any bankruptcy or similar law.
Section 2.02. Agreement to Purchase Pre-Funded Mortgage Loans. Subject to
the terms and conditions of this Agreement, the Sponsor hereby agrees to sell to
the Depositor without recourse (but without limitation of its obligations and
representations in this Agreement), and the Depositor hereby agrees to purchase,
all right, title and interest of the Sponsor in and to additional mortgage loans
satisfying the requirements of Section 2.02(c) of the Sale and Servicing
Agreement ("Pre-Funded Mortgage Loans"), having an aggregate Stated Principal
Balance as of their respective Cut-off Dates of up to the Original Pre-Funded
Amount, together with the Other Conveyed Property relating thereto. It is the
intention of the Sponsor and the Depositor that each such transfer and
assignment of Pre-Funded Mortgage Loans and the Other Conveyed Property relating
thereto shall constitute a sale of such Pre-Funded Mortgage Loans and Other
Conveyed Property from the Sponsor to the Depositor, conveying good title
thereto free and clear of any liens (other than the Warehouse Liens to be
satisfied and discharged as provided in Section 2.04), and such Pre-Funded
Mortgage Loans and Other Conveyed Property shall not be part of the Sponsor's
estate in the event of the filing of a bankruptcy petition by or against the
Sponsor under any bankruptcy or similar law.
(a) The Sponsor shall be obligated to sell Pre-Funded Mortgage Loans
and Other Conveyed Property relating thereto pursuant to this Section 2.02
subject only to the availability thereof to the Sponsor during the
Pre-Funding Period under the Originator/Contributor Contribution
Agreement. To the extent Pre-Funded Mortgage Loans shall become available
to the Sponsor under the Originator/Contributor Contribution Agreement
during the Pre-Funded Period, the Sponsor shall execute and deliver to the
Depositor an Addition Notice, accompanied by a Mortgage Loan Schedule with
respect to such Pre-Funded Mortgage Loans.
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(b) Subject to the satisfaction of the conditions set forth in paragraph
(d) below, in consideration of the Depositor's delivery on the related
Pre-Funded Loan Transfer Dates to or upon the order of the Sponsor of the
purchase price therefor, the Sponsor shall on such Pre-Funded Loan Transfer
Dates sell to the Depositor without recourse but subject to terms and provisions
of this Agreement, all of the right, title and interest of the Sponsor in and to
the relevant Pre-Funded Mortgage Loans, including all principal outstanding as
of, and all interest due after, the related Cut-off Dates, and all other assets
included or to be included in the Trust and to be pledged by the Trust to the
Indenture Trustee for the benefit of the Noteholders and the Insurer. In
connection with each such sale, the Originator, the Contributor, the Sponsor,
the Depositor, the Trust and the Indenture Trustee shall execute and deliver an
instrument of transfer substantially in the form of Exhibit G to the Sale and
Servicing Agreement (the "Pre-Funded Mortgage Loan Transfer Agreement").
(c) The obligation of the Depositor to purchase Pre-Funded Mortgage Loans
and any other property and rights related thereto pursuant to this Section 2.02
shall be subject to the satisfaction of each of the following conditions on or
prior to the related Pre-Funded Transfer Date:
(i) the Sponsor shall have provided the Depositor, the Indenture
Trustee, the Rating Agencies and the Insurer with a timely Addition
Notice, which shall include a Mortgage Loan Schedule listing such
Pre-Funded Mortgage Loans, and shall have provided any other information
reasonably requested by any of the foregoing with respect to the
Pre-Funded Mortgage Loans;
(ii) the Originator, the Contributor and the Sponsor shall have
executed and delivered a Pre-Funded Mortgage Loan Transfer Agreement with
respect to the Pre-Funded Mortgage Loans;
(iii) the Sponsor shall have deposited in the Collection Account all
collections of (x) principal in respect of the Pre-Funded Mortgage Loans
received after the related Cut-off Date and (y) interest due on the
Pre-Funded Mortgage Loans after the related Cut-off Date;
(iv) as of such Pre-Funded Loan Transfer Date, neither the
Contributor nor the Sponsor shall be insolvent or aware of any pending
insolvency, the contribution of such Pre-Funded Mortgage Loans by the
Contributor to the Sponsor shall not have resulted in the insolvency of
the Contributor and the transfer of such Pre-Funded Mortgage Loans to the
Depositor on such Pre-Funded Loan Transfer Date shall not result in the
insolvency of the Sponsor;
(v) such addition will not result in a material adverse tax
consequence to the Trust or the Holders of the Notes;
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(vi) the Pre-Funding Period shall not have terminated;
(vii) the addition of such Pre-Funded Mortgage Loans shall not
result in any representation or warranty set forth in Section 3.02 being
or becoming untrue or inaccurate and such Pre-Funded Mortgage Loans shall
satisfy the requirements of Section 2.02(c) of the Sale and Servicing
Agreement;
(viii) the Sponsor shall have delivered to the Indenture Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (d);and
(ix) there shall have been delivered to the Depositor, the Insurer,
the Rating Agencies and the Indenture Trustee, independent Opinions of
Counsel with respect to the transfer of the Pre-Funded Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Depositor, the Insurer and the Indenture Trustee, respectively on the
Closing Date (bankruptcy, corporate and tax opinions).
Section 2.03. Purchase Price.
(a) On the Closing Date, as full consideration for the Sponsor's sale of
the Initial Mortgage Loans and the Additional Mortgage Loans and the Other
Conveyed Property relating thereto to the Depositor, the Depositor will deliver
to or upon the written order of the Sponsor the Certificates to be issued by the
Trust pursuant to Section 4.2 of the Trust Agreement.
(b) On each Pre-Funded Loan Transfer Date, as full consideration for the
Sponsor's sale of the Pre-Funded Mortgage Loans to be sold to the Depositor on
such Pre-Funded Loan Transfer Date and the Other Conveyed Property relating
thereto, the Depositor will apply 100% of the aggregate Principal Balance of the
Pre-Funded Mortgage Loans as of the related Pre-Funded Loan Cut-off Date to the
satisfaction and discharge of the Warehouse Liens with respect to such
Pre-Funded Mortgage Loans.
Section 2.04. Satisfaction and Discharge of Warehouse Liens.
(a) The Depositor agrees to cause all Warehouse Liens with respect to the
Initial and Additional Mortgage Loans to be satisfied and discharged effective
on the Closing Date.
(b) On each Pre-Funded Loan Transfer Date, the Depositor shall cause all
Warehouse Liens with respect to the related Pre-Funded Mortgage Loans to be
satisfied and discharged effective on such Pre-Funded Loan Transfer Date.
Section 2.05. Delivery of Mortgage Loan Files. On or prior to the Closing
Date or Pre-Funded Loan Transfer Date, as the case may be, the Sponsor shall
6
deliver or shall cause to be delivered to the Indenture Trustee (as assignee of
the Depositor and the Trust pursuant to the Sale and Servicing Agreement), the
documents listed in Section 2.03(a) of the Sale and Servicing Agreement with
respect to each Mortgage Loan being sold to the Depositor on such date.
Section 2.06. Transfer of Mortgage Loans; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the Trust
as may be required to effect the purposes of the Sale and Servicing Agreement
and the Trust has the right to pledge such interest to the Indenture Trustee as
may be required to effect the purposes of the Indenture, without further notice
to, or consent of, the Sponsor, and the Trust and the Indenture Trustee shall
succeed to such of the rights and obligations of the Depositor hereunder as
shall be so assigned. The Depositor shall, pursuant to the Sale and Servicing
Agreement, assign all of its right, title and interest in and to the Mortgage
Loans and its right to exercise the remedies created by this Section 2.06 and
Section 3.05 to the Trust and the Trust shall pledge all of its right, title and
interest in and to the Mortgage Loans and its right to exercise the remedies
created by this Section 2.06 and Section 3.05 to the Indenture. The Sponsor
agrees that, upon such assignment to the Trust and pledge to the Indenture
Trustee, such representations, warranties, agreements and covenants will run to
and be for the benefit of the Trust and the Indenture Trustee and the Trust and
the Indenture Trustee may enforce diligently, without joinder of the Depositor,
the repurchase obligations of the Sponsor set forth herein with respect to
breaches of such representations, warranties, agreements and covenants.
Section 2.07. Examination of Mortgage Loan File. Prior to the Closing Date
and each Pre-Funded Loan Transfer Date, as applicable, the Sponsor shall make
the Mortgage Files available to the Depositor or its designee for examination at
the Sponsor's offices or at such other place as the Sponsor shall reasonably
specify. Such examination may be made by the Depositor or its designee at any
time on or before the Closing Date and each Pre-Funded Loan Transfer Date, as
applicable. If the Depositor or its designee makes such examination prior to the
Closing Date and each Pre-Funded Loan Transfer Date, as applicable, and
identifies any Mortgage Loans that do not conform to the requirements of the
Depositor as described in this Agreement, such Mortgage Loans shall be deleted
from the Schedule of Mortgage Loans. The Depositor may, at its option and
without notice to the Sponsor, purchase all or part of the Mortgage Loans
without conducting any partial or complete examination. The fact that the
Depositor or the Indenture Trustee has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.
Section 2.08. Books and Records. The sale of each Mortgage Loan shall be
reflected on the Sponsor's balance sheet and other financial statements as a
sale of assets by the Sponsor. The Sponsor shall be responsible for maintaining,
and shall maintain, a complete set of books and records for each Mortgage Loan
which shall be clearly marked to reflect the ownership of each Mortgage Loan by
the Trust and the pledge thereof to the Indenture Trustee for the benefit of the
Noteholders and the Insurer.
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ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Sponsor. The
Sponsor hereby represents and warrants to the Depositor, as of the Closing Date,
and as of each Pre-Funded Loan Transfer Date, that:
(a) Organization and Good Standing. The Sponsor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Mortgage Loans and the Other Conveyed Property transferred to the
Depositor.
(b) Due Qualification. The Sponsor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(c) Power and Authority. The Sponsor has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Sponsor
has full power and authority to sell and assign the Mortgage Loans and the
Other Conveyed Property to be sold and assigned to and deposited with the
Depositor by it and has duly authorized such sale and assignment to the
Depositor by all necessary corporate action; the execution, delivery and
performance of this Agreement and the Related Documents to which it is a
party have been duly authorized by the Sponsor by all necessary corporate
action; and this Agreement has been duly and validly executed and
delivered by the Sponsor.
(d) Valid Sale; Binding Obligations. This Agreement shall effect a
valid sale, transfer and assignment of the Mortgage Loans and the Other
Conveyed Property, enforceable against the Sponsor and creditors of and
purchasers from the Sponsor; and this Agreement constitutes a legal, valid
and binding obligation of the Sponsor enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions and other
matters contemplated by this Agreement and the fulfillment of the terms of
this Agreement shall not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice, lapse of
time or both) a default under, the certificate of incorporation or by-laws
of the Sponsor, or any material
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indenture, agreement, mortgage, deed of trust or other instrument to which
the Sponsor is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or violate any law, order, rule or
regulation applicable to the Sponsor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Sponsor or any of its
properties.
(f) No Proceedings. There are no material proceedings or
investigations pending or, to the Sponsor's knowledge, threatened against
the Sponsor, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Sponsor or its properties (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the issuance of the Notes 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 Sponsor of its obligations under,
or the validity or enforceability of, this Agreement, (iv) involving the
Sponsor and which might adversely affect the federal income tax or other
federal, state or local tax attributes of the Certificates, or (v) that
could have a material adverse effect on the Mortgage Loans.
(g) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection
with the execution and delivery by the Sponsor of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing Date.
(h) Chief Executive Office. The chief executive office of the
Sponsor is at 00 Xxxx Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx.
Section 3.02. Representations and Warranties Relating to the Mortgage
Loans. The Sponsor represents and warrants to the Depositor, as of the Closing
Date, as to each Initial Mortgage Loan and Additional Mortgage Loan, and as of
each Pre-Funded Loan Transfer Date, as to each Pre-Funded Mortgage Loan, that
immediately prior to the sale and transfer of the relevant Mortgage Loans on
such date by the Sponsor to the Depositor and immediately prior to the sale of
the Mortgage Loans from the Depositor to the Trust pursuant to the Sale and
Servicing Agreement and the pledge thereof by the Trust to the Indenture Trustee
pursuant to the Indenture:
(a) The information with respect to each Mortgage Loan set forth in
the Schedule of Mortgage Loans is true and correct as of the related
Cut-off Date;
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(b) The information provided by the Sponsor to the Depositor in
connection with a Pre-Funded Mortgage Loan is true and correct in all
material respects at the date or dates respecting which such information
was furnished and such Pre-Funded Mortgage Loans comply with the
requirements of Section 2.02(d);
(c) All of the original or certified documentation required to be
delivered to the Trust pursuant to the Sale and Servicing Agreement
(including all material documents related thereto) with respect to each
Mortgage Loan has been or will be delivered to the Indenture Trustee in
accordance with the terms of such Sale and Servicing Agreement. Each of
the documents and instruments specified to be included therein has been
duly executed and in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage lenders
that regularly originate or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans.
(d) Each Mortgaged Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums, townhouses and units in
planned unit developments, or manufactured housing, but shall not include
cooperatives;
(e) No Mortgage Loan had a Loan-to-Value Ratio in excess of 96.01%;
(f) Each Mortgage is a valid and subsisting first lien of record on the
Mortgaged Property subject in all cases to the exceptions to title set forth in
the title insurance policy, with respect to the related Mortgage Loan, which
exceptions are generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
(g) Immediately prior to the transfer and assignment herein contemplated,
the Sponsor held good and indefeasible title to, and was the sole owner of, each
Mortgage Loan conveyed by it subject to no Liens, except for Warehouse Liens to
be satisfied and discharged as provided in Section 2.04 and for Liens which will
be released simultaneously with such transfer and assignment and subordinate
Liens on the related Mortgaged Property and immediately upon the sale and
assignment herein contemplated, the Depositor will hold good and indefeasible
title to, and be the sole owner of each Mortgage Loan subject to no liens,
except the Warehouse Liens to be so satisfied and discharged and such Liens
which will be released simultaneously with such sale and assignment and
subordinate liens on the related Mortgaged Property;
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(h) As of the related Cut-off Date, no Initial Mortgage Loan is 60
or more days delinquent and no Additional Mortgage Loan or Pre-Funded
Mortgage Loan is 30 or more days delinquent;
(i) There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is
in good repair;
(j) There is no valid and enforceable right of rescission, offset,
defense or counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note or the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto;
(k) There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph (m)
below;
(l) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act and other consumer protection laws, real estate settlement procedure,
usury, equal credit opportunity, disclosure and recording laws;
(m) With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard American Land Title Association form, or other
form acceptable in a particular jurisdiction by a title insurance company
authorized to transact business in the state in which the related
Mortgaged Property is situated, in an amount at least equal to the initial
Stated Principal Balance of such Mortgage Loan insuring the mortgagee's
interest under the related Mortgage Loan as the holder of a valid first
mortgage lien of record on the real property described in the related
Mortgage, as the case may be, subject only to exceptions of the character
referred to in paragraph (f) above, was effective on the date of the
origination of such Mortgage Loan, and, as of the Cut-off Date such policy
will be valid and thereafter such policy shall continue in full force and
effect;
(n) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy (which may be a blanket policy
of the type described in the related Sale 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
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related Mortgage Loan and (B) the minimum amount required to compensate
for damage or loss on a replacement cost basis;
(o) If any Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy (which may be a blanket
policy of the type described in the Sale and Servicing Agreement) in a
form meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the outstanding principal balance
of the related Mortgage Loan and (B) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
(p) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Mortgage Loan had full legal capacity to execute
all documents relating to such Mortgage Loan and convey the estate therein
purported to be conveyed;
(q) The Sponsor has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and remedies of
the servicer in any insurance policies applicable to any Mortgage Loans
delivered by such Sponsor including, to the extent such Mortgage Loan is
not covered by a blanket policy described in the Sale and Servicing
Agreement, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the servicer;
(r) Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
have been recorded or are in the process of being recorded in the
appropriate jurisdictions wherein such recordation is necessary to perfect
the lien thereof for the benefit of the Indenture Trustee, subject to the
provisions of Section 2.03 of the Sale and Servicing Agreement;
(s) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the owners and which has been delivered to the Indenture Trustee;
(t) The proceeds of each Mortgage Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future
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advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Mortgage Loans have been
paid;
(u) Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note
is not and has not been secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage;
(v) No Mortgage Loan was originated under a buydown plan;
(w) No Mortgage Loan provides for negative amortization, has a
shared appreciation feature, or other contingent interest feature;
(x) Each Mortgaged Property is located in the state identified in
the Schedule of Mortgage Loans, and consists of one or more parcels of
real property with a residential dwelling thereon;
(y) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in
the event the related Mortgaged Property is sold without the prior consent
of the mortgagee thereunder;
(z) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-off Date, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the Schedule of Mortgage Loans. The
consolidated principal amount does not exceed the original principal
amount of the related Mortgage Loan. No Mortgage Note permits or obligates
the Originator to make future advances to the related Mortgagor at the
option of the Mortgagor;
(aa) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty, so
as to affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(bb) All of the improvements of any Mortgaged Property lie wholly
within the boundaries and building restriction lines of such Mortgaged
Property, and no improvements on adjoining properties encroach upon such
Mortgaged Property, and, if a title insurance policy exists with respect
to such Mortgaged Property, are stated in such title insurance policy and
affirmatively insured;
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(cc) No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Mortgaged Property and, with
respect to the use and occupancy of the same, including, but not limited
to, certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities and such Mortgaged
Property is lawfully occupied under the applicable law;
(dd) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Sponsor or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor;
(ee) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the related Mortgaged Property of the benefits of
the security, including (A) in the case of a Mortgage designated as a deed
of trust, by trustee's sale and (B) otherwise by judicial foreclosure.
There is no homestead or other exemption available which materially
interferes with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose the related Mortgage;
(ff) There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and neither the Sponsor nor the Depositor has
waived any default, breach, violation or event of acceleration;
(gg) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part;
(hh) The credit underwriting guidelines applicable to each Mortgage
Loan conform in all material respects to the Originator's underwriting
guidelines;
(ii) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
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(jj) The Sponsor has no actual knowledge that there exist on any
Mortgaged Property any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation;
(kk) None of the Mortgage Loans shall be due from the United States
of America or any State or from any agency, department, subdivision or
instrumentality thereof;
(ll) At the Cut-off Date, no Mortgagor had been identified on the
records of the Sponsor as being the subject of a current bankruptcy
proceeding;
(mm) By the Closing Date, the Sponsor will have caused the portions
of the Sponsor's records relating to the Initial Mortgage Loans and the
Additional Mortgage Loans to be clearly and unambiguously marked to show
that such Loans constitute part of the Trust and are owned by the Trust in
accordance with the terms of the Sale and Servicing Agreement and have
been pledged to the Indenture Trustee in accordance with the terms of the
Indenture, and by each Pre-Funded Loan Transfer Date, the Sponsor will
have caused the portions of the Sponsor's records relating to the related
Pre-Funded Mortgage Loans to be clearly and unambiguously marked to show
that such Mortgage Loans constitute part of the Trust and are owed by the
Trust in accordance with the terms of the Sale and Servicing Agreement and
have been pledged to the Indenture Trustee in accordance with the terms of
the Indenture;
(nn) No Mortgage Loan was originated in, or is subject to the laws
of, any jurisdiction the laws of which would make unlawful, void or
voidable the sale, transfer and assignment of such Mortgage Loan under
this Agreement or pursuant to transfers of the Notes. The Sponsor has not
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of the Mortgage
Loans;
(oo) All filings (including, without limitation, UCC filings)
required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Indenture Trustee
a first priority perfected lien on, or ownership interest in, the Mortgage
Loans and the proceeds thereof and the other property of the Trust Fund
have been made, taken or performed;
(pp) The Sponsor 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 and
the Noteholders in any Mortgage Loan or the proceeds thereof;
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(qq) No Mortgage Loan is assumable (without the consent of the
Sponsor 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 Sponsor with respect to such Mortgage Loan;
(rr) With respect to the Initial Mortgage Loans as of the Cut-off
Date: the aggregated Stated Principal Balance was $92,034,591.56; each of
the Stated Principal Balances was at least $11,000 but no more than
$550,000; the average Stated Principal Balance was $67,375.25; the
Mortgage Rates were at least 8.500% but no more than 15.803%; the weighted
average Mortgage Rate was 11.250%; the original Loan-to-Value Ratios were
at least 11.00% but no more than 96.00%; the weighted average original
Loan-to-Value Ratio was 76.495%; the remaining terms to stated maturity
were at least 118 months but no more than 361 months; the weighted average
remaining term to stated maturity was 202 months; the original terms to
stated maturity were at least 120 months but no more than 361 months; the
weighted average original term to stated maturity was 203 months; and no
more than 0.60% of the Mortgage Loans are secured by Mortgaged Properties
located in any one postal zip code area;
(ss) No selection procedures adverse to the Noteholders or to the
Insurer have been utilized in selecting such Mortgage Loan from all other
similar Mortgage Loans originated by the Originator;
(tt) The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
(uu) There was no fraud involved in the origination of the Mortgage
Loan by the mortgagee or the Mortgagor, any appraiser or any other party
involved in the origination of the Mortgage Loan; and
(vv) Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value of
such Mortgaged Property on the Mortgage Loan Schedule. Each appraisal has
been performed in accordance with the requirements of FNMA or FHLMC.
(ww) Each Mortgage Loan is a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code.
Section 3.03. Covenants of the Sponsor . The Sponsor covenants to the
Depositor as follows:
(a) The Sponsor shall cooperate with the Depositor and the firm of
independent certified public accountants retained with respect to the
issuance of the Notes in making available all information and taking all
steps reasonably necessary to permit the accountants' letters required
hereunder to be delivered within the times set for delivery herein.
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(b) The Sponsor agrees to satisfy or cause to be satisfied on or
prior to the Closing Date all of the conditions to the Depositor's
obligations set forth in Section 5.01 hereof that are within the Sponsor's
(or its agents') control.
(c) The Sponsor hereby agrees to do all acts, transactions, and
things and to execute and deliver all agreements, documents, instruments,
and papers by and on behalf of the Sponsor as the Depositor or its counsel
may reasonably request in order to consummate the transfer of the Mortgage
Loans to the Depositor and the subsequent transfer thereof to the Trust
and then to the Indenture Trustee pursuant to the Indenture, and the
rating, issuance and sale of the Notes.
(d) The Sponsor hereby agrees to arrange separately to pay to the
Indenture Trustee all of the Indenture Trustee's fees and expenses in
connection with the transactions contemplated by the Sale and Servicing
Agreement and the Indenture, including, without limitation, all of the
Indenture Trustee's fees and expenses in connection with any actions taken
by the Indenture Trustee pursuant to Section ____ thereof. For the
avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Owner
Trustee's fees and expenses or the Indenture Trustee's fees and expenses
in connection with the transactions contemplated by the Trust Agreement,
Sale and Servicing Agreement or the Indenture.
Section 3.04. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Sponsor, as of the
date of execution of this Agreement, as of the Closing Date and as of each
Pre-Funded Loan Transfer Date, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to purchase
each Mortgage Loan and to execute, deliver and perform, and to enter into
and consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Sponsor, constitutes the legal, valid
and binding agreement of the Depositor, enforceable against the Depositor
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in
a proceeding in equity or at law);
17
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by
the Depositor with this Agreement or the consummation by the Depositor of
any of the transactions contemplated hereby, except such as have been made
on or prior to the Closing Date;
(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b)
under the Securities Act;
(f) None of the execution and delivery of this Agreement, the
purchase of the Mortgage Loans from the Sponsor, the consummation of the
other transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts
or will conflict with the charter or bylaws of the Depositor or conflicts
or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under, any term, condition or provision of any indenture,
deed of trust, contract or other agreement or other instrument to which
the Depositor is a party or by which it is bound and which is material to
the Depositor, or (ii) results or will result in a violation of any law,
rule, regulation, order, judgment or decree of any court or governmental
authority having jurisdiction over the Depositor.
Section 3.05. Repurchase Obligation for Breach of a Representation or
Warranty . Each of the representations and warranties contained in Sections 3.01
and 3.02 shall survive the purchase by the Depositor of the Mortgage Loans and
the subsequent transfer thereof by the Depositor to the Trust and from the Trust
to the Indenture Trustee and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Loans
and notwithstanding subsequent termination of this Agreement or the Sale and
Servicing Agreement.
(a) Upon the occurrence of a breach of any of the Sponsor's
representations and warranties under Section 3.02 hereof that materially
and adversely affects the related Mortgage Loan, the Sponsor shall, unless
such breach shall have been cured in all material respects or unless the
Originator shall have repurchased such Mortgage Loan directly from the
Trust, repurchase the related Mortgage Loan from the Trust within 60 days
following discovery by or notice to the Sponsor of such breach pursuant to
Section 2.05 of the Sale and Servicing Agreement, and, the Sponsor shall
pay the Purchase Price to the Indenture Trustee pursuant to the Sale and
Servicing Agreement. To the extent such Sponsor fails to effect its
repurchase obligation, Emergent Group shall repurchase the related
Mortgage Loans and pay the Purchase Price to the Indenture Trustee on such
date. The provisions of this Section 3.05 are intended to grant the
Indenture Trustee a direct right against the Sponsor and the Emergent
Group to demand performance hereunder, and in connection therewith, the
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Sponsor and Emergent Group waive any requirement of prior demand against
the Depositor with respect to such repurchase obligation. Any such
purchase resulting from the Sponsor Repurchase Event shall take place in
the manner specified in Section 2.05 of the Sale and Servicing Agreement.
Notwithstanding any other provision of this Agreement or the Sale and
Servicing Agreement to the contrary, the obligation of the Sponsor and
Emergent Group under this Section shall be performed in accordance with
the terms hereof notwithstanding the failure of the Depositor or the
Servicer to perform any of their respective obligations with respect to
such Mortgage Loan under this Agreement or under the Sale and Servicing
Agreement.
(b) In addition to the foregoing and notwithstanding whether the
related Mortgage Loan shall have been purchased by the Sponsor or Emergent
Group, the Sponsor shall indemnify the Depositor, the Trust, the Indenture
Trustee, the Insurer, the Owner Trustee, Emergent Group and the
Noteholders 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 Sponsor
Repurchase Events.
Section 3.06. Reassignment of Purchased Mortgage Loans. Upon deposit in
the Collection Account of the Purchase Price of any Mortgage Loan repurchased by
the Sponsor under Section 3.05 hereof, the Depositor and the Indenture Trustee
shall take such steps as may be reasonably requested by the Sponsor in order to
assign to the Sponsor or its designee all of the Depositor's and the Trust's and
the Indenture Trustee's right, title and interest in and to such Mortgage Loan
and all security and documents and all Other Conveyed Property conveyed to the
Depositor, the Trust and the Indenture Trustee directly relating thereto,
without recourse, representation or warranty, except as to the absence of Liens
created by or arising as a result of actions of the Depositor or the Indenture
Trustee. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a Purchased Mortgage Loan, in any
enforcement suit or legal proceeding, it is held that the Sponsor may not
enforce any such Mortgage Loan on the ground that it shall not be a real party
in interest or a holder entitled to enforce the Mortgage Loan, the Depositor,
the Trust and the Indenture Trustee shall, at the expense of the Sponsor, take
such steps as the Sponsor deems reasonably necessary to enforce the Mortgage
Loan, including bringing suit in the Depositor's, the Trust's or the Trust's
name or the names of the Noteholders.
Section 3.07. Waivers. No failure or delay on the part of the Depositor,
the Trust or the Indenture Trustee as pledgee of the Trust, 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.
Section 3.08. Representations and Warranties of Emergent Group. Emergent
Group hereby represents and warrants to the Depositor as of the date of
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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);
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by
Emergent Group with this Agreement or the consummation by Emergent Group
of any of the transactions contemplated hereby or thereby, except such as
have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the other transactions contemplated hereby, or the
fulfillment of or compliance with the terms and conditions of this
Agreement, (i) conflicts or will conflict with the charter or bylaws of
Emergent Group or conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any material indenture, deed of trust, contract or other
agreement or other instrument to which Emergent Group is a party or by
which it is bound and which is material to Emergent Group, or (ii) results
or will result in a violation of any law, rule, regulation, order,
judgment or decree of any court or governmental authority having
jurisdiction over Emergent Group.
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ARTICLE FOUR
THE SPONSOR
Section 4.01. Liability of the Sponsor. The Sponsor shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by such Sponsor and its representations and warranties.
Section 4.02. Merger or Consolidation. The Sponsor will keep in full
effect its existence, rights and franchises as a corporation and will obtain and
preserve its qualification to do business as a foreign corporation, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any corporation or other entity (i) into which the Sponsor or Emergent
Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Sponsor or Emergent Group is a party or (iii)
succeeding to the business of the Sponsor or Emergent Group, which corporation
has a certificate of incorporation containing provisions relating to limitations
on business and other matters substantively identical to those contained in the
Sponsor's certificate of incorporation, shall execute an agreement of assumption
to perform every obligation of the Sponsor or Emergent Group, as the case may
be, under this Agreement and, whether or not such assumption agreement is
executed, shall be the successor to the Sponsor or Emergent Group, as the case
may be, hereunder (without relieving the Sponsor or Emergent Group, as the case
may be, 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 Insurer Default shall not have occurred and be continuing, the Sponsor
shall not merge or consolidate with any other Person or permit any other Person
to become the successor to the Sponsor's business without the prior written
consent of the Insurer. The Sponsor or Emergent Group, as the case may be, shall
promptly inform the other party, the Indenture Trustee and, so long as a Insurer
Default shall not have occurred and be continuing, the Insurer of such merger,
consolidation or purchase and assumption. Notwithstanding the foregoing, as a
condition to the consummation of the transactions referred to in clauses (i),
(ii) and (iii) above, (x) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Sections 3.01, 3.02 and 3.08 or
covenant made pursuant to Section 3.03, shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become an event of default under the Insurance Agreement,
shall have occurred and be continuing, (y) the Sponsor or Emergent Group, as the
case may be, shall have delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
4.02 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Sponsor shall
have delivered to the Indenture Trustee an Opinion of Counsel, stating, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments
21
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Indenture Trustee in the Trust and reciting the details of
the filings or (B) no such action shall be necessary to preserve and protect
such interest.
Section 4.03. Costs. In connection with the transactions contemplated
under this Agreement, the Sale and Servicing Agreement and the Indenture, the
Sponsor shall promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred): (i) the fees
and disbursements of the Sponsor's counsel; (ii) the fees of the Depositor's
counsel, not to exceed $175,000; (iii) the fees and disbursements of Ernst &
Young, the Sponsor's independent certified public accountants, in rendering a
comfort letter in connection with the Prospectus Supplement and in comforting
the Derived Information; (iv) the fees of Standard & Poor's Ratings Group and
Xxxxx'x Investors Service, Inc.; (v) expenses incurred in connection with
printing the Prospectus, the Prospectus Supplement, any amendment or supplement
thereto, any preliminary prospectus and the Notes; (vi) fees and expenses
incurred with the issuance of the Certificates and the Notes; (vii) fees and
expenses relating to the filing of documents with the Securities and Exchange
Commission (including without limitation periodic reports under the Exchange
Act); (vii) the shelf registration amortization fee paid in connection with the
issuance of Notes; and (ix) to the extent not covered above, all of the initial
upfront expenses of the Depositor and the Underwriter including, without
limitation, legal fees and expenses, accountant fees and expenses and expenses
in connection with due diligence conducted on the Mortgage Loan File. The
Sponsor also will promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred) all of the
initial upfront expenses of the Insurer including, without limitation, legal
fees and expenses, accountant fees and expenses and expenses in connection with
due diligence conducted on the Mortgage Loan File. All other costs and expenses
in connection with the transactions contemplated hereunder shall be borne by the
party incurring such expenses.
Section 4.04. Servicing. The Mortgage Loans shall be serviced by the
Servicer in accordance with the Sale and Servicing Agreement.
Section 4.05. Mandatory Delivery. Each document specified in Section 2.03
of the Sale and Servicing Agreement for each Mortgage Loan shall be delivered to
the Depositor on or before the Closing Date or relevant Pre-Funded Loan Transfer
Date (except as otherwise provided in such Section 2.03).
Section 4.06. Indemnification.
(a) (i) Emergent Group agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who have signed the
Registration Statement, Prudential Securities Incorporated and each of its
directors and each person or entity who controls the Depositor or
Prudential Securities Incorporated or any such person, within the meaning
of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Depositor,
Prudential Securities Incorporated or any
22
such person or entity may become subject, under the Securities Act or
otherwise, and will reimburse the Depositor, Prudential Securities
Incorporated and each such controlling person for any legal or other
expenses incurred by the Depositor, Prudential Securities Incorporated or
such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Prospectus Supplement or any amendment
or supplement to the Prospectus Supplement or the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement, in light of the
circumstances under which they were made, not misleading, except insofar
as such claims arise out of or are based upon any untrue statement or
omission in the FSA Information or the Depositor Information. This
indemnity agreement will be in addition to any liability which Emergent
Group may otherwise have.
(ii) Emergent Group agrees to indemnify and to hold each of the
Depositor, the Indenture Trustee, the Owner Trustee, the Insurer and each
Noteholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs,
fees and expenses that the Depositor, the Trust, the Indenture Trustee,
the Owner Trustee, the Insurer and any Noteholder may sustain in any way
related to (i) the failure of the Sponsor or Emergent Group to perform its
duties in compliance with the terms of this Agreement or (ii) the breach
by either the Sponsor or Emergent Group of any of the representations or
warranties made by it in this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the Sponsor,
each of its directors and each person or entity who controls the Sponsor
or any such person, within the meaning of Section 15 of the Securities
Act, against any and all losses, claims, damages or liabilities, joint and
several, to which the Sponsor or any such person or entity may become
subject, under the Securities Act or otherwise, and will reimburse the
Sponsor and any such director or controlling person for any legal or other
expenses incurred by the Sponsor or any such director or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the
Prospectus Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, but with respect to the Prospectus Supplement,
only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission relates to the information contained in
the Prospectus Supplement under the caption "Plan
23
of Distribution" (the information contained under the caption "Plan of
Distribution" the "Depositor Information"). This indemnity agreement will
be in addition to any liability which the Depositor may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 4.06 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 4.06, notify the indemnifying party
in writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any
liability which the indemnifying party may have to any indemnified party
hereunder except to the extent such indemnifying party has been prejudiced
thereby. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably satisfactory
to such indemnified party. After notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.06 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there
may be legal defenses available to it that are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. The indemnifying
party shall not be liable for the expenses of more than one separate
counsel.
(d) The Depositor agrees, assuming all Emergent Group-Provided
Information (defined below) is accurate and complete in all material
respects, to indemnify and hold harmless Emergent Group, its respective
officers and directors and each person who controls Emergent Group within
the meaning of the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they
may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in the Derived Information provided
by the Depositor, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her
24
or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are
incurred. The obligations of the Depositor under this Section 4.06(d)
shall be in addition to any liability which the Depositor may otherwise
have.
The procedures set forth in Section 4.06(c) shall be equally
applicable to this Section 4.06(d).
(e) For purposes of this Section 4.06, the term "Derived
Information" means such portion, if any, of the information used by the
Depositor for filing with the Commission on Form 8-K as: (i) is not
contained in the Prospectus without taking into account information
incorporated therein by reference; and (ii) does not constitute Emergent
Group-Provided Information. "Emergent Group-Provided Information" means
any computer tape furnished to the Depositor by Emergent Group or the
Originator concerning the assets comprising the Trust Fund.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 4.06 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party under
subsection(a) or subsection (b) of this Section 4.06 in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof); provided,
-------- however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered the
relative benefits received by Emergent Group and the Sponsor on the one
hand, and the Depositor on the other, Emergent Group and the Sponsor's,
Emergent Group's and the Depositor's relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. Emergent Group and the Sponsor and the Depositor agree that
it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation. For purposes of this
Section 4.06, each director of the Depositor, each officer of the
Depositor who signed the Registration Statement, and each person, if any
who controls the Depositor within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the
Depositor, and each director of the Sponsor, and each person, if any who
controls the Sponsor within the meaning of Section 15 of the Securities
Act, shall have the same rights to contribution as the Sponsor.
25
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The obligations of
the Depositor to purchase the Initial Mortgage Loans and Additional Mortgage
Loans will be subject to the satisfaction, on the Closing Date, of the following
conditions. Upon payment of the purchase price for the Mortgage Loans, such
conditions shall be deemed satisfied or waived.
(a) Each of the obligations of the Sponsor required to be performed
by it on or prior to the Closing Date pursuant to the terms of this
Agreement, of Originator and Contributor required to be performed prior to
the Closing Date pursuant to the terms of the Originator/Contributor
Contribution Agreement, and of Contributor and the Sponsor required to be
performed prior to the Closing Date pursuant to the terms of the
Contributor/Sponsor Contribution and Assignment Agreement shall have been
duly performed and complied with and all of the representations and
warranties of the Sponsor and Emergent Group under this Agreement and of
Originator and Contributor under their respective agreements shall be true
and correct as of the Closing Date and no event shall have occurred which,
with notice or the passage of time, would constitute a default under this
Agreement or the Contribution Agreements, and the Depositor shall have
received a certificate to the effect of the foregoing signed by an
authorized officer of the Sponsor.
(b) The Depositor shall have received a letter dated the date of
this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Ernst & Young, independent certified public
accountants, regarding the numerical information contained in the
Prospectus Supplement under the caption "The Mortgage Pool."
(c) [This subsection is reserved.]
(d) The Depositor shall have received the following additional
closing documents, in form and substance satisfactory to the Depositor and
its counsel:
(i) the Schedule of Mortgage Loans;
(ii) the Sale and Servicing Agreement, the Indenture and the
Underwriting Agreement, dated December 4, 1997, among the Depositor,
the Trust and Prudential Securities Incorporated and all documents
required thereunder, duly executed and delivered by each of the
parties thereto other than the Depositor;
(iii) an officer's certificate, dated as of the Closing Date,
in the form of Exhibit B hereto, and attached thereto resolutions of
the board of directors of the Sponsor and a copy of the by-laws of
the Sponsor;
26
(iv) copy of the Sponsor's and Emergent Group's charter and
all amendments, revisions, and supplements thereof, certified as of
a recent date by the Secretary of State of the State of Delaware and
the State of South Carolina, respectively;
(v) an opinion of the counsel for the Sponsor and Emergent
Group as to various corporate matters (it being agreed that the
opinion shall expressly provide that the Trust and the Indenture
Trustee shall be entitled to rely on the opinion);
(vi) opinions of counsel for the Sponsor, in forms acceptable
to the Depositor, its counsel, Standard & Poor's Ratings Group and
Xxxxx'x Investors Service, Inc. as to such matters as shall be
required for the assignment of a rating to the Class A Notes of
"AAA" by Standard & Poor's Ratings Group, and "Aaa" by Xxxxx'x
Investors Service, Inc. (it being agreed that such opinions shall
expressly provide that the Trust and the Indenture Trustee shall be
entitled to rely on such opinions);
(vii) a letter from Xxxxx'x Investors Service, Inc. that it
has assigned a rating of "Aaa" to the Class A Notes;
(viii) a letter from Standard & Poor's Ratings Group that it
has assigned a rating of "AAA" to the Class A Notes;
(ix) an opinion of counsel of the Trust in form and substance
acceptable to the Depositor, its counsel, Xxxxx'x Investor Service,
Inc. and Standard and Poor's Ratings Group (it being agreed that the
opinion shall expressly provide that the Sponsor shall be entitled
to rely on the opinion)
(x) an opinion of counsel of the Owner Trustee in form and
substance acceptable to the Depositor, its counsel, Xxxxx'x Investor
Service, Inc. and Standard and Poor's Ratings Group (it being agreed
that the opinion shall expressly provide that the Sponsor shall be
entitled to rely on the opinion)
(xi) an opinion of counsel for the Indenture Trustee in form
and substance acceptable to the Depositor, its counsel, Xxxxx'x
Investors Service, Inc. and Standard & Poor's Ratings Group (it
being agreed that the opinion shall expressly provide that the
Sponsor shall be entitled to rely on the opinion);
(xii) an opinion or opinions of counsel for the Insurer, in
each case in form and substance acceptable to the Depositor, its
counsel, Xxxxx'x Investors Service, Inc. and Standard & Poor's
Ratings Group (it being agreed that the opinion shall expressly
provide that the Sponsor shall be entitled to rely on the opinion);
and
27
(e) The Policy shall have been duly executed, delivered and issued
with respect to the Notes.
(f) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be satisfactory
in form and substance to the Depositor and its counsel.
(g) The Sponsor shall have furnished the Depositor with such other
certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
Section 5.02. Conditions of Sponsor's Obligations. The obligations of the
Sponsor under this Agreement shall be subject to the satisfaction, on the
Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of
this Agreement shall have been duly performed and complied with and all of
the representations and warranties of the Depositor contained in this
Agreement shall be true and correct as of the Closing Date, and the
Sponsor shall have received a certificate to that effect signed by an
authorized officer of the Depositor.
(b) The Sponsor shall have received the following additional
documents:
(i) the Sale and Servicing Agreement and the Indenture, and
all documents required thereunder, in each case executed by the
Depositor as applicable; and
(ii) a copy of a letter from Xxxxx'x Investors Service, Inc.
to the Depositor to the effect that it has assigned a rating of
"Aaa" to the Class A Notes and a copy of a letter from Standard &
Poor's Ratings Group to the Depositor to the effect that it has
assigned a rating of "AAA" to the Class A Notes.
(c) The Depositor shall have furnished the Sponsor with such other
certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Sponsor may reasonably request.
Section 5.03. Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Sponsor at any time before
delivery of and payment of the Purchase Price for the Initial Mortgage Loans and
Additional Mortgage Loans if: (i) any of the conditions set forth in Section
5.01 are not satisfied when and as provided therein; (ii) there shall have been
the entry of a decree or order by a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment
28
of debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Sponsor or Emergent Group, or for the winding up or liquidation
of the affairs of the Sponsor; (iii) there shall have been the consent by the
Sponsor or Emergent Group to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Sponsor or Emergent
Group or of or relating to substantially all of the property of the Sponsor or
Emergent Group; (iv) any purchase and assumption agreement with respect to the
Sponsor or Emergent Group or the assets and properties of the Sponsor or
Emergent Group shall have been entered into; or (v) a Termination Event shall
have occurred. The termination of the Depositor's obligations hereunder shall
not terminate the Depositor's rights hereunder or its right to exercise any
remedy available to it at law or in equity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Prudential Securities Secured Financing
Corporation, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, if to the Sponsor,
addressed to the Sponsor at Emergent Mortgage Holdings Corporation II, 00 X.
Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx
or to such other address as the Sponsor may designate in writing to the
Depositor and if to Emergent Group, addressed to Emergent Group, Inc., 00 Xxxxx
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxx X.
Xxxx.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 6.03. Agreement of Sponsor. The Sponsor agrees to execute and
deliver such instruments and take such actions as the Depositor may, from time
to time, reasonably request in order to effectuate the purpose and to carry out
the terms of this Agreement.
29
Section 6.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 6.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Insurer; provided, however, that the Depositor may assign its
rights hereunder without the consent of the Sponsor and Emergent Group.
Section 6.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 6.08. Confirmation of Intent. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Sponsor to the
Depositor as contemplated by this Unaffiliated Seller's Agreement be, and be
treated for all purposes as, a sale by the Sponsor to the Depositor of the
Mortgage Loans. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Sponsor to the
Depositor to secure a debt or other obligation of the Sponsor. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans are
held to continue to be property of the Sponsor then (a) this Unaffiliated
Seller's Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of
the Mortgage Loans provided for herein shall be deemed to be a grant by the
Sponsor to the Depositor of a security interest in all of the Sponsor's right,
title and interest in and to the Mortgage Loans and all amounts payable on the
Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property; (c) the possession by the Depositor of Mortgage
Loans and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the Uniform Commercial Code; and (d) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be
30
deemed notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Depositor for
the purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Sponsor and the Depositor shall, to the extent consistent with this
Unaffiliated Seller's Agreement, take such actions as may be necessary to ensure
that, if this Unaffiliated Seller's Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and would be
maintained as such throughout the term of this Agreement.
Section 6.09. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 6.10. Amendments. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof.
(a) This Agreement may be amended by the Sponsor, the Depositor and
Emergent Group, with the prior written consent of the Insurer (so long as
an Insurer Default shall not have occurred and be continuing) but without
the consent of the Indenture Trustee, the Trust or any of the Noteholders
(unless an Insurer Default shall have occurred, in which event the consent
of Holders of Notes evidencing in excess of 50% of the Outstanding Amount
of the Notes 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
Indenture Trustee and the Trust, adversely affect in any material respect
the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the
Sponsor, the Depositor and Emergent Group with the prior written consent
of the Insurer (so long as an Insurer Default shall not have occurred and
be continuing) and with the consent of the Indenture Trustee and Holders
of Notes evidencing in excess of 50% of the Outstanding Amount of the
Notes, 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 Noteholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments
on Mortgage Loans or distributions that shall be required to be made on
any Note or the Interest 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 Notes 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
31
amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Indenture Trustee shall furnish written notification of the substance
of such amendment or consent to each Noteholder.
(e) It shall not be necessary for the consent of Noteholders
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 Noteholders
shall be subject to such reasonable requirements as the Indenture Trustee
may prescribe, including the establishment of record dates. The consent of
any Holder of a Note 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 Note and of any Note issued upon
the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Note.
Section 6.11. Miscellaneous. (a) The parties agree that each of the
Insurer, the Trust, the Owner Trustee and the Indenture 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 Depositor under this
Agreement which are assigned to the Trust pursuant to the Sale and Servicing
Agreement to the Indenture Trustee for the benefit of the Noteholders pursuant
to the Indenture and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Sponsor under Section 3.05
and 4.06 of this Agreement. The parties further agree that Prudential Securities
Incorporated and each of its directors and each person or entity who controls
Prudential Securities Incorporated or any such person, within the meaning of
Section 15 of the Securities Act (each, an "Underwriter Entity") is an intended
third-party beneficiary of this Agreement to the extent necessary to obtain the
benefit of the enforcement of the obligations and covenants of the Sponsor with
respect to each Underwriter Entity under Section 4.06 of this Agreement.
(b) The Depositor, Emergent Group and the Sponsor intend the
conveyance by the Sponsor to the Depositor of all of its right, title and
interest in and to the Mortgage Loans pursuant to this Agreement to
constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
32
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed by their respective officers thereunto duly authorized as of the date
first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:________________________________
Name: Xxxx Xxxxx
Title: Vice President
EMERGENT RESIDUAL HOLDING
CORP.
By:________________________________
Name:
Title:
EMERGENT GROUP, INC.
By:________________________________
Name: Xxxxx Xxxxxxx
Title: President
[Signature Page for Unaffiliated Seller's Agreement]
ii
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 23, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxx Xxxxx, personally known to
me (or proved to me on the basis of satisfactory evidence) to be Xxxx Xxxxx of
Prudential Securities Secured Financing Corporation, a Delaware corporation, the
corporation that executed the within Unaffiliated Seller's Agreement on behalf
of said corporation, and acknowledged to me that said corporation executed it.
____________________________
Notary Public
My Commission expires:
iii
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 23, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxx Xxxxxxx, personally known
to me (or proved to me on the basis of satisfactory evidence) to be Xxxxx
Xxxxxxx of Emergent Group, Inc., the corporation that executed the within
Unaffiliated Seller's Agreement on behalf of said corporation, and acknowledged
to me that said corporation executed it.
____________________________
Notary Public
My Commission expires:
iv
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 23, 1997 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared _________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be
__________________ of Emergent Residual Mortgage Holding Corp., the corporation
that executed the within Unaffiliated Seller's Agreement on behalf of said
corporation, and acknowledged to me that said corporation executed it.
____________________________
Notary Public
My Commission expires:
v
EXHIBIT A
SCHEDULE OF MORTGAGE LOANS
EXHIBIT B
OFFICER'S CERTIFICATE
I, Xxxxx Xxxxx, Vice President of EMERGENT RESIDUAL HOLDING CORP. (the
"Contributor") do hereby certify as follows:
(1) No financing statements or other filings have been filed naming the
Contributor as debtor or seller in any State of the United States of America to
perfect a sale, transfer or assignment of or lien, encumbrance, security
interest or other interest in, or which otherwise pertains to, the Mortgage
Loans other than those filed in connection with the Unaffiliated Seller's
Agreement, the Sale and Servicing Agreement and the Indenture.
(2) The Contributor's chief executive office is located at 00 Xxxx
Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Sale and Servicing Agreement dated as of
December 1, 1997, among Prudential Securities Secured Financing Corporation, as
Depositor, Emergent Mortgage Corp., as Servicer, and First Union National Bank,
as Indenture Trustee.
IN WITNESS WHEREOF, I have set my hand this 23rd day of December, 1997.
EMERGENT RESIDUAL HOLDING
CORP.
By:_____________________________
Name:
Title:
