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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 27, 1996
PSSFC Auto Receivables Trust 1996-A
(Exact name of registrant as specified in its charter)
New York 33-84918 13-3526694
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Prudential Securities
Secured Financing
Corporation
Attention: Norman Chaleff 10292
One New York Plaza, 12th Fl. (Zip Code)
New York, New York
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (212) 778-4114
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Receivables
Prudential Securities Secured Financing Corporation, as Depositor (the
"Depositor"), has registered issuances of an aggregate of up to $400,000 in
principal amount of lease and auto receivables-backed securities, on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 33-84918) (as amended, the "Registration Statement"). The Depositor formed
the PSSFC Auto Receivables Trust 1996-A (the "Trust"), a New York trust,
pursuant to a Pooling and Servicing Agreement, dated as of March 1, 1996 (the
"Pooling and Servicing Agreement"), among the Depositor, Emergent Group, Inc.,
as servicer (the "Servicer") and Bankers Trust Company, as trustee (the
"Trustee"). Pursuant to the Registration Statement, the Trust issued
$14,496,000.00 in aggregate principal amount of its 6.55% Auto
Receivables-Backed Certificates, Class A (the "Certificates"), on March 27,
1996. This Current Report on Form 8-K is being filed to satisfy an undertaking
to file copies of certain agreements executed in connection with the issuance of
the Certificates, the forms of which are being filed as exhibits to the Pooling
and Servicing Agreement attached hereto as Exhibit 4.1.
The Certificates were issued pursuant to the Pooling and Servicing
Agreement attached hereto as Exhibit 4.1. The Certificates consist of three
classes, the Class A Certificates (the "Class A Certificates"), the Class B
Certificates and the Class C Certificate. Only the Class A Certificates were
issued pursuant to the Registration Statement.
The assets of the Trust consist of a segregated pool of installment sale
contracts or promissory notes, (collectively, the "Receivables"), together with
all monies at any time paid or payable thereon or in respect thereof after
February 29, 1996 (including amounts due on or before February 29, 1996 but
received by the Depositor, the Seller or the Originators after February 29,
1996), an assignment of security interests of the Originators in the Financed
Vehicles, the Insurance Policies and any proceeds from any Insurance Policies
relating to the Receivables, the Obligors or the Financed Vehicles, including
rebates of premiums, rights of the Originators against Dealers with respect to
the Receivables under the Dealer Agreements and the Dealer Assignments, all
items contained in the Receivable Files, any and all other documents that the
Originators keep on file in accordance with their customary procedures relating
to the Receivables, the Obligors or the Financed Vehicles, property (including
the right to receive future Liquidation Proceeds) that secures a Receivable and
that has been acquired by or on behalf of the Trust pursuant to liquidation of
such Receivable, such amounts as from time to time may be held in one or other
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accounts established by the Servicer and all proceeds of the foregoing (all such
capitalized terms as defined in the Pooling and Servicing Agreement). On and
prior to March 27, 1996 (the "Closing Date"), The Loan Pro$, Inc. and Premier
Financial Services, Inc. (together, the "Originators") transferred the
Receivables and the related assets to Emergent Auto Holdings Corp. (the
"Seller") pursuant to the Purchase Agreement and Assignment, dated as of March
1, 1996, attached hereto as Exhibit 10.2, between the Originators, the Seller
and Emergent Group, Inc. On the Closing Date, the Seller transferred the
Receivables and the related assets to the Depositor pursuant to the Unaffiliated
Seller's Agreement, dated as of March 1, 1996, attached hereto as Exhibit 10.1,
among the Seller, Emergent Group, Inc., the Originators and the Depositor. The
Depositor, in turn, then transferred the Receivables and the related assets to
the Trust pursuant to the Pooling and Servicing Agreement, attached hereto as
Exhibit 4.1.
Interest payments on the Class A Certificates are based on the outstanding
Class A Certificate Balance and the Class A Pass-Through Rate. The Class A
Pass-Through Rate will be 6.55% per annum. The Class A Certificates have an
initial Class A Certificate Balance of $14,496,000.00.
As of the Closing Date, the Receivables possessed the characteristics
described in the Prospectus dated December 2, 1994 and the Prospectus Supplement
dated March 25, 1996 filed pursuant to Rule 424(b) of the Act on March 26, 1996.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated March 25, 1996, between Prudential
Securities Secured Financing Corporation and Prudential Securities Incorporated.
4.1 Pooling and Servicing Agreement, dated as of March 1, 1996, among
Prudential Securities Secured Financing Corporation, as depositor, Emergent
Group, Inc., as servicer and Bankers Trust Company, as trustee.
4.2 Master Spread Account Agreement, dated as of March 1, 1996 between
Emergent Auto Holdings Corp., The Loan Pro$, Inc. and Premier Financial
Services, Inc. (collectively the "Originators"), Emergent Group, Inc., Financial
Security Assurance Inc. and Bankers Trust Company.
4.3 Form of Certificate Insurance Policy and Endorsement No. 1 thereto
dated March 27, 1996.
10.1 Unaffiliated Seller's Agreement, dated as of March 1, 1996, among
Prudential Securities Secured Financing Corporation, Emergent Group, Inc. and
Emergent Auto Holdings Corp.
10.2 Purchase Agreement and Assignment, dated as of March 1, 1996, between
the Originators, Emergent Auto Holdings Corp. and Emergent Group, Inc.
10.3 Insurance and Indemnity Agreement, dated as of March 1, 1996 among
Financial Security Assurance Inc., Prudential Securities Secured Financing
Corporation, Emergent Group, Inc., The Loan Pro$, Inc., Premier Financial
Services, Inc. and Emergent Auto Holdings Corp.
10.4 Indemnification Agreement, dated as of March 1, 1996 among Financial
Security Assurance Inc., Prudential Securities Secured Financing Corporation,
Emergent Group, Inc., The Loan Pro$, Inc., Premier Financial Services, Inc.,
Emergent Auto Holdings Corp. and Prudential Securities Incorporated.
10.5 Stock Pledge and Collateral Agency Agreement, dated as of March 1,
1996 among The Loan Pro$, Inc., Premier Financial Services, Inc., Emergent Auto
Holdings Corp., Emergent Group, Inc., Financial Security Assurance Inc. and
Bankers Trust Company.
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EXHIBIT INDEX
Exhibit No. Description Page No.
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1.1 Underwriting Agreement, dated March
25, 1996 between Prudential
Securities Secured Financing
Corporation and Prudential
Securities Incorporated.
4.1 Pooling and Servicing Agreement,
dated as of March 1, 1996, among
Prudential Securities Secured
Financing Corporation, as
depositor, Emergent Group, Inc., as
servicer, and Bankers Trust
Company, as trustee.
4.2 Master Spread Account Agreement,
dated as of March 1, 1996 between
Emergent Auto Holdings corp., the
Originators, Emergent Group, Inc.,
Financial Security Assurance Inc.
and Bankers Trust Company.
4.3 Form of Certificate Insurance
Policy and Endorsement No. 1
thereto dated March 27, 1996.
10.1 Unaffiliated Seller's Agreement,
dated as of March 1, 1996, among
Prudential Securities Secured
Financing Corporation, Emergent
Auto Holdings Corp. and Emergent
Group, Inc.
10.2 Purchase Agreement and Assignment,
dated as of March 1, 1996, between
Emergent Auto Holdings Corp., The
Loan Pro$, Inc., Premier Financial
Services, Inc. and Emergent Group,
Inc.
10.3 Insurance and Indemnity Agreement,
dated as of March 1, 1996 among
Financial Security Assurance Inc.,
Prudential Securities Secured
Financing Corporation, Emergent
Group, Inc., The Loan Pro$, Inc.,
Premier Financial Services, Inc.
and Emergent Auto Holdings Corp.
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Exhibit No. Description Page No.
- ----------- ----------- --------
10.4 Indemnification Agreement, dated as
of March 1, 1996 among Financial
Security Assurance Inc., Prudential
Securities Secured Financing
Corporation, Emergent Group, Inc.,
The Loan Pro$, Inc., Premier
Financial Services, Inc., Emergent
Auto Holdings Corp. and Prudential
Securities Incorporated.
10.5 Stock Pledge and Collateral Agency
Agreement, dated as of March 1,
1996 among The Loan Pro$, Inc.,
Premier Financial Services, Inc.,
Emergent Auto Holdings Corp.,
Emergent Group, Inc., Financial
Security Assurance Inc. and Bankers
Trust Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PSSFC AUTO RECEIVABLES TRUST 1996-A
By: Prudential Securities Secured
Financing Corporation, as
Depositor
By: /s/ Norman Chaleff
---------------------------
Name: Norman Chaleff
Title: Vice President
Dated: April 10, 1996
EXHIBIT 1.1
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
AUTO RECEIVABLES BACKED CERTIFICATES, CLASS A
SERIES 1996-A
UNDERWRITING AGREEMENT
March 25, 1996
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UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 15th Floor
New York, New York 10292
March 25, 1996
Dear Sirs:
Prudential Securities Secured Financing Corporation (the "Depositor")
proposes, subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated March 25, 1996 (the "Standard
Provisions"), between the Depositor and Prudential Securities Incorporated, to
issue and sell to you (the "Underwriter") the Certificates specified in Schedule
I hereto (the "Class A Certificates"). The Depositor agrees that each of the
provisions of the Standard Provisions is incorporated herein by reference in its
entirety, and shall be deemed to be a part of this Agreement to the same extent
as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Underwriting Agreement. Each reference to the
Representative herein and in the provisions of the Standard Provisions so
incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Standard Provisions are used herein as
therein defined. The Prospectus Supplement and the accompanying Prospectus
relating to the Class A Certificates (together, the "Prospectus") are
incorporated by reference herein.
Subject to the terms and conditions set forth herein and in the
Standard Provisions incorporated herein by reference, the Depositor agrees to
issue and sell to the Underwriter, and the Underwriter agrees to purchase from
the Depositor, at the time and place and at the Purchase Price (as defined in
Schedule I hereto) and in the manner set forth in Schedule I hereto, the entire
original principal balance of the Class A Certificates.
If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon acceptance hereof by
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you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Very truly yours,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/ Glen Stein
------------------------
Name: Glen Stein
Title: Vice President
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Glen Stein
-------------------------
Name: Glen Stein
Title: Vice President
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SCHEDULE I
Title of Class A
Certificates: Prudential Securities Secured
Financing Corporation Auto
Receivables Backed Certificates,
Series 1996-A, Class A.
Terms of Class A
Certificates: The Class A Certificates shall have
the terms set forth in the
Prospectus and shall conform in all
material respects to the
descriptions thereof contained
therein, and shall be issued
pursuant to a Pooling and Servicing
Agreement to be dated as of March 1,
1996 among the Depositor, Emergent
Group, Inc., as servicer, and
Bankers Trust Company, as trustee,
backup servicer and collateral
agent.
Purchase Price: The "Purchase Price" for the Class A
Certificates including accrued
interest at the rate of 6.55% per
annum from March 1, 1996 up to but
not including the date of payment
thereof, shall be 99.37% of the
aggregate principal balance of the
Class A Certificates as of the
Closing Date, in a total amount
equal to $14,404,574.13.
Specified funds for
payment of
Purchase Price: Same day federal funds wire payable
to the order of the Depositor.
Required Rating: "Aaa" by Moody's Investors Service,
Inc.
"AAA" by Standard & Poor's Ratings
Group.
Closing Date: March 27, 1996 at 11:00 A.M. eastern
standard time or at such other time
as the Depositor and the Underwriter
shall agree.
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Closing Location: Offices of Dewey Ballantine, 1301
Avenue of the Americas, New York,
New York
Name and address of
Representative: Prudential Securities Incorporated
Address for Notices,
etc.: One New York Plaza, 15th Floor
New York, New York 10292
Attn: Mr. Norm Chaleff
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
March 25, 1996
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the one or several underwriters named therein
(such underwriters constituting the "Underwriters" with respect to such
Underwriting Agreement and the securities specified therein). The several
underwriters named in an Underwriting Agreement will be represented by one or
more representatives as named in such Underwriting Agreement (collectively, the
"Representative"). The term "Representative" also refers to a single firm acting
as sole representative of the Underwriters and to Underwriters who act without
any firm being designated as their representative. The standard provisions set
forth herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriters to purchase such securities. The obligation of the Depositor to
sell any securities and the obligation of any of the Underwriters to purchase
any of the securities shall be evidenced by the Underwriting Agreement with
respect to the securities specified therein. An Underwriting Agreement shall be
in the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of the communications
transmitted. The obligations of the underwriters under this Agreement and each
Underwriting Agreement shall be several and not joint. Unless otherwise defined
herein, the terms defined in the Underwriting Agreement are used herein as
defined in the Prospectus referred to below.
1. The Class A Certificates. The Depositor proposes to sell pursuant
to the applicable Underwriting Agreement to the one or several Underwriters
named therein auto receivables backed certificates (the "Certificates")
representing beneficial ownership interests in a trust, the trust property of
which consists of a pool of Receivables and certain related property. The
Certificates will be issued pursuant to a pooling and servicing agreement (the
"Pooling and Servicing Agreement") by and among the Depositor, Emergent Group,
Inc. (the "Servicer") and Bankers Trust Company, as trustee (the Trustee") and
as backup servicer (the "Backup Servicer").
The terms and rights of any particular issuance of Certificates shall
be as specified in the Underwriting Agreement relating thereto and in or
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pursuant to the Pooling and Servicing Agreement identified in such Underwriting
Agreement. The Certificates which are the subject of any particular Underwriting
Agreement into which this Agreement is incorporated are herein referred to as
the "Class A Certificates."
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 33-84918),
including a prospectus relating to the Certificates under the Securities Act of
1933, as amended (the "1933 Act"). The term "Registration Statement" means such
registration statement as amended to the date of the Underwriting Agreement. The
term "Basic Prospectus" means the prospectus included in the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
prospectus supplement specifically relating to the Class A Certificates, as
first filed with the Commission pursuant to Rule 424. The term "Preliminary
Prospectus" means a preliminary prospectus supplement specifically relating to
the Class A Certificates together with the Basic Prospectus.
2. Offering by the Underwriters. Upon the execution of the
Underwriting Agreement applicable to any Class A Certificates and the
authorization by the Representative of the release of such Class A Certificates,
the several Underwriters propose to offer for sale to the public the Class A
Certificates at the prices and upon the terms set forth in the Prospectus.
3. Purchase, Sale and Delivery of the Class A Certificates. Unless
otherwise specified in the Underwriting Agreement, payment for the Class A
Certificates shall be made by a same day federal funds wire payable to the order
of the Depositor, as set forth in the Underwriting Agreement, upon delivery to
the Representative for the respective accounts of the several Underwriters of
the Class A Certificates registered in definitive form and in such names and in
such denominations as the Representative shall request in writing not less than
five full business days prior to the date of delivery. The time and date of such
payment and delivery with respect to the Class A Certificates are herein
referred to as the "Closing Date".
4. Conditions of the Underwriters' Obligations. The respective
obligations of the several Underwriters pursuant to the Underwriting Agreement
shall be subject, in the discretion of the Representative, to the accuracy in
all material respects of the representations and warranties of the Depositor
contained herein as of the date of the Underwriting Agreement and as of the
Closing Date as if made on and as of the Closing Date, to the accuracy in all
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material respects of the statements of the officers of the Depositor and the
Servicer made in any certificates pursuant to the provisions hereof and of the
Underwriting Agreement, to the performance by the Depositor of its covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required to be
made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to
the sale of the Class A Certificates shall have been duly taken or
made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for
such purpose shall be pending before or threatened by the Commission,
or by any authority administering any state securities or "Blue Sky"
laws; (iii) any requests for additional information on the part of
the Commission shall have been complied with to the Representative's
reasonable satisfaction, (iv) since the respective dates as of which
information is given in the Registration Statement and the Prospectus
except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
affairs, regulatory situation or business prospects of the Depositor;
(v) there are no material actions, suits or proceedings pending
before any court or governmental agency, authority or body or
threatened, affecting the Depositor or the transactions contemplated
by the Underwriting Agreement; (vi) the Depositor is not in violation
of its charter or its by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it or
its properties may be bound, which violations or defaults separately
or in the aggregate would have a material adverse effect on the
Depositor; and (vii) the Representative shall have received, on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement, there
shall not have occurred any of the following: (i) if at or prior to
the Closing Date, trading in securities on the New York Stock
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Exchange shall have been suspended or any material limitation in
trading in securities generally shall have been established on such
exchange, or a banking moratorium shall have been declared by New
York or United States authorities; (ii) if at or prior to the Closing
Date, there shall have been an outbreak or escalation of hostilities
between the United States and any foreign power, or of any other
insurrection or armed conflict involving the United States which
results in the declaration of a national emergency or war, and, in
the reasonable opinion of the Representative, makes it impracticable
or inadvisable to offer or sell the Class A Certificates or (iii) if
at or prior to the Closing Date, a general moratorium on commercial
banking activities in New York shall have been declared by either
Federal or New York State authorities.
(d) The Representative shall have received, on the Closing Date, a
certificate dated the Closing Date and signed by an executive officer
of the Depositor to the effect that attached thereto is a true and
correct copy of the letter from each nationally recognized
statistical rating organization (as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act) that
rated the Class A Certificates and confirming that, unless otherwise
specified in the Underwriting Agreement, the Class A Certificates
have been rated in the highest rating categories by each such
organization and that each such rating has not been rescinded since
the date of the applicable letter.
(e) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Depositor, dated the Closing Date, in form
and substance satisfactory to the Representative and containing
opinions substantially to the effect set forth in Exhibit A hereto.
In rendering such opinions, counsel for the Depositor may rely as to
matters involving the laws of any other jurisdictions other than the
United States, upon counsel licensed to practice law in such
jurisdictions.
(f) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Servicer, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set
forth in Exhibit B hereto.
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(g) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Seller, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set
forth in Exhibit C hereto.
(h) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Trustee, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set
forth in Exhibit D hereto.
(i) The Representative shall have received, on the Closing Date, an
opinion of Dewey Ballantine, counsel for the Underwriters, dated the
Closing Date, with respect to the incorporation of the Depositor, the
validity of the Class A Certificates, the Registration Statement, the
Prospectus and other related matters as the Underwriters may
reasonably require, and the Depositor shall have furnished to such
counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(j) The Representative shall have received, on or prior to the date
of first use of the prospectus supplement relating to the Class A
Certificates, and on the Closing Date if requested by the
Representative, letters of independent accountants of the Depositor
in the form and reflecting the performance of the procedures
previously requested by the Representative.
(k) The Depositor shall have furnished or caused to be furnished to
the Representative on the Closing Date a certificate of an executive
officer of the Depositor satisfactory to the Representative as to the
accuracy of the representations and warranties of the Depositor
herein at and as of such Closing Date as if made as of such date, as
to the performance by the Depositor of all of its obligations
hereunder to be performed at or prior to such Closing Date, and as to
such other matters as the Representative may reasonably request;
(l) The Servicer shall have furnished or caused to be furnished to
the Representative on the Closing Date a certificate of officers of
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such Servicer in form and substance satisfactory to the
Representative and substantially to the effect set forth in Exhibit E
hereto, and as to such other matters as the Representative may
reasonably request;
(m) The Certificate Insurance Policy shall have been duly executed
and issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus
Supplement.
(n) The Representative shall have received, on the Closing Date, an
opinion of counsel to Financial Security Assurance Inc. ("the
Certificate Insurer"), dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters
and containing opinions substantially to the effect set forth in
Exhibit F hereto.
(o) On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended
or potential downgrading or (ii) any review or possible change in
rating, the direction of which has not been indicated, in the rating
accorded the Certificate Insurer's claims paying ability by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of the 1933 Act.
(p) There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, since September 30, 1995, of
the Certificate Insurer, that is in the Representative's judgment
material and adverse and that makes it in the Representative's
judgment impracticable to market the Class A Certificates on the
terms and in the manner contemplated in the Prospectus.
(q) The Representative shall have received, on the Closing Date, a
certificate dated the Closing Date and signed by the President, a
senior vice president or a vice president of the Certificate Insurer
to the effect that the signer of such certificate has carefully
examined the Certificate Insurance Policy, the Indemnification
Agreement dated the Closing Date (the "Indemnification Agreement")
among Emergent (as defined therein), the Underwriter, the Depositor
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and the Certificate Insurer and the related documents and that, to
the best of his or her knowledge based on reasonable investigation:
(i) there are no actions, suits or proceedings pending or threatened
against or affecting the Certificate Insurer which, if adversely
determined, individually or in the aggregate, would adversely affect
the Certificate Insurer's performance under the Certificate Insurance
Policy or the Indemnification Agreement;
(ii) each person who as an officer or representative of the
Certificate Insurer, signed or signs the Certificate Insurance
Policy, the Indemnification Agreement or any other document delivered
pursuant hereto, on the date thereof, or on the Closing Date, in
connection with the transactions described in this Agreement was, at
the respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures;
(iii) the information contained in the Prospectus under the captions
"THE POLICY" and "THE CERTIFICATE INSURER" is true and correct in all
material respects and does not omit to state a material fact with
respect to the description of the Certificate Insurance Policy or the
ability of the Certificate Insurer to meet its payment obligations
under the Certificate Insurance Policy;
(iv) the tables regarding the Certificate Insurer's capitalization
set forth under the heading "THE CERTIFICATE INSURER" present fairly
the capitalization of the Certificate Insurer as of September 30,
1995, respectively;
(v) on or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (i) any intended or potential
downgrading or (ii) any review or possible changes in rating, the
direction of which has not been indicated, in the rating accorded the
claims paying ability of the Certificate Insurer by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of the 1933 Act;
(vi) the audited balance sheet of the Certificate Insurer as of
December 31, 1994 and the related statement of income and retained
earnings for the fiscal year then ended, and the accompanying
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footnotes, together with an opinion thereon dated January 16, 1995 of
Coopers & Lybrand, independent certificated public accountants,
incorporated by reference into the Prospectus, fairly present in all
material respects the financial condition of the Certificate Insurer
as of such date and for the period covered by such statements in
accordance with generally accepted accounting principles consistently
applied; the unaudited balance sheet of the Certificate Insurer as of
September 30, 1995 and the related statement of income and retained
earnings for the nine-month period then ended, incorporated by
reference into the Prospectus, fairly present in all material
respects the financial condition of the Certificate Insurer as of
such date and for the period covered by such statements in accordance
with generally accepted accounting principles applied consistently
with those principles applied in preparing the December 31, 1994
audited statements.
(vii) to the best knowledge of such officer, since September 30,
1995, no material adverse change has occurred in the financial
position of the Certificate Insurer other than as set forth in the
Prospectus.
The officer of the Certificate Insurer certifying to items (v)-(vii)
shall be an officer in charge of a principal financial function. The
Certificate Insurer shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as
appropriate, and its bylaws, all of which are in full force and
effect on the date of such certificate.
(r) The Representative shall have been furnished such further
information, certificates, documents and opinions as the
Representative may reasonably request.
5. Covenants of the Depositor. In further consideration of the
agreements of the Underwriters contained in the Und\erwriting Agreement, the
Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of the
Registration Statement and any amendments thereto including exhibits
and as many copies of the Prospectus and any supplements and
amendments thereto as the Representative may from time to time
reasonably request.
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(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting
forth the principal amount, notional amount or stated amount, as
applicable, of the Class A Certificates covered thereby, the price at
which the Class A Certificates are to be purchased by the
Underwriters from the Depositor, either the initial public offering
price or prices or the method by which the price or prices at which
the Class A Certificates are to be sold will be determined, the
selling concessions and reallowances, if any, any delayed delivery
arrangements, and such other information as the Representative and
the Depositor deem appropriate in connection with the offering of the
Class A Certificates, but the Depositor will not file any amendment
to the Registration Statement or any supplement to the Prospectus of
which the Representative shall not previously have been advised and
furnished with a copy a reasonable time prior to the proposed filing
or to which the Representative shall have reasonably objected. The
Depositor will use its best efforts to cause any amendment to the
Registration Statement to become effective as promptly as possible.
During the time when a Prospectus is required to be delivered under
the 1933 Act, the Depositor will comply so far as it is able with all
requirements imposed upon it by the 1933 Act and the rules and
regulations thereunder to the extent necessary to permit the
continuance of sales or of dealings in the Class A Certificates in
accordance with the provisions hereof and of the Prospectus, and the
Depositor will prepare and file with the Commission, promptly upon
request by the Representative, any amendments to the Registration
Statement or supplements to the Prospectus which may be necessary or
advisable in connection with the distribution of the Class A
Certificates by the Underwriters, and will use its best efforts to
cause the same to become effective as promptly as possible. The
Depositor will advise the Representative, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement or any amended Registration Statement has become effective
or any supplement to the Prospectus or any amended Prospectus has
been filed. The Depositor will advise the Representative, promptly
after it receives notice or obtains knowledge thereof, of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any order preventing
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or suspending the use of any Preliminary Prospectus or the
Prospectus, or the suspension of the qualification of the Class A
Certificates for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or
of any request made by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information, and the Depositor will use its best efforts
to prevent the issuance of any such stop order or any order
suspending any such qualification, and if any such order is issued,
to obtain the lifting thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Class A
Certificates is required to be delivered under the 1933 Act, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact,
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus
to comply with the 1933 Act, to promptly notify the Representative
thereof and upon its request to prepare and file with the Commission,
at the Depositor's own expense, an amendment or supplement which will
correct such statement or omission or any amendment which will effect
such compliance.
(d) During the period when a prospectus is required by law to be
delivered in connection with the sale of the Class A Certificates
pursuant to the Underwriting Agreement, the Depositor will file, on a
timely and complete basis, all documents that are required to be
filed by the Depositor with the Commission pursuant to Sections 13,
14, or 15(d) of the 1934 Act.
(e) To qualify the Class A Certificates for offer and sale under the
securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request and to pay all expenses
(including fees and disbursements of counsel) in connection with such
qualification of the eligibility of the Class A Certificates for
investment under the laws of such jurisdictions as the Representative
may designate provided that in connection therewith the Depositor
shall not be required to qualify to do business or to file a general
consent to service of process in any jurisdiction.
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<PAGE>
(f) To make generally available to the Depositor's security holders,
as soon as practicable, but in any event not later than eighteen
months after the date on which the filing of the Prospectus, as
amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including at the option of the Depositor Rule 158).
(g) For so long as any of the Class A Certificates remain
outstanding, to furnish to the Representative upon request in writing
copies of such financial statements and other periodic and special
reports as the Depositor may from time to time distribute generally
to its creditors or the holders of the Class A Certificates and to
furnish to the Representative copies of each annual or other report
the Depositor shall be required to file with the Commission.
(h) For so long as any of the Class A Certificates remain
outstanding, the Depositor will, or will cause the Servicer to,
furnish to the Representative, as soon as available, a copy of (i)
the annual statement of compliance delivered by the Servicer to the
Trustee under the applicable Pooling and Servicing Agreement, (ii)
the annual independent public accountants' servicing report furnished
to the Trustee pursuant to the applicable Pooling and Servicing
Agreement, (iii) each report regarding the Class A Certificates
mailed to the holders of such Certificates, and (iv) from time to
time, such other information concerning such Certificates as the
Representative may reasonably request.
6. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with, each Underwriter, as of the date of
the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating to the
Certificates and the offering thereof from time to time in accordance
with Rule 415 under the 1933 Act has been filed with the Commission
and such Registration Statement, as amended to the date of the
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Underwriting Agreement, has become effective. No stop order
suspending the effectiveness of such Registration Statement has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission. A prospectus supplement specifically
relating to the Class A Certificates will be filed with the
Commission pursuant to Rule 424 under the 1933 Act; provided,
however, that a supplement to the Prospectus prepared pursuant to
Section 5(b) hereof shall be deemed to have supplemented the Basic
Prospectus only with respect to the Class A Certificates to which it
relates. The conditions to the use of a registration statement on
Form S-3 under the 1933 Act, as set forth in the General Instructions
on Form S-3, and the conditions of Rule 415 under the 1933 Act, have
been satisfied with respect to the Depositor and the Registration
Statement. There are no contracts or documents of the Depositor that
are required to be filed as exhibits to the Registration Statement
pursuant to the 1933 Act or the rules and regulations thereunder that
have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Basic Prospectus conformed in all
material respects to the requirements of the 1933 Act and the rules
and regulations thereunder, and did not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; on the date of the Underwriting Agreement and as of the
Closing Date, the Registration Statement and the Prospectus conform,
and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules
and regulations thereunder, and on the date of the Underwriting
Agreement and as of the Closing Date, neither of such documents
includes any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and neither of such documents
as amended or supplemented, if applicable, will include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing does
not apply to statements or omissions in any of such documents based
upon written information furnished to the Depositor by any
Underwriter specifically for use therein.
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<PAGE>
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the
condition, financial or otherwise, earnings, affairs, regulatory
situation or business prospects of the Depositor, whether or not
arising in the ordinary course of the business of the Depositor.
(d) The Depositor has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of
Delaware.
(e) The Depositor has all requisite power and authority (corporate
and other) and all requisite authorizations, approvals, order,
licenses, certificates and permits of and from all government or
regulatory officials and bodies to own its properties, to conduct its
business as described in the Registration Statement and the
Prospectus and to execute, deliver and perform this Agreement, the
Underwriting Agreement and the Pooling and Servicing Agreement,
except such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution by the
Underwriter of the Class A Certificates; all such authorizations,
approvals, orders, licenses, certificates are in full force and
effect and contain no unduly burdensome provisions; and, except as
set forth or contemplated in the Registration Statement or the
Prospectus, there are no legal or governmental proceedings pending
or, to the best knowledge of the Depositor, threatened that would
result in a material modification, suspension or revocation thereof.
(f) The Class A Certificates have been duly authorized, and when the
Class A Certificates are issued and delivered pursuant to the
Underwriting Agreement, the Class A Certificates will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the applicable Pooling and Servicing Agreement, subject,
as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the
rights of creditors generally, and to general principles of equity
(regardless of whether the entitlement to such benefits is considered
in a proceeding in equity or at law), and will conform in substance
to the description thereof contained in the Registration Statement
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<PAGE>
and the Prospectus, and will in all material respects be in the form
contemplated by the Pooling and Servicing Agreement.
(g) The execution and delivery by the Depositor of this Agreement,
the Underwriting Agreement and the Pooling and Servicing Agreement
are within the corporate power of the Depositor and neither the
execution and delivery by the Depositor of this Agreement, the
Underwriting Agreement and the Pooling and Servicing Agreement nor
the consummation by the Depositor of the transactions therein
contemplated, nor the compliance by the Depositor with the provisions
thereof, will conflict with or result in a breach of, or constitute a
default under, the charter or the by-laws of the Depositor or any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Depositor or its properties, or any of
the provisions of any indenture, mortgage, contract or other
instrument to which the Depositor is a party or by which it is bound,
or will result in the creation or imposition of a lien, charge or
encumbrance upon any of its property pursuant to the terms of any
such indenture, mortgage, contract or other instrument, except such
as have been obtained under the 1933 Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Class A Certificates by the
Underwriters.
(h) The Underwriting Agreement has been, and at the Closing Date the
Pooling and Servicing Agreement will have been, duly authorized,
executed and delivered by the Depositor.
(i) At the Closing Date, each of the Underwriting Agreement and the
Pooling and Servicing Agreement will constitute a legal, valid and
binding obligation of the Depositor, enforceable against the
Depositor, in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law).
(j) No filing or registration with, notice to, or consent, approval,
non-disapproval, authorization or order or other action of, any court
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<PAGE>
or governmental authority or agency is required for the consummation
by the Depositor of the transactions contemplated by the Underwriting
Agreement or the Pooling and Servicing Agreement, except such as have
been obtained and except such as may be required under the 1933 Act,
the rules and regulations thereunder, or state securities or "Blue
Sky" laws, in connection with the purchase and distribution of the
Class A Certificates by the Underwriters.
(k) The Depositor owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may
be, and to operate, its properties and to carry on its business as
presently conducted and has received no notice of proceedings
relating to the revocation of any such license, permit, consent,
order or approval, which singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations,
net worth or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the
subject which, if determined adversely to the Depositor would
individually or in the aggregate have a material adverse effect on
the condition (financial or otherwise), earnings, affairs, or
business or business prospects of the Depositor and, to the best of
the Depositor's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(m) At the Closing Date, each of the Receivables which is a subject
of the Pooling and Servicing Agreement and all such Receivables in
the aggregate will meet the criteria for selection described in the
Prospectus, and at the Closing Date, the representations and
warranties made by the Depositor in such Pooling and Servicing
Agreement will be true and correct as of the date made.
(n) At the time of execution and delivery of the Pooling and
Servicing Agreement, the Depositor will have good and marketable
title to the Receivables being transferred to the Trustee pursuant
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<PAGE>
thereto, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively
"Liens"), and will not have assigned to any person any of its right,
title or interest in such Receivables or in such Pooling and
Servicing Agreement or the Class A Certificates being issued pursuant
thereto, the Depositor will have the power and authority to transfer
such Receivables to the Trustee and to transfer the Class A
Certificates to each of the Underwriters, and, upon execution and
delivery to the Trustee of the Pooling and Servicing Agreement and
delivery to each of the Underwriters of the Class A Certificates, the
Trustee will have good and marketable title to the Receivables and
each of the Underwriters will have good and marketable title to the
Class A Certificates, in each case free and clear of any Liens.
(o) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Property (as defined in the Pooling and Servicing Agreement) is
not required to be registered under the Investment Company Act of
1940, as amended.
(p) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of the Underwriting Agreement,
this Agreement, the Pooling and Servicing Agreement and the Class A
Certificates have been or will be paid
at or prior to the Closing Date.
7. Indemnification and Contribution.
(a) The Depositor agrees to indemnify and hold harmless each
Underwriter (including Prudential Securities Incorporated acting in
its capacity as Representative and as one of the Underwriters), and
each person, if any, who controls any Underwriter within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 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 or
alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
20
<PAGE>
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Depositor will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with (1) written information
furnished to the Depositor by any Underwriter through the
Representative specifically for use therein or (2) information
regarding the Receivables except to the extent that the Depositor has
been indemnified by the Seller and Emergent (as defined in the
Indemnification Agreement). This indemnity agreement will be in
addition to any liability which the Depositor may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Depositor,
each of the Depositor's directors, each of the Depositor's officers
who signed the Registration Statement and each person, if any, who
controls the Depositor, within the meaning of the 1933 Act, against
any losses, claims, damages or liabilities to which the Depositor, or
any such director, officer or controlling person may become subject,
under the 1933 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 or alleged untrue statement of
any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or any other prospectus relating to the Class A
Certificates, 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 not
misleading, in each case to the extent, but only to the extent, that
such untrue statements or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Depositor by any Underwriter
through the Representative specifically for use therein; and each
Underwriter will reimburse any legal or other expenses reasonably
21
<PAGE>
incurred by the Depositor or any such director, officer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which such Underwriter
may otherwise have. The Depositor acknowledges that the statements
set forth under the caption "Underwriting" in the Prospectus
Supplement constitute the only information furnished to the Depositor
by or on behalf of any Underwriter for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus, and each of
the several Underwriters represents and warrants that such statements
are correct as to it.
(c) Promptly after receipt by an indemnified party under this Section
7 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 7, notify the indemnifying
party 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 wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 7 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, that the Representative
shall have the right to employ separate counsel to represent the
Representative, those other Underwriters and their respective
controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the
Underwriters against the Depositor under this Section 7 if, in the
reasonable judgment of the Representative, it is advisable for the
Representative and those Underwriters and controlling persons to be
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represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Depositor (it
being understood, however, that the Depositor shall not, in
connection with any one such claim or separate but substantially
similar or related claim in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Representative and those Underwriters
and controlling persons).
(d) The Underwriter agrees to provide the Depositor no later than the
date on which the Prospectus Supplement is required to be filed
pursuant to Rule 424 with a copy of any Derived Information (defined
below) for filing with the Commission on Form 8-K.
(e) The Underwriter agrees, assuming all Depositor- Provided
Information (defined below) is accurate and complete in all material
respects, to indemnify and hold harmless the Depositor, its
respective officers and directors and each person who controls the
Depositor 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 such Underwriter, 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 the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each
such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The obligations of
the Underwriter under this Section 7(e) shall be in addition to any
liability which the Underwriter may otherwise have.
The procedures set forth in Section 7(c) shall be equally applicable
to this Section 7(e).
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(f) For purposes of this Section 7, the term "Derived Information"
means such portion, if any, of the information delivered to the
Depositor pursuant to Section 7(d) 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 Depositor-Provided Information.
"Depositor-Provided Information" means any computer tape furnished to
the Underwriter by the Depositor concerning the assets comprising the
Trust.
(g) 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 7 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then 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 1933
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 the
Depositor on the one hand, and the Underwriters on the other, from
the offering of the Class A Certificates (taking into account the
portion of the proceeds of the offering realized by each), the
Depositor's and the Underwriters' 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. The Depositor and the Underwriters agree that it would
not be equitable if the amount of such contribution were determined
by pro rata or per capita allocation (even if the Underwriters were
treated as one entity for such purpose). No Underwriter or person
controlling such Underwriter shall be obligated to make contribution
hereunder which in the aggregate exceeds the total public offering
price of the Class A Certificates purchased by such Underwriter under
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<PAGE>
the Underwriting Agreement, less the aggregate amount of any damages
which such Underwriter and its controlling persons have otherwise
been required to pay in respect of the same or any substantially
similar claim. The Underwriters' obligation to contribute hereunder
are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7, each
person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution
as such Underwriter, and 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 1933 Act, shall have the same rights to
contribution as the Depositor.
(h) The parties hereto agree that the first sentence of Section 5 of
the Indemnification Agreement (the "Indemnification Agreement") dated
as of March 1, 1996 among the Certificate Insurer, Emergent (as
defined therein), the Depositor and the Underwriter shall not be
construed as limiting the Depositor's right to enforce its rights
under Section 7 of this Agreement. The parties further agree that, as
between the parties hereto, to the extent that the provisions of
Section 4, 5 and 6 of the Indemnification Agreement conflict with
Section 7 hereof, the provisions of Section 7 hereof shall govern.
(i) Notwithstanding anything in this Section 7 to the contrary the
Underwriter shall not be required to contribute or indemnify in an
amount in excess of the fee paid to Prudential Securities
Incorporated by the Depositor pursuant to this Agreement.
8. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor, its officers and the several Underwriters set
forth in, or made pursuant to, the Underwriting Agreement shall remain in full
force and effect, regardless of any investigation, or statement as to the result
thereof, made by or on behalf of any Underwriter, the Depositor, or any of the
officers or directors or any controlling person of any of the foregoing, and
shall survive the delivery of and payment for the Class A Certificates.
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<PAGE>
9. Termination.
(a) The Underwriting Agreement may be terminated by the Depositor by
notice to the Representative in the event that a stop order
suspending the effectiveness of the Registration Statement shall have
been issued or proceedings for that purpose shall have been
instituted or threatened.
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the
Depositor shall have failed, refused or been unable to perform all
obligations and satisfy all conditions to be performed or satisfied
hereunder by the Depositor at or prior to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party
other than as provided in Sections 7 and 11 hereof.
10. Default of Underwriters. If any Underwriter or Underwriters
defaults or default in their obligation to purchase the Class A Certificates
which it or they have agreed to purchase under the Underwriting Agreement and
the aggregate principal amount of the Class A Certificates which such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or less
of the aggregate principal amount, notional amount or stated amount, as
applicable, of the Class A Certificates to be sold under the Underwriting
Agreement, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments under the Underwriting
Agreement to purchase the Class A Certificates which such defaulting Underwriter
or Underwriters agreed but failed to purchase, if applicable. If any Underwriter
or Underwriters so defaults or default and the aggregate principal amount of the
Class A Certificates with respect to which such default or defaults occurs or
occur is more than ten percent of the aggregate principal amount, notional
amount or stated amount, as applicable, of the Class A Certificates to be sold
under the Underwriting agreement, as the case may be, and arrangements
satisfactory to the Representative and the Depositor for the purchase of such
Class A Certificates by other persons (who may include one or more of the
non-defaulting Underwriters including the Representative) are not made within 36
hours after any such default, the Underwriting Agreement will terminate without
liability on the part of any non-defaulting Underwriters or the Depositor except
for the expenses to be paid or reimbursed by the Depositor pursuant to Section
11 hereof. As used in the Underwriting Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
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<PAGE>
Nothing herein shall relieve a defaulting Underwriter from liability for its
default.
11. Expenses. The Depositor agrees with the several Underwriters
that:
(a) whether or not the transactions contemplated in the Underwriting
Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to
the performance of its obligations under the Underwriting Agreement,
including but not limited to, (i) the Commission's registration fee,
(ii) the expenses of printing and distributing the Underwriting
Agreement and any related underwriting documents, the Registration
Statement, any Preliminary Prospectus, the Prospectus, any amendments
or supplements to the Registration Statement or the Prospectus, and
any Blue Sky memorandum or legal investment survey and any
supplements thereto, (iii) fees and expenses of rating agencies,
accountants and counsel for the Depositor, (iv) the expenses referred
to in Section 5(e) hereof, and (v) all miscellaneous expenses
referred to in Item 30 of the Registration Statement;
(b) all out-of-pocket expenses, including counsel fees, disbursements
and expenses, reasonably incurred by the Underwriters in connection
with investigating, preparing to market and marketing the Class A
Certificates and proposing to purchase and purchasing the Class A
Certificates under the Underwriting Agreement will be borne and paid
by the Depositor if the Underwriting Agreement is terminated by the
Depositor pursuant to Section 9(a) hereof or by the Representative on
account of the failure, refusal or inability on the part of the
Depositor to perform all obligations and satisfy all conditions on
the part of the Depositor to be performed or satisfied hereunder; and
(c) the Depositor will pay the cost of preparing the Class A
Certificates.
Except as otherwise provided in this Section 11, the Underwriters
agree to pay all of their expenses in connection with investigating, preparing
to market and marketing the Class A Certificates and proposing to purchase and
purchasing the Class A Certificates under the Underwriting Agreement, including
the fees and expenses of their counsel and any advertising expenses incurred by
them in making offers and sales of the Class A Certificates.
27
<PAGE>
12. Notices. All communications under the Underwriting Agreement
shall be in writing and, if sent to the Underwriters, shall be mailed, delivered
or telegraphed and confirmed to the Representative at the address and to the
attention of the person specified in the Underwriting Agreement, and, if sent to
the Depositor, shall be mailed, delivered or telegraphed and confirmed to
Prudential Securities Secured Financing Corporation, One New York Plaza, New
York, New York 10292, Attention: Director-Asset-Backed Finance Group; provided,
however, that any notice to any Underwriter pursuant to the Underwriting
Agreement shall be mailed, delivered or telegraphed and confirmed to such
Underwriter at the address furnished by it.
13. Representative of Underwriters. Any Representative identified in
the Underwriting Agreement will act for the Underwriters of the Class A
Certificates and any action taken by the Representative under the Underwriting
Agreement will be binding upon all of such Underwriters.
14. Successors. The Underwriting Agreement shall inure to the benefit
of and shall be binding upon the several Underwriters and the Depositor and
their respective successors and legal representatives, and nothing expressed or
mentioned herein or in the Underwriting Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of the Underwriting Agreement, or any provisions herein
contained, the Underwriting Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriters shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Class A Certificates from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15. Time of the Essence. Time shall be of the essence of each
Underwriting Agreement.
28
<PAGE>
16. Governing Law. This Agreement and each Underwriting Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
29
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return two counterparts hereof.
Very truly yours,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/ Glen Stein
-----------------------
Name: Glen Stein
Title: Vice President
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:/s/ Glen Stein
----------------------
Name: Glen Stein
Title: Vice President
30
<PAGE>
Exhibit A
Opinions of Counsel For
The Depositor
(i) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to the
best of such counsel's knowledge, threatened against the Depositor which could
reasonably be expected to interfere with or adversely affect the consummation of
the transactions contemplated in the Underwriting Agreement, the Unaffiliated
Seller's Agreement or the Pooling and Servicing Agreement.
(iii) Neither the execution and delivery of the Underwriting
Agreement, the Unaffiliated Seller's Agreement or the Pooling and Servicing
Agreement, the incurrence of the obligations therein set forth, nor the
consummation of the transactions contemplated therein, to the best of such
counsel's knowledge, will conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any Lien upon any property or
assets of the Depositor pursuant to, any contract, indenture, pooling and
administration agreement, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it may be bound, or to
which any of the assets is subject, which separately or in the aggregate are
material, nor will any such action result in any violation of the provisions of
the Certificate of Incorporation or bylaws of the Depositor or to the best of
such counsel's knowledge, of any law, administrative regulation or
administrative or court decree.
(iv) No filing or registration with, notice to, or consent,
approval, authorization, order, qualification or other action of or with any
court or governmental authority, agency or body, is required for the
consummation by the Depositor of the transactions contemplated by the
Underwriting Agreement, the Unaffiliated Seller's Agreement or the Pooling and
Servicing Agreement, except such as have been obtained and except such as may be
required under state securities or Blue Sky laws in connection with the
distribution of the Certificates by the Underwriters.
(v) The execution and delivery of the Underwriting Agreement, the
Unaffiliated Seller's Agreement and the Pooling and Servicing Agreement, the
<PAGE>
incurrence of the obligations therein set forth and the consummation of the
transactions contemplated therein are within the corporate power and authority
of the Depositor and have been duly authorized by the Depositor by all necessary
corporate action; the Underwriting Agreement, the Unaffiliated Seller's
Agreement and the Pooling and Servicing Agreement have been duly executed and
delivered by the Depositor and each constitutes a legal, valid and binding
agreement of the Depositor, enforceable in accordance with its terms, subject,
as to enforceability of remedies, to applicable bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and to
general principles of equity and equitable remedies (regardless of whether the
enforceability of such remedies is considered in a proceeding at law or in
equity).
(vi) The issuance of the Offered Certificates has been duly and
validly authorized by the Depositor and, assuming due authorization, execution,
countersignature and delivery of the Pooling and Servicing Agreement by the
Trustee, when executed and countersigned by the Trustee in accordance with the
terms of the Pooling and Servicing Agreement and delivered to and paid for by
the Underwriter pursuant to the Underwriting Agreement, will be validly issued,
fully paid and nonassessable and entitled to the benefits provided by the
Pooling and Servicing Agreement. The Offered Certificates are in all material
respects in the form contemplated by the Pooling and Servicing Agreement.
(vii) The Registration Statement is effective under the 1933 Act,
and, to the best of counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or threatened by the
Commission.
(viii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements, schedules,
notes thereto and the other financial and statistical data included therein, as
to which no opinion need be rendered), as of their respective effective or issue
dates, complied as to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations.
(ix) The statements in the Prospectus under the captions
["Description of the Certificates,"] and ["The Pooling and Servicing Agreement
and the Transfer Agreements,"] to the extent they constitute matters of law or
legal conclusions, have been prepared or reviewed by counsel and provide a fair
and accurate summary of such law or conclusions and, to the extent they purport
A-2
<PAGE>
to summarize opinions of counsel, correctly represent the opinion of counsel;
the descriptions in the Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are accurate and fairly present
the information required to be shown.
(x) To the best of counsel's knowledge, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Registration Statement, nor any contracts or documents of a
character required to be described or referred to therein or to be filed as
exhibits thereto other than those described or referred to therein or filed as
exhibits thereto (other than financial statements, schedules, and notes thereto
and the other financial and statistical data included therein, as to which no
opinion need be rendered).
(xi) The Depositor is not, and neither the Depositor nor the Trust
Property will, as a result of the transactions contemplated in the Pooling and
Servicing Agreement, the Underwriting Agreement, the Unaffiliated Seller's
Agreement or the Indemnification Agreement, become an "investment company" or
under the "control" of an "investment company" as such terms are defined in the
Investment Company Act which would be required to register under the Investment
Company Act and the Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act.
A-3
<PAGE>
Exhibit B
Opinions of Counsel to
the Servicer
(i) The Servicer has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of South Carolina,
with the requisite corporate power and authority to own its properties and
conduct its business as described in the Registration Statement and (i) is duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business to the extent required by such jurisdiction
to enable the Servicer to perform its obligations as Servicer under the Pooling
and Servicing Agreement or is subject to no material liability or disability by
reason of the failure to be so qualified in any jurisdiction, or (ii) has
otherwise entered into or has committed to enter into a sub-servicing
arrangement with an entity that is duly qualified for the transaction of
business in those jurisdictions requiring such qualifications or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction.
(ii) The Servicer has the requisite power and authority to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the conditions of, the Pooling and Servicing Agreement and the Sub-Servicing
Agreement.
(iii) The Pooling and Servicing Agreement and the Sub-Servicing
Agreement have been duly and validly authorized, executed and delivered by the
Servicer, all requisite corporate action having been taken with respect thereto,
and constitute valid, legal and binding agreements of the Servicer, and are
enforceable against the Servicer in accordance with their terms.
(iv) The Servicer owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate its properties and to carry on its business as presently conducted and
to perform its obligations under the Pooling and Servicing Agreement and the
Sub-Servicing Agreement.
(v) Neither the transfer of the Receivables to the Depositor, nor the
execution, delivery or performance by the Servicer of the Pooling and Servicing
<PAGE>
Agreement (A) conflicts or will conflict with or results or will result in a
breach of, or constitutes or will constitute a default under or violates or will
violate, (i) any term or provision of the Articles of Incorporation or By-laws
of the Servicer; (ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Servicer or any of its subsidiaries is a
party or is bound; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having jurisdiction
over the Servicer or any of its properties; or (B) results in, or will result in
the creation or imposition of any lien, charge or encumbrance upon the Trust
Property or upon the Certificates, except as otherwise contemplated by the
Pooling and Servicing Agreement.
(vi) No consent, approval, authorization or order of, registration
or qualification of or with or notice to, any courts, governmental agency or
body or other tribunal is required under the laws of New York or South Carolina,
for the execution, delivery and performance of the Pooling and Servicing
Agreement and the Sub-Servicing Agreement or the consummation of any other
transaction contemplated thereby by the Servicer, except such which have been
obtained.
(vii) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Servicer before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Servicer, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Servicer; (ii) the Servicer's ability to perform its obligations under, or
the validity or enforceability of the Pooling and Servicing Agreement and the
Sub-Servicing Agreement; (iii) any installment sale contract or Financed
Vehicle, or the title of any Obligor to any Financed Vehicle; or (B) which have
not otherwise been disclosed in the Registration Statement and to the best of
such counsel's knowledge, no such proceedings or investigations are threatened
or contemplated by governmental authorities or threatened by others.
(viii) To the best of such counsel's knowledge, the statements made
concerning the Servicer under the Section entitled "The Servicer and the
Originators" contained in the Prospectus regarding the Servicer, are accurate in
all material respects in light of the circumstances under which they are made
therein. Such counsel has not independently verified and has not passed upon,
and does not assume any responsibility for the accuracy or completeness of any
other information contained in the Registration Statement.
B-2
<PAGE>
Exhibit C
Opinions of Counsel to
the Seller
(i) The Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with the
requisite corporate power and authority to own its properties and conduct its
business as described in the Registration Statement and is duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases properties, or
conducts any business to the extent required by such jurisdiction to enable the
Seller to perform its obligations as Seller under the Unaffiliated Seller's
Agreement dated as of March 1, 1996 (the "Unaffiliated Seller's Agreement")
between the Seller and the Depositor or is subject to no material liability or
disability by reason of the failure to be so qualified in any jurisdiction.
(ii) The Seller has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
conditions of, the Unaffiliated Seller's Agreement.
(iii) The Unaffiliated Seller's Agreement has been duly and validly
authorized, executed and delivered by the Seller, all requisite corporate action
having been taken with respect thereto, and constitutes the valid, legal and
binding agreement of the Seller, and is enforceable against the Seller in
accordance with its terms.
(iv) The Seller owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate its properties and to carry on its business as presently conducted and
to perform its obligations under the Unaffiliated Seller's Agreement.
(v) Neither the transfer of the Receivables to the Depositor, nor
the execution, delivery or performance by the Seller of the Unaffiliated
Seller's Agreement (A) conflicts or will conflict with or results or will result
in a breach of, or constitutes or will constitute a default under or violates or
will violate, (i) any term or provision of the Articles of Incorporation or
By-laws of the Seller; (ii) any term or provision of any material agreement,
contract, instrument or indenture, to which the Seller or any of its
<PAGE>
subsidiaries is a party or is bound; or (iii) any order, judgment, writ,
injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Seller or any of its properties; or (B)
results in, or will result in the creation or imposition of any lien, charge or
encumbrance upon the Trust Property or upon the Certificates, except as
otherwise contemplated by the Pooling and Servicing Agreement.
(vi) The endorsement and delivery of each installment sale contract
with respect to each Receivable in accordance with the Purchase Agreement and
Assignment and the Unaffiliated Seller's Agreement is sufficient fully to
transfer to the Depositor and its assignees all right, title and interest of the
Seller in each installment sale contract and each Receivable, as noteholder and
assignee thereof.
(vii) No consent, approval, authorization or order of, registration
or qualification of or with or notice to, any courts, governmental agency or
body or other tribunal is required under the laws of New York or South Carolina,
for the execution, delivery and performance of the Unaffiliated Seller's
Agreement or the consummation of any other transaction contemplated thereby by
the Seller, except such which have been previously obtained.
(viii) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Seller before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Seller, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Seller; (ii) the Seller's ability to perform its obligations under, or the
validity or enforceability of the Unaffiliated Seller's Agreement; (iii) any
installment sale contract or Financed Vehicle, or the title of any Obligor to
any Financed Vehicle; or (B) which have not otherwise been disclosed in the
Registration Statement and to the best of such counsel's knowledge, no such
proceedings or investigations are threatened or contemplated by governmental
authorities or threatened by others.
C-2
<PAGE>
Exhibit D
Opinions of Counsel to
the Trustee
(i) the Trustee is a New York banking corporation duly organized,
validly existing and in good standing under the laws of the United States and
has the power and authority to enter into and to take all actions required of it
under the Pooling and Servicing Agreement;
(ii) the Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and the Pooling and Servicing Agreement
constitutes the legal, valid and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, except as enforceability
thereof may be limited by (A) bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally, as such
laws would apply in the event of a bankruptcy, insolvency or reorganization or
similar occurrence affecting the Trustee, and (B) general principles of equity
regardless of whether such enforcement is sought in a proceeding at law or in
equity;
(iii) no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Trustee in connection with its execution and delivery of the Pooling and
Servicing Agreement or the performance of its obligations thereunder;
(iv) the Certificates have been duly executed, authenticated and
delivered by the Trustee; and
(v) the execution and delivery of, and performance by the Trustee of
its obligations under, the Pooling and Servicing Agreement do not conflict with
or result in a violation of any statute or regulation applicable to the Trustee,
or the charter or bylaws of the Trustee, or to the best knowledge of such
counsel, any governmental authority having jurisdiction over the Trustee or the
terms of any indenture or other agreement or instrument to which the Trustee is
a party or by which it is bound.
<PAGE>
Exhibit E
Certificate of Servicer Officers
The persons named below have been since _______, 19__ and are as of the date
hereof duly elected and qualified officers of the Servicer, each holding the
respective office or offices set forth opposite their name below, and their
respective signatures are set forth opposite their name below.
Name Position Signature
- ---- -------- ---------
<PAGE>
Exhibit F
Opinions of Counsel
to the Certificate Insurer
(i) The Certificate Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York. The
Certificate Insurer is validly licensed and authorized to issue the Certificate
Insurance Policy and perform its obligations under the Certificate Insurance
Policy in accordance with the terms thereof, under the laws of the State of New
York.
(ii) The execution and delivery by the Certificate Insurer of the
Certificate Insurance Policy and the Indemnification Agreement are within the
corporate power of the Certificate Insurer and have been authorized by all
necessary corporate action on the part of the Certificate Insurer; the
Certificate Insurance Policy has been duly executed and is the valid and binding
obligation of the Certificate Insurer enforceable in accordance with its terms
except that the enforcement of the Certificate Insurance Policy may be limited
by laws relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights generally and by
general principles of equity.
(iii) The Certificate Insurer is authorized to deliver the
Indemnification Agreement, and the Indemnification Agreement has been duly
executed and is the valid and binding obligation of the Certificate Insurer
enforceable in accordance with its terms except that the enforcement thereof may
be limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting creditors' rights
generally and by general principles of equity and by public policy
considerations relating to indemnification for securities law violations.
(iv) No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of the
Certificate Insurer, the lack of which would adversely affect the validity or
enforceability of the Certificate Insurance Policy; to the extent required by
applicable legal requirements that would adversely affect the validity or
enforceability of the Certificate Insurance Policy, the form of each Certificate
Insurance Policy has been filed with, and approved by, all governmental
authorities having jurisdiction over the Certificate Insurer in connection with
such Certificate Insurance Policy.
<PAGE>
(v) To the extent the Certificate Insurance Policy constitutes a
security within the meaning of Section 2(1) of the 1933 Act, it is a security
that is exempt from the registration requirements of the Act.
(vi) The information set forth under the captions "THE POLICY" and
"THE CERTIFICATE INSURER" in the Prospectus insofar as such statements
constitute a description of the Certificate Insurance Policy, accurately
summarizes the Certificate Insurance Policy.
F-2
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
RELATING TO
EMERGENT AUTO RECEIVABLES TRUST 1996-A
among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
as Depositor
EMERGENT GROUP, INC.
as Servicer
and
BANKERS TRUST COMPANY
as Trustee and as Backup Servicer
----------------------
Dated as of March 1, 1996
----------------------
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..................................................... 1
Section 1.1. Definitions............................................ 1
Section 1.2. Usage of Terms......................................... 20
Section 1.3. Calculations........................................... 20
Section 1.4. Section References..................................... 20
Section 1.5. Action by or Consent of Certificateholders............. 20
Section 1.6. No Recourse............................................ 20
Section 1.7. Material Adverse Effect................................ 20
ARTICLE II CREATION OF TRUST.............................................. 21
Section 2.1. Creation of Trust...................................... 21
ARTICLE III CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY
TRUSTEE; ORIGINAL ISSUANCE OF CERTIFICATES.................... 21
Section 3.1. Conveyance of Receivables.............................. 21
Section 3.2. Custody Matters........................................ 22
Section 3.3. Conditions to Acceptance by Trustee.................... 23
Section 3.4. Representations, Warranties and Covenants of Depositor. 23
Section 3.5. [Reserved]............................................. 26
Section 3.6. Repurchase of Receivables Upon Breach of
Representation and Warranty............................ 26
Section 3.7. Nonpetition Covenant................................... 26
Section 3.8. Collecting Lien Certificates Not Delivered on
the Closing Date....................................... 27
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES.................... 27
Section 4.1. Duties of the Servicer................................. 27
Section 4.2. Collection of Receivable Payments; Modification and
Amendment of Receivables............................... 28
Section 4.3. Realization Upon Receivables........................... 30
Section 4.4. Insurance.............................................. 31
Section 4.5. Maintenance of Security Interests in Vehicles.......... 31
Section 4.6. Covenants, Representations and Warranties of Servicer.. 32
Section 4.7. Purchase of Receivables Upon Breach of Covenant or
Representation and Warranty............................ 35
Section 4.8. Total Servicing Fee; Payment of Compensating Interest;
Payment of Certain Expenses by Servicer................ 36
-i-
<PAGE>
Page
----
Section 4.9. Servicer's Certificate................................. 36
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event...................................... 37
Section 4.11. Annual Independent Accountants' Report................. 37
Section 4.12. Access to Certain Documentation and Information
Regarding Receivables.................................. 38
Section 4.13. Monthly Tape........................................... 39
Section 4.14. Retention and Termination of Servicer.................. 40
ARTICLE V DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS............................................. 41
Section 5.1. Accounts............................................... 41
Section 5.2. Collections............................................ 41
Section 5.3. Application of Collections............................. 42
Section 5.4. Additional Deposits.................................... 43
Section 5.5. Distributions.......................................... 43
Section 5.6. Net Deposits........................................... 45
Section 5.7. Statements to Certificateholders....................... 46
Section 5.8. Optional Deposits by the Certificate Insurer........... 47
ARTICLE VI THE SPREAD ACCOUNT AND THE POLICY.............................. 48
Section 6.1. Spread Account......................................... 48
Section 6.2. Policy................................................. 48
Section 6.3. Withdrawals from Spread Account........................ 48
Section 6.4. Claims Under Policy.................................... 48
Section 6.5. Preference Claims; Direction of Proceedings............ 50
Section 6.6. Surrender of Policy.................................... 50
Section 6.7. Seller as Agent of the Reversionary Holders............ 50
ARTICLE VII THE CERTIFICATES............................................... 51
Section 7.1. The Certificates....................................... 51
Section 7.2. Initial Issuance of Certificates....................... 53
Section 7.3. Registration of Transfer and Exchange of Certificates.. 53
Section 7.4. Mutilated, Destroyed, Lost or Stolen Certificates...... 54
Section 7.5. Persons Deemed Owners.................................. 54
Section 7.6. Access to List of Certificateholders' Names
and Addresses.......................................... 55
ARTICLE VIII THE DEPOSITOR ................................................. 55
Section 8.1. Liability of Depositor................................. 55
Section 8.2. Limitation on Liability of Depositor................... 55
-ii-
<PAGE>
Page
----
ARTICLE IX THE SERVICER................................................... 56
Section 9.1. Liability of Servicer; Indemnities..................... 56
Section 9.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Backup Servicer........ 57
Section 9.3. Limitation on Liability of Servicer, Backup Servicer
and Others............................................. 58
Section 9.4. Delegation of Duties................................... 59
Section 9.5. Resignation of Servicer and Backup Servicer............ 59
ARTICLE X SERVICER TERMINATION EVENTS.................................... 60
Section 10.1. Servicer Termination Event............................. 60
Section 10.2. Consequences of a Servicer Termination Event........... 62
Section 10.3. Appointment of Successor............................... 63
Section 10.4. Notification to Certificateholders..................... 64
Section 10.5. Waiver of Past Defaults................................ 64
Section 10.6. Effect of Servicer Termination Event on Sub-Servicer... 64
ARTICLE XI THE TRUSTEE.................................................... 64
Section 11.1. Duties of Trustee...................................... 64
Section 11.2. Trustee's Assignment of Administrative Receivables and
Warranty Receivables................................... 66
Section 11.3. Certain Matters Affecting the Trustee.................. 66
Section 11.4. Trustee Not Liable for Certificates or Receivables..... 68
Section 11.5. Trustee May Own Certificates........................... 68
Section 11.6. Trustee's Fees and Expenses; Indemnification........... 68
Section 11.7. Eligibility Requirements for Trustee................... 69
Section 11.8. Resignation or Removal of Trustee...................... 69
Section 11.9. Successor Trustee...................................... 70
Section 11.10. Merger or Consolidation of Trustee..................... 71
Section 11.11. Appointment of Co-Trustee or Separate Trustee.......... 71
Section 11.12. Representations and Warranties of Trustee and Backup
Servicer............................................... 73
Section 11.13. Tax Returns............................................ 73
Section 11.14. Trustee May Enforce Claims Without Possession of
Certificates........................................... 73
Section 11.15. Suit for Enforcement................................... 73
Section 11.16. Rights to Direct Trustee............................... 74
-iii-
<PAGE>
Page
----
ARTICLE XII TERMINATION.................................................... 74
Section 12.1. Termination of the Trust............................... 74
Section 12.2. Optional Purchase of All Receivables................... 75
ARTICLE XIII MISCELLANEOUS PROVISIONS....................................... 76
Section 13.1. Amendment.............................................. 76
Section 13.2. Protection of Title to Trust........................... 77
Section 13.3. Limitation on Rights of Certificateholders............. 79
Section 13.4. Governing Law.......................................... 80
Section 13.5. Severability of Provisions............................. 80
Section 13.6. Assignment............................................. 80
Section 13.7. Certificates Nonassessable and Fully Paid.............. 81
Section 13.8. Third-Party Beneficiaries.............................. 81
Section 13.9. Financial Security as Controlling Party................ 81
Section 13.10. Counterparts........................................... 81
Section 13.11. Notices................................................ 81
Section 13.12. Successors and Assigns................................. 82
SCHEDULES
Schedule A -- Schedule of Receivables
EXHIBITS
Exhibit A -- Form of Class A Certificate
Exhibit B -- Form of Class B Certificate
Exhibit C -- Form of Class C Certificate
Exhibit D -- Form of Spread Account Agreement
Exhibit E -- Form of Servicer's Certificate
Exhibit F -- Form of Policy
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Exhibit G -- Form of Unaffiliated Seller's Agreement
Exhibit H -- Form of Purchase Agreement and Assignment
Exhibit I -- Servicer's Request for Release
Exhibit J -- Form of Deficiency Notice
Exhibit K -- Form of Notice
Exhibit L -- Form of Investment Letter
Exhibit M -- Servicer's Request For Permanent Release
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THIS POOLING AND SERVICING AGREEMENT ("this Agreement"), dated as of March
1, 1996, is made with respect to the formation of the Emergent Auto Receivables
Trust 1996-A, among Prudential Securities Secured Financing Corporation, as
depositor (the "Depositor"), Emergent Group, Inc., as servicer (the "Servicer")
and Bankers Trust Company, as trustee (in such capacity, the "Trustee") and as
backup servicer (in such capacity, the "Backup Servicer").
WHEREAS, the Depositor wishes to establish a trust and provide for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Receivables, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee, valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done; and
WHEREAS, Bankers Trust Company is willing to serve in the capacity of
Trustee and Backup Servicer hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Servicer, the Trustee and the Backup
Servicer hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All terms defined in the Spread Account Agreement
(as defined below) shall have the same meaning in this Agreement. Whenever
capitalized and used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accountants' Report: The report of Elliott Davis & Company, L.L.P. or a
firm of nationally recognized independent accountants described in Section 4.11.
Administrative Receivable: With respect to any Collection Period, a
Receivable which the Servicer is required to purchase pursuant to Section 4.7.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
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direct the management and voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
Aggregate Principal Balance: With respect to any Determination Date, the
sum of the Principal Balances (computed as of the related Record Date) for all
Receivables (other than (i) any Receivable that became a Liquidated Receivable
during the related Collection Period and (ii) any Receivable that became a
Purchased Receivable on the immediately preceding Deposit Date).
Amount Available: With respect to any Distribution Date, the sum of (i) the
Available Funds for the immediately preceding Determination Date, plus (ii) the
actual amount received by the Trustee with respect to any Deficiency Notice
relating to such Distribution Date, plus (iii) the Policy Claim Amount, if any,
received by the Trustee with respect to such Distribution Date.
Amount Financed: With respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of automobile installment sale contracts or promissory notes,
and related costs.
Annual Percentage Rate or APR: With respect to a Receivable, the rate per
annum of finance charges stated in such Receivable as the "annual percentage
rate" (within the meaning of the Federal Truth-in-Lending Act). If after the
Closing Date, the rate per annum with respect to a Receivable as of the Closing
Date is reduced as a result of (i) an insolvency proceeding involving the
Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
Annual Percentage Rate or APR shall refer to such reduced rate.
Annual Trustee's Fee: Shall have the meaning set forth in Section .
Available Funds: With respect to any Determination Date, the sum of (i) the
Collected Funds for such Determination Date, (ii) all Purchase Amounts deposited
in the Collection Account on the related Deposit Date and (iii) any Compensating
Interest actually deposited by the Servicer on such Deposit Date.
Average Default Rate: With respect to any Distribution Date, the arithmetic
average of the Default Rate for such Distribution Date and the Default Rates for
the two immediately preceding Distribution Dates.
Average Delinquency Ratio: With respect to any Distribution Date, the
arithmetic average of the Delinquency Ratio for such Distribution Date and the
Delinquency Ratios for the two immediately preceding Distribution Dates.
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Average Net Loss Rate: With respect to any Distribution Date, the
arithmetic average of the Net Loss Rates for the three immediately preceding
Collection Periods.
Basic Servicing Fee: With respect to any Collection Period, the fee payable
to the Servicer for services rendered during such Collection Period, which shall
be equal to one-twelfth of the Basic Servicing Fee Rate multiplied by the
Aggregate Principal Balance as of the first day of the Collection Period.
Basic Servicing Fee Rate: 3.0% per annum, payable monthly at one- twelfth
of the annual rate.
Business Day: Any day other than a Saturday, Sunday, legal holiday or other
day on which banking institutions or trust companies in New York, South Carolina
or any other location of any successor Servicer, successor Trustee or successor
Spread Account Trustee are authorized or obligated by law, executive order or
governmental decree to be closed.
Calendar Quarter: The three-month period ending on the last day of March,
June, September or December.
Certificate: Any one of the Class A Certificates, Class B Certificates or
Class C Certificates executed by the Trustee on behalf of the Trust in
substantially the form set forth in Exhibit A, B or C, respectively.
Certificate Insurer: Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or any
successor thereto, as issuer of the Policy.
Certificate Majority: Holders of Class A Certificates and Class B
Certificates representing greater than fifty (50%) percent of the sum of the
Class A Certificate Balance and the Class B Certificate Balance, or if there are
no Class A Certificates outstanding, holders of Class B Certificates
representing greater than fifty (50%) percent of the Class B Certificate
Balance.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register.
Certificate Register: The register maintained pursuant to Section 7.3
hereof.
Claim Amount: Shall have the meaning described in Section 6.4(a).
Class: A class of Certificates.
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Class A Certificate: Any one of the Certificates executed by the Trust and
authenticated by the Trustee in substantially the form set forth in Exhibit A
hereto.
Class A Certificate Balance: Initially, the Class A Percentage of the
Original Aggregate Principal Balance and, thereafter, the initial Class A
Certificate Balance reduced by all amounts distributed to the Class A
Certificateholders and allocable to principal.
Class A Certificate Factor: As of any Distribution Date, a seven-digit
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance as of the Cut-Off Date.
Class A Distributable Amount: On any Distribution Date, the sum of the
Class A Principal Distributable Amount and the Class A Interest Distributable
Amount.
Class A Interest Carryover Shortfall: As of the close of business on any
Distribution Date, the excess of the Class A Interest Distributable Amount for
such Distribution Date plus any outstanding Class A Interest Carryover Shortfall
from the preceding Distribution Date plus interest on such outstanding Class A
Interest Carryover Shortfall, to the extent permitted by law, at the Class A
Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of the Class A
Certificates actually received on such current Distribution Date.
Class A Interest Distributable Amount: With respect to any Distribution
Date, the sum of (i) thirty (30) days of interest, calculated on the basis of a
360-day year consisting of twelve 30-day months, at the Class A Pass-Through
Rate on the Class A Certificate Balance as of the close of business on the last
day of the preceding Collection Period and (ii) any outstanding Class A Interest
Carryover Shortfall.
Class A Pass-Through Rate: 6.55% per annum, calculated on the basis of a
360-day year consisting of twelve 30-day months.
Class A Percentage: 90%.
Class A Percentage Interest: The interest in the Class A Portion of the
Trust that is evidenced by a Class A Certificate and that is set forth on the
face of such Certificate; provided, however, that the Trustee shall only issue
Class A Certificates evidencing in the aggregate Class A Percentage Interests
totalling 100%. To the extent that, for federal income tax purposes, the Class A
Certificates constitute indebtedness, all references in this Agreement to
Holders of Class A Certificates owning a specified percentage of the outstanding
Class A Certificate Balance shall be construed to mean Holders of Class A
Certificates evidencing such specified percentage of the then outstanding
indebtedness.
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Class A Portion: The aggregate interest in the Trust evidenced by the Class
A Certificates.
Class A Principal Carryover Shortfall: As of the close of business on any
Distribution Date, the excess of the Class A Principal Distributable Amount plus
any outstanding Class A Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal that the holders of the Class A
Certificates actually received on such current Distribution Date.
Class A Principal Distributable Amount: With respect to any Distribution
Date, without duplication, the sum of the Class A Percentage of (i) the
principal portion of all Collected Funds received during the immediately
preceding Collection Period (other than Liquidated Receivables and Purchased
Receivables), (ii) the Principal Balance of all Receivables that became
Liquidated Receivables during the related Collection Period (other than
Purchased Receivables), (iii) the principal portion of the Purchase Amount of
all Receivables that became Purchased Receivables as of the immediately
preceding Record Date, plus, in the sole discretion of the Certificate Insurer,
the Principal Balance allocable to the Class A Certificates as of the
immediately preceding Record Date of all the Receivables that were required to
be purchased pursuant to Sections 3.6 and 4.7 as of the immediately preceding
Record Date but were not so purchased and (iv) the aggregate amount of Cram Down
Losses that shall have occurred during the related Collection Period.
Class B Certificate: Any one of the Certificates executed by the Trust and
authenticated by the Trustee in substantially the form set forth in Exhibit B
hereto.
Class B Certificate Balance: Initially, the Class B Percentage of the
Original Aggregate Principal Balance and, thereafter, the initial Class B
Certificate Balance, reduced by (x) all amounts distributed to Class B
Certificateholders and allocable to principal and (y) on any Distribution Date
on which (i) the sum of the Class A Certificate Balance and the Class B
Certificate Balance as of such Distribution Date and after taking into account
all distributions to be made on such Distribution Date exceeds (ii) the
Aggregate Principal Balance with respect to the immediately preceding Collection
Period, the amount of such excess.
Class B Certificate Factor: As of any Distribution Date, a seven-digit
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance.
Class B Distributable Amount: On any Distribution Date, the sum of the
Class B Principal Distributable Amount and the Class B Interest Distributable
Amount.
Class B Interest Carryover Shortfall: As of the close of business on any
Distribution Date, the excess of the Class B Interest Distributable Amount for
such Distribution Date plus any outstanding Class B Interest Carryover Shortfall
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from the preceding Distribution Date plus interest on such outstanding Class B
Interest Carryover Shortfall, to the extent permitted by law, at the Class B
Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of the Class B
Certificates actually received on such current Distribution Date.
Class B Interest Distributable Amount: With respect to any Distribution
Date, the sum of (i) thirty (30) days of interest calculated on the basis of a
360-day year consisting of twelve 30-day months, at the Class B Pass-Through
Rate on the Class B Certificate Balance as of the close of business on the last
day of the preceding Collection Period and (ii) any outstanding Class B Interest
Carryover Shortfall.
Class B Pass-Through Rate: 8.25% per annum, calculated on the basis of a
360-day year consisting of twelve 30-day months.
Class B Percentage: 10%.
Class B Percentage Interest: The interest in the Class B Portion of the
Trust that is evidenced by a Class B Certificate and that is set forth on the
face of such Certificate; provided, however, that the Trustee shall only issue
Class B Certificates evidencing in the aggregate Class B Percentage Interests
totalling 100%. To the extent that, for federal income tax purposes, the Class B
Certificates constitute indebtedness, all references in this Agreement to
Holders of Class B Certificates owning a specified percentage of the outstanding
Class B Certificate Balance shall be construed to mean Holders of Class B
Certificates evidencing such specified percentage of the then outstanding
indebtedness.
Class B Portion: The aggregate interest in the Trust evidenced by the Class
B Certificates.
Class B Principal Carryover Shortfall: As of the close of business on any
Distribution Date, the excess of the Class B Principal Distributable Amount plus
any outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal that the holders of the Class B
Certificates actually received on such current Distribution Date.
Class B Principal Distributable Amount: With respect to any Distribution
Date, without duplication, the sum of the Class B Percentage of: (i) the
principal portion of all Collected Funds received during the immediately
preceding Collection Period (other than Liquidated Receivables and Purchased
Receivables) including the principal portion of all prepayments, (ii) the
Principal Balance of all Receivables that became Liquidated Receivables during
the related Collection Period (other than Purchased Receivables), (iii) the
principal portion of the Purchase Amount of all Receivables that became
Purchased Receivables as of the immediately preceding Record Date and (iv) the
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aggregate amount of Cram Down Losses that shall have occurred during the related
Collection Period.
Class C Certificate: Any one of the Certificates executed by the Trust and
authenticated by the Trustee in substantially the form set forth in Exhibit C.
Class C Percentage Interest: The interest in the Class C Portion of the
Trust that is evidenced by a Class C Certificate and that is set forth on the
face of such Certificate; provided, however, that the Trustee on behalf of the
Trust shall only issue Class C Certificates evidencing in the aggregate Class C
Percentage Interests totalling 100%.
Class C Portion: The aggregate interest in the Trust evidenced by the Class
C Certificates.
Closing Date: March 27, 1996.
Collected Funds: With respect to any Determination Date, the amount of
funds in the Collection Account representing collections on the Receivables
during the related Collection Period, including all Liquidation Proceeds
collected during the related Collection Period (but excluding any Purchase
Amounts).
Collection Account: The account designated as the Collection Account in,
and which is established and maintained pursuant to, Section 5.1.
Collection Period: With respect to a Determination Date or a Distribution
Date, the calendar month preceding the month in which such Determination Date or
Distribution Date occurs (such calendar month being referred to as the "related"
Collection Period with respect to such Determination Date or Distribution Date).
Collection Records: All manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the
Receivables.
Compensating Interest: shall have the meaning set forth in Section 4.8(b)
hereof.
Computer Tape or Listing: The computer tape or listing generated on behalf
of the Depositor which provides information relating to the Receivables and
which was used by the Depositor, the Seller and the Originators in selecting the
Receivables conveyed to the Trust hereunder.
Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at Four Albany Street, New York, New York 10006,
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Attention: Corporate Trust and Agency Group - Structured Finance Team or such
other office as the Trustee may designate from time to time by notice to the
Certificateholders. The telecopy number for the Corporate Trust Office on the
Closing Date is (212) 250-6439.
Cram Down Loss: With respect to a Receivable, if a court of appropriate
jurisdiction in an insolvency proceeding shall have issued an order reducing the
amount owed on a Receivable or otherwise modifying or restructuring the
scheduled payments to be made on a Receivable, an amount equal to the excess of
the principal balance of such Receivable immediately prior to such order over
the principal balance of such Receivable as so reduced or the net present value
(using as the discount rate the higher of the APR on such Receivable or the rate
of interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
Cut-Off Date: The close of business on February 29, 1996.
Dealer: A seller of new or used automobiles or light trucks that originated
one or more of the Receivables and sold the respective Receivable, directly or
indirectly, to either Originator.
Dealer Agreement: An agreement by and among either Originator and a Dealer
relating to the sale of retail installment sale contracts and installment notes
to either Originator and all documents and instruments relating thereto.
Dealer Assignment: With respect to a Receivable, the executed assignment
executed by a Dealer conveying such Receivable to either Originator.
Default Rate: With respect to any Distribution Date and based on such
information provided in the Servicer's Certificate under Section 4.9(b), the
product of (x) twelve and (y) a fraction (i) the numerator of which is the sum
of (a) the aggregate Principal Balance (as of the related Record Date) of all
Receivables which became Defaulted Receivables during the related Collection
Period and (b) the aggregate Principal Balance (as of the related repurchase
date) of Receivables that became Purchased Receivables during the related
Collection Period that were 30 days or more delinquent with respect to more than
ten percent of a Scheduled Payment at the time of such repurchase hereunder and
(ii) the denominator of which is a fraction (a) the numerator of which is the
sum of (1) the Aggregate Principal Balance of the Receivables as of the first
day of the related Collection Period and (2) the Aggregate Principal Balance of
the Receivables as of the last day of the related Collection Period and (b) the
denominator of which is two.
Defaulted Receivable: With respect to any Distribution Date, a Receivable
with respect to which: (i) more than ten percent of a Scheduled Payment is 90 or
more days delinquent, (ii) the Servicer has repossessed the related Financed
Vehicle (and any applicable redemption period has expired) or (iii) such
Receivable is in default and the Servicer has determined in good faith that
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payments thereunder are not likely to be resumed; provided, however, that a
Receivable shall not be a Defaulted Receivable if the Servicer has determined in
good faith that insurance proceeds with respect to such Receivable are likely to
be paid.
Deficiency Claim Amount: Shall have the meaning set forth in Section
6.3(a).
Deficiency Claim Date: With respect to any Distribution Date, the fifth
Business Day immediately preceding such Distribution Date.
Deficiency Notice: Shall have the meaning set forth in Section 6.3.(a).
Definitive Certificate: Shall have the meaning set forth in Section
7.3.(c).
Delinquency Ratio: With respect to any Distribution Date, a fraction (a)
the numerator of which is equal to the aggregate Principal Balance (as of the
related Record Date) of all Receivables that were 30 or more days delinquent
with respect to more than ten percent of a Scheduled Payment and (b) the
denominator of which is equal to the Aggregate Principal Balance of the
Receivables as of the related Record Date.
Deposit Date: With respect to any Collection Period, the Business Day
immediately preceding the related Determination Date.
Depositor: shall have the meaning set forth in the first paragraph of this
Agreement.
Depository: The Depository Trust Company, 55 Water Street, New York, New
York 10041 and any successor Depository hereafter named.
Determination Date: With respect to any Collection Period, the ninth
Business Day preceding the Distribution Date in the next calendar month.
Distribution Amount: With respect to a Distribution Date, the sum of (i)
the Available Funds for such Distribution Date, plus (ii) the Deficiency Claim
Amount, if any, received by the Trustee with respect to such Distribution Date.
Distribution Date: With respect to a Collection Period, the 20th day of the
next succeeding calendar month, or if such 20th day is not a Business Day, the
next succeeding Business Day, commencing April 22, 1996.
Draw Date: With respect to any Distribution Date, the third Business Day
immediately preceding such Distribution Date.
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Electronic Ledger: The electronic master record of the installment sales
contracts or installment loans of the Servicer.
Eligible Account: (i) A segregated trust account that is maintained with a
depository institution acceptable to the Certificate Insurer (so long as an
Insurer Default shall not have occurred and be continuing), (ii) a segregated
direct deposit account maintained with a depository institution or trust company
organized under the laws of the United States of America, or any of the States
thereof, or the District of Columbia, having a certificate of deposit, short
term deposit or commercial paper rating of at least A-1+ by Standard & Poor's
and P-1 by Moody's and (so long as an Insurer Default shall not have occurred
and be continuing) acceptable to the Certificate Insurer, or (iii) a segregated
trust account with the corporate trust department of the initial Trustee. In
either case, such depository institution or trust company shall have been
approved by the Controlling Party (as defined in the Spread Account Agreement),
acting in its discretion, by written notice to the Spread Account Trustee.
Eligible Investments: Any one or more of the following types of
investments:
(i) (a) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by,
the United States or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the United
States; and (b) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal
and interest by, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, but only if, at the time of investment,
such obligations are rated AAA by Standard & Poor's and Aaa by Moody's;
(ii) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal and/or State banking authorities
(including, if applicable, the Trustee or any agent of the Trustee acting
in their respective commercial capacities); provided that the short-term
unsecured debt obligations of such depository institution or trust company
at the time of such investment, or contractual commitment providing for
such investment, are rated A-1 by Standard & Poor's and P-1 by Moody's;
(iii) repurchase obligations pursuant to a written agreement (1) with
respect to any obligation described in clause (i) above, where the Trustee
has taken actual or constructive delivery of such obligation in accordance
with Section 5.1, and (2) entered into with a depository institution or
trust company organized under the laws of the United States or any State
thereof, the deposits of which are insured by the Federal Deposit Insurance
Corporation and the short-term unsecured debt obligations of which are
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rated "A-1+" by Standard & Poor's and "P-1" by Moody's (including, if
applicable, the Trustee or any agent of the Trustee acting in their
respective commercial capacities);
(iv) securities bearing interest or sold at a discount rated "A-1" by
Standard & Poor's and "P-1" by Moody's issued by any corporation
incorporated under the laws of the United States or any State whose
long-term unsecured debt obligations are rated AAA by Standard & Poor's and
Aaa by Moody's at the time of such investment or contractual commitment
providing for such investment; provided, however, that securities issued by
any particular corporation will not be Eligible Investments to the extent
that an investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the Collection
Account to exceed 10% of the Eligible Investments held in the Collection
Account (with Eligible Investments held in the Collection Account valued at
par);
(v) commercial paper that (1) is payable in United States dollars and
(2) is rated "A-1" by Standard & Poor's and "P-1" by Moody's;
(vi) money market mutual funds registered under the Investment Company
Act of 1940, as amended, having a rating, at the time of such investment,
from each of the Rating Agencies in the highest investment category granted
thereby and acceptable to the Certificate Insurer; and
(vii) any other demand or time deposit, obligation, security or
investment as may be acceptable to the Certificate Insurer, as evidenced by
the prior written consent of the Certificate Insurer, as may from time to
time be confirmed in writing to the Trustee by the Certificate Insurer.
Eligible Servicer: The Servicer, the Backup Servicer or another Person
which at the time of its appointment as Servicer, (i) is servicing a portfolio
of motor vehicle installment sales contracts and/or motor vehicle installment
loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle installment sales contracts and/or motor
vehicle installment loans similar to the Receivables with reasonable skill and
care, and (iv) is qualified and entitled to use, pursuant to a license or other
written agreement, and agrees to maintain the confidentiality of, the software
which the Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has available software which
is adequate to perform its duties and responsibilities under this Agreement.
Emergent: Collectively, Emergent Group, Inc., the Seller and the
Originators.
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Emergent Banks: Depository institutions named by the Servicer and, so long
as an Insurer Default shall not have occurred and be continuing, acceptable to
the Certificate Insurer, or, if an Insurer Default shall have occurred and be
continuing, a Certificate Majority.
Emergent Collection Accounts: The segregated accounts maintained on behalf
of the Trustee by the Emergent Banks pursuant to Section 4.2(d).
Final Scheduled Distribution Date: February 20, 2003.
Financed Vehicle: A new or used automobile or light duty truck, van or
mini-van together with all accessories thereto, securing or purporting to secure
an Obligor's indebtedness under a Receivable.
Fractional Undivided Interest: The fractional undivided interest in the
Trust that is evidenced by a Certificate.
Indemnification Agreement: The Indemnification Agreement among the
Certificate Insurer, Emergent, the Depositor and the Underwriter.
Independent Accountants: shall have the meaning set forth in Section
4.11(a).
Insurance Agreement: The Insurance and Indemnity Agreement among the
Depositor, Emergent, the Certificate Insurer, and the Seller.
Insurance Agreement Event of Default: An "Event of Default" as defined in
the related Insurance Agreement.
Insurance Policy: With respect to a Receivable, any insurance policy
(including the insurance policies described in Section 3.02(w) of the
Unaffiliated Seller's Agreement benefiting the holder of the Receivable
providing loss or physical damage, credit life, credit disability, theft,
mechanical breakdown or similar coverage with respect to the Financed Vehicle or
the Obligor.
Insurer Default: The occurrence and continuance of any of the following
events:
(a) the Certificate Insurer shall have failed to make a payment
required under the Policy in accordance with its terms;
(b) The Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
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creditors, or (iii) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Certificate Insurer or for
all or any material portion of its property or (ii) authorizing the taking
of possession by a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material portion of the
property of the Certificate Insurer).
Lien: Any security interest, lien, charge, pledge, preference, equity or
encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Lien Certificate: With respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
Liquidated Receivable: With respect to any Collection Period, a Receivable
as to which (i) 60 days have elapsed since the Servicer repossessed the Financed
Vehicle, (ii) the Servicer has determined in good faith that all amounts it
expects to recover have been received, (iii) more than ten percent of a
Scheduled Payment shall have become 180 or more days delinquent or (iv) the
Financed Vehicle has been sold and the proceeds received. Any Receivable that
becomes a Purchased Receivable on or before the related Deposit Date shall not
be a Liquidated Receivable.
Liquidation Proceeds: With respect to a Liquidated Receivable, all amounts
realized with respect to such Receivable (other than amounts withdrawn from the
Spread Account and drawings under the Policy) net of amounts that are required
to be refunded to the Obligor on such Receivable less reasonable Servicer
out-of-pocket costs including repossession and resale expenses not already
deducted from such amounts; provided, however, that the Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero.
Local Banks: Depository institutions named by the Servicer and, so long as
an Insurer Default shall not have occurred and be continuing, acceptable to the
Certificate Insurer, or, if an Insurer Default shall have occurred and be
continuing, a Certificate Majority.
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Local Collection Accounts: The segregated accounts maintained on behalf of
the Trust by the Local Banks pursuant to Section 4.2(d).
Moody's: Moody's Investors Service, Inc., or any successor thereto.
Net Loss Rate: For any Collection Period, the product, expressed as a
percentage, of twelve multiplied by a fraction, the numerator of which is equal
to (i) the sum of (a) the aggregate of the Principal Balances as of the related
Record Date of all Receivables that became Liquidated Receivables during the
related Collection Period and (b) the amount of any Cram Down Losses less (ii)
the Liquidation Proceeds received by the Trust with respect to Receivables which
became Liquidated Receivables in prior Collection Periods, and the denominator
of which is equal to the average of the Aggregate Principal Balance as of the
related Record Date and the Aggregate Principal Balance as of the first day of
the related Collection Period.
Notice of Claim: A written or telecopied notice from the Trustee to the
Certificate Insurer, substantially in the form of Exhibit A to the Policy.
Obligor: The purchaser or the co-purchasers of the Financed Vehicle and any
other Person or Persons who are primarily or secondarily obligated to make
payments under a Receivable.
Officer's Certificate: A certificate signed by the chairman of the board,
the vice chairman, the president, the chief financial officer, the treasurer,
the assistant treasurer, the controller or any executive vice president.
Opinion of Counsel: A written opinion of counsel acceptable in form and
substance to the Trustee and, if such opinion or a copy thereof is required by
the provisions of this Agreement to be delivered to the Certificate Insurer, to
the Certificate Insurer.
Original Aggregate Principal Balance: $16,107,339.72
Originators: The Loan Pro$, Inc., a South Carolina corporation and Premier
Financial Services, Inc., a South Carolina corporation.
Originator's Underwriting Guide: means the respective underwriting manuals
used by each Originator in the origination or purchase of Receivables as amended
from time to time.
Participant: Any broker-dealer, bank or other financial institution for
which the Depository holds Class A Certificates from time to time as a
securities depository.
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Person: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
Policy: The financial guaranty insurance policy number 50450-N issued by
the Certificate Insurer to the Trustee for the benefit of the Class A
Certificateholders, including any endorsements thereto.
Policy Claim Amount: Shall have the meaning set forth in Section 6.4(a).
Policy Payments Account: The account designated as the Policy Payments
Account in, and which is established and maintained pursuant to, Section 5.1.
Pool Factor: With respect to any Distribution Date, a seven digit decimal
figure equal to, as applicable, the Class A Certificate Balance as of such
Distribution Date (after giving effect to distributions on such date) divided by
the Class A Certificate Balance as of the Closing Date, or the Class B
Certificate Balance as of such Distribution Date (after giving effect to
distributions on such date) divided by the Class B Certificate Balance as of the
Closing Date.
Preference Claim: Shall have the meaning set forth in Section 6.5(b).
Prepayment: Any payment in full made by an Obligor of the principal of a
Receivable which is received by the Servicer in advance of the scheduled
maturity date for such Receivable.
Principal Balance: With respect to any Receivable, as of any date, the
Amount Financed minus (i) that portion of all amounts received on or prior to
such date and allocable to principal in accordance with the terms of the
Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
Purchase Agreement: The Purchase Agreement and Assignment dated as of March
1, 1996 between the Originators, the Seller and Emergent Group, Inc. relating to
the purchase by the Seller from the Originators of the Receivables, as set forth
in Exhibit H.
Purchase Amount: With respect to a Receivable, the Principal Balance and
all accrued and unpaid interest on the Receivable as of the date of purchase.
Purchased Receivable: As of any Record Date, any Receivable that became a
Warranty Receivable or Administrative Receivable as of such Record Date (or
which the Seller, the Originators or the Servicer has elected to purchase as of
an earlier Record Date, as permitted hereunder) and as to which the Purchase
Amount has been deposited in the Collection Account by the Seller, the
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Originators, Emergent Group, Inc. or the Servicer, as applicable, on or before
the related Deposit Date.
Rating Agency: Each of Moody's and Standard & Poor's, so long as such
Persons maintain a rating on the Certificates; and if either Moody's or Standard
& Poor's no longer maintains a rating on the Certificates, such other nationally
recognized statistical rating organization selected by the Depositor and (so
long as an Insurer Default shall not have occurred and be continuing) acceptable
to the Certificate Insurer.
Receivable: An installment sale contract or promissory note (and related
security agreement) for a new or used automobile or light duty truck, van or
mini-van (and all accessories thereto) that is included in the Schedule of
Receivables, and all rights and obligations under such a contract, but not
including (i) any Liquidated Receivable (other than for purposes of calculating,
as applicable, the Class A Principal Distributable Amount and the Class B
Principal Distributable Amount hereunder) or (ii) any Purchased Receivable on or
after the Record Date immediately preceding the Deposit Date on which payment of
the Purchase Amount is made in connection therewith pursuant to Section 5.4.
Receivable File: The documents, electronic entries, instruments and
writings listed in Section 3.2 pertaining to a particular Receivable.
Record Date: With respect to any Determination Date or Distribution Date,
the last day of the immediately preceding calendar month, except that with
respect to the initial Determination Date or Distribution Date, the Closing
Date.
Registrar of Titles: With respect to any state, the governmental agency or
body responsible for the registration of, and the issuance of certificates of
title relating to, motor vehicles and liens thereon.
Related Documents: The Certificates, the Purchase Agreement, the
Indemnification Agreement, the Spread Account Agreement, the Insurance Agreement
and the Unaffiliated Seller's Agreement. The Related Documents to be executed by
any party are referred to herein as "such party's Related Documents," "its
Related Documents" or by a similar expression.
Representation Letter: Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Class A Certificates
registered in the Certificate Register under the nominee of the Depository.
Repurchase Events: The occurrence of a breach of any of Emergent's
representations or warranties in the Unaffiliated Seller's Agreement and the
Purchase Agreement or the Servicer's representations and warranties in this
Agreement which requires the repurchase of a Receivable by Emergent or the
Servicer.
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Required Deposit Rating: A rating on short-term unsecured debt obligations
of at least "P-1" by Moody's and at least "A-1+" by Standard & Poor's (or such
other rating as may be acceptable to the Rating Agencies and, so long as an
Insurer Default shall not have occurred and be continuing, the Certificate
Insurer) so as to not affect the rating on the Certificates.
Requisite Amount: shall have the meaning set forth in the Spread Account
Agreement.
Responsible Officer: When used with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, Managing
Director or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to any other Person that is not an
individual, the President, any Vice-President, Assistant Vice-President,
Treasurer, Assistant Treasurer or the Controller of such Person, or any other
officer or employee having similar functions.
Rule of 78's Method: means the method under which a portion of a payment
allocated to earned interest and the portion allocable to principal is
determined according to the sum of the month's digits or any equivalent method
commonly referred to as the "Rule of 78's."
Rule of 78's Receivables: means any Receivable under which the portion of a
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Rule of 78's Method.
Schedule of Receivables: The schedule of all installment sales contracts
and promissory notes originally held as part of the Trust which is attached as
Schedule A.
Scheduled Payment: With respect to any Collection Period for any
Receivable, the amount set forth in such Receivable as required to be paid by
the Obligor in such Collection Period. If after the Closing Date, the Obligor's
obligation under a Receivable with respect to a Collection Period has been
modified so as to differ from the amount specified in such Receivable as a
result of (i) the order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940 or
(iii) modifications or extensions of the Receivable permitted by Section 4.2(b),
the Scheduled Payment with respect to such Collection Period shall refer to the
Obligor's payment obligation with respect to such Collection Period as so
modified.
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Seller: Emergent Auto Holdings Corp., a special-purpose finance vehicle
incorporated in Delaware and a subsidiary of the Originators.
Series: The Certificates issued pursuant to this Agreement.
Servicer: shall have the meaning set forth in the first paragraph of this
Agreement.
Servicer Extension Notice: The notice delivered pursuant to Section 4.14.
Servicing Procedures Manual: means the servicing manual used by the
Servicer (or the Sub-Servicers with respect to the Sub-Serviced Receivables) in
the servicing of the Receivables as amended from time to time.
Servicer Termination Event: An event described in Section 10.1.
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 4.9, substantially in the form attached hereto as Exhibit E.
Simple Interest Method: The method of allocating a fixed level payment on
an obligation between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the fixed
rate of interest on such obligation multiplied by the period of time (expressed
as a fraction of a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the preceding payment
under the obligation was made.
Simple Interest Receivable: A Receivable under which the portion of the
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
Spread Account: The Spread Account established and maintained pursuant to
the Spread Account Agreement. The Spread Account is not part of the Trust
Property.
Spread Account Agreement: The Master Spread Account Agreement among the
Seller, Emergent Group, Inc., the Originators, the Certificate Insurer and the
Trustee as Trustee and Spread Account Trustee substantially in the form attached
hereto as Exhibit D, as the same may be amended, supplemented or otherwise
modified in accordance with the terms thereof.
Spread Account Trustee: The Spread Account Trustee named in the Spread
Account Agreement, and any successor thereto pursuant to the terms of the Spread
Account Agreement.
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Standard & Poor's: Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., or any successor thereto.
Sub-Serviced Receivables: Those Receivables sub-serviced by the Loan Pro$,
Inc. or Premier Financial Services, Inc.
Sub-Servicers: The Loan Pro$, Inc. with respect to Receivables originated
by it and Premier Financial Services, Inc. with respect to Receivables
originated by it.
Supplemental Servicing Fee: With respect to any Collection Period (i) all
administrative fees, expenses and charges paid by or on behalf of Obligors,
including late fees, prepayment fees and liquidation fees collected on the
Receivables during such Collection Period and (ii) the net realized earnings on
all investments of funds deposited in the Collection Account.
Total Servicing Fee: The sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
Trigger Event: shall have the meaning set forth in the Spread Account
Agreement.
Trust: shall have the meaning set forth in Section 2.1.
Trust Property: The property and proceeds of every description conveyed
pursuant to Section 3.1 hereof, together with certain monies paid on or after
the Cut-Off Date, the Policy, the Collection Account (including all Eligible
Investments therein and all proceeds therefrom), collections on the Receivables
held at any time in the Emergent Collection Accounts, collections on the
Receivables held at any time in the Local Collection Accounts and certain other
rights under this Agreement. The Spread Account is not a part of or otherwise
includable in the Trust or the Trust Property.
Trustee: shall have the meaning set forth in the first paragraph of this
Agreement.
UCC: The Uniform Commercial Code as in effect in the relevant jurisdiction.
Unaffiliated Seller's Agreement: The Unaffiliated Seller's Agreement
between the Depositor, the Seller, Emergent Group, Inc. and the Originators,
dated as of March 1, 1996 pursuant to which the Seller will sell the Receivables
to the Depositor.
Underwriter: Prudential Securities Incorporated.
Warranty Receivable: With respect to any Collection Period, a Receivable
which Emergent has become obligated to repurchase pursuant to Section 3.6.
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Section 1.2. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
Section 1.3. Calculations. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Basic
Servicing Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All references to the Principal Balance of a Receivable as of a
Record Date shall refer to the close of business on such day.
Section 1.4. Section References. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
Section 1.5. Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller or any Affiliate thereof shall be deemed not to be outstanding and
the Fractional Undivided Interest evidenced thereby shall not be taken into
account in determining whether the requisite Fractional Undivided Interest
necessary to effect any such action or consent has been obtained; provided,
however, that, solely for the purpose of determining whether the Trustee is
entitled to rely upon any such action or consent, only Certificates which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded.
Section 1.6. No Recourse. No recourse may be taken, directly or indirectly,
under this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer, or director, as such,
of the Depositor, the Seller, the Originators, the Servicer or the Trustee or of
any predecessor or successor of the Depositor, the Seller, the Originators, the
Servicer or the Trustee.
Section 1.7. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
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on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy.
ARTICLE II
CREATION OF TRUST
Section 2.1. Creation of Trust. The Depositor does hereby create and
establish, pursuant to the laws of the State of New York and this Agreement a
trust (the "Trust"), which for convenience shall be known as "Emergent Auto
Receivables Trust 1996-A."
ARTICLE III
CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY TRUSTEE;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 3.1. Conveyance of Receivables. (a) Subject to the terms and
conditions of this Agreement, the Depositor hereby sells, transfers, assigns,
and otherwise conveys to the Trustee, in trust for the benefit of the
Certificateholders, without recourse (but without limitation of its obligations
in this Agreement), all of the right, title and interest of the Depositor in and
to the Receivables, all monies at any time paid or payable thereon or in respect
thereof after the Cut-Off Date (including amounts due on or before the Cut-Off
Date but received by the Depositor, the Seller or the Originators after the
Cut-Off Date), an assignment of security interests of the Originators in the
Financed Vehicles, the Insurance Policies and any proceeds from any Insurance
Policies relating to the Receivables, the Obligors or the Financed Vehicles,
including rebates of premiums, rights of the Originators against Dealers with
respect to the Receivables under the Dealer Agreements and the Dealer
Assignments, all items contained in the Receivable Files, any and all other
documents that the Originators keep on file in accordance with their customary
procedures relating to the Receivables, the Obligors or the Financed Vehicles,
property (including the right to receive future Liquidation Proceeds) that
secures a Receivable and that has been acquired by or on behalf of the Trust
pursuant to liquidation of such Receivable, and all proceeds of the foregoing.
It is the intention of the Depositor and the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other Trust Property from the Depositor to the Trust and the
beneficial interest in and title to the Receivables and the other Trust Property
shall not be part of the Depositor's or the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Depositor or the Seller under
any bankruptcy law. In the event that, notwithstanding the intent of the
Depositor or the Seller, the transfer and assignment contemplated hereby is held
not to be a sale, this Agreement shall constitute a grant of a security interest
in the property referred to in this Section 3.1 for the benefit of the
Certificateholders. The execution and delivery of this Agreement shall
constitute an acknowledgment by the Depositor, the Seller and the Trustee on
behalf of the Certificateholders that they intend to establish (for Federal tax
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purposes) a trust, rather than an association taxable as a corporation. The
powers granted and obligations undertaken in this Agreement shall be construed
so as to further such intent.
(b) The Depositor hereby directs the Trustee to, and the Trustee does
hereby, accept the Trust Property conveyed by the Depositor pursuant to this
Section 3.1. The Trustee declares that the Trustee shall hold such Trust
Property upon the trusts herein set forth for the benefit of all present and
future Certificateholders, subject to the terms and provisions of this
Agreement. The Depositor hereby appoints the Trustee as the Depositor's
attorney-in-fact with all power independently to enforce all of the Depositor's
rights against the Seller, the Originators and Emergent Group, Inc. under the
Unaffiliated Seller's Agreement directs the Trustee to enforce such rights. The
Trustee hereby accepts such appointment and agrees to enforce such rights.
Section 3.2. Custody Matters. (a) In connection with the sale, transfer and
assignment of the Receivables and the other Trust Property to the Trust pursuant
to this Agreement, the Depositor shall deliver to the Trustee the following
documents or instruments in its possession which shall be delivered to the
Trustee on or before the Closing Date (or in the case of the Lien Certificate,
within 180 days after the Closing Date) with respect to each Receivable:
(i) the fully executed original of the Receivable (together with any
agreements modifying the Receivable, including without limitation any
extension agreements); and
(ii) the Lien Certificate, or, if not yet received, such documents, if
any, that the related Originator keeps on file in accordance with its
customary procedures indicating that the Financed Vehicle is owned by the
Obligor and subject to the interest of the related Originator as first
lienholder or secured party.
(b) Upon payment in full on any Receivable, the Servicer will notify the
Trustee by an Officer's Certificate (which certification shall include a
statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Collection Account pursuant
to Section 3.1 have been so deposited) and shall request delivery of the
Receivable and Receivable File to the Servicer. From time to time as appropriate
for servicing and enforcing any Receivable, the Trustee shall, upon written
request of an officer of the Servicer and delivery to the Trustee of a receipt
signed by such officer in the form of Exhibit I attached hereto, cause the
original Receivable and the related Receivable File to be released to the
Servicer. The Trustee may conclusively rely and shall be protected when acting
or refraining from acting upon any certificate, request or receipt under this
Section. The Servicer's receipt of a Receivable and/or Receivable File shall
obligate the Servicer to return the original Receivable and the related
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Receivable File to the Trustee when its need by the Servicer has ceased unless
the Receivable shall be liquidated or repurchased as described in Section 3.6 or
4.7.
Section 3.3. Conditions to Acceptance by Trustee. As conditions to the
execution and delivery of the Certificates by the Trustee on the Closing Date,
the Trustee shall have received the following on or before the Closing Date:
(a) The Schedule of Receivables certified by the President, Controller
or Treasurer of the Depositor;
(b) Copies of resolutions of the Board of Directors of the Depositor
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, certified by a Secretary or an Assistant
Secretary of the Depositor;
(c) Copies of resolutions of the Board of Directors of the Servicer
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, certified by a Secretary or an Assistant
Secretary of the Servicer;
(d) Evidence that all filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken
or performed by any Person in any jurisdiction to give the Trustee a first
priority perfected lien on, or ownership interest in, the Receivables and
the other Trust Property have been made, taken or performed;
(e) An executed copy of the Policy and Spread Account Agreement; and
(f) A computer tape and a diskette in a format acceptable to the
Trustee containing the information with respect to the Receivables.
Section 3.4. Representations, Warranties and Covenants of Depositor. The
Depositor hereby makes the following representations, warranties and covenants
to the Trustee, the Certificate Insurer and the Certificateholders on which the
Trustee relies in accepting the Receivables in trust and in authenticating the
Certificates. Such representations, warranties and covenants are made as of the
Closing Date and shall survive the sale, transfer and assignment of the
Receivables to the Trustee, until the Certificates have been paid in full. The
Depositor represents and warrants, as to itself:
(i) Organization and Good Standing. The Depositor 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
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times, and now has, power, authority and legal right to acquire, own and
sell the Receivables and the other property transferred to the Trust.
(ii) Due Qualification. The Depositor 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.
(iii) Power and Authority. The Depositor has the power and authority
to execute and deliver this Agreement and the Related Documents to which it
is a party and to carry out its terms and their terms, respectively; the
Depositor has full power and authority to sell and assign the Trust
Property to be sold and assigned to and deposited with the Trustee by it
and has duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery and performance of
this Agreement and the Related Documents to which it is a party have been
duly authorized by the Depositor by all necessary corporate action.
(iv) Valid Sale; Binding Obligations. This Agreement, when duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Receivables and the other Trust Property, enforceable against the
Depositor and creditors of and purchasers from the Depositor; and this
Agreement and the Related Documents to which it is a party, when duly
executed and delivered, shall constitute legal, valid and binding
obligations of the Depositor enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated by
this Agreement and the Related Documents to which it is a party and the
fulfillment of the terms of this Agreement and the Related Documents to
which it is a party 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 Depositor, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Depositor 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 Depositor of
any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Depositor or any of its properties.
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(vi) No Proceedings. There are no material proceedings or
investigations pending or, to the Depositor's knowledge, threatened against
the Depositor, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over the
Depositor or its properties (i) asserting the invalidity of this Agreement
or any of the Related Documents, (ii) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents, (iv) involving the Depositor 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
Receivables.
(vii) 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 Depositor 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.
(viii) Registration. The Depositor's Registration Statement relating
to the Class A Certificates has been declared effective under the
Securities Act of 1933, as amended; such Registration Statement complies as
to form with all requirements of such Act. The statements contained in the
Registration Statement which describe the Depositor or matters or
activities for which the Depositor is responsible or which are attributed
to the Depositor therein are true and correct in all material respects, and
the Registration Statement does not contain any untrue statement of a
material fact with respect to the Depositor or omit to state a material
fact required to be stated therein or necessary in order to make the
statements contained therein with respect to the Depositor not misleading.
To the best of the Depositor's knowledge and belief, the Registration
Statement does not contain any untrue statement of a material fact required
to be stated therein or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein not
misleading.
(ix) Chief Executive Office. The chief executive office of the
Depositor is located at One New York Plaza, New York, New York 10292.
(x) No Grant of a Security Interest. The Depositor has not pledged,
assigned or transferred to any creditor, lender or any other entity a
security interest in the Depositor's right, title and interest in and to
the Receivables and Other Conveyed Property (as defined in and pursuant to
the Unaffiliated Seller's Agreement) which right, title and interest was
conveyed to the Trust pursuant to Section 3.1 hereof, other than a security
interest in favor of the Trustee on behalf of the Certificateholders
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pursuant to this Agreement. Nor have any UCC financing statements been
filed or signed by or agreed to by the Depositor as debtor in respect of
the Depositor's right, title and interest in and to the Receivables and the
Other Conveyed Property (as defined in the Unaffiliated Seller's
Agreement), other than the security interest granted to the Trustee on
behalf of the Certificateholders pursuant to this Agreement.
Section 3.5. [Reserved].
Section 3.6. Repurchase of Receivables Upon Breach of Representation and
Warranty. The Servicer or the Trustee, as the case may be, shall inform the
other parties to this Agreement and the Certificate Insurer promptly, in
writing, upon the discovery (or, in the case of the Trustee, upon actual
knowledge by a Responsible Officer of the Trustee), of any breach of the
Seller's representations and warranties pursuant to the Unaffiliated Seller's
Agreement; provided, however, that the failure to give any such notice shall not
derogate from any obligation of Emergent and, provided further, that the Trustee
and the Backup Servicer shall have no duty to inquire into or to investigate the
breach of any such representations and warranties. Emergent, pursuant to the
Unaffiliated Seller's Agreement and the Purchase Agreement, shall either cure
the breach by the Deposit Date of the first full calendar month following the
discovery by or notice to Emergent of the breach or repurchase any Receivable
materially and adversely affected by such breach. The Trustee shall (provided
that it either has actual knowledge of such breach or has received such written
notice thereof) enforce such obligation of Emergent to repurchase any Receivable
materially and adversely affected by the breach. If Emergent shall fail to so
repurchase any Receivable, the Trustee shall promptly notify the Certificate
Insurer, in writing, of such failure. In consideration of the purchase of the
Receivable, Emergent shall remit the Purchase Amount in the manner specified in
Section 5.4. The sole remedy of the Trustee, the Trust, or the
Certificateholders with respect to a breach of the Seller's representations and
warranties pursuant to the Unaffiliated Seller's Agreement shall be to require
Emergent to repurchase such Receivables pursuant to the Unaffiliated Seller's
Agreement or the Purchase Agreement.
In addition to the foregoing, Emergent shall, pursuant to the Unaffiliated
Seller's Agreement or the Purchase Agreement, as the case may be, indemnify the
Trustee, the Backup Servicer, the Depositor, the Spread Account Trustee, the
Certificate Insurer, the Trust and the Certificateholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third-party claims arising out of the events or facts giving rise to
a breach of the representations and warranties set forth in the Unaffiliated
Seller's Agreement or the Purchase Agreement.
Section 3.7. Nonpetition Covenant. Until one year plus one day shall have
elapsed since the termination of the Trust in accordance with Section 12.1, none
of the Depositor, the Seller, the Servicer, the Trustee, nor the Originators
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
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Depositor or the Trust under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Depositor or the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Depositor or the Trust.
Section 3.8. Collecting Lien Certificates Not Delivered on the Closing
Date. In the case of any Receivable in respect of which written evidence from an
Originator or a Dealer selling the related Financed Vehicle that the Lien
Certificate for such Financed Vehicle showing the related Originator as first
lienholder has been applied for from the Registrar of Titles, the Servicer shall
use its best efforts to collect such Lien Certificate from the Registrar of
Titles as promptly as practicable. If such Lien Certificate showing the related
Originator as first lienholder is not received by the Trustee within 180 days
after the Closing Date and, notwithstanding the Servicer's continued efforts to
obtain such Lien Certificate, a loss occurs as a result of the failure to
receive the Lien Certificate within 180 days, then the representation and
warranty in Section 3.02(q) of the Unaffiliated Seller's Agreement in respect of
such Receivable shall be deemed to have been incorrect in a manner that
materially and adversely affects such Receivable, the Certificateholders, the
Certificate Insurer and the Trust, and the Receivable must be repurchased by the
Seller, the Originators or Emergent pursuant to Section 3.6 hereof.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.1. Duties of the Servicer. (a) The Servicer is hereby authorized
to act as agent for the Trust and in such capacity shall manage, service,
administer and make collections on the Receivables, and perform the other
actions required by the Servicer under this Agreement. The Servicer shall follow
its customary standards, policies, and procedures in performing its duties as
Servicer; provided, that with respect to the Sub-Serviced Receivables and for so
long as the Sub-Servicers are sub-servicing the Sub-Serviced Receivables, the
Servicer shall follow each Sub-Servicer's respective customary standards,
policies and procedures; provided, further, that the Servicer and the
Sub-Servicers will be subject to no less degree of care and skill that would be
exercised by a prudent servicer of non-prime motor vehicle installment sale
contracts. The Servicer's duties shall include, without limitation, collection
and posting of all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, reporting any required tax information
to Obligors, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Trustee and the Certificate Insurer with
respect to distributions, monitoring the status of Insurance Policies with
respect to the Financed Vehicles and performing the other duties specified
herein. The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements (and shall maintain possession of the Dealer Agreements, to the
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extent it is necessary to do so), the Dealer Assignments and the Insurance
Policies, to the extent that such Dealer Agreements, Dealer Assignments and
Insurance Policies relate to the Receivables, the Financed Vehicles or the
Obligors. To the extent consistent with the standards, policies and procedures
otherwise required hereby, the Servicer shall follow its customary standards,
policies, and procedures and shall have full power and authority, acting alone,
to do any and all things in connection with such managing, servicing,
administration and collection that it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Servicer is hereby authorized and
empowered by the Trustee to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and with
respect to the Financed Vehicles; provided, however, that notwithstanding the
foregoing, the Servicer shall not, except pursuant to an order from a court of
competent jurisdiction, release an Obligor from payment of any unpaid amount
under any Receivable or waive the right to collect the unpaid balance of any
Receivable from the Obligor, except that the Servicer may forego collection
efforts if the amount subject to collection is de minimis and if it would forego
collection in accordance with its customary procedures. The Servicer is hereby
authorized to commence, in its own name or in the name of the Trustee on behalf
of the Trust (provided the Servicer has obtained the Trustee's consent, which
consent shall not be unreasonably withheld), a legal proceeding to enforce a
Receivable pursuant to Section 4.3 or to commence or participate in any other
legal proceeding (including, without limitation, a bankruptcy proceeding)
relating to or involving a Receivable, an Obligor or a Financed Vehicle. If the
Servicer commences or participates in such a legal proceeding in its own name,
the Trustee shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer solely for purposes of commencing or participating in
any such proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Trustee to execute and deliver in the Servicer's name any
notices, demands, claims, complaints, responses, affidavits or other documents
or instruments in connection with any such proceeding. The Trustee shall furnish
the Servicer with any powers of attorney and other documents which the Servicer
may reasonably request in writing and which the Servicer deems necessary or
appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
Section 4.2. Collection of Receivable Payments; Modification and Amendment
of Receivables. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies and the other Trust Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Trust with
respect thereto. The Servicer is authorized in its discretion to waive any
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prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.
(b) The Servicer may at any time agree to a modification or amendment of a
Receivable in order to (i) change the Obligor's regular due date to a date
within 30 days in which such due date occurs, (ii) re-amortize the scheduled
payments on the Receivable following a partial prepayment of principal or (iii)
convert a Rule of 78s Receivable to a Simple Interest Receivable.
(c) The Servicer may grant payment extensions on, or other modifications or
amendments to, a Receivable (including those modifications permitted by Section
4.2(b)) in accordance with its customary procedures if the Servicer believes in
good faith that such extension, modification or amendment is necessary to avoid
a default on such Receivable, will maximize the amount to be received by the
Trust with respect to such Receivable, and is otherwise in the best interests of
the Trust; provided, however, that:
(i) The aggregate period of all extensions on a Receivable shall not
exceed 6 months;
(ii) In no event may a Receivable be extended by the Servicer beyond the
Collection Period immediately preceding the Final Scheduled
Distribution Date;
(iii)So long as an Insurer Default shall not have occurred and be
continuing, the Servicer shall not amend or modify a Receivable
(except as provided in Section 4.2(b) and this Section 4.2(c)) without
the written consent of the Certificate Insurer;
(iv) As of any Record Date the number of Receivables the term of which have
been extended during the preceding 12-month period shall not exceed
10% of the number of Receivables which comprise the pool of
Receivables underlying the Class A Certificate Balance and the Class B
Certificate Balance at the beginning of the preceding 12-month period;
(v) No such extension, modification or amendment shall be granted more
than 90 days after the Closing Date if such action would have the
effect of causing such Receivable to be deemed to have been exchanged
for another Receivable within the meaning of Section 1001 of the
Internal Revenue Code of 1986, as amended, or any proposed, temporary
or final Treasury Regulations issued thereunder; and
(vi) So long as an Insurer Default shall not have occurred and be
continuing, the term of each Receivable may not be extended more than
twice in a twelve month period.
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(d) Any payments on the Receivables received by the Servicer shall be
deposited directly into one or more Local Collection Accounts, and the Servicer
shall cause the Local Banks to deposit all such payments on the Receivables into
Emergent Collection Accounts no later than the first Business Day after receipt
of such payments. The Servicer shall then cause the Emergent Banks to deposit
all such payments on the Receivables into the Collection Account no later than
the first Business Day after receipt of such payments by the Emergent Banks.
Section 4.3. Realization Upon Receivables. (a) Consistent with the
standards, policies and procedures required by this Agreement, the Servicer
shall use its best efforts to repossess (or otherwise comparably convert the
ownership of) and liquidate any Financed Vehicle securing a Receivable with
respect to which the Servicer has determined that payments thereunder are not
likely to be resumed, as soon as is practicable after default on such Receivable
but in no event later than the date on which more than ten percent of a
Scheduled Payment has become 180 or more days delinquent. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
4.1, which practices and procedures may include reasonable efforts to realize
upon any recourse to Dealers, selling the related Financed Vehicle at public or
private sale, the submission of claims under an Insurance Policy and other
actions by the Servicer in order to realize upon such a Receivable. The
foregoing is subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
shall increase the proceeds of liquidation of the related Receivable by an
amount greater than the amount of such expenses. All amounts received upon
liquidation of a Financed Vehicle shall be remitted by the Servicer to the
Collection Account as soon as practicable, but in no event later than two
Business Days after receipt thereof, and the Servicer shall notify the Trustee,
in writing, of the amount and date of such deposit. The Servicer shall be
entitled to recover all reasonable expenses incurred by it in the course of
repossessing and liquidating a Financed Vehicle, but only out of the cash
proceeds of such Financed Vehicle, any deficiency obtained from the Obligor or
any amounts received from the related Dealer, which amounts may be retained by
the Servicer (and shall not be required to be deposited in the Collection
Account) to the extent of such expenses. The Servicer shall recover such
reasonable expenses based on the information contained in the Servicer's
Certificate delivered on the related Determination Date. The Servicer shall pay
on behalf of the Trust any personal property taxes assessed on repossessed
Financed Vehicles; the Servicer shall be entitled to reimbursement of any such
tax from Liquidation Proceeds with respect to such Receivable.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Trustee to the Servicer of the rights
under such Dealer Agreement and Dealer Assignment for purposes of collection
only. If, however, in any enforcement suit or legal proceeding, it is held that
the Servicer may not enforce a Dealer Agreement or Dealer Assignment on the
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grounds that it is not a real party in interest or a Person entitled to enforce
the Dealer Agreement or Dealer Assignment, the Trustee, at the Servicer's
expense, shall take such steps as the Servicer deems necessary and which the
Trustee has received written notice thereof to enforce the Dealer Agreement or
Dealer Assignment, including bringing suit in its name or of the Trustee for the
benefit of the Certificateholders. All amounts recovered shall be remitted by
the Servicer to the Collection Account as soon as practicable, but in no event
later than two Business Days after receipt thereof.
Section 4.4. Insurance. (a) The Servicer shall monitor the status of the
insurance policies referred to in Section 3.02(w) of the Unaffiliated Seller's
Agreement in accordance with its customary servicing procedures. If the Servicer
shall determine that an Obligor has failed to obtain or maintain a physical loss
and damage insurance policy covering the related Financed Vehicle which
satisfies the conditions set forth in clause (i) of Section 3.02(w) of the
Unaffiliated Seller's Agreement (including during the repossession of such
Financed Vehicle) the Servicer shall be diligent in carrying on its customary
servicing procedures to enforce the rights of the holder of the Receivable
thereunder to ensure that the Obligor obtains such physical loss and damage
insurance.
(b) The Servicer may sue to enforce or collect upon the Insurance Policies,
in its own name, if possible, or as agent of the Trust. If the Servicer elects
to commence a legal proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an automatic assignment of the rights of the
Trust under such Insurance Policy to the Servicer for purposes of collection
only. If, however, in any enforcement suit or legal proceeding it is held that
the Servicer may not enforce an Insurance Policy on the grounds that it is not a
real party in interest or a holder entitled to enforce the Insurance Policy, the
Trustee, on behalf of the Trust, at the Servicer's expense, shall take such
steps as the Servicer deems necessary and which the Trustee has received written
notice thereof to enforce such Insurance Policy, including bringing suit in its
name or the name of the Trustee for the benefit of the Certificateholders.
Section 4.5. Maintenance of Security Interests in Vehicles. (a) Consistent
with the policies and procedures required by this Agreement, the Servicer shall
take such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle on behalf of the
Trust, including but not limited to obtaining the execution by the Obligors and
the recording, registering, filing, re-recording, re-filing, and re-registering
of all security agreements, financing statements and continuation statements as
are necessary to maintain the security interest granted by the Obligors under
the respective Receivables. The Trustee hereby authorizes the Servicer, and the
Servicer agrees, to take any and all steps necessary to re-perfect such security
interest on behalf of the Trust as necessary because of the relocation of a
Financed Vehicle or for any other reason. In the event that the assignment of a
Receivable to the Trustee on behalf of the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
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state in which the Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Trust, the parties hereto agree
that the related Originator's designation as the secured party on the
certificate of title is, with respect to each secured party, as applicable, in
its capacity as agent of the Trust.
(b) So long as an Insurer Default shall not have occurred and be
continuing, upon the occurrence of an Insurance Agreement Event of Default, the
Certificate Insurer may instruct, in writing, the Trustee and the Servicer to
take or cause to be taken such action as may, in the opinion of counsel to the
Certificate Insurer, be necessary or desirable to perfect or re-perfect the
security interests in the Financed Vehicles securing the Receivables in the name
of the Trustee on behalf of the Trust by amending the title documents of such
Financed Vehicles or by such other reasonable means as may, in the opinion of
counsel to the Certificate Insurer, be necessary or prudent. If an Insurer
Default shall have occurred and be continuing, upon the occurrence of a Servicer
Termination Event, the Trustee (upon actual knowledge of such Servicer
Termination Event by a Responsible Officer) and the Servicer shall take or cause
to be taken such action as may, in the opinion of counsel to the Trustee, be
necessary to perfect or re-perfect the security interests in the Financed
Vehicles securing the Receivables in the name of the Trustee on behalf of the
Trust by amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Certificate Insurer,
be necessary or prudent. The Servicer hereby agrees to pay all expenses related
to such perfection or re-perfection and to take all action necessary therefor.
In addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Certificate Insurer may (unless an Insurer Default shall have occurred and
be continuing) instruct, in writing, the Trustee and the Servicer to take or
cause to be taken such action as may, in the opinion of counsel to the
Certificate Insurer, be necessary to perfect or re-perfect the security
interests in the Financed Vehicles underlying the Receivables in the name of the
Trustee on behalf of the Trust, including by amending the title documents of
such Financed Vehicles or by such other reasonable means as may, in the opinion
of counsel to the Certificate Insurer, be necessary or prudent; provided,
however, that (unless an Insurer Default shall have occurred and be continuing)
if the Certificate Insurer requests that the title documents be amended prior to
the occurrence of an Insurance Agreement Event of Default, the out-of-pocket
expenses of the Servicer or the Trustee in connection with such action shall be
reimbursed to the Servicer or the Trustee, as applicable, by the Certificate
Insurer.
Section 4.6. Covenants, Representations and Warranties of Servicer. The
Servicer hereby makes the following covenants to the other parties hereto and
the Certificate Insurer on which the Trustee shall conclusively rely in
accepting the Receivables in trust and issuing the Certificates and on which the
Certificate Insurer shall rely in issuing the Policy.
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(a) The Servicer covenants as follows:
(i) Liens in Force. The Financed Vehicle securing each Receivable
shall not be released in whole or in part from the security interest
granted by the Receivable, except upon payment in full of the Receivable
or, in the event that more than one Financed Vehicle was originally pledged
to secure such Receivable, upon the payment of an allowable portion of such
Receivable, one or more such Financed Vehicles may be so released or as
otherwise contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to impair the rights
of the Trust or the Certificateholders in the Receivables, the Dealer
Agreements, the Dealer Assignments, the Insurance Policies or the other
Trust Property;
(iii) No Amendments. The Servicer shall not extend or otherwise amend
the terms of any Receivable, except in accordance with Section 4.2; and
(iv) Servicing of Receivables. The Servicer shall service the
Receivables (and shall require the Sub-Servicers to service the
Sub-Serviced Receivables) as required by the terms of this Agreement and in
material compliance with the current Servicing Procedures Manual.
(b) The Servicer represents and warrants to the Depositor, the Trustee, the
Certificate Insurer, the Backup Servicer and the Certificateholders as of the
Closing Date as to itself:
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement;
(ii) Due Qualification. The Servicer 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 property or the conduct of its business (involving the servicing
of the Receivables as required by this Agreement) requires or shall require
such qualification;
(iii) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry
out its terms and their terms, respectively, and the execution, delivery
and performance of this Agreement and the Servicer's Related Documents have
been duly authorized by the Servicer by all necessary corporate action;
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(iv) Binding Obligation. This Agreement and the Servicer's Related
Documents shall constitute legal, valid and binding obligations of the
Servicer enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(v) No Violation. The consummation by the Servicer of the transactions
contemplated by this Agreement and the Servicer's Related Documents, and
the fulfillment by the Servicer of the terms of this Agreement and the
Servicer's Related Documents, shall not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of the Servicer, or any indenture, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which it
is bound or any of its properties are subject, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trust in any Receivable, or affect the Servicer's
ability to perform its obligations under this Agreement;
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Servicer or
its properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement or any of the Related Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of,
this Agreement or any of the Related Documents, (D) including the Servicer
and which might adversely affect the federal income tax or other federal,
state or local tax attributes of the Certificates, or (E) that could have a
material adverse effect on the Receivables. To the Servicer's knowledge,
there are no proceedings or investigations pending or threatened against
the Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over the
Servicer or its properties relating to the Servicer which might adversely
affect the federal income tax or other federal, state or local tax
attributes of the Certificates;
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(vii) 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 Servicer 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.
(viii) No Consents. The Servicer is not required to obtain the consent
of any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement; and
(ix) Chief Executive Office. The chief executive office of the
Servicer is located at 15 South Main Street, Suite 750, Greenville, South
Carolina 29601.
Section 4.7. Purchase of Receivables Upon Breach of Covenant or
Representation and Warranty. The Servicer or the Trustee, as the case may be,
shall inform the other parties to this Agreement and the Certificate Insurer
promptly, in writing, upon the discovery (or, in the case of the Trustee, upon
actual knowledge by a Responsible Officer of the Trustee) of any breach of the
Servicer's covenants pursuant to Sections 4.5(a) or 4.6(a); provided, however,
that the failure to give any such notice shall not derogate from any obligation
of the Servicer, and so long as Emergent Group, Inc. is the Servicer, Emergent,
hereunder to repurchase any Receivable; provided further that, the Trustee or
the Backup Servicer shall have no duty to inquire into or to investigate the
breach of any such representations and warranties. The Servicer, and so long as
Emergent Group, Inc. is the Servicer, Emergent, shall either cure any breach by
the Deposit Date of the first full calendar month following the discovery by or
notice to the Servicer of the breach or repurchase any Receivable materially and
adversely affected by the breach. The Trustee shall (provided that it either has
such actual knowledge or has received such notice thereof) enforce such
repurchase obligation of the Servicer and, so long as Emergent Group, Inc. is
the Servicer, Emergent. The Trustee shall notify the Certificate Insurer
promptly, in writing, of any failure by the Servicer (or Emergent, if
applicable) to so repurchase any Receivable. In consideration of the purchase of
the Receivable, the Servicer (or Emergent, if applicable) shall remit the
Purchase Amount in the manner specified in Section 5.4.
In addition to the foregoing and notwithstanding whether the related
Receivable shall have been purchased by the Servicer (or Emergent, if
applicable), the Servicer (or Emergent, if applicable) shall indemnify the
Depositor, the Trustee, the Backup Servicer, the Spread Account Trustee, the
Certificate Insurer, the Trust and the Certificateholders and any of their
directors, officers, agents, employees or custodians 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
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as a result of third party claims arising out of a breach of the covenants or
representations and warranties set forth in Sections 4.5(a) or 4.6(a).
Section 4.8. Total Servicing Fee; Payment of Compensating Interest; Payment
of Certain Expenses by Servicer.
(a) On each Distribution Date, the Servicer shall be entitled to receive
out of the Collection Account the Basic Servicing Fee and any Supplemental
Servicing Fee for the related Collection Period pursuant to Section 5.5.
(b) On or prior to each Determination Date, the Servicer shall deposit in
the Collection Account with respect to any Prepayment received on a Receivable
during the related Collection Period, out of its own funds without any right of
reimbursement therefor, an amount equal to the difference between (x) 30 days'
interest at an interest rate equal to the sum of the Class A Pass-Through Rate
and the Class B Pass-Through Rate on the Principal Balance of such Receivable as
of the first day of the related Collection Period and (y) the interest actually
paid by the Obligor with respect to the Receivable during such Collection Period
(any such amount paid by the Servicer, "Compensating Interest"). The Servicer
shall in no event be required to pay Compensating Interest with respect to any
Collection Period in an amount in excess of the aggregate Basic Servicing Fee
received by the Servicer with respect to all Receivables for the related
Collection Period.
(c) The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Servicer, expenses incurred in connection with distributions and reports to
Certificateholders and the Certificate Insurer and all other fees and expenses
of the Trust including taxes levied or assessed against the Trust, and claims
against the Trust in respect of indemnification not expressly stated under this
Agreement to be for the account of the Trust). The Servicer shall be liable for
the fees and expenses of the Trustee, the Backup Servicer, the Spread Account
Trustee and the Independent Accountants.
Section 4.9. Servicer's Certificate. (a) No later than 10:00 a.m. New York
City time on each Determination Date, the Servicer shall deliver to the Trustee,
the Backup Servicer, the Certificate Insurer, the Spread Account Trustee, the
Depositor and each Rating Agency a Servicer's Certificate executed by a
Responsible Officer of the Servicer containing, among other things, (i) all
information necessary to enable the Trustee to make any withdrawal and deposit
required by Section 6.3, to give any notice required by Sections 6.3 or 6.4 and
make the distributions required by Section 5.5, (ii) a listing of all Warranty
Receivables and Administrative Receivables purchased as of the related Deposit
Date, identifying the Receivables so purchased, and (iii) all information set
forth in Section 5.7 hereof. Receivables purchased by the Seller, the
Originators, Emergent or the Servicer on the related Deposit Date and each
Receivable which became a Liquidated Receivable or which was paid in full during
the related Collection Period shall be identified by account number (as set
forth in the Schedule of Receivables). A copy of such Servicer's Certificate may
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be obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office.
(b) In addition to the information required by Section 4.9(a), the Servicer
shall include in the Servicer's Certificate delivered to the Certificate Insurer
and the Trustee (i) the Delinquency Ratio, Average Delinquency Ratio, Default
Rate, Average Default Rate, Net Loss Rate and Average Net Loss Rate for such
Determination Date, (ii) whether any Trigger Event has occurred as of such
Determination Date, (iii) whether any Trigger Event that may have occurred as of
a prior Determination Date is deemed cured as of such Determination Date, and
(iv) whether to the knowledge of the Servicer an Insurance Agreement Event of
Default has occurred.
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event. (a) The Servicer shall deliver to the Trustee, the Backup
Servicer, the Certificate Insurer, the Certificateholders and each Rating
Agency, on or before March 31 of each year, beginning March 31, 1997, an
Officer's Certificate, dated as of March 31 of such year, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or such other period as shall have elapsed from the Closing Date to the date of
the first such certificate) and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, the Backup Servicer, the
Certificate Insurer, the Spread Account Trustee, the Depositor, the
Certificateholders and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than two Business Days thereafter,
written notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 10.1(a). The Servicer shall deliver to the Trustee, the Backup
Servicer, the Certificate Insurer, the Spread Account Trustee, the Depositor,
the Certificateholders and each Rating Agency promptly after having obtained
knowledge thereof, but in no event later than two Business Days thereafter,
written notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under any other clause of Section 10.1.
Section 4.11. Annual Independent Accountants' Report. (a) The Servicer
shall, at its expense, cause Elliott Davis & Company, L.L.P. or a firm of
nationally recognized independent certified public accountants (the "Independent
Accountants"), who may also render other services to the Servicer, to deliver to
the Trustee, the Backup Servicer, the Certificate Insurer, the Depositor, the
Certificateholders and each Rating Agency, for the first two calendar months
after the Closing Date and if exceptions or errors that are required by
generally accepted auditing standards to be reported exists, for each month
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thereafter until reports for two such consecutive months indicate no exceptions
or errors that are required by generally accepted auditing standards to be
reported, a statement (the "Accountant's Report") addressed to the Board of
Directors of the Servicer, to the Trustee, to the Backup Servicer, to the
Depositor and to the Certificate Insurer, to the effect that such firm has
audited the financial statements of the Servicer and issued its report thereon
and that such audit (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included an examination of documents and records relating to
the servicing of automobile installment sales contracts under pooling and
servicing agreements substantially similar one to another (such statement to
have attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby, including this Agreement); (3) included an
examination of the delinquency and loss statistics relating to the Servicer's
portfolio of automobile installment sales contracts; and (4) except as described
in the statement, disclosed no exceptions or errors in the records relating to
automobile and light truck loans serviced for others that, in the firm's
opinion, generally accepted auditing standards requires such firm to report. The
Accountants' Report shall further state that (1) except as disclosed in the
Report, no exceptions or errors in the Servicer's Certificates so examined were
found; and (2) the delinquency and loss information relating to the Receivables
contained in the Servicer's Certificates were found to be accurate. In addition,
the Accountant's Report must also be submitted on or before March 31 of each
year, beginning on March 31, 1997, with respect to the twelve months ended the
immediately preceding December 31. The Accountant's Report to be submitted on an
annual basis shall also indicate that a review in accordance with agreed upon
procedures was made of three randomly selected Servicer's Certificates for the
Trust.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
Section 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide (and shall require the Sub-Servicers to
provide) to representatives of the Trustee, the Backup Servicer and the
Certificate Insurer reasonable access to the documentation regarding the
Receivables. The Servicer will permit any authorized representative or agent
designated by the Trustee or the Backup Servicer to visit and inspect any of the
properties of the Servicer, to examine the corporate books and financial records
of the Servicer, its records relating to the Receivables, and make copies
thereof or extracts therefrom and to discuss the affairs, finances, and accounts
of the Servicer with its principal officers and its independent accountants. Any
expense incident to the exercise by the Trustee and the Backup Servicer of any
right under this Section 4.12 shall be borne by the Servicer. The Servicer shall
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provide such access to any Certificateholder only in such cases where the
Servicer is required by applicable statutes or regulations (whether applicable
to the Servicer or to such Certificateholder) to permit such Certificateholder
to review such documentation. In each case, such access shall be afforded
without charge but only upon reasonable request and during normal business
hours. Nothing in this Section 4.12 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section 4.12 as a result of such obligation shall not
constitute a breach of this Section 4.12. Any Certificateholder, by its
acceptance of a Certificate (or by acquisition of its beneficial interest
therein), shall be deemed to have agreed to keep confidential and not to use for
its own benefit any information obtained by it pursuant to this Section 4.12,
except as may be required by applicable law.
Section 4.13. Monthly Tape. On or before the fourth Business Day, but in no
event later than the fifth calendar day, of each month, the Servicer will
deliver to the Backup Servicer a computer tape and a diskette (or any other
electronic transmission acceptable to the Backup Servicer) in a format
acceptable to the Backup Servicer, containing the information with respect to
the Receivables as of the preceding Record Date necessary for preparation of the
Servicer's Certificate relating to the immediately succeeding Determination Date
and necessary to determine the application of collections as provided in Section
5.3. The Backup Servicer shall use such tape or diskette (or other electronic
transmission acceptable to the Trustee and the Backup Servicer) to verify the
Servicer's Certificate delivered by the Servicer. The Backup Servicer shall
notify the Servicer and the Certificate Insurer of any discrepancies on or
before the second Business Day after the Determination Date. In the event that
the Backup Servicer reports any discrepancies, the Servicer and the Backup
Servicer shall attempt to reconcile such discrepancies prior to the related
Deficiency Claim Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions with
respect to the related Distribution Date. In the event that the Backup Servicer
and the Servicer are unable to reconcile discrepancies with respect to a
Servicer's Certificate by the related Distribution Date, the Servicer shall
cause the Independent Accountants, at the Servicer's expense, to audit the
Servicer's Certificate and, prior to the fourth Business Day, but in no event
later than the fifth calendar day, of the following month, reconcile the
discrepancies. The effect, if any, of such reconciliation shall be reflected in
the Servicer's Certificate for such next succeeding Determination Date.
In addition, the Servicer shall, if so requested by the Certificate Insurer
(unless an Insurer Default shall have occurred and be continuing) deliver to the
Backup Servicer its Collection Records within two Business Days of demand
therefor and a computer tape containing as of the close of business on the date
of demand or the following day all of the data maintained by the Servicer in
computer format in connection with servicing the Receivables. Unless an Insurer
Default shall have occurred and be continuing, the Backup Servicer shall have no
obligation to act in respect of such Collection Records delivered pursuant to
this paragraph.
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Other than the duties specifically set forth in this Agreement, the Backup
Servicer shall have no obligations hereunder, including, without limitation, to
supervise, verify, monitor or administer the performance of the Servicer. The
Backup Servicer shall not be responsible for delays attributable to the
Servicer's failure to deliver information, defects in the information supplied
by the Servicer or other circumstances beyond the control of the Backup
Servicer. In addition, the Backup Servicer shall have no responsibility, shall
not be in default and shall incur no liability (i) for any act or failure to act
by any third party, including the Servicer, the Controlling Party or the Trustee
or for any inaccuracy or omission in a notice or communication received by the
Backup Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Receivable or non-compliance of the
underlying installment sale contract with applicable law or the breach or the
inaccuracy of any representation or warranty made pursuant to the Unaffiliated
Seller's Agreement and the Purchase Agreement with respect to any Receivable.
The duties and obligations of the Backup Servicer shall be determined solely by
the express provisions of this Agreement and no implied covenants or obligations
shall be read into this Agreement against the Backup Servicer.
Section 4.14. Retention and Termination of Servicer. The Servicer hereby
covenants and agrees to act as such under this Agreement for an initial term,
commencing on the Closing Date and ending on June 30, 1996, which term shall be
extendible by the Certificate Insurer for successive quarterly terms ending on
each successive September 30, December 31, March 31 and June 30 (or, pursuant to
revocable written standing instructions from time to time to the Servicer, the
Trustee and the Backup Servicer for any specified number of terms greater than
one), until the termination of the Trust. Each such notice (including each
notice pursuant to standing instructions, which shall be deemed delivered at the
end of successive quarterly terms for so long as such instructions are in
effect) (a "Servicer Extension Notice") shall be delivered by the Certificate
Insurer to the Trustee, the Servicer and the Backup Servicer. The Servicer
hereby agrees that, as of the date hereof and upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound, for the initial term
beginning on the date hereof and for the duration of the term covered by such
Notice, to continue as the Servicer subject to and in accordance with the other
provisions of this Agreement. Until such time as an Insurer Default shall have
occurred and be continuing, the Trustee agrees that if as of the fifteenth day
prior to the last day of any term of the Servicer the Trustee shall not have
received any Servicer Extension Notice from the Certificate Insurer, the Trustee
will, within five days thereafter, give written notice of such non-receipt to
the Certificate Insurer, the Backup Servicer (or any alternate successor
servicer appointed by the Certificate Insurer pursuant to Section 10.3(b)) and
the Servicer and the Servicer's term shall not be extended unless a Servicer
Extension Notice is received on or before the last day of such term.
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ARTICLE V
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 5.1. Accounts. The Servicer shall establish the Collection Account
in the name of the Trustee for the benefit of the Certificateholders. The
Servicer shall also establish the Policy Payments Account in the name of the
Trustee for the benefit of the Class A Certificateholders. Each of the
Collection Account and the Policy Payments Account shall be an Eligible Account
and initially shall be a segregated trust account established with the Trustee
and maintained with the Trustee. All amounts held in the Collection Account
shall, to the extent permitted by applicable laws, rules and regulations, be
invested, as directed in writing by the Servicer, in Eligible Investments that
mature not later than one Business Day prior to the Distribution Date for the
Collection Period to which such amounts relate. Any such written direction shall
certify that any such investment is authorized by this Section 5.1. Investments
in Eligible Investments shall be made in the name of the Trustee on behalf of
the Trust, and such investments shall not be sold or disposed of prior to their
maturity. The Trustee may trade with itself or an Affiliate in the purchase or
sale of Eligible Investments. Any investment of funds in the Collection Account
shall be made in Eligible Investments. All interest, dividends, gains upon sale
and other income from, or earnings on, investments of funds in the Collection
Account shall be deposited in the Collection Account and distributed on the next
Distribution Date pursuant to Section 5.5. The Servicer shall deposit in the
Collection Account an amount equal to any net loss on such investments
immediately as realized. Amounts in the Policy Payments Account shall not be
invested. On the Closing Date, the Servicer shall deposit in the Collection
Account (i) all Scheduled Payments and prepayments of Receivables received by
the Local Banks after the Cut-Off Date and prior to the Closing Date and (ii)
all Liquidation Proceeds and proceeds of Insurance Policies realized in respect
of a Financed Vehicle and applied by the Servicer after the Cut-Off Date and any
Compensating Interest.
Section 5.2. Collections. (a) The Servicer shall remit all payments by or
on behalf of the Obligors received by the Servicer with respect to the
Receivables (other than Purchased Receivables) and all Liquidation Proceeds
directly into the Local Collection Accounts on the Business Day of receipt, and
the Local Banks shall deposit all such payments on the Receivables into the
Emergent Collection Accounts no later than the Business Day following receipt of
such payments. The Emergent Collection Banks shall deposit all such payments on
the Receivables into the Collection Account one Business Day following receipt
of such payments. Within one Business Day of the initial issuance of the
Certificates, the Local Banks shall deposit into the Emergent Collection
Accounts the foregoing amounts received during the current Collection Period
through such date of issuance and the Emergent Banks shall deposit the foregoing
amounts no later than the Business Day after receipt of such payments into the
Collection Account. On the Closing Date, the Servicer, the Originators, the
Seller or the Depositor shall deposit into the Local Collection Accounts all
payments by or on behalf of the Obligors on the Receivables and any Liquidation
Proceeds received by the Originators, the Seller, the Depositor or the Servicer
after the Cut-Off Date and any Compensating Interest on or prior to the second
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Business Day immediately preceding the Closing Date. The Local Banks shall
deposit all such payments on the Receivables and any Compensating Interest into
the Emergent Collection Accounts no later than the Business Day after receipt of
such payments and the Emergent Banks shall deposit all such payments into the
Collection Account no later than the Business Day after receipt of such
payments.
(b) The Servicer will be entitled to be reimbursed from amounts on deposit
in the Collection Account with respect to a Collection Period for amounts
previously deposited in the Collection Account but later determined by the
Servicer to have resulted from mistaken deposits or postings or checks returned
for insufficient funds. The amount to be reimbursed hereunder shall be paid to
the Servicer on the related Distribution Date pursuant to Section 5.5(b)(i) upon
certification by the Servicer of such amounts and the provision of such
information to the Trustee and the Certificate Insurer as may be necessary in
the opinion of the Trustee and the Certificate Insurer to verify the accuracy of
such certification. In the event that the Certificate Insurer has not received
evidence satisfactory to it of the Servicer's entitlement to reimbursement
pursuant to this Section 5.2(b), the Certificate Insurer shall (unless an
Insurer Default shall have occurred and be continuing) give the Trustee written
notice to such effect, following receipt of which the Trustee shall not make a
distribution to the Servicer in respect of such amount pursuant to Section 5.5,
or if the Servicer prior thereto has been reimbursed pursuant to Section 5.5 or
Section 5.6, the Trustee shall withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Distribution Date.
Section 5.3. Application of Collections. For the purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor (other than of
Supplemental Servicing Fees with respect to such Receivable, to the extent
collected) shall be applied, in the case of a Rule of 78s Receivable,
first, to the Scheduled Payment of such Rule of 78s Receivable and, second,
to any late fees accrued with respect to such Rule of 78s Receivable and,
in the case of a Simple Interest Receivable, to interest and principal in
accordance with the Simple Interest Method. With respect to any Rule of 78s
Receivable, any remaining excess shall be applied to prepay the Receivable.
With respect to Simple Interest Receivables, any prepayment of principal
during each Collection Period shall be immediately applied to reduce the
principal balance of the Receivable during such Collection Period.
(b) With respect to each Receivable that has become a Purchased
Receivable on any Deposit Date, the Purchase Amount shall be applied, for
purposes of this Agreement only, to interest and principal on the
Receivable in accordance with the terms of the Receivable as if the
Purchase Amount had been paid by the Obligor on the Record Date. The
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Servicer shall not be entitled to any Supplemental Servicing Fees with
respect to such a Receivable. Nothing contained herein shall relieve any
Obligor of any obligation relating to any Receivable.
(c) All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Servicer in accordance with Section 5.5(b)(i).
(d) All payments by or on behalf of an Obligor received with respect
to any Purchased Receivable after the Record Date immediately preceding the
Deposit Date on which the Purchase Amount was paid by the Seller, the
Originators, Emergent or the Servicer shall be paid to the Seller, the
Originators, Emergent or the Servicer, respectively, and shall not be
included in the Available Funds.
Section 5.4. Additional Deposits. On or before each Deposit Date, the
Seller, the Originators or the Servicer shall deposit into the Collection
Account the aggregate Purchase Amounts with respect to Administrative
Receivables and Warranty Receivables, respectively. All such deposits of
Purchase Amounts shall be made in immediately available funds. On or before each
Draw Date, the Trustee shall remit to the Collection Account any amounts
delivered to the Trustee by the Spread Account Trustee.
Section 5.5. Distributions. (a) [Reserved]
(b) On each Distribution Date, the Trustee shall (x) distribute all amounts
from the Collection Account deposited by the Certificate Insurer under Section
5.8 as directed in writing by the Certificate Insurer, and (y) (based solely on
the information contained in the Servicer's Certificate delivered with respect
to the related Determination Date) distribute the following amounts and in the
following order of priority:
(i) first, from the Distribution Amount, to the Servicer, the Basic
Servicing Fee for the related Collection Period, any Supplemental Servicing
Fees for the related Collection Period, and any amounts specified in
Section 5.2(b), to the extent the Servicer has not reimbursed itself in
respect of such amounts pursuant to Section 5.6;
(ii) second, from the Distribution Amount, to the Trustee, Spread
Account Trustee, Emergent Banks or Local Banks (including the Trustee if
acting in any such additional capacity), any accrued and unpaid fees (in
each case, to the extent such Person has not previously received such
amount from the Servicer);
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(iii) third, from the Amount Available to the Class A
Certificateholders, the Class A Interest Distributable Amount for such
Distribution Date;
(iv) fourth, from the Amount Available to the Class A
Certificateholders, the sum of (x) the Class A Principal Distributable
Amount for such Distribution Date and (y) the Class A Principal Carryover
Shortfall, if any, for such Distribution Date;
(v) fifth, from the Distribution Amount, to the Certificate Insurer,
to the extent of any amounts owing to the Certificate Insurer under the
Insurance Agreement and not paid, whether or not the Originators are also
obligated to pay such amounts;
(vi) sixth, from Available Funds to the Spread Account Trustee certain
amounts for deposit in the Spread Account up to the Requisite Amount in
accordance with the Spread Account Agreement;
(vii) seventh, from Available Funds to the Class B Certificateholders,
the Class B Interest Distributable Amount for such Distribution Date;
(viii) eighth, from Available Funds to the Class B Certificateholders,
the sum of (x) the Class B Principal Distributable Amount for such
Distribution Date and (y) the Class B Principal Carryover Shortfall, if
any, for such Distribution Date;
(ix) ninth, to the Spread Account, all remaining Available Funds; and
(x) tenth, from the Spread Account, from amounts released under
priority SEVENTH of Section 3.03(b) of the Spread Agreement to the Class B
Certificateholders and the Class C Certificateholder.
Distributions hereunder to the Seller shall be made by the Trustee by check
mailed to the address specified in Section 13.11 or by wire transfer.
(c) Subject to Section 12.1 respecting the final payment upon retirement of
each Certificate, and provided that the Trustee has received the applicable
Servicer's Certificate, on each Distribution Date the Trustee shall distribute
to each Certificateholder of record on the preceding Record Date either (i) by
wire transfer, in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder holds Certificates representing at least $3 million in Class A
Certificate Balance or Class B Certificate Balance as of the Cut-Off Date, and
if such Certificateholder shall have provided to the Trustee appropriate written
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instructions not later than 15 days prior to such Distribution Date, or (ii) by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register, such Holder's Fractional Undivided Interest of
either the Class A Distributable Amount or the Class B Distributable Amount, as
applicable, to the extent funds therefor are distributed under Section 5.5(b).
(d) Each Certificateholder, by its acceptance of its Certificate, will be
deemed to have consented to the provisions of paragraph (a) above relating to
the priority of distributions, and will be further deemed to have acknowledged
that no property rights in any amount or the proceeds of any such amount shall
vest in such Certificateholder until such amounts have been distributed to such
Certificateholder pursuant to such provisions, provided, that the foregoing
shall not restrict the right of any Certificateholder, upon compliance with the
provisions hereof, from seeking to compel the performance of the provisions
hereof by the parties hereto.
In furtherance of and not in limitation of the foregoing, each Class B and
Class C Certificateholder by acceptance of its Class B Certificate or Class C
Certificate specifically acknowledges that, to the extent of any reversionary
interest such Certificateholder may have in the Spread Account, no amounts shall
be received by it, nor shall it have any right to receive any amounts, unless
and until such amounts have been released pursuant to Section 3.03(b) SEVENTH of
the Spread Account Agreement for distribution to such Class B and Class C
Certificateholder pursuant to paragraph (b)(x) above. Each Class B and Class C
Certificateholder, by its acceptance of its Class B and Class C Certificate
further specifically acknowledges that it has no right to or interest in any
moneys at any time held pursuant to the Spread Account Agreement or pursuant
hereto prior to the release of such moneys as aforesaid, such moneys being held
in trust for the benefit of the Certificateholders and the Certificate Insurer,
as their interests may appear prior to such release. Notwithstanding the
foregoing, in the event that it is ever determined that the moneys held in the
Spread Account constitute a pledge of collateral, then the provisions of this
Agreement and the Spread Account Agreement shall be considered to constitute a
security agreement and the Class C Certificateholders hereby grant to the Spread
Account Trustee and to the Trustee a first priority perfected security interest
in such amounts, to be applied as set forth in Section 3.03(b) of the Spread
Account Agreement.
Section 5.6. Net Deposits. The Servicer may make the remittances to be made
by it pursuant to Sections 5.2 and 5.4 net of amounts (which amounts may be
netted prior to any such remittance for a Collection Period) to be distributed
to it pursuant to Sections 4.8 and 5.2(b) and (subject to payment by the
Servicer of amounts otherwise payable pursuant to Section 5.5(b)(ii)) 5.5(b)(i),
for so long as no Servicer Termination Event has occurred and is continuing;
provided, however, that the Servicer shall account for all of such amounts in
the related Servicer's Certificate as if such amounts were deposited and
distributed separately; and, provided, further, that if an error is made by the
Servicer in calculating the amount to be deposited or retained by it, with the
result that an amount less than the amount required is deposited in the
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Collection Account, the Servicer shall make a payment of the deficiency to the
Collection Account, immediately upon becoming aware, or receiving notice from
the Trustee, of such error.
Section 5.7. Statements to Certificateholders. (a) On each Distribution
Date, the Trustee shall send to each Certificateholder, a copy of the related
Servicer's Certificate delivered on the related Determination Date pursuant to
Section 4.9, setting forth for the Collection Period relating to such
Distribution Date the following information:
(i) in the case of the Class A and Class B Certificateholders, the
amount of such distribution allocable to principal;
(ii) in the case of the Class A and Class B Certificateholders, the
amount of such distribution allocable to interest;
(iii) the amount of such distribution payable out of amounts withdrawn
from the Spread Account or pursuant to a claim on the Policy;
(iv) the Class A Certificate Balance and the Class B Certificate
Balance, as applicable, (after giving effect to distributions made on such
Distribution Date);
(v) the amount of fees paid by the Trust with respect to such
Collection Period;
(vi) the amount of the Class A Interest Carryover Shortfall, Class A
Principal Carryover Shortfall, Class B Interest Carryover Shortfall and
Class B Principal Carryover Shortfall, if any, on such Distribution Date
and the change in such amounts from those of the prior Distribution Date;
(vii) the Class A Certificate Factor, Class A Certificate Balance,
Class B Certificate Factor and Class B Certificate Balance as of such
Distribution Date;
(viii) the Delinquency Ratio, Average Delinquency Ratio, Default Rate,
Average Default Rate, Net Loss Rate and Average Net Loss Rate for such
Determination Date;
(ix) whether any Trigger Event has occurred as of such Determination
Date;
(x) whether any Trigger Event that may have occurred as of a prior
Determination Date is Deemed Cured (as defined in the Spread Account
Agreement), as of such Determination Date;
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(xi) whether an Insurance Agreement Event of Default has occurred; and
(xii) the Pool Factor (after giving effect to distributions made on
such Distribution Date).
Each amount set forth pursuant to subclauses (i) (such amounts broken down by
Class of Certificate), (ii) (such amounts broken down by Class of Certificate),
(v) and (vi) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate of the related Class.
(b) Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of this Agreement, the Trustee
shall mail, to each Person who at any time during such calendar year shall have
been a Certificateholder, a statement prepared by the Servicer containing the
sum of the amounts set forth in clauses (i), (ii), and (v) (separately
indicating amounts in respect of the Class A Certificates and the Class B
Certificates in the case of (i) and (ii)) and such other information, requested
in writing by the Servicer, if any, as the Servicer determines is necessary to
permit the Certificateholder to ascertain its share of the gross income and
deductions of the Trust (exclusive of the Supplemental Servicing Fee), for such
calendar year or, in the event such Person shall have been a Certificateholder
during a portion of such calendar year, for the applicable portion of such year,
for the purposes of such Certificateholder's preparation of federal income tax
returns.
Section 5.8. Optional Deposits by the Certificate Insurer. The Certificate
Insurer shall at any time, and from time to time, with respect to a Distribution
Date, have the option (but shall not be required, except as provided in Section
6.4 and in accordance with the terms of the Policy) to deliver amounts to the
Trustee for deposit into the Collection Account for any of the following
purposes: (i) to provide funds in respect of the payment of fees or expenses of
any provider of services to the Trust with respect to such Distribution Date,
(ii) to distribute as a component of the Class A Principal Distributable Amount
to the extent that the Class A Certificate Balance as of the Determination Date
preceding such Distribution Date exceeds the Class A Percentage of the Aggregate
Principal Balance as of such Determination Date, or (iii) to include such amount
as part of the Class A Distributable Amount for such Distribution Date to the
extent that without such amount a draw would be required to be made on the
Policy. The Certificate Insurer shall notify the Trustee at least three Business
Days prior to the Distribution Date of such optional deposit specifying the
amount of the optional deposit and remit such amount on the related Deposit
Date.
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ARTICLE VI
THE SPREAD ACCOUNT AND THE POLICY
Section 6.1. Spread Account. The Seller will, simultaneously with the
execution and delivery of this Agreement, execute and deliver the Spread Account
Agreement and, pursuant to the terms thereof, deposit $1,288,587.18 in the
Spread Account.
Section 6.2. Policy. The Seller (pursuant to the Insurance Agreement) and
the Servicer agree, simultaneously with the execution and delivery of this
Agreement, to cause the Certificate Insurer to issue the Policy for the benefit
of the Trust in accordance with the terms thereof.
Section 6.3. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the amount of the Available Funds with respect to such Determination Date is
less than the sum of the amounts payable on the related Distribution Date
pursuant to clauses (i) through (v) of Subsection 5.5(b) (such deficiency being
a "Deficiency Claim Amount") then on the Deficiency Claim Date immediately
preceding such Distribution Date, the Trustee shall deliver to the Spread
Account Trustee, the Certificate Insurer, the fiscal agent, if any, and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice in
the form of Exhibit I (a "Deficiency Notice") specifying the Deficiency Claim
Amount for such Distribution Date. Such Deficiency Notice shall direct the
Spread Account Trustee to remit such Deficiency Claim Amount (to the extent of
the funds available to be distributed pursuant to the Spread Account Agreement)
to the Trustee for deposit in the Collection Account.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York City
time, on the fourth Business Day preceding such Distribution Date. The amounts
distributed by the Spread Account Trustee to the Trustee pursuant to a
Deficiency Notice shall be deposited by the Trustee into the Collection Account
pursuant to Section 5.4.
Section 6.4. Claims Under Policy. (a) In the event that the Trustee has
delivered a Deficiency Notice with respect to any Determination Date, the
Trustee shall determine on the related Draw Date whether the sum of (i) the
amount of Available Funds with respect to such Determination Date (as stated in
the Servicer's Certificate with respect to such Determination Date) plus (ii)
the amount actually received by the Trustee from the Spread Account Trustee as a
result of a Deficiency Notice with respect to such Distribution Date (as stated
in the certificate delivered on the immediately preceding Deficiency Claim Date
by the Spread Account Trustee pursuant to Section 3.03(a) of the Spread Account
Agreement) would be insufficient, after giving effect to the distributions
required by Section 5.5(b)(i)-(ii), to pay the Class A Distributable Amount for
the related Distribution Date. If the above sum is insufficient, then the
Trustee shall furnish to the Certificate Insurer no later than 10:00 a.m. New
York City time on the related Draw Date a completed Notice of Claim in the
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amount of the shortfall in amounts so available to pay the Class A Interest
Distributable Amount and the Class A Principal Distributable Amount with respect
to such Distribution Date (the amount of any such shortfall being hereinafter
referred to as the "Policy Claim Amount"). Amounts paid by the Certificate
Insurer under the Policy shall be deposited by the Trustee into the Policy
Payments Account and thereafter into the Collection Account for payment to Class
A Certificateholders on the related Distribution Date (or promptly following
payment on a later date as set forth in the Policy).
(b) Any notice delivered by the Trustee to the Certificate Insurer pursuant
to subsection 6.4(a) shall specify the Policy Claim Amount claimed under the
Policy and shall constitute a "Notice of Claim" under the Policy. In accordance
with the provisions of the Policy, the Certificate Insurer is required to pay to
the Trustee the Policy Claim Amount properly claimed thereunder by 10:00 a.m.,
New York City time, on the later of (i) the third Business Day following receipt
on a Business Day of the Notice of Claim, and (ii) the applicable Distribution
Date. Any payment made by the Certificate Insurer under the Policy shall be
applied solely to the payment of the Class A Certificates, and for no other
purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Certificateholder any Policy Claim Amount from the Certificate Insurer and (ii)
deposit the same in the Collection Account for disbursement to the Class A
Certificateholders as set forth in clauses (iii) and (iv) of subsection 5.5(b).
Any and all Policy Claim Amounts disbursed by the Trustee from claims made under
the Policy shall not be considered payment by the Trust or from the Spread
Account with respect to such Class A Certificates, and shall not discharge the
obligations of the Trust with respect thereto. The Certificate Insurer shall, to
the extent it makes any payment with respect to the Class A Certificates, become
subrogated to the rights of the recipients of such payments to the extent of
such payments. Subject to and conditioned upon any payment with respect to the
Class A Certificates by or on behalf of the Certificate Insurer in accordance
with the written instructions of the Servicer, the Trustee shall assign to the
Certificate Insurer, pursuant to an agreement of assignment prepared by and
provided by the Certificate Insurer in a form satisfactory to the Trustee all
rights to the payment of interest or principal with respect to the Class A
Certificates which are then due for payment to the extent of all payments made
by the Certificate Insurer, and the Certificate Insurer may exercise any option,
vote, right, power or the like with respect to the Class A Certificates to the
extent that it has made payment pursuant to the Policy. To evidence such
subrogation, the Trustee shall note the Certificate Insurer's rights as subrogee
upon the register of Class A Certificateholders upon receipt from the
Certificate Insurer of proof of payment by the Certificate Insurer of any Class
A Interest Distributable Amount or Class A Principal Distributable Amount.
(d) The Trustee shall be entitled to enforce on behalf of the Class A
Certificateholders the obligations of the Certificate Insurer under the Policy.
Notwithstanding any other provision of this Agreement, the Class A
Certificateholders are not entitled to institute proceedings directly against
the Certificate Insurer.
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Section 6.5. Preference Claims; Direction of Proceedings. (a) In the event
that the Trustee has received a certified copy of an order of the appropriate
court that any Class A Interest Distributable Amount or Class A Principal
Distributable Amount paid on a Class A Certificate has been avoided in whole or
in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Certificate Insurer, shall comply with the provisions of the
Policy to obtain payment by the Certificate Insurer of such avoided payment, and
shall, at the time it provides notice to the Certificate Insurer, notify Holders
of the Class A Certificates by mail that, in the event that any Class A
Certificateholder's payment is so recoverable, such Class A Certificateholder
will be entitled to payment pursuant to the terms of the Policy. Pursuant to the
terms of the Policy, the Certificate Insurer will make such payment on behalf of
the Class A Certificateholder to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order (as defined in the Policy) and not
to the Trustee or any Class A Certificateholder directly (unless a Class A
Certificateholder has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case the Certificate
Insurer will make such payment to the Trustee for distribution to such Class A
Certificateholder upon proof of such payment reasonably satisfactory to the
Certificate Insurer).
(b) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trustee has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any distribution made with respect to
the Class A Certificates. Each Holder, by its purchase of Class A Certificates,
and the Trustee hereby agree that so long as an Insurer Default shall not have
occurred and be continuing, the Certificate Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim including, without limitation, (i) the
direction of any appeal of any order relating to any Preference Claim and (ii)
the posting of any surety, supersedeas or performance bond pending any such
appeal at the expense of the Certificate Insurer, but subject to reimbursement
as provided in the Insurance Agreement. In addition, and without limitation of
the foregoing, as set forth in Section 6.4(c), the Certificate Insurer shall be
subrogated to, and each Class A Certificateholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of the
Trustee and each Class A Certificateholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim.
Section 6.6. Surrender of Policy. The Trustee shall surrender the Policy to
the Certificate Insurer for cancellation upon its expiration in accordance with
the terms thereof.
Section 6.7. Seller as Agent of the Reversionary Holders. The Seller shall
be deemed to be the agent of the Reversionary Holders for purposes of perfecting
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the Spread Account Trustee's Interest in the related Property (as such terms are
defined in the Spread Account Agreement). The Reversionary Holders agree, by
acceptance of the Class C Certificate, to execute and deliver such instruments
of conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case, as the Controlling Party (as defined in the Spread
Account Agreement) shall consider reasonably necessary in order to perfect the
Spread Account Trustee's Interest in the related Property.
ARTICLE VII
THE CERTIFICATES
Section 7.1. The Certificates. (a) The Class A Certificates will be issued
in minimum denominations of $1,000,000 and integral multiples of $1,000 in
excess thereof, except that one Class A Certificate shall be issued in a
denomination that includes any residual amount. The Class B Certificates will be
issued in minimum denominations of $250,000 and integral multiples of $1,000 in
excess thereof, except that one Class B Certificate shall be issued in a
denomination that includes any residual amount. The Class C Certificate will be
issued without denomination. Each Certificate shall represent a validly issued
and binding obligation, but only if such Certificate has been executed and
authenticated by a Responsible Officer of the Trustee by manual signature.
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trust
shall be valid and binding obligations, notwithstanding that such individuals or
any of them have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form set forth in the form
of the Certificates of the related Class, attached as exhibits hereto, signed by
the Trustee by manual signature, and such certificate upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Class A Certificates shall be
substantially in the form set forth in Exhibit A hereto, all Class B
Certificates shall be substantially in the form set forth in Exhibit B hereto,
and the Class C Certificate shall be substantially in the form set forth in
Exhibit C hereto. The Certificates shall be dated the date of their
authentication. Neither the Certificates nor the Receivables are insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
(b) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A Certificates shall, except as otherwise provided below, be
initially issued in the form of a single fully registered Class A Certificate
with a denomination equal to the initial Class A Certificate Balance. Upon
initial issuance, the ownership of each such Class A Certificate shall be
registered in the Certificate Register in the name of Cede & Co., or any
successor thereto, as nominee for the Depository.
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The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository.
With respect to Class A Certificates registered in the Certificate Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Seller, the Originators, the Servicer and the Trustee shall have no
responsibility or obligation to Participants or beneficial owners for which the
Depository holds Class A Certificates from time to time as a Depository. Without
limiting the immediately preceding sentence, the Depositor, the Seller, the
Originators, the Servicer and the Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Participant with respect to any ownership interest in any
Class A Certificate, (ii) the delivery to any Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A
Certificates or (iii) the payment to any Participant or any other Person, other
than a Certificateholder, of any amount with respect to any distribution of
principal or interest on the Class A Certificates. No Person other than a
Certificateholder shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(c) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Servicer or the Depository is unable to locate a
qualified successor or (ii) the Trustee in its sole discretion elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Certificate Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Servicer.
(d) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal or interest on such
Class A Certificates as the case may be and all notices with respect to such
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Class A Certificates as the case may be shall be made and given, respectively,
in the manner provided in the Representation Letter.
(e) No transfer of any Class B Certificates or Class C Certificate shall be
made unless such transfer is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under any State securities laws or "Blue Sky" laws or in a transaction which
does not require such registration or qualification. If such a transfer is to be
made in reliance upon an exemption from the Securities Act other than Rule 144A
thereunder, (i) the Trustee shall require an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act,
describing the applicable exemption and the basis therefor, from said Act and
laws or is being made pursuant to said Act or laws or (ii) the Trustee shall
require the transferee to execute an investment letter acceptable to and in form
and substance satisfactory to the transferor and the Certificate Insurer in the
form of Exhibit L certifying to the Trustee, the Certificate Insurer and the
transferor the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee, the Trust, the Certificate Insurer, the
Depositor or the transferor. The Servicer promptly shall furnish to any Holder,
or any prospective purchaser designated by a Holder, the information required to
be delivered to Holders and prospective purchasers of Class B Certificates and
Class C Certificate in connection with the resale of the Class B Certificates
and Class C Certificate to permit compliance with Rule 144A in connection with
such resale.
Section 7.2. Initial Issuance of Certificates. The Trustee has delivered
upon the instruction of the Depositor, in exchange for the Receivables, Class A
Certificates and the Class B Certificates duly authenticated by the Trustee, in
authorized denominations equaling in the aggregate the initial Class A
Certificate Balance and the initial Class B Certificate Balance and the Class C
Certificate duly authenticated by the Trustee, evidencing an aggregate Class C
Percentage Interest of 100%.
Section 7.3. Registration of Transfer and Exchange of Certificates. (a) The
Trustee shall maintain, or cause to be maintained, at the Corporate Trust
Office, a Certificate Register in which the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. All Certificates shall be so registered.
(b) Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute on behalf of the Trust,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of the
same class, of a like aggregate Percentage Interest, dated the date of such
authentication.
(c) At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same class (of authorized denominations in the case of
Class A Certificates and Class B Certificates) of a like aggregate Class A
Percentage Interest, Class B Percentage Interest or Class C Percentage Interest,
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as the case may be, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for exchange
the Trustee on behalf of the Trust shall execute on behalf of the Trust,
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive.
(d) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge or expense that may be
imposed in connection with any transfer or exchange of Certificates.
(e) All Certificates surrendered for registration of transfer or exchange
shall be delivered to the Trustee and canceled and subsequently destroyed by the
Trustee in accordance with its customary procedures in effect from time to time.
(f) Notwithstanding the foregoing, in the case of any transfer or exchange
of record or beneficial ownership of a Class B or Class C Certificate, the
transferee of such Certificate shall be deemed to have represented and warranted
that it is not acquiring its interest in the Certificate with the assets of (A)
an employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) subject to Title I of ERISA,
(B) a plan or other arrangement described in Section 4975 of the Code or (C) any
entity whose underlying assets include plan assets by reason of an investment in
such entity by a plan described in (A) or (B) above.
Section 7.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Depositor, the Servicer and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee on behalf of
the Trust shall execute on behalf of the Trust, authenticate and deliver in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate a new Certificate of like Class and Percentage Interest. In
connection with the issuance of any new Certificate under this Section 7.4, the
Trustee may require the payment by the Certificateholder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto. Any other expenses (including the fees and expenses of the Trustee) in
connection therewith shall be paid by the Servicer. Any duplicate Certificate
issued pursuant to this Section 7.4 shall constitute a Certificate duly issued
by the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 7.5. Persons Deemed Owners. The Trustee may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.6 hereof and for
all other purposes whatsoever, and the Trustee shall not be affected by any
notice to the contrary.
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Section 7.6. Access to List of Certificateholders' Names and Addresses. The
Trustee shall furnish or cause to be furnished to the Servicer or (unless an
Insurer Default shall have occurred and be continuing) the Certificate Insurer,
within 10 days after receipt by the Trustee of a written request therefor from
such party, a list of the names and addresses of the Certificateholders as of
the most recent Record Date for payment of distributions to Certificateholders.
Every Certificateholder, by receiving and holding a Certificate, agrees with the
Servicer and the Trustee that neither the Servicer nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders under this Agreement, regardless of the
source from which such information was derived.
ARTICLE VIII
THE DEPOSITOR
Section 8.1. Liability of Depositor. The Depositor shall be liable for
payments in respect of the Certificates in accordance herewith only to the
extent of the obligations specifically undertaken by the Depositor herein.
Section 8.2. Limitation on Liability of Depositor. The directors, officers,
employees or agents of the Depositor shall not be under any liability to the
Trust, the Trustee, the Certificateholders, the Originators, the Servicer, the
Seller or any other Person hereunder or pursuant to any document delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the Depositor's
execution and delivery of this Agreement and the issuance of the Certificates.
The Depositor shall not be under any liability to the Trust, the Trustee, the
Certificateholders, the Originators, the Servicer, the Seller or any other
Person for any action taken or for refraining from the taking of any action in
its capacity as Depositor pursuant to this Agreement whether arising from
express or implied duties under this Agreement; provided, however, that this
provision shall not protect the Depositor against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith,
misrepresentation or negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Depositor may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any other Person respecting any matters arising hereunder.
ARTICLE IX
THE SERVICER
Section 9.1. Liability of Servicer; Indemnities. (a) The Servicer shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer and the representations made by the
Servicer.
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(b) The Servicer shall defend, indemnify and hold harmless the Trustee, the
Backup Servicer, the Spread Account Trustee, the Certificate Insurer, the
Depositor, the Seller and their respective officers, directors, agents and
employees, the Trust, and the Certificateholders from and against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation arising out of or
resulting from the use, ownership or operation by the Servicer or any Affiliate
thereof of any Financed Vehicle;
(c) The Servicer shall defend, indemnify and hold harmless the Trust, the
Trustee, the Backup Servicer, the Spread Account Trustee, the Depositor, the
Seller, the Certificate Insurer, their respective officers, directors, agents
and employees, and the Certificateholders from and against any taxes that may at
any time be asserted against the Trust, the Trustee or the Certificateholders
with respect to the transactions contemplated in this Agreement, including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but not including any taxes
asserted with respect to, and as of the date of, the sale of the Receivables and
the other Trust Property to the Trustee or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Receivables, or
federal or other income taxes arising out of distributions on the Certificates)
and costs and expenses in defending against the same;
(d) The Servicer shall indemnify, defend and hold harmless the Trust, the
Trustee, the Backup Servicer, the Certificate Insurer, the Depositor, the
Seller, the Spread Account Trustee, their respective officers, directors, agents
and employees and the Certificateholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that such cost,
expense, loss, claim, damage, or liability arose out of, or was imposed upon the
Trustee, the Trust, the Certificate Insurer, the Depositor, the Seller or the
Certificateholders through the breach of this Agreement, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement;
(e) The Servicer shall indemnify, defend, and hold harmless the Backup
Servicer, the Trustee, its officers, directors, agents and employees, from and
against all costs, tax (other than income taxes on fees and expenses payable to
the Trustee), expenses, losses, claims, damages and liabilities arising out of
or incurred in connection with the acceptance or performance of the trusts and
duties contained in this Agreement, except to the extent that such cost, taxes
(other than income tax), expense, loss, claim, damage or liability (A) is due to
the willful misfeasance, bad faith or negligence of the Backup Servicer or the
Trustee, or (B) arises from the Backup Servicer's or the Trustee's breach of any
of its representations or warranties set forth in Section 11.12;
(f) For purposes of this Section 9.1, in the event of the termination of
the rights and obligations of the Servicer (or any successor thereto pursuant to
Section 9.2) as Servicer pursuant to Section 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
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Servicer pending appointment of a successor Servicer pursuant to Section 10.3.
The provisions of this Section 9.1(f) shall in no way affect the survival
pursuant to Section 9.1(g) of the indemnification by the Servicer provided by
Sections 9.1(b) through 9.1(e); and
(g) Indemnification under this Article shall survive the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity payments
pursuant to this Article and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts collected
to the Servicer, without interest. Notwithstanding any other provision of this
Agreement, the obligations of the Servicer described in this Section shall not
terminate or be deemed released upon the resignation or termination of Emergent
Financial Corporation as the Servicer and shall survive any termination of this
Agreement.
Section 9.2. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or Backup Servicer. (a) The Servicer shall not merge or
consolidate with any other Person, convey, transfer or lease substantially all
its assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be an Eligible Servicer and shall be capable of
fulfilling the duties of the Servicer contained in this Agreement. Any Person
(i) into which the Servicer may be merged or consolidated, (ii) resulting from
any merger or consolidation to which the Servicer shall be a party, (iii) which
acquires by conveyance, transfer, or lease substantially all of the assets of
the Servicer, or (iv) succeeding to the business of the Servicer, in any of the
foregoing cases shall execute an agreement of assumption to perform every
obligation of the Servicer under this Agreement and, whether or not such
assumption agreement is executed, shall be the successor to the Servicer under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties to this Agreement, anything in this Agreement
to the contrary notwithstanding; provided, however, that nothing contained
herein shall be deemed to release the Servicer from any obligation. The Servicer
shall provide notice of any merger, consolidation or succession pursuant to this
Section 9.2(a) to the Trustee, the Certificate Insurer, the Certificateholders
and each Rating Agency. 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 Section 4.6 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 Insurance Agreement Event of Default,
shall have occurred and be continuing, (y) the Servicer shall have delivered to
the Trustee and the Certificate Insurer 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 9.2(a) and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
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have been complied with, and (z) the Servicer shall have delivered to the
Trustee and the Certificate Insurer an Opinion of Counsel, stating, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to preserve and protect the interest of the Trustee in the Trust
Property and reciting the details of the filings or (B) no such action shall be
necessary to preserve and protect such interest.
(b) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Backup Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Backup Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Backup Servicer from any obligation.
Section 9.3. Limitation on Liability of Servicer, Backup Servicer and
Others. Neither the Servicer, the Backup Servicer nor any of the directors or
officers or employees or agents of the Servicer or the Backup Servicer shall be
under any liability to the Trust, the Originators, the Seller, the Depositor or
the Certificateholders, except as provided in this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement; provided, however, that this provision shall not protect the
Servicer, the Backup Servicer or any such person against any liability that
would otherwise be imposed by reason of a breach of this Agreement or willful
misfeasance, bad faith or negligence (excluding errors in judgment) in the
performance of duties (including negligence with respect to the Servicer's
indemnification obligations hereunder), by reason of reckless disregard of
obligations and duties under this Agreement or any violation of law by the
Servicer, the Backup Servicer or such person, as the case may be; further
provided, that this provision shall not affect any liability to indemnify the
Trustee for costs, taxes, expenses, claims, liabilities, losses or damages paid
by the Trustee in its individual capacity. The Servicer, the Backup Servicer and
any director, officer, employee or agent of the Servicer or Backup Servicer may
conclusively rely in good faith on the advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement. The Backup Servicer shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if the repayment of such funds or written indemnity
reasonably satisfactory to it against such risk or liability is not reasonably
assured to it in writing prior to the expenditure or risk of such funds or
incurrence of financial liability.
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Section 9.4. Delegation of Duties. Subject to prior approval by the
Certificate Insurer, the Servicer may at any time delegate any duties hereunder
to any Person, including, without limitation, the Sub-Servicers, who agree to
conduct such duties in accordance with this Agreement. Such delegation shall not
relieve the Servicer of its responsibilities and liabilities with respect to
such duties, and shall not constitute a resignation within the meaning of
Section 9.5. The Backup Servicer may execute any of the trusts or powers under
this Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys, custodians or nominees. The Backup Servicer
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by the Backup Servicer.
Section 9.5. Resignation of Servicer and Backup Servicer. (a) Subject to
the provisions of Section 9.2, the Servicer shall not resign from the
obligations and duties imposed on it by this Agreement as Servicer except upon a
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer, and the Certificate Insurer (so long as an Insurer Default
shall not have occurred and be continuing) or a Certificate Majority (if an
Insurer Default shall have occurred and be continuing) does not elect to waive
the obligations of the Servicer to perform the duties which render it legally
unable to act or to delegate those duties to another Person. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered and acceptable to the Trustee and
the Certificate Insurer (unless an Insurer Default shall have occurred and be
continuing). No resignation of the Servicer shall become effective until, so
long as no Insurer Default shall have occurred and be continuing, the Backup
Servicer or an entity acceptable to the Certificate Insurer shall have assumed
the responsibilities and obligations of the Servicer or, if an Insurer Default
shall have occurred and be continuing, the Backup Servicer or a successor
Servicer that is an Eligible Servicer shall have assumed the responsibilities
and obligations of the Servicer.
(b) The Backup Servicer may at any time resign from the obligations and
duties imposed on it by this Agreement by giving written notice to the
Certificate Insurer, provided, however, that no resignation of the Backup
Servicer shall become effective until, so long as no Insurer Default shall have
occurred and be continuing, an entity acceptable to the Certificate Insurer
shall have assumed the responsibilities and obligations of the Backup Servicer
or, if an Insurer Default shall have occurred and be continuing, a Person that
is an Eligible Servicer shall have assumed the responsibilities and obligations
of the Backup Servicer; provided, however, that in the event a successor Backup
Servicer is not appointed within 60 days after the Backup Servicer has given
notice of its resignation as permitted by this Section 9.5, the Backup Servicer
may petition a court for its removal. Notwithstanding anything herein to the
contrary, in the event the entity serving as Trustee hereunder is also serving
as Backup Servicer, such resignation of the Backup Servicer shall become
effective without any further act upon the effectiveness of the resignation of
the Trustee hereunder.
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ARTICLE X
SERVICER TERMINATION EVENTS
Section 10.1. Servicer Termination Event. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to Certificateholders or deposit in the Spread Account any
proceeds or payment required to be so delivered under the terms of the
Certificates or this Agreement (including deposits of the Purchase Amount
pursuant to Section 4.7) that continues unremedied for a period of two
Business Days (one Business Day with respect to payment of Purchase
Amounts) after written notice is received by the Servicer from the Trustee
or (unless an Insurer Default shall have occurred and be continuing) the
Certificate Insurer or after discovery of such failure by a Responsible
Officer of the Servicer;
(b) Failure by the Servicer to deliver to the Trustee and (so long as
an Insurer Default shall not have occurred and be continuing) the
Certificate Insurer the Servicer's Certificate required by Section 4.9 on
the date such certificate is required to be delivered;
(c) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 9.2(a);
(d) Failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement, which failure continues unremedied for a period of
30 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by the
Trustee or the Certificate Insurer (or, if an Insurer Default shall have
occurred and be continuing, any Certificateholder);
(e) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer in an involuntary
case under the federal bankruptcy laws, as now or hereafter in effect, or
another present or future, federal or state, bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or of any
substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of the Servicer and the continuance of any
such decree or order unstayed and in effect for a period of 60 consecutive
days or the commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or
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(f) The commencement by the Servicer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law,
or the consent by the Servicer to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or of any substantial part of its
property or the making by the Servicer of an assignment for the benefit of
creditors or the failure by the Servicer generally to pay its debts as such
debts become due or the taking of corporate action by the Servicer in
furtherance of any of the foregoing; or
(g) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of
the time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Trust and, within 30 days after written notice thereof shall have been
given to the Servicer by the Trustee or the Certificate Insurer (or, if an
Insurer Default shall have occurred and be continuing, a
Certificateholder), the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured;
(h) So long as an Insurer Default shall not have occurred and be
continuing, the Certificate Insurer shall not have delivered a Servicer
Extension Notice pursuant to Section 4.14;
(i) So long as an Insurer Default shall not have occurred and be
continuing, (x) an Insurance Agreement Event of Default shall have occurred
or (y) an Insurance Agreement Event of Default with respect to another
Series (as defined in the Spread Account Agreement) (other than a Portfolio
Performance Event of Default as defined in the related Insurance Agreement)
shall have occurred;
(j) A claim is made under the Policy; or
(k) Any failure by Emergent, only while Emergent Group, Inc. is acting
as Servicer, to cure any breach or repurchase any Receivable in accordance
with and upon the conditions set forth in Section 3.6 hereof.
Section 10.2. Consequences of a Servicer Termination Event. (a) If a
Servicer Termination Event shall occur and be continuing, so long as no Insurer
Default shall have occurred and be continuing, the Certificate Insurer, subject
to subsection (b) of this Section 10.2, (or, if an Insurer Default shall have
occurred and be continuing, any of the Trustee or the Certificateholders
evidencing not less than a Certificate Majority), by notice given in writing to
the Servicer (and to the Trustee if given by the Certificate Insurer or the
Certificateholders) may terminate all of the rights and obligations of the
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Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, or, if the Certificate Insurer shall not have delivered a
Servicer Extension Notice pursuant to Section 4.14, all authority, power,
obligations and responsibilities of the Servicer under this Agreement, whether
with respect to the Certificates or the Trust Property or otherwise,
automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer; provided, however, that the Backup
Servicer shall have no liability with respect to any obligation which was
required to be performed by the prior Servicer prior to the date that the Backup
Servicer becomes the Servicer or any claim of a third party based on any alleged
action or inaction of the prior Servicer. The Backup Servicer is authorized and
empowered by this Agreement to execute and deliver, on behalf of the prior
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the other Trust
Property and related documents to show the Trustee as lienholder or secured
party on the related Lien Certificates, or otherwise. The prior Servicer agrees
to cooperate with the Backup Servicer in effecting the termination of the
responsibilities and rights of the prior Servicer under this Agreement,
including, without limitation, the transfer to the Backup Servicer for
administration by it of all cash amounts that shall at the time be held by the
prior Servicer for deposit, or have been deposited by the prior Servicer, in the
Collection Account or thereafter received with respect to the Receivables and
the delivery to the Backup Servicer of all Receivable Files, Collection Records
and a computer tape in readable form containing all information necessary to
enable the Backup Servicer or a successor Servicer to service the Receivables
and the other Trust Property. The Trustee and the Backup Servicer may set off
and deduct any amounts owed by the terminated Servicer from any amounts payable
to the terminated Servicer pursuant to the preceding sentence. The terminated
Servicer shall grant the Trustee, the Backup Servicer and the Certificate
Insurer reasonable access to the terminated Servicer's premises at the
Servicer's expense.
(b) So long as no Insurer Default shall have occurred and be continuing,
(i) if as the result of a default by the Servicer with respect to its
obligations pursuant to Section 4.7, a Servicer Termination Event described in
Section 10.1(a) shall occur and be continuing and (ii) if a Servicer Termination
Event described in Section 10.1(k) has occurred and is continuing, the Trustee
may request in writing that the Certificate Insurer deliver the notice as set
forth in subsection (a) above. The consent of the Certificate Insurer to such
request shall not be unreasonably withheld.
Section 10.3. Appointment of Successor. (a) On and after (i) the time the
Servicer receives a notice of termination pursuant to Section 10.2 or (ii) upon
the resignation of the Servicer pursuant to Section 9.5 or (iii) the receipt by
the Backup Servicer (or any alternate successor Servicer appointed by the
Certificate Insurer pursuant to Section 10.3(b)), of written notice from the
Certificate Insurer that the Certificate Insurer is not extending the Servicer's
term pursuant to Section 4.14, the Backup Servicer shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
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the transactions set forth or provided for in this Agreement, and shall be
subject to all the responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer by the terms and
provisions of this Agreement; provided, however that the Backup Servicer shall
not be liable for any acts, omissions or obligations of the Servicer prior to
such succession or for any breach by the Servicer of any of its representations
and warranties contained in this Agreement or in any related document or
agreement. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession. If
a successor Servicer is acting as Servicer hereunder, it shall be subject to
termination under Section 10.2 upon the occurrence of any Servicer Termination
Event applicable to it as Servicer.
(b) The Certificate Insurer may (so long as an Insurer Default shall not
have occurred and be continuing) exercise at any time its right to appoint as
Backup Servicer or as successor to the Servicer a person other than the Person
serving as Backup Servicer at the time, and (without limiting its obligations
under the Policy) shall have no liability to the Trustee, the Depositor, the
Seller, the Person then serving as Backup Servicer, any Certificateholder or any
other Person if it does so. Notwithstanding the above, if the Backup Servicer
shall be legally unable or unwilling to act as Servicer and an Insurer Default
shall have occurred and be continuing, the Backup Servicer, the Trustee or a
Certificate Majority may petition a court of competent jurisdiction to appoint
any Eligible Servicer as the successor to the Servicer. Pending such
appointment, the Backup Servicer shall act as successor Servicer unless it is
legally unable to do so, in which event the outgoing Servicer shall continue to
act as Servicer until a successor Servicer has been appointed and accepted such
appointment. Subject to Section 9.5, no provision of this Agreement shall be
construed as relieving the Backup Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section 10.2
or the resignation of the Servicer pursuant to Section 9.5. If upon the
termination of the Servicer pursuant to Section 10.2 or the resignation of the
Servicer pursuant to Section 9.5, the Certificate Insurer appoints a successor
Servicer other than the Backup Servicer, the Backup Servicer shall not be
relieved of its duties as Backup Servicer hereunder.
(c) Any successor Servicer which shall include the Backup Servicer shall be
entitled to such compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under the Agreement if
the Servicer had not resigned or been terminated hereunder. If any successor
Servicer is appointed for any reason, the Certificate Insurer and such successor
Servicer may agree on additional compensation to be paid to such successor
Servicer, which additional compensation shall be payable out of funds on deposit
in the Spread Account. In addition, any successor Servicer shall be entitled,
out of funds in the Spread Account, to reasonable transition expenses incurred
in acting as successor Servicer.
Section 10.4. Notification to Certificateholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article X, the
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Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Rating
Agency.
Section 10.5. Waiver of Past Defaults. So long as no Insurer Default shall
have occurred and be continuing, the Certificate Insurer, subject to subsection
(b) of this Section 10.5 (or, if an Insurer Default shall have occurred and be
continuing, a Certificate Majority) may, on behalf of all Certificateholders,
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
Section 10.6. Effect of Servicer Termination Event on Sub-Servicer. Any
removal of the Servicer pursuant to this Article X shall ipso facto constitute a
removal of the Sub-Servicers.
ARTICLE XI
THE TRUSTEE
Section 11.1. Duties of Trustee. (a) Subject to paragraph (c) of this
Section 11.1, the Trustee, both prior to and after the occurrence of a Servicer
Termination Event, undertakes to perform as Trustee such duties and only such
duties as are specifically set forth in this Agreement.
(b) The Trustee, upon receipt of any resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any
provisions of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act (other than errors in judgment) or its own bad faith or willful
misfeasance; provided, however, that:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
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(ii) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be
proven that the Trustee was negligent in performing its duties in
accordance with the terms of this Agreement;
(iii) the Trustee shall not be liable for any action taken, suffered
or omitted to be taken by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Agreement; and
(iv) the Trustee shall not be liable for any action it takes or omits
to take in good faith at the direction of the Certificate Insurer (or,
after an Insurer Default shall have occurred and be continuing, a
Certificate Majority); provided that the Trustee shall not be authorized
hereunder to comply with any direction which is not authorized by the terms
of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Trustee
shall not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties under this
Agreement, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or indemnity
reasonably satisfactory to it against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Backup Servicer shall be the successor
to, and be vested with the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement.
(e) The Trustee shall not be charged with knowledge of any failure by the
Servicer to comply with the obligations of the Servicer referred to in this
Agreement, or of any failure by the Seller to comply with the obligations of the
Seller referred to in this Agreement, unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure (it being understood that
knowledge of the Servicer is not attributable to the Trustee) or the Trustee
receives written notice of such failure from the Servicer or the Seller, as the
case may be, or the Certificate Insurer (or, if an Insurer Default shall have
occurred and be continuing) the Certificateholders evidencing not less than 25%
of the sum of the Class A Certificate Balance and the Class B Certificate
Balance, or, if there are no Class A Certificates then outstanding, by Holders
of Class B Certificates evidencing not less than 25% of the Class B Certificate
Balance; and
(f) Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
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Section 11.2. Trustee's Assignment of Administrative Receivables and
Warranty Receivables. With respect to all Administrative Receivables and all
Warranty Receivables purchased by the Seller, the Originators, Emergent Group,
Inc. or the Servicer, the Trustee shall take any and all actions reasonably
requested in writing by the Seller, the Originators, Emergent Group, Inc. or the
Servicer at the expense of the Person whose obligation was to repurchase the
Administrative Receivable or the Warranty Receivable, to assign, without
recourse, representation or warranty, to the Seller, the Originators, Emergent
Group, Inc. or the Servicer, as applicable, including, without limitation, all
the items conveyed to the Trustee pursuant to Section 3.1(a) with respect to
such purchased Receivable, all monies due thereon, the security interests in the
related Financed Vehicles, proceeds from any Insurance Policies, proceeds from
recourse against Dealers on such Receivables and the interests of the Trust in
certain rebates of premiums and other amounts relating to the Insurance Policies
and any documents relating thereto, such assignment being an assignment outright
and not for security; and the Seller, the Originators, Emergent Group, Inc. or
the Servicer, as applicable, shall thereupon own such Receivable, and all such
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto. Each of the Servicer and the Trustee
shall cooperate with respect to the orderly transfer of the servicing to the
party purchasing the Administrative Receivable or the Warranty Receivable
hereunder, and each of the Servicer and the Trustee shall cooperate with such
party to ensure that the purchasing party is subrogated to the rights of each
such Person with respect to such Receivable.
Section 11.3. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 11.1(c):
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Trustee may consult with counsel and the advice of such
counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such advice;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation under this Agreement or in relation to this
Agreement, pursuant to the provisions of this Agreement, unless the Trustee
shall have been assured security or indemnity reasonably satisfactory to it
against the costs, expenses and liabilities that may be incurred therein or
thereby; provided, however, that the Trustee shall, upon the occurrence of
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a Servicer Termination Event (that has not been cured), exercise the rights
and powers vested in it by this Agreement with reasonable care and skill;
(d) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Certificate Insurer or by Certificateholders evidencing not less than
25% of the sum of the Class A Certificate Balance and the Class B
Certificate Balance, or, if there are no Class A Certificates then
outstanding, by Holders of Class B Certificates evidencing not less than
25% of the Class B Certificate Balance; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee may
require indemnity reasonably satisfactory to it against such cost, expense
or liability as a condition to so proceeding; the reasonable expense of
every such examination shall be paid by the Person making such request or,
if paid by the Trustee, shall be reimbursed by the Person making such
request upon demand;
(e) The Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys, custodians or nominees. The Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by the Trustee. The Trustee shall
not be responsible for any misconduct or negligence attributable to the
acts or omissions of the Servicer or the Depositor;
(f) The Trustee may conclusively rely, as to factual matters relating
to the Depositor or the Servicer, on an Officer's Certificate of a
Responsible Officer of the Depositor or Servicer, respectively; and
(g) The Trustee shall not be required to take any action or refrain
from taking any action under this Agreement, or any Related Document
referred to herein, nor shall any provision of this Agreement, or any such
Related Document be deemed to impose a duty on the Trustee to take action,
if the Trustee shall have been advised by counsel that such action is
contrary to the terms of this Agreement, or any Related Document or is
contrary to law.
Section 11.4. Trustee Not Liable for Certificates or Receivables. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the execution of the Certificates)
or of any Receivable or Related Document, except to the extent otherwise
expressly provided herein. The Trustee and the Backup Servicer shall at no time
(except during such time, if any, as it is acting as successor Servicer) have
any responsibility or liability for or with respect to the legality, validity
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and enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation, the existence, condition, location and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence of any Receivable or any computer or other record thereof (it being
understood that the Trustee has not reviewed and does not intend to review such
matters, the sole responsibility for such review being vested in the Servicer);
the completeness of any Receivable; the receipt by the Servicer of any
Receivable; the performance or enforcement of any Receivable; the compliance by
the Depositor and the Servicer with any covenant or the breach by the Depositor
and the Servicer of any warranty or representation made under this Agreement or
in any related document and the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any noncompliance
therewith or any breach thereof, any investment of monies by or at the direction
of the Servicer or any loss resulting therefrom (it being understood, however,
that the Trustee shall remain responsible for any Trust Property that it may
hold directly); the acts or omissions of the Depositor, the Servicer or any
Obligor; any action of the Servicer taken in the name of the Trustee; the
accuracy, content or completeness of any offering documents used in connection
with the sale of the Certificates or any action by the Trustee taken at the
instruction of the Servicer, the Depositor, the Certificate Insurer or the
Certificateholders holding the requisite percentage of Certificates; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement, whether as Trustee or as Backup
Servicer. The Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Servicer in respect of the
Receivables prior to the time such funds are deposited in the Collection
Account.
Section 11.5. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee and may deal with the
Depositor and the Servicer in banking transactions with the same rights as it
would have if it were not Trustee.
Section 11.6. Trustee's Fees and Expenses; Indemnification. The Servicer in
a separate agreement (the "Fee Letter") has covenanted and agreed to pay to the
Trustee, and the Trustee shall be entitled to, certain annual fees (the "Annual
Trustee's Fee") (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services, including
services as Backup Servicer, rendered by it in the execution of the trusts
created by this Agreement and in the exercise and performance of any of the
powers and duties under this Agreement of the Trustee. To the extent not covered
by Article IX, the Depositor and the Servicer shall indemnify, defend, and hold
harmless the Trustee and the Backup Servicer from and against all costs,
expenses (including legal fees and expenses), losses, claims, damages and
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liabilities arising out of or incurred in connection with the acceptance of the
performance of the trusts and duties contained in this Agreement, except to the
extent that such cost, expense, loss, claim, damage or liability is due to the
bad faith or gross negligence (except for errors in judgment) of the Trustee or
the Backup Servicer, respectively. In addition, the Servicer in Section 9.1 has
agreed to indemnify the Trustee with respect to certain matters, and the
Certificateholders in their individual capacity under Section 11.3(c) or (d) may
agree to indemnify the Trustee under certain circumstances. The provisions of
this Section 11.6 shall (i) not be in limitation of the Fee Letter entered into
in connection with this Agreement between the Servicer and the Trustee (ii)
shall not terminate or be deemed released upon the resignation or termination of
Emergent Group, Inc. as the Servicer, or the resignation or termination of the
Trustee or the Backup Servicer and (iii) shall survive any termination of this
Agreement.
Section 11.7. Eligibility Requirements for Trustee. The Trustee under this
Agreement shall at all times be a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority (so long as an Insurer Default shall not have
occurred and be continuing) satisfactory to the Certificate Insurer, and (if
Moody's then has a rating outstanding on the Certificates) with a long-term debt
rating from Moody's of "Baa3" or higher or otherwise acceptable to Moody's. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 11.7, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.7, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.8.
Section 11.8. Resignation or Removal of Trustee. (a) Subject to the
provisions of subsection (c) of this Section , the Trustee may at any time
resign and be discharged from the trusts created by this Agreement by giving
written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer, with the consent of the Certificate Insurer (unless
an Insurer Default shall have occurred and be continuing), shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public officer shall take
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charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer or (so long as
an Insurer Default shall not have occurred and be continuing) the Certificate
Insurer shall remove the Trustee. If the Trustee is removed under the authority
of the immediately preceding sentence, the Servicer or the Certificate Insurer,
as the case may be, shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee. The Servicer shall
also pay all amounts due and owing to the outgoing Trustee. Any successor
trustee shall (so long as an Insurer Default shall not have occurred and be
continuing) be acceptable to the Certificate Insurer.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.8 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.9.
(d) If the Trustee and the Backup Servicer shall be the same Person and the
rights and obligations of the Backup Servicer shall have been terminated
pursuant to Section 10.2, then the Certificate Insurer (or, if an Insurer
Default shall have occurred and be continuing, a Certificate Majority) shall
have the option, by 60 days' prior notice in writing to the Servicer and the
Trustee, to remove the Trustee, and the Certificate Insurer shall not have any
liability to the Trustee, the Depositor, the Servicer or any Certificateholder
in connection with such removal.
Section 11.9. Successor Trustee. (a) Any successor Trustee appointed as
provided in Section 11.8 shall execute, acknowledge and deliver to the Servicer
and the Certificate Insurer, and to its predecessor Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance (except as provided below),
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Trustee; but, on request of the Servicer and the Certificate Insurer, or the
successor trustee, such predecessor Trustee shall, upon payment of its charges
then unpaid, execute and deliver an instrument transferring to such successor
trustee all of the rights, powers and trusts of the Trustee so ceasing to act,
and shall duly assign, transfer and deliver to such successor trustee all
property and money held by such trustee so ceasing to act hereunder. Upon
request of any such successor trustee, the Depositor, on behalf of the Trust,
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers and trusts. The
predecessor Trustee shall deliver to the successor Trustee all documents and
statements held by it under this Agreement or any Related Document; and the
predecessor Trustee and the other parties to the Related Documents shall amend
any Related Document to make the successor Trustee the successor to the
predecessor Trustee thereunder; and the Servicer and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
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reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations. No successor
Trustee shall accept appointment as provided in this Section 11.9 unless at the
time of such acceptance such successor Trustee shall be eligible under the
provisions of Section 11.7. Upon acceptance of appointment by a successor
Trustee as provided in this Section 11.9, the Depositor shall mail notice by
first-class mail of the successor of such Trustee and the address of the
successor Trustee's corporate trust office under this Agreement to each Rating
Agency, the Certificate Insurer and all Certificateholders at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Depositor. The Trustee shall not be liable for acts and omissions of any
Successor Trustee.
Section 11.10. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the business of the Trustee,
shall be the successor of the Trustee under this Agreement, provided such
corporation shall be eligible under the provisions of Section 11.7, without the
execution or filing of any instrument or any further act on the part of any of
the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding. The Trustee or its successor hereunder shall provide the
Servicer and the Certificate Insurer with prompt notice of any such transaction.
Section 11.11. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property or any Financed Vehicle may at the time be located, the
Trustee, with the consent of the Servicer and (so long as an Insurer Default
shall not have occurred and be continuing) the Certificate Insurer, shall have
the power and may execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Property, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust Property,
or any part thereof, and, subject to the other provisions of this Section 11.11,
such powers, duties, obligations, rights and trusts as the Servicer, the Trustee
and (so long as an Insurer Default shall not have occurred and be continuing)
the Certificate Insurer may consider necessary or desirable. If the Servicer
shall not have responded to such appointment within 15 days after the receipt by
it of a request to do so, or if a Servicer Termination Event shall have occurred
and be continuing, the consent of the Servicer shall not be required. No
co-Trustee or separate Trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee under Section 11.7 and no notice
to Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 11.9. Every separate trustee and co-trustee
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shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-Trustee jointly
(it being understood that such separate trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed by the Trustee, the Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) The Servicer, the Trustee and provided no Insurer Default shall
have occurred and be continuing, the Certificate Insurer acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
(b) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(c) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.12. Representations and Warranties of Trustee and Backup
Servicer. Each of the Trustee and Backup Servicer represents and warrants as of
the date of this Agreement that:
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(a) it is a banking corporation duly organized and validly existing
under the laws of the state of its incorporation;
(b) it has full power, authority and legal right to execute, deliver
and perform this Agreement, and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement;
(c) the execution, delivery and performance by it of this Agreement do
not violate any provision of its corporate charter or by-laws; and
(d) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding agreement of it, 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.
Section 11.13. Tax Returns. In the event the Trust shall be required to
file tax returns, the Servicer shall prepare or shall cause to be prepared any
tax returns required to be filed by the Trust and shall remit such returns to
the Trustee for signature on behalf of the Trust at least ten Business Days
before such returns are due to be filed by the Servicer. The Trustee, upon
request, shall furnish the Servicer with all such information known to the
Trustee as may be reasonably required in connection with the preparation of all
tax returns of the Trust.
Section 11.14. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.15. Suit for Enforcement. If a Servicer Termination Event shall
occur and be continuing, the Trustee, in its discretion may (but shall have no
duty or obligation so to proceed), subject to the provisions of Section 11.1,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy as the Trustee, being advised by counsel, shall deem
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most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
Section 11.16. Rights to Direct Trustee. Subject to Section 11.3(c), the
Certificate Insurer (or, if an Insurer Default shall have occurred and be
continuing, a Certificate Majority) shall have the right to direct in writing
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee;
provided, however, that subject to Section 11.1, the Trustee shall have the
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed would be in violation of this Agreement or any of the
Related Documents or would subject it to personal liability against which it has
not been provided indemnity reasonably satisfactory to it or (in the case of
directions provided by a Certificate Majority) be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided further
that nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificate Insurer or the Certificateholders.
ARTICLE XII
TERMINATION
Section 12.1. Termination of the Trust. (a) The respective obligations and
responsibilities of the Depositor, the Servicer, the Certificate Insurer and the
Trustee created by this Agreement and the Trust created by this Agreement shall
terminate upon the latest of (i) the maturity or other liquidation of the last
Receivable (including the purchase as of any Record Date by the Depositor or the
Servicer at its option of the corpus of the Trust as described in Section 12.2)
and the subsequent distribution to Certificateholders pursuant to Section 5.5 of
the amount required to be deposited pursuant to Section 12.2 or (ii) the payment
to Certificateholders of all amounts required to be paid to them pursuant to
this Agreement and the payment to the Certificate Insurer of all amounts payable
or reimbursable to it pursuant to this Agreement and the Insurance Agreement. In
either case, there shall be delivered to the Trustee and the Certificate Insurer
an Opinion of Counsel that all applicable preference periods under federal,
state and local bankruptcy insolvency and similar laws have expired with respect
to the payments pursuant to clause (ii); provided, however, that in no event
shall the Trust created by this Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living on the date
of this Agreement of Rose Kennedy of the Commonwealth of Massachusetts; and
provided, further, that the rights to indemnification under Sections 9.1 and
11.6 shall survive the termination of the Trust. The Servicer shall promptly
notify the Trustee and the Certificate Insurer of any prospective termination
pursuant to this Section 12.1.
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(b) Notice of any final distribution, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and retirement of the Certificates, shall be
given promptly by the Trustee by letter to Certificateholders mailed not earlier
than the 1st day and not later than the seventeenth day of the month of such
final distribution specifying (i) the Distribution Date upon which final payment
of the Certificates shall be made upon presentation and surrender of
Certificates at the office of the Trustee therein specified, (ii) the amount of
any such final payment, and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar at the time such notice is given to Certificateholders. In the event
such notice is given, the Servicer or the Trustee, as the case may be, shall
make deposits into the Collection Account in accordance with Section 5.4, or, in
the case of an optional purchase of Receivables pursuant to Section 12.2, shall
deposit the amount specified in Section 12.2. Upon presentation and surrender of
the Certificates, the Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.5.
(c) In the event that all of the Certificateholders shall not surrender
their Certificates for retirement within six months after the date specified in
the above-mentioned written notice, the Trustee shall have a second written
notice to the remaining Certificateholders to surrender their Certificates for
retirement and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for retirement, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain subject to
this Agreement. As soon as practicable after the termination of the Trust, the
Trustee shall surrender the Policy to the Certificate Insurer for cancellation.
Section 12.2. Optional Purchase of All Receivables. On each Determination
Date as of which the Aggregate Principal Balance is less than 10% of the
Original Aggregate Principal Balance, the Servicer shall have the option to
purchase the corpus of the Trust (with the consent of the Certificate Insurer,
if such purchase would result in a claim on the Policy or would result in any
amount owing to the Certificate Insurer remaining unpaid). To exercise such
option, the Servicer shall pay the aggregate Purchase Amounts for the
Receivables, plus the appraised value of any other property (including the right
to receive any future recoveries) held as part of the Trust, such appraisal to
be conducted by an appraiser mutually agreed upon by the Servicer and the
Certificate Insurer (or the Trustee, if an Insurer Default shall have occurred
and be continuing), and such appraisal to be conducted only in the event that
the Class A Certificateholders have not been paid in full. The Servicer shall
succeed to all interests in and to the Trust Property. The fees and expenses
related to such appraisal shall be paid by the party exercising the option to
purchase.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1. Amendment. (a) This Agreement may be amended by the
Depositor, the Servicer, the Trustee and the Backup Servicer with the prior
written consent of the Certificate Insurer (so long as an Insurer Default shall
not have occurred and be continuing) but without the consent of any of the
Certificateholders, (i) to cure any ambiguity, or (ii) to correct or supplement
any provisions in this Agreement; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of the Certificateholders, provided, further, that if an Insurer
Default has occurred and is continuing, such action shall not amend, modify or
limit the Certificate Insurer's rights under (i) Section 5.5(b), (ii) any rights
to indemnification to which the Certificate Insurer is entitled hereunder or
(iii) any defined terms used in preceding clauses (i) or (ii).
(b) This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Trustee and the Backup Servicer with the prior written consent
of the Certificate Insurer (so long as an Insurer Default shall not have
occurred and be continuing) and with the consent of a Certificate Majority
(which consent of any Certificateholder given pursuant to this Section 13.1(b)
or pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate and of any
Certificate issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Certificate)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate or the Class
A Pass-Through Rate or the Class B Pass-Through Rate or (b) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of all the Certificateholders then outstanding, provided,
further, that if an Insurer Default has occurred and is continuing, such action
shall not amend, modify or limit the Certificate Insurer's rights under (i)
Section 5.5(b), (ii) any rights to indemnification to which the Certificate
Insurer is entitled hereunder or (iii) any defined terms used in preceding
clauses (i) or (ii).
(c) Prior to the execution of any such amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or consent
to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
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(e) It shall not be necessary for the consent of Certificateholders
pursuant to Section 13.1(b) 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 any other
consents of Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and conclusively rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement, in addition to the Opinion of Counsel referred to in Section 13.2(i).
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.
Section 13.2. Protection of Title to Trust. (a) The Depositor or the
Servicer or both shall execute and file such financing statements and cause to
be executed and filed such continuation and other statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Trust, the Trustee and the Certificate Insurer under
this Agreement in the Trust Property and in the proceeds thereof. The Depositor
or the Servicer or both shall deliver (or cause to be delivered) to the Trustee
and the Certificate Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee and the
Certificate Insurer (so long as an Insurer Default shall not have occurred and
be continuing) at least 60 days prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing statements and
continuation statements.
(c) Each of the Depositor and the Servicer shall give the Trustee and the
Backup Servicer and the Certificate Insurer at least 60 days prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement. The Servicer shall at all times maintain each
office from which it services Receivables and its principal executive office
within the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
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and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems (and shall require the
Sub-Servicers to maintain their computer systems) so that, from and after the
time of sale under this Agreement of the Receivables to the Trustee, the
Servicer's master computer records (including any Backup archives) that refer to
any Receivable indicate clearly (with reference to the particular grantor trust)
that the Receivable is owned by the Trust. Indication of the Trust's ownership
of a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable has been paid in full or repurchased
by the Seller, the Originators or the Servicer.
(f) If at any time the Depositor or the Servicer proposes to sell, grant a
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned by the Trust
unless such Receivable has been paid in full or repurchased by the Seller, the
Originators or the Servicer.
(g) The Servicer shall permit the Trustee, the Backup Servicer, the
Certificate Insurer, the Depositor and their respective agents, at any time to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivables or any other portion of the Trust Property.
(h) The Servicer shall furnish to the Trustee, the Backup Servicer, the
Depositor and the Certificate Insurer at any time upon request a list of all
Receivables then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust. The Trustee shall hold any such list and Schedule of Receivables
for examination by interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such Persons of their desire to
conduct an examination.
(i) The Depositor and the Servicer shall deliver to the Trustee and the
Certificate Insurer simultaneously with the execution and delivery of this
Agreement and of each amendment thereto and upon the occurrence of the events
giving rise to an obligation to give notice pursuant to Section 13.2(b) or (c),
an Opinion of Counsel (a) stating that, in the opinion of such Counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee in
the Receivables and the other Trust Property, and reciting the details of such
filing or referring to prior Opinions of Counsel in which such details are
given, (b) stating that, in the opinion of such counsel, no such action is
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necessary to preserve and protect such interest, or (c) stating in the opinion
of such counsel, any action which is necessary to preserve and protect such
interest during the following 12- month period.
(j) The Servicer shall deliver to the Trustee and the Certificate Insurer,
within 90 days after the beginning of each calendar year beginning with the
first calendar year beginning more than three months after the Closing Date, an
Opinion of Counsel, either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee in
the Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no action shall be necessary to preserve and protect
such interest.
Section 13.3. Limitation on Rights of Certificateholders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as provided
in this Section 13.3 or Sections 10.2, 10.5 or 13.1) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties to this Agreement, nor shall anything set forth in this Agreement, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision of this Agreement or any Related Document.
(c) So long as no Insurer Default has occurred and is continuing, except as
otherwise specifically provided herein, whenever Class A Certificateholder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Class A Certificateholders if the Certificate
Insurer agrees to take such action or give such consent or approval. If an
Insurer Default shall have occurred and is continuing, no Certificateholder
shall have any right by virtue or by availing itself of any provisions of this
Agreement to institute any suit, action, or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder previously shall
have given to the Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement and unless also the Certificateholders
evidencing not less than 25% of the sum of the Class A Certificate Balance and
the Class B Certificate Balance, or, if there are no Class A Certificates then
outstanding, by Holders of Class B Certificates evidencing not less than 25% of
the Class B Certificate Balance shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee under
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this Agreement and shall have offered to the Trustee such indemnity reasonably
satisfactory to it as it may require against the costs, expenses and liabilities
to be incurred therein or thereby, and the Trustee, for 30 days after its
receipt of such notice, request, and offer of indemnity, shall have neglected or
refused to institute any such action, suit, or proceeding and during such 30-day
period, no request or waiver inconsistent with such written request has been
given to the Trustee pursuant to and in compliance with this Section 13.3 or
Section 10.5; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Certificateholders shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 13.3, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity. Nothing in this Agreement shall be construed
as giving the Certificateholders any right to make a claim under the Policy.
Section 13.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflicts of laws thereof and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
Section 13.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 13.6. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 8.2 or Section 9.2
and as provided in the provisions of the Agreement concerning the resignation of
the Servicer and the Backup Servicer, this Agreement may not be assigned by the
Depositor or the Servicer without the prior written consent of the Trustee and
the Certificate Insurer (or, if an Insurer Default shall have occurred and be
continuing the Trustee and a Certificate Majority).
Section 13.7. Certificates Nonassessable and Fully Paid. Certificateholders
shall not be personally liable for obligations of the Trust, the Fractional
Undivided Interests represented by the Certificates shall be nonassessable for
any losses or expenses of the Trust or for any reason whatsoever, and
Certificates upon authentication thereof by the Trustee pursuant to Section 7.2
are and shall be deemed fully paid.
80
<PAGE>
Section 13.8. Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this Article
XIII, no other Person shall have any right or obligation hereunder. The
Certificate Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement so long as no
Insurer Default shall have occurred and be continuing. Except as expressly
stated otherwise herein or in the Related Documents, any right of the
Certificate Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Certificate
Insurer in its sole and absolute discretion. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the
Trustee.
Section 13.9. Financial Security as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee on behalf of the Trust, as partial consideration of the issuance of
the Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Certificateholders. The Certificate
Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee. The Certificate Insurer may give or withhold any consent
hereunder in its sole and absolute discretion.
Section 13.10. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 13.11. Notices. All demands, notices and communications under this
Agreement shall be in writing, personally delivered or mailed and shall be
deemed to have been duly given upon receipt (a) in the case of the Servicer, at
the following address: Emergent Group, Inc., 15 South Main Street, Suite 750,
Greenville, South Carolina 29601, (b) in the case of the Trustee, and, for so
long as the Trustee is the Backup Servicer, the Trustee, at its Corporate Trust
Office, Bankers Trust Company, 4 Albany Street, 10th Floor, New York, New York
10006, (c) in the case of each Rating Agency, 99 Church Street, New York, New
York 10007 (for Moody's) and 26 Broadway, New York, New York 10004 (for Standard
& Poor's), and (d) in the case of the Certificate Insurer, Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022, Attention:
Surveillance Department, Re: Emergent Auto Receivables Trust 1996-A, or at such
other address as shall be designated by any such party in a written notice to
81
<PAGE>
the other parties. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register, and any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 13.12. Successors and Assigns. This Agreement shall be binding upon
the parties hereof and their respective successors and assigns, and shall inure
to the benefit of and be enforceable by the parties hereof and their respective
successors and assigns permitted hereunder. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Trustee
and the Certificateholders and their respective permitted successors and
assigns, if any. Any request, notice, direction, consent, waiver or other
instrument or action by any Certificateholder shall bind its successors and
assigns.
82
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
this Pooling and Servicing Agreement to be duly executed by their respective
officers, effective as of the day and year first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By /s/ Glen Stein
---------------------------------
Name: Glen Stein
Title: Vice President
EMERGENT GROUP, INC.,
as Servicer
By /s/ Kevin Mast
---------------------------------
Name: Kevin J. Mast
Title: Treasurer
BANKERS TRUST COMPANY
as Trustee and as Backup Servicer
By /s/ Linda Rakolta
---------------------------------
Name: Linda Rakolta
Title: Vice President
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
[See Exhibit A to the
Unaffiliated Seller's Agreement]
<PAGE>
EXHIBIT A
[FORM OF CLASS A CERTIFICATE]
EMERGENT AUTO RECEIVABLES TRUST 1996-A
6.55% AUTO RECEIVABLES BACKED CERTIFICATE, CLASS A
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company ("DTC") to Issuer ("Emergent Auto Receivables Trust
1996- A") or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
This Certificate evidences a fractional undivided interest in the Class A
Percentage Interest of the Trust, as defined below, the property of which
includes a pool of installment sale contracts secured by new and used
automobiles and light trucks and sold to the Trust by Prudential Securities
Secured Financing Corporation ("PSSFC"). This Certificate does not represent any
interest in or obligation of PSSFC, Emergent Group, Inc. or any of their
respective affiliates thereof. Neither the Class A Certificates nor the
Receivables are insured by any governmental agency.
No. A-1 CUSIP: 29088VAA3
$14,496,000
Certificate Principal Balance Percentage Interest: 100%
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a $14,496,000
nonassessable, fully-paid, 100% Class A Percentage Interest in the Class A
Certificates issued by Emergent Auto Receivables Trust 1996-A (the "Trust")
formed by PSSFC. The Trust hereby agrees to pay to such registered holder its
pro rata share (based on the aggregate Class A Percentage Interest held by such
registered Holder) of the amounts which all Holders of the Class A Certificates
are entitled to receive, as hereinafter set forth in this Class A Certificate
and as more fully set forth in the Agreement (defined below), at all times from
the sources and on the terms and conditions hereinafter set forth and as more
fully set forth in the Agreement.
The Trust was created pursuant to the Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1996, by and among PSSFC, Emergent Group,
Inc., as servicer, and Bankers Trust Company, as trustee of the Trust (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth
<PAGE>
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement.
The property of the Trust includes (as more fully described in the
Agreement) a pool of installment sale contracts for new and used automobiles and
light duty trucks (the "Receivables"), certain monies due thereunder on or after
February 29, 1996, an assignment of security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property securing the
Receivables and held by the Trustee, proceeds from claims on physical damage,
credit life and credit disability insurance policies covering vehicles financed
thereby and the obligors thereunder, certain rights against Dealers and in
contracts with Dealers, all right, title and interest of the Depositor in and to
the Unaffiliated Seller's Agreement and all right, title and interest of the
Seller in and to the Purchase Agreement and Assignment and any and all proceeds
of the foregoing.
This Certificate is one of the duly authorized Certificates designated as
Emergent Auto Receivables Trust 1996-A, 6.55% Auto Receivables Backed
Certificates, Class A (the "Class A Certificates") issued under the Agreement.
Also issued under the Agreement are the Class B Certificate and the Class C
Certificate. The aggregate undivided interest in the Trust evidenced by all
Class A Certificates is 90%. This Class A Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A Certificate, by virtue of the acceptance
hereof, assents and by which such Holder is bound.
With respect to the Class A Certificates registered in the name of Cede &
Co., as nominee of the Depository, the Depositor, the Seller, the Originators,
the Servicer and the Trustee shall have no responsibility or obligation to
Participants or beneficial owners for which the Depository holds Class A
Certificates from time to time as a Depository. Without limiting the immediately
preceding sentence, the Depositor, the Seller, the Originators, the Servicer and
the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Participant with
respect to the ownership interest in any Class A Certificate, (ii) the delivery
to any Participant or any other Person, other than a Certificateholder, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Participant or any other Person, other than a Certificateholder, of any amount
with respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a Certificateholder shall receive a
Certificate evidencing such Class A Certificate.
- ------------------------------------------------------------
A-2
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Class A Certificate to be
duly executed.
EMERGENT AUTO RECEIVABLES TRUST 1996-A
--------------------------------------
By: BANKERS TRUST COMPANY, not in its
individual capacity, but solely as
Trustee
Date: March 27, 1996
A-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates of the Series designated herein,
issued under the within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee
By:
------------------------------------------
- ------------------------------------------------------------
This Class A Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class A Certificateholder, at
its expense, upon a written request to the Trustee: Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group - Structured Finance.
There will be distributed on the 20th day of each month or, if such 20th
day is not a Business Day, the next succeeding Business Day (the "Distribution
Date"), commencing on April 22, 1996, to the person in whose name this Class A
Certificate is registered at the close of business on the last day of the prior
calendar month (the "Record Date"), to the extent available from the Amount
Available, such Class A Certificateholder's fractional undivided interest in the
sum of the Class A Interest Distributable Amount for such Distribution Date, any
outstanding Class A Interest Carryover Shortfall for such Distribution Date, the
Class A Principal Distributable Amount for such Distribution Date and any Class
A Principal Carryover Shortfall for such Distribution Date.
Distributions on this Class A Certificate will be made by the Trustee by
check mailed, or upon request of the Holder hereof to Certificateholders holding
certificates representing at least $3 million in Class A Certificate Balance, by
wire transfer of immediately available funds, to the Person entitled thereto, as
specified by such Person in accordance with the terms of the Agreement or by
such other means as the Person entitled thereto and the Trustee shall agree,
without the presentation or surrender of this Class A Certificate, other than
with respect to the final payment of the Class A Certificateholder, or the
making of any notation hereon.
The Class A Certificates do not represent an obligation of, or an interest
in, the Trustee or any Affiliate thereof. The Class A Certificates are limited
in right of payment to certain collections and recoveries respecting the
Receivables,
A-4
<PAGE>
all as more specifically set forth above in the Agreement. The right to receive
payments with respect to the Class B Certificate and the Class C Certificate is
subordinate to the prior payment in full of all amounts of principal and
interest due and payable on the Class A Certificates on each Distribution Date.
As provided in the Agreement, so long as no Insurer Default has occurred
and is continuing, with certain exceptions whenever Class A Certificateholder
action, consent or approval is required under the Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Class A Certificateholders if the Certificate
Insurer agrees to take such action or give such consent or approval. If an
Insurer Default shall have occurred and is continuing, no Certificateholder
shall have any right by virtue or by availing itself of any provisions of the
Agreement to institute any suit, action, or proceeding in equity or at law upon
or under or with respect to the Agreement, unless such Holder previously shall
have given to the Trustee a written notice of default and of the continuance
thereof, as provided in the Agreement and unless also the Certificateholders
evidencing not less than 25% of the sum of the Class A Certificate Balance and
the Class B Certificate Balance, or, if there are no Class A Certificates then
outstanding, by the Holder of Class B Certificate evidencing not less than 25%
of the Class B Certificate Balance shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
under the Agreement.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of PSSFC
and the Servicer and the rights of the Holders of the Certificates under the
Agreement at any time by the Servicer, PSSFC and the Trustee with the consent of
the Certificate Insurer and the Holders of Certificates, voting together as a
Class, evidencing not less than a Certificate Majority. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Class A Certificates are issuable only as registered Class A
Certificates without coupons in minimum denominations of $1,000,000 and integral
multiples of $1,000 in excess thereof; however, one Certificate may be issued in
a denomination representing or including any remaining portion of the initial
Class A Certificate Balance. As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates of authorized denominations evidencing the same aggregate
Class A Percentage Interest, as requested by the Class A Certificateholder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the
A-5
<PAGE>
Trustee may require payment of a sum sufficient to cover any tax or governmental
charge or expenses payable in connection therewith.
Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of the
Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Certificateholders. The Certificate
Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee. The Certificate Insurer may give or withhold any consent
hereunder in its sole and absolute discretion.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option (subject to the consent of the Certificate
Insurer, as described in the Agreement), purchase the corpus of the Trust at a
price specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only on any Determination Date as of which
the Aggregate Principal Balance is less than 10% of the Original Aggregate
Principal Balance. In the event of such removal, the entire outstanding Class A
Certificate Balance and the Class B Certificate Balance, together with accrued
interest thereon at the Class A Percentage or Class B Percentage, as applicable,
will be required to be paid to the Class A Certificateholders and the Class B
Certificateholder on such Distribution Date.
The Trustee and any agent of the Trustee may treat the person in whose name
this Class A Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any agent shall be affected by any notice to the
contrary.
A-6
<PAGE>
EXHIBIT B
[FORM OF CLASS B CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF CERTAIN PAYMENTS TO THE CLASS
A CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. DISTRIBUTIONS
HEREON ARE SUBJECT TO THE PRIOR RIGHT OF THE CLASS A CERTIFICATEHOLDERS TO
RECEIVE AMOUNTS ON DEPOSIT IN THE SPREAD ACCOUNT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 7.1 OF THE
POOLING AND SERVICING AGREEMENT AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE SATISFACTION OF
CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NEITHER PSSFC, THE
SELLER, THE SERVICER, THE TRUST NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE
PROPOSED TRANSFEREE OF THIS CERTIFICATE HAS DELIVERED AN AFFIDAVIT (OR AN
OPINION OF COUNSEL) TO THE EFFECT THAT SUCH A TRANSFER MAY BE MADE PURSUANT TO
AN EXEMPTION FROM THE SECURITIES ACT, INCLUDING RULE 144A THEREUNDER, AND
APPLICABLE STATE SECURITIES LAWS AND (A) SUCH TRANSFEREE WILL NOT ACQUIRE THIS
CERTIFICATE WITH THE ASSETS OF ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION
3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), (B) NO "PROHIBITED TRANSACTION" UNDER ERISA OR THE CODE WILL OCCUR
IN CONNECTION WITH SUCH TRANSFEREE'S ACQUISITION OF THIS CERTIFICATE OR (C) THE
ACQUISITION OF THIS CERTIFICATE IS SUBJECT
<PAGE>
TO A STATUTORY OR ADMINISTRATIVE EXEMPTION FROM THE "PROHIBITED TRANSACTION"
PROVISIONS OF ERISA AND THE CODE.
EMERGENT AUTO RECEIVABLES TRUST 1996-A
8.25% AUTO RECEIVABLES BACKED CERTIFICATE, CLASS B
This Certificate evidences a fractional undivided interest in the Class B
Percentage Interest of the Trust, as defined below, the property of which
includes a pool of installment sale contracts secured by new and used
automobiles and light trucks and sold to the Trust by Prudential Securities
Secured Financing Corporation ("PSSFC"). This Certificate does not represent any
interest in or obligation of PSSFC, Emergent Financial Corporation or any of
their respective affiliates thereof. Neither the Class B Certificates nor the
Receivables are insured by any governmental agency.
No. B-1 $1,611,339.72
Certificate Principal Balance
Percentage Interest: 100%.
THIS CERTIFIES THAT EMERGENT AUTO HOLDINGS CORP. is the registered owner of
a $1,611,339.72 nonassessable, fully-paid, fractional undivided interest in the
Class B Certificates issued by Emergent Auto Receivables Trust 1996-A (the
"Trust") formed by PSSFC. The Trust was created pursuant to the Pooling and
Servicing Agreement (the "Agreement"), dated as of March, 1996, by and among
PSSFC, Emergent Group, Inc., as servicer, and Bankers Trust Company, as trustee
of the Trust (the "Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement.
The property of the Trust includes (as more fully described in the
Agreement) a pool of installment sale contracts for new and used automobiles and
light duty trucks (the "Receivables"), certain monies due thereunder on or after
February 29, 1996, an assignment of security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property securing the
Receivables and held by the Trustee, proceeds from claims on physical damage,
credit life and disability insurance policies covering vehicles financed thereby
and the obligors thereunder, certain rights against Dealers and in contracts
with Dealers, all right, title and interest of the Depositor in and to the
Unaffiliated Seller's Agreement and all right, title and interest of the Seller
in and to the Purchase Agreement and Assignment and any and all proceeds of the
foregoing.
B-2
<PAGE>
This Certificate is one of the duly authorized Certificates designated as
8.25% Emergent Auto Receivables Trust 1996-A, Auto Receivables Backed
Certificates, Class B (the "Class B Certificates") issued under the Agreement.
Also issued under the Agreement are the Class A Certificates and the Class C
Certificate. The aggregate undivided interest in the Trust evidenced by all
Class B Certificates is 10%. This Class B Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class B Certificate, by virtue of the acceptance
hereof, assents and by which such Holder is bound.________________________
- --------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust has caused this Class B Certificate to be
duly executed.
EMERGENT AUTO RECEIVABLES TRUST 1996-A
--------------------------------------
By: BANKERS TRUST COMPANY, not in its
individual capacity, but solely as
Trustee
Date: March 27, 1996
B-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates of the Series designated herein,
issued under the within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee
By:
-----------------------------------
- ------------------------------------------------------------
This Class B Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class B Certificateholder, at
its expense, upon a written request to the Trustee: Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group - Structured Finance.
There will be distributed on the 20th day of each month or, if such 20th
day is not a Business Day, the next succeeding Business Day (the "Distribution
Date"), commencing on April 22, 1996, to the person in whose name this Class B
Certificate is registered at the close of business on the last day of the prior
calendar month (the "Record Date"), to the extent available from the Available
Funds, such Class B Certificateholder's fractional undivided interest in the sum
of the Class B Interest Distributable Amount for such Distribution Date, the
Class B Principal Distributable Amount for such Distribution Date and any Class
B Principal Carryover Shortfall for such Distribution Date.
Distributions on this Class B Certificate will be made by the Trustee by
check mailed, or upon request of the Holder hereof to Certificateholders holding
Certificates representing at least $3 million in Class B Certificate Balance, by
wire transfer of immediately available funds, to the Person entitled thereto, as
specified by such Person in accordance with the terms of the Agreement or by
such other means as the Person entitled thereto and the Trustee shall agree,
without the presentation or surrender of this Class B Certificate, other than
with respect to the final payment of the Class B Certificateholder, or the
making of any notation hereon.
The Class B Certificates do not represent an obligation of, or an interest
in, the Trustee or any Affiliate thereof. The Class B Certificates are limited
in right of payment to certain collections and recoveries respecting the
Receivables,
B-4
<PAGE>
all as more specifically set forth above in the Agreement. The right to receive
distributions with respect to the Class B Certificates is subordinate to the
prior payment in full of all amounts of principal and interest due and payable
on the Class A Certificates on each Distribution Date.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of PSSFC
and the Servicer and the rights of the Holders of the Certificates under the
Agreement at any time by the Servicer, PSSFC and the Trustee with the consent of
the Certificate Insurer and the Holders of Certificates, voting together as a
Class, evidencing not less than a Certificate Majority. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Class B Certificates are issuable only as registered Class B
Certificates without coupons in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof; however, one Certificate may be issued in
a denomination representing or including any remaining portion of the initial
Class B Certificate Balance. As provided in the Agreement and subject to certain
limitations therein set forth, Class B Certificates are exchangeable for new
Class B Certificates of authorized denominations evidencing the same aggregate
Class B Percentage Interest, as requested by the Class B Certificateholder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of the
Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Certificateholders. The Certificate
Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee. The Certificate Insurer may give or withhold any consent
hereunder in its sole and absolute discretion.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of
B-5
<PAGE>
all property held as part of the Trust. The Servicer of the Receivables may at
its option (subject to the consent of the Certificate Insurer, as described in
the Agreement), purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable only on any Determination Date as of which the Aggregate
Principal Balance is less than 10% of the Original Aggregate Principal Balance.
In the event of such removal, the entire outstanding Class A Certificate Balance
and the Class B Certificate Balance, together with accrued interest thereon at
the related Class A Percentage or Class B Percentage, as applicable, will be
required to be paid to the Class A Certificateholders and the Class B
Certificateholder on such Distribution Date.
The Trustee and any agent of the Trustee may treat the person in whose name
this Class B Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any agent shall be affected by any notice to the
contrary.
B-6
<PAGE>
EXHIBIT C
[FORM OF CLASS C CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF CERTAIN DISTRIBUTIONS TO THE
CLASS A CERTIFICATES AND THE CLASS B CERTIFICATES AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN. DISTRIBUTIONS HEREON ARE SUBJECT TO THE PRIOR RIGHT OF THE
CLASS A CERTIFICATEHOLDERS AND THE CLASS B CERTIFICATEHOLDERS TO RECEIVE AMOUNTS
ON DEPOSIT IN THE SPREAD ACCOUNT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 7.1 OF THE
POOLING AND SERVICING AGREEMENT AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE SATISFACTION OF
CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NEITHER PSSFC, THE
SELLER, THE SERVICER, THE TRUST NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE
PROPOSED TRANSFEREE OF THIS CERTIFICATE HAS DELIVERED AN AFFIDAVIT (OR AN
OPINION OF COUNSEL) TO THE EFFECT THAT SUCH A TRANSFER MAY BE MADE PURSUANT TO
AN EXEMPTION FROM THE SECURITIES ACT, INCLUDING RULE 144A THEREUNDER, AND
APPLICABLE STATE SECURITIES LAWS AND (A) SUCH TRANSFEREE WILL NOT ACQUIRE THIS
CERTIFICATE WITH THE ASSETS OF ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION
3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), (B) NO "PROHIBITED TRANSACTION" UNDER ERISA OR THE CODE WILL OCCUR
<PAGE>
IN CONNECTION WITH SUCH TRANSFEREE'S ACQUISITION OF THIS CERTIFICATE OR (C) THE
ACQUISITION OF THIS CERTIFICATE IS SUBJECT TO A STATUTORY OR ADMINISTRATIVE
EXEMPTION FROM THE "PROHIBITED TRANSACTION" PROVISIONS OF ERISA AND THE CODE.
EMERGENT AUTO RECEIVABLES TRUST 1996-A
AUTO RECEIVABLES BACKED CERTIFICATE, CLASS C
This Certificate evidences a fractional undivided interest in the Class C
Percentage Interest of the Trust, as defined below, the property of which
includes a pool of installment sale contracts secured by new and used
automobiles and light trucks and sold to the Trust by Prudential Securities
Secured Financing Corporation ("PSSFC"). This Certificate does not represent any
interest in or obligation of PSSFC, Emergent Group, Inc. or any of their
respective affiliates thereof. Neither the Class C Certificates nor the
Receivables are insured by any governmental agency.
No. C-1 Percentage Interest: 100%
THIS CERTIFIES THAT EMERGENT AUTO HOLDINGS CORP. is the registered owner of
a fractional undivided interest in the Class C Certificates issued by Emergent
Auto Receivables Trust 1996-A (the "Trust") formed by PSSFC. The Trust was
created pursuant to the Pooling and Servicing Agreement (the "Agreement"), dated
as of March 1, 1996, by and among PSSFC, Emergent Group, Inc., as servicer, and
Bankers Trust Company, as trustee of the Trust (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement.
The property of the Trust includes (as more fully described in the
Agreement) a pool of installment sale contracts for new and used automobiles and
light duty trucks (the "Receivables"), certain monies due thereunder on or after
February 29, 1996, an assignment of security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property securing the
Receivables and held by the Trustee, proceeds from claims on physical damage,
credit life and disability insurance policies covering vehicles financed thereby
and the obligors thereunder, certain rights against Dealers and in contracts
with Dealers, all right, title and interest of the Depositor in and to the
Unaffiliated Seller's Agreement and all right, title and interest of the Seller
in and to the Purchase Agreement and Assignment and any and all proceeds of the
foregoing.
This Certificate is the duly authorized Certificate designated as Emergent
Auto Receivables Trust 1996-A, Auto Receivables Backed Certificates,
C-2
<PAGE>
Class C (the "Class C Certificate") issued under the Agreement. Also issued
under the Agreement are the Class A Certificates and the Class B Certificates.
This Class C Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this Class C
Certificate, by virtue of the acceptance hereof, assents and by which such
Holder is bound.
- ------------------------------------------------------------
IN WITNESS WHEREOF, the Trust has caused this Class C Certificate to be
duly executed.
EMERGENT AUTO RECEIVABLES TRUST 1996-A
--------------------------------------
By: BANKERS TRUST COMPANY, not in its
individual capacity, but solely as
Trustee
Date: March 27, 1996
C-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Class C Certificate of the Series designated herein, issued
under the within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee
By:
---------------------------------------
- ------------------------------------------------------------
This Class C Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class C Certificateholder, at
its expense, upon a written request to the Trustee: Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group - Structured Finance.
There will be distributed on the 20th day of each month or, if such 20th
day is not a Business Day, the next succeeding Business Day (the "Distribution
Date"), commencing on April 22, 1996, to the person in whose name this Class C
Certificate is registered at the close of business on the last day of the prior
calendar month (the "Record Date"), such Class C Certificateholder's fractional
undivided interest in the amount available in the Spread Account in excess of
the Requisite Amount for the next succeeding Distribution Date, after giving
effect to (A) the amounts required to be distributed to the holders of the Class
A Certificates and the Class B Certificates pursuant to the subordination of the
rights of the holders of Class C Certificates, (B) the amount required to be
deposited in the Spread Account and (C) the amounts required to pay the Total
Servicing Fee (including any unpaid Servicing Fees with respect to prior
Collection Periods) payable to the Servicer on such Distribution Date.
Distributions on this Class C Certificate will be made by the Trustee by
check mailed, or upon request of the Holder hereof, by wire transfer of
immediately available funds, to the Class C Certificateholder of record, as
specified by such Certificateholder in accordance with the terms of the
Agreement or by such other means as the Certificateholder entitled thereto and
the Trustee shall agree, without the presentation or surrender of this Class C
Certificate, other than with respect to the final payment of the Class C
Certificateholder, or the making of any notation hereon.
C-4
<PAGE>
The Class C Certificate does not represent an obligation of, or an interest
in, the Trustee or any Affiliate thereof. The Class C Certificate is limited in
right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth above in the Agreement.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of PSSFC
and the Servicer and the rights of the Holders of the Certificates under the
Agreement at any time by the Servicer, PSSFC and the Trustee with the consent of
the Certificate Insurer and the Holders of Certificates, voting together as a
Class, evidencing not less than a Certificate Majority. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Class C Certificate is issuable only as a registered Class C
Certificate without coupons and without denomination. As provided in the
Agreement and subject to certain limitations therein set forth, this Class C
Certificate is exchangeable for new Class C Certificates evidencing the same
aggregate Class C Percentage Interest, as requested by the Class C
Certificateholder surrendering the same. No service charge will be made for any
such registration of transfer or exchange, but the Trustee may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of the
Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Certificateholders. The Certificate
Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee. The Certificate Insurer may give or withhold any consent
hereunder in its sole and absolute discretion.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option (subject to the consent of the Certificate
Insurer, as described in the Agreement), purchase the corpus of the Trust at a
price specified in the Agreement,
C-5
<PAGE>
and such purchase of the Receivables and other property of the Trust will effect
early retirement of the Certificates; however, such right of purchase is
exercisable only on any Determination Date as of which the Aggregate Principal
Balance is less than 10% of the Original Aggregate Principal Balance. In the
event of such removal, the entire outstanding Class A Certificate Balance and
the Class B Certificate Balance, together with accrued interest thereon at the
related Class A Percentage or Class B Percentage, will be required to be paid to
the Class A Certificateholders and the Class B Certificateholder on such
Distribution Date.
The Trustee and any agent of the Trustee may treat the person in whose name
this Class C Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any agent shall be affected by any notice to the
contrary.
C-6
<PAGE>
EXHIBIT D
FORM OF SPREAD ACCOUNT AGREEMENT
[See Spread Account Agreement]
D-1
<PAGE>
EXHIBIT E
FORM OF SERVICER'S CERTIFICATE
EMERGENT GROUP, INC.
Monthly Servicing Report:
Emergent Auto Receivables Trust 1996-A
Collection Period Ending: dd/mm/yy
I. Original Deal Parameter Inputs
(A) Original Total Portfolio $ -
(B) Class A Certificate Ownership Interest of the Trust 0.00%
(C) Original Class A Certificate Balance $ -
(D) Class A Certificate Rate 0.00%
(E) Class B Certificate Ownership Interest of the Trust
(F) Original Class B Certificate Balance
(G) Class B Certificate Rate
(H) Servicing Fee Rate 0.00%
(I) Original Weighted Average Coupon (WAC) 0.00%
(J) Original Weighted Average Remaining Term (WAM) 0.000
(K) Number of Contracts 0
II. Inputs from Previous Monthly Servicer Reports
(A) Total Portfolio Outstanding $ -
(B) Total Portfolio Pool Factor .0000
(C) Class A Certificate Balance $ -
(D) Class A Principal Factor .0000
(E) Class B Certificate Balance
(F) Class B Principal Factor
III. Inputs from Other Sources
(A) Aggregate Net Losses for Collection Period $ -
(B) Number of Vehicles Repossessed During the Collection Period
IV. Pool Balances and Portfolio Information
<TABLE>
<CAPTION>
Beginning Principal End of
(A) Balances and Principal Factors of Period Distribution Period
--------- ------------ ------
<S> <C> <C> <C>
i. Class A Certificate Balance $ - $ - $ -
ii. Class A Principal Factor .0000 .0000
iii. Class B Certificate Balance $ - $ - $ -
iv. Class B Principal Factor .0000 .0000
v. Total Pool Balance $ - $ - $ -
vi. Total Pool Factor .0000 .0000
</TABLE>
(B) Portfolio Information
i. Weighted Average Coupon (WAC) 0.00%
ii. Weighted Average Remaining Maturity (WAM) 0.00%
E-1
<PAGE>
iii. Remaining Number of Contracts 0
V. Collections
(A) Total Principal Payments Received (Excluding Repurchases) $ -
(B) Total Interest Payments Received $ -
(C) Recoveries on Liquidated Receivables $ -
(D) Principal on Repurchased Receivables $ -
(E) Compensating Interest
(F) Late and Penalty Fees
(G) Other Deposits $ -
-------
Total Available Amount $ -
VI. Distributions
(A) Principal Payments Received (Excluding Repurchases) $ -
(B) Principal on Repurchased Contracts $ -
(C) Gross Balance of Liquidated Receivables $ -
-------
(D) Total Principal Reduction $ -
(E) Basic Servicing Fee/Supplemental Servicing Fee $ -
(F) Trustee Fee $ -
(G) Spread Account Trustee Fee $ -
(H) Backup Servicer Fee $ -
(I) Class A Distributable Amount $ -
i. Class A monthly Interest Distributable Amount
ii. monthly Class A Principal Distributable Amount $ -
Class A Principal Carryover Shortfall $ -
(J) Insurer Fee $ -
(K) Spread Account deposits up to Requisite Amount $ -
(L) Class B Distributable Amount $ -
i. Class B Monthly Interest Payment $ -
ii. Monthly Principal to Class B $ -
Class B Principal Carryover Shortfall $ -
(M) Remaining Available Funds to Spread Account $ -
-------
$ -
VII. Reconciliation of Spread Account
(A) Initial Deposit to Spread Account $ -
(B) Beginning Spread Account Balance $ -
(C) Draw for Class A Distributable Amount and Servicing Fee $ -
(D) Amount Available for Deposit to Spread Account $ -
-------
(E) Spread Account Balance Prior to Release $ -
(F) Spread Account Requirement $ -
(G) Spread Account Release to Seller $ -
-------
(H) Ending Spread Account Balance $ -
=======
(I) Ending Spread Account Balance as a % of Outstanding
Portfolio
(J) Requisite Amount $ -
=======
VIII. Tests for Increase in Spread Account Balance
(A) Average Net Loss Rate
i. Second Preceding Collection Period 0.00%
ii. Preceding Collection Period 0.00%
E-2
<PAGE>
iii. Current Collection Period 0.00%
iv. Three Month Average 0.00%
(B) Average Default Rate
i. Second Preceding Collection Period 0.00%
ii. Preceding Collection Period 0.00%
iii. Current Collection Period 0.00%
--------
iv. Three Month Average 0.00%
(C) Average Number of Contracts Over 30 Days Delinquent
i. Second Preceding Collection Period 0.00%
ii. Preceding Collection Period 0.00%
iii. Current Collection Period 0.00%
--------
iv. Three Month Average 0.00%
(D) Has Trigger Event Occurred ___Yes ___No
IX. Additional Information
(A) Has Insurance Agreement Event of Default Occurred ___Yes ___No
E-3
<PAGE>
EXHIBIT F
FORM OF POLICY
[See Certificate Insurance Policy]
<PAGE>
EXHIBIT G
FORM OF UNAFFILIATED SELLER'S AGREEMENT
[See Unaffiliated Seller's Agreement]
G-1
<PAGE>
EXHIBIT H
FORM OF PURCHASE AGREEMENT AND ASSIGNMENT
[See Purchase Agreement]
H-1
<PAGE>
EXHIBIT I
REQUEST BY THE SERVICER [OR SUB-SERVICER] FOR TEMPORARY
RELEASE OF RECEIVABLES AND LIEN CERTIFICATES
TO: Bankers Trust Company,
as Trustee
Four Albany Street
New York, New York 10006
Attention: Corporate Trust Office
Gentlemen:
In connection with the administration of the Receivables held by you as
Trustee, under the Pooling and Servicing Agreement dated as of March 1, 1996
among Emergent Group, Inc., as Servicer, Prudential Securities Secured Financing
Corporation, as Depositor, and you, as Trustee and Backup Servicer, the
undersigned requests the temporary release of the Receivables and the related
Lien Certificates for the Receivables identified in the schedule attached to
this Request.
[EMERGENT GROUP, INC.] [THE LOAN
PRO$, INC.] [PREMIER FINANCIAL
SERVICES, INC.]
as [Servicer] [Sub-Servicer]*
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
ACKNOWLEDGED BY:
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
* The signature of the Servicer or either Sub-Servicer will suffice.
I-1
<PAGE>
The Emergent Group, Inc.
The Loan Pro$, Inc. and Premier Financial Services, Inc.
Request for Receivables and Lien Certificates
- --------------------------------------------------------------------------------
Branch Number
-------------------------------------
Account Number
-------------------------------------
Loan Number
-------------------------------------
Account Name
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Document(s) Needed:
-------------------
[ ] Note
[ ] Automobile Title
Vehicle Identification Number (VIN)
-----------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reason For Item Request:
------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Return Document(s) to Branch by:
--------------------------------
[ ] OVERNIGHT EXPRESS DELIVERY
Address to Send Document: (e.g., Federal Express)
------------------------- [ ] REGULAR MAIL
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------- --------------------
Name (Printed) of Individual Requesting Documents Phone Number
- ---------------------------------------------------- --------------------
Signature of Individual Requesting Documents Date of Request
Attention Branches:
Send this Document to: Send a copy of this document to:
---------------------- --------------------------------
Christopher Murray Vick Crowley
Bankers Trust Company Emergent Group, Inc.
4 Albany Street, 10th Floor P.O. Box 17526
New York, NY 10006 Greenville, SC 29606
Fax: (212) 250-6439 Fax: (864) 271-6374
I-A
<PAGE>
EXHIBIT J
FORM OF DEFICIENCY NOTICE
NOTICE UNDER MASTER SPREAD ACCOUNT AGREEMENT
EMERGENT AUTO RECEIVABLES TRUST
SERIES 1996-A
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Emergent Group, Inc.
15 South Main Street, Suite 750
Greenville, South Carolina 29601
The undersigned, a duly authorized officer of Bankers Trust Company, as
trustee (the "Trustee"), hereby certifies to Financial Security Assurance Inc.
(the "Collateral Agent") and Emergent Group, Inc. (the "Servicer"), with
reference to the Master Spread Account Agreement in respect of the $14,496,000
Emergent Auto Receivables Trust 1996-A, Auto Receivables Backed Certificates,
Class A (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of March 1, 1996 (the "Agreement") among Prudential
Securities Secured Financing Corporation, as Company, Emergent Group, Inc.,
as Servicer, and the Trustee, as trustee for the Holders;
(ii) the sum of the amounts payable on the Distribution Date occurring
on _____________ (the "Applicable Distribution Date") pursuant to clauses
(i) through (v) of Section 5.5(b) of the Agreement is $_____________;
(iii) the Available Funds for the Class A Certificates for the
Distribution Date occurring on the Applicable Distribution Date is
$_______________;
(iv) the amount by which (ii) above exceeds (iii) above is
$_______________ (the "Deficiency Claim Amount");
(v) the Trustee is making a claim under and pursuant to the terms of
the Master Spread Account Agreement for the Deficiency Claim Amount to be
applied to payment of (ii) above for the Applicable Distribution Date in
accordance with the Agreement; and
(vi) the Trustee directs that payment of the Deficiency Claim Amount
be made to the following account by bank wire transfer of federal or other
immediately available funds: Collection Account.
Any capitalized term used in this Notice and not otherwise defined herein
shall have the meaning assigned thereto in the Master Spread Account Agreement.
J-1
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Master Spread Account Agreement as of the 1st day of March, 1996.
BANKERS TRUST COMPANY
By
-----------------------------
Title
--------------------------
J-2
<PAGE>
EXHIBIT K
FORM OF NOTICE
TO FINANCIAL GUARANTY INSURANCE POLICY
NUMBER:50450-N
NOTICE UNDER FINANCIAL GUARANTY
INSURANCE POLICY NUMBER:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
The undersigned, a duly authorized officer of Bankers Trust Company, as
trustee (the "Trustee"), hereby certifies to Financial Security Assurance Inc.
(the "Insurer"), with reference to the Financial Guaranty Insurance Policy
Number (the "Policy") issued by the Insurer in respect of the $14,496,000
Emergent Auto Receivables Trust 1996-A, Auto Receivables Backed Certificates,
Class A (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of March 1, 1996 (the "Agreement") among Prudential
Securities Secured Financing Corporation, as Company, Emergent Group, Inc.,
as Servicer, and the Trustee, as trustee for the Holders;
(ii) the Class A Interest Distributable Amount for the Class A
Certificates for the Distribution Date occurring on _____________ (the
"Applicable Distribution Date") is $__________;
(iii) the Class A Principal Distributable Amount for the Class A
Certificates for the Applicable Distribution Date is $_____________;
(iv) the Amount Available with respect to the Applicable Distribution
Date is $_____________;
(v) the Amount by which the sum of (ii) and (iii) above exceeds (iv)
above is $______________ (the "Policy Claim Amount");
(vi) the Trustee is making a claim under and pursuant to the terms of
the Policy for the Insured Payment to be applied to payment of the sum of
(ii) and (iii) above for the Applicable Distribution Date in accordance
with the Agreement; and
(vii) the Trustee directs that payment of the Policy Claim Amount be
made to the following account by bank wire transfer of federal or other
immediately available funds: Collection Account.
Any capitalized term used in this Notice and not otherwise defined herein
shall have the meaning assigned thereto in the Master Spread Account Agreement.
K-1
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the ___ day of ____________, ____.
BANKERS TRUST COMPANY
By
-----------------------------
Title
--------------------------
K-2
<PAGE>
EXHIBIT L
FORM OF INVESTMENT LETTER
Emergent Group, Inc.
15 S. Main Street, Suite 750
Greenville, SC 29601
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Bankers Trust Company
4 Albany Street
10th Floor
New York, NY 10006
Re: Emergent Auto Receivables Trust 1996-A,
8.25% Auto Receivables Backed Certificates,
Class B and Auto Receivables Backed
Certificate, Class C (the "Certificates")
Ladies and Gentlemen:
____________________ (the "Seller") intends to transfer the captioned
Certificates to _________________ (the "Purchaser"), for registration in the
name of _________________________________.
1. In connection with such transfer, and in accordance with Section 7.3 of
the Pooling and Servicing Agreement, dated as of March 1, 1996 (the "Agreement";
all capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Agreement), between Emergent Group, Inc. (the
"Company"), Prudential Securities Secured Financing Corporation and Bankers
Trust Company, not in its individual capacity but solely as Trustee (the
"Trustee") and Backup Servicer, pursuant to which the Certificates were issued,
the Seller hereby certifies to you the following facts: Neither the Seller nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action which would constitute a distribution of the Certificates under
the Securities Act of 1933, as amended (the "1933 Act"), or under state
securities laws, or which would render the disposition of the Certificates a
violation of Section 5 of the 1933 Act or applicable state securities laws or
require registration pursuant thereto.
L-1
<PAGE>
2. The Purchaser warrants and represents to, and covenants with, the
Trustee pursuant to Section 7.3 of the Agreement that:
(a) The Purchaser agrees to be bound, as Certificateholder, by all of
the terms, covenants and conditions of the Agreement and the Certificates,
and from and after the date hereof, the Purchaser assumes for the benefit
of each of the Trustee, Financial Security Assurance Inc. ("Financial
Security") and the Seller all of the Seller's obligations as
Certificateholder thereunder;
(b) The Purchaser understands that the Certificates have not been and
may never be registered under the 1933 Act or the securities laws of any
state;
(c) The Purchaser is acquiring the Certificates for investment for its
own account or the account of another qualified institutional buyer (within
the meaning of Rule 144A under the 1933 Act) only and not for any other
person or with a view to the distribution thereof in violation of
applicable securities laws;
(d) The Purchaser is an "accredited investor" within the meaning of
Rule 501 under the 1933 Act, and considers itself a substantial,
sophisticated institutional investor having such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of investment in the Certificates;
(e) The Purchaser has been furnished with all information regarding
the Certificates that it has requested from the Seller or the Trustee and
has been afforded the opportunity to ask all questions it reasonably
desires to ask of the Seller (and all such questions have been answered to
the Purchaser's satisfaction); and
(f) Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar
security with, any person in any manner, or made any general solicitation
by means of general advertising or in any other manner, or taken any other
action which, with respect to any such action, would constitute a
distribution of the Certificates under the 1933 Act or applicable state
securities laws or which would render the disposition of the Certificates a
violation of Section 5 of the 1933 Act or applicable state securities laws
or require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with
respect to the Certificates.
3. The Purchaser is not acquiring (or considered to be acquiring) the Note
with the assets of (a) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
subject to Title I of ERISA, (b) a plan described in Section 4975 of the
Internal Revenue Code of 1986, as amended, or (c) any entity whose underlying
assets include plan assets by reason of an investment in such entity by a plan
described in (a) or (b) above.
L-2
<PAGE>
4. The Purchaser agrees that neither the Certificates nor any interest
therein will be sold, transferred or otherwise disposed of (except for sales to
the Company) unless registered under the 1933 Act or similar successor law,
without first having presented to the Seller and the Trustee or their counsel a
written opinion of counsel, satisfactory to the Seller and the Trustee in form
and substance, experienced in securities laws matters and satisfactory to the
Seller and the Trustee, indicating that the proposed transfer will not be in
violation of any of the registration provisions of the 1933 Act or similar
successor law. In any event and regardless of when such sale, transfer or other
disposition of the Certificates or any interest therein takes place (except for
sales to the Company), no such sales, transfers or other dispositions may be
made without first having presented to the Seller and the Trustee or their
counsel (i) a written opinion, satisfactory to the Seller and the Trustee in
form and substance, of such counsel, indicating exemption from or compliance
with or qualification under all applicable state securities, or "blue sky" laws,
and (ii) the Purchaser's indemnification of the Seller against any liabilities,
costs or expenses which might result should such disposition (or any action by
any broker or dealer in connection with the foregoing) violate or be alleged to
violate the 1933 Act, the rules and regulations promulgated thereunder or any
other applicable federal laws or state securities or "blue sky" laws and
regulations or any court or administrative decision, but only as a result of any
act or omission committed by the Purchaser in connection with any such transfer,
sale or other disposition.
4. The Purchaser agrees to indemnify the Seller and hold it harmless from
and against any and all damages suffered and liabilities incurred by the Seller
(including costs of investigation and defense and attorneys' fees) arising out
of any inaccuracy in, or breach of, the agreements, representations, covenants
and warranties which the Purchaser has made herein.
5. The Purchaser agrees that it will obtain from any subsequent purchaser
of the Certificates substantially the same representations, warranties,
covenants and agreements contained herein and acknowledges that any transfer of
the Certificates by the Purchaser will comply with Section 7.3 of the Agreement.
6. This Investment Letter may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Investment Letter to be
executed by their duly authorized officers as of the date first above written.
- ------------------------------, -----------------------------,
Seller Purchaser
By: By:
---------------------------- ----------------------------
Its: Its:
--------------------------- ---------------------------
Taxpayer Identification Taxpayer Identification
No. No.
-------------------- ---------------------
L-3
<PAGE>
EXHIBIT M
OFFICER'S CERTIFICATE
REQUEST BY THE SERVICER FOR PERMANENT RELEASE
OF RECEIVABLES AND LIEN CERTIFICATES
TO: Bankers Trust Company,
as Trustee
Four Albany Street
New York, New York 10006
Attention: Corporate Trust Office
Gentlemen:
In connection with the payment in full of the Receivables held by you as
Trustee, under the Pooling and Servicing Agreement dated as of March 1, 1996
among Emergent Group, Inc., as Servicer, Prudential Securities Secured Financing
Corporation, as Depositor, and you, as Trustee and Backup Servicer, the
undersigned requests the release of the Receivables and the Lien Certificates
(and the related Receivables Files if applicable) for the Receivables identified
in the schedule attached to this Request.
The undersigned hereby certifies that any and all payments received on the
Receivables identified in the schedule attached to this Request which are
required to be deposited in the Collection Account pursuant to Section 3.1 of
such Pooling and Servicing Agreement have been so deposited.
EMERGENT GROUP, INC.
as Servicer
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date:
---------------------------
ACKNOWLEDGED BY:
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date:
---------------------------
M-1
<PAGE>
The Emergent Group, Inc.
The Loan Pro$, Inc. and Premier Financial Services, Inc.
Request for Receivables and Lien Certificates
- --------------------------------------------------------------------------------
Branch Number
-------------------------------------
Account Number
-------------------------------------
Loan Number
-------------------------------------
Account Name
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Document(s) Needed:
-------------------
[ ] Note
[ ] Automobile Title
Vehicle Identification Number (VIN)
-----------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reason For Item Request:
------------------------
[ ] Loan Paid in Full (Date of Pay-Off:__________)
[ ] Other (Explain)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Return Document(s) to Branch by:
--------------------------------
[ ] OVERNIGHT EXPRESS DELIVERY
Address to Send Document: (e.g., Federal Express)
------------------------- [ ] REGULAR MAIL
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------- --------------------
Name (Printed) of Individual Requesting Documents Phone Number
- ---------------------------------------------------- --------------------
Signature of Individual Requesting Documents Date of Request
Attention Branches:
Send this Document to: Send a copy of this document to:
---------------------- --------------------------------
Christopher Murray Vick Crowley
Bankers Trust Company Emergent Group, Inc.
4 Albany Street, 10th Floor P.O. Box 17526
New York, NY 10006 Greenville, SC 29606
Fax: (212) 250-6439 Fax: (864) 271-6374
M-A
Exhibit 4.2
MASTER SPREAD ACCOUNT AGREEMENT
dated as of March 1, 1996,
among
EMERGENT AUTO HOLDINGS CORP.
THE EMERGENT COMPANIES
(as defined herein)
FINANCIAL SECURITY ASSURANCE INC.
and
BANKERS TRUST COMPANY
as Trustee and as Spread Account Trustee
<PAGE>
MASTER SPREAD ACCOUNT AGREEMENT
MASTER SPREAD ACCOUNT AGREEMENT, dated as of March 1, 1996 (the
"Agreement"), by and among EMERGENT AUTO HOLDINGS CORP., a Delaware corporation
(the "Seller"), EMERGENT GROUP, INC., a South Carolina corporation ("Emergent
Parent"), THE LOAN PRO$, INC., a South Carolina corporation ("Loan Pro$"),
Premier Financial Services, Inc., a South Carolina corporation ("Premier")
(Emergent Parent, Loan Pro$ and Premier, collectively, the "Emergent
Companies"), FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company ("Financial Security") and BANKERS TRUST COMPANY, a New York banking
corporation in its capacities as Trustee under each Pooling and Servicing
Agreement referred to below, in such capacity as agent for the
Certificateholders with respect to the related Series (the "Trustee") and as
Spread Account Trustee (as defined below).
RECITALS
1. Emergent Auto Receivables Trust, 1996-A (the "Series 1996-A Trust") was
formed pursuant to a Pooling and Servicing Agreement, dated as of March 1, 1996
(the "Series 1996-A Pooling and Servicing Agreement"), among Prudential
Securities Secured Financing Corporation as depositor (the "Depositor"),
Emergent Parent as servicer (the "Servicer") and the Trustee, as Trustee and as
Backup Servicer.
2. Pursuant to the Series 1996-A Pooling and Servicing Agreement, the
Depositor sold to the Series 1996-A Trust all of its right, title and interest
in and to the Receivables and certain other Trust Property in exchange for the
Series 1996-A Certificates.
3. Pursuant to the Series 1996-A Unaffiliated Seller's Agreement, the
Seller sold to the Depositor all of its right, title and interest in and to the
Receivables and certain other Trust Property.
4. The Seller requested that Financial Security issue the Series 1996-A
Policy to the Trustee to guarantee payment of the Guaranteed Distributions (as
defined in such Policy) on each Distribution Date in respect of the Series
1996-A Certificates.
5. In partial consideration of the issuance of the Series 1996-A Policy,
the Seller has agreed that Financial Security shall have certain rights as
Controlling Party, to the extent set forth herein with respect to the Series
1996-A Trust.
6. The Seller is a jointly-owned special purpose subsidiary of Loan Pro$
and Premier and is the agent of the Reversionary Holders.
7. In order to secure the performance of the Obligations, the Seller, in
its capacity as the agent of the Reversionary Holders and initial Reversionary
Holder, has agreed to assign to the Spread Account Trustee the Property for the
1
<PAGE>
benefit of Financial Security and for the benefit of the Trustees on behalf of
the Trusts, upon the terms and conditions set forth herein.
8. It is contemplated that the Servicer may enter into one or more
additional Pooling and Servicing Agreements with the Trustee pursuant to which
the Depositor will sell all of its right, title and interest in pools of
Receivables, and that Financial Security in its discretion may issue additional
Policies with respect to certain guaranteed distributions on the corresponding
additional Series of Certificates. In connection with any such issuance of
additional Policies, it is contemplated that Financial Security will obtain
certain Controlling Party rights with respect to the related Series, and that,
in connection with each such additional Series, the parties hereto will enter
into a Series Supplement hereto pursuant to which the Seller will assign, or
cause to be assigned, additional Property pursuant to the terms hereof.
A G R E E M E N T S
In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Unless defined in this Agreement, capitalized
terms used in this Agreement shall have the meaning given such terms in the
applicable Series Pooling and Servicing Agreement or Series Supplement, as
identifiable from the context in which such term is used. The following terms
shall have the following respective meanings:
"Authorized Officer" means, (i) with respect to Financial Security, the
Chairman of the Board, the President, the Executive Vice President or any
Managing Director of Financial Security, (ii) with respect to the Trustees or
the Spread Account Trustee, any Responsible Officer thereof, (iii) with respect
to the Emergent Companies, the President, any Vice President or Treasurer
thereof and (iv) with respect to the Seller, the President, any Vice President
or Treasurer thereof.
"Certificate" means any "certificates" or "notes" issued under a Pooling
and Servicing Agreement.
"Collection Account" means the Collection Account applicable to any Series,
as specified in the related Pooling and Servicing Agreement.
2
<PAGE>
"Controlling Party" means with respect to a Series, at any time, the Person
designated as the Controlling Party at such time pursuant to Section 6.01
hereof.
"Deemed Cured" means, as of a Determination Date, with respect to a Trigger
Event that has occurred with respect to a Series, that no Trigger Event with
respect to such Series shall have occurred as of such Determination Date or as
of any of the three consecutively preceding Determination Dates.
"Default" means with respect to any Series, at any time, (i) if Financial
Security is then the Controlling Party with respect to such Series, any
Insurance Agreement Event of Default with respect to such Series, and (ii) if
the Trustee is then the Controlling Party with respect to such Series, any
Servicer Termination Event with respect to such Series.
"Delinquency Claim Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.
"Depositor" means, with respect to the Series 1996-A Certificates,
Prudential Securities Secured Financing Corporation, a Delaware corporation and,
with respect to any other Series, the Person named as "Depositor" in the related
Series Supplement.
"Designated Parties" means Financial Security and the Trustee.
"Final Termination Date" means, with respect to a Series, the date that is
the later of (i) the Insurer Termination Date with respect to such Series and
(ii) the Trustee Termination Date with respect to such Series.
"Financial Security Default" means, with respect to any Series, any one of
the following events shall have occurred and be continuing:
(a) Financial Security shall have failed to make a payment required
under the related Policy;
(b) Financial Security shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii)
made a general assignment for the benefit of its creditors, or (iii) had an
order for relief entered against it under the United States Bankruptcy Code
or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is final
and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for Financial Security or for all or
3
<PAGE>
any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of Financial Security
(or the taking of possession of all or any material portion of the property
of Financial Security.)
"Guaranteed Distribution" shall have the meaning set forth in the related
Policy.
"Initial Principal Amount" means $16,107,339.72 with respect to Series
1996-A.
"Initial Spread Account Deposit" means $1,288,587.18 for Series 1996-A.
"Insurance Agreement" means, with respect to any Series, the Insurance and
Indemnity Agreement among Financial Security, the Emergent Companies and the
Seller and such other parties as may be named therein, pursuant to which
Financial Security issued a Policy to the Trustee.
"Insurer Obligations" means, with respect to a Series, all amounts and
obligations which may at any time be owed to or on behalf of Financial Security
(or any agents, accountants or attorneys for Financial Security) under the
Insurance Agreement related to such Series or under any Transaction Document in
respect of such Series, regardless of whether such amounts are owed now or in
the future, whether liquidated or unliquidated, contingent or non-contingent.
"Insurer Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date of the expiration of all Policies issued in
respect of such Series, (ii) the date on which Financial Security shall have
received payment and performance in full of all Insurer Obligations with respect
to such Series and (iii) the latest date on which any payment referred to above
could be avoided as a preference or otherwise under the United States Bankruptcy
Code or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, as specified in an
Opinion of Counsel delivered by the Seller to the Spread Account Trustee and the
Trustee.
"Interests" means, with respect to the Series 1996-A Certificates, the
interests and Liens in the Series 1996-A Property granted pursuant to Section
2.03 hereof, and, with respect to any other Series, the interests and Liens in
the related Property granted pursuant to the related Series Supplement.
"Non-Controlling Party" means with respect to a Series at any time, the
Designated Party that is not the Controlling Party at such time.
"Obligations" means, with respect to each Series the Insurer Obligations
with respect to such Series and the Trustee Obligations with respect to such
Series.
4
<PAGE>
"Opinion of Counsel" means a written opinion of counsel acceptable, as to
form, substance and issuing counsel, to the Controlling Party.
"Policy" means the Series 1996-A Policy and any insurance policy
subsequently issued by Financial Security with respect to a Series.
"Pooling and Servicing Agreement" means, with respect to the Series 1996-A
Certificates, the Series 1996-A Pooling and Servicing Agreement and, for each
other Series created pursuant to a Pooling and Servicing Agreement, the "Pooling
and Servicing Agreement" or the "Indenture" related to such Series, as
identified on the related Series Supplement.
"Property" means the Series 1996-A Property, and with respect to any other
Series, all collateral delivered hereunder with respect to each of such Series,
as specified in the related Series Supplement.
"Requisite Amount" means, with respect to Series 1996-A as of any
Determination Date after giving effect to any Principal Distribution to be made
on the related Distribution Date, the greater of (a) the lesser of (i) 3% of the
sum of the initial Class A Certificate Balance and the Class B Certificate
Balance and (ii) the greater of (A) the sum of the then current Class A
Certificate Principal Balance and the then current Class B Certificate Balance,
and (B) $100,000 and (b) (i) if no Trigger Event shall exist as of such
Determination Date, and no Insurance Agreement Event of Default shall have
occurred as of such Determination Date, 10% of the Certificate Balance; (ii) if
a Trigger Event shall have occurred as of such Determination Date (and until
such Trigger Event is Deemed Cured) and no Insurance Agreement Event of Default
shall have occurred as of such Determination Date, 15% of the Certificate
Balance; or (iii) if an Insurance Agreement Event of Default shall have occurred
as of such Determination Date, an unlimited amount. "Requisite Amount", with
respect to any other Series, shall have the meaning set forth in the related
Series Supplement.
"Reversionary Holder" has the meaning set forth in Section 2.01 hereof.
"Series 1996-A Certificates" means the Series of Certificates issued
pursuant to the Series 1996-A Pooling and Servicing Agreement.
"Series 1996-A Property" has the meaning specified in Section 2.03(a)
hereof.
"Series 1996-A Insurance Agreement" means the Insurance Agreement related
to the Series 1996-A Certificates.
"Series 1996-A Obligations" means the Obligations related to the Series
1996-A Certificates.
5
<PAGE>
"Series 1996-A Pooling and Servicing Agreement" means the Pooling and
Servicing Agreement, dated as of the date hereof, among Prudential Securities
Secured Financing Corporation, as Depositor, Emergent Parent, as Servicer, and
the Trustee, as Trustee and Backup Servicer, as such agreement may be
supplemented, amended or modified from time to time.
"Series 1996-A Reversionary Holder" has the meaning set forth in Section
2.01 hereof.
"Series of Certificates" or "Series" means the Series 1996-A Certificates
or, as the context may require, any other series of Certificates issued as
described in Section 2.02 hereof, or collectively, all such series.
"Series Supplement" means a supplement hereto executed by the parties
hereto in accordance with Section 2.02 hereof.
"Spread Account" has the meaning specified in Section 3.01(a) hereof.
"Spread Account Eligible Investments" means Eligible Investments held by
the Spread Account Trustee in a Spread Account and with respect to which (a) the
Spread Account Trustee has noted the Secured Parties' interest therein on its
books and records, and (b) either (i) such investments are in the possession of
the Spread Account Trustee, or (ii) the Spread Account Trustee has, with respect
to investments comprised of securities, purchased such securities for value in
good faith without notice of any adverse claim thereto, and which securities (A)
if certificated and in bearer form, have been delivered to the Spread Account
Trustee, or if in registered form, have been issued or endorsed to the Spread
Account Trustee or in blank, (B) if uncertificated, the transfer of which is
registered on the books of the issuer, or (C) have been transferred (x) through
acquisition or possession by a financial intermediary of a certificated security
specifically indorsed to or issued in the name of the Spread Account Trustee, or
(y) through confirmation by a financial intermediary (not a clearing
corporation) of the Spread Account Trustee's purchase of a certificated security
and appropriate identification of its interest in the records of such
intermediary, or (z) through the making of appropriate entries to the Spread
Account Trustee's (or its designee's) account on the books of a clearing
corporation in accordance with Section 8-320 of the applicable Uniform
Commercial Code. Any such Spread Account Eligible Investment may be purchased by
or through the Spread Account Trustee or any of its affiliates.
"Spread Account Shortfall" means, with respect to any Series and any
Distribution Date, the excess, if any, of (1) the Requisite Amount for such
Series as of such Distribution Date, over (2) the amount on deposit in the
related Spread Account after making any withdrawals therefrom required by
priority FOURTH of Section 3.03(b) hereof.
"Spread Account Trustee" means, initially, Bankers Trust Company in its
capacity as Spread Account Trustee on behalf of the Designated Parties,
including its successors in interest, until a successor Person shall have become
6
<PAGE>
the Spread Account Trustee pursuant to Section 4.05 hereof, and thereafter
"Spread Account Trustee" shall mean such successor Person.
"Spread Account Trustee Fee" means the monthly fee payable on each
Distribution Date to the Spread Account Trustee for services rendered by it as
agreed upon in a side letter between the Spread Account Trustee and Emergent
Parent.
"Stock Pledge Agreement" means the Stock Pledge and Collateral Agency
Agreement, dated as of March 1, 1996, among the Emergent Companies, Financial
Security and the Spread Account Trustee.
"Transaction Documents" means, with respect to a Series, this Agreement,
each of the Pooling and Servicing Agreement, the Insurance Agreement, the
Indemnification Agreement, the Unaffiliated Seller's Agreement, the Purchase
Agreement and the Stock Pledge Agreement related to such Series.
"Trigger Event" means, with respect to Series 1996-A, as of any
Determination Date with respect to Series 1996-A that any one of the following
events shall have occurred and shall not have terminated: (a) the Average
Delinquency Ratio as of such Determination Date is equal to or greater than 18%;
or (b) the Average Default Rate as of such Determination Date is equal to or
greater than 30%; or (c) the Average Net Loss is equal to or greater than 10%. A
Trigger Event will be deemed to have terminated as of a Determination Date if as
of each of the two most recent Determination Dates and the current Determination
Date no event constituting a Trigger Event shall exist.
"Trust" means a trust formed pursuant to a Pooling and Servicing Agreement.
"Trust Property" with respect to any Series means the property held in the
estate of the Trust formed pursuant to the related Pooling and Servicing
Agreement.
"Trustee" means with respect to any Series, the Trustee named in the
related Pooling and Servicing Agreement.
"Trustee Obligations" means, with respect to a Series, the amount of all
related Deficiency Claim Amounts requested from the Spread Account Trustee under
the related Pooling and Servicing Agreement, together with all other amounts and
obligations which the Emergent Companies or the Seller may at any time owe to or
on behalf of the Trustee, the Trust or the Certificateholders under the
Unaffiliated Seller's Agreement with respect to such Series or the Purchase
Agreement with respect to such Series.
"Trustee Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date on which the Trustee shall have received, as
Trustee for the holders of the Certificates of such Series, payment and
performance in full of all Trustee Obligations arising out of or relating to
7
<PAGE>
such Series and (ii) the date on which all payments in respect of the
Certificates shall have been made and the related Trust shall have been
terminated pursuant to the terms of the related Pooling and Servicing Agreement
and (iii) the latest date on which any payment referred to above could be
avoided as a preference or otherwise under the United States Bankruptcy Code or
any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, as specified in an Opinion of
Counsel delivered to the Spread Account Trustee and the Trustee.
"Underwriting Agreement" means, with respect to any Series, the
Underwriting Agreement between the Depositor and the Underwriter named therein.
"Unearned Interest" means, with respect to any Receivable as of any
Determination Date, all interest on such Receivable which is unpaid as of such
Determination Date, whether or not such interest is due.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code in
effect in the relevant jurisdiction, as the same may be amended from time to
time.
"Unreimbursed Amounts" has the meaning specified in Section 3.03(b) hereof.
Section 1.02. Rules of Interpretation. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article," "Section," "Appendix," "Exhibit" or "Annex" shall refer to an
Article or Section of, or Appendix, Exhibit or Annex to, this Agreement. The
definition of a term shall include the singular, the plural, the past, the
present, the future, the active and the passive forms of such term. A term
defined herein and used herein preceded by a Series designation, shall mean such
term as it relates to the Series designated.
ARTICLE II.
REVERSIONARY HOLDERS; SERIES SUPPLEMENTS; THE PROPERTY
Section 2.01. Reversionary Holders. It is anticipated that, pursuant to
each Pooling and Servicing Agreement, at least two classes of securities will be
issued; a senior class, with respect to which certain distributions will be
insured by Financial Security, and a subordinate class, with respect to which
all or certain distributions thereon will be deposited into the Spread Account
prior to such distributions being distributed to the Holders of such subordinate
class. With respect to any Series, the Holders of the subordinate class which
will ultimately be entitled to receive distributions of amounts released from
the Spread Account are the "Reversionary Holders". To the extent that any future
Pooling and Servicing Agreement is styled as an indenture pursuant to which the
8
<PAGE>
securities issued thereunder are in the form of debt, the Seller shall be the
Reversionary Holder, unless otherwise specified in the related Series
Supplement. The "Reversionary Holders" with respect to the Series 1996-A
Certificates are the Holders of the "Class C Certificates" issued pursuant to
the Series 1996-A Pooling and Servicing Agreement (the "1996-A Reversionary
Holders").
It is intended by the parties hereto, including the Seller in its capacity
as the agent of the Reversionary Holders, that the Property shall constitute
property held in trust by the Spread Account Trustee, to provide for the payment
of the Obligations, and that such Property and any property rights appurtenant
thereto shall vest in the related Reversionary Holder only when such Property is
released to such Reversionary Holders in accordance with Section 3.03(b) hereof.
Notwithstanding the foregoing, each Reversionary Holder may treat the
deposit of the related Property into the related Spread Account as the receipt
by such Reversionary Holder of such Property for federal and state income taxes,
as may be required by law.
Each Pooling and Servicing Agreement shall provide that the Seller, whether
or not the Seller is the initial Reversionary Holder, shall be deemed to be the
agent of the related Reversionary Holders for the purpose of perfecting the
Spread Account Trustee's Interest in the related Property. Each Pooling and
Servicing Agreement shall additionally provide that the Reversionary Holders
agree, by their acceptance of the related subordinate class of securities, to
execute and deliver such instruments of conveyance, assignment, grant,
confirmation, etc., as well as any financing statements, in each case, as the
Controlling Party shall consider reasonably necessary in order to perfect the
Spread Account Trustee's Interest in the related Property
Section 2.02. Series Supplements. The parties hereto agree that the Seller
and the Emergent Companies will have the option to enter into a Series
Supplement hereto with respect to each Series of Certificates, the Secured
Obligations with respect to which are to be secured by Collateral held pursuant
to the provisions of this Agreement. The parties will enter into a Series
Supplement only if the following conditions shall have been satisfied:
(i) The Depositor shall have sold Receivables to a Trust, or shall
have pledged such Receivables to the Trustee, pursuant to a Pooling and
Servicing Agreement;
(ii) Financial Security shall have issued a Policy in respect of the
Guaranteed Distributions on the Series of senior Certificates issued
pursuant to such Pooling and Servicing Agreement; and
(iii) Pursuant to the related Series Supplement the related Collateral
specified herein shall be administered by the Spread Account Trustee
substantially on the terms set forth in Section 2.03 hereof.
9
<PAGE>
Section 2.03. Creation and Grant of Interest by the Seller and the Emergent
Companies in the Series 1996-A Property.
(a) For the purpose of providing for the payment, when due of the Series
1996-A Obligations and the Obligations with respect to each other Series, to the
extent provided herein, the Seller as the agent of the 1996-A Reversionary
Holders (and the Emergent Companies, to the extent it may have any rights
therein) hereby pledges, assigns, grants, transfers and conveys to the Spread
Account Trustee, on behalf of and for the benefit of the Designated Parties to
secure the Obligations with respect to each Series, all of its right, title and
interest in and to the following (all being collectively referred to herein as
the "Series 1996-A Property" and constituting Property hereunder):
(i) the amounts distributed to the Series 1996-A Spread Account
pursuant to Section 5.5(b)(vi) of the Series 1996-A Pooling and Servicing
Agreement and all rights and remedies that the Seller may have to enforce
payment of such amounts whether under the Series 1996-A Pooling and
Servicing Agreement or otherwise;
(ii) the Series 1996-A Spread Account established pursuant to Section
3.01 hereof, (including, without limitation, the Initial Spread Account
Deposit related thereto and all additional monies, securities, investments
and other documents from time to time held in or evidencing such Accounts);
(iii) all of the Seller's right, title and interest, in its capacity
as the 1996-A Reversionary Holder, in and to investments made with proceeds
of the property described in clauses (i) and (ii) above, or made with
amounts on deposit in the Series 1996-A Spread Account; and
(iv) all distributions, revenues, products, substitutions, benefits,
profits and proceeds, in whatever form, of any of the foregoing.
(b) In order to effectuate the provisions and purposes of this Agreement,
including for the purpose of perfecting the interests granted hereunder, the
Seller, on behalf of itself and as the agent of the 1996-A Reversionary Holders
(and the Emergent Companies, to the extent it may have any rights therein),
represents and warrants that it has, prior to the execution of this Agreement,
executed and filed an appropriate Uniform Commercial Code financing statement in
South Carolina sufficient to assure that the Spread Account Trustee, as agent
for the Secured Parties, has a first priority perfected security interest in all
Series 1996-A Property which can be perfected by the filing of a financing
statement.
Section 2.04. Priority of Interest. The Seller, on behalf of itself and as
the agent of the 1996-A Reversionary Holders, (and the Emergent Companies, to
the extent it may have any rights in the Property) intends the interests in
favor of the Designated Parties to be prior to all other Liens in respect of the
Property, and the Seller, on behalf of itself and as agent for the 1996-A
Reversionary Holders, and the Emergent Companies shall take all actions
10
<PAGE>
necessary to obtain and maintain, in favor of the Spread Account Trustee, for
the benefit of the Designated Parties, a first lien on and a first priority,
perfected security interest in the Property. Subject to the provisions hereof
specifying the rights and powers of the Controlling Party from time to time to
control certain specified matters relating to the Property, each Designated
Party shall have all of the rights, remedies and recourse with respect to the
Property afforded a secured party under the Uniform Commercial Code, and all
other applicable law in addition to, and not in limitation of, the other rights,
remedies and recourse granted to such Designated Parties by this Agreement or
any other law relating to the creation and perfection of liens on, and security
interests in, the Property.
Section 2.05. Seller and the Emergent Companies Remain Liable. The
Interests have been created to establish a trust fund to secure the payment of
the Obligations and shall not (i) transfer or in any way affect or modify, or
relieve either the Seller, the Reversionary Holders, or the Emergent Companies
from, any obligation to perform or satisfy, any term, covenant, condition or
agreement to be performed or satisfied by the Seller, the Reversionary Holders,
or the Emergent Companies under or in connection with this Agreement, the
Insurance Agreement or any other Transaction Document to which it is a party or
(ii) impose any obligation on any of the Designated Parties or the Spread
Account Trustee to perform or observe any such term, covenant, condition or
agreement or impose any liability on any of the Designated Parties or the Spread
Account Trustee for any act or omission on its part relative thereto or for any
breach of any representation or warranty on its part contained therein or made
in connection therewith, except, in each case, to the extent provided herein and
in the other Transaction Documents.
Section 2.06. Maintenance of Property.
(a) Safekeeping. The Spread Account Trustee agrees to maintain the Property
received by it (or evidence thereof, in the case of book-entry securities in the
name of the Spread Account Trustee) and all records and documents relating
thereto at the office of the Spread Account Trustee specified in Section 8.06
hereof or such other address within the State of New York (unless all filings
have been made to continue the perfection of the security interest in the
Property to the extent such security interest can be perfected by filing a
financing statement, as evidenced by an Opinion of Counsel delivered to the
Controlling Party), as may be approved by the Controlling Party. The Spread
Account Trustee shall keep all Property and related documentation in its
possession separate and apart from all other property that it is holding in its
possession and from its own general assets and shall maintain accurate records
pertaining to the Spread Account Eligible Investments and Spread Accounts
included in the Property in such a manner as shall enable the Designated Parties
to verify the accuracy of such record-keeping. The Spread Account Trustee's
books and records shall at all times show that the Property is held by the
Spread Account Trustee as agent of the Designated Parties in a trust capacity
and is not the property of the Spread Account Trustee. The Spread Account
Trustee will promptly report to each Designated Party, the Reversionary Holders
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and the Seller any failure on its part to hold the Property as provided in this
Section 2.06(a) and will promptly take appropriate action to remedy any such
failure.
(b) Access. The Spread Account Trustee shall permit each of the Designated
Parties, the Reversionary Holders or their respective duly authorized
representatives, attorneys, auditors or designees, to inspect the Property in
the possession of or otherwise under the control of the Spread Account Trustee
pursuant hereto at such reasonable times during normal business hours as any
such Designated Party or such Reversionary Holders may reasonably request upon
not less than one Business Day's prior written notice. The costs and expenses
associated with any such inspection will be paid by the party making such
inspection.
Section 2.07. Termination and Release of Rights.
(a) On the Insurer Termination Date relating to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon Financial
Security pursuant to this Agreement in respect of the Property related to such
Series (and, to the extent provided herein, in respect of Property related to
other Series) shall terminate and be of no further force and effect and all
rights, remedies, powers, duties, authority and obligations of Financial
Security with respect to such Property shall be automatically released; provided
that any indemnity provided to or by Financial Security herein shall survive
such Insurer Termination Date. If Financial Security is acting as Controlling
Party with respect to a Series on the related Insurer Termination Date,
Financial Security agrees, at the expense of the Seller, to execute and deliver
such instruments as the successor Controlling Party may reasonably request to
effectuate such release, and any such instruments so executed and delivered
shall be fully binding on Financial Security and any Person claiming by, through
or under Financial Security.
(b) On the Trustee Termination Date related to a Series, the rights,
remedies, powers, duties, authority and obligations, if any, conferred upon the
Trustee pursuant to this Agreement in respect of the Property related to such
Series (and, to the extent provided herein, in respect of Property related to
other Series) shall terminate and be of no further force and effect and all such
rights, remedies, powers, duties, authority and obligations of the Trustee with
respect to such Property shall be automatically released; provided that any
indemnity provided to the Trustee herein shall survive such Trustee Termination
Date. If the Trustee is acting as Controlling Party with respect to a Series on
the related Trustee Termination Date, the Trustee agrees, at the expense of the
Seller, to execute and deliver such instruments as the Seller may reasonably
request to effectuate such release, and any such instruments so executed and
delivered shall be fully binding on the Trustee.
(c) On the Final Termination Date with respect to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon the Spread
Account Trustee and each Designated Party pursuant to this Agreement shall
terminate and be of no further force and effect and all rights, remedies,
powers, duties, authority and obligations of the Spread Account Trustee and each
Designated Party with respect to the Property related to such Series (and, to
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the extent provided herein, in respect of Property related to other Series)
shall be automatically released, subject to the application of such amounts for
indemnity payments and all amounts due and payable hereunder. On the Final
Termination Date with respect to a Series, the Spread Account Trustee agrees,
and each Designated Party agrees, at the expense of the Seller, to execute such
instruments of release, in recordable form if necessary, in favor of the Seller
as the Seller may reasonably request, to deliver any Property in its possession
to the Seller or as otherwise provided on the related Pooling and Servicing
Agreement, and to otherwise release the Property related to such Series to the
Seller or as otherwise provided on the related Pooling and Servicing Agreement.
Section 2.08. Non-Recourse Obligations of Seller and the Emergent
Companies. Notwithstanding anything herein or in the other Transaction Documents
to the contrary, the parties hereto agree that the obligations of the Seller (to
the extent that the Seller is a Reversionary Holder) hereunder shall be recourse
only to the extent of amounts released pursuant to priority SEVENTH of Section
3.03(b) hereof and retained by the Seller in accordance with the next sentence.
The Seller agrees that it shall not declare or make payment of (i) any dividend
or other distribution on or in respect of any shares of its capital stock or
(ii) any payment on account of the purchase, redemption, retirement or
acquisition of (x) any shares of its capital stock or (y) any option, warrant or
other right to acquire shares of its capital stock, unless (in each case) at the
time of such declaration or payment (and after giving effect thereto) no amount
payable by Seller under any Transaction Document is then due and owing but
unpaid. Nothing contained herein shall be deemed to limit the rights of the
Certificateholders, or any Reversionary Holder other than the Seller, under any
other Transaction Document.
ARTICLE III.
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits into
Spread Accounts.
(a) On or prior to the Closing Date relating to Series 1996-A, the Spread
Account Trustee shall establish with respect to such Series, at its office or at
another depository institution or trust company an Eligible Account, designated,
"Spread Account - Series 1996-A - Bankers Trust Company, as Spread Account
Trustee for Financial Security Assurance Inc. and another Designated Party" (the
"Spread Account", and, with respect to the Series 1996-A Certificates, the
"Series 1996-A Spread Account"). All Spread Accounts established under this
Agreement from time to time shall be maintained at the same depository
institution or trust company (which depository institution or trust company may
be changed from time to time in accordance with this Agreement). If any Spread
Account established with respect to a Series ceases to be an Eligible Account,
the Spread Account Trustee shall establish or cause to be established, within
five Business Days, establish a new Eligible Account for such Series.
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(b) No withdrawals may be made of funds in any Spread Account except as
provided in Section 3.03 of this Agreement. Except as specifically provided in
this Agreement, funds in a Spread Account established with respect to a Series
shall not be commingled with funds in a Spread Account established with respect
to another Series or with any other moneys. All moneys deposited from time to
time in such Spread Account and all investments made with such moneys shall be
held by the Spread Account Trustee as part of the Property with respect to such
Series.
(c) On the Closing Date with respect to a Series, the Spread Account
Trustee shall deposit the Initial Spread Account Deposit with respect to such
Series, if any, received by the Spread Account Trustee into the related Spread
Account.
(d) Each Spread Account shall be separate from each Trust and amounts on
deposit therein will not constitute a part of the Trust Property of any Trust.
Each Spread Account shall be maintained by the Spread Account Trustee at all
times separate and apart from any other account of the Seller, the Emergent
Companies, the Servicer or the Trust. All income or loss on investments of funds
in any Spread Account shall be reported by the Reversionary Holder as taxable
income or loss of such Reversionary Holder.
Section 3.02. Investments.
(a) Funds which may at any time be held in the Spread Account established
with respect to a Series shall be invested and reinvested by the Spread Account
Trustee, at the written direction (which may include, subject to the provisions
hereof, general standing instructions) of the Seller (unless a Default shall
have occurred and be continuing, in which case at the written direction of the
Controlling Party) or its designee (as designated in writing by the Seller)
received by the Spread Account Trustee by 1:00 P.M. New York City time on the
Business Day prior to the date on which such investment shall be made, in one or
more Spread Account Eligible Investments in the manner specified in Section
3.02(c) hereof. If no written direction with respect to any portion of such
Spread Account is received by the Spread Account Trustee, the Spread Account
Trustee shall invest such funds overnight in such Eligible Investments specified
in clause (v) of the definition thereof, provided that the Spread Account
Trustee shall not be liable for any loss or absence of income resulting from
such investments.
(b) Each investment made pursuant to this Section 3.02 on any date shall
mature not later than the Business Day immediately preceding the Distribution
Date next succeeding the day such investment is made, except that any investment
made on the day preceding a Distribution Date shall mature on such Distribution
Date; provided that any investment of funds in any Spread Account maintained
with the Spread Account Trustee (which shall be qualified as a Spread Account
Eligible Investment) in any investment as to which the Spread Account Trustee is
the obligor, if otherwise qualified as an Eligible Investment (including any
repurchase agreement on which the Spread Account Trustee in its commercial
capacity is liable as principal) may mature on the Distribution Date next
succeeding the date of such investment.
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(c) Subject to the other provisions hereof, the Spread Account Trustee
shall have sole control over each such investment and the income thereon, and
any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Spread Account Trustee or its agent, together
with each document of transfer, if any, necessary to transfer title to such
investment to the Spread Account Trustee in a manner which complies with Section
2.06 hereof and the requirements of the definition of "Spread Account Eligible
Investments."
(d) If amounts on deposit in any Spread Account are at any time invested in
a Spread Account Eligible Investment payable on demand, the Spread Account
Trustee shall (i) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Spread Account Eligible
Investment is permitted to mature under the provisions hereof and (ii) demand
payment of all amounts due thereunder promptly upon receipt of written notice
from the Controlling Party to the effect that such investment does not
constitute a Spread Account Eligible investment.
(e) All moneys on deposit in a Spread Account together with any deposits or
securities in which such moneys may be invested or reinvested, and any gains
from such investments, shall constitute Property hereunder with respect to the
related Series subject to the Interests of the Designated Parties.
(f) Subject to Section 4.03 hereof, the Spread Account Trustee shall not be
liable by reason of any insufficiency in any Spread Account resulting from any
loss on any Eligible Investment included therein except for losses attributable
to the Spread Account Trustee's failure in its commercial capacity to make
payments on Eligible Investments as to which the Spread Account Trustee, in its
commercial capacity, is obligated.
Section 3.03. Distributions; Priority of Payments.
(a) On or before each Delinquency Claim Date with respect to any Series,
the Spread Account Trustee will make the following calculations on the basis of
information (including, without limitation, the amount of any Deficiency Claim
Amount with respect to any Series) received pursuant to Section 4.9 (or other
section referenced in the related Series Supplement) of the Pooling and
Servicing Agreement, with respect to each such Series from the Servicer
thereunder; provided, however, that if the Spread Account Trustee receives
notice from Financial Security of the occurrence of an Insurance Agreement Event
of Default with respect to any Series, such notice shall be determinative for
the purposes of determining the Requisite Amount for such Series:
first, determine the amounts to be on deposit in the respective Spread
Accounts (taking into account amounts to be deposited into the related
Spread Accounts) on the next succeeding Distribution Date which will be
available to satisfy any Deficiency Claim Amount;
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second, determine (i) the amounts, if any, to be distributed from each
Spread Account related to each Series with respect to which there exists a
Deficiency Claim Amount and (ii) whether, following distribution from the
related Spread Accounts to the respective Trustees for deposit into the
respective Collection Accounts with respect to which there exists a
Deficiency Claim Amount, a Deficiency Claim Amount will continue to exist
with respect to one or more Series;
third, if a Deficiency Claim Amount will continue to exist with
respect to one or more Series following the distributions from the related
Spread Accounts contemplated by paragraph second above, determine the
amount, if any, to be distributed to the Trustee with respect to each
Series from unrelated Spread Accounts in respect of such Deficiency Claim
Amount(s). This determination shall be made in accordance with the
distribution priority scheme set forth in Section 3.03(b) below.
On such Delinquency Claim Date related to a Series, the Spread Account
Trustee shall deliver a certificate to each Trustee in respect of which the
Spread Account Trustee has received a Deficiency Notice stating the amount, if
any, to be distributed to such Trustee on the next Distribution Date in respect
of such Deficiency Claim Amount.
(b) On each Distribution Date, following the deposit into the respective
Spread Accounts of the amounts required to be deposited therein pursuant to the
respective Pooling and Servicing Agreements and if the Trustee has received a
Deficiency Notice with respect to one or more such Series, or with respect to
priority SEVENTH below to the extent the amount referred to therein is due and
owing, the Spread Account Trustee shall make the following distributions in the
following order of priority:
FIRST, if with respect to any Series there exists a Deficiency Claim
Amount, from the Spread Account related to such Series, to the Trustee for
deposit in the related Collection Account the amount of such Deficiency
Claim Amount;
SECOND, if with respect to any Series there continues to exist a
Deficiency Claim Amount after deposit into the Collection Account of
amounts distributed pursuant to priority FIRST of this Section 3.03(b),
from amounts, if any, on deposit in each unrelated Spread Account in excess
of the related Requisite Amount, an amount in the aggregate up to the
aggregate of the Deficiency Claim Amounts for all Series, for deposit in
the respective Collection Accounts pro rata in accordance with the
respective Deficiency Claim Amounts;
THIRD, if with respect to any Series there continues to exist a
Deficiency Claim Amount after deposit into the Collection Account of
amounts distributed pursuant to priorities FIRST and SECOND, from each
unrelated Spread Account pro rata in accordance with amounts on deposit
therein, an amount up to the aggregate of the remaining Deficiency Claim
Amounts for all Series, to the respective Trustees for deposit in the
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respective Collection Accounts with respect to which there continue to
exist Deficiency Claim Amounts.
FOURTH, if with respect to one or more Series there exists a Spread
Account Shortfall, from amounts, if any, (1) on deposit in each Spread
Account in excess of the related Requisite Amount; or (2) on deposit in any
Spread Account with respect to which the Final Termination Date shall have
occurred on such Distribution Date or a prior Distribution Date, an amount
in the aggregate up to the aggregate of the Spread Account Shortfalls for
all Series for deposit into each Spread Account pro rata in accordance with
the respective Spread Account Shortfalls.
FIFTH, if with respect to one or more Series, amounts have been
withdrawn from the related Spread Account pursuant to priority THIRD of
this Section 3.03(b) on such Distribution Date and/or prior Distribution
Dates and such amounts have not been redeposited in full into such Spread
Account pursuant to this priority FIFTH (such amounts in the aggregate for
a Series "Unreimbursed Amounts"), from amounts, if any, (1) on deposit in
each Spread Account in excess of the related Requisite Amount; or (2) on
deposit in any Spread Account with respect to which the Final Termination
Date shall have occurred on such Distribution Date or a prior Distribution
Date, an amount up to the aggregate of the Unreimbursed Amounts for all
such Series for deposit into each Spread Account with respect to which
there exist Unreimbursed Amounts pro rata in accordance with the respective
Unreimbursed Amounts.
SIXTH, if any amounts are owed to the Trustee, Spread Account Trustee
or Backup Servicer for reasonable out-of-pocket expenses in connection with
the administration of the Trust, including the expenses incurred in the
transition to a successor Servicer and such amounts have not been paid,
then from amounts (if any) on deposit in the related Spread Account, an
amount up to the amount so owed, to be paid to the Trustee, the Spread
Account Trustee and the Backup Servicer; and
SEVENTH, any funds in a Spread Account in excess of the applicable
Requisite Amount and any funds in a Spread Account with respect to a Series
for which the Final Termination Date shall have occurred after distribution
pursuant to priorities FIRST through SIXTH will be released to the
Reversionary Holders, as provided in the related Pooling and Servicing
Agreement (or if the related Pooling and Servicing Agreement does not so
provide, to the Seller) free and clear of the Lien established hereunder.
Section 3.04. General Provisions Regarding Spread Accounts.
(a) Promptly upon the establishment (initially or upon any relocation) of a
Spread Account hereunder, the Spread Account Trustee shall advise the Seller and
each Designated Party in writing of the name and address of the depository
institution or trust company where such Spread Account has been established (if
not Bankers Trust Company or any successor Spread Account Trustee in its
commercial banking capacity), the name of the officer of the depository
institution who is responsible for overseeing such Spread Account, the account
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number and the individuals whose names appear on the signature cards for such
Spread Account. The Seller shall cause each such depository institution or trust
company to execute a written agreement, in form and substance satisfactory to
the Controlling Party, waiving, and the Spread Account Trustee by its execution
of this Agreement hereby waives (except to the extent expressly provided
herein), in each case to the extent permitted under applicable law, (i) any
banker's or other statutory or similar Lien, and (ii) any right of set-off or
other similar right under applicable law with respect to such Spread Account and
any other Spread Account and agreeing, and the Spread Account Trustee by its
execution of this Agreement hereby agrees, to notify the Seller, the Spread
Account Trustee, and each Designated Party of any charge or claim against or
with respect to such Spread Account of which a Responsible Officer of the
Trustee has actual knowledge. The Spread Account Trustee shall give the Seller
and each Designated Party at least ten (10) Business Days' prior written notice
of any change in the location of such Spread Account or in any related account
information. If the Spread Account Trustee changes the location of any Spread
Account, it shall change the location of the other Spread Accounts, so that all
Spread Accounts shall at all times be located at the same depository
institution. Anything herein to the contrary notwithstanding, unless otherwise
consented to by the Controlling Party in writing, the Spread Account Trustee
shall have no right to change the location of any Spread Account.
(b) Upon the written request of the Controlling Party, the Seller or any
Reversionary Holder and at expense of the Seller, the Spread Account Trustee
shall cause, at the expense of the Seller, the depository institution at which
any Spread Account is located to forward to the requesting party copies of all
monthly account statements for such Spread Account.
(c) If at any time any Spread Account ceases to be an Eligible Account, the
Spread Account Trustee shall notify the Controlling Party of such fact and shall
establish within ten (10) Business Days of such determination in accordance with
paragraph (a) of this Section, a successor Spread Account thereto, which shall
be an Eligible Account, at another depository institution acceptable to the
Controlling Party and shall establish successor Spread Accounts with respect to
all other Spread Accounts, each of which shall be an Eligible Account at the
same depository institution.
(d) No passbook, certificate of deposit or other similar instrument
evidencing a Spread Account shall be issued, and all contracts, receipts and
other papers, if any, governing or evidencing a Spread Account shall be held by
the Spread Account Trustee.
Section 3.05. Reports by the Spread Account Trustee. The Spread Account
Trustee shall report to the Seller, Financial Security, the Trustee and the
Servicer on a monthly basis with respect to the amount on deposit in each Spread
Account and the identity of the investments included therein as of the last day
of the related Collection Period, and shall provide accountings of deposits into
and withdrawals from the Spread Accounts, and of the investments made therein,
upon the request of the Seller, Financial Security or the Servicer.
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ARTICLE IV.
THE SPREAD ACCOUNT TRUSTEE
Section 4.01. Appointment and Powers. Subject to the terms and conditions
hereof, each of the Designated Parties hereby appoints Bankers Trust Company as
the Spread Account Trustee with respect to the Series 1996-A Property and the
related Property subsequently specified in a Series Supplement, and Bankers
Trust Company hereby accepts such appointment and agrees to act as Spread
Account Trustee with respect to the Series 1996-A Property, and upon execution
of any Series Supplement, shall be deemed to accept such appointment, and agree
to act as Spread Account Trustee with respect to such Property, in each case,
for the Designated Parties, to maintain custody and possession of such Property,
in trust, (except as otherwise provided hereunder) and to perform the other
duties of the Spread Account Trustee in accordance with the provisions of this
Agreement. Each Designated Party hereby authorizes the Spread Account Trustee to
take such action on its behalf, and to exercise such rights, remedies, powers
and privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Spread Account Trustee by the
terms hereof, together with such actions, rights, remedies, powers and
privileges as are reasonably incidental thereto. The Spread Account Trustee
shall act upon and in compliance with the written instructions of the
Controlling Party delivered pursuant to this Agreement promptly following
receipt of such written instructions; provided that the Spread Account Trustee
shall not act in accordance with any instructions for which the Spread Account
Trustee has not received reasonable indemnity satisfactory to it. Receipt of
such instructions shall not be a condition to the exercise by the Spread Account
Trustee of its express duties hereunder, except where this Agreement provides
that the Spread Account Trustee is permitted to act only following and in
accordance with such instructions.
Section 4.02. Performance of Duties. The Spread Account Trustee shall have
no duties or responsibilities except those expressly set forth in this Agreement
and the other Transaction Documents to which the Spread Account Trustee is a
party or as directed by the Controlling Party in accordance with this Agreement.
The Spread Account Trustee shall not be required to take any discretionary
actions hereunder except at the written direction and with the indemnification
of the Controlling Party.
Section 4.03. Limitation on Liability. The Spread Account Trustee and any
of its directors, officers or employees shall have the same scope of liabilities
and immunities as provided in Article XI of the Pooling and Servicing Agreement.
Section 4.04. Reliance upon Documents. In the absence of bad faith or
negligence on its part, the Spread Account Trustee shall be entitled to
conclusively rely on any communication, instrument, paper or other document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reasonable reliance
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upon any statement or opinion contained in any such document or instrument.
Section 4.05. Successor Spread Account Trustee.
(a) Merger. Any Person into which the Spread Account Trustee may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its trust business and assets as a whole or substantially as a
whole, or any Person resulting from any such conversion, merger, consolidation,
sale or transfer to which the Spread Account Trustee is a party, shall (provided
it is otherwise qualified to serve as the Spread Account Trustee hereunder) be
and become a successor Spread Account Trustee hereunder and be vested with all
of the title to and interest in the Collateral and all of the trusts, powers,
discretions, immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, except to the extent, if any, that any such action is
necessary to perfect, or continue the perfection of, the security interest of
the Designated Parties in the Property.
(b) Resignation. The Spread Account Trustee and any successor Spread
Account Trustee may resign and be discharged from the trusts created by this
Agreement by giving written notice of any such resignation by registered or
certified mail to the other Designated Party and the Seller; provided, that such
resignation shall take effect only upon the effective date of the appointment of
a successor Spread Account Trustee and the acceptance in writing by such
successor Spread Account Trustee of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, pursuant
to subsection (d) below. Notwithstanding the preceding sentence, if by the
contemplated date of resignation specified in the written notice of resignation
delivered as described above no successor Spread Account Trustee or temporary
successor Spread Account Trustee has been appointed Spread Account Trustee or
becomes the Spread Account Trustee pursuant to subsection (d) hereof, the
resigning Spread Account Trustee may petition a court of competent jurisdiction
in New York, New York for the appointment of a successor.
(c) Removal. The Spread Account Trustee may be removed by the Controlling
Party at any time, with or without cause, by an instrument or concurrent
instruments in writing delivered to the Spread Account Trustee, the other
Designated Party and the Seller. A temporary successor may be removed at any
time to allow a successor Spread Account Trustee to be appointed pursuant to
subsection (d) below. Any removal pursuant to the provisions of this subsection
(c) shall take effect only upon the date which is the latest of (i) the
effective date of the appointment of a successor Spread Account Trustee and the
acceptance in writing by such successor Spread Account Trustee of such
appointment and of its obligation to perform its duties hereunder in accordance
with the provisions hereof, (ii) delivery of the Collateral to such successor to
be held in accordance with the procedures specified in Article II hereof and
(iii) receipt by the Controlling Party of an Opinion of Counsel to the effect
described in Section 5.02 hereof.
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(d) Acceptance by Successor. The Controlling Party shall have the sole
right to appoint each successor Spread Account Trustee. Every temporary or
permanent successor Spread Account Trustee appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to each Designated Party and the
Seller an instrument in writing accepting such appointment hereunder and the
relevant predecessor shall execute, acknowledge and deliver such other documents
and instruments as will effectuate the delivery of all Property to the successor
Spread Account Trustee to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessor. Such predecessor shall,
nevertheless, on the written request of either Designated Party or the Seller,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Seller or a Designated Party is
reasonably required by a successor Spread Account Trustee to more fully and
certainly vest in such successor the estates, properties, rights, powers, duties
and obligations vested or intended to be vested hereunder in the Spread Account
Trustee, any and all such written instruments shall, at the request of the
temporary or permanent successor Spread Account Trustee, be forthwith executed,
acknowledged and delivered by the Seller. The designation of any successor
Spread Account Trustee and the instrument or instruments removing any Spread
Account Trustee and appointing a successor hereunder, together with all other
instruments provided for herein, shall be maintained with the records relating
to the Property and, to the extent required by applicable law, filed or recorded
by the successor Spread Account Trustee in each place where such filing or
recording is necessary to effect the transfer of the Property to the successor
Spread Account Trustee or to protect or continue the perfection of the security
interests granted hereunder.
(e) Any resignation or removal of a Spread Account Trustee and appointment
of a successor Spread Account Trustee shall be effected with respect to this
Agreement and all Series Supplements simultaneously, so that at no time is there
more than one Spread Account Trustee acting hereunder and under all Series
Supplements.
Section 4.06. Indemnification. The Seller and the Emergent Companies shall
indemnify the Spread Account Trustee, its directors, officers, employees and
agents for, and hold the Spread Account Trustee, its directors, officers,
employees and agents harmless against, any loss, liability or expense (including
the costs and expenses of defending against any claim of liability) arising out
of or in connection with the Spread Account Trustee's acting as Spread Account
Trustee hereunder, except such loss, liability or expense as shall result from
the gross negligence, bad faith or willful misconduct of the Spread Account
Trustee or its officers or agents. The obligation of the Seller and the Emergent
Companies under this Section shall survive the termination of this Agreement and
the resignation or removal of the Spread Account Trustee. The Spread Account
Trustee covenants and agrees that the obligations of the Seller hereunder and
under Section 4.07 hereof shall be limited to the extent provided in Section
2.08 hereof, and further covenants not to take any action to enforce its rights
to indemnification hereunder with respect to the Seller and to payment under
Section 4.07 hereof except in accordance with the provisions of Section 8.05
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hereof, or otherwise to assert any Lien or take any other action in respect of
the Property or the Trust Property of a Series until the applicable Final
Termination Date.
Section 4.07. Compensation and Reimbursement. The Seller and the Emergent
Companies agree for the benefit of the Designated Parties and as part of the
Obligations (a) to pay to the Spread Account Trustee, on each Distribution Date,
the Spread Account Trustee Fee for all services rendered by it hereunder
including legal fees and expenses; and (b) to reimburse the Spread Account
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Spread Account Trustee in accordance with any provision
of, or carrying out its duties and obligations under, this Agreement (including
the reasonable compensation and fees and the expenses and disbursements of its
agents, any independent certified public accountants and independent counsel),
except any expense, disbursement or advances as may be attributable to
negligence, bad faith or willful misconduct on the part of the Spread Account
Trustee.
Section 4.08. Representations and Warranties of the Spread Account Trustee.
The Spread Account Trustee represents and warrants to the Seller, the Emergent
Companies and to each Designated Party and each Reversionary Holder as follows:
(a) Due Organization. The Spread Account Trustee is a New York banking
corporation, duly organized, validly existing and in good standing under
the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Spread Account Trustee has all requisite
right, power and authority to execute and deliver this Agreement and to
perform all of its duties as Spread Account Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Spread
Account Trustee of this Agreement and the other Transaction Documents to
which it is a party, and the performance by the Spread Account Trustee of
its duties hereunder and thereunder, have been duly authorized by all
necessary corporate proceedings and no further approvals or filings,
including any governmental approvals, are required for the valid execution
and delivery by the Spread Account Trustee, or the performance by the
Spread Account Trustee, of this Agreement and such other Transaction
Documents.
(d) Valid and Binding Agreement. The Spread Account Trustee has duly
executed and delivered this Agreement and each other Transaction Document
to which it is a party, and each of this Agreement and each such other
Transaction Document constitutes the legal, valid and binding obligation of
the Spread Account Trustee, enforceable against the Spread Account Trustee
in accordance with its terms, except as (i) such enforceability may be
limited by bankruptcy, insolvency, reorganization and similar laws relating
to or affecting the enforcement of creditors, rights generally and (ii) the
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availability of equitable remedies may be limited by equitable principles
of general applicability.
Section 4.09. Waiver of Setoffs. The Spread Account Trustee hereby
expressly waives any and all rights of setoff that the Spread Account Trustee
may otherwise at any time have under applicable law with respect to any Spread
Account and agrees that amounts in the Spread Accounts shall at all times be
held and applied solely in accordance with the provisions hereof.
Section 4.10 Control by the Controlling Party. The Spread Account Trustee
shall comply with notices and instructions given by the Seller only if
accompanied by the written consent of the Controlling Party, except that if any
Default shall have occurred and be continuing, the Spread Account Trustee shall
act upon and comply with notices and instructions given by the Controlling Party
alone in the place and stead of the Seller.
ARTICLE V.
COVENANTS OF THE SELLER
Section 5.01. Preservation of Property. Subject to the rights, powers and
authorities granted to the Spread Account Trustee and the Controlling Party in
this Agreement, the Seller, on behalf of itself and as the agent of the
Reversionary Holders, shall take such action as is necessary and proper with
respect to the Property in order to preserve and maintain such Property and to
cause (subject to the rights of the Designated Parties) the Spread Account
Trustee to perform its obligations with respect to such Property as provided
herein. The Seller will execute, acknowledge and deliver, or cause to be done by
the Reversionary Holders, or others, executed, acknowledged and delivered, such
instruments of transfer or take such other steps or actions as may be necessary,
or reasonably required by the Controlling Party, to perfect the Interests
created hereunder in the Property, to ensure that such Interests rank prior to
all other Liens and to preserve the priority of such Interests and the validity
and enforceability thereof. Upon any delivery or substitution of Property, the
Seller, on behalf of itself and as the agent of the Reversionary Holders, shall
be obligated to execute such documents and perform such actions (or to cause the
Reversionary Holders to so execute and perform) as are necessary to vest the
Property in trust in the name of the Spread Account Trustee, and to create in
the Spread Account Trustee for the benefit of the Designated Parties a valid
first Lien on, and valid and perfected, first priority security interest in, the
Property so delivered and to deliver such Property to the Spread Account
Trustee, free and clear of any other Lien, together with satisfactory assurances
thereof, and to pay any reasonable costs incurred by any of the Designated
Parties or the Spread Account Trustee (including its agents) or otherwise in
connection with such delivery.
Section 5.02. Opinions as to Property. Not more than 90 days nor less than
30 days prior to (i) each anniversary of the date hereof during the term of this
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Agreement and (ii) each date on which the Seller proposes to take any action
contemplated by Section 5.06 hereof, the Seller shall, at its own cost and
expense, furnish to each Designated Party and the Spread Account Trustee an
Opinion of Counsel with respect to each Series either (a) stating that, in the
opinion of such counsel, such action has been taken with respect to the
execution and filing of any financing statements and continuation statements and
other actions as are necessary to perfect, maintain and protect the lien and
security interest of the Spread Account Trustee (and the priority thereof), on
behalf of the Designated Parties, with respect to such Property against all
creditors of and purchasers from the Seller, the Emergent Companies and the
Reversionary Holders and reciting the details of such action, or (b) stating
that, in the opinion of such counsel, no such action is necessary to maintain
such perfected lien and security interest. Such Opinion of Counsel shall further
describe each execution and filing of any financing statements and continuation
statements and such other actions as will, in the opinion of such counsel, be
required to perfect, maintain and protect the lien and security interest of the
Spread Account Trustee, on behalf of the Designated Parties, with respect to
such Property against all creditors of and purchasers from the Seller, the
Emergent Companies or the Reversionary Holders for a period, specified in such
Opinion, continuing until a date not earlier than eighteen months from the date
of such Opinion.
Section 5.03. Notices. In the event that the Emergent Companies or the
Seller acquires knowledge of the occurrence and continuance of any Insurance
Agreement Event of Default or Servicer Termination Event or of any event of
default or like event, howsoever described or called, under any of the
Transaction Documents, the Emergent Companies or the Seller, as the case may be,
shall immediately give notice thereof to the Spread Account Trustee and each
Designated Party.
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of Assets. The
Seller, on behalf of itself and as agent for the Reversionary Holders,
covenants, to the fullest extent permitted by applicable law, that neither it,
nor any Reversionary Holder will at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Agreement or any absolute sale of the Property or any part thereof, or the
possession thereof by any purchaser at any sale under Article VII of this
Agreement; and the Seller, on behalf of itself and as agent for the Reversionary
Holders, to the fullest extent permitted by applicable law, for itself, each
Reversionary Holder, and all who may claim under it or them, hereby waives the
benefit of all such laws, and covenants that neither it nor any Reversionary
Holder will hinder, delay or impede the execution of any power herein granted to
the Spread Account Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted. The Seller, for itself, each
Reversionary Holder, and all who may claim under it or them, waives, to the
fullest extent permitted by applicable law, all right to have the Property
marshalled upon any foreclosure or other disposition thereof.
Section 5.05. Noninterference, etc. The Seller, on behalf of itself and as
agent for the Reversionary Holders, agrees that neither it nor any Reversionary
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Holder shall (i) waive or alter any of its or their rights under the Property
(or any agreement or instrument relating thereto) without the prior written
consent of the Controlling Party; or (ii) fail to pay any tax, assessment,
charge or fee levied or assessed against the Property, or to defend any action,
if such failure to pay or defend may adversely affect the priority or
enforceability of the Seller's or such Reversionary Holder's right, title or
interest in and to the Property or the Spread Account Trustee's lien on, and
Interest in, the Property for the benefit of the Designated Parties; or (iii)
take any action, or fail to take any action, if such action or failure to take
action will interfere with the enforcement of any rights under the Transaction
Documents.
Section 5.06. Seller Changes.
(a) Change in Name, Structure, etc. The Seller shall not change its name,
identity or corporate structure unless it shall have given each Designated Party
and the Spread Account Trustee at least 60 days prior written notice thereof,
shall have effected any necessary or appropriate assignments or amendments
thereto and filings of financing statements or amendments thereto, and shall
have delivered to the Spread Account Trustee and each Designated Party an
Opinion of Counsel of the type described in Section 5.02 hereof.
(b) Relocation of the Seller. Neither the Emergent Companies nor the Seller
shall change their respective principal executive office unless it gives each
Designated Party and the Spread Account Trustee at least 90 days prior written
notice of any relocation of its principal executive office. If the Seller
relocates its principal executive office or principal place of business from
South Carolina, the Seller shall give prior notice thereof to the Controlling
Party and the Spread Account Trustee and shall effect whatever appropriate
recordations and filings are necessary and shall provide an Opinion of Counsel
to the Controlling Party and the Spread Account Trustee, to the effect that,
upon the recording of any necessary assignments or amendments to
previously-recorded assignments and filing of any necessary amendments to the
previously filed financing or continuation statements or upon the filing of one
or more specified new financing statements, and the taking of such other actions
as may be specified in such opinion, the security interests in the Property
shall remain, after such relocation, valid and perfected.
ARTICLE VI.
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party. From and after the Closing
Date of a Series until the Insurer Termination Date related to such Series,
Financial Security shall be the Controlling Party with respect to such Series
and shall be entitled to exercise all the rights given the Controlling Party
hereunder with respect to such Series. From and after the Insurer Termination
Date related to such Series until the Trustee Termination Date related to such
Series, the Trustee shall be the Controlling Party with respect to such Series.
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Notwithstanding the foregoing, in the event that a Financial Security Default
shall have occurred and be continuing, the Trustee shall be the Controlling
Party with respect to such Series until the applicable Trustee Termination Date.
If prior to an Insurer Termination Date the Trustee shall have become the
Controlling Party with respect to a Series as a result of the occurrence of a
Financial Security Default and either such Financial Security Default is cured
or for any other reason ceases to exist or the Trustee Termination Date with
respect to a Series occurs, then upon such cure or other cessation or on such
Trustee Termination Date, as the case may be, Financial Security shall, upon
notice thereof being duly given to the Spread Account Trustee, again be the
Controlling Party with respect to such Series.
Section 6.02. Controlling Party's Authority.
(a) Each of the Emergent Companies and the Seller, on behalf of itself and
as agent for the Reversionary Holders, hereby irrevocably appoints the
Controlling Party, and any successor to the Controlling Party appointed pursuant
to Section 6.01 hereof, its true and lawful attorney, with full power of
substitution, in the name of the Emergent Companies, the Seller, on behalf of
itself and as agent for the Reversionary Holders, the Designated Parties or
otherwise, but (subject to Section 2.08 hereof) at the expense of the Seller, to
the extent permitted by law to exercise, at any time and from time to time while
any Insurance Agreement Event of Default has occurred and is continuing, any or
all of the following powers with respect to all or any of the Property related
to the relevant Series: (i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due upon or by virtue
thereof, (ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto, (iii) to sell, transfer, assign or otherwise
deal with the same or the proceeds thereof as fully and effectively as if the
Controlling Party were the absolute owner thereof, and (iv) to extend the time
of payment of any or all thereof and to make any allowance or other adjustments
with respect thereto.
(b) With respect to each Series of Certificates and the related Property,
each Designated Party hereby irrevocably and unconditionally constitutes and
appoints the Controlling Party with respect to such Series, and any successor to
such Controlling Party appointed pursuant to Section 6.01 hereof from time to
time, as the true and lawful attorney-in-fact of such Designated Party for so
long as such Designated Party is the Non-Controlling Party, with full power of
substitution, to execute, acknowledge and deliver any notice, document,
certificate, paper, pleading or instrument and to do in the name of the
Controlling Party as well as in the name, place and stead of such Designated
Party such acts, things and deeds for and on behalf of and in the name of such
Designated Party under this Agreement with respect to such Series which such
Designated Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and, without limitation, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration of the Property related to such Series, and the enforcement of
the rights of the Designated Parties hereunder with respect to such Series, on
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behalf of and for the benefit of such Controlling Party and such Non-Controlling
Party, as their interests may appear.
Section 6.03. Rights of Designated Parties. With respect to each Series of
Certificates and the related Property, the Non-Controlling Party at any time
expressly agrees that it shall not assert any rights that it may otherwise have,
as a Designated Party with respect to the Property, to direct the maintenance,
sale or other disposition of the Property or any portion thereof,
notwithstanding the occurrence and continuance of any Default with respect to
such Series or any non-performance by the Emergent Companies, the Seller or the
Reversionary Holder of any obligation owed to such Designated Party hereunder or
under any other Transaction Document, and each party hereto agrees that the
Controlling Party shall be the only Person entitled to assert and exercise such
rights.
Section 6.04. Degree of Care.
(a) Controlling Party. Notwithstanding any term or provision of this
Agreement, the Controlling Party shall incur no liability to the Emergent
Companies, the Seller or the Reversionary Holder for any action taken or omitted
by the Controlling Party in connection with the Property, except for any gross
negligence, bad faith or willful misconduct on the part of the Controlling Party
and, further, shall incur no liability to the Non-Controlling Party except for a
breach of the terms of this Agreement or for gross negligence, bad faith or
willful misconduct in carrying out its duties, if any, to the Non-Controlling
Party. The Controlling Party shall be protected and shall incur no liability to
any such party in relying upon the accuracy, acting in reliance upon the
contents and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document believed by the Controlling Party to be
genuine and to have been duly executed by the appropriate signatory, and (absent
manifest error or actual knowledge to the contrary) the Controlling Party shall
not be required to make any independent investigation with respect thereto. The
Controlling Party shall, at all times, be free independently to establish to its
reasonable satisfaction the existence or nonexistence, as the case may be, of
any fact the existence or nonexistence of which shall be a condition to the
exercise or enforcement of any right or remedy under this Agreement or any of
the Transaction Documents.
(b) The Non-Controlling Party. The Non-Controlling Party shall not be
liable to the Seller, the Emergent Companies or any Reversionary Holder for any
action or failure to act by the Controlling Party or the Spread Account Trustee
in exercising, or failing to exercise, any rights or remedies hereunder.
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ARTICLE VII.
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default. If a Default with respect to a
Series has occurred and is continuing, the Spread Account Trustee shall, at the
direction of the Controlling Party, take whatever action at law or in equity as
may appear necessary or desirable in the judgment of the Controlling Party to
collect and satisfy all Obligations, including, but not limited to, the
liquidation of the Property and all other rights available to secured parties
under applicable law or to enforce performance and observance of any obligation,
agreement or covenant under any of the Transaction Documents related to such
Series. The Spread Account Trustee may recover expenses incurred in respect of
this Section 7.01 from the Emergent Companies.
Section 7.02. Waiver of Default. The Controlling Party shall have the sole
right, to be exercised in its complete discretion, to waive any Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
the Controlling Party and delivered to the Spread Account Trustee, the other
Designated Party and the Seller; provided, however, that during any period when
the Trustee shall be the Controlling Party, no Default may be waived without the
consent of the majority of a Certificate Majority. Any such waiver shall be
binding upon the Non-Controlling Party and the Spread Account Trustee. Unless
such writing expressly provides to the contrary, any waiver so granted shall
extend only to the specific event or occurrence which gave rise to the Default
so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.
Section 7.03. Restoration of Rights and Remedies. If the Spread Account
Trustee has instituted any proceeding to enforce any right or remedy under this
Agreement, and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to such Spread Account Trustee, then
and in every such case the Seller, the Spread Account Trustee, each of the
Designated Parties and each Reversionary Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Designated Parties shall continue as though no such proceeding had been
instituted.
Section 7.04. No Remedy Exclusive. No right or remedy herein conferred upon
or reserved to the Spread Account Trustee, the Controlling Party or either of
the Designated Parties is intended to be exclusive of any other right or remedy,
and every right or remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law, in equity or otherwise (but, in each case, shall be
subject to the provisions of this Agreement limiting such remedies), and each
and every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Controlling Party, and the exercise of or the
beginning of the exercise of any right or power or remedy shall not be construed
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to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Further Assurances. Each party hereto shall take such action
and deliver such instruments to any other party hereto, in addition to the
actions and instruments specifically provided for herein, as may be reasonably
requested or required to effectuate the purpose or provisions of this Agreement
or to confirm or perfect any transaction described or contemplated herein.
Section 8.02. Waiver. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and estop
such party from thereafter enforcing such provision, right, remedy or option if
such waiver is given in writing and only as to the specific instance and for the
specific purpose for which such waiver was given. The failure or refusal of any
party hereto to insist in any one or more instances, or in a course of dealing,
upon the strict performance of any of the terms or provisions of this Agreement
by any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or relinquishment of any such term
or provision, but the same shall continue in full force and effect.
Section 8.03. Amendments; Waivers. No amendment, modification, waiver or
supplement to this Agreement or any provision of this Agreement shall in any
event be effective unless the same shall have been made or consented to in
writing by each of the parties hereto and each Rating Agency shall have
confirmed in writing that such amendment will not cause a reduction or
withdrawal of a rating on any Series; provided, however, that, for so long as
Financial Security shall be the Controlling Party with respect to a Series,
amendments, modifications, waivers or supplements hereto relating to such
Series, the related Property or Spread Account or any requirement hereunder to
deposit or retain any amounts in such Spread Account or to distribute any
amounts therein as provided in Section 3.03 hereof shall be effective if made or
consented to in writing by Financial Security, the Seller, the Emergent
Companies and the Spread Account Trustee (the consent of which shall not be
withheld or delayed with respect to any amendment that does not adversely affect
the Spread Account Trustee) but shall in no circumstances require the consent of
the Trustee, the Certificateholders related to such Series or any other Series
or any Reversionary Holder.
Section 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to. the extent that it is invalid or
unenforceable and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
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circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Spread Account Trustee, or any of the Designated
Parties, hereunder is unavailable or unenforceable shall not affect in any way
the ability of the Spread Account Trustee or any of the Designated Parties to
pursue any other remedy available to it or them (subject, however, to the
provisions of this Agreement limiting such remedies).
Section 8.05. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, each of the parties hereto agrees that it shall not, prior to
one year and one day after the Final Scheduled Distribution Date with respect to
each Series, acquiesce, petition or otherwise invoke or cause the Seller, the
Emergent Companies or the Trust to invoke the process of the United States of
America, any State or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government for the purpose of commencing or
sustaining a case by or against the Seller or the Trust under a Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or the Trust or all or any part of its property or assets or ordering the
winding up or liquidation of the affairs of the Seller or the Trust. The parties
agree that damages will be an inadequate remedy for breach of this covenant and
that this covenant may be specifically enforced.
Section 8.06. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Seller:
Emergent Auto Holdings Corp.
44 East Camperdown Way
Greenville, South Carolina 29601
Attention: Cary H. Hall, Jr.
Telecopier No.: (864) 242-8324
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(ii) If to the Emergent Companies:
Emergent Group, Inc.
15 South Main Street
Greenville, South Carolina 29601
Attention: Kevin J. Mast
Telecopier No.: (864) 242-8324
(iii) If to Financial Security:
Financial Security Assurance Inc.
350 Park Avenue - 13th Floor
New York, New York 10022
Attention: Surveillance Department
Telecopier No.: (212) 755-5165
(212) 688-3101
(in each case in which notice or other communication
to Financial Security refers to a Default or a claim
on the Policy or in which failure on the part of
Financial Security to respond shall be deemed to
constitute consent or acceptance, then with a copy to
the attention of the Senior Vice President
Surveillance)
(iv) If to the Trustee:
Bankers Trust Company
4 Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Structured Finance
Telecopier No.: (212) 250-6439
(v) If to the Spread Account Trustee:
Bankers Trust Company
4 Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Structured Finance
Telecopier No.: (612) 667-9825
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(vi) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Telecopier No.: (212) 553-0344
(vii) If to Standard & Poor's:
Standard & Poor's Corporation
26 Broadway
New York, New York 10004
Telecopier No.: (212) 208-1582
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication) Financial Security, the Seller, the Trustee and the Spread
Account Trustee. Each party hereto may, by notice given in accordance herewith
to each of the other parties hereto, designate any further or different address
to which subsequent notices shall be sent.
Section 8.07. Term of this Agreement. This Agreement shall take effect on
the Closing Date of the Series 1996-A Certificates and shall continue in effect
until the last Final Termination Date to occur with respect to each Series. On
such Final Termination Date, this Agreement shall terminate, all obligations of
the parties hereunder shall cease and terminate and the Property, if any, held
hereunder and not to be used or applied in discharge of any Obligations or
otherwise under this Agreement, shall be released to and in favor of the related
Reversionary Holders, or, if not otherwise identified, to the Seller, provided
that the provisions of Sections 4.06, 4.07 and 8.05 hereof shall survive any
termination of this Agreement and the release of any Property upon such
termination.
Section 8.08. Assignments; Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the parties hereto
and shall (i) be binding upon the parties and their respective successors and
assigns, and (ii) inure to the benefit of and be enforceable by each Designated
Party and the Spread Account Trustee, and by their respective successors,
transferees and assigns. Neither the Seller nor the Emergent Companies may
assign this Agreement, or delegate any of its duties hereunder, without the
prior written consent of the Controlling Party.
(b) Financial Security shall have the right (unless a Financial Security
Default shall have occurred and be continuing) to give participations in its
rights under this Agreement and to enter into contracts of reinsurance with
respect to any Policy issued in connection with a Series of Certificates and
each such participant or reinsurer shall be entitled to the benefit of any
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representation, warranty, covenant and obligation of each party (other than
Financial Security) hereunder as if such participant or reinsurer was a party
hereto and, subject only to such agreement regarding such reinsurance or
participation, shall have the right to enforce the obligations of each such
other party directly hereunder; provided, however, that no such reinsurance or
participation agreement or arrangement shall relieve Financial Security of its
obligations hereunder, under the Transaction Documents to which it is a party or
under any such Policy. In addition, nothing contained herein shall restrict
Financial Security from assigning to any Person pursuant to any liquidity
facility or credit facility any rights of Financial Security under this
Agreement or with respect to any real or personal property or other interests
pledged to Financial Security, or in which Federal Security has a security
interest, in connection with the transactions contemplated hereby. The terms of
any such assignment or participation shall contain an express acknowledgment by
such Person of the condition of this Section and the limitations of the rights
of Financial Security hereunder.
Section 8.09. Consent of Controlling Party. In the event that the
Controlling Party's consent is required under the terms hereof or under the
terms of any Transaction Document, it is understood and agreed that, except as
otherwise provided expressly herein, the determination whether to grant or
withhold such consent shall be made solely by the Controlling Party in its sole
discretion.
Section 8.10. Trial by Jury Waived. Each of the parties hereto waives, to
the fullest extent permitted by law, any right it may have to a trial by jury in
respect of any litigation arising directly or indirectly out of, under or in
connection with this Agreement, any of the other Transaction Documents or any of
the transactions contemplated hereunder or thereunder. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this Agreement and the other
Transaction Documents to which it is a party, by among other things, this
waiver.
Section 8.11. Governing Law. This Agreement shall be governed by and
construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with the laws of the State of New York.
Section 8.12. Consents to Jurisdiction. Each of the parties hereto
irrevocably submits to the jurisdiction of the United States District Court for
the Southern District of New York, any court in the State of New York located in
the city and county of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and related to or in
connection with this Agreement, the other Transaction Documents or the
transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action, suit or proceeding shall be
33
<PAGE>
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. To the extent permitted by applicable law,
each of the parties hereby waives and agrees not to assert by way of motion, as
a defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or any of the
other Transaction Documents or the subject matter hereof or thereof may not be
litigated in or by such courts. Each of the Emergent Companies and the Seller
hereby irrevocably appoints and designates Bankers Trust Company, as its true
and lawful attorney and duly authorized agent for acceptance of service of legal
process. Each of the Emergent Companies and the Seller agrees that service of
such process upon such Person shall constitute personal service of such process
upon it. Subject to Section 8.05 hereof, nothing contained in this Agreement
shall limit or affect the rights of any party hereto to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Transaction Documents against the Seller, the Emergent Companies or their
respective property in the courts of any jurisdiction.
Section 8.13. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Bankers Trust Company, not individually or personally but solely as Spread
Account Trustee in the exercise of the powers and authority conferred and vested
in it, and (b) nothing herein contained shall be construed as creating any
liability on Bankers Trust Company, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties who are signatories to this Agreement
and by any person claiming by, through or under such parties.
Section 8.14. Determination of Adverse Effect. Any determination of an
adverse effect on the interest of the Secured Parties or the Certificateholders
shall be made without consideration of the availability of funds under the
Policies.
Section 8.15. Counterparts. This Agreement may be executed in two or more
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 8.16. Headings. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth on the first page hereof.
EMERGENT AUTO HOLDINGS CORP.
By /s/ Kevin Mast
-----------------------------
Name: Kevin Mast
Title: Vice President/Treasurer
EMERGENT GROUP, INC.
By /s/ Kevin Mast
-----------------------------
Name: Kevin Mast
Title: Treasurer
THE LOAN PRO$, INC.
By /s/ Kevin Mast
-----------------------------
Name: Kevin Mast
Title: CFO/Treasurer
PREMIER FINANCIAL SERVICES, INC.
By /s/ Kevin Mast
-----------------------------
Name: Kevin Mast
Title: CFO/Treasurer
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Bryan Townsend
------------------------------
Name: Bryan Townsend
Title: Authorized Officer
35
<PAGE>
BANKERS TRUST COMPANY, as Trustee
By /s/ Linda Rakolta
------------------------------
Name: Linda Rakolta
Title: Vice President
BANKERS TRUST COMPANY, as Spread
Account Trustee
By /s/ Linda Rakolta
------------------------------
Name: Linda Rakolta
Title: Vice President
36
EXHIBIT 4.3
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE(R)
Trust: As described in Endorsement No. 1 Form of Policy No.: 50450-N
Certificates: $14,496,000 Date of Issuance: 3/27/96
6.55% Auto Receivables
Backed Certificates, Class A
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration
received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the Trustee for
the benefit of each Holder, subject only to the terms of this Policy (which
includes each endorsement hereto), the full and complete payment of Guaranteed
Distributions with respect to the Certificates of the Trust referred to above.
For the further protection of each Holder, Financial Security irrevocably
and unconditionally guarantees payment of the amount of any distribution of
principal or interest with respect to the Certificates made during the Term of
this Policy to such Holder that is subsequently avoided in whole or in part as a
preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security, and
shall not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment thereto. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever. This Policy may not be canceled or
revoked during the Term of this Policy. An acceleration payment shall not be due
under this Policy unless such acceleration is at the sole option of Financial
Security. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY
FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By
-------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 101NY (5/89)
<PAGE>
ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
TRUST: Emergent Auto Receivables Trust 1996-A
CERTIFICATES: $14,496,000 6.55% Asset Backed Certificates, Class A
Policy No.: 50450-N
Date of Issuance: March 27, 1996
1. Definitions: For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
and not defined herein shall have the respective meanings ascribed to such terms
in the Pooling and Servicing Agreement, dated as of March 1, 1996, made with
respect to the formation of the Emergent Auto Receivables Trust 1996-A, among
Prudential Securities Secured Financing Corporation, a Delaware corporation, as
Seller, Emergent Group, Inc., a South Carolina corporation, as Servicer and
Bankers Trust Company, as Trustee and as Backup Servicer (as amended from time
to time in accordance with its terms, the "Pooling and Servicing Agreement"),
unless the context shall otherwise require.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which banking institutions or trust companies in New York, South
Carolina or any other location of any successor Servicer, successor Trustee or
successor Spread Account Trustee are authorized or obligated by law, executive
order or governmental decree to be closed.
"Guaranteed Distributions" means, with respect to each Distribution Date,
the distribution to be made to Class A Certificateholders in an aggregate amount
equal to (i) the Class A Interest Distributable Amount and (ii) the Class A
Principal Distributable Amount each as due and payable on such Distribution
Date, in each case in accordance with the original terms of the Class A
Certificates when issued and without regard to any amendment or modification of
the Class A Certificates or the Pooling and Servicing Agreement, except
amendments or modifications to which Financial Security Assurance Inc.
("Financial Security") has given its prior written consent; provided, however,
that Guaranteed Distributions do not include (x) any portion of the Class A
Interest Distributable Amount due to Class A Certificateholders because the
appropriate notice and certificate for payment in proper form was not timely
Received (as defined below) by Financial Security, (y) any portion of the Class
A Interest Distributable Amount due to Class A Certificateholders representing
interest on any Class A Interest Carryover Shortfall unless, in each case,
Financial Security elects, in its sole discretion, to pay such amount in whole
or in part. Guaranteed Distributions shall not include, nor shall coverage be
provided under this Policy in respect of, any taxes, withholding or other charge
1
<PAGE>
imposed by any governmental authority due in connection with the payment of any
Guaranteed Distribution to a Class A Certificateholder.
"Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security and to
the Fiscal Agent (as defined below), if any, prior to 12:00 noon, New York City
time, on a Business Day; delivery either on a day that is not a Business Day or
after 12:00 noon, New York City time, shall be deemed to be "Receipt" on the
next succeeding Business Day. If any notice or certificate given hereunder by
the Trustee is not in proper form or is not properly completed, executed or
delivered, it shall be deemed not to have been Received, and Financial Security
or the Fiscal Agent shall promptly so notify the Trustee and the Trustee may
submit an amended notice.
"Term of This Policy" means the period from and including the Issuance Date
to and including the latest of the date on which (i) the Class A Certificate
Balance has been reduced to zero and all distributions of Class A Interest
Distributable Amount have been paid on the Class A Certificates, (ii) any period
during which any payment on the Class A Certificates could have been avoided in
whole or in part as a preference payment under applicable bankruptcy,
insolvency, receivership or similar law has expired, and (iii) if any
proceedings requisite to avoidance as a preference payment have been commenced
prior to the occurrence of (i) and (ii), a final and nonappealable order in
resolution of each such proceeding has been entered.
"Trustee" means Bankers Trust Company, in its capacity as Trustee under the
Pooling and Servicing Agreement, and any successor in such capacity.
2. Notices and Conditions to Payment in Respect of Guaranteed
Distributions. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Guaranteed Distributions out of the funds of Financial Security on the later
to occur of (i) 12:00 noon, New York City time, on the third Business Day
following Receipt of such notice and certificate and (ii) 12:00 noon, New York
City time, on the Distribution Date to which such claim relates. Payments due
hereunder in respect of Guaranteed Distributions will be disbursed by wire
transfer of immediately available funds to the Policy Payments Account
established pursuant to the Pooling and Servicing Agreement or, if no such
Policy Payment Account has been established, to the Trustee.
Financial Security shall be entitled to pay any amount hereunder in respect
of Guaranteed Distributions, including any acceleration payment, whether or not
any notice and certificate shall have been Received by Financial Security as
provided above. Guaranteed Distributions insured hereunder shall not include
interest, in respect of principal paid hereunder on an accelerated basis,
accruing from after the date of such payment of principal. Financial Security's
obligations hereunder in respect of Guaranteed
2
<PAGE>
Distributions shall be discharged to the extent funds are disbursed by Financial
Security to the Trustee as provided herein, whether or not such funds are
properly applied by the Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed Distributions
Avoided as Preference Payments. If any Guaranteed Distribution is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order (as defined below) or (b) the first to occur of (i) the fourth
Business Day following Receipt by Financial Security from the Trustee of (A) a
certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that the Class A Certificateholder is
required to return principal or interest distributed with respect to the Class A
Certificates during the Term of this Policy because such distributions were
avoidable as preference payments under applicable bankruptcy law (the "Order"),
(B) a certificate of the Class A Certificateholder that the Order has been
entered and is not subject to any stay and (C) an assignment duly executed and
delivered by the Class A Certificateholder, in such form as is reasonably
required by Financial Security and provided to the Class A Certificateholder by
Financial Security, irrevocably assigning to Financial Security all rights and
claims of the Class A Certificateholder relating to or arising under the Class A
Certificates against the debtor which made such preference payment or otherwise
with respect to such preference payment or (ii) the date of Receipt by Financial
Security from the Trustee of the items referred to in clauses (A), (B) and (C)
above if, at least four Business Days prior to such date of Receipt, Financial
Security shall have Received written notice from the Trustee that such items
were to be delivered on such date and such date was specified in such notice.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trustee or any Class A Certificateholder directly (unless a Class A
Certificateholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trustee for distribution to such Class A
Certificateholder upon proof of such payment reasonably satisfactory to
Financial Security). In connection with the foregoing, Financial Security shall
have the rights provided pursuant to Section 6.5 of the Pooling and Servicing
Agreement.
4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trustee at the notice address specified in the
Pooling and Servicing Agreement specifying the name and notice address of the
Fiscal Agent. From and after the date of receipt of such notice by the Trustee,
(i) copies of all notices and documents required to be delivered to Financial
Security pursuant to this Policy shall be simultaneously delivered to the Fiscal
Agent and to Financial Security and shall not be
3
<PAGE>
deemed Received until Received by both and (ii) all payments required to be made
by Financial Security under this Policy may be made directly by Financial
Security or by the Fiscal Agent on behalf of Financial Security. The Fiscal
Agent is the agent of Financial Security only and the Fiscal Agent shall in no
event be liable to any Class A Certificateholder for any acts of the Fiscal
Agent or any failure of Financial Security to deposit, or cause to be deposited,
sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Class A Certificateholder, all rights (whether by counterclaim, set-off or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in writing (except
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President-Surveillance
Facsimile No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered by
the Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not covered by the Florida Insurance Guaranty
Association created under Part II of Chapter 631 of the Florida Insurance Code.
In the event Financial Security were to become insolvent, any claims arising
under this Policy are excluded from coverage by the California Insurance
Guaranty Association, established pursuant to Article 14.2 of Chapter 1 of Part
2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.
4
<PAGE>
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:
--------------------------
Authorized Officer
5
<PAGE>
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
(Letterhead of Trustee)
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Emergent Auto Receivables Trust 1995-A
The undersigned, a duly authorized officer of Bankers Trust Company (the
"Trustee"), hereby certifies to Financial Security Assurance Inc. ("Financial
Security"), with reference to Financial Guaranty Insurance Policy No. 50450-N
dated March 27, 1996 (the "Policy") issued by Financial Security in respect of
the 6.55% Receivables Backed Certificates, Class A of the above-referenced trust
(the "Certificates"), that:
(i) The Trustee is the Trustee under the Pooling and Servicing
Agreement for the Class A Certificateholders.
(ii) The sum of all amounts on deposit (or scheduled to be on deposit)
in the Collection Account and available for distribution to the Class A
Certificateholders pursuant to the Pooling and Servicing Agreement will be
$________ (the "Shortfall") less than the Guaranteed Distributions with
respect to the [Distribution Date].
(iii) The Trustee is making a claim under the Policy for the Shortfall
to be applied to distributions of principal or interest or both with
respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply the
same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose; (c)
not commingle such funds with other funds held by the Trustee; and (d)
maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds thereof
and, if the Certificate is required to be surrendered or presented for such
payment, shall stamp on each such Certificate the legend $"[insert
applicable amount] paid by Financial Security and the balance hereof has
been cancelled and reissued" and then shall deliver such Certificate to
Financial Security.
A-1
<PAGE>
(v) The Trustee, on behalf of the Class A Certificateholders, hereby
assigns to Financial Security the rights of the Class A Certificateholders
with respect to the Certificates to the extent of any payments under the
Policy, including, without limitation, any amounts due to the Class A
Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates. The foregoing assignment is in addition
to, and not in limitation of, rights of subrogation otherwise available to
Financial Security in respect of such payments. Payments to Financial
Security in respect of the foregoing assignment shall in all cases be
subject to, and Financial Security in respect of the foregoing assignment
shall in all cases be subject to, and subordinate to the rights of the
Class A Certificateholders to receive all Guaranteed Distributions in
respect of the Certificates. The Trustee shall take such action and deliver
such instruments as may be reasonably requested or required by Financial
Security to effectuate the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Class A
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Class A Certificateholder in
any legal proceeding with respect to the Certificates. The Trustee hereby
agrees that Financial Security may at any time during the continuation of
any proceeding by or against any debtor with respect to which a preference
claim (as defined below) or other claim with respect to the Certificates is
asserted under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") direct all matters relating to such Insolvency
Proceeding, including, without limitation, (A) all matters relating to any
claim in connection with an Insolvency Proceeding seeking the avoidance as
a preferential transfer of any payment made with respect to the
Certificates (a "Preference Claim"), (B) the direction of any appeal of any
order relating to any Preference Claim and (C) the posting of any surety,
supersedeas or performance bond pending any such appeal at the expense of
Financial Security but subject to reimbursement as provided in the
Insurance Agreement. In addition, the Trustee hereby agrees that Financial
Security shall be subrogated to, and the Trustee on its behalf and on
behalf of each Class A Certificateholder, hereby delegates and assigns, to
the fullest extent permitted by law, the rights of the Trustee and each
Class A Certificateholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in connection
with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to [Specify
Account].
A-2
<PAGE>
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice of
Claim and Certificate as of the ______ day of __________, _____.
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Trustee
By:
-----------------------------------------
Title:
--------------------------------------
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on _____________ by ___________________
Confirmation Number _______________
A-3
Exhibit 10.1
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
EMERGENT AUTO HOLDINGS CORP.
Unaffiliated Seller
and
EMERGENT GROUP, INC.
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of March 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions........................... 1
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE RECEIVABLES
Section 2.01. Agreement to Purchase................. 4
Section 2.02. Purchase Price........................ 4
Section 2.03. Delivery of Receivable File........... 5
Section 2.04. Transfer of Receivables; Assignment
of Agreement......................... 5
Section 2.05. Examination of Receivable File........ 5
Section 2.06. Books and Records..................... 6
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as
to the Unaffiliated Seller........... 6
Section 3.02. Representations and Warranties
Relating to the Receivables.......... 8
Section 3.03. Covenants of the Unaffiliated
Seller............................... 14
Section 3.04. Representations and Warranties of
the Depositor........................ 15
Section 3.05. Repurchase Obligation for Breach of
a Representation or Warranty......... 16
Section 3.06. Reassignment of Purchased
Receivables......................... 17
Section 3.07. Waivers.............................. 17
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Liability of the Unaffiliated
Seller............................... 18
Section 4.02. Merger or Consolidation............... 18
Section 4.03. Costs................................. 19
Section 4.04. Servicing............................. 20
Section 4.05. Mandatory Delivery.................... 20
Section 4.06. Indemnification....................... 20
i
<PAGE>
Page
----
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's
Obligations.......................... 23
Section 5.02. Conditions of Unaffiliated Seller's
Obligations.......................... 25
Section 5.03. Termination of Depositor's
Obligations.......................... 26
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices............................... 27
Section 6.02. Severability of Provisions............ 27
Section 6.03. Agreement of Unaffiliated Seller...... 27
Section 6.04. Survival.............................. 27
Section 6.05. Effect of Headings and Table of
Contents............................. 28
Section 6.06. Successors and Assigns................ 28
Section 6.07. Governing Law......................... 28
Section 6.08. Confirmation of Intent................ 28
Section 6.09. Execution in Counterparts............. 29
Section 6.10. Amendments............................ 29
Section 6.11. Miscellaneous......................... 30
EXHIBITS
Exhibit A - Schedule of Receivables
Exhibit B - Officer's Certificate
ii
<PAGE>
This agreement (the "Unaffiliated Seller's Agreement"), dated as of March
1, 1996, among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware
corporation (the "Depositor"), EMERGENT AUTO HOLDINGS CORP., a Delaware
corporation (the "Unaffiliated Seller") and EMERGENT GROUP, INC., a South
Carolina corporation ("Emergent Group").
W I T N E S S E T H:
WHEREAS, the Depositor has agreed to purchase from the Unaffiliated Seller
and the Unaffiliated Seller, pursuant to this Agreement, is selling to the
Depositor the Receivables and Other Conveyed Property;
WHEREAS, it is the intention of the Unaffiliated Seller and the Depositor
that simultaneously with the Unaffiliated Seller's conveyance of the Receivables
and Other Conveyed Property to the Depositor (a) the Depositor shall deposit the
Receivables and Other Conveyed Property in a trust pursuant to a Pooling and
Servicing Agreement to be dated as of March 1, 1996 (the "Pooling and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor,
Emergent Group, Inc., as servicer, and Bankers Trust Company, as trustee (the
"Trustee") and (b) the Trustee shall issue certificates (the "Certificates")
evidencing beneficial ownership interests in the property of the trust fund
formed by the Pooling and Servicing Agreement (the "Trust Fund") to the
Depositor;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article:
"Agreement" means this Unaffiliated Seller's Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Certificate Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
"Closing Date" shall be March 27, 1996.
<PAGE>
"Commission" means the Securities and Exchange Commission and its
successors.
"Cut-Off Date" means February 29, 1996.
"Cut-Off Date Principal Balance" means as to each Receivable, its unpaid
principal balance as of the Cut-Off Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Lien Certificate" means with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
registrar of titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title.
"Original Pool Balance" means the aggregate unpaid principal balance of the
Receivables as of the Cut-Off Date. The Original Pool Balance is $16,107,339.72.
"Originators" means The Loan Pro$, Inc., a South Carolina corporation, and
Premier Financial Services, Inc., a South Carolina corporation.
"Other Conveyed Property" means all monies at any time paid or payable on
the Receivables or in respect thereof after the Cut-Off Date (including amounts
due on or before the Cut-Off Date but received by the Originators, the
Unaffiliated Seller or the Depositor after the Cut-Off Date), an assignment of
security interests in the Financed Vehicles, the Insurance Policies and any
proceeds from any Insurance Policies relating to the Receivables, the Obligors
or the Financed Vehicles, including rebates of premiums, rights of the
Unaffiliated Seller against Dealers with respect to the Receivables under the
Dealer Agreements and the Dealer Assignments, all items contained in the
Receivables Files, property (including the right to receive future Liquidation
Proceeds) that secures a Receivable and that has been acquired by or on behalf
of the Trustee pursuant to liquidation of such Receivable, and all proceeds of
the foregoing.
"Prospectus" means the Prospectus dated December 2, 1994 relating to the
offering by the Depositor from time to time of its pass-through certificates
(issuable in series) in the form in which it was or will be filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Certificates.
2
<PAGE>
"Prospectus Supplement" means the Prospectus Supplement dated March 25,
1996, relating to the offering of the Certificates in the form in which it was
or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Registration Statement" means that certain registration statement on Form
S-3, as amended (Registration No. 33-84918) relating to the offering by the
Depositor from time to time of its pass-through certificates (issuable in
series) as heretofore declared effective by the Commission.
"Schedule of Receivables" means the schedule of all installment sales
contracts and promissory notes sold and transferred pursuant to this Agreement
which is attached hereto as Schedule A.
"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 Certificates, by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act; or
(c) Subsequent to the execution and delivery of this Agreement, there
shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of
the Certificate Insurer or the Unaffiliated Seller reasonably determined by
the Depositor to be material; or
(d) Subsequent to the date of this Agreement there shall have occurred
any of the following: (i) a suspension or material limitation in trading in
securities substantially similar to the Certificates; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the engagement by the
United States in hostilities, or the escalation of such hostilities, or any
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calamity or crisis, if the effect of any such event specified in this
clause (iii) in the reasonable judgment of the Depositor makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Certificates on the terms and in the manner contemplated in
the Prospectus Supplement.
"Unaffiliated Seller" means Emergent Auto Holdings Corp., in its capacity
as Unaffiliated Seller of the Receivables under this Agreement and any successor
to Emergent Auto Holdings Corp., whether through merger, consolidation, purchase
and assumption of Emergent Auto Holdings Corp. or all or substantially all of
its assets or otherwise.
"Unaffiliated Seller Repurchase Event" means the occurrence of a breach of
any of the Unaffiliated Seller's representations and warranties under Section
3.02 herein.
Capitalized terms used herein that are not otherwise defined shall have the
respective meanings ascribed thereto in the Pooling and Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE RECEIVABLES
Section 2.01. Agreement to Purchase. (a) Subject to the terms and
conditions of this Agreement, the Unaffiliated Seller hereby sells, transfers,
assigns, and otherwise conveys to the Depositor without recourse (but without
limitation of its obligations in this Agreement), and the Depositor hereby
purchases, all right, title and interest of the Unaffiliated Seller in and to
the Receivables and the Other Conveyed Property. It is the intention of the
Unaffiliated Seller and the Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
the Other Conveyed Property from the Unaffiliated Seller to the Depositor,
conveying good title thereto free and clear of any Liens, and the Receivables
and the Other Conveyed Property shall not be part of the Unaffiliated Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Unaffiliated Seller under any bankruptcy or similar law.
Section 2.02. Purchase Price. On the Closing Date, as full consideration
for the Unaffiliated Seller's sale of the Receivables to the Depositor, the
Depositor will deliver to the Unaffiliated Seller (i) an amount in cash equal to
100% of the aggregate principal balance of the Class A Certificates as of the
Closing Date and which amount includes accrued interest on such aggregate
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principal balance at the rate of 6.55% per annum from March 1, 1996 to (but not
including) March 27, 1996, less certain expenses and (ii) the Subordinate
Certificates to be issued pursuant to the Pooling and Servicing Agreement.
Section 2.03. Delivery of Receivable File. On or prior to the Closing Date,
the Unaffiliated Seller shall deliver to the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement), each of the
following documents for each Receivable:
(a) the fully executed original of the Receivable (together with any
agreements modifying the Receivable, including without limitation, any
extension agreements); and
(b) the Lien Certificate (or, if not yet received, such Lien
Certificate must be received within 180 days of Closing), showing the
related Originator as secured party and such documents, if any, that the
related Originator keeps on file in accordance with its customary
procedures indicating that the Financed Vehicle is owned by the Obligor and
subject to the interest of the related Originator as first lienholder or
secured party.
Section 2.04. Transfer of Receivables; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the
Trustee as may be required to effect the purposes of the Pooling and Servicing
Agreement, without further notice to, or consent of, the Unaffiliated Seller,
and the Trustee shall succeed to such of the rights and obligations of the
Depositor hereunder as shall be so assigned. The Depositor shall, pursuant to
the Pooling and Servicing Agreement, assign all of its right, title and interest
in and to the Receivables and its right to exercise the remedies created by this
Section 2.04 and Section 3.05 hereof to the Trustee for the benefit of the
Certificate- holders. The Unaffiliated Seller agrees that, upon such assignment
to the Trustee, such representations, warranties, agreements and covenants will
run to and be for the benefit of the Trustee and the Trustee may enforce
diligently, without joinder of the Depositor, the repurchase obligations of the
Unaffiliated Seller set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.
Section 2.05. Examination of Receivable File. Prior to the Closing Date,
the Unaffiliated Seller shall make the Receivable File available to the
Depositor or its designee for examination at the Unaffiliated Seller's offices
or at such other place as the Unaffiliated Seller shall reasonably specify. Such
examination may be made by the Depositor or its designee at any time on or
before the Closing Date. If the Depositor or its designee makes such examination
prior to the Closing Date and identifies any Receivables that do not conform to
the requirements of the Depositor as described in this Agreement, such
Receivables shall be deleted from the
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Schedule of Receivables. The Depositor may, at its option and without notice to
the Unaffiliated Seller, purchase all or part of the Receivables without
conducting any partial or complete examination. The fact that the Depositor or
the Trustee has conducted or has failed to conduct any partial or complete
examination of the Receivables File shall not affect the rights of the Depositor
or the Trustee to demand repurchase or other relief as provided in this
Agreement.
Section 2.06. Books and Records. The sale of each Receivable shall be
reflected on the Unaffiliated Seller's balance sheet and other financial
statements as a sale of assets by the Unaffiliated Seller. The Unaffiliated
Seller shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Receivable which shall be clearly marked to
reflect the ownership of each Receivable by the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Unaffiliated Seller.
The Unaffiliated Seller hereby represents and warrants to the Depositor, as of
the Closing Date, that:
(a) Organization and Good Standing. The Unaffiliated Seller has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Receivables and the Other Conveyed Property transferred to the
Depositor.
(b) Due Qualification. The Unaffiliated Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business requires
such qualification.
(c) Power and Authority. The Unaffiliated Seller has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Unaffiliated Seller has full power and authority to sell and assign the
Trust Property to be sold and assigned to and deposited with the Depositor
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by it and has duly authorized such sale and assignment to the Depositor by
all necessary corporate action; and the execution, delivery and performance
of this Agreement and the Related Documents to which it is a party have
been duly authorized by the Unaffiliated Seller by all necessary corporate
action.
(d) No False Statement. Neither this Agreement nor the information
contained in the Prospectus Supplement under the captions "The Receivables"
and "The Servicer and the Originators" nor any statement, report or other
document prepared by the Unaffiliated Seller and furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement or alleged untrue
statement of any material fact or omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
(e) Valid Sale; Binding Obligations. This Agreement, when duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Receivables and the Other Conveyed Property, enforceable against the
Unaffiliated Seller and creditors of and purchasers from the Unaffiliated
Seller; and this Agreement, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Unaffiliated Seller
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of
or constitute (with or without notice, lapse of time or both) a default
under, the certificate of incorporation or by-laws of the Unaffiliated
Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Unaffiliated Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement, or
violate any law, order, rule or regulation applicable to the Unaffiliated
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Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Unaffiliated Seller or any of its properties.
(g) No Proceedings. There are no material proceedings or
investigations pending or, to the Unaffiliated Seller's knowledge,
threatened against the Unaffiliated Seller, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Unaffiliated Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Unaffiliated Seller of its obligations under, or the
validity or enforceability of, this Agreement, (iv) involving the
Unaffiliated Seller and which might adversely affect the federal income tax
or other federal, state or local tax attributes of the Certificates, or (v)
that could have a material adverse effect on the Receivables.
(h) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with
the execution and delivery by the Unaffiliated Seller of this Agreement and
the consummation of the transactions contemplated hereby have been or will
be taken or obtained on or prior to the Closing Date.
(i) Chief Executive Office. The chief executive office of the
Unaffiliated Seller is at 44 East Camperdown Way, Greenville, South
Carolina 29601.
Section 3.02. Representations and Warranties Relating to the Receivables.
The Unaffiliated Seller represents and warrants to the Depositor, as of the
Closing Date, that as to each Receivable, immediately prior to the sale and
transfer of the Receivables by the Unaffiliated Seller to the Depositor:
(a) Characteristics of Receivables. Each Receivable (A) was originated
by either Originator in the ordinary course of such Originator's business
and such Originator had all necessary licenses and permits to originate
Receivables in the state where such Originator was located, was fully and
properly executed by the parties thereto or was purchased by either
Originator from a Dealer under an existing Dealer Agreement with either
Originator and was validly assigned by such Dealer to either Originator,
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(B) contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for realization against
the collateral security, and (C) is a fully amortizing Simple Interest
Receivable or Rule of 78s Receivable which provides for level monthly
payments (provided that the payment in the first Collection Period and the
final Collection Period of the life of the Receivable may be minimally
different from the level payment) which, if made when due, shall fully
amortize the Amount Financed over the original term.
(b) No Fraud or Misrepresentation. Each Receivable was originated or
acquired by either Originator without any fraud or material
misrepresentation on the part of a Dealer or on the part of the Obligor.
(c) Compliance with Law. All requirements of applicable federal, state
and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Civil Relief Act of 1940, and state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code and other consumer credit laws and equal credit opportunity and
disclosure laws) in respect of all of the Receivables, each and every sale
of Financed Vehicles and the sale of any physical damage insurance and any
extended service contracts, have been complied with in all material
respects, and each Receivable and the sale of the Financed Vehicle
evidenced by each Receivable and the sale of any physical damage insurance
and any extended service contracts complied at the time it was originated
or made and now complies in all material respects with all applicable legal
requirements.
(d) Origination. Each Receivable was originated in the United States
and, at the time of origination materially conformed to all requirements of
the respective Originator's underwriting guide applicable to such
Receivable.
(e) Binding Obligation. Each Receivable represents the genuine, legal,
valid and binding payment obligation of the Obligor thereon, enforceable by
the holder thereof in accordance with its terms, except (A) as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally and
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by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (B) as such Receivable may be modified by the
application after the Cut-Off Date of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended; and all parties to each Receivable had full
legal capacity to execute and deliver such Receivable and all other
documents related thereto and to grant the security interest purported to
be granted thereby.
(f) No Government Obligor. None of the Receivables shall be due from
the United States of America or any State or from any agency, department,
subdivision or instrumentality thereof.
(g) Obligor Bankruptcy. At the Cut-Off Date, no Obligor had been
identified on the records of the related Originator as being the subject of
a current bankruptcy proceeding.
(h) Schedule of Receivables. The information pertaining to each
Receivable set forth in the Schedule of Receivables was true and correct in
all material respects as of the close of business on the Cut-Off Date and
at the Closing Date.
(i) Marked Records. By the Closing Date, the Unaffiliated Seller will
have caused the portions of the Unaffiliated Seller's records relating to
the Receivables to be clearly and unambiguously marked to show that the
Receivables constitute part of the Trust Property and are owned by the
Trust in accordance with the terms of the Pooling and Servicing Agreement.
(j) Computer Tape or Listing. The Computer Tape or Listing made
available by the Unaffiliated Seller to the Trustee on the Closing Date was
complete and accurate as of the Cut-Off Date and includes a description of
the same Receivables that are described in the Schedule of Receivables.
(k) Chattel Paper. The Receivables constitute chattel paper within the
meaning of the UCC.
(l) One Original. There is only one original executed copy of each
Receivable.
(m) Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains, without
limitation, (a) a fully executed original of the Receivable and (b) the
original Lien Certificate (if received from the State) endorsed by the
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Unaffiliated Seller to the Depositor. Each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces. All blanks on any form have been properly filled in and
each form has otherwise been correctly prepared. Notwithstanding the above,
a copy of the complete Receivable File for each Receivable, which fulfills
the documentation requirements of the related Originator's underwriting
guide as in effect at the time of purchase is in the possession of the
Servicer or the Trustee.
(n) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No provisions of any Receivable have been waived, altered
or modified in any respect since its origination, except by instruments or
documents identified in the Receivable File held by the Trustee. No
Receivable has been modified as a result of application of the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended.
(o) Lawful Assignment. No Receivable 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 Receivable under
this Agreement or pursuant to transfers of the Certificates. The
Unaffiliated Seller has not entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any
portion of the Receivables.
(p) Good Title. No Receivable has been sold, transferred, assigned or
pledged by the Unaffiliated Seller to any Person other than the Depositor;
immediately prior to the conveyance of the Receivables to the Depositor
pursuant to this Agreement, the Unaffiliated Seller was the sole owner
thereof and had good and indefeasible title thereto, free of any Lien
except for the lien of BankAmerica Business Credit, Inc. which will be
simultaneously released with the transfer of the Receivables to Purchaser
and, upon execution and delivery of this Agreement by the Unaffiliated
Seller, the Depositor shall have good and indefeasible title to and will be
the sole owner of such Receivables, free of any Lien. No Dealer has a
participation in, or other right to receive, proceeds of any Receivable.
Neither the Originators nor the Unaffiliated Seller has taken any action to
convey any right to any Person that would result in such Person having a
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right to payments received under the related Insurance Policies or the
related Dealer Agreements or Dealer Assignments or to payments due under
such Receivables.
(q) Security Interest in Financed Vehicle. Each Receivable created or
shall create a valid, binding and enforceable first priority security
interest in favor of the related Originator in the Financed Vehicle. The
Lien Certificate for each Financed Vehicle shows, or if a new or
replacement Lien Certificate is being applied for with respect to such
Financed Vehicle the Lien Certificate will be received within 180 days of
the Closing Date and will show, the related Originator named as the secured
party under each Receivable as the holder of a first priority security
interest in such Financed Vehicle. With respect to each Receivable for
which the Lien Certificate has not yet been returned from the Registrar of
Titles, the related Originator has applied for a Lien Certificate showing
the related Originator as first lienholder. If the Receivable was
originated in a state in which a filing or recording is required of the
secured party to perfect a security interest in motor vehicles, such
filings or recordings have been duly made to show the related Originator
named as the secured party under the related Receivable. The related
Originator's security interest has been validly assigned by the related
Originator to the Unaffiliated Seller pursuant to the Purchase Agreement
and by the Unaffiliated Seller to the Depositor pursuant to this Agreement.
Immediately after the sale, transfer and assignment thereof to the Trust,
each Receivable will be secured by an enforceable and perfected first
priority security interest in the Financed Vehicle in favor of the Trustee
as secured party, which security interest is prior to all other liens upon
and security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any lien for
taxes, labor or materials affecting a Financed Vehicle). As of the Cut-Off
Date there were no Liens or claims for taxes, work, labor or materials
affecting a Financed Vehicle which are or may be Liens prior or equal to
the lien of the related Receivable.
(r) All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken
or performed by any Person in any jurisdiction to give the Trustee a first
priority perfected lien on, or ownership interest in, the Receivables and
the proceeds thereof and the other Trust Property have been made, taken or
performed.
(s) No Impairment. Neither the related Originator nor the Unaffiliated
Seller has done anything to convey any right to any Person that would
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result in such Person having a right to payments due under the Receivable
or otherwise to impair the rights of the Trust and the Certificateholders
in any Receivable or the proceeds thereof.
(t) Receivable Not Assumable. No Receivable is assumable by another
Person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Unaffiliated Seller with respect to such
Receivable.
(u) No Defenses. No Receivable is subject to any right of rescission,
setoff, counterclaim or defense and no such right has been asserted or
threatened with respect to any Receivable.
(v) No Default. There is currently no default, breach, violation or
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable, and there is currently no
effective waiver of any of the foregoing. As of the Cut-Off Date, no
Financed Vehicle had been repossessed.
(w) Insurance. At the time of the origination of each Receivable, the
related Financed Vehicle was covered by a comprehensive and collision
insurance policy (i) in an amount at least equal to the lesser of (a) its
maximum insurable value or (b) the principal amount due from the Obligor
under the related Receivable, (ii) naming the related Originator and its
successors and assigns as loss payee and (iii) insuring against loss and
damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage. Each Receivable
requires the Obligor to maintain physical loss and damage insurance, naming
the related Originator and its successors and assigns as additional insured
parties, and each Receivable permits the holder thereof to obtain physical
loss and damage insurance at the expense of the Obligor if the Obligor
fails to do so.
(x) Receivables. (i) Each Receivable had a remaining maturity, as of
the Cut-Off Date, of at least 2 months but not more than 70 months; (ii)
each Receivable had an original maturity of at least 4 months but not more
than 72 months; (iii) each Receivable had an original principal balance of
at least $483.58 and not more than $18,656.08; (iv) each Receivable had a
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Principal Balance as of the Cut-Off Date of at least $5.45 and not more
than $18,523.29; (v) each Receivable has an Annual Percentage Rate of at
least 17.82% and not more than 45.99%; (vi) no Receivable was more than 30
days past due as of the Cut-Off Date; (vii) no funds have been advanced by
the Unaffiliated Seller, the Servicer, the related Originator, any Dealer,
or anyone acting on behalf of any of them in order to cause any Receivable
to qualify under subclause (vi) of this clause (x); (viii) no Receivable
has a final scheduled payment date on or after February 20, 2003; (ix) the
Principal Balance of each Receivable set forth in the Schedule of
Receivables is true and accurate in all material respects as of the Cut-Off
Date and (x) as of the Cut-Off Date, substantially all of the Aggregate
Principal Balance for all the Receivables is attributable to loans for the
origination or purchase of used Financed Vehicles.
(y) Origination. Each Receivable was originated in the United States
and, at the time of origination, materially conformed to all requirements
of the related Originators underwriting policies and guidelines then in
effect and applicable to such Receivable.
(z) No Adverse Selection. No selection procedures adverse to the
Certificateholders or to the Certificate Insurer have been utilized in
selecting such Receivable from all other similar Receivables originated by
the related Originator.
Section 3.03. Covenants of the Unaffiliated Seller. The Unaffiliated Seller
covenants to the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor and the
firm of independent certified public accountants retained with respect to
the issuance of the Certificates in making available all information and
taking all steps reasonably necessary to permit the accountants' letters
required hereunder to be delivered within the times set for delivery
herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be satisfied
on or prior to the Closing Date all of the conditions to the Depositor's
obligations set forth in Section 5.01 hereof that are within the
Unaffiliated Seller's (or its agents') control.
(c) The Unaffiliated Seller hereby agrees to do all acts,
transactions, and things and to execute and deliver all agreements,
documents, instruments, and papers by and on behalf of the Unaffiliated
Seller as the Depositor or its counsel may reasonably request in order to
consummate the transfer of the Receivables to the Depositor and the
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subsequent transfer thereof to the Trustee, and the rating, issuance and
sale of the Certificates.
(d) The Unaffiliated Seller hereby agrees to arrange separately to pay
to the Trustee all of the Trustee's fees and expenses in connection with
the transactions contemplated by the Pooling and Servicing Agreement,
including, without limitation, all of the Trustee's fees and expenses in
connection with any actions taken by the Trustee pursuant to Section 11.11
thereof. For the avoidance of doubt, the parties hereto acknowledge that it
is the intention of the parties that the Depositor shall not pay any of the
Trustee's fees and expenses in connection with the transactions
contemplated by the Pooling and Servicing Agreement.
Section 3.04. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Unaffiliated Seller,
as of the date of execution of this Agreement and the Closing 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 Receivable and to execute, deliver and perform, and to enter into and
consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, and, assuming the due authorization, execution
and delivery hereof by the Unaffiliated Seller, constitutes the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any
of the transactions contemplated hereby, except such as have been made on
or prior to the Closing Date;
(e) The Depositor has filed or will file the Prospectus and Prospectus
Supplement with the Commission in accordance with Rule 424(b) under the
Securities Act;
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(f) None of the execution and delivery of this Agreement, the purchase
of the Receivables from the Unaffiliated Seller, the consummation of the
other transactions contemplated hereby, or the fulfillment of or compliance
with the terms and conditions of this Agreement, (i) conflicts or will
conflict with the charter or bylaws of the Depositor or conflicts or will
conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration
under, any term, condition or provision of any indenture, deed of trust,
contract or other agreement or other instrument to which the Depositor is a
party or by which it is bound and which is material to the Depositor, or
(ii) results or will result in a violation of any law, rule, regulation,
order, judgment or decree of any court or governmental authority having
jurisdiction over the Depositor.
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 Receivables and the
subsequent transfer thereof by the Depositor to the Trustee and shall continue
in full force and effect, notwithstanding any restrictive or qualified
endorsement on the Receivables and notwithstanding subsequent termination of
this Agreement or the Pooling and Servicing Agreement.
(a) Upon the occurrence of a breach of any of the Unaffiliated Seller's
representations and warranties under Section 3.02 hereof that materially and
adversely affects the related Receivable, the Unaffiliated Seller shall, unless
such breach shall have been cured in all material respects, repurchase the
related Receivable from the Trustee by the last day of the first full calendar
month following discovery by or notice to the Unaffiliated Seller of such breach
pursuant to Section 3.6 of the Pooling and Servicing Agreement, and, on or
before the related Deposit Date, the Unaffiliated Seller shall pay the Purchase
Amount to the Trustee pursuant to the Pooling and Servicing Agreement. To the
extent such Unaffiliated Seller fails to effect its repurchase obligation,
Emergent shall repurchase the related Receivables and pay the Purchase Amount to
the Trustee on such date. The provisions of this Section 3.05 are intended to
grant the Trustee a direct right against the Unaffiliated Seller to demand
performance hereunder, and in connection therewith, the Unaffiliated Seller and
Emergent waive any requirement of prior demand against the Depositor with
respect to such repurchase obligation. Any such purchase resulting from the
Unaffiliated Seller Repurchase Event shall take place in the manner specified in
Section 3.6 of the Pooling and Servicing Agreement. Notwithstanding any other
provision of this Agreement or the Pooling and Servicing Agreement to the
contrary, the obligation of the Unaffiliated Seller under this
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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 Receivable under this Agreement or under the
Pooling and Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether the related
Receivable shall have been purchased by the Unaffiliated Seller, the
Unaffiliated Seller shall indemnify the Depositor, the Trustee, the Backup
Servicer, the Certificate Insurer, the Trust and the Certificateholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to Unaffiliated Seller Repurchase Events.
Section 3.06. Reassignment of Purchased Receivables. Upon deposit in the
Collection Account of the Purchase Amount of any Receivable repurchased by the
Unaffiliated Seller under Section 3.05 hereof, the Depositor and the Trustee
shall take such steps as may be reasonably requested by the Unaffiliated Seller
in order to assign to the Unaffiliated Seller all of the Depositor's and the
Trust's right, title and interest in and to such Receivable and all security and
documents and all Other Conveyed Property conveyed to the Depositor and the
Trust directly relating thereto, without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Depositor or the Trustee. Such assignment shall be
a sale and assignment outright, and not for security. If, following the
reassignment of a Purchased Receivable, in any enforcement suit or legal
proceeding, it is held that the Unaffiliated Seller may not enforce any such
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, the Depositor and the Trustee shall,
at the expense of the Unaffiliated Seller, take such steps as the Unaffiliated
Seller deems reasonably necessary to enforce the Receivable, including bringing
suit in the Depositor's or the Trustee's name or the names of the
Certificateholders.
Section 3.07. Waivers. No failure or delay on the part of the Depositor or
the Trustee as assignee of the Depositor, in exercising any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
or future exercise thereof or the exercise of any other power, right or remedy.
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ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Liability of the Unaffiliated Seller. The Unaffiliated Seller
shall be liable in accordance herewith only to the extent of the obligations in
this Agreement specifically undertaken by such Unaffiliated Seller and its
representations and warranties.
Section 4.02. Merger or Consolidation. The Unaffiliated Seller will keep in
full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation,
in each jurisdiction necessary to protect the validity and enforceability of
this Agreement or any of the Receivables and to perform its duties under this
Agreement.
Any corporation or other entity (i) into which the Unaffiliated Seller may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Unaffiliated Seller is a party or (iii) succeeding to the business of
the Unaffiliated Seller, which corporation has a certificate of incorporation
containing provisions relating to limitations on business and other matters
substantively identical to those contained in the Unaffiliated Seller's
certificate of incorporation, shall execute an agreement of assumption to
perform every obligation of the Unaffiliated Seller under this Agreement and,
whether or not such assumption agreement is executed, shall be the successor to
the Unaffiliated Seller hereunder (without relieving the Unaffiliated Seller 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 an Insurer
Default shall not have occurred and be continuing, the Unaffiliated Seller shall
not merge or consolidate with any other Person or permit any other Person to
become the successor to the Unaffiliated Seller's business without the prior
written consent of the Certificate Insurer. The Unaffiliated Seller shall
promptly inform the other party, the Trustee and, so long as an Insurer Default
shall not have occurred and be continuing, the Certificate Insurer of such
merger, consolidation or purchase and assumption. Notwithstanding the foregoing,
as a condition to the consummation of the transactions referred to in clauses
(i), (ii) and (iii) above, (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Sections 3.1 and 3.2
or covenant made pursuant to Section 3.3, shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become an event of
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default under the Insurance Agreement, shall have occurred and be continuing,
(y) the Unaffiliated Seller shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
4.02 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Unaffiliated
Seller shall have delivered to the Trustee an Opinion of Counsel, stating, in
the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary to preserve and protect the interest of the Trustee in the Trust
Property and reciting the details of the filings or (B) no such action shall be
necessary to preserve and protect such interest.
Section 4.03. Costs. In connection with the transactions contemplated under
this Agreement and the Pooling and Servicing Agreement, the Unaffiliated Seller
shall promptly pay (or shall promptly reimburse the Depositor to the extent that
the Depositor shall have paid or otherwise incurred): (i) the fees and
disbursements of the Unaffiliated Seller's counsel; (ii) the fees of the
Depositor's counsel (excluding fees in connection with "Blue Sky" matters), not
to exceed $175,000; (iii) the fees and disbursements of Ernst & Young, the
Unaffiliated Seller's independent certified public accountants, in rendering a
comfort letter in connection with the Prospectus Supplement; (iv) the fees of
Standard & Poor's Ratings Group and Moody's Investors Service, Inc.; (v) the
fees of the Trustee, the fees and disbursements of the Trustee's counsel, if any
and the fees of the Trustee for custodial acceptance and loan deposit; (vi)
expenses incurred in connection with printing the Prospectus, the Prospectus
Supplement, any amendment or supplement thereto, any preliminary prospectus and
the Certificates; (vii) fees and expenses relating to the filing of documents
with the Securities and Exchange Commission (including without limitation
periodic reports under the Exchange Act); and (viii) the shelf registration
amortization fee paid in connection with the issuance of Certificates. The
Unaffiliated Seller 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 Certificate Insurer
including, without limitation, legal fees and expenses, accountant fees and
expenses and expenses in connection with due diligence conducted on the
Receivable File. All other costs and expenses in connection with the
transactions contemplated hereunder shall be borne by the party incurring such
expenses.
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Section 4.04. Servicing. The Receivables shall be serviced by the Servicer
in accordance with the Pooling and Servicing Agreement.
Section 4.05. Mandatory Delivery. Each document specified in Section 2.03
for each Receivable shall be delivered to the Depositor on or before the Closing
Date (except as otherwise provided in such Section 2.03).
Section 4.06. Indemnification. (a)(i) The Unaffiliated Seller agrees to
indemnify and hold harmless the Depositor, each of its directors, each of its
officers who have signed the Registration Statement, Prudential Securities
Incorporated and each of its directors and each person or entity who controls
the Depositor or Prudential Securities Incorporated or any such person, within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages or liabilities, joint and several, to which the Depositor,
Prudential Securities Incorporated or any such person or entity may become
subject, under the Securities Act or otherwise, and will reimburse the
Depositor, Prudential Securities Incorporated and each such controlling person
for any legal or other expenses incurred by the Depositor, Prudential Securities
Incorporated or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or any amendment or
supplement to the Prospectus Supplement or the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements in the Prospectus Supplement or any amendment or supplement
to the Prospectus Supplement, in light of the circumstances under which they
were made, not misleading, but 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 referred to in Section
3.01(d). This indemnity agreement will be in addition to any liability which the
Unaffiliated Seller may otherwise have.
(ii) The Unaffiliated Seller agrees to indemnify and to hold each of the
Depositor, the Trustee, the Certificate Insurer and each Certificateholder
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Depositor, the Trustee, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the
Unaffiliated Seller to perform its duties in compliance with the terms of this
Agreement.
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(b) The Depositor agrees to indemnify and hold harmless the Unaffiliated
Seller, each of its directors and each person or entity who controls the
Unaffiliated Seller or any such person, within the meaning of Section 15 of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint and several, to which the Unaffiliated Seller or any such person or entity
may become subject, under the Securities Act or otherwise, and will reimburse
the Unaffiliated Seller and any such director or controlling person for any
legal or other expenses incurred by the Unaffiliated Seller or any such director
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is other than a statement or omission relating to
the information set forth in subsection (a)(i) of this Section 4.06. 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
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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 Seller- Provided Information
(defined below) is accurate and complete in all material respects, to indemnify
and hold harmless the Seller, its respective officers and directors and each
person who controls the Seller within the meaning of the Securities Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act or the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Derived Information
provided by the Depositor, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred.
The obligations of the Depositor under this Section 4.06(d) shall be in addition
to any liability which the Depositor may otherwise have.
The procedures set forth in Section 4.06(c) shall be equally applicable to
this Section 4.06(d).
(e) For purposes of this Section 4.06, the term "Derived Information" means
such portion, if any, of the information used by the Depositor for filing with
the Commission on Form 8-K as: (i) is not contained in the Prospectus without
taking into account information incorporated therein by reference; and (ii) does
not constitute Seller-Provided Information. "Seller-Provided Information" means
any computer tape furnished to the Depositor by the Seller concerning the assets
comprising the Trust.
(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
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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 the Unaffiliated Seller on the one hand, and the Depositor on the
other, the Unaffiliated Seller'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. The
Unaffiliated Seller and the Depositor agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation. For purposes of this Section 4.06, each director of the Depositor,
each officer of the Depositor who signed the Registration Statement, and each
person, if any who controls the Depositor within the meaning of Section 15 of
the Securities Act, shall have the same rights to contribution as the Depositor,
and each director of the Unaffiliated Seller, and each person, if any who
controls the Unaffiliated Seller within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the Unaffiliated
Seller.
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The obligations of the
Depositor to purchase the Receivables will be subject to the satisfaction, on
the Closing Date, of the following conditions. Upon payment of the purchase
price for the Receivables, such conditions shall be deemed satisfied or waived.
(a) Each of the obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Unaffiliated Seller under this Agreement
shall be true and correct as of the Closing Date and no event shall have
occurred which, with notice or the passage of time, would constitute a default
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under this Agreement, and the Depositor shall have received a certificate to the
effect of the foregoing signed by an authorized officer of the Unaffiliated
Seller.
(b) The Depositor shall have received (i) 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
captions "The Servicer and The Originators" and (ii) 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 Receivables."
(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 Receivables;
(ii) the Pooling and Servicing Agreement and the Underwriting
Agreement dated as of March 25, 1996 between the Depositor and Prudential
Securities Incorporated and all documents required thereunder, duly
executed and delivered by each of the parties thereto other than the
Depositor;
(iii) an officer's certificate, dated as of the Closing Date, in the
form of Exhibit B hereto, and attached thereto resolutions of the board of
directors of the Unaffiliated Seller and a copy of the by-laws of the
Unaffiliated Seller;
(iv) copy of the Unaffiliated Seller's charter and all amendments,
revisions, and supplements thereof, certified as of a recent date by the
Secretary of State of the State of Delaware;
(v) an opinion of the counsel for the Unaffiliated Seller as to
various corporate matters (it being agreed that the opinion shall expressly
provide that the Trustee shall be entitled to rely on the opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in forms
acceptable to the Depositor, its counsel, Standard & Poor's Ratings Group
and Moody's Investors Service, Inc. as to such matters as shall be
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required for the assignment of a rating to the Class A Certificates of
"AAA" by Standard & Poor's Ratings Group, and "Aaa" by Moody's Investors
Service, Inc. (it being agreed that such opinions shall expressly provide
that the Trustee shall be entitled to rely on such opinions);
(vii) a letter from Moody's Investors Service, Inc. that it has
assigned a rating of "Aaa" to the Class A Certificates;
(viii) a letter from Standard & Poor's Ratings Group that it has
assigned a rating of "AAA" to the Class A Certificates;
(ix) an opinion of counsel for the Trustee in form and substance
acceptable to the Depositor, its counsel, Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group (it being agreed that the opinion shall
expressly provide that the Unaffiliated Seller shall be entitled to rely on
the opinion);
(x) an opinion or opinions of counsel for the Servicer, in form and
substance acceptable to the Depositor, its counsel, Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group (it being agreed that the
opinion shall expressly provide that the Unaffiliated Seller shall be
entitled to rely on the opinion);
(xi) an opinion or opinions of counsel for the Certificate Insurer, in
each case in form and substance acceptable to the Depositor, its counsel,
Moody's Investors Service, Inc. and Standard & Poor's Ratings Group (it
being agreed that the opinion shall expressly provide that the Unaffiliated
Seller shall be entitled to rely on the opinion); and
(e) The Certificate Insurance Policy shall have been duly executed,
delivered and issued with respect to the Certificates.
(f) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be satisfactory in form
and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the Depositor with such
other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
Section 5.02. Conditions of Unaffiliated Seller's Obligations. The
obligations of the Unaffiliated Seller under
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this Agreement shall be subject to the satisfaction, on the Closing Date, of the
following conditions:
(a) Each of the obligations of the Depositor required to be performed
by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date, and the Unaffiliated
Seller shall have received a certificate to that effect signed by an
authorized officer of the Depositor.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents
required thereunder, in each case executed by the Depositor as
applicable; and
(ii) a copy of a letter from Moody's Investors Service, Inc. to
the Depositor to the effect that it has assigned a rating of "Aaa" to
the Class A Certificates and a copy of a letter from Standard & Poor's
Ratings Group to the Depositor to the effect that it has assigned a
rating of "AAA" to the Class A Certificates.
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Agreement as
the Unaffiliated Seller may reasonably request.
Section 5.03. Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Unaffiliated Seller at any
time before delivery of and payment of the purchase price for the Receivables
if: (i) any of the conditions set forth in Section 5.01 are not satisfied when
and as provided therein; (ii) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Unaffiliated Seller, or for the
winding up or liquidation of the affairs of the Unaffiliated Seller; (iii) there
shall have been the consent by the Unaffiliated Seller to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller or of or relating to substantially all of the property
of the Unaffiliated Seller; (iv) any purchase and assumption agreement with
respect to the Unaffiliated Seller or the assets and properties of the
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Unaffiliated Seller 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, 130 John Street, New York, New York 10038, if to the Unaffiliated
Seller, addressed to the Unaffiliated Seller at Emergent Auto Holdings Corp., 44
East Camperdown Way, Greenville, South Carolina 29601 or to such other address
as the Unaffiliated Seller may designate in writing to the Depositor and if to
the Emergent Parents, addressed to Emergent Group, Inc., 15 South Main Street,
Suite 750, Greenville, South Carolina 29601.
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 Receivable shall not invalidate or render unenforceable
such provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereto waive any provision of law which prohibits or renders
void or unenforceable any provision hereof.
Section 6.03. Agreement of Unaffiliated Seller. The Unaffiliated Seller
agrees to execute and deliver such instruments and take such actions as the
Depositor may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate
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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 Receivables.
Section 6.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Certificate Insurer; provided, however, that the Depositor may
assign its rights hereunder without the consent of the Unaffiliated Seller.
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 Receivables by the Unaffiliated Seller
to the Depositor as contemplated by this Unaffiliated Seller's Agreement be, and
be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Receivables. It is, further, not the intention of the parties
that such conveyance be deemed a pledge of the Receivables by the Unaffiliated
Seller to the Depositor to secure a debt or other obligation of the Unaffiliated
Seller. However, in the event that, notwithstanding the intent of the parties,
the Receivables are held to continue to be property of the Unaffiliated Seller
then (a) this Unaffiliated Seller's Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code; (b) the transfer of the Receivables provided for herein shall
be deemed to be a grant by the Unaffiliated Seller to the Depositor of a
security interest in all of the Unaffiliated Seller's right, title and interest
in and to the Receivables and all amounts payable on the Receivables in
accordance with the terms thereof and all proceeds of the conversion,
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voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property; (c) the possession by the Depositor of Receivables and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Depositor pursuant to any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. The Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Receivables, 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 super- sedes all prior agreements
and understandings relating to the subject matter hereof.
(a) This Agreement may be amended by the Unaffiliated Seller, the Depositor
and Emergent Group, Inc., with the prior written consent of the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) but without the consent of the Trustee or any of the
Certificateholders (unless an Insurer Default shall have occurred, in which
event the consent of the Certificate Majority shall be obtained) (i) to cure any
ambiguity or (ii) to correct any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect in any material respect the interests
of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Unaffiliated Seller, the Depositor and Emergent Group, Inc. with the prior
written consent of the Certificate Insurer (so long as an Insurer Default shall
not have occurred
29
<PAGE>
and be continuing) and with the consent of the Trustee and a Certificate
Majority, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate or the Pass--
Through Rate or (ii) reduce the aforesaid percentage required to consent to any
such amendment or any waiver hereunder, without the consent of the Holders of
all Certificates then outstanding.
(c) Prior to the execution of any such amendment or consent, Emergent
Group, Inc. shall have furnished written notification of the substance of such
amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates. The consent of any Holder of a Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate.
Section 6.11. Miscellaneous. (a) The parties agree that each of the
Certificate Insurer and the Trustee is an intended third-party beneficiary of
this Agreement to the extent necessary to enforce the rights and to obtain the
benefit of the remedies of the Depositor under this Agreement which are assigned
to the Trustee for the benefit of the Certificateholders pursuant to the Pooling
and Servicing Agreement and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Unaffiliated Seller under
Section 4.01 and 4.05(a)(ii) 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
30
<PAGE>
Incorporated or any such person, within the meaning of Section 15 of the
Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.05(a)(i) of this Agreement.
(b) The Depositor and the Unaffiliated Seller intend the conveyance by the
Unaffiliated Seller to the Depositor of all of its right, title and interest in
and to the Receivables pursuant to this Agreement to constitute a purchase and
sale and not a loan.
[Signatures Commence on Following Page]
31
<PAGE>
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: /s/ Glen Stein
----------------------
Name: Glen Stein
Title: Vice President
EMERGENT AUTO HOLDINGS CORP.
By: /s/ Kevin Mast
----------------------
Name: Kevin Mast
Title: Vice President/
Treasurer
EMERGENT GROUP, INC.
By: /s/ Kevin Mast
----------------------
Name: Kevin Mast
Title: Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On March 26, 1996 before me, the undersigned, a Notary Public in and for
said County and State, personally appeared Glen Stein, personally known to me
(or proved to me on the basis of satisfactory evidence) to be Glen Stein 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.
/s/ Maureen Frederick
----------------------
Notary Public
My Commission expires:
33
<PAGE>
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On March 26, 1996 before me, the undersigned, a Notary Public in and for
said County and State, personally appeared Kevin Mast, personally known to me
(or proved to me on the basis of satisfactory evidence) to be Kevin Mast of
Emergent Auto Holdings 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.
/s/ Richard Kim
----------------------
Notary Public
My Commission expires:
<PAGE>
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On March 26, 1996 before me, the undersigned, a Notary Public in and for
said County and State, personally appeared Kevin Mast, personally known to me
(or proved to me on the basis of satisfactory evidence) to be Kevin Mast 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.
/s/ Richard Kim
----------------------
Notary Public
My Commission expires:
<PAGE>
EXHIBIT A
SCHEDULE OF RECEIVABLES
Branch Acct Loan Balance
40 690 2 6,737.88
40 937 2 3,774.32
40 942 6 4,339.81
40 1017 5 2,778.47
40 1060 3 11,335.05
40 1071 2 3,867.70
40 1337 3 10,701.34
40 1381 4 3,666.30
40 1385 1 5,358.03
40 1436 3 605.27
40 1544 6 7,858.42
40 1555 9 3,638.86
40 1605 5 5,960.56
40 1625 3 6,116.10
40 1630 2 5,968.70
40 1654 1655 4,861.14
40 1669 6 8,629.79
40 1681 11 870.77
40 1689 1690 1,169.98
40 1690 7 4,294.96
40 1702 5 2,228.07
40 1704 4 891.40
40 1721 3 5,998.71
40 1725 2 2,228.36
40 1797 4 4,282.17
40 1804 4 1,766.34
40 1808 4 817.55
40 1863 2 6,903.43
40 1878 2 5,718.58
40 1884 1 3,145.27
40 1892 1893 3,294.14
40 1895 2 1,311.85
40 1941 2 295.69
40 1953 5 6,398.49
40 1966 2 1,859.71
40 1969 4 1,716.47
40 1972 3 2,509.09
40 2024 4 8,509.79
40 2025 1 3,101.48
40 2039 3 3,439.31
40 2047 2 9,360.84
40 2052 2 1,967.57
40 2064 2065 9,759.58
40 2081 4 9,390.42
40 2086 2 3,911.12
40 2087 2 3,931.68
40 2091 2 3,039.26
40 2096 2 11,313.73
40 2097 2 3,115.31
40 2098 1 3,688.25
40 3021 1 4,272.99
40 3032 2 10,650.00
40 3036 2 3,565.88
40 3052 3 1,166.51
40 3056 1 5,793.98
40 3060 1 2,809.25
40 3067 2 1,738.61
40 3071 4 664.41
40 3077 3 3,455.05
40 3094 2 2,182.43
40 3096 1 1,288.84
40 4020 4 3,650.27
40 4022 1 1,550.71
40 4035 2 4,468.15
40 4037 3 5,395.95
40 4042 4 506.46
40 4043 2 5,638.03
40 4058 2 2,527.91
40 4060 1 1,056.53
40 4094 2 4,101.48
40 4095 1 1,825.42
40 4098 1 1,086.59
40 4108 4 4,193.21
40 4109 1 3,100.47
40 4118 2 6,348.64
40 4122 4 566.43
40 4125 1 2,290.06
40 4126 1 2,797.44
40 4130 2 1,879.81
40 4136 2 3,240.26
40 4146 1 2,411.39
40 4148 2 466.07
40 4149 1 1,670.16
40 4157 2 4,672.95
40 4167 1 1,607.22
40 4168 2 8,847.81
40 4169 2 4,693.80
40 4181 2 8,100.10
40 4183 1 3,043.52
40 4185 1 7,603.92
40 4186 1 3,388.64
40 4194 1 3,314.22
40 4196 1 4,770.13
40 4197 3 9,843.28
A-1
<PAGE>
40 4198 1 6,016.27
40 4200 2 5,550.49
40 4201 3 1,681.78
40 4202 1 1,607.73
40 4208 1 4,722.46
40 4212 2 4,980.17
40 4219 1 1,269.89
40 4220 1 8,144.34
40 4221 1 2,264.24
40 4233 1 3,389.22
40 4234 3 15,824.24
40 4235 1 3,853.22
40 4236 2 2,525.21
40 4238 1 3,215.50
40 4241 2 1,504.81
40 4242 1 1,890.17
40 4244 1 5,428.74
40 4249 1 4,132.99
40 4250 1 4,367.42
40 4256 4 2,548.23
40 4259 1 5,750.67
40 4260 2 9,698.36
40 4265 1 3,812.41
40 4277 1 4,298.69
40 4278 1 5,502.71
40 4280 3 8,247.87
40 4281 1 5,283.29
40 4285 1 3,889.60
40 4288 1 2,409.04
40 4289 1 305.18
40 4290 4 16,194.95
40 4295 2 4,825.55
40 4299 1 4,678.60
40 4302 1 3,455.25
40 4303 1 5,858.88
40 4306 2 8,629.65
40 4309 1 5,818.59
40 4310 2 5,239.15
40 4312 1 1,745.62
40 4316 1 3,847.99
40 4317 1 257.09
40 4319 3 871.06
40 4324 1 6,528.97
40 4326 3 5,814.51
40 4332 4 952.37
40 4336 2 6,793.98
40 4337 1 3,400.11
40 4338 3 11,822.24
40 4341 1 4,366.11
40 4346 1 3,085.98
40 4348 1 6,148.95
40 4350 1 5,223.69
40 4354 1 5,625.36
40 4355 1 4,711.16
40 4356 1 823.85
40 4359 1 6,268.62
40 4361 1 3,624.10
40 4382 1 3,749.63
40 4383 1 6,531.32
40 4384 3 9,416.97
40 4389 1 5,255.98
40 4392 2 6,449.92
40 4393 3 4,984.66
40 4394 3 3,273.30
40 4411 1 3,414.00
40 4416 1 7,268.34
40 4418 6 12,225.32
40 4419 1 1,317.54
40 4425 2 1,901.43
40 4426 1 4,345.25
40 4429 1 4,284.20
40 4430 1 3,990.74
40 4436 1 3,128.23
40 4440 1 4,774.74
40 4441 1 989.44
40 4442 2 11,528.65
40 4443 1 5,791.20
40 4444 1 2,856.46
40 4448 1 4,913.02
40 4454 1 4,878.11
40 4457 1 3,955.98
40 4458 2 8,533.18
40 4465 1 1,879.69
40 4469 1 4,033.06
40 4473 1 4,704.07
40 4474 2 5,550.33
40 4478 1 2,234.39
40 4480 2 4,226.03
40 4483 1 4,404.03
40 4492 1 2,967.40
40 4495 1 2,693.55
40 4498 2 5,082.23
40 4500 1 1,300.36
40 4506 1 3,049.96
40 4507 1 2,557.86
40 4509 1 7,092.09
40 4512 1 7,423.69
40 4513 1 5,279.15
40 4520 1 1,482.56
40 4524 1 2,233.87
40 4527 1 3,769.95
A-2
<PAGE>
40 4533 1 2,421.79
40 4534 1 2,492.07
40 4537 1 3,633.10
40 4538 1 5,932.01
40 4541 1 4,421.97
40 4542 1 4,977.45
40 4549 1 8,064.55
40 4550 1 5,905.33
40 4552 1 577.87
40 4553 2 5,635.48
40 4554 2 7,945.29
40 4557 1 6,703.99
40 4560 1 4,382.05
40 4562 2 1,038.40
40 4565 1 2,536.84
40 4568 2 3,598.83
40 4571 1 5,764.27
40 4572 1 861.75
40 4573 1 4,499.22
40 4574 1 5,656.54
40 4577 1 2,727.06
40 4579 1 4,537.90
40 4580 1 7,704.14
40 4584 1 5,178.66
40 4588 1 2,954.40
40 4589 2 6,108.58
40 4590 1 3,976.24
40 4592 2 10,255.62
40 4597 2 2,089.71
40 4599 1 8,025.00
40 4600 1 4,199.61
40 4602 1 5,712.58
40 4603 1 7,053.18
40 4606 1 8,659.49
40 4608 1 4,294.27
40 4611 1 3,263.18
40 4612 1 6,868.26
40 4617 1 3,924.45
40 4621 1 6,213.96
40 4622 1 8,243.94
40 4627 1 5,933.44
40 4629 1 3,505.65
40 4631 1 8,630.36
40 4634 1 6,406.45
40 4638 2 7,207.94
40 4639 1 816.09
40 4642 1 4,303.30
40 4643 1 3,251.11
40 4647 1 7,556.73
40 4652 1 4,970.38
40 4653 1 3,819.70
40 4654 2 13,029.89
40 4655 1 9,897.32
40 4656 1 1,775.73
40 4662 1 13,479.56
40 4663 1 6,511.99
40 4664 1 2,253.97
40 4665 1 8,534.81
40 4667 1 3,194.33
40 4668 1 3,790.77
40 4670 1 1,047.52
40 4672 1 5,646.00
40 4673 1 6,112.86
40 4675 1 6,124.75
40 4680 1 3,018.68
40 4682 1 7,444.87
40 4683 1 5,286.57
40 4686 2 360.04
40 4687 2 4,361.86
40 4688 1 7,891.83
40 4689 1 7,499.31
40 4690 2 1,478.74
40 4693 1 4,971.84
40 4696 1 6,635.84
40 4697 1 7,911.84
40 4700 1 4,773.73
40 4701 1 5,664.92
40 4703 1 7,359.00
40 4705 1 9,084.39
40 4707 1 6,303.66
40 4708 1 1,885.88
40 4711 1 10,017.37
40 4712 1 2,659.56
40 4716 1 902.04
40 4717 1 6,347.02
40 4718 1 5,508.82
40 4719 1 2,528.24
40 4720 1 11,506.56
40 4721 1 213.23
40 4723 1 8,216.03
40 4725 1 7,358.61
40 4726 1 5,276.01
40 4732 2 3,556.02
40 4734 1 8,020.18
40 4735 1 9,645.80
40 4736 1 7,470.88
40 4737 1 10,837.28
40 4738 1 4,248.15
40 4739 1 6,031.02
40 4744 1 8,042.46
40 4745 1 347.23
40 4747 1 2,531.27
40 4749 1 7,195.43
40 4750 2 6,587.56
40 4752 1 9,348.61
40 4753 1 824.43
A-3
<PAGE>
40 4755 1 7,777.75
40 4758 1 8,728.96
40 4759 1 1,910.48
40 4760 1 5,329.11
40 4762 1 4,235.63
40 4763 1 6,776.05
40 4764 1 10,822.39
40 4765 1 5,977.80
40 4769 2 6,221.02
40 4770 1 5,589.25
40 4771 1 9,563.44
40 4773 1 1,166.94
40 4775 1 7,045.76
40 4776 1 4,128.81
40 4777 1 5,249.37
40 4778 1 7,035.61
40 4779 1 1,107.86
40 4781 1 5,731.07
40 4783 1 3,658.23
40 4784 1 6,482.16
40 4785 1 7,790.53
40 4786 2 8,502.86
40 4787 1 9,614.22
40 4789 1 9,600.23
40 4790 1 5,234.10
40 4791 1 4,735.18
40 4793 1 5,974.36
40 4796 1 9,097.70
40 4800 1 7,205.35
40 4802 2 6,200.28
40 4803 1 8,797.73
40 4804 1 7,290.24
40 4805 1 1,073.75
40 4808 1 10,275.92
40 4809 1 8,551.68
40 4810 1 5,539.90
40 4811 1 7,943.46
40 4812 1 7,590.87
40 4813 1 4,413.56
40 4814 1 9,453.76
40 4816 2 6,261.45
40 4818 1 7,426.56
40 4819 1 6,534.89
40 4820 1 9,891.66
40 4822 2 9,893.66
40 4823 2 3,374.59
40 4824 1 7,748.86
40 4825 1 7,383.70
40 4826 1 4,553.30
40 4827 2 3,943.43
40 4828 2 11,428.62
40 4829 1 9,147.83
40 4830 1 7,432.66
40 4832 1 6,994.73
40 4834 2 11,188.85
40 4837 1 3,876.87
40 4839 1 3,407.73
40 4840 1 13,197.44
40 4842 1 5,481.40
40 4843 1 5,953.41
40 4846 1 6,618.90
40 4847 1 9,427.31
40 4848 1 2,700.84
40 4849 1 3,703.04
40 4850 1 8,651.10
40 4851 1 2,192.04
40 4853 1 7,006.70
40 4855 1 9,241.11
40 4856 1 6,227.66
40 4857 1 4,390.85
40 4860 1 7,116.04
40 4861 2 7,688.52
40 4862 1 623.90
40 4863 2 10,591.02
40 4865 1 7,990.62
40 4866 1 5,865.40
40 4868 1 5,954.90
40 4870 1 6,215.28
40 4871 1 6,307.19
40 4872 1 2,374.87
40 4875 1 8,018.80
40 4876 1 7,171.38
40 4877 1 5,692.32
40 4878 1 6,929.42
40 4880 1 7,779.60
40 4882 1 8,234.81
40 4883 1 528.93
40 4884 1 6,761.25
40 4885 1 6,901.08
40 4887 1 2,761.55
40 4888 1 8,743.68
40 4889 1 7,342.22
40 4890 1 6,602.91
40 4891 1 8,241.85
40 4892 1 6,959.65
40 4893 1 8,312.77
40 4894 1 7,132.10
40 4897 2 7,835.94
40 4898 1 8,361.47
40 4902 2 6,574.51
40 4903 1 5,670.14
40 4904 1 9,695.33
40 4909 1 6,161.43
40 4911 1 10,057.06
40 4912 1 8,808.33
40 4914 1 7,293.80
A-4
<PAGE>
40 4916 1 6,309.73
40 4917 1 9,524.02
40 4918 1 6,044.00
40 4919 1 3,077.64
40 4920 2 6,445.17
40 4921 1 3,260.18
40 4922 1 8,401.77
40 4925 1 6,800.00
40 4926 1 6,819.18
40 4927 1 1,049.56
40 4928 1 8,457.49
40 4929 1 4,576.72
40 4932 1 597.66
40 4933 1 7,193.42
40 4934 2 9,927.86
40 4936 3 12,667.07
40 4938 1 7,499.89
40 4941 1 7,149.88
40 4943 1 2,256.72
40 4945 2 7,109.65
40 4946 1 3,407.00
40 4947 1 5,653.61
40 4948 1 11,874.59
40 4949 1 6,561.72
40 4957 1 5,825.08
40 4958 1 1,223.84
40 4960 1 8,194.51
40 4963 1 9,877.53
40 4966 3 7,449.37
40 4969 1 6,329.37
40 4972 1 9,095.83
40 4973 1 8,066.55
40 4976 1 6,037.97
40 4978 1 4,301.72
40 4982 1 8,034.93
40 4983 2 5,722.11
40 4986 2 4,594.36
40 4987 1 7,362.61
40 4988 1 7,516.13
40 4989 1 3,843.51
40 4990 2 7,986.47
40 4991 1 8,370.56
40 4993 1 2,531.62
40 4995 1 2,255.00
40 4998 1 5,150.02
40 4999 1 7,724.91
40 5003 1 2,800.80
40 5004 1 8,745.75
40 5006 1 4,326.34
40 5009 2 2,179.22
40 5010 1 5,365.58
40 5011 1 4,033.36
40 5012 1 4,631.47
40 5014 1 5,728.42
40 5016 1 5,761.90
40 5017 1 298.61
40 5018 1 2,746.16
40 5019 2 7,909.08
40 5021 2 9,978.00
40 5022 2 8,441.64
40 5023 1 5,662.56
40 5024 1 8,518.65
40 5025 1 7,914.49
40 5028 1 2,182.17
40 5031 1 7,536.44
40 5032 1 5,795.45
40 5033 1 3,785.81
40 5034 1 6,301.43
40 5035 1 7,414.33
40 5038 1 7,133.77
40 5040 1 6,936.93
40 5041 1 7,128.10
40 5042 1 6,525.24
40 5044 1 5,005.77
40 5048 1 6,515.98
40 5049 1 9,118.24
40 5052 1 6,338.14
40 5053 1 8,257.81
40 5057 2 11,774.63
40 5058 1 7,406.86
40 5062 1 8,383.16
40 5063 1 7,376.27
40 5065 1 8,942.81
40 5067 1 6,317.70
40 5068 1 6,873.17
40 5069 1 709.21
40 5071 1 5,612.88
40 5072 2 5,305.30
40 5073 1 3,404.10
40 5078 1 4,691.23
40 5079 1 8,433.61
40 5080 1 4,250.34
40 5083 1 7,254.69
40 5085 1 6,082.91
40 5090 1 8,926.52
40 5095 1 7,688.99
40 5096 1 9,372.50
40 5097 1 6,014.19
40 5101 1 4,976.86
40 5104 1 4,726.91
40 5105 1 5,231.75
40 5106 2 7,768.86
40 5107 1 5,444.59
40 5109 1 5,168.20
40 5110 1 7,132.38
40 5113 3 4,681.95
A-5
<PAGE>
40 5114 1 6,810.55
40 5115 2 5,744.52
40 5117 1 6,668.99
40 5118 1 10,000.00
40 5121 1 7,017.89
40 5122 1 4,783.73
40 5125 1 3,593.52
40 5126 1 9,560.44
40 5131 1 7,727.42
40 5133 1 6,098.69
40 5134 1 956.10
40 5136 1 5,830.86
40 5138 1 8,371.31
40 5139 1 9,704.94
40 5140 1 6,875.21
40 5142 1 6,162.35
40 5143 1 9,297.46
40 5145 1 8,145.09
40 5150 1 7,313.29
40 5151 1 5,662.41
40 5154 1 7,432.47
40 5157 1 5,781.36
40 5158 1 2,840.93
40 5159 1 5,475.39
40 5160 2 2,911.76
40 5162 1 1,139.82
40 5164 1 6,447.60
40 5166 1 11,443.60
40 5167 1 1,378.86
40 5168 1 10,070.52
40 5169 1 540.66
40 5171 1 3,876.99
40 5172 1 2,857.23
40 5173 1 5,388.89
40 5177 1 5,721.50
40 5178 1 4,574.15
40 5179 1 1,160.54
40 5180 1 883.12
40 5181 1 7,466.84
40 5182 1 7,925.38
40 5187 2 10,210.90
40 5189 1 8,281.05
40 5194 1 4,378.46
40 5196 1 1,608.46
40 5197 1 8,371.35
40 5198 1 8,797.62
40 5199 1 5,860.92
40 5202 1 8,164.26
40 5203 1 8,613.79
40 5204 1 10,158.33
40 5205 1 8,987.00
40 5207 1 7,566.33
40 5209 1 6,550.38
40 5211 1 9,041.83
40 5213 1 558.16
40 5214 1 7,513.21
40 5216 1 7,665.06
40 5219 2 11,882.26
40 5220 2 5,869.75
40 5221 1 6,743.83
40 5222 1 8,750.38
40 5226 1 8,290.34
40 5228 1 8,073.26
40 5231 1 8,779.82
40 5232 2 8,714.91
40 5234 1 2,526.99
40 5237 1 4,852.49
40 5238 1 5,303.72
40 5239 1 9,759.00
40 5240 1 7,300.96
40 5241 1 8,032.28
40 5243 1 8,203.27
40 5245 1 6,300.40
40 5247 1 4,529.32
40 5249 2 1,512.12
40 5250 1 7,673.46
40 5251 1 6,461.91
40 5252 1 1,313.89
40 5253 1 8,209.70
40 5255 1 8,403.73
40 5257 1 8,269.92
40 5258 1 2,732.13
40 5259 1 3,600.13
40 5260 1 7,262.66
40 5261 1 7,262.92
40 5262 1 6,169.92
40 5264 1 3,368.46
40 5265 1 7,572.11
40 5266 1 5,171.57
40 5267 1 7,817.75
40 5269 1 6,245.33
40 5270 1 8,613.72
40 5271 1 9,404.59
40 5272 1 7,784.63
40 5273 1 8,391.69
40 5275 1 6,655.63
40 5276 1 7,817.57
40 5277 1 6,993.30
40 5278 1 7,055.62
40 5279 1 2,241.99
40 5280 1 7,112.72
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40 5282 1 6,323.33
40 5283 1 6,755.50
40 5285 1 8,020.21
40 5287 1 4,701.37
A-6
<PAGE>
40 5288 1 5,860.33
40 5291 1 9,361.85
40 5292 1 9,306.98
40 5293 1 3,385.38
40 5294 1 7,184.55
40 5297 1 8,985.46
40 5298 1 5,996.97
40 5299 1 5,000.44
40 5300 1 7,261.71
40 5301 1 8,615.64
40 5303 1 8,508.76
40 5304 1 8,124.99
40 5305 1 787.06
40 5306 1 4,479.52
40 5308 1 3,185.93
40 5309 1 7,863.35
40 5313 1 8,420.01
40 5314 1 9,134.24
40 5315 2 13,225.57
40 5316 1 5,485.19
40 5317 1 4,772.16
40 5319 1 5,876.47
40 5320 1 7,099.80
40 5321 1 7,446.69
40 5323 1 5,802.90
40 5327 1 7,871.96
40 5328 1 9,459.99
40 5331 1 8,662.93
40 5332 1 4,692.56
40 5334 1 7,272.43
40 5335 1 5,670.52
40 5336 1 6,772.04
40 5337 1 6,518.51
40 5338 1 8,585.65
40 5341 1 6,602.38
40 5342 1 9,706.05
40 5343 1 8,217.78
40 5344 1 3,127.44
40 5345 1 8,110.76
40 5346 1 9,899.37
40 5347 1 3,045.18
40 5348 1 3,816.24
40 5349 1 8,500.00
40 5350 1 2,735.87
40 5351 1 4,243.21
40 5352 1 3,920.79
40 5354 1 4,899.11
40 5355 1 9,582.51
40 5356 1 8,398.37
40 5357 1 4,466.93
40 5358 1 10,409.05
40 5359 2 9,142.12
40 5360 1 799.77
40 5361 3 6,466.62
40 5362 1 1,181.98
40 5363 1 7,557.84
40 5364 1 9,726.41
40 5365 1 8,904.32
40 5366 1 6,986.76
40 5367 1 2,778.56
40 5368 1 8,391.30
40 5369 1 9,381.16
40 5370 1 8,673.43
40 5371 1 8,420.06
40 5372 1 6,745.79
40 5373 1 7,977.03
40 5374 1 9,006.53
40 5375 1 7,311.35
40 5376 1 2,372.98
40 5377 1 2,849.61
40 5378 1 3,549.20
40 5380 1 4,693.08
40 5381 1 7,973.35
40 5382 1 5,739.24
40 5384 1 6,342.93
40 5385 1 8,249.54
40 5386 1 2,643.16
40 5387 1 9,051.17
40 5388 1 6,744.53
40 5390 1 3,846.23
40 5392 2 6,668.15
40 5394 1 6,901.18
40 5395 1 5,632.08
40 5396 1 6,110.24
40 5397 1 9,676.35
40 5398 1 3,031.86
40 5399 1 9,264.37
40 5400 1 6,384.37
40 5401 1 5,012.52
40 5402 1 6,394.25
40 5403 1 7,334.23
40 5404 1 4,913.61
40 5405 1 4,155.98
40 5406 1 3,518.87
40 5407 1 1,953.74
40 5408 1 6,120.03
40 5409 1 4,891.61
40 5410 1 8,865.80
40 5411 1 2,672.18
40 5412 1 5,133.25
40 5413 1 6,123.77
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40 5420 1 9,289.37
40 5421 1 7,115.15
40 5422 1 7,902.79
A-7
<PAGE>
40 5423 1 7,345.00
40 5424 1 10,469.13
40 5425 1 7,703.00
40 5426 1 4,662.26
40 5427 1 5,652.51
40 5428 1 6,251.94
40 5429 1 6,962.50
40 5430 1 9,817.26
40 5431 1 7,663.46
40 5432 1 6,791.40
40 5433 1 10,198.53
40 5434 1 7,514.36
40 5435 1 8,294.79
40 5436 1 4,577.05
40 5438 1 8,405.71
40 5439 1 8,874.79
40 5440 1 1,394.04
40 5442 1 8,393.93
40 5443 1 9,995.00
40 5445 1 8,271.29
40 5446 1 6,732.13
40 5447 1 8,744.88
40 5448 1 5,392.34
40 5449 1 4,863.80
40 5450 2 14,300.00
40 5451 1 9,595.00
40 5452 1 6,601.28
40 5453 1 8,874.51
40 5454 1 7,653.80
40 5455 1 8,316.19
40 5456 1 9,970.00
40 5458 1 14,454.34
40 5459 1 8,078.89
40 5460 1 3,859.47
40 5462 1 7,974.74
40 5463 1 7,332.48
40 5465 1 18,189.30
40 5466 1 15,947.02
40 5467 1 9,988.00
40 5468 1 9,546.02
40 5469 1 8,431.50
40 5470 1 4,689.03
40 5471 1 5,108.34
40 5472 1 2,565.53
40 5473 1 9,982.47
40 5474 1 3,562.04
40 5476 1 10,938.19
40 5477 1 8,370.14
40 5478 1 6,898.23
40 5479 1 7,956.51
40 5480 1 8,487.50
40 5481 1 5,080.94
40 5482 1 11,308.00
40 5483 1 8,361.79
40 5484 1 7,046.50
40 5485 1 7,177.86
40 5486 1 8,990.00
40 5487 1 8,601.76
40 5489 1 6,817.03
40 5490 1 2,441.08
40 5493 1 5,649.31
40 5494 1 7,086.66
40 5495 1 6,312.31
40 5496 1 8,215.00
40 5497 1 8,239.16
40 5498 1 7,902.72
40 5499 1 11,362.00
40 5500 1 9,929.18
40 5501 1 5,980.76
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40 5504 1 7,064.49
40 5505 1 6,862.06
40 5506 1 2,100.00
40 5507 1 10,620.00
40 5508 1 3,912.26
40 5509 1 941.19
40 5510 1 5,841.54
40 5511 1 9,695.00
40 5512 1 8,439.00
40 5513 1 7,088.59
40 5514 2 6,586.13
40 5516 1 10,177.02
40 5518 1 5,295.00
40 5519 1 8,012.00
40 5520 1 3,824.00
40 5521 1 3,900.00
40 5522 1 5,610.02
40 5523 1 4,580.44
40 5524 1 511.15
40 5525 1 7,324.00
40 5526 1 6,229.00
40 5527 1 6,128.62
40 5528 1 7,561.40
40 5529 1 8,274.00
40 5530 1 4,070.95
40 5531 1 7,324.00
40 5532 1 10,149.00
40 5533 1 9,474.00
40 5534 1 8,597.00
40 5535 1 8,279.00
40 5536 1 7,229.00
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40 5538 1 6,829.00
40 5539 1 4,141.80
40 5540 1 9,551.29
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A-8
<PAGE>
40 5542 1 8,562.83
40 5543 1 6,043.80
40 5544 1 8,955.23
40 5545 1 8,250.00
40 5546 1 9,514.00
40 5547 1 8,000.00
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40 5549 1 9,892.40
40 5550 1 9,224.00
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40 5552 1 3,508.50
40 5553 1 3,258.99
40 5554 1 11,419.00
40 5555 1 8,527.00
40 5556 1 6,699.68
40 5557 1 7,534.00
40 5558 1 8,827.00
40 5559 1 9,515.71
40 5560 1 8,324.00
40 5561 1 7,299.00
40 5562 1 8,500.00
40 5563 1 9,244.21
40 5564 1 7,762.00
40 5565 1 6,571.47
40 5566 1 5,484.34
40 5567 1 9,927.00
40 5569 1 3,332.42
40 5570 1 7,621.00
40 5571 1 6,300.00
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40 5574 1 6,746.01
40 5575 1 10,469.70
40 5576 1 7,729.00
40 5577 1 4,279.55
40 5578 1 2,419.00
40 5579 1 6,779.00
40 5580 1 8,174.00
40 5581 1 5,502.62
40 5582 1 9,329.00
40 5583 1 4,727.00
40 5584 1 10,255.12
40 5585 1 7,827.00
40 5586 1 5,325.22
40 5587 1 6,994.75
40 5588 1 4,348.00
40 5590 1 7,824.00
40 5591 1 8,379.00
40 5592 1 7,479.00
40 5593 1 10,462.58
40 5594 1 5,251.36
40 5595 1 8,582.89
40 5596 1 6,649.00
40 5598 1 7,339.00
40 5599 1 7,013.13
40 5600 1 7,529.00
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40 5602 1 9,050.13
40 5603 1 6,829.00
40 5604 1 6,825.00
40 5605 1 7,100.00
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41 115 2 3,278.63
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41 131 2 2,606.45
41 139 3 4,052.14
41 140 2 1,471.97
41 150 1 2,610.24
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41 163 2 2,645.14
41 172 1 2,439.33
41 177 2 5,136.69
41 180 1 3,696.64
41 181 1 2,012.45
41 190 1 923.74
41 193 2 4,700.84
41 199 1 290.20
41 206 1 4,470.52
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41 227 1 5,330.89
41 241 1 5,118.07
41 243 1 5,505.80
41 245 2 7,693.04
41 253 2 6,117.87
41 265 1 3,437.45
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41 279 1 1,740.23
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41 293 1 4,960.42
41 306 3 5,304.44
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41 311 1 4,874.88
41 315 2 3,433.52
41 316 1 4,422.94
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A-9
<PAGE>
41 321 1 6,323.48
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41 355 3 7,883.38
41 357 1 9,088.99
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41 377 1 2,740.11
41 379 1 2,759.76
41 380 0 2,025.44
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41 399 2 5,062.73
41 401 1 5,303.88
41 405 1 4,295.50
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41 408 1 3,610.93
41 410 2 4,980.78
41 411 1 5,671.09
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41 422 1 2,143.60
41 423 1 6,242.75
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41 427 1 4,928.02
41 434 0 2,500.89
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41 451 1 2,616.43
41 455 1 6,878.31
41 459 0 1,615.09
41 462 1 4,147.54
41 464 1 510.77
41 466 1 4,836.37
41 468 1 2,704.88
41 469 1 905.77
41 475 1 3,367.87
41 476 1 5,647.30
41 479 1 6,259.86
41 480 1 3,285.43
41 481 1 4,439.62
41 486 1 5,832.94
41 487 1 4,945.68
41 488 1 1,894.45
41 489 1 5,139.45
41 492 1 3,221.64
41 496 2 2,488.71
41 498 1 2,297.54
41 501 1 2,497.47
41 503 1 978.86
41 505 1 6,637.67
41 510 2 3,088.38
41 514 1 2,081.43
41 516 1 5,851.20
41 519 1 1,304.65
41 520 1 1,173.83
41 523 1 5,872.19
41 526 1 7,668.78
41 527 2 875.58
41 528 2 6,786.24
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41 535 1 5,911.71
41 536 1 6,789.70
41 537 1 7,332.05
41 539 1 2,948.31
41 541 1 1,461.36
41 544 1 5,840.86
41 547 1 2,734.52
41 549 2 1,643.54
41 550 1 5,771.23
41 551 1 5,182.76
41 552 1 1,419.71
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41 560 1 8,853.91
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41 572 1 4,839.12
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41 589 1 9,168.51
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41 598 2 2,486.16
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41 600 1 1,953.93
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A-10
<PAGE>
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41 647 1 3,541.91
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41 693 1 2,431.52
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41 698 1 5,518.71
41 699 1 7,625.95
41 702 1 8,146.57
41 703 1 5,614.22
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41 708 1 7,148.03
41 709 1 3,824.66
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41 713 1 3,019.24
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41 719 1 4,048.35
41 720 1 4,842.90
41 721 1 4,850.26
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41 726 1 7,942.07
41 727 1 4,475.12
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41 737 1 8,273.39
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41 743 1 899.49
41 744 1 5,026.89
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41 766 1 7,727.45
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A-11
<PAGE>
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41 856 1 4,887.20
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41 860 1 10,318.41
41 862 1 6,337.04
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41 875 2 6,608.07
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41 878 1 6,722.12
41 879 1 3,006.59
41 880 1 4,959.04
41 884 1 9,464.39
41 886 1 6,298.82
41 887 1 1,170.90
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41 905 1 8,831.10
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41 910 1 9,657.91
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41 915 1 4,800.10
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41 920 1 7,324.59
41 921 1 5,705.47
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41 928 1 6,008.10
41 929 1 3,033.29
41 931 1 2,560.31
41 932 1 4,892.65
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41 934 1 3,132.33
41 935 1 5,382.02
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A-12
<PAGE>
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41 971 1 7,821.98
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41 973 1 6,104.62
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41 976 1 4,854.77
41 977 1 5,653.50
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41 980 1 4,758.64
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41 982 1 7,512.91
41 983 1 6,512.16
41 985 1 4,870.86
41 987 1 7,054.00
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41 992 1 8,364.15
41 993 1 6,401.97
41 994 1 3,558.88
41 995 1 4,602.63
41 996 1 6,103.64
41 998 2 6,717.12
41 1000 2 4,445.74
41 1001 1 3,689.96
41 1002 1 1,881.58
41 1003 1 8,050.98
41 1004 1 6,033.65
41 1006 1 7,587.12
41 1007 2 4,457.58
41 1008 1 6,927.37
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41 1010 1 7,147.37
41 1011 1 8,410.26
41 1012 1 8,348.83
41 1013 0 5,214.87
41 1015 1 4,318.07
41 1019 2 9,999.40
41 1020 1 6,296.67
41 1021 1 5,945.32
41 1022 1 5,957.72
41 1024 1 4,657.11
41 1025 1 4,936.47
41 1026 2 3,021.03
41 1027 1 1,974.37
41 1028 1 6,592.69
41 1029 1 4,469.71
41 1030 1 7,973.83
41 1033 1 9,164.50
41 1034 1 9,256.27
41 1035 1 7,440.14
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41 1037 1 6,940.68
41 1038 1 9,396.34
41 1039 1 6,658.02
41 1040 1 7,963.29
41 1041 1 7,362.48
41 1042 1 6,783.23
41 1044 1 8,655.86
41 1045 1 10,800.55
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41 1048 1 5,656.62
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41 1051 1 6,401.50
41 1052 1 6,026.97
41 1053 1 3,030.87
41 1054 1 4,773.78
41 1055 1 5,883.67
41 1056 1 8,262.74
41 1057 1 5,109.40
41 1058 1 4,172.13
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41 1060 1 4,638.72
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41 1063 1 10,493.63
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41 1067 1 4,767.63
41 1068 1 4,144.34
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41 1070 1 7,618.37
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41 1074 1 6,308.66
41 1075 1 9,211.26
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A-13
<PAGE>
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41 1090 1 7,586.47
41 1091 1 5,483.44
41 1092 1 5,698.16
41 1093 1 8,661.98
41 1094 1 6,153.98
41 1095 1 6,978.84
41 1098 1 6,236.97
41 1099 1 10,000.00
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41 1101 1 5,424.79
41 1102 1 7,352.67
41 1103 1 4,400.12
41 1104 1 7,092.06
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41 1106 1 5,329.00
41 1107 1 6,477.38
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41 1141 2 4,748.81
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41 1143 1 6,324.00
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42 1040 2 2,704.61
42 1044 2 2,465.33
42 1045 2 3,672.17
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42 1052 1 2,490.12
42 1053 1 5,441.23
42 1054 1 4,513.66
42 1056 1 1,125.22
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A-14
<PAGE>
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42 1111 1 6,531.05
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42 1121 1 2,071.58
42 1122 1 469.53
42 1123 2 1,381.62
42 1124 1 2,873.76
42 1125 1 7,636.36
42 1127 1 6,593.84
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42 1133 2 1,406.58
42 1138 2 2,165.52
42 1140 2 2,040.32
42 1142 1 598.82
42 1145 2 4,698.94
42 1146 1 4,365.73
42 1147 1 6,534.13
42 1148 1 5,328.77
42 1150 2 1,453.98
42 1154 1 685.62
42 1155 1 7,279.29
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42 1161 1 1,911.41
42 1164 1 607.90
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42 1168 2 1,622.22
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42 1193 2 1,659.52
42 1194 2 4,343.34
42 1195 1 1,748.76
42 1198 1 5,538.77
42 1202 1 937.40
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42 1209 1 1,828.31
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42 1216 2 6,257.84
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42 1259 2 1,301.55
42 1260 1 759.82
42 1261 1 7,857.00
42 1263 2 2,338.59
42 1268 1 197.10
42 1273 1 1,215.61
42 1276 2 3,233.30
42 1280 1 2,231.28
42 1282 1 370.02
42 1283 1 3,071.25
42 1286 1 329.09
42 1288 1 220.46
42 1290 1 1,076.89
42 1291 1 2,532.74
42 1292 2 1,370.83
42 1296 1 5,893.41
42 1300 1 5,516.78
42 1301 1 3,178.37
42 1304 1 3,492.45
42 1305 1 5,616.55
42 1306 2 2,253.54
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A-15
<PAGE>
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42 1335 2 1,208.28
42 1336 1 5,445.74
42 1341 2 820.17
42 1342 1 865.35
42 1343 1 3,945.23
42 1347 2 5,505.90
42 1348 1 7,338.98
42 1350 1 7,949.64
42 1351 1 3,595.43
42 1354 3 6,485.05
42 1361 1 7,858.89
42 1364 1 2,157.29
42 1367 1 3,665.29
42 1371 1 7,214.69
42 1373 1 3,522.49
42 1374 2 4,808.14
42 1375 1 6,733.30
42 1380 1 5,311.19
42 1381 1 3,480.43
42 1386 1 7,188.04
42 1392 3 3,316.24
42 1396 1 5,646.43
42 1398 1 4,629.20
42 1400 1 7,775.43
42 1401 1 1,424.48
42 1402 1 9,270.42
42 1403 1 2,619.29
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42 1409 1 2,954.22
42 1410 1 7,386.72
42 1413 1 3,159.78
42 1415 1 6,874.92
42 1416 3 5,377.62
42 1418 1 5,392.18
42 1419 1 2,603.56
42 1422 1 1,662.47
42 1423 1 5,869.42
42 1424 1 6,686.79
42 1425 1 825.35
42 1426 1 2,320.43
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42 1429 2 6,484.25
42 1430 1 5,675.98
42 1433 1 4,066.68
42 1436 1 8,803.06
42 1439 1 5,639.70
42 1442 1 2,855.60
42 1443 1 7,639.93
42 1445 1 495.18
42 1446 1 6,917.70
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42 1450 1 9,772.29
42 1451 1 5,319.54
42 1452 1 6,889.92
42 1453 2 8,743.36
42 1454 1 444.47
42 1455 1 3,506.26
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42 1462 1 2,057.98
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42 1481 1 8,035.75
42 1482 1 1,232.85
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42 1484 1 7,060.43
42 1486 1 8,087.00
42 1487 1 6,911.88
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42 1498 1 6,645.72
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42 1504 3 9,959.36
42 1507 1 3,125.08
42 1511 1 6,011.14
42 1514 1 2,192.95
42 1517 1 853.84
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42 1529 1 7,364.29
42 1530 1 7,709.85
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A-16
<PAGE>
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42 1553 1 3,080.48
42 1554 1 8,131.00
42 1555 1 6,407.64
42 1560 1 6,528.78
42 1561 1 4,665.19
42 1562 1 3,145.52
42 1564 1 6,914.21
42 1565 1 1,168.96
42 1566 1 10,587.19
42 1570 1 3,788.11
42 1573 1 8,400.03
42 1574 1 1,008.99
42 1576 1 2,830.63
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42 1581 1 6,540.81
42 1583 1 9,704.88
42 1584 1 7,266.90
42 1586 1 7,577.36
42 1587 1 7,392.69
42 1588 1 7,335.90
42 1589 1 6,168.33
42 1591 1 4,246.71
42 1593 1 2,611.46
42 1594 1 8,694.10
42 1595 1 8,372.88
42 1596 1 7,470.48
42 1598 1 11,811.72
42 1599 1 6,515.35
42 1600 1 582.36
42 1602 1 3,951.77
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42 1605 1 3,230.36
42 1607 1 8,843.99
42 1608 1 4,841.60
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42 1611 1 12,598.88
42 1612 1 10,796.92
42 1614 1 4,207.47
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42 1618 1 7,247.15
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42 1621 1 8,359.99
42 1623 1 7,141.89
42 1624 1 2,178.83
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42 1627 1 8,551.44
42 1629 1 3,104.29
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42 1680 1 2,813.06
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42 1701 1 2,833.18
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A-17
<PAGE>
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42 1722 1 7,769.78
42 1723 1 2,667.58
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42 1726 1 5,379.33
42 1727 1 11,902.50
42 1728 1 9,688.91
42 1730 1 17,538.53
42 1731 1 3,971.88
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42 1735 2 3,810.10
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42 1740 1 9,137.82
42 1741 1 9,797.86
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42 1750 1 6,118.47
42 1751 1 1,838.21
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42 1755 1 5,339.19
42 1756 1 11,135.45
42 1757 1 3,958.15
42 1758 1 888.48
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42 1804 1 7,203.84
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A-18
<PAGE>
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43 10 1 3,647.37
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43 12 2 8,082.89
43 14 1 3,828.86
43 17 2 6,529.46
43 18 2 1,141.16
43 19 1 6,588.83
43 20 1 5,699.03
43 22 1 4,404.02
43 25 1 4,060.53
43 26 2 1,115.89
43 28 2 1,665.77
43 29 1 1,544.64
43 32 1 8,027.99
43 33 3 5,725.66
43 34 1 1,438.16
43 37 1 1,921.36
43 39 1 808.33
43 43 1 5,741.93
43 44 1 5,874.53
43 45 1 511.66
43 49 1 7,169.29
43 52 1 4,296.29
43 53 2 4,002.35
43 54 1 2,486.64
43 56 1 4,842.52
43 57 1 8,013.51
43 59 1 9,167.92
43 60 2 610.51
43 61 1 3,102.05
43 63 1 10,327.08
43 64 1 5,591.85
43 65 2 6,107.18
43 67 1 6,493.35
43 69 1 2,920.15
43 71 1 2,950.56
43 72 1 3,972.16
43 75 1 2,199.12
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43 79 1 7,128.26
43 82 1 3,396.42
43 83 1 2,459.25
43 85 1 2,718.01
43 86 1 5,182.15
43 87 1 5,008.54
43 88 2 1,199.98
43 90 1 6,071.76
43 92 2 1,864.55
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43 100 2 3,237.88
43 101 1 10,907.74
43 102 1 5,682.81
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43 107 1 2,778.18
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43 110 1 4,800.01
43 111 1 1,228.30
43 112 1 1,912.43
43 113 1 1,689.74
43 114 1 2,674.98
43 115 1 10,416.44
43 116 1 7,902.35
43 118 1 2,195.29
43 123 1 2,300.53
43 126 1 3,290.78
43 127 1 1,931.43
43 128 1 9,498.98
43 129 1 5,764.28
43 132 1 6,260.37
43 133 2 2,272.67
43 134 1 5,428.02
43 135 1 4,773.74
43 136 1 2,197.31
43 137 1 1,269.62
43 139 1 3,901.88
43 140 2 5,844.47
43 141 1 5,926.69
43 142 1 6,040.14
43 143 1 3,349.19
43 145 2 4,166.67
43 147 1 5,507.07
43 148 1 8,138.41
43 150 1 2,869.15
43 151 2 11,012.10
43 152 1 3,338.59
43 153 2 6,660.01
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43 157 1 9,009.89
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A-19
<PAGE>
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43 173 1 8,272.75
43 175 1 1,587.42
43 177 2 5,653.40
43 178 1 4,846.54
43 179 2 1,735.16
43 181 1 4,797.63
43 182 1 563.16
43 183 1 1,837.51
43 184 1 2,905.51
43 185 2 1,138.41
43 186 1 6,669.54
43 187 1 11,922.36
43 188 1 4,309.88
43 189 1 3,695.71
43 190 1 8,831.36
43 191 2 8,551.87
43 192 1 8,074.27
43 193 1 6,941.34
43 194 1 2,804.40
43 196 1 3,426.98
43 198 1 2,997.83
43 200 1 2,552.67
43 201 1 10,263.81
43 202 1 2,835.89
43 203 1 3,284.98
43 204 1 4,055.64
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43 206 1 2,177.35
43 207 1 1,239.67
43 210 1 3,347.95
43 212 1 5,266.60
43 213 2 6,888.69
43 214 1 4,943.08
43 215 1 797.53
43 216 1 4,033.75
43 217 1 5,126.87
43 218 1 3,473.41
43 219 1 1,103.86
43 221 1 9,006.29
43 222 1 3,881.07
43 223 1 9,779.45
43 224 1 5,902.00
43 226 1 3,015.74
43 227 1 7,914.13
43 228 1 1,894.84
43 229 1 4,078.57
43 230 2 3,788.65
43 231 1 3,183.06
43 233 1 6,440.60
43 235 1 7,635.24
43 236 1 7,739.82
43 237 1 2,515.01
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43 239 1 6,770.14
43 240 1 6,429.35
43 242 1 4,192.38
43 243 1 9,604.62
43 244 1 6,924.51
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43 247 2 5,217.59
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43 249 1 2,276.39
43 250 1 1,318.20
43 251 1 7,187.34
43 252 1 6,860.51
43 253 1 8,555.56
43 254 1 7,336.36
43 255 1 2,213.14
43 256 1 9,940.77
43 257 1 4,029.15
43 259 1 2,984.73
43 261 2 3,027.13
43 263 1 12,652.91
43 265 1 5,203.94
43 266 1 2,184.77
43 267 1 884.92
43 268 1 1,410.39
43 269 1 2,462.24
43 270 1 6,630.96
43 271 1 911.98
43 272 1 696.09
43 273 2 5,504.68
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43 275 1 4,757.48
43 276 1 5,026.46
43 277 1 6,466.21
43 278 1 1,603.92
43 279 1 13,319.64
43 280 1 4,518.67
43 282 1 1,594.72
43 283 1 2,083.13
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43 285 1 751.66
43 286 1 965.97
43 287 1 10,744.87
43 288 1 7,610.64
43 290 1 2,279.05
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A-20
<PAGE>
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43 301 1 5,837.90
43 302 1 5,555.08
43 303 1 3,843.20
43 304 1 4,350.00
43 305 1 7,312.30
43 306 1 7,557.58
43 307 1 5,405.00
43 308 1 4,345.00
43 309 1 6,900.00
43 310 1 8,500.00
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43 312 1 4,400.00
43 313 1 1,035.21
43 314 1 3,995.43
43 315 1 6,301.62
43 316 1 4,788.55
43 317 1 5,988.00
43 318 1 6,500.00
43 319 1 4,882.32
43 320 1 3,161.40
43 321 1 3,250.79
43 322 1 1,471.88
43 323 1 3,800.00
43 324 1 2,723.00
43 325 1 1,045.68
43 326 1 4,475.00
43 327 1 2,294.00
43 328 1 3,779.00
43 329 1 1,679.44
43 330 1 7,000.00
43 331 1 5,900.00
43 332 1 3,395.75
43 333 1 6,185.00
43 334 1 5,929.75
43 335 1 4,150.00
43 336 1 3,511.54
43 337 1 4,427.16
43 338 1 4,340.00
43 339 1 5,140.00
43 340 1 5,200.00
43 341 1 4,376.27
43 342 1 6,400.00
43 343 1 3,047.87
43 344 1 3,754.00
43 345 1 6,600.00
43 346 1 3,744.00
43 347 1 4,426.62
43 348 1 1,551.91
43 349 1 8,500.00
43 350 1 4,579.82
53 5 8 4,064.59
53 61 62 1,984.53
53 300 303 227.55
53 435 439 1,548.13
53 462 463 292.53
53 694 698 2,693.02
53 755 350 2,727.57
53 902 905 820.10
53 996 1000 3,117.02
53 1014 3 7,187.86
53 1083 1085 2,194.22
53 1224 1225 1,300.87
53 1227 1231 7,667.24
53 1342 4 1,882.63
53 1579 8 3,440.53
53 1665 6 1,717.38
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53 3014 3016 2,091.12
53 3028 3030 1,500.00
53 3052 5 2,522.20
53 3068 2 1,934.68
53 3085 3 1,650.12
53 3096 2 1,905.44
53 3101 1 944.10
53 3131 7 5,283.84
53 3138 5 4,128.72
53 3139 1 871.28
53 3152 2 1,194.09
53 3167 2 2,495.74
53 3189 3 327.23
53 3190 3 1,083.85
53 3193 2 14,307.97
53 3206 2 723.55
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53 3219 1 3,030.87
53 3224 4 1,408.46
53 3231 1 1,553.21
53 3243 2 995.54
53 3246 2 1,142.19
53 3272 2 3,475.00
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53 3281 3 445.60
53 3282 5 5,929.99
53 3288 3 911.89
53 3291 3 1,438.42
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53 3297 5 360.81
53 3305 5 928.88
53 3309 3 6,911.53
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A-21
<PAGE>
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53 3315 8 3,397.42
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53 3320 3 2,712.82
53 3344 3 693.17
53 3352 4 4,730.06
53 3357 5 2,456.26
53 3363 3 1,688.28
53 3364 3 518.59
53 3369 2 2,459.75
53 3373 2 4,222.51
53 3377 1 4,194.10
53 3379 1 7,824.66
53 3382 5 8,292.33
53 3388 2 1,150.89
53 3395 5 1,436.48
53 3396 5 576.05
53 3401 6 1,597.80
53 3402 2 5.45
53 3413 2 1,307.15
53 3415 3 4,399.35
53 3425 3 1,841.10
53 3428 2 2,916.05
53 3438 1 1,197.04
53 3439 1 1,802.96
53 3449 5 5,199.70
53 3467 2 4,641.77
53 3468 1 2,896.76
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53 3478 2 4,487.16
53 3481 3 2,558.84
53 3483 4 10,985.31
53 3484 2 2,676.67
53 3488 1 3,400.57
53 3496 3 2,035.04
53 3497 2 362.41
53 3502 1 590.97
53 3503 2 4,537.66
53 3510 4 2,396.30
53 3517 4 7,583.10
53 3519 2 1,364.69
53 3522 8 648.97
53 3522 9 5,728.28
53 3525 1 3,296.40
53 3528 2 11,172.55
53 3555 2 9,564.43
53 3557 1 1,622.30
53 3563 3 7,654.23
53 3568 2 736.32
53 3575 5 2,781.95
53 3575 6 9,713.60
53 3577 3 2,577.00
53 3585 1 5,616.45
53 3586 3 2,371.92
53 3587 3 2,768.43
53 3588 3 2,881.69
53 3590 2 1,802.27
53 3597 5 6,787.29
53 3598 2 1,692.10
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53 3611 5 10,140.06
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53 3624 3 1,459.50
53 3628 1 2,005.26
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53 3643 3 6,155.56
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53 3646 1 2,912.00
53 3648 2 1,863.18
53 3651 2 1,416.23
53 3654 2 2,979.65
53 3661 2 4,930.62
53 3663 2 4,866.72
53 3664 2 4,362.60
53 3666 3 9,412.68
53 3667 3 3,817.64
53 3668 1 1,608.13
53 3671 1 1,704.80
53 3674 1 4,271.59
53 3680 2 6,557.21
53 3681 1 1,539.93
53 3685 2 3,241.09
53 3693 1 1,744.46
53 3704 2 4,832.10
53 3705 1 3,179.72
53 3706 1 3,045.03
53 3707 2 3,280.93
53 3708 1 1,704.43
53 3713 1 1,632.48
53 3720 1 3,428.04
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53 3734 1 2,095.31
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A-22
<PAGE>
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53 3763 1 4,609.75
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53 3774 2 771.68
53 3778 2 16,108.87
53 3789 3 8,955.42
53 3790 2 6,139.21
53 3792 3 5,716.04
53 3793 2 3,490.47
53 3794 2 883.33
53 3795 3 2,987.90
53 3800 1 1,464.22
53 3808 1 2,999.55
53 3818 1 1,506.57
53 3825 1 3,669.73
53 3829 2 10,448.32
53 3832 1 5,981.95
53 3835 2 1,589.87
53 3837 2 2,505.01
53 3842 1 2,378.03
53 3844 1 4,056.28
53 3845 1 2,191.94
53 3848 2 4,444.62
53 3853 1 5,258.51
53 3857 1 569.08
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53 3863 1 1,190.83
53 3864 2 6,528.99
53 3865 2 5,893.05
53 3867 2 16,484.10
53 3868 1 1,083.14
53 3869 1 563.60
53 3870 1 1,626.73
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53 3874 1 833.23
53 3875 2 8,694.48
53 3884 1 3,332.27
53 3886 8 9,473.94
53 3891 3 5,282.01
53 3892 1 719.95
53 3895 2 4,925.44
53 3897 1 7,110.96
53 3898 1 1,347.02
53 3900 1 3,773.18
53 3903 1 1,004.07
53 3905 2 3,634.26
53 3906 1 3,777.40
53 3907 1 729.03
53 3908 1 4,833.31
53 3910 1 3,693.68
53 3916 2 6,191.47
53 3919 1 4,980.10
53 3921 2 3,712.59
53 3923 1 1,448.87
53 3925 1 816.74
53 3929 1 2,900.65
53 3935 2 5,863.76
53 3936 1 2,702.15
53 3939 1 1,168.04
53 3941 2 8,940.71
53 3942 1 3,304.67
53 3943 1 3,315.68
53 3944 1 1,156.24
53 3947 1 4,494.31
53 3948 1 909.39
53 3949 1 3,529.65
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53 3955 1 3,892.61
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53 3964 1 2,346.25
53 3965 2 1,493.00
53 3968 2 681.67
53 3969 1 2,923.03
53 3971 1 5,794.38
53 3971 2 2,730.45
53 3972 2 5,495.24
53 3973 1 4,745.44
53 3975 1 1,430.89
53 3979 1 2,131.15
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53 3983 1 5,888.25
53 3986 1 1,344.00
53 3995 2 2,960.00
53 3996 2 4,834.03
53 3998 3 2,400.67
53 4003 1 2,103.04
53 4005 1 636.17
53 4006 1 4,496.25
53 4008 1 1,724.50
53 4010 1 1,712.27
53 4012 1 613.21
53 4015 1 3,802.47
53 4016 2 4,412.23
53 4017 1 7,029.38
53 4019 1 463.23
53 4020 1 5,379.05
53 4021 1 830.98
53 4022 1 7,285.30
53 4023 2 12,267.46
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53 4025 1 3,096.56
53 4026 2 1,232.97
53 4028 1 2,861.39
53 4029 1 8,847.99
A-23
<PAGE>
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53 4039 1 735.38
53 4040 1 1,098.74
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53 4043 1 3,539.94
53 4044 1 315.27
53 4047 3 1,781.21
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53 4050 1 2,905.88
53 4051 1 1,850.25
53 4053 1 6,520.18
53 4054 1 2,086.07
53 4057 1 7,650.03
53 4058 1 1,634.80
53 4061 2 399.51
53 4062 1 1,748.03
53 4066 1 6,033.98
53 4069 1 1,718.70
53 4070 2 5,784.78
53 4071 1 2,625.89
53 4076 1 3,014.78
53 4077 2 4,045.39
53 4078 2 5,451.32
53 4079 1 3,969.39
53 4081 1 3,486.11
53 4082 1 7,107.53
53 4083 1 1,199.90
53 4084 1 9,457.32
53 4085 1 4,615.96
53 4087 1 3,355.79
53 4089 1 11,047.09
53 4090 1 7,216.20
53 4091 1 3,666.25
53 4092 1 2,252.00
53 4099 1 2,760.33
53 4100 1 3,463.62
53 4104 1 616.29
53 4107 2 2,361.31
53 4108 1 4,210.49
53 4109 1 4,618.16
53 4110 1 6,546.29
53 4111 2 3,029.18
53 4113 1 584.22
53 4115 2 6,866.71
53 4120 1 4,056.92
53 4122 1 2,766.06
53 4124 1 8,138.19
53 4125 1 747.42
53 4126 1 636.45
53 4127 1 5,820.40
53 4129 2 6,796.17
53 4130 1 2,391.91
53 4131 2 1,843.68
53 4132 1 762.22
53 4135 1 3,079.88
53 4136 1 3,602.36
53 4137 1 16.34
53 4138 1 2,918.78
53 4140 1 4,787.38
53 4144 2 5,458.50
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53 4147 1 3,191.36
53 4148 1 7,204.20
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53 4153 1 2,002.43
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53 4162 1 3,740.81
53 4163 2 4,249.57
53 4164 1 2,102.82
53 4166 1 4,090.63
53 4167 1 234.51
53 4168 1 5,834.67
53 4171 2 4,784.50
53 4172 1 6,575.49
53 4174 2 4,399.11
53 4175 5 10,700.72
53 4177 1 328.60
53 4178 2 5,514.78
53 4179 2 6,978.25
53 4181 1 3,168.33
53 4182 1 5,757.19
53 4183 1 5,114.98
53 4184 1 3,005.91
53 4185 1 1,544.59
53 4187 2 6,721.03
53 4189 1 1,205.62
53 4190 1 3,117.49
53 4191 1 938.90
53 4193 2 277.81
53 4194 1 4,670.34
53 4195 1 4,509.39
53 4196 1 949.96
53 4197 1 1,332.05
53 4199 1 5,539.70
53 4202 1 1,930.06
53 4203 1 1,498.98
53 4204 2 1,160.56
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53 4210 1 5,668.42
53 4211 1 8,938.53
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A-24
<PAGE>
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53 4228 1 3,908.47
53 4229 2 4,701.45
53 4231 1 5,918.61
53 4232 1 1,524.27
53 4235 1 5,267.34
53 4236 1 4,460.10
53 4237 1 7,737.86
53 4239 1 5,604.06
53 4241 1 2,943.90
53 4242 1 1,320.10
53 4245 2 8,206.44
53 4246 1 6,801.06
53 4247 1 7,168.74
53 4248 1 1,675.14
53 4249 1 6,858.33
53 4250 1 507.57
53 4251 1 14,258.12
53 4254 1 4,504.91
53 4255 1 1,470.19
53 4256 1 3,056.00
53 4257 1 1,279.08
53 4259 1 4,637.08
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53 4268 1 1,452.32
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53 4273 1 1,289.90
53 4274 1 9,495.46
53 4275 1 5,145.60
53 4276 1 1,714.80
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53 4279 1 2,084.18
53 4284 1 5,963.48
53 4287 1 3,509.50
53 4288 2 4,342.59
53 4289 1 3,145.98
53 4290 1 1,302.59
53 4292 1 5,689.79
53 4294 1 6,934.09
53 4295 1 3,603.78
53 4296 1 3,513.71
53 4297 1 1,102.64
53 4298 1 5,220.11
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53 4301 1 4,253.15
53 4302 1 1,889.87
53 4303 1 5,122.40
53 4304 1 1,565.93
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53 4308 1 1,473.14
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53 4311 1 3,994.15
53 4313 1 4,791.23
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53 4316 1 3,088.24
53 4317 1 1,978.31
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53 4324 1 4,951.53
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53 4329 1 1,765.36
53 4332 1 2,178.61
53 4333 1 4,320.99
53 4334 1 5,813.75
53 4335 1 7,102.77
53 4336 1 1,515.02
53 4337 1 3,590.06
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53 4339 1 3,032.57
53 4341 1 4,116.60
53 4342 1 3,684.94
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53 4354 1 1,781.94
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A-25
<PAGE>
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53 4373 1 1,164.35
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53 4381 1 4,685.76
53 4383 1 4,714.27
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53 4387 1 1,365.79
53 4388 1 1,796.58
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53 4390 1 585.85
53 4391 1 1,601.12
53 4392 1 2,210.85
53 4393 1 8,647.25
53 4394 1 2,036.61
53 4395 1 813.00
53 4396 1 3,826.45
53 4398 1 7,826.47
53 4402 1 1,605.87
53 4403 1 6,222.60
53 4404 1 2,514.14
53 4405 1 7,156.98
53 4406 1 4,973.38
53 4407 2 1,412.54
53 4408 1 2,763.55
53 4409 1 2,610.00
53 4410 1 3,590.56
53 4411 1 2,729.66
53 4412 1 3,962.14
53 4413 1 7,197.40
53 4414 1 2,363.73
53 4415 1 3,212.71
53 4416 1 2,026.86
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53 4418 1 1,611.21
53 4421 1 2,843.15
53 4422 1 1,297.84
53 4423 1 886.99
53 4424 1 2,899.03
53 4425 1 473.72
53 4426 1 3,855.40
53 4428 1 2,505.24
53 4429 1 680.41
53 4430 1 5,110.38
53 4431 2 2,999.91
53 4432 1 4,459.70
53 4433 1 8,244.50
53 4434 1 3,837.85
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53 4448 1 5,155.80
53 4449 1 6,021.78
53 4450 1 12,166.87
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53 4452 1 2,246.62
53 4453 1 10,991.49
53 4454 2 2,586.19
53 4455 1 11,342.08
53 4456 1 3,169.06
53 4457 1 4,114.75
53 4459 1 3,325.65
53 4460 1 7,056.90
53 4461 1 2,070.50
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53 4467 1 2,198.90
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53 4472 1 3,327.71
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53 4482 1 5,225.32
53 4483 1 10,222.61
53 4484 1 1,433.59
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53 4490 1 5,038.48
53 4491 1 9,363.31
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A-26
<PAGE>
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53 4495 1 9,500.97
53 4496 1 2,767.69
53 4497 1 1,081.21
53 4498 1 2,874.12
53 4499 1 4,766.90
53 4500 2 3,076.63
53 4501 1 4,541.54
53 4502 1 5,414.53
53 4503 1 2,254.46
53 4505 1 8,919.23
53 4506 1 5,554.82
53 4508 1 6,114.61
53 4509 1 3,923.90
53 4512 1 2,988.70
53 4514 1 4,138.20
53 4515 1 4,886.09
53 4518 1 4,726.20
53 4519 1 9,597.24
53 4520 1 1,456.51
53 4521 1 7,068.40
53 4523 1 2,780.43
53 4524 1 3,971.90
53 4525 1 4,605.62
53 4527 1 3,492.51
53 4528 1 2,831.64
53 4529 2 7,659.27
53 4530 1 4,676.71
53 4531 1 6,242.96
53 4532 1 7,818.36
53 4533 1 7,347.66
53 4534 1 6,094.58
53 4535 1 503.68
53 4536 1 6,158.30
53 4537 1 3,850.60
53 4538 1 905.56
53 4539 1 1,987.24
53 4540 1 2,387.21
53 4541 1 6,335.86
53 4542 1 8,900.00
53 4543 1 746.42
53 4544 1 5,055.60
53 4545 1 1,479.54
53 4546 1 1,807.84
53 4547 1 6,762.75
53 4548 1 8,550.00
53 4549 1 5,534.00
53 4550 1 9,551.84
53 4551 1 2,345.25
53 4552 1 10,039.43
53 4553 1 5,073.56
53 4554 1 7,763.35
53 4555 1 3,082.37
53 4556 1 4,350.00
53 4557 1 5,833.50
53 4559 1 5,414.78
53 4560 1 3,421.89
53 4561 1 3,600.00
53 4562 1 8,440.02
53 4564 1 3,290.08
53 4565 1 7,000.00
53 4566 1 1,029.24
53 4567 1 1,782.77
53 4568 1 2,206.03
53 4569 1 2,749.99
53 4570 1 823.75
53 4571 1 1,141.29
53 4572 1 6,793.28
53 4573 1 2,987.90
53 4574 1 4,096.40
53 4575 1 7,561.18
53 4576 1 6,852.48
53 4577 1 4,515.00
53 4578 1 4,241.84
53 4579 1 9,129.61
53 4580 1 7,955.22
53 4581 1 3,699.14
53 4582 1 5,501.78
53 4583 1 6,304.46
53 4584 1 5,665.16
53 4585 1 5,490.24
53 5001 1 2,221.70
53 5002 1 7,575.29
53 5003 1 2,333.86
53 80252 253 9,682.83
53 91122 1598 1,817.33
55 10001 3 868.17
55 10002 1 6,744.48
55 10003 1 696.77
55 10004 2 5,455.52
55 10006 2 2,326.75
55 10008 1 7,376.34
55 10009 2 5,368.43
55 10010 3 2,051.51
55 10011 1 3,065.94
55 10013 2 1,260.97
55 10014 1 4,382.57
55 10017 2 2,899.72
55 10018 1 5,470.33
55 10020 3 8,526.93
55 10022 1 1,909.46
55 10024 2 2,524.54
55 10025 2 2,698.11
55 10026 1 2,760.19
55 10029 2 9,186.90
55 10030 1 1,089.24
A-27
<PAGE>
55 10031 3 5,134.28
55 10032 1 2,799.24
55 10035 2 4,237.67
55 10036 1 2,154.09
55 10037 1 1,940.06
55 10042 2 2,659.31
55 10043 1 3,441.59
55 10044 1 9,791.76
55 10045 1 4,843.27
55 10046 1 2,177.41
55 10047 1 679.43
55 10050 1 3,862.37
55 10051 1 3,168.88
55 10053 1 1,609.47
55 10055 1 3,955.99
55 10056 2 3,808.19
55 10057 1 2,220.44
55 10058 1 1,345.94
55 10059 1 2,260.57
55 10060 1 1,287.56
55 10061 1 2,245.74
55 10062 1 1,802.64
55 10063 1 5,011.93
55 10067 1 8,131.16
55 10068 1 873.74
55 10069 1 3,306.07
55 10071 1 2,990.97
55 10072 1 104.75
55 10074 1 5,215.44
55 10075 3 3,921.24
55 10076 1 5,858.46
55 10077 2 3,196.55
55 10078 1 4,343.64
55 10079 2 1,386.29
55 10080 2 960.93
55 10082 1 3,056.84
55 10085 2 1,038.01
55 10086 2 3,896.60
55 10087 1 7,411.76
55 10089 1 4,072.56
55 10090 1 3,274.52
55 10091 1 4,670.36
55 10092 1 566.44
55 10093 2 858.17
55 10094 1 7,350.71
55 10095 1 2,531.40
55 10097 2 3,517.07
55 10098 1 3,705.98
55 10101 1 5,965.08
55 10104 2 1,609.73
55 10105 1 3,570.20
55 10106 1 2,917.24
55 10107 1 2,114.68
55 10108 1 3,230.03
55 10109 2 2,167.89
55 10112 1 5,246.47
55 10113 1 1,032.21
55 10114 1 5,601.16
55 10115 2 2,433.23
55 10116 1 2,554.07
55 10117 2 5,487.74
55 10118 1 4,669.01
55 10119 1 5,020.12
55 10123 1 2,821.88
55 10124 1 1,805.54
55 10126 3 6,828.67
55 10127 1 2,180.92
55 10128 1 1,640.76
55 10129 1 2,107.61
55 10131 1 9,974.19
55 10132 1 4,413.30
55 10133 2 3,513.84
55 10134 2 4,962.24
55 10135 1 3,435.47
55 10137 1 2,125.57
55 10138 1 3,552.45
55 10139 1 5,078.20
55 10140 1 651.94
55 10141 1 6,130.92
55 10142 1 1,009.39
55 10143 1 1,275.32
55 10144 2 1,590.55
55 10147 1 3,277.66
55 10149 1 4,857.53
55 10150 1 3,177.79
55 10152 1 3,206.23
55 10153 1 3,229.86
55 10154 1 2,775.20
55 10155 1 3,014.06
55 10156 1 4,382.92
55 10158 1 4,948.81
55 10159 1 7,580.68
55 10161 1 8,036.80
55 10162 1 2,796.27
55 10163 1 477.09
55 10164 1 5,424.85
55 10165 1 1,718.83
55 10166 1 3,219.65
55 10167 1 3,815.19
55 10168 1 7,020.96
55 10172 2 5,038.46
55 10174 1 6,372.53
55 10180 1 1,991.29
55 10181 1 1,406.75
55 10182 1 7,132.89
55 10183 1 3,401.93
A-28
<PAGE>
55 10184 1 2,825.84
55 10185 2 2,492.80
55 10186 1 5,430.84
55 10187 1 4,088.58
55 10188 2 3,248.16
55 10190 2 1,999.19
55 10191 1 2,527.56
55 10192 1 4,532.15
55 10193 1 4,729.74
55 10195 1 2,767.75
55 10196 1 2,378.47
55 10197 2 1,392.56
55 10199 1 6,292.32
55 10201 2 1,431.13
55 10204 1 691.05
55 10205 2 3,619.16
55 10207 1 346.36
55 10208 1 1,708.58
55 10209 3 3,584.52
55 10211 2 3,862.81
55 10212 1 3,344.91
55 10213 1 4,954.85
55 10214 1 2,057.72
55 10215 1 10,176.81
55 10216 1 4,773.46
55 10217 1 3,924.25
55 10218 1 2,166.53
55 10219 1 7,069.31
55 10220 1 2,923.33
55 10221 1 1,340.52
55 10222 1 3,501.89
55 10223 1 5,170.71
55 10225 1 3,567.33
55 10226 1 6,556.99
55 10227 1 4,762.57
55 10229 1 1,700.76
55 10230 1 2,405.80
55 10231 1 4,869.08
55 10232 1 7,838.42
55 10233 1 1,206.66
55 10234 1 1,478.03
55 10235 1 8,221.40
55 10237 1 6,352.60
55 10238 1 1,836.64
55 10239 2 5,438.67
55 10240 2 2,786.28
55 10242 1 5,080.52
55 10243 1 5,799.90
55 10244 1 1,810.41
55 10245 2 2,677.13
55 10246 2 7,039.31
55 10247 1 2,212.87
55 10248 1 7,033.50
55 10249 1 3,593.39
55 10250 1 3,617.82
55 10252 1 2,920.38
55 10253 1 9,412.05
55 10254 1 3,539.46
55 10255 1 6,179.74
55 10256 1 850.32
55 10257 1 8,066.34
55 10258 1 6,319.40
55 10259 1 1,817.57
55 10260 1 2,803.16
55 10261 1 1,685.68
55 10263 1 1,935.80
55 10264 1 8,329.61
55 10265 1 6,609.90
55 10266 1 2,820.13
55 10268 1 3,552.88
55 10269 1 3,763.90
55 10270 1 5,116.04
55 10271 1 5,016.63
55 10272 1 9,566.11
55 10273 1 4,089.31
55 10274 1 1,326.40
55 10275 1 5,448.92
55 10276 1 2,161.13
55 10277 1 2,390.24
55 10278 1 911.13
55 10280 1 4,272.85
55 10281 1 3,820.79
55 10282 1 1,018.20
55 10283 1 6,415.97
55 10284 1 3,567.77
55 10285 1 2,972.73
55 10286 1 615.73
55 10287 1 7,526.71
55 10288 1 13,978.26
55 10289 1 9,836.54
55 10290 1 8,109.20
55 10291 1 8,598.54
55 10292 1 14,347.90
55 10293 1 2,114.40
55 10294 1 4,267.22
55 10295 1 4,215.04
55 10296 1 3,022.90
55 10297 1 10,050.53
55 10298 1 6,151.96
55 10299 1 1,305.76
55 10300 1 2,619.59
55 10301 1 861.55
55 10302 1 10,500.00
55 10303 1 6,329.00
55 10304 1 5,496.20
55 10305 2 11,078.11
A-29
<PAGE>
55 10306 1 2,435.70
55 10307 1 786.76
55 10308 1 3,265.00
55 10309 1 609.98
55 10310 1 1,029.54
55 10311 1 3,657.60
55 10312 1 7,226.98
55 10313 1 6,229.23
55 10314 1 6,992.69
55 10315 1 6,012.23
55 10316 1 3,942.55
55 10317 1 3,200.00
55 10318 1 1,828.66
55 10319 1 12,025.92
55 10320 1 3,222.94
55 10321 1 11,500.00
55 10322 1 7,500.00
55 10323 1 4,191.47
55 10324 1 3,000.00
55 10325 1 5,000.00
55 10326 1 3,884.79
55 10327 1 7,606.39
55 10328 1 7,023.06
55 10329 1 4,786.83
55 10330 1 1,818.06
55 10331 1 1,198.56
55 10332 1 6,500.00
55 10333 1 5,530.76
55 10334 1 2,290.40
55 10335 1 6,400.00
55 10336 1 2,080.08
55 10337 1 7,500.00
55 10338 1 5,400.00
55 10339 1 7,809.89
55 10340 1 4,181.01
55 10341 1 6,174.99
55 10342 1 12,500.00
55 10343 1 3,100.00
55 10344 1 5,266.21
56 2001 1 4,447.02
56 20002 1 5,742.29
56 20004 1 12,433.23
56 20005 1 5,417.48
56 20006 1 3,239.65
56 20007 1 3,410.97
56 20008 1 2,583.60
56 20009 1 18,523.29
56 20010 1 11,500.00
56 20011 1 5,176.72
56 20013 1 7,180.68
56 20014 1 3,375.41
56 20015 1 2,702.80
56 20016 1 1,783.88
56 20017 1 8,256.92
56 20018 1 7,798.13
56 20020 2 6,327.63
56 20021 1 4,725.31
56 20022 1 3,884.63
56 20023 1 1,513.87
56 20024 1 1,950.40
56 20025 1 6,692.41
56 20026 1 7,295.59
56 20027 1 4,933.99
56 20028 1 4,373.05
56 20029 1 6,918.21
56 20030 1 5,574.89
56 20031 1 6,395.06
56 20032 1 10,324.00
56 20033 1 4,195.18
56 20034 1 3,667.54
56 20035 1 6,980.02
56 20036 1 6,441.23
56 20037 1 9,448.34
56 20038 1 4,199.17
56 20039 1 5,084.30
56 20040 1 7,026.67
56 20041 1 5,182.11
56 20042 1 6,161.37
56 20043 1 6,362.21
56 20044 1 12,625.42
56 20045 1 6,113.90
56 20046 1 5,960.30
56 20047 1 2,900.07
56 20048 1 8,274.67
56 20049 1 1,643.11
56 20050 1 10,800.00
56 20051 1 4,516.43
56 20052 1 8,131.11
56 20053 1 2,438.52
56 20054 1 3,982.39
56 20055 1 1,426.09
56 20056 1 8,676.44
--------------------------------------------------
16,107,339.72
--------------------------------------------------
A-30
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE
I, _______________________________, President of EMERGENT AUTO HOLDINGS
CORP. (the "Company") do hereby certify as follows:
(1) No financing statements or other filings have been filed naming
the Company as debtor or seller in any State of the United States of
America to perfect a sale, transfer or assignment of or lien, encumbrance,
security interest or other interest in, or which otherwise pertains to, the
Receivables other than those certain financing statements naming The Loan
Pro$, Inc., Premier Financial Services, Inc., Prudential Securities Secured
Financing Corporation or the Company as debtor or seller and Bankers Trust
Company, as trustee, as secured party, assignee or buyer, to be filed with
the Secretary of State of Delaware on or about March 27, 1996.
(2) The Company's chief executive office is located at 44 East
Camperdown Way, Greenville, South Carolina 29602.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Pooling and Servicing Agreement dated as
of March 1, 1996, among Prudential Securities Secured Financing Corporation, as
Depositor, Emergent Group, Inc., as Servicer, and Bankers Trust Company, as
Trustee.
IN WITNESS WHEREOF, I have set my hand this 27th day of March 1996.
EMERGENT AUTO HOLDINGS CORP.
By:_________________________
Name:
Title:
B-1
EXHIBIT 10.2
PURCHASE AGREEMENT AND ASSIGNMENT
between
EMERGENT AUTO HOLDINGS CORP.
as Purchaser
THE LOAN PRO$, INC. and
PREMIER FINANCIAL SERVICES, INC.
as Sellers
and
EMERGENT GROUP, INC.
dated as of
March 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................. 1
SECTION 1.1 General............................................. 1
SECTION 1.2 Specific Terms...................................... 1
SECTION 1.3 Usage of Terms...................................... 2
SECTION 1.4 Certain References.................................. 3
SECTION 1.5 No Recourse......................................... 3
SECTION 1.6 Action by or Consent of Certificateholders.......... 3
SECTION 1.7 Material Adverse Effect............................. 3
ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER
CONVEYED PROPERTY............................................. 3
SECTION 2.1 Conveyance of the Receivables and the Other Conveyed
Property............................................ 3
SECTION 2.2 Purchase Price...................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES................................ 4
SECTION 3.1 Representations and Warranties of the Sellers....... 4
SECTION 3.2 Representations and Warranties of Purchaser......... 6
SECTION 3.3 Indemnification..................................... 8
ARTICLE IV COVENANTS OF THE SELLERS...................................... 10
SECTION 4.1 Protection of Title of Purchaser, the Depositor
and the Trust.................................... 10
SECTION 4.2 Other Liens or Interests............................ 11
SECTION 4.3 Costs and Expenses.................................. 12
ARTICLE V REPURCHASES................................................... 12
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty... 12
SECTION 5.2 Reassignment of Purchased Receivables............... 13
SECTION 5.3 Waivers............................................. 13
ARTICLE VI MISCELLANEOUS................................................. 13
SECTION 6.1 Liability of the Sellers............................ 13
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser.. 13
-i-
<PAGE>
SECTION 6.3 Limitation on Liability of the Sellers and Others... 14
SECTION 6.4 Amendment........................................... 14
SECTION 6.5 Notices............................................. 15
SECTION 6.6 Merger and Integration.............................. 16
SECTION 6.7 Severability of Provisions.......................... 16
SECTION 6.8 Intention of the Parties............................ 16
SECTION 6.9 Governing Law....................................... 16
SECTION 6.10 Counterparts..................................... 16
SECTION 6.11 Conveyance of the Receivables and the Other
Conveyed Property to the Trust................... 16
SECTION 6.12 Nonpetition Covenant............................. 17
SCHEDULE A -- Schedule of Receivables Conveyed
SCHEDULE B -- Representations and Warranties of Sellers
-ii-
<PAGE>
PURCHASE AGREEMENT AND ASSIGNMENT
THIS PURCHASE AGREEMENT AND ASSIGNMENT, dated as of March 1, 1996, executed
among Emergent Auto Holdings Corp., a Delaware corporation (the "Purchaser"),
The Loan Pro$, Inc., a South Carolina corporation ("Loan Pro$") and Premier
Financial Services, Inc., a South Carolina corporation ("Premier") (Premier,
together with Loan Pro$, the "Sellers") and Emergent Group, Inc., a South
Carolina corporation ("Emergent Group").
W I T N E S S E T H:
WHEREAS, Purchaser has agreed to purchase from Sellers, and Sellers,
pursuant to this Agreement, are transferring to Purchaser the Receivables and
Other Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt of which is acknowledged, Purchaser and Sellers, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. The specific terms defined in this Article include the
plural as well as the singular. The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of and Schedules and Exhibits to this Agreement. Capitalized terms used
herein without definition shall have the respective meanings assigned to such
terms in the Pooling and Servicing Agreement (defined herein).
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Agreement" shall mean this Purchase Agreement and Assignment and all
amendments hereof and supplements hereto.
"Initial Spread Account Deposit" means $1,288,587.18.
<PAGE>
"Other Conveyed Property" means all monies at any time paid or payable on
the Receivables or in respect thereof after the Cut-Off Date (including amounts
due on or before the Cut-Off Date but received by each of the Sellers after the
Cut-Off Date), an assignment of security interests in the Financed Vehicles, the
Insurance Policies and any proceeds from any Insurance Policies relating to the
Receivables, the Obligors or the Financed Vehicles, including rebates of
premiums, rights of each of the Sellers against Dealers with respect to the
Receivables under the Dealer Agreements and the Dealer Assignments, all items
contained in the Receivable Files, any and all other documents or electronic
records that each Seller keeps on file in accordance with its customary
procedures relating to the Receivables, the Obligors or the Financed Vehicles,
property (including the right to receive future Liquidation Proceeds) that
secures a Receivable and that has been acquired by or on behalf of the Trustee
pursuant to liquidation of such Receivable, and all proceeds of the foregoing.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of March 1, 1996, among Prudential Securities Secured
Financing Corporation, as Depositor, Emergent Group, Inc. as Servicer, and
Bankers Trust Company, a New York banking corporation, as Trustee and Backup
Servicer, as the same may be amended, modified or supplemented from time to
time.
"Purchaser" means Emergent Auto Holdings Corp.
"Schedule of Receivables Conveyed" means the schedule of all installment
sales contracts and promissory notes sold and transferred pursuant to this
Agreement which is attached hereto as Schedule A.
"Schedule of Representations" means the Schedule of Representations and
Warranties attached hereto as Schedule B.
"Seller Repurchase Event" means with respect to each Seller, the occurrence
of a breach of any of either Seller's representations and warranties under
Schedule B hereto.
"Sellers" means The Loan Pro$, Inc. and Premier Financial Services, Inc.
SECTION 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Pooling and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
2
<PAGE>
SECTION 1.4 Certain References. All references to the Principal Balance of
a Receivable as of a Record Date shall refer to the close of business on such
day, or as of the first day of a Collection Period shall refer to the opening of
business on such day. All references to the last day of a Collection Period
shall refer to the close of business on such day.
SECTION 1.5 No Recourse. Without limiting the obligations of Sellers
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of the
Sellers, or of any predecessor or successor of any of the Sellers.
SECTION 1.6 Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
any of the Sellers or any Affiliate thereof shall be deemed not to be
outstanding and the Fractional Undivided Interest evidenced thereby shall not be
taken into account in determining whether the requisite Fractional Undivided
Interest necessary to effect any such action or consent has been obtained;
provided, however, that, solely for the purpose of determining whether the
Trustee is entitled to rely upon any such action or consent, only Certificates
which the Trustee knows to be so owned shall be so disregarded.
SECTION 1.7 Material Adverse Effect. Whenever a determination is to be made
under this Agreement as to whether a given event, action, course of conduct or
set of facts or circumstances could or would have a material adverse effect on
the Trust or the Certificateholders (or any similar or analogous determination),
such determination shall be made without taking into account the funds available
from claims under the Policy.
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Receivables and the Other Conveyed Property.
Subject to the terms and conditions of this Agreement, the Sellers hereby sell,
transfer, assign, and otherwise convey to Purchaser without recourse (but
without limitation of its obligations in this Agreement), and Purchaser hereby
purchases, all right, title and interest of each of the Sellers in and to the
Receivables and the Other Conveyed Property. It is the intention of the each of
the Sellers and Purchaser that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Receivables and
3
<PAGE>
the Other Conveyed Property from each of the Sellers to Purchaser, conveying
good title thereto free and clear of any Liens, and the Receivables and the
Other Conveyed Property shall not be part of the Sellers' respective estates in
the event of the filing of a bankruptcy petition by or against the Sellers under
any bankruptcy or similar law.
SECTION 2.2 Purchase Price. Simultaneously with the conveyance of the
Receivables and the Other Conveyed Property to Purchaser, Purchaser has paid or
caused to be paid to or upon the order of (a) Loan Pro$ $12,180,275.60 by wire
transfer of immediately available funds (partially representing the proceeds to
Purchaser from the sale of the Receivables to the Depositor); and (b) Premier
$3,995,638.25 by wire transfer of immediately available funds (partially
representing the proceeds to Purchaser from the sale of the Receivables to the
Depositor).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Sellers. Each Seller
makes the following representations and warranties, on which Purchaser relies in
purchasing the Receivables and the Other Conveyed Property and in transferring
the Receivables and the Other Conveyed Property to the Depositor under the
Unaffiliated Seller's Agreement, on which the Depositor will rely in
transferring the Receivables and the Other Conveyed Property to the Trust under
the Pooling and Servicing Agreement and on which the Certificate Insurer will
rely in issuing the Policy. Such representations are made as of the execution
and delivery of this Agreement or other time specified in the Schedule of
Representations, but shall survive the sale, transfer and assignment of the
Receivables and the Other Conveyed Property hereunder, the sale, transfer and
assignment thereof by the Seller to the Depositor under the Unaffiliated
Seller's Agreement and the sale, transfer and assignment thereof by the
Depositor to the Trustee under the Pooling and Servicing Agreement. Each Seller
and Purchaser agree that Purchaser will assign to the Depositor all of
Purchaser's rights under the Agreement, the Depositor will assign to the Trustee
all of Purchaser's rights under the Agreement and that the Trustee will
thereafter be entitled to enforce this Agreement directly against each Seller in
the Trustee's own name on behalf of the Trust.
(a) Schedule of Representations. The representations and warranties
made by each Seller, as a Seller hereunder and set forth on the Schedule of
Representations are true and correct.
(b) Organization and Good Standing. Each Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of South Carolina, with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
4
<PAGE>
times and now has, power, authority and legal right to enter into and
perform its obligations under this Agreement.
(c) Due Qualification. Each Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) Power and Authority. Each Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; each Seller
has full power and authority to sell and assign the Receivables and Other
Conveyed Property to be sold and assigned to and deposited with Purchaser
hereunder and has duly authorized such sale and assignment to Purchaser by
all necessary corporate action and the execution, delivery and performance
of this Agreement have been duly authorized by each Seller by all necessary
corporate action.
(e) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Receivables and the Other Conveyed Property, enforceable against
each Seller and creditors of and purchasers from each Seller, and this
Agreement constitute legal, valid and binding obligations of each Seller
enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of each Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to which each Seller
is a party or by which it is bound or any of its properties are subject, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement or the Stock Pledge
Agreement or violate any law, order, rule or regulation applicable to each
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over each Seller or any of its properties, or in any way
materially adversely affect the interest of the Certificateholders or the
Trust in any Receivable, or affect each Seller's ability to perform its
obligations under this Agreement;
(g) No Proceedings. There are no proceedings or investigations pending
or, to each Seller's knowledge, threatened against each Seller, before any
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court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over each Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by each Seller of its obligations under, or the validity or
enforceability of, this Agreement, (iv) involving each Seller or which
might adversely affect the federal income tax or other federal, state or
local tax attributes of the Certificates or (v) that could have a material
adverse effect on the Receivables. To each Seller's knowledge, there are no
proceedings or investigations pending or threatened against each Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over each Seller or its
properties relating to each Seller which might adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates;
(h) No Consents. Neither Seller is required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement except such consents as have been
obtained;
(i) Approvals. All approvals, authorizations, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by each Seller of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing Date.
(j) Chief Executive Office. The chief executive offices of Loan Pro$
and Premier are located at 15 South Main Street, Suite 750, Greenville,
South Carolina 29601.
SECTION 3.2 Representations and Warranties of Purchaser. Purchaser makes
the following representations and warranties, on which each Seller relies in
selling, assigning, transferring and conveying the Receivables and the Other
Conveyed Property to Purchaser hereunder. Such representations are made as of
the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Receivables and the Other Conveyed Property
hereunder, the sale, transfer and assignment thereof by Purchaser to the
Depositor under the Unaffiliated Seller's Agreement and the sale, transfer and
assignment thereof by the Depositor to the Trustee under the Pooling and
Servicing Agreement.
(a) Organization and Good Standing. Purchaser has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of South Carolina, with the power and authority to own
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its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and has, full power, authority and legal right to acquire and own
the Receivables and the Other Conveyed Property, and to transfer the
Receivables and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
(b) Due Qualification. Purchaser is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Purchaser's ability to acquire the
Receivables or the Other Conveyed Property or the validity or
enforceability of the Receivables and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Related Documents.
(c) Power and Authority. Purchaser has the power, authority and legal
right to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Receivables and the Other Conveyed Property
hereunder; and the execution, delivery and performance of this Agreement
and all of the documents required pursuant hereto have been duly authorized
by Purchaser by all necessary action.
(d) No Consent Required. Purchaser is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as
have been obtained, effected or made.
(e) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(f) No Violation. The execution, delivery and performance by Purchaser
of this Agreement, the consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms
of this Agreement and the Related Documents do not and will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of Purchaser, or conflict with or
breach any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement,
mortgage, deed of trust or other instrument to which Purchaser is a party
or by which Purchaser is bound or to which any of its properties are
subject, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
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mortgage, deed of trust or other instrument (other than the Unaffiliated
Seller's Agreement or the Spread Account Agreement), or violate any law,
order, rule or regulation, applicable to Purchaser or its properties, of
any federal or state regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction over Purchaser or
any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Purchaser, threatened against Purchaser,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality having jurisdiction over Purchaser or its
properties: (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by Purchaser of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income tax
attributes of, or seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the Receivables and the
Other Conveyed Property hereunder or the transfer by Purchaser of the
Receivables and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
In the event of any breach of a representation and warranty made by Purchaser
hereunder, each Seller covenants and agrees that neither Seller will take any
action to pursue any remedy that either may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all
pass-through certificates or other similar securities issued by the Trust, or a
trust or similar vehicle formed by Purchaser, have been paid in full. Each
Seller and Purchaser agree that damages will not be an adequate remedy for such
breach and that this covenant may be specifically enforced by Purchaser or by
the Trustee on behalf of the Trust.
SECTION 3.3 Indemnification.
(a) Each Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Backup Servicer, the Trust and the
Certificateholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from any breach of
any of each Seller's representations and warranties contained herein.
(b) Each Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Backup Servicer, the Trust and the
Certificateholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting, from the use,
ownership or operation by each Seller or any affiliate thereof of a Financed
Vehicle.
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(c) Each Seller will defend and indemnify Purchaser, the Depositor, the
Trustee, the Backup Servicer, the Trust, the Certificate Insurer and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities arising out of or resulting from any action taken, or any action
failed to be taken that is required to be taken under this Agreement, by it in
respect of any portion of the Trust Property other than in accordance with this
Agreement.
(d) Each Seller agrees to pay, and shall defend, indemnify and hold
harmless Purchaser, the Depositor, the Trustee, the Backup Servicer, the Trust
and the Certificateholders from and against any taxes that may at any time be
asserted against Purchaser, the Depositor, the Trustee, the Backup Servicer, or
the Certificateholders with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but, not including any taxes asserted with respect to, and as of the date
of, the sale, transfer and assignment of the Receivables and the Other Conveyed
Property to Purchaser, the conveyance of the Receivables or Other Conveyed
Property under the Unaffiliated Seller's Agreement and the conveyance of the
Trust Property to the Trustee or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Receivables and Other
Conveyed Property or the Trust Property which shall be indemnified by each
Seller pursuant to clause (e) below, or federal, state or other income taxes,
arising out of distributions on the Certificates or transfer taxes arising in
connection with the transfer of Certificates) and costs and expenses in
defending against the same, arising by reason of the acts to be performed by
each Seller under this Agreement or imposed against such Persons.
(e) Each Seller agrees to pay, and to indemnify, defend and hold harmless
Purchaser, the Depositor, the Trustee, the Backup Servicer, the Trust and the
Certificateholders from, any taxes which may at any time be asserted against
such Persons with respect to, and as of the date of, the conveyance or ownership
of the Receivables or the Other Conveyed Property hereunder, the conveyance or
ownership of the Receivables or Other Conveyed Property under the Unaffiliated
Seller's Agreement and the conveyance or ownership of the Trust Property under
the Pooling and Servicing Agreement or the issuance and original sale of the
Certificates, including, without limitation, any sales, gross receipts, personal
property, tangible or intangible personal property, privilege or license taxes
(but not including any federal or other income taxes, including franchise taxes,
arising out of the transactions contemplated hereby or transfer taxes arising in
connection with the transfer of Certificates) and costs and expenses in
defending against the same, arising by reason of the acts to be performed by
each Seller under this Agreement or imposed against such Persons.
(f) Each Seller shall defend, indemnify, and hold harmless Purchaser, the
Depositor, the Trustee, the Backup Servicer, the Trust and the
Certificateholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon Purchaser, the Depositor,
the Trustee, the Backup Servicer, the Trust and the
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Certificateholders through, the negligence, willful misfeasance, or bad faith of
each Seller in the performance of its duties under this Agreement or by reason
of reckless disregard of each Seller's obligations and duties under this
Agreement.
(g) Each Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer, the Backup Servicer, the Trust
and the Certificateholders from and against any loss, liability or expense
incurred by reason of the violation by each Seller of federal or state
securities laws in connection with the registration or the sale of the
Certificates.
(h) Each Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer, the Backup Servicer, the Trust
and the Certificateholders from and against any loss, liability or expense
imposed upon, or incurred by, Purchaser, the Depositor, the Trustee, the
Certificate Insurer, the Trust or the Certificateholders as a result of the
failure of any Receivable, or the sale of the related Financed Vehicle, to
comply with all requirements of applicable law.
Indemnification under this Section 3.3 shall include reasonable fees and
expenses of counsel and expenses of litigation and shall survive termination of
the Trust. The indemnity obligations hereunder shall be in addition to any
obligation that each Seller may otherwise have.
ARTICLE IV
COVENANTS OF THE SELLERS
SECTION 4.1 Protection of Title of Purchaser, the Depositor and the Trust.
(a) At or prior to the Closing Date, each Seller shall have filed or caused
to be filed a UCC-1 financing statement, executed by such Seller as seller or
debtor, naming Purchaser as purchaser or secured party and describing the
Receivables and the Other Conveyed Property being sold by it to Purchaser as
collateral, with the office of the Secretary of State of the State of South
Carolina and in such other locations as Purchaser shall have required. From time
to time thereafter, the Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of Purchaser under this Agreement, of the
Depositor under the Unaffiliated Seller's Agreement and of the Trust under the
Pooling and Servicing Agreement in the Receivables and the Other Conveyed
Property, as the case may be, and in the proceeds thereof. Each Seller shall
deliver (or cause to be delivered) to Purchaser, the Depositor, the Trustee, and
the Certificate Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
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filing. In the event that each Seller fails to perform its obligations under
this subsection, Purchaser, the Depositor or the Trustee may do so, at the
expense of such Seller.
(b) Each Seller shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by each such Seller (or by Purchaser or the Trustee
on behalf of such Seller) in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless such Seller
shall have given Purchaser, the Depositor, the Trustee and the Certificate
Insurer at least 60 days prior written notice thereof, and shall promptly file
appropriate amendments to all previously filed financing statements and
continuation statements.
(c) Each Seller shall give Purchaser, the Depositor, the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and the Trustee at least 60 days prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. Each Seller shall at all times maintain each office from
which it services Receivables and its principal executive office within the
United States of America.
(d) Each Seller shall maintain its computer systems so that, from and after
the time of sale under this Agreement of the Receivables to Purchaser, the
conveyance of the Receivables by Purchaser to the Depositor and the conveyance
of the Receivables by the Depositor to the Trustee on behalf of the Trust, each
Seller's master computer records (including archives) that shall refer to a
Receivable indicate clearly that such Receivable has been sold to Purchaser and
has been conveyed by Purchaser to the Depositor and by the Depositor to the
Trustee on behalf of the Trust. Indication of the Trustee's ownership of a
Receivable shall be deleted from or modified on each Seller's computer systems
when, and only when, the Receivable shall become a Purchased Receivable or shall
have been paid in full.
(e) If at any time each Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle receivables to
any prospective purchaser, lender or other transferee, such Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from archives) that, if they shall refer
in any manner whatsoever to any Receivable shall indicate clearly that such
Receivable has been sold to Purchaser, sold by Purchaser to the Depositor, and
is owned by the Trust.
SECTION 4.2 Other Liens or Interests. Except for the conveyances hereunder,
each Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on the Receivables or
the Other Conveyed Property or any interest therein, and such Seller shall
defend the right, title, and interest of Purchaser, the Depositor and the
Trustee in and to the Receivables and the
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Other Conveyed Property against all claims of third parties claiming through or
under such Seller.
SECTION 4.3 Costs and Expenses. Each Seller shall pay all reasonable costs
and disbursements in connection with the performance of its obligations
hereunder and its Related Documents.
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty. (a) Upon the
occurrence of a Seller Repurchase Event, such Seller shall, unless such breach
shall have been cured in all material respects, repurchase the related
Receivable from the Trustee by the last day of the first full calendar month
following discovery or notice to such Seller of such breach pursuant to Section
3.6 of the Pooling and Servicing Agreement, and, on or before the related
Deposit Date, such Seller shall pay the Purchase Amount to the Trustee pursuant
to the Pooling and Servicing Agreement. To the extent such Seller fails to
effect its repurchase obligation, Emergent Group shall repurchase the related
Receivable and pay the purchase amount to the Trustee on such date. The
provisions of this Section 5.1 are intended to grant the Trustee a direct right
against each Seller to demand performance hereunder, and in connection therewith
each Seller and Emergent Group waive any requirement of prior demand against the
Depositor or Purchaser with respect to such repurchase obligation. Any such
purchase resulting from a Seller Repurchase Event shall take place in the manner
specified in Section 3.6 of the Pooling and Servicing Agreement. Notwithstanding
any other provision of this Agreement or the Pooling and Servicing Agreement to
the contrary, the obligation of each Seller and Emergent Group under this
Section shall be performed in accordance with the terms hereof notwithstanding
the failure of the Servicer and the Depositor to perform any of their respective
obligations with respect to such Receivable under the Pooling and Servicing
Agreement.
(b) In addition to the foregoing, each Seller shall promptly purchase from
Purchaser (in its capacity as Seller under the Unaffiliated Seller's Agreement)
any Receivable repurchased by Purchaser upon the occurrence of an Unaffiliated
Seller Repurchase Event involving a Seller breach by Purchaser (in its capacity
as Seller under the Unaffiliated Seller's Agreement) pursuant to Section 3.05 of
the Unaffiliated Seller's Agreement.
(c) In addition to the foregoing and notwithstanding whether the related
Receivable shall have been purchased by a Seller or Emergent Group, such Seller
shall indemnify the Trustee, the Depositor, the Backup Servicer, the Collateral
Agent, the Certificate Insurer, the Trust and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which
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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 Repurchase Events.
SECTION 5.2 Reassignment of Purchased Receivables. Upon deposit in the
Collection Account of the Purchase Amount of any Receivable repurchased by a
Seller under Section 5.1 hereof, the Servicer and the Trustee shall take such
steps as may be reasonably requested by such Seller in order to assign to such
Seller all of Purchaser's, the Depositor's and the Trust's right, title and
interest in and to such Receivable and all security and documents and all Other
Conveyed Property conveyed to Purchaser, the Depositor and the Trust directly
relating thereto, without recourse, representation or warranty, except as to the
absence of liens, charges or encumbrances created by or arising as a result of
actions of Purchaser or the Trustee. Such assignment shall be a sale and
assignment outright, and not for security. If, following the reassignment of a
Purchased Receivable, in any enforcement suit or legal proceeding, it is held
that such Seller may not enforce any such Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce the Receivable,
the Servicer and the Trustee shall, at the expense of such Seller, take such
steps as such Seller deems reasonably necessary to enforce the Receivable,
including bringing suit in Purchaser's or the Trustee's name or the names of the
Certificateholders.
SECTION 5.3 Waivers. No failure or delay on the part of Purchaser, the
Depositor or the Trustee as assignee of Purchaser, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Liability of the Sellers. The Sellers shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by such Seller and its representations and warranties.
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser. Any
corporation or other entity (i) into which a Seller, Purchaser or Emergent Group
may be merged or consolidated, (ii) resulting from any merger or consolidation
to which a Seller, Purchaser or Emergent Group is a party or (iii) succeeding to
the business of a Seller, Purchaser or Emergent Group, in the case of Purchaser,
which corporation has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantively identical to
those contained in Purchaser's certificate of incorporation, provided that in
any of the foregoing cases such corporation shall execute an agreement of
assumption to perform every obligation of a Seller, Purchaser or Emergent Group,
as the case may be, under this Agreement and, whether or not such
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assumption agreement is executed, shall be the successor to a Seller, Purchaser
or Emergent Group, as the case may be, hereunder (without relieving a Seller,
Purchaser or Emergent Group of its responsibilities hereunder, if it survives
such merger or consolidation) without the execution or filing of any document or
any further act by any of the parties to this Agreement. Notwithstanding the
foregoing, so long as an Insurer Default shall not have occurred and be
continuing, Purchaser shall not merge or consolidate with any other Person or
permit any other Person to become the successor to Purchaser's business without
the prior written consent of the Certificate Insurer. Such Seller, Purchaser or
Emergent Group shall promptly inform the other party, the Trustee and, so long
as an Insurer Default shall not have occurred and be continuing, the Certificate
Insurer of such merger, consolidation or purchase and assumption.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii) and (iii) above, (x) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Sections 3.1 and 3.2 or covenant made pursuant to Section 3.3, shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction) and no event
that, after notice or lapse of time, or both, would become an event of default
under the Insurance Agreement, shall have occurred and be continuing, (y) such
Seller, Purchaser or Emergent Group, as applicable, shall have delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section 6.2 and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, and (z)
such Seller, Purchaser or Emergent Group, as applicable, shall have delivered to
the Trustee an Opinion of Counsel, stating, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trustee in the Trust Property and reciting the details of
the filings or (B) no such action shall be necessary to preserve and protect
such interest.
SECTION 6.3 Limitation on Liability of the Sellers and Others. Each Seller
and any director, officer, employee or agent of any such Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. No Seller shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement or its Related Documents and that in its opinion may
involve it in any expense or liability.
SECTION 6.4 Amendment.
(a) This Agreement may be amended by the Sellers, Purchaser and Emergent
Group, with the prior written consent of the Certificate Insurer (so long as an
Insurer Default shall not have occurred and be continuing) but without the
consent of the Trustee or any of the Certificateholders (unless an Insurer
Default shall have occurred, in which event the consent of the Certificate
Majority shall be obtained) (i) to cure any
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ambiguity or (ii) to correct any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect in any material respect the interests
of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Sellers,
Purchaser and Emergent Group with the prior written consent of the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with the consent of the Trustee and a Certificate Majority, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Certificateholders; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that
shall be required to be made on any Certificate or the pass-through rate or (ii)
reduce the aforesaid percentage required to consent to any such amendment or any
waiver hereunder, without the consent of the Holders of all Certificates then
outstanding.
(c) Prior to the execution of any such amendment or consent, Emergent Group
shall have furnished written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates. The consent of any Holder of a Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate.
SECTION 6.5 Notices. All demands, notices and communications to any of the
Sellers, Purchaser or Emergent Group hereunder shall be in writing, personally
delivered, or sent by telecopier (subsequently confirmed in writing), reputable
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been given upon receipt (a) in the case of Loan Pro$, to
The Loan Pro$, Inc., 15 South Main Street, Suite 750, Greenville, South Carolina
29601, (b) in the case of Premier, to Premier Financial Services, Inc., 15 South
Main Street, Suite 750, Greenville, South Carolina 29601, (c) in the case of
Emergent Group, to Emergent Group, Inc., 15 South Main Street, Suite 750,
Greenville, South Carolina 29601 or (d) in the case of Purchaser,
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to Emergent Auto Holdings Corp., 44 East Camperdown Way, Greenville, South
Carolina 29601.
SECTION 6.6 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement, the Pooling and Servicing Agreement and the Related
Documents set forth the entire understanding of the parties relating to the
subject matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement, the Pooling and Servicing Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.7 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.8 Intention of the Parties. The execution and delivery of this
Agreement shall constitute an acknowledgment by each Seller and Purchaser that
they intend that the assignment and transfer herein contemplated constitute a
sale and assignment outright, and not for security, of the Receivables and the
Other Conveyed Property conveying good title thereto free and clear of any
Liens, from each such Seller to Purchaser, and that none of the Receivables and
the Other Conveyed Property shall be a part of such Seller's estate in the event
of the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to, such
Seller. In the event that such conveyance is determined to be made as security
for a loan made by Purchaser, the Trust or the Certificateholders to such
seller, as applicable, the parties intend that either such Seller shall have
granted to Purchaser a security interest in all right, title and interest in and
to the Receivables and the Other Conveyed Property conveyed pursuant to Section
2.1 hereof, and that this Agreement shall constitute a security agreement under
applicable law.
SECTION 6.9 Governing Law. This Agreement shall be construed in accordance
with, the laws of the State of New York without regard to the principles of
conflicts of laws thereof and the obligations, rights and remedies of the
parties under this Agreement shall be determined in accordance with such laws.
SECTION 6.10 Counterparts. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
SECTION 6.11 Conveyance of the Receivables and the Other Conveyed Property
to the Trust. Each Seller acknowledges that Purchaser intends, pursuant to the
Unaffiliated Seller's Agreement, to convey the Receivables and the Other
16
<PAGE>
Conveyed Property, together with its respective rights under this Agreement, to
the Depositor on the date hereof and that the Depositor intends, pursuant to the
Pooling and Servicing Agreement, to convey the Receivables and the Other
Conveyed Property, together with its respective rights under this Agreement, to
the Trust on the date hereof. Each Seller acknowledges and consents to such
conveyance and waives any further notice thereof and covenants and agrees that
the representations and warranties of such Seller contained in this Agreement
and the rights of Purchaser hereunder are intended to benefit the Depositor, the
Certificate Insurer, the Trustee, the Trust and the Certificateholders. In
furtherance of the foregoing, each Seller covenants and agrees to perform its
duties and obligations hereunder, in accordance with the terms hereof for the
benefit of the Depositor, the Certificate Insurer, the Trustee, the Trust and
the Certificateholders and that, notwithstanding anything to the contrary in
this Agreement, each Seller shall be directly liable to the Trustee and the
Trust (notwithstanding any failure by the Servicer, the Backup Servicer or
Purchaser to perform its duties and obligations hereunder or under the Pooling
and Servicing Agreement) and that the Trustee may enforce the duties and
obligations of each Seller under this Agreement against each such Seller for the
benefit of the Certificate Insurer, the Trust and the Certificateholders.
SECTION 6.12 Nonpetition Covenant. Until one year and one day after the
termination of the Trust, neither Seller nor Purchaser shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust (or, in the case of
each Seller, against Purchaser) under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust (or
Purchaser) or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust (or Purchaser).
17
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
EMERGENT AUTO HOLDINGS CORP.,
as Purchaser
By: /s/ Kevin Mast
-----------------------------------
Name: Kevin J. Mast
Title: Vice President and Treasurer
THE LOAN PRO$, INC., as Seller
By: /s/ Kevin Mast
-----------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
PREMIER FINANCIAL SERVICES, INC., as
Seller
By: /s/ Kevin Mast
------------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
EMERGENT GROUP, INC.
By: /s/ Kevin Mast
------------------------------------
Name: Kevin J. Mast
Title: Treasurer
18
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES CONVEYED
[see Exhibit A to the Unaffiliated Seller's Agreement]
A-1
<PAGE>
SCHEDULE B
SCHEDULE OF REPRESENTATIONS
1. Characteristics of Receivables. Each Receivable (A) was originated by
each Seller in the ordinary course of each Seller's business and each Seller had
all necessary licenses and permits to originate Receivables in the state where
each Seller was located, was fully and properly executed by the parties thereto
or was purchased by each Seller from a Dealer under an existing Dealer Agreement
with Loan Pro$ or Premier and was validly assigned by such Dealer to Loan Pro$
or Premier, (B) contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for realization against
the collateral security, and (C) is a fully amortizing Simple Interest
Receivable or Rule of 78s Receivable which provides for level monthly payments
(provided that the payment in the first Collection Period and the final
Collection Period of the life of the Receivable may be minimally different from
the level payment) which, if made when due, shall fully amortize the Amount
Financed over the original term.
2. No Fraud or Misrepresentation. Each Receivable was originated or
acquired by each Seller without any fraud or material misrepresentation on the
part of a Dealer, an Originator, the Obligor or a Seller.
3. Compliance with Law. All requirements of applicable federal, state and
local laws, and regulations thereunder (including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors'
Civil Relief Act of 1940, and state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and other consumer credit laws and equal
credit opportunity and disclosure laws) in respect of all of the Receivables,
each and every sale of Financed Vehicles and the sale of any physical damage
insurance and any extended service contracts, have been complied with in all
material respects, and each Receivable and the sale of the Financed Vehicle
evidenced by each Receivable and the sale of any physical damage insurance and
any extended service contracts complied at the time it was originated or made
and now complies in all material respects with all applicable legal
requirements.
4. Origination. Each Receivable was originated in the United States and, at
the time of origination materially conformed to all requirements of the
respective Seller's underwriting guide applicable to such Receivable.
5. Binding Obligation. Each Receivable represents the genuine, legal, valid
and binding payment obligation of the Obligor thereon, enforceable by the holder
thereof in accordance with its terms, except (A) as enforceability may be
limited by
B-1
<PAGE>
bankruptcy, insolvency, reorganization or 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 and (B) as such Receivable may be modified by
the application after the Cut-Off Date of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended; and all parties to each Receivable had full
legal capacity to execute and deliver such Receivable and all other documents
related thereto and to grant the security interest purported to be granted
thereby.
6. No Government Obligor. None of the Receivables shall be due from the
United States of America or any State or from any agency, department,
subdivision or instrumentality thereof.
7. Obligor Bankruptcy. At the Cut-Off Date, no Obligor had been identified
by the related Seller as being the subject of a current bankruptcy proceeding.
8. Schedule of Receivables. The information pertaining to each Receivable
set forth in the Schedule of Receivables and in the Underwriting Agreement was
true and correct in all material respects as of the close of business on the
Cut-Off Date and at the Closing Date.
9. Marked Records. By the Closing Date, each Seller will have caused the
portions of each Seller's servicing records relating to the Receivables to be
clearly and unambiguously marked to show that the Receivables have been sold to
the Depositor and are owned by the Depositor in accordance with the terms of the
Unaffiliated Seller's Agreement.
10. Computer Tape or Listing. The Computer Tape or Listing made available
by each Seller to the Depositor on the Closing Date was complete and accurate as
of the Cut-off Date and includes a description of the same Receivables that are
described in the Schedule of Receivables.
11. Chattel Paper. The Receivables constitute chattel paper within the
meaning of the UCC.
12. One Original. There is only one original executed copy of each
Receivable.
13. Receivable Files Complete. There exists a Receivable File pertaining to
each Receivable and such Receivable File contains, without limitation, (a) a
fully executed original of the Receivable and (b) the original Lien Certificate
or application therefor together with an assignment of the Lien Certificate
executed by each Seller to the Depositor. Each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces. All blanks on any form have been properly filled in and each
form has otherwise been correctly prepared.
B-2
<PAGE>
Notwithstanding the above, a copy of the complete Receivable File for each
Receivable, which fulfills the documentation requirements of the related
Seller's underwriting guide as in effect at the time of purchase is in the
possession of the Servicer or the Trustee.
14. Receivables in Force. No Receivable has been satisfied, subordinated or
rescinded, and the Financed Vehicle securing each such Receivable has not been
released from the lien of the related Receivable in whole or in part. No
provisions of any Receivable have been waived, altered or modified in any
respect since its origination, except by instruments or documents identified in
the Receivable File held by the Trustee. No Receivable has been modified as a
result of application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
15. Lawful Assignment. No Receivable 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 Receivable under this
Agreement, the Unaffiliated Seller's Agreement or pursuant to transfers of the
Certificates. Neither Seller has entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Receivables.
16. Good Title. No Receivable has been sold, transferred, assigned or
pledged by either Seller to any Person other than Purchaser immediately prior to
the conveyance of the Receivables to Purchaser pursuant to this Agreement, the
Sellers were the sole owners thereof and had good and indefeasible title
thereto, free of any Lien except for the lien of BankAmerica Business Credit,
Inc. which will be simultaneously released with the transfer of the Receivables
to Purchaser and, upon execution and delivery of this Agreement by the Seller,
the Trustee shall have good and indefeasible title to and will be the sole owner
of such Receivables, free of any Lien. No Dealer has a participation in, or
other right to receive, proceeds of any Receivable. Neither Seller has taken any
action to convey any right to any Person that would result in such Person having
a right to payments received under the related Insurance Policies or the related
Dealer Agreements or Dealer Assignments or to payments due under such
Receivables.
17. Security Interest in Financed Vehicle. Each Receivable created or shall
create a valid, binding and enforceable first priority security interest in
favor of either Seller in the Financed Vehicle. The Lien Certificate for each
Financed Vehicle shows, or if a new or replacement Lien Certificate is being
applied for with respect to such Financed Vehicle the Lien Certificate will be
received within 180 days of the Closing Date and will show, either Seller named
as the secured party under each Receivable as the holder of a first priority
security interest in such Financed Vehicle. With respect to each Receivable for
which the Lien Certificate has not yet been returned from the Registrar of
Titles, the related Seller has received written evidence from the related Dealer
that such Lien Certificate showing either Seller as first lienholder has been
applied for. If the Receivable was originated in a state in which a filing or
recording is required of the secured party to perfect a security interest in
motor vehicles, such filings or recordings have been duly made to show the
related Seller named as the secured party
B-3
<PAGE>
under the related Receivable. The related Seller's security interest has been
validly assigned by the related Seller, as the case may be, to Purchaser
pursuant to this Agreement, by the Unaffiliated Seller to the Depositor pursuant
to the Unaffiliated Seller's Agreement and by the Depositor to the Trustee
pursuant to the Pooling and Servicing Agreement. Immediately after the sale,
transfer and assignment thereof to the Trust, each Receivable will be secured by
an enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Trustee as secured party, which security interest is
prior to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to priority,
for any lien for taxes, labor or materials affecting a Financed Vehicle). As of
the Cut-Off Date there were no Liens or claims for taxes, work, labor or
materials affecting a Financed Vehicle which are or may be Liens prior or equal
to the lien of the related Receivable.
18. All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Trustee a first priority
perfected lien on, or ownership interest in, the Receivables and the proceeds
thereof and the other Trust Property have been made, taken or performed.
19. No Impairment. Neither Seller has done anything to convey any right to
any Person that would result in such Person having a right to payments due under
the Receivable or otherwise to impair the rights of the Trust and the
Certificateholders in any Receivable or the proceeds thereof.
20. Receivable Not Assumable. No Receivable is assumable by another Person
in a manner which would release the Obligor thereof from such Obligor's
obligations to either Seller with respect to such Receivable.
21. No Defenses. No Receivable is subject to any right of rescission,
setoff, counterclaim or defense and no such right has been asserted or
threatened with respect to any Receivable.
22. No Default. There is currently no default, breach, violation or event
permitting acceleration under the terms of any Receivable (other than payment
delinquencies of not more than 30 days), and no condition exists or event has
occurred and is continuing that with notice, the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of any Receivable, and there is currently no effective waiver of any
of the foregoing. As of the Cut-Off Date, no Financed Vehicle had been
repossessed.
23. Insurance. At the time of the origination of each Receivable, the
related Financed Vehicle was covered by a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) its maximum
insurable value or (b) the principal amount due from the Obligor under the
related Receivable, (ii) naming the related Seller and its successors and
assigns as loss payee and (iii) insuring against loss
B-4
<PAGE>
and damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage. Each Receivable
requires the Obligor to maintain physical loss and damage insurance, naming the
related Seller and its successors and assigns as additional insured parties, and
each Receivable permits the holder thereof to obtain physical loss and damage
insurance at the expense of the Obligor if the Obligor fails to do so.
24. Receivables. (i) Each Receivable had a remaining maturity, as of the
Cut-Off Date, of at least 2 months but not more than 70 months; (ii) each
Receivable had an original maturity of at least 4 months but not more than 72
months; (iii) each Receivable had an original principal balance of at least
$483.58 and not more than $18,656.08; (iv) each Receivable had a Principal
Balance as of the Cut-Off Date of at least $5.45 and not more than $18,523.29;
(v) each Receivable has an Annual Percentage Rate of at least 17.82% and not
more than 45.99%; (vi) no Receivable was more than 30 days past due as of the
Cut-Off Date; (vii) no funds have been advanced by the Unaffiliated Seller, the
Servicer, the related Seller, any Dealer, or anyone acting on behalf of any of
them in order to cause any Receivable to qualify under subclause (vi) of this
clause (24); (viii) no Receivable has a final scheduled payment date on or after
February 20, 2003; (ix) the Principal Balance of each Receivable set forth in
Schedule of Receivables is true and accurate in all material respects as of the
Cut-Off Date and (x) as of the Cut-Off Date, substantially all of the Aggregate
Principal Balance for all the Receivables is attributable to loans for the
origination or purchase of used Financed Vehicles.
25. Origination. Each Receivable was originated in the United States and,
at the time of origination, materially conformed to all requirements of the
related Seller's underwriting policies and guidelines then in effect and
applicable to such Receivable.
26. No Adverse Selection. No selection procedures adverse to the
Certificateholders or to the Certificate Insurer have been utilized in selecting
such Receivable from all other similar Receivables originated by the related
Seller.
B-5
EXHIBIT 10.3
================================================================================
INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
and
THE EMERGENT COMPANIES
(as defined herein)
Dated as of March 1, 1996
Emergent Auto Receivables Trust 1996-A
6.55% Auto Receivables Backed Certificates, Class A
$14,496,000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................. 2
Section 1.01. Definitions............................................ 2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS................... 2
Section 2.01. Representations and Warranties of each
Emergent Company....................................... 2
Section 2.02. Representations and Warranties of the
Depositor.............................................. 8
Section 2.03. Affirmative Covenants of each Emergent
Company................................................ 12
Section 2.04. Affirmative Covenants of the Depositor................. 19
Section 2.05. Negative Covenants of each Emergent Company............ 20
Section 2.06. Negative Covenants of the Depositor.................... 23
ARTICLE III THE POLICY; REIMBURSEMENT; INDEMNIFICATION.................. 24
Section 3.01. Issuance of the Policy................................. 24
Section 3.02. Payment of Fees and Premium............................ 24
Section 3.03. Reimbursement Obligation............................... 25
Section 3.04. Certain Obligations Not Recourse to Emergent;
Recourse to Trust Property............................. 27
Section 3.05. Indemnification........................................ 27
Section 3.06. Subrogation............................................ 31
ARTICLE IV FURTHER AGREEMENTS.......................................... 31
Section 4.01. Effective Date; Term of Agreement...................... 31
Section 4.02. Obligation Absolute.................................... 31
Section 4.03. Assignments; Reinsurance; Third-Party
Rights................................................. 33
Section 4.04. Liability of Financial Security........................ 34
ARTICLE V EVENTS OF DEFAULT; REMEDIES................................. 34
Section 5.01. Events of Default...................................... 34
Section 5.02. Remedies; Waivers...................................... 36
ARTICLE VI MISCELLANEOUS .............................................. 38
Section 6.01. Amendments, etc........................................ 38
Section 6.02. Notices................................................ 38
Section 6.03. Payment Procedure...................................... 39
Section 6.04. Severability........................................... 39
Section 6.05. Governing Law.......................................... 39
Section 6.06. Consent to Jurisdiction................................ 40
Section 6.07. Consent of Financial Security.......................... 40
Section 6.08. Counterparts........................................... 41
i
<PAGE>
Section 6.09. Trial by Jury Waived................................... 41
Section 6.10. Limited Liability...................................... 41
Section 6.11. Entire Agreement....................................... 41
Appendix I Definitions ................................................
Appendix A Opinions of Counsel.........................................
Annex I Form of Financial Guaranty Insurance Policy.................
Appendix II Conditions Precedent to Issuance of Policy..................
ii
<PAGE>
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of March 1, 1996, by and among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), Prudential Securities
Secured Financing Corporation (the "Depositor"), Emergent Auto Holdings Corp.
(the "Seller"), Emergent Group, Inc. ("Emergent Parent," and in its capacity as
servicer, the "Servicer"), The Loan Pro$, Inc. ("Loan Pro$") and Premier
Financial Services, Inc. ("Premier") (the Seller, Emergent Parent, Loan Pro$ and
Premier, collectively, the "Emergent Companies").
INTRODUCTORY STATEMENTS
1. The Seller proposes to acquire the Receivables and certain other
property from Loan Pro$ and Premier and simultaneously to sell to the Depositor
all of its right, title and interest in and to the Receivables and such other
property pursuant to the Unaffiliated Seller's Agreement.
2. the Depositor proposes to acquire the Receivables and certain other
property from the Seller and simultaneously to sell to the Trust all of its
right, title and interest in and to the Receivables and such other property
pursuant to the Pooling and Servicing Agreement.
3. The Securities will represent fractional undivided interests in the
Trust. The Seller has requested that Financial Security issue a financial
guaranty insurance policy guarantying certain distributions of the principal of
and interest on the Securities (including any such distributions subsequently
avoided as a preference under applicable bankruptcy law) upon the terms and
subject to the conditions provided herein.
4. Emergent Parent and the Seller may in the future enter into one or more
pooling and servicing agreements or sale and servicing agreements with a trust
pursuant to which the Seller will sell all of its right, title and interest in
and to receivables and other trust property and in connection therewith
Financial Security may in the future issue additional policies with respect to
certain guaranteed distributions on the corresponding securities issued by the
trust.
5. The parties hereto desire to specify the terms of payment of premium in
respect of the Policy, the indemnity and reimbursement to be provided to
Financial Security in respect of certain amounts paid by Financial Security and
certain other matters.
<PAGE>
In consideration of the premises and of the agreements herein contained,
Financial Security, the Emergent Companies and the Depositor hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All terms defined in the Pooling and Servicing
Agreement or in the Spread Account Agreement shall have the same meanings in
this Insurance Agreement. Unless otherwise specified, if a word or phrase
defined in the Pooling and Servicing Agreement or in the Spread Account
Agreement can be applied with respect to one or more Series, such a word or
phrase shall be used herein as applied to Series 1996-A. In addition,
capitalized terms used herein shall have the meanings provided in Appendix I
hereto unless the context otherwise requires.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of each Emergent Company. Each
Emergent Company, jointly and severally, represents, warrants and covenants, as
of the date hereof and as of the Date of Issuance, as follows:
(a) Due Organization and Qualification. Each Emergent Company is a
corporation, duly organized, validly existing and in good standing under
the laws of the state of its incorporation. Each Emergent Company is duly
qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Receivable unenforceable in any respect or would
otherwise have a material adverse effect upon the Transaction.
(b) Power and Authority. Each Emergent Company has all necessary
corporate power and authority to conduct its business as currently
conducted and as described in the Offering Document, to execute, deliver
and perform its obligations under the Transaction Documents to which it is
a party and to consummate the Transaction.
2
<PAGE>
(c) Due Authorization. The execution, delivery and performance of the
Transaction Documents by each Emergent Company which is a party thereto
have been duly authorized by all necessary corporate action and do not
require any additional approvals or consents (except for the consent of
BankAmerica Business Credit, Inc. which has been received) or other action
by or any notice to or filing with any Person, including, without
limitation, any governmental entity, or such entity's stockholders.
(d) Noncontravention. None of the execution and delivery of the
Transaction Documents by any Emergent Company, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of any
provision of the Certificate/Articles of Incorporation or Bylaws of
such Emergent Company or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to such Emergent Company or any of their
respective properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over such Emergent Company;
(ii) constitutes a default by such Emergent Company under or a
breach of any provision of any loan agreement, mortgage, indenture or
other agreement or instrument to which such Emergent Company or any of
its Subsidiaries is a party or by which it or any of its or their
properties is or may be bound or affected; or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the assets of such Emergent Company or any of its
Subsidiaries except as otherwise expressly contemplated by the
Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting all or any of the Receivables, any Emergent Company,
or any properties or rights of such Emergent Company, pending or to their
knowledge threatened, which, in any case, if decided adversely, would
result in a Material Adverse Change with respect to such Emergent Company
or any Receivable.
3
<PAGE>
(f) Valid and Binding Obligations. Each of the Transaction Documents
to which an Emergent Company is a party when executed and delivered by such
Emergent Company will constitute the legal, valid and binding obligations
of such Person, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles. The Securities, when
executed, authenticated and delivered in accordance with the Pooling and
Servicing Agreement, will be validly issued and outstanding and entitled to
the benefits of the Pooling and Servicing Agreement and will evidence the
entire beneficial ownership interest in the Trust.
(g) Financial Statements. The Financial Statements of each Emergent
Company, copies of which have been furnished to Financial Security, (i)
are, as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of such Emergent Company as of the
dates and for the periods indicated and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied, except as noted therein (subject as to interim statements to
normal year-end adjustments). Since the date of the most recent Financial
Statements, there has been no material adverse change in such financial
condition or results of operations. Except as disclosed in the Financial
Statements, no Emergent Company is subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material
possibility of causing a Material Adverse Change in respect of such
Emergent Company.
(h) ERISA. Each Emergent Company is in material compliance with ERISA
and has not incurred and does not reasonably expect to incur any
liabilities to the PBGC under ERISA in connection with any Plan or
Multiemployer Plan or to contribute now or in the future in respect of any
Plan or Multiemployer Plan.
(i) Accuracy of Information. None of the Provided Documents contain
any statement of a material fact with respect to any Emergent Company or
the Transaction that was untrue or misleading in any material respect when
made. Since the furnishing of the Provided Documents, there has been no
change, nor any development or event involving a prospective change known
to such Emergent Company, that would render any of the Provided Documents
untrue or misleading in any material respect. There is no fact known to any
4
<PAGE>
Emergent Company which has a reasonable possibility of causing a Material
Adverse Change with respect to such Emergent Company or the Receivables.
(j) Compliance With Securities Laws. The information in the Offering
Document under the captions "The Servicer and The Originators" and "The
Receivables" does not contain any untrue statement of a material fact and
does not omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(k) Incorporation of Certain Representations and Warranties. Each of
the representations and warranties of any Emergent Company contained in the
Transaction Documents is true and correct in all material respects and each
Emergent Company hereby makes each such representation and warranty made by
it to, and for the benefit of, Financial Security as if the same were set
forth in full herein.
(l) No Consents. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
nongovernmental person, is required in connection with the execution,
delivery and performance by any Emergent Company of this Insurance
Agreement or of any other Transaction Document to which such Person is a
party, except (in each case) such as have been obtained and are in full
force and effect.
(m) Compliance With Law, etc. No practice, procedure or policy
employed or proposed to be employed by any Emergent Company in the conduct
of their respective businesses violates any law, regulation, judgment,
agreement, order or decree applicable to it which, if enforced, would
result in a Material Adverse Change with respect to such Person.
(n) Special Purpose Entity.
(i) The capital of the Seller is adequate for the business and
undertakings of the Seller.
(ii) Other than with respect to the purchase by the Depositor of
the Receivables of the Seller and the transactions as provided in the
Purchase Agreement, the Unaffiliated Seller's Agreement, the Pooling
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and Servicing Agreement and the Spread Account Agreement, the Seller
is not engaged in any business transactions.
(iii) At least two directors of the Seller shall be a person who
is not, and will not be, a director, officer, employee or holder of
any material amount of equity securities of Emergent Parent or any of
its affiliates (other than any other "special purpose" financing
subsidiary).
(iv) The Seller's funds and assets are not, and will not be,
commingled with the funds of any other person.
(v) The Bylaws of the Seller require it to maintain (A) correct
and complete minute books and records of account, and (B) minutes of
the meetings and other proceedings of its shareholders and board of
directors.
(o) Solvency; Fraudulent Conveyance. Each Emergent Company is solvent
and will not be rendered insolvent by the Transaction and, after giving
effect to such Transaction, no Emergent Company will be left with an
unreasonably small amount of capital with which to engage in its business.
No Emergent Company intends to incur, or believes that it has incurred,
debts beyond its ability to pay such debts as they mature. No Emergent
Company contemplates the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of such
Emergent Company or any of its respective assets. The amount of
consideration being received by the Seller upon the sale of the Receivables
constitutes reasonably equivalent value and fair consideration for the
interest in the Receivables. The amount of consideration being received by
Premier and Loan Pro$ upon the sale of the Receivables to the Seller
constitutes reasonably equivalent value and fair consideration for the
Receivables. The Seller is not selling the Receivables, as provided in the
Transaction Documents, with any intent to hinder, delay or defraud any of
the Seller's creditors.
(p) Capital Structure. The shares of stock of the Seller which have
been pledged pursuant to the Stock Pledge Agreement constitute all of the
issued and outstanding shares of the Seller.
(q) Investment Company Act Compliance. The Seller is not required to
be registered as an "investment company" under the Investment Company Act.
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The Seller is not subject to the information reporting requirements of the
Exchange Act.
(r) Good Title; Valid Transfer; Absence of Liens; Security Interest.
(i) Immediately prior to the sale of the Receivables and related
Other Trust Property to the Seller pursuant to the Purchase Agreement,
either Premier or Loan Pro$ (as set forth in the Purchase Agreement)
was the owner of, and had good and marketable title to, such property
free and clear of all Liens (other than Liens to be released
simultaneously with such date) and Restrictions on Transferability,
and had full right, corporate power and lawful authority to assign,
transfer and pledge the Receivables and related Other Trust Property.
The Purchase Agreement constitutes a valid sale, transfer and
assignment of the Receivables and related Other Trust Property to the
Seller enforceable against creditors of and purchasers of Premier and
Loan Pro$. In the event that, in contravention of the intention of the
parties, the transfer of the Receivables and related Other Trust
Property by Premier or Loan Pro$ to the Seller is characterized as
other than a sale, such transfer shall be characterized as a secured
financing, and the Seller shall have a valid and perfected first
priority security interest in the Receivables and related Other Trust
Property free and clear of all Liens and Restrictions on
Transferability.
(ii) Immediately prior to the sale of the Receivables and related
Other Trust Property to the Depositor pursuant to the Unaffiliated
Seller's Agreement, the Seller was the owner of, and had good and
marketable title to, such property free and clear of all Liens and
Restrictions on Transferability, and had full right, corporate power
and lawful authority to assign, transfer and pledge the Receivables
and the related Other Trust Property. The Unaffiliated Seller's
Agreement constitutes a valid sale, transfer and assignment of the
Receivables and related Other Trust Property to the Depositor
enforceable against creditors of and purchasers of the Seller. In the
event that, in contravention of the intention of the parties, the
transfer of the Receivables and related Other Trust Property by the
Seller to the Depositor is characterized as other than a sale, such
transfer shall be characterized as a secured financing, and the
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Depositor shall have a valid and perfected first priority security
interest in the Receivables and related Other Trust Property free and
clear of all Liens and Restrictions on Transferability
(s) Perfection of Liens and Security Interest. On the Closing Date,
the Lien and security interest in favor of the Trustee with respect to
Trust Property will be perfected by the filing of financing statements on
Form UCC-1 in each jurisdiction where such recording or filing is necessary
for the perfection thereof, the delivery of the original chattel paper and
certificates of title for the Receivables to the Trustee and the
establishment of the Collection Account will be accomplished, in accordance
with the provisions of the Transaction Documents, and no other filings in
any jurisdiction or any other actions (except as expressly provided herein)
are necessary to perfect the Trustee's Lien on and security interest in the
Collateral as against any third parties.
(t) Taxes. Each Emergent Company has and each of their respective
Subsidiaries has filed all federal and state tax returns which are required
to be filed and paid all taxes, including any assessments received by it,
to the extent that such taxes have become due. Any taxes, fees and other
governmental charges payable by each Emergent Company in connection with
the Transaction, the execution and delivery of the Transaction Documents
and the issuance of the Securities have been paid or shall have been paid
at or prior to the Date of Issuance.
Section 2.02. Representations and Warranties of the Depositor. The
Depositor represents, warrants and covenants, as of the date hereof and as of
the Date of Issuance, as follows:
(a) Due Organization and Qualification. The Depositor is a
corporation, duly organized, validly existing and in good standing under
the laws of Delaware. The Depositor is duly qualified to do business, is in
good standing and has obtained all necessary licenses, permits, charters,
registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and as described in the
Offering Document and the performance of its obligations under the
Transaction Documents, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Receivable
unenforceable in any respect or would otherwise have a material adverse
effect upon the Transaction.
(b) Power and Authority. The Depositor has all necessary corporate
power and authority to conduct its business as currently conducted and as
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described in the Offering Document, to execute, deliver and perform its
obligations under the Transaction Documents and to consummate the
Transaction.
(c) Due Authorization. The execution, delivery and performance of the
Transaction Documents by the Depositor have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents or other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity, or the Depositor's
stockholders.
(d) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Depositor, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents,
(i) conflicts with or results in any breach or violation of any
provision of the certificate of incorporation or bylaws of the
Depositor or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to the Depositor or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Depositor,
(ii) constitutes a default by the Depositor under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Depositor is a party or by which
it or any of its or their properties is or may be bound or affected,
or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Depositor's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting the Depositor, or any properties or rights of the
Depositor, pending or, to the Depositor's knowledge after reasonable
inquiry, threatened, which, in any case, if decided adversely to the
Depositor would result in a Material Adverse Change with respect to the
Depositor or any Receivable.
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(f) Valid and Binding Obligations. The applicable Transaction
Documents, when executed and delivered by the Depositor, will constitute
the legal, valid and binding obligations of the Depositor, enforceable in
accordance with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles. The Securities, when executed, authenticated and delivered in
accordance with the Pooling and Servicing Agreement, will be validly issued
and outstanding and entitled to the benefits of the Pooling and Servicing
Agreement and, together with the Class B Certificate and the Class C
Certificate, will evidence the entire beneficial ownership interest in the
Trust Property.
(g) Accuracy of Information. None of the Provided Documents contain
any statement of a material fact with respect to the Depositor that was
untrue or misleading in any material respect when made. Since the
furnishing of the Provided Documents, there has been no change, nor any
development or event involving a prospective change known to the Depositor
that would render any of the information in the Provided Documents with
respect to the Depositor untrue or misleading in any material respect.
There is no fact known to the Depositor which has a material possibility of
causing a Material Adverse Change with respect to the Depositor or the
Receivables.
(h) Compliance With Securities Laws. The offer and sale of the
Securities comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not contain
any untrue statement of a material fact and does not omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Depositor makes no
representation or warranty with regard to the Financial Security
Information or the Emergent Information (each as defined in Section
3.05(b)(iii). Neither the Trust nor the Trust Property is required to be
registered as an "investment company" under the Investment Company Act. The
Pooling and Servicing Agreement is not required to be qualified under the
Trust Indenture Act.
(i) Transaction Documents. Each of the representations and warranties
of the Depositor contained in the Transaction Documents is true and correct
in all material respects and the Depositor hereby makes each such
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representation and warranty to, and for the benefit of, Financial Security
as if the same were set forth in full herein.
(j) Compliance With Law, etc. No practice, procedure or policy
employed or proposed to be employed by the Depositor in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Depositor which, if enforced, would result in a Material
Adverse Change with respect to the Depositor.
(k) Good Title; Absence of Liens; Security Interest. the Depositor is
the owner of, and has good and marketable title to, the Receivables free
and clear of all Liens and Restrictions on Transferability which may have
been created by the Depositor, and has full right, corporate power and
lawful authority to assign, transfer and pledge the Receivables. In the
event that, in contravention of the intention of the parties, the transfer
of the Receivables by the Depositor to the Trust is characterized as other
than a sale, such transfer shall be characterized as a secured financing,
and the Trustee shall, for the benefit of the Certificateholders and
Financial Security, have a valid and perfected first priority security
interest in the Receivables free and clear of all Liens and Restrictions on
Transferability.
(l) Security Interest in Funds and Investments. Assuming the retention
of funds in the Trust Accounts and the acquisition of Eligible Investments
in accordance with the Transaction Documents, such funds and Eligible
Investments will be subject to a valid and perfected, first priority
security interest in favor of the Trustee. Assuming the retention of funds
in the Spread Account, such funds will be subject to a valid and perfected,
first priority security interest in favor of the Spread Account Trustee on
behalf of Financial Security.
(m) Taxes. the Depositor has filed all federal and state tax returns
which are required to be filed and paid all taxes, including any
assessments received by it, to the extent that such taxes have become due.
Any taxes, fees and other governmental charges payable by the Depositor in
connection with the Transaction, the execution and delivery of the
Transaction Documents and the issuance of the Securities have been paid or
shall have been paid at or prior to the Date of Issuance.
(n) Solvency; Fraudulent Conveyance. the Depositor is solvent and will
not be rendered insolvent by the transactions contemplated by the
Transaction Documents and, after giving effect to such transactions, the
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Depositor will not be left with an unreasonably small amount of capital
with which to engage in its business. the Depositor does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay
such debts as they mature; provided, however, that the limitations of this
Section 2.03(n) shall not be construed as limiting the ability of the
Depositor to issue asset-backed securities classified as debt (other than
any debt creating recourse against the Depositor). the Depositor does not
contemplate the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of the Depositor or any
of its assets. The amount of consideration being received by the Depositor
upon the sale of the Securities to the Underwriter constitutes reasonably
equivalent value and fair consideration for the interest in the Receivables
evidenced by the Securities. the Depositor is not transferring the
Receivables to the Trust or selling the Securities to the Underwriter, as
provided in the Transaction Documents, with any intent to hinder, delay or
defraud any of the Depositor's creditors.
Section 2.03. Affirmative Covenants of each Emergent Company. Each Emergent
Company hereby agrees that during the Term of the Agreement, unless Financial
Security shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. Each Emergent
Company shall perform each of its respective obligations under the
Transaction Documents and shall comply with all material requirements of,
and the Securities shall be offered and sold in accordance with, any law,
rule or regulation applicable to it or thereto, or that are required in
connection with its performance under any of the Transaction Documents. No
Emergent Company will cause or permit to become effective any amendment to
or modification of any of the Transaction Documents to which it is a party
unless (so long as no Insurer Default shall have occurred and be
continuing) Financial Security shall have previously approved in writing
the form of such amendment or modification. No Emergent Company shall take
any action or fail to take any action that would interfere with the
enforcement of any rights under the Transaction Documents.
(b) Financial Statements: Accountants' Reports: Other Information.
Each Emergent Company shall keep or cause to be kept in reasonable detail
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books and records of account of its assets and business. Each Emergent
Company shall furnish or cause to be furnished to Financial Security:
(i) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of each
Emergent Company, the consolidated audited balance sheet of Emergent
Parent (and the unaudited balance sheet with respect to the other
Emergent Companies) as of the end of such fiscal year and the audited
statements of income, changes in shareholders' equity and cash flows
of Emergent Parent, for such fiscal year (and the unaudited statements
with respect to the other Emergent Companies), all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared
in accordance with generally accepted accounting principles,
consistently applied, and accompanied by the certificate, in the case
of Emergent Parent, independent accountants (who shall be, in each
case, a nationally recognized firm or otherwise acceptable to
Financial Security) and by the certificate specified in Section
2.03(c) hereof.
(ii) Quarterly Financial Statements. As soon as available, and in
any event within 45 days after the close of each of the first three
quarters of each fiscal year of each Emergent Company, the unaudited
balance sheets of each Emergent Company, as of the end of such quarter
and the unaudited statements of income, changes in shareholders'
equity and cash flows of each Emergent Company for the portion of the
fiscal year then ended, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied
(subject to normal year-end adjustments), and accompanied by the
certificate specified in Section 2.03(c) hereof if such certificate is
required to be provided pursuant to such Section.
(iii) Accountants' Reports. If a Special Event has occurred,
copies of any reports submitted to any Emergent Company by their
respective independent accountants in connection with any examination
of the financial statements of such Emergent Company, promptly upon
receipt thereof.
(iv) Other Information. Promptly upon receipt thereof, copies of
all reports, statements, certifications, schedules, or other similar
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items delivered to or by any Emergent Company pursuant to the terms of
the Transaction Documents and, promptly upon request, such other data
as Financial Security may reasonably request; provided, however, that
no Emergent Company shall be required to deliver any such items if
provision by some other party to Financial Security is required under
the Transaction Documents unless such other party wrongfully fails to
deliver such item. Each Emergent Company shall, upon the reasonable
request of Financial Security, permit Financial Security or its
respective authorized agents (A) to inspect its respective books and
records as they may relate to the Securities, the Receivables and the
Other Trust Property, the obligations of such Emergent Company under
the Transaction Documents, the Transaction and such Emergent Company's
business; (B) to discuss the affairs, finances and accounts of such
Emergent Company with its respective Chief Operating Officer and Chief
Financial Officer; and (C) to discuss the affairs, finances and
accounts of such Emergent Company with its independent accountants;
provided that an officer of the related Emergent Company shall have
the right to be present during such discussions. Such inspections and
discussions shall be conducted during normal business hours and shall
not unreasonably disrupt the business of such Emergent Company. In
addition, each Emergent Company shall promptly (but in no case more
than 30 days following issuance or receipt by a Commonly Controlled
Entity) provide to Financial Security a copy of all correspondence
between a Commonly Controlled Entity and the PBGC, IRS, Department of
Labor or the administrators of a Multiemployer Plan relating to any
Reportable Event or the underfunded status, termination or possible
termination of a Plan or a Multiemployer Plan. The books and records
of each Emergent Company will be maintained at the address of the
related Emergent Company designated herein for receipt of notices,
unless the related Emergent Company shall otherwise advise the parties
hereto in writing.
(v) Emergent Parent shall provide or cause to be provided to
Financial Security an executed original copy of each document executed
in connection with the transaction within 10 days after the date of
closing.
(c) Compliance Certificate. Each of Emergent Parent and the Seller
shall deliver to Financial Security concurrently with the delivery of the
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financial statements required pursuant to Section 2.03(b) hereof a
certificate signed by the Chief Financial Officer of each of Emergent
Parent and the Seller stating that:
(i) a review of Emergent Parent's and the Seller's respective
performance under the Transaction Documents during such period has
been made under such officer's supervision;
(ii) to the best of such individual's knowledge, no Special
Event, Default or Event of Default has occurred, or if a Special
Event, Default or Event of Default has occurred, specifying the nature
thereof and, if any Emergent Company has a right to cure any such
Default or Event of Default pursuant to Section 5.01, stating in
reasonable detail the steps, if any, being taken by the related
Emergent entity to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such Default
or Event of Default relates; and
(iii) the attached financial reports submitted in accordance with
Section 2.03(b)(i) or (ii) hereof, as applicable, are complete and
correct in all material respects and present fairly the financial
condition and results of operations of the related Emergent Company
entity as of the dates and for the periods indicated, in accordance
with generally accepted accounting principles consistently applied
(subject as to interim statements to normal year-end adjustments).
(d) Notice of Material Events. Each Emergent Company shall promptly
inform Financial Security in writing of the occurrence of any of the
following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation (A)
against such Emergent Company pertaining to the Receivables in
general, (B) with respect to a material portion of the Receivables or
(C) in which a request has been made for certification as a class
action (or equivalent relief) that would involve a material portion of
the Receivables:
(ii) any change in the location of such Emergent Company's
principal office or any change in the location of such Emergent
Company's books and records;
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(iii) the occurrence of any Default or Special Event; or
(iv) any other event, circumstance or condition that has
resulted, or which such Emergent Company reasonably believes might
result, in a Material Adverse Change in respect of such Emergent
Company.
(e) Further Assurances. Each of Premier, the Loan Pro$, Emergent
Parent and the Seller will file all necessary financing statements,
assignments or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such manner
and in such places as may be required by law to preserve and protect fully
the Lien on and security interest in, and all rights of the Trustee with
respect to the Receivables, under the Pooling and Servicing Agreement. In
addition, each of Emergent Parent and the Seller shall, upon the request of
Financial Security, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, within thirty (30) days
of such request, such amendments hereto and such further instruments and
take such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents or to
protect the interest of the Trustee, for the benefit of the
Certificateholders and Financial Security, in the Receivables, free and
clear of all Liens and Restrictions on Transferability except the Lien in
favor of the Trustee, for the benefit of the Certificateholders and
Financial Security, and the Restrictions on Transferability imposed by the
Pooling and Servicing Agreement. In addition, each of Emergent Parent and
the Seller agrees to cooperate with S&P and Moody's in connection with any
review of the Transaction which may be undertaken by S&P and Moody's after
the date hereof.
(f) Retirement of Securities. Emergent Parent shall cause the Trustee,
upon retirement of the Securities pursuant to the Pooling and Servicing
Agreement or otherwise, to furnish to Financial Security a notice of such
retirement, and, upon retirement of the Securities and the expiration of
the term of the Policy, to surrender the Policy to Financial Security for
cancellation.
(g) Third-Party Beneficiary. Each of Premier, Loan Pro$ and the Seller
agrees that Financial Security shall have all rights of a third-party
beneficiary in respect of the Purchase Agreement and the Unaffiliated
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Seller's Agreement and hereby incorporates its representations, warranties
and covenants as set forth therein for the benefit of Financial Security.
(h) Corporate Existence. Each Emergent Company shall maintain its
corporate existence and shall at all times continue to be duly organized
under the laws of the jurisdiction of their incorporation and duly
qualified and duly authorized (as described in Sections 2.01(a), (b) and
(c) hereof) and shall conduct its business in accordance with the terms of
its certificate/articles of incorporation and bylaws.
(i) Disclosure Document. Each Offering Document approved by the
Emergent Companies delivered with respect to the Securities shall clearly
disclose that the Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law. In
addition, each Offering Document delivered with respect to the Securities
which includes financial statements of Financial Security prepared in
accordance with generally accepted accounting principles shall include the
following statement immediately preceding such financial statements (unless
such financial information is incorporated by reference into the Offering
Document):
The New York State Insurance Department recognizes only statutory
accounting practices for determining and reporting the financial
condition and results of operations of an insurance company, for
determining its solvency under the New York Insurance Law, and for
determining whether its financial condition warrants the payment of a
dividend to its stockholders. No consideration is given by the New
York State Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in making
such determinations.
(j) Special Purpose Entity.
(i) The Seller shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the entity with which those officers are
concerned, and particularly will use its best efforts to avoid the
appearance of conducting business on behalf of Emergent Parent or any
affiliate thereof or that the assets of the Seller are available to
pay the creditors of Emergent Parent or any affiliate thereof. Without
limiting the generality of the foregoing, all oral and written
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communications, including, without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications, will be
made solely in the name of the Seller.
(ii) The Seller shall maintain corporate records and books of
account separate from those of Emergent Parent and the affiliates
thereof. The Seller's books and records shall clearly reflect the
transfer of the Receivables to the Depositor and the sale of the
Securities each as a sale of the Seller's interest in the Receivables.
The books and records of the Seller will be maintained at the address
designated herein for receipt of notices, unless the Seller shall
otherwise advise the parties hereto in writing.
(iii) The Seller shall obtain proper authorization from its Board
of Directors of all corporate action requiring such authorization,
meetings of the board of directors of the Seller shall be held not
less frequently than three times per annum and copies of the minutes
of each such board meeting shall be delivered to Financial Security
within two weeks of such meeting.
(iv) The Seller shall obtain proper authorization from its
shareholders of all corporate action requiring shareholder approval,
meetings of the shareholders of the Seller shall be held not less
frequently than one time per annum and copies of each such
authorization and the minutes of each such shareholder meeting shall
be delivered to Financial Security within two weeks of such
authorization or meeting, as the case may be.
(v) Although the organizational expenses of the Seller have been
paid by Emergent Parent, operating expenses and liabilities of the
Seller shall be paid from its own funds.
(vi) The annual financial statements of the Seller shall disclose
the effects of the Seller's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of
the Seller are not available to pay creditors of Emergent Parent or
any affiliate thereof.
(vii) The resolutions, agreements and other instruments of the
Seller underlying the transactions described in this Agreement and in
the other Transaction Documents shall be continuously maintained by
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the Seller as official records of the Seller separately identified and
held apart from the records of Emergent Parent and each affiliate
thereof.
(viii) The Seller shall maintain an arm's-length relationship
with Emergent Parent and the affiliates thereof and will not hold
itself out as being liable for the debts of Emergent Parent or any
affiliate thereof.
(ix) The Seller shall keep its assets and its liabilities wholly
separate from those of all other entities, including, but not limited
to, Emergent Parent and the affiliates thereof.
(k) Maintenance of Licenses. Each Emergent Company shall maintain all
licenses, permits, charters and registrations which are material to the
performance by such Emergent Company of its respective obligations under
this Agreement and each other Transaction Document to which such Emergent
Company is a party or by which it is bound.
Section 2.04. Affirmative Covenants of the Depositor. the Depositor hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
(a) Corporate Existence. The Depositor shall maintain its corporate
existence and shall at all times continue to be duly organized under the
laws of the State of Delaware and duly qualified and duly authorized (as
described in Sections 2.02(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its certificate of incorporation
and bylaws as they may be amended from time to time; provided, however,
that no such amendment will result in the inability of the Depositor to
perform its obligations under the Transaction Documents.
(b) Compliance With Agreements and Applicable Laws. The Depositor
shall perform or cause to be performed each of its obligations under the
Transaction Documents and shall comply with all material requirements of,
and the Securities shall be offered and sold in accordance with, any law,
rule or regulation applicable to it or thereto, or that are required in
connection with its performance under any of the Transaction Documents.
(c) Reporting Events. The Depositor shall furnish or cause to be
furnished to Financial Security promptly after the filing or sending
thereof, copies of all proxy statements, financial statements, reports and
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registration statements which any Emergent Company files, or delivers to,
the IRS, the Commission, or any other federal, state or foreign government
agency, authority or body which supervises the issuance of securities by
such Emergent Company or any national securities exchange.
(d) Further Assurances. The Depositor shall, upon the request of
Financial Security, from time to time, (i) execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, within thirty
(30) days of such request, such amendments hereto and such further
instruments and (ii) take such further action, as may be reasonably
necessary to effectuate the intention, performance and provisions of the
Transaction Documents or to protect the interest of the Trustee, for the
benefit of the Certificateholders and Financial Security, in the
Receivables, free and clear of all Liens and Restrictions on
Transferability except the Lien, in favor of the Trustee, for the benefit
of the Certificateholders and Financial Security, and the Restrictions on
Transferability imposed by the Pooling and Servicing Agreement. In
addition, the Depositor agrees to cooperate with S&P and Moody's in
connection with any review of the Transaction which may be undertaken by
S&P and Moody's after the date hereof.
(e) Retirement of Securities. The Depositor shall cause the Trustee,
upon retirement of the Securities pursuant to the Pooling and Servicing
Agreement or otherwise, to furnish to Financial Security a notice of such
retirement, and, upon retirement of the Securities and the expiration of
the term of the Policy, to surrender the Policy to Financial Security for
cancellation.
(f) Third-Party Beneficiary. The Depositor agrees that Financial
Security shall have all rights of a third-party beneficiary in respect of
the Unaffiliated Seller's Agreement and the Pooling and Servicing Agreement
and hereby incorporates its representations, warranties and covenants as
set forth therein for the benefit of Financial Security.
Section 2.05. Negative Covenants of each Emergent Company. Each Emergent
Company hereby agrees that during the Term of the Agreement, unless Financial
Security shall otherwise expressly consent in writing:
(a) Restrictions on Liens. No Emergent Company shall (i) create, incur
or suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any Lien
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on the Receivables or Restriction on Transferability of the Receivables
except for the Lien in favor of the Trustee, for the benefit of the
Certificateholders and Financial Security, and the Restrictions on
Transferability imposed by the Pooling and Servicing Agreement or (ii) with
respect to the Receivables, sign or file under the Uniform Commercial Code
of any jurisdiction any financing statement which names either Premier,
Loan Pro$ or the Seller as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing statement,
except in each case any such instrument solely securing the rights and
preserving the Lien of the Trustee, for the benefit of the
Certificateholders and Financial Security.
(b) Impairment of Rights. No Emergent Company shall take any action,
or fail to take any action, if such action or failure to take action
required under the Transaction Documents may (i) interfere with the
enforcement of any rights under the Transaction Documents that are material
to the rights, benefits or obligations of the Trustee, the
Certificateholders or Financial Security, (ii) result in a Material Adverse
Change in respect of the Receivables or (iii) impair the ability of any
Emergent Company to perform its obligations under the Transaction
Documents, including any consolidation, merger with any Person or any
transfer of all or any material amount of such Emergent Company's assets to
any other Person if such consolidation, merger or transfer would materially
impair the net worth of any Emergent Company or any successor Person
obligated, after such event, to perform such Emergent Company's obligations
under the Transaction Documents.
(c) Waiver, Amendments, etc. No Emergent Company shall waive, modify
or amend, or consent to any waiver, modification or amendment of, any of
the provisions of any of the Transaction Documents or the Seller's
certificate of incorporation (i) unless, so long as no Insurer Default
shall have occurred and be continuing, Financial Security shall have
consented thereto in writing or (ii) if an Insurer Default shall have
occurred and be continuing, if such waiver, modification, amendment or
supplement would adversely affect the interests of Financial Security.
(d) Successors. No Emergent Company shall terminate or designate, or
consent to the termination or designation of, the Servicer, Backup Servicer
or Spread Account Trustee or any successor thereto without the prior
written approval of Financial Security.
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(e) Creation of Indebtedness; Guarantees. The Seller shall not create,
incur, assume or suffer to exist any indebtedness other than indebtedness
guaranteed or approved in writing by Financial Security. Without the prior
written consent of Financial Security, the Seller shall not assume,
guarantee, endorse or otherwise be or become directly or contingently
liable for the obligations of any Person by, among other things, agreeing
to purchase any obligation of another Person, agreeing to advance funds to
such Person or causing or assisting such Person to maintain any amount of
capital.
(f) Subsidiaries. The Seller shall not form, or cause to be formed,
any Subsidiaries.
(g) Issuance of Stock. The Seller shall not issue any shares of
capital stock or rights, warrants or options in respect of capital stock or
securities convertible into or exchangeable for capital stock, other than
the shares of common stock which have been pledged to Financial Security
under the Stock Pledge Agreement.
(h) No Mergers. (a) The Seller shall not consolidate with or merge
into any Person or transfer all or any material portion of its assets to
any Person or liquidate or dissolve; and (b) Emergent Parent shall not
consolidate with or merge into any Person or transfer all or any material
portion of its assets to any Person or liquidate or dissolve other than in
accordance with Section 9.2 of the Pooling and Servicing Agreement.
(i) Other Activities. The Seller shall not:
(a) sell, transfer, exchange or otherwise dispose of any of its
assets except as permitted under the Transaction Documents;
(b) engage in any business or activity other than in connection
with the Pooling and Servicing Agreement, the Purchase Agreement, the
Unaffiliated Seller's Agreement, the Spread Account Agreement and as
permitted by its certificate of incorporation.
(j) Insolvency. None of Emergent Parent, the Seller, Premier or Loan
Pro$ shall commence with respect to the Seller any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to the bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, reincorporation or other relief with
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respect to it or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or make a general assignment for the benefit of its creditors. None
of Emergent Parent, Premier, Loan Pro$ or the Seller shall take any action
in furtherance of, or indicating the consent to, approval of, or
acquiescence in any of the acts set forth above. The Seller shall not admit
in writing its inability to pay its debts.
(k) ERISA. The Seller shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan.
(l) Dividends. The Seller shall not declare or make payment of (i) any
dividend or other distribution on any shares of its capital stock, or (ii)
any payment on account of the purchase, redemption, retirement or
acquisition of any option, warrant or other right to acquire shares of its
capital stock, unless (in each case) at the time of such declaration or
payment (and after giving effect thereto) no amount payable by the Seller
under any Transaction Document with respect to any Series is then due and
owing but unpaid.
(m) Transfer of Subordinate Certificates. Emergent Parent shall not
acquire, nor shall it permit any entity, the assets and liabilities of
which would be consolidated with the estate of Emergent in an insolvency
proceeding, to acquire, any Class B or Class C Certificate. The Seller
shall not sell, transfer, assign, convey or pledge any Class B or Class C
Certificate with respect to any entity, the assets and liabilities of which
would be consolidated with the estate of Emergent Parent in an insolvency
proceeding.
Section 2.06. Negative Covenants of the Depositor. the Depositor hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
(a) Restrictions on Liens. the Depositor shall not (i) create or incur
or agree to create or incur or consent to cause the creation, incurrence or
existence of any Lien or Restriction on Transferability on the Receivables
except for the Lien, in favor of the Trustee, for the benefit of the
Certificateholders and Financial Security, and the Restrictions on
Transferability imposed by the Pooling and Servicing Agreement or (ii) sign
or file under the Uniform Commercial Code of any jurisdiction any financing
statement which names the Depositor as a debtor, or sign any security
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agreement authorizing any secured party thereunder to file such financing
statement, with respect to the Receivables, except in each case any such
instrument solely securing the rights and preserving the Lien of the
Trustee, for the benefit of the Certificateholders and Financial Security.
(b) Impairment of Rights. the Depositor shall not take any action,
which may (i) interfere with the enforcement against the Depositor of any
rights under the Transaction Documents that are material to the rights,
benefits or obligations of the Trustee, the Certificateholders or Financial
Security or (ii) impair the ability of the Depositor to perform its
obligations under the Transaction Documents.
(c) Waiver, Amendments, Etc. the Depositor shall not waive, modify or
amend, or consent to any waiver, modification or amendment of, any of the
provisions of any of the Transaction Documents.
ARTICLE III
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy. Financial Security agrees to issue
the Policy subject to satisfaction of the conditions precedent set forth in
Appendix II hereto.
Section 3.02. Payment of Fees and Premium.
(a) Inducement Letter Fees and Expenses. On the Date of Issuance, the
Emergent Companies agree to pay or cause to be paid the amounts specified with
respect to fees, expenses and disbursements in the Inducement Letter, unless
otherwise agreed among Emergent Parent, the Seller and Financial Security.
(b) Legal Fees. On the Date of Issuance, the Emergent Companies shall pay
or cause to be paid legal fees and disbursements incurred by Financial Security
in connection with the issuance of the Policy, unless otherwise agreed between
Emergent Parent and Financial Security.
(c) Rating Agency Fees. The initial fees of S&P and Moody's with respect to
the Securities and the transactions contemplated hereby shall be paid by the
Emergent Companies in full on the Date of Issuance, or otherwise provided for to
the satisfaction of Financial Security. All periodic and subsequent fees of S&P
or Moody's with respect to, and directly allocable to, the
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Securities shall be for the account of, and shall be billed to, Emergent Parent.
The fees for any other rating agency shall be paid by the party requesting such
other agency's rating, unless such other agency is a substitute for S&P or
Moody's in the event that S&P or Moody's is no longer rating the Securities, in
which case the cost for such agency shall be paid by the Emergent Companies.
(d) Auditors' Fees. The Emergent Companies shall pay on demand any such
additional fees of Financial Security's auditors payable in respect of any
Offering Document that are incurred after the Date of Issuance.
(e) Premium. In consideration of the issuance by Financial Security of the
Policy, Financial Security shall be entitled to receive the Premium and Premium
Supplement, if any, as and when due in accordance with the terms of the Premium
Letter (i) in the case of Premium due on or by the Date of Issuance, directly
from the Emergent Companies and (ii) in the case of Premium or Premium
Supplement, if due after the Date of Issuance, first, from Available Funds in
the priority and manner set forth in Section 5.5 of the Pooling and Servicing
Agreement and second, to the extent that such amounts are insufficient, from the
Emergent Companies. The Premium and Premium Supplement, if any, paid hereunder
or under the Pooling and Servicing Agreement shall be nonrefundable without
regard to whether Financial Security makes any payment under the Policy or any
other circumstances relating to the Securities or provision being made for
payment of the Securities prior to maturity. Although the Premium is fully
earned by Financial Security as of the Closing Date, the Premium shall be
payable in periodic installments as provided in the Premium Letter. Anything
herein or in any of the Transaction Documents notwithstanding, upon the
occurrence of an Event of Default, the entire outstanding balance of further
installments the Premium and Premium Supplement shall be immediate and payable.
All payments of Premium and Premium Supplement, if any, shall be made by wire
transfer to an account designated from time to time by Financial Security by
written notice to the Seller and Emergent Parent.
Section 3.03. Reimbursement Obligation. The Emergent Companies, jointly and
severally, agree to pay to Financial Security the following amounts as and when
incurred:
(a) a sum equal to the total of all amounts paid by Financial Security
under the Policy;
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(b) interest on any and all amounts described in Section 3.03(a) or
Section 3.02(e) from the date due to Financial Security pursuant to the
provisions hereof until payment thereof in full, payable to Financial
Security at the Late Payment Rate per annum;
(c) any payments made by Financial Security on behalf of, or advanced
to, Emergent Parent, in its capacity as Servicer, the Trust or the Trustee,
including, without limitation, any amounts payable by Emergent Parent, in
its capacity as Servicer, the Trust or the Trustee pursuant to the
Securities or any other Transaction Documents; and any payments made by
Financial Security as, or in lieu of, any servicing, management, trustee,
custodial or administrative fees payable, in the sole reasonable discretion
of Financial Security to third parties in connection with the Transaction;
and
(d) any and all out-of-pocket charges, fees, costs and expenses which
Financial Security may reasonably pay or incur, including, but not limited
to, reasonable attorneys' and accountants' fees and expenses, in connection
with (i) in the event of payments under the Policy, any accounts
established to facilitate payments under the Policy, to the extent
Financial Security has not been immediately reimbursed on the date that any
amount is paid by Financial Security under the Policy, or other
administrative expenses relating to such payments under the Policy, (ii)
the administration, enforcement, defense or preservation of any rights in
respect of any of the Transaction Documents, including defending,
monitoring or participating in any litigation or proceeding (including any
insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate thereof) relating to any of the Transaction
Documents, any party to any of the Transaction Documents or the
Transaction, (iii) any amendment, waiver or other action with respect to,
or related to, any Transaction Document whether or not executed or
completed, (iv) any review or investigation made by Financial Security in
those circumstances where its approval or consent is sought under any of
the Transaction Documents, (v) the foreclosure against, sale or other
disposition of any collateral securing any obligations under any of the
Transaction Documents or otherwise in the discretion of Financial Security,
or pursuit of any other remedies under any of the Transaction Documents, to
the extent such costs and expenses are not recovered from such foreclosure,
sale or other disposition, (vi) preparation of bound volumes of the
Transaction Documents, (vii) any federal, state or local tax (other than
taxes payable in respect of the gross income of Financial Security) or
other governmental charge imposed in connection with the issuance of the
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Policy,and (viii) Financial Security reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent
proposed in respect of any of the Transaction Documents (for the purpose of
this paragraph (d), costs and expenses shall include a reasonable
allocation of compensation and overhead attributable to time of employees
of Financial Security spent in connection with the actions described in the
foregoing clauses (ii) and (v).
Section 3.04. Certain Obligations Not Recourse to Emergent; Recourse to
Trust Property. (a) Notwithstanding any provision of Section 3.03 to the
contrary, the payment obligations provided in Section 3.03(a), (c) and (d)(v)
(to the extent of advances to the Trust in respect of distributions on the
Securities), in each case, to the extent that such payment obligations do not
arise from any failure or default in the performance by any Emergent Company of
any of its obligations under the Transaction Documents, and any interest on the
foregoing in accordance with Section 3.03(b), shall not be recourse to any
Emergent Company, but shall be payable in the manner and in accordance with
priorities provided in the Pooling and Servicing Agreement.
(b) Financial Security covenants and agrees that it shall not be entitled
to any payment from the Trust Property with respect to amounts owed under this
Agreement other than as set forth in Section 5.5 of the Pooling and Servicing
Agreement.
Section 3.05. Indemnification.
(a) Indemnification by the Emergent Companies. In addition to any and all
rights of reimbursement, indemnification, subrogation and any other rights
pursuant hereto or under law or in equity, the Emergent Companies, jointly and
severally, agree to pay, and to protect, indemnify and save harmless, Financial
Security and its officers, directors, shareholders, employees, agents and each
Person, if any, who controls Financial Security within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including, without
limitation, reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) of any nature arising out of or relating
to the transactions contemplated by the Transaction Documents by reason of:
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(i) any statement, omission or action (other than of or by Financial
Security) in connection with the offering, issuance, sale or delivery of
the Securities;
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent
of any Emergent Company;
(iii) the breach by any Emergent Company of any representation,
warranty or covenant under any of the Transaction Documents or the
occurrence, in respect of any Emergent Company under any of the Transaction
Documents of any "event of default" or any event which, with the giving of
notice or the lapse of time or both, would constitute any "event of
default";
(iv) the violation by any Emergent Company of any federal, state or
foreign law, rule or regulation, or any judgment, order or decree
applicable to it; or
(v) any untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
claims arise out of or are based upon any untrue statement or omission in
the Financial Security Information included in an Offering Document.
(b) Indemnification by the Depositor. In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant hereto
or under law or in equity, the Depositor agrees to pay, and to protect,
indemnify and save harmless, Financial Security and its, officers, directors,
shareholders, employees, agents and each Person, if any, who controls Financial
Security within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) of
any nature arising out of or relating to the transactions contemplated by the
Transaction Documents by reason of:
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(i) the gross negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent
of the Depositor;
(ii) the breach by the Depositor of any representation, warranty or
covenant under any of the Transaction Documents or the occurrence, in
respect of the Depositor under any of the Transaction Documents of any
"event of default" or any event which, with the giving of notice or the
lapse of time or both, would constitute any "event of default"; or
(iii) any untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
claims arise out of or are based upon any untrue statement or omission in
information included in an Offering Document and (a) is furnished by
Financial Security in writing expressly for use therein (all such
information so furnished being referred to therein as "Financial Security
Information"), it being understood that, in respect of the initial Offering
Document, the Financial Security Information is limited to the information
included under the caption "The Certificate Insurer" and the financial
statements of Financial Security incorporated therein by reference or (b)
is furnished by the Emergent Companies in writing expressly for use therein
(all such information so furnished being referred to herein as "Emergent
Information"), it being understood that, in respect of the initial Offering
Document, the Emergent Information is limited to the information included
under the captions "The Servicer and The Originators" and "The
Receivables."
(c) Conduct of Actions or Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
Financial Security, any officer, director, shareholder, employee or agent of
Financial Security or any Person controlling Financial Security (individually,
an "Indemnified Party" and, collectively, the "Indemnified Parties") in respect
of which indemnity may be sought from the Emergent Companies (the "Indemnifying
Party") hereunder, Financial Security shall promptly notify the Indemnifying
Party in writing, and the Indemnifying Party
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shall assume the defense thereof, including the employment of counsel
satisfactory to Financial Security and the payment of all expenses. An
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel satisfactory to Financial Security in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that (A) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party and
(B) the representation of the Indemnifying Party and the Indemnified Party by
the same counsel would be inappropriate or contrary to prudent practice (in
which case, if the Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Indemnified Parties, which firm shall be designated in writing by Financial
Security). The Indemnifying Party shall not be liable for any settlement of any
such action or proceeding effected without its written consent to the extent
that any such settlement shall be prejudicial to the Indemnifying Party but, if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding with respect to which the
Indemnifying Party shall have received notice in accordance with this subsection
(c), the Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such settlement or
judgment.
(d) Contribution. To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application
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of this Section), the Indemnifying Party shall contribute to the losses incurred
by the Indemnified Party on the basis of the relative fault of the Indemnifying
Party, on the one hand, and the Indemnified Party, on the other hand.
Section 3.06. Subrogation. Subject only to the priority of payment
provisions of the Pooling and Servicing Agreement, each Emergent Company
acknowledges that, to the extent of any payment made by Financial Security
pursuant to the Policy, Financial Security is to be fully subrogated to the
extent of such payment and any additional interest due on any late payment, to
the rights of the Certificateholders to any moneys paid or payable in respect of
the Securities under the Transaction Documents or otherwise. Each Emergent
Company agrees to such subrogation and, further, agrees to execute such
instruments and to take such actions as, in the sole judgment of Financial
Security, are necessary to evidence such subrogation and to perfect the rights
of Financial Security to receive any moneys paid or payable in respect of the
Securities under the Transaction Documents or otherwise.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement. This Agreement shall take
effect on the Date of Issuance and shall remain in effect until the later of (a)
such time as Financial Security is no longer subject to a claim under the Policy
and the Policy shall have been surrendered to Financial Security for
cancellation and (b) all amounts payable to Financial Security and the
Certificateholders under the Transaction Documents and under the Securities have
been paid in full; provided, however, that the provisions of Sections 3.02,
3.03, 3.04 and 3.05 hereof shall survive any termination of this Agreement.
Section 4.02. Obligation Absolute. (a) The payment obligations of the
Depositor and the Emergent Companies hereunder shall be absolute and
unconditional, and shall be paid strictly in accordance with this Agreement
under all circumstances irrespective of the following:
(i) any lack of validity or enforceability of, or any amendment or
other modifications of, or waiver with respect to, any of the Transaction
Documents, the Securities or the Policy;
(ii) any exchange or release of any other obligations hereunder;
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(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right which the Depositor or any Emergent Company may
have at any time against Financial Security or any other Person;
(iv) any document presented in connection with the Policy proving to
be forged, fraudulent, invalid or insufficient in any respect, including
any failure to strictly comply with the terms of the Policy, or any
statement therein being untrue or inaccurate in any respect;
(v) any payment by Financial Security under the Policy against
presentation of a certificate or other document which does not strictly
comply with the terms of the Policy;
(vi) any failure of the Seller to receive the proceeds from the sale
of the Receivables or any failure of the Depositor to receive the proceeds
from the sale of the Securities;
(vii) any breach by the Depositor or any Emergent Company of any
representation, warranty or covenant contained in any of the Transaction
Documents; or
(viii) any other circumstances, other than payment in full, which
might otherwise constitute a defense available to, or discharge of, the
Depositor or any Emergent Company in respect of any Transaction Document.
(b) The Depositor, each Emergent Company and any and all others who are now
or may become liable for all or part of the obligations of the Depositor or any
Emergent Company under this Agreement agree to be bound by this Agreement and
(i) to the extent permitted by law, waive and renounce any and all redemption
and exemption rights and the benefit of all valuation and appraisement
privileges against the indebtedness, if any, and obligations evidenced by any
Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in connection
with the delivery and acceptance hereof and all other notices in connection with
the performance, default or enforcement of any payment hereunder except as
required by the Transaction Documents; (iv) waive all rights of abatement,
diminution, postponement or deduction, or to any defense other than payment, or
to any right of setoff or
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recoupment arising out of any breach under any of the Transaction Documents, by
any party thereto or any beneficiary thereof, or out of any obligation at any
time owing to the Depositor or any Emergent Company; (v) agree that any consent,
waiver or forbearance hereunder with respect to an event shall operate only for
such event and not for any subsequent event; (vi) consent to any and all
extensions of time that may be granted by Financial Security with respect to any
payment hereunder or other provisions hereof and to the release of any security
at any time given for any payment hereunder, or any part thereof, with or
without substitution, and to the release of any Person or entity liable for any
such payment; and (vii) consent to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and agree
that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Depositor or any
Emergent Company from pursuing any rights or remedies it may have against any
Person other than Financial Security in a separate legal proceeding.
Section 4.03. Assignments; Reinsurance; Third-Party Rights. (a) This
Agreement shall be a continuing obligation of the parties hereto and shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither the Depositor nor the Emergent
Companies may assign their rights under this Agreement, or delegate any of its
duties hereunder, without the prior written consent of Financial Security,
unless otherwise permitted by Section 9.2 of the Pooling and Servicing
Agreement. Any assignment made in violation of this Agreement shall be null and
void.
(b) Financial Security shall have the right to give participations in its
rights under this Agreement and to enter into contracts of reinsurance with
respect to the Policy upon such terms and conditions as Financial Security may
in its discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve Financial Security of any of
its obligations hereunder or under the Policy.
(c) In addition, Financial Security shall be entitled to assign or pledge
to any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of Financial Security in connection therewith any
rights of Financial Security
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under the Transaction Documents or with respect to any real or personal property
or other interests pledged to Financial Security, or in which Financial Security
has a security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and reinsurers,
nothing in this Agreement shall confer any right, remedy or claim, express or
implied, upon any Person, including, particularly, any Certificateholder, other
than Financial Security, against the Depositor or the Emergent Companies, and
all the terms, covenants, conditions, promises and agreements contained herein
shall be for the sole and exclusive benefit of the parties hereto and their
successors and permitted assigns. Neither the Trustee nor any Certificateholder
shall have any right to payment from any premiums paid or payable hereunder or
from any other amounts paid by the Depositor or Emergent Parent pursuant to
Section 3.02, 3.03, 3.04 or 3.05 hereof.
Section 4.04. Liability of Financial Security. Neither Financial Security
nor any of its officers, directors or employees shall be liable or responsible
for: (a) the use which may be made of the Policy by the Trustee or for any acts
or omissions of the Trustee in connection therewith or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to Financial
Security (or its Fiscal Agent) in connection with any claim under the Policy, or
of any signatures thereon, even if such documents or signatures should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged
(unless Financial Security had actual knowledge thereof). In furtherance and not
in limitation of the foregoing, Financial Security (or its Fiscal Agent) may
accept documents that appear on their face to be in order, without
responsibility for further investigation.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under the Policy;
(b) any representation or warranty made by the Seller (other than a
representation or warranty made by the Seller in Section 3.02 of the
Unaffiliated Seller's Agreement so long as the Seller has met its
repurchase obligations under Section 3.6 of the Pooling and Servicing
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Agreement), or any Emergent Company under any of the Transaction Documents,
or in any certificate or report furnished under any of the Transaction
Documents, shall prove to be untrue or incorrect in any material respect;
provided, however, that if such Emergent Company effectively cures any such
defect in any representation or warranty under any Transaction Document, or
certificate or report furnished under any Transaction Document, within 30
days (or, if longer, within the time period specified in the relevant
Transaction Document as the cure period therefor), such defect shall not in
and of itself constitute an Event of Default hereunder;
(c) (i) the Emergent Companies shall fail to pay when due any amount
payable by the Emergent Companies under any of the Transaction Documents
unless such amounts are paid in full within any applicable cure period
explicitly provided for under the relevant Transaction Document; (ii) any
Emergent Company shall have asserted that any of the Transaction Documents
to which it is a party is not valid and binding on the parties thereto;
(iii) so long as the Servicer is an affiliate of the Emergent Companies,
the Servicer shall have failed to deliver the Servicer's Certificate by the
date required to be delivered; or (iv) any court, governmental authority or
agency having jurisdiction over any of the parties to any of the
Transaction Documents or any property thereof shall find or rule that any
material provision of any of the Transaction Documents is not valid and
binding on the parties thereto;
(d) the Depositor or any Emergent Company shall fail to perform or
observe any other covenant or agreement contained in any of the Transaction
Documents (except for the obligations described under clause (c) above) and
such failure shall continue for a period of 30 days; provided, however,
that, if such failure shall be of a nature that it cannot be cured within
30 days, such failure shall not constitute an Event of Default hereunder if
within such 30-day period the Depositor or the related Emergent Company, as
the case may be, shall have given notice to Financial Security of
corrective action it proposes to take, which corrective action is agreed in
writing by Financial Security to be satisfactory and the related Emergent
Company shall thereafter pursue such corrective action diligently until
such default is cured;
(e) the Depositor or any Emergent Company shall fail to pay its debts
generally as they come due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute any proceeding seeking to adjudicate it
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insolvent or seeking a liquidation, or shall take advantage of any
insolvency act, or shall commence a case or other proceeding naming it as
debtor under the United States Bankruptcy Code or similar law, domestic or
foreign, or a case or other proceeding shall be commenced against the
Depositor or any Emergent Company under the United States Bankruptcy Code
or similar law, domestic or foreign, or any proceeding shall be instituted
against the Depositor or any Emergent Company seeking liquidation of its
assets and such Person shall fail to take appropriate action resulting in
the withdrawal or dismissal of such proceeding within 30 days or there
shall be appointed, or the Depositor or any Emergent Company shall consent
to, or acquiesce in, the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of such Person or the
whole or any substantial part of its properties or assets or such Person
shall take any corporate action in furtherance of any of the foregoing;
(f) the Average Delinquency Ratio with respect to any Determination
Date shall have been equal to or greater than 22%;
(g) the Average Default Rate with respect to any Determination Date
shall have been equal to or greater than 42%;
(h) the Average Net Loss Rate with respect to any Determination Date
shall have been equal to or greater than 14%;
(i) the occurrence of a Servicer Termination Event under the Pooling
and Servicing Agreement; and
(j) the occurrence of an "Event of Default" under and as defined in
any Insurance and Indemnity Agreement among Financial Security, the
Depositor or any Emergent Company or any Affiliate of Emergent, which
"Event of Default" is not defined as a "Portfolio Performance Event of
Default" in such Insurance and Indemnity Agreement;
Section 5.02. Remedies; Waivers. (a) Upon the occurrence of an Event of
Default, Financial Security may exercise any one or more of the rights and
remedies set forth below:
(i) declare the Premium Supplement to be immediately due and payable,
and the same shall thereupon be immediately due and payable, whether or not
Financial Security shall have declared an "Event of Default" or shall have
exercised, or be
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entitled to exercise, any other rights or remedies hereunder;
(ii) exercise any rights and remedies available under the Transaction
Documents in its own capacity or in its capacity as the Person entitled to
exercise the rights of the Certificateholders in respect of the Securities;
or
(iii) take whatever action at law or in equity may appear necessary or
desirable in its judgment to enforce performance of any obligation of the
Depositor or the Emergent Companies under the Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under the Transaction Documents or existing at law or in equity. No delay or
failure to exercise any right or power accruing under any Transaction Document
upon the occurrence of any Event of Default or otherwise shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle Financial Security to exercise any remedy
reserved to Financial Security in this Article, it shall not be necessary to
give any notice, other than such notice as may be expressly required in this
Article.
(c) If any proceeding has been commenced to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to Financial Security, then and in
every such case the parties hereto shall, subject to any determination in such
proceeding, be restored to their respective former positions hereunder, and,
thereafter, all rights and remedies of Financial Security shall continue as
though no such proceeding had been instituted.
(d) Financial Security shall have the right, to be exercised in its
complete discretion, to waive any covenant, Default or Event of Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
Financial Security and delivered to the Depositor or Emergent. Any such waiver
may only be effected in writing duly executed by Financial Security, and no
other course of conduct shall constitute a waiver of any provision hereof.
Unless such writing expressly provides to the contrary, any waiver so granted
shall
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extend only to the specific event or occurrence so waived and not to any other
similar event or occurrence.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, etc. This Agreement may be amended, modified or
terminated only by written instrument or written instruments signed by the
parties hereto. No act or course of dealing shall be deemed to constitute an
amendment, modification or termination hereof.
Section 6.02. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered or
telecopied to the recipient as follows:
(a) To Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: Emergent Auto Receivables Trust, 6.55% Auto
Receivables Backed Certificates, Series 1996-A
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518
(212) 339-3529
(in each case in which notice or other communication to
Financial Security refers to an Event of Default, a claim on
the Policy or with respect to which failure on the part of
Financial Security to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of
the General Counsel and the Head Financial Guaranty Group and
shall be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Seller:
Emergent Auto Holdings Corp.
44 E. Camperdown Way
Greenville, South Carolina 29601
Attn: William Crawford
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(c) To the Emergent Companies:
Emergent Group, Inc.
15 South Main Street, Suite 750
Greenville, South Carolina 29601
(d) To the Depositor:
Prudential Securities Secured Funding Corporation
One New York Plaza
New York, New York 10292
Attn: General Counsel
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Payment Procedure. In the event of any payment by Financial
Security for which it is entitled to be reimbursed or indemnified as provided
above, each of the Depositor and the Emergent Companies agrees to accept the
voucher or other evidence of payment as prima facie evidence of the propriety
thereof and the liability therefor to Financial Security. All payments to be
made to Financial Security under this Agreement shall be made to Financial
Security in lawful currency of the United States of America in immediately
available funds to the account number provided in the Premium Letter before 1:00
p.m. (New York, New York time) on the date when due or as Financial Security
shall otherwise direct by written notice to the Depositor or Emergent. In the
event that the date of any payment to Financial Security or the expiration of
any time period hereunder occurs on a day which is not a Business Day, then such
payment or expiration of time period shall be made or occur on the next
succeeding Business Day with the same force and effect as if such payment was
made or time period expired on the scheduled date of payment or expiration date.
Payments to be made to Financial Security under this Agreement shall bear
interest at the Late Payment Rate from the date due to the date paid.
Section 6.04. Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.05. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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Section 6.06. Consent to Jurisdiction. (a) TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY
OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED EXECUTION COPY THEREUNDER
OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO MERELY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THE TRANSACTION DOCUMENTS OR THE
SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other nation or jurisdiction which may be called upon to
grant an enforcement of such judgment.
(c) Each of the Depositor and the Emergent Company hereby irrevocably
appoints and designates Prentice-Hall Corporation System, Inc., whose address is
15 Columbus Circle, New York, New York 10023, as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process. Each of
the Depositor and the Emergent Company agrees that service of such process upon
such Person shall constitute personal service of such process upon it.
(d) Nothing contained in the Agreement shall limit or affect Financial
Security's right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Transaction Documents against the
Depositor or any Emergent Company or its respective property in the courts of
any jurisdiction.
Section 6.07. Consent of Financial Security. In the event that Financial
Security's consent is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by
Financial Security in its
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sole discretion without any implied duty towards any other Person, except as
otherwise expressly provided therein.
Section 6.08. Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.09. Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH
ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. Limited Liability. No recourse under any Transaction Document
shall be had against, and no personal liability shall attach to, any officer,
employee, director, affiliate or shareholder of any party hereto, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise in respect of any of the Transaction
Documents, the Securities or the Policy, it being expressly agreed and
understood that each Transaction Document is solely a corporate obligation of
each party hereto, and that any and all personal liability, either at common law
or in equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches by any party hereto of any
obligations under any Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Agreement.
Section 6.11. Entire Agreement. This Agreement, the Premium Letter and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Agreement supersedes and replaces any agreement
or understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Russell Brewer
------------------------------
Name: Russell Brewer
Title: Managing Director
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION
By: /s/ Glen Stein
------------------------------
Name: Glen Stein
Title: Vice President
EMERGENT GROUP, INC.
By: /s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: Treasurer
EMERGENT AUTO HOLDINGS CORP.
By: /s/ Kevin Mast
------------------------------
Name: Kevin Mast
Title: Vice President/Treasurer
PREMIER FINANCIAL SERVICES, INC.
By: /s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
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THE LOAN PRO$, INC.
By: /s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
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APPENDIX I
DEFINITIONS
"Accumulated Funding Deficiency" shall have the meaning provided in Section
412 of the Code and Section 302 of ERISA, whether or not waived.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in New York, South
Carolina or any other location of any successor Servicer, successor Trustee or
successor Spread Account Trustee are authorized or obligated by law, executive
order or executive decree to be closed.
"Certificateholders" means registered holders of the Securities.
"Code" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Commonly Controlled Entity" means each Emergent Company and each entity,
whether or not incorporated, which is affiliated with any Emergent Company
pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Default" means any event which results, or which with the giving of notice
or the lapse of time or both would result, in an Event of Default
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Event of Default" means any event of default specified in Section 5.01 of
this Insurance Agreement.
"Expiration Date" means the final date of the Term of the Policy, as
specified in the Policy.
"Financial Security" means Financial Security Assurance Inc., a New York
stock insurance company, its successors and assigns.
"Financial Statements" means with respect to each Emergent Company, the
balance sheets as of December 31 and the statements of income, retained earnings
and cash flows for the 12-month period then ended and the notes thereto.
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"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to the
terms of the Policy.
"Indemnification Agreement" means the Indemnification Agreement dated as of
March 1, 1996 among Financial Security, the Depositor, the Emergent Companies
and the Underwriter, as the same may be amended from time to time.
"Inducement Letter" means that letter dated March 27, 1996 from Emergent
Parent to Financial Security.
"Insurance Agreement" means this Insurance and Indemnity Agreement, as the
same may be amended from time to time.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IRS" means the Internal Revenue Service.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by Bankers Trust
Company at its principal office in the City of New York, as its prime or base
lending rate (any change in such rate of interest to be effective on the date
such change is announced by Bankers Trust Company) plus 3%, and (ii) the then
applicable highest rate of interest on the Securities and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates. The
Late Payment Rate shall be computed on the basis of the actual number of days
elapsed over the actual number of days in the current calendar year.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any liens
that may attach to a Financed Vehicle by operation of law.
"Material Adverse Change" means, (a) in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person and any of its Subsidiaries, taken as a whole, or
(ii) the ability of such Person to perform its obligations under any of the
Transaction Documents to which it is a party and (b) in respect of the
Receivables, a material adverse change in (i) the value or marketability of the
Receivables, taken as a whole, or (ii) the probability that amounts now or
hereafter due in respect of a material portion of the Receivables will be
collected on a timely basis.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and any successor thereto, and, if such corporation shall for any reason no
longer perform the functions of a securities rating agency, "Moody's" shall be
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deemed to refer to any other nationally recognized rating agency designated by
Financial Security.
"Multiemployer Plan" means a multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"Notice of Claim" means a Notice of Claim and Certificate in the form
attached as Exhibit A to Endorsement No. 1 to the Policy.
"Offering Document" means the Prospectus dated December 2, 1994 of the
Depositor in respect of the Securities and any amendment or supplement thereto
and any other offering document in respect of the Securities that makes
reference to the Policy.
"Other Trust Property" means the Trust Property exclusive of the Policy.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"Performance Tests" means the Trigger Events, as such term is defined in
the Spread Account Agreement.
"Person" means an individual, joint stock company, trust, unincorporated
association joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
"Plan" means any pension plan (other than a Multiemployer Plan) covered by
Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in
respect of which a Commonly Controlled Entity has liability.
"Policy" means the financial guaranty insurance policy, including any
endorsements thereto, issued by Financial Security with respect to the
Securities, substantially in the form attached as Annex I to this Agreement.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of March 1, 1996 among the Depositor, as depositor, Emergent Parent, as
servicer, and the Trustee on behalf of the Certificateholders, pursuant to which
the Securities are to be issued and the Receivables are to be serviced and
administered, as the same may be amended from time to time.
"Portfolio Performance Event of Default" means an Event of Default
specified in clauses (f), (g) and (h) of Section 5.01 hereof;
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"Premium" means the premium payable in accordance with Section 3.02 of the
Insurance Agreement and the Premium Supplement, if any.
"Premium Letter" means the side letter between Financial Security, the
Emergent Companies and the Trustee dated March 27, 1996 in respect of the
premium payable by the Seller in consideration of the issuance of the Policy.
"Premium Supplement" means a non-refundable premium, in addition to the
premium payable in accordance with Section 3.02 of the Insurance Agreement,
payable to Financial Security in monthly installments commencing on the Premium
Supplement Commencement Date and on each monthly anniversary thereof in
accordance with the terms set forth in the Premium Letter.
"Prospectus" means the form of Prospectus, as supplemented, relating to the
Securities, as first filed with the Commission pursuant to Rule 424 under the
Securities Act.
"Provided Documents" means the Transaction Documents and any documents,
agreements, instruments, schedules, certificates, statements, cash flow
schedules, number runs or other writings or data furnished to Financial Security
by or on behalf of any Emergent Company with respect to itself, its Affiliates
or the Transaction.
"the Depositor" means Prudential Securities Secured Financing Corporation,
a Delaware corporation.
"Purchase Agreement" means the Purchase Agreement and Assignment dated as
of March 1, 1996 by and between the Seller, Premier, Loan Pro$ and Emergent
Group, Inc.
"Receivable" has the meaning provided in the Pooling and Servicing
Agreement.
"Registration Statement" means the registration statement on Form S-3 (No.
33-84918), including a form of prospectus, relating to the Securities, as
amended to the date hereof.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
"Restrictions on Transferability" means, as applied to the property or
assets (or the income or profits therefrom) of any Person, in each case whether
the same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise, any material condition to, or restriction on, the
ability of such Person or any transferee therefrom to sell, assign, transfer or
otherwise liquidate such property or assets in a commercially reasonable time
and manner or which would otherwise materially deprive such Person or any
transferee therefrom of the benefits of ownership of such property or assets.
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"Securities" means the $14,496,000 of Emergent Auto Receivables Trust
1996-A, 6.55% Auto Receivables Backed Certificates, Class A, issued pursuant to
the Pooling and Servicing Agreement.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Series 1996-A" means the Series of Class A Certificates issued on the date
hereof pursuant to the Pooling and Servicing Agreement.
"Series of Certificates" or "Series" means Series 1996-A or any, or as the
context may require, all, additional series of certificates issued as described
in paragraph 4 of the Introductory Statements hereto.
"Servicer Termination Side Letter" means the letter from Financial Security
to the Servicer, Trustee and Emergent Parent dated as of March 27, 1996, with
regard to the renewal term of the Servicer.
"S&P" means Standard & Poor's Ratings Group, division of McGraw Hill, Inc.,
and any successor thereto, and, if such entity shall for any reason no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized rating agency designated by Financial
Security.
"Special Event" means the occurrence of any one of the following: (a) an
Event of Default under the Insurance Agreement has occurred and is continuing,
(b) a Performance Test is not being complied with, (c) any legal proceeding or
binding arbitration is instituted with respect to the Transaction or (d) any
governmental or administrative investigation, action or proceeding is instituted
that would, if adversely decided, result in a Material Adverse Change in respect
of any Emergent Company or the Receivables.
"Spread Account Agreement" means the Master Spread Account Agreement, dated
as of March 1, 1996 among the Seller, the Spread Account Trustee named therein
and Financial Security, as the same may be amended, supplemented or otherwise
modified in accordance with the terms thereof.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as of
March 1, 1996 among Financial Security, the Emergent Companies and the Spread
Account Trustee named therein, as the same may be amended from time to time.
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"Subsidiary" means, with respect to any Person, any corporation of which a
majority of the outstanding shares of capital stock having ordinary voting power
for the election of directors is at the time owned by such Person directly or
through one or more Subsidiaries.
"Term of the Agreement" shall be determined as provided in Section 4.01 of
this Insurance Agreement.
"Term of the Policy" has the meaning provided in the Policy.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means the Insurance Agreement, the Indemnification
Agreement, the Pooling and Servicing Agreement, the Premium Letter, the
Inducement Letter, the Stock Pledge Agreement, the Purchase Agreement, the
Unaffiliated Seller's Agreement, the Servicer Termination Side Letter, the
Underwriting Agreement and the Spread Account Agreement.
"Trust" means the trust created under the Pooling and Servicing Agreement.
"Trust Accounts" means the Collection Account, Emergent Collection
Accounts, Local Collection Accounts and Policy Payments Account.
"Trust Indenture Act" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Trustee" means Bankers Trust Company, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement, and any successor thereto as
trustee under the Pooling and Servicing Agreement.
"Underfunded Plan" means any Plan that has an Underfunding.
"Underfunding" means, with respect to any Plan, the excess, if any, of (a)
the present value of all benefits under the Plan (based on the assumptions used
to fund the Plan pursuant to Section 412 of the Code) as of the most recent
valuation date over (b) the fair market value of the assets of such Plan as of
such valuation date.
"Unaffiliated Seller's Agreement" means the Unaffiliated Seller's Agreement
dated as of March 1, 1996 between the Depositor, the Seller and Emergent Group,
Inc. relating to the sale of the Receivables to the Depositor.
"Underwriter" means Prudential Securities Incorporated.
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"Underwriting Agreement" means the Underwriting Agreement between the
Underwriter and the Depositor with respect to the offer and sale of the
Securities, as the same may be amended from time to time.
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APPENDIX A
OPINIONS OF COUNSEL
There shall be delivered to Financial Security, Moody's and S&P opinions of
counsel satisfactory to Financial Security and its counsel, including, without
limitation, opinions as follows:
(i) opinions to the effect that the Securities have been duly issued,
and the Transaction Documents have been duly executed and delivered, and
each constitutes a legal, valid and binding obligation, enforceable in
accordance with its respective terms;
(ii) opinions as to compliance with applicable securities laws,
including, but not limited to, opinions to the effect that:
(A) to the best of counsel's knowledge, no filing or registration
with or notice to or consent, approval, authorization or order of any
court or governmental authority or agency is required for the
consummation of the Transaction, except such as may be required and
have been obtained under the Securities Act and state securities or
"blue sky" laws;
(B) neither the Trust nor the Trust estate is required to be
registered under the Investment Company Act; and
(C) the Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act;
(iii) an opinion to the effect that (A) the Trustee is the owner of
the Receivables, holding good and marketable title thereto; (B) the
Receivables would not be included as part of the estate of the Depositor or
the Seller in the event of any receivership or insolvency proceedings in
respect thereof; and (C) the transfer of the Receivables would be
characterized by a court of competent jurisdiction as a sale of such
Receivables and not as a borrowing by the Depositor or the Seller or a
relationship of joint ownership, partnership, joint venture or similar
arrangement;
(iv) an opinion to the effect that the transfer of the Receivables to
the Trust does not constitute either a fraudulent conveyance or a
preferential transfer by the Depositor or the Seller;
(v) the Spread Account Trustee under the Spread Account Agreement has
a valid, perfected first perfected security interest in the collateral held
thereunder for the benefit of secured parties thereunder;
A-1
<PAGE>
(vi) a title opinion with respect to the Financed Vehicles from South
Carolina;
(vii) opinions with respect to United States Federal and New York
State tax law; and
(viii) opinion relating to compliance with Truth in Lending Act.
A-2
<PAGE>
ANNEX I
TO
INSURANCE AND INDEMNITY AGREEMENT
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
[See Certificate Insurance Policy]
<PAGE>
APPENDIX II
TO INSURANCE AND INDEMNITY AGREEMENT
CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY
(a) Payment of Initial Premium and Expenses; Premium Letter. Financial
Security shall have been paid, by or on behalf of Emergent Parent, a
nonrefundable Premium and shall have been reimbursed, by or on behalf of the
Emergent Companies, for other fees and expenses identified in Section 3.02 of
the Agreement as payable at closing and Financial Security shall have received a
fully executed copy of the Premium Letter.
(b) Transaction Documents. Financial Security shall have received a copy of
each of the Transaction Documents, in form and substance satisfactory to
Financial Security, duly authorized, executed and delivered by each party
thereto. Without limiting the foregoing, the provisions of the Pooling and
Servicing Agreement relating to the payment to Financial Security of Premium due
on the Policy and the reimbursement to Financial Security of amounts paid under
the Policy shall be in form and substance acceptable to Financial Security in
its sole discretion.
(c) Certified Documents and Resolutions. Financial Security shall have
received a copy of (i) the certificate of incorporation and bylaws of each
Emergent Company and (ii) the resolutions of each Emergent Company's Board of
Directors authorizing the issuance of the Securities and the execution, delivery
and performance by the Emergent Companies of the Transaction Documents and the
transactions contemplated thereby, certified by the Secretary or an Assistant
Secretary of the related Emergent Company (which certificate shall state that
such certificate of incorporation, bylaws and resolutions are in full force and
effect without modification on the Date of Issuance).
(d) Incumbency Certificate. Financial Security shall have received a
certificate of the Secretary or an Assistant Secretary of each Emergent Company
certifying the name and signatures of the officers of the related Emergent
Company authorized to execute and deliver the Transaction Documents and that
shareholder consent to the execution and delivery of such documents is not
necessary.
(e) Representations and Warranties; Certificate. The representations and
warranties of each Emergent Company in the Insurance Agreement shall be true and
correct as of the Date of Issuance with respect to such Person as if made on the
Date of Issuance and Financial Security shall have received a certificate of
appropriate officers of the related Emergent Company to that effect.
(f) Opinions of Counsel. Financial Security shall have received opinions of
counsel addressed to Financial Security,
AII-1
<PAGE>
Moody's and S&P in respect of the Emergent Companies, the other parties to the
Transaction Documents and the Transaction in form and substance satisfactory to
Financial Security, addressing such matters as Financial Security may reasonably
request, including without limitation, the items set forth in Appendix A hereto,
and the counsel providing each such opinion shall have been instructed by its
client to deliver such opinion to the addressees thereof.
(g) Approvals, Etc. Financial Security shall have received true and correct
copies of all approvals, licenses and consents, if any, including, without
limitation, the approval of the shareholders of the Seller, required in
connection with the Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding, investigation,
or injunction or final judgment relating thereto, shall be pending or threatened
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with any of the
Transaction Documents or the consummation of the Transaction.
(i) Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated by
any of the Transaction Documents illegal or otherwise prevent the consummation
thereof.
(j) Issuance of Ratings. Financial Security shall have received
confirmation that the risk secured by the Policy constitutes an investment grade
risk by S&P and an insurable risk by Moody's and that the Securities, when
issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(k) Maintenance of Receivable Files; Evidence of Perfection. Financial
Security shall have received evidence satisfactory to it that: (i) the
Receivable Files are being maintained by and held in the custody of the Trustee,
pursuant to Section 3.3 of the Pooling and Servicing Agreement and (ii) all
filings necessary to perfect the interest of the Trust in the Receivables have
been made
(l) No Default. No Default or Event of Default shall have occurred.
(m) Additional Items. Financial Security shall have received such other
documents, instruments, approvals or opinions requested by Financial Security as
may be reasonably necessary to effect the Transaction, including but not limited
to evidence satisfactory to Financial Security that all conditions precedent, if
any, in the Transaction Documents have been satisfied.
AII-2
EXHIBIT 10.4
================================================================================
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
EMERGENT
(as defined herein)
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of March 1, 1996
Emergent Auto Receivables Trust 1996-A
6.55% Auto Receivables Backed Certificates, Class A
$14,496,000
================================================================================
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of March 1, 1996, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), Emergent Group, Inc. ("Emergent
Parent"), The Loan Pro$, Inc. ("Loan Pro$"), Premier Financial Services, Inc.
("Premier"), Emergent Auto Holdings Corp. (Emergent Parent, Loan Pro$, Premier
and Emergent Auto Holdings Corp., collectively, "Emergent"), PRUDENTIAL
SECURITIES SECURED FINANCING CORPORATION (the "Depositor") and PRUDENTIAL
SECURITIES INCORPORATED (the "Underwriter"):
Section 1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as amended from time to
time.
"Depositor Party" means any of the Depositor, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Emergent Party" means any company comprising Emergent, its respective
corporate parents, subsidiaries and affiliates and any shareholder, director,
officer, employee, agent or "controlling person" (as such term is used in the
Securities Act) of any of the foregoing.
"Federal Securities Laws" means the Securities Act, the Securities Exchange
Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of
1940, the Investment Advisers Act of 1940 and the Public Utility Holding Company
Act of 1935, each as amended from time to time, and the rules and regulations in
effect from time to time under such Act.
"Financial Security Agreements" means this Agreement, the Stock Pledge
Agreement, the Spread Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in Section 2(g)
hereof.
"Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 5 hereof.
<PAGE>
"Indemnifying Party" means any party required to provide indemnification
pursuant to Section 7 hereof.
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
of March 1, 1996, among Financial Security, Emergent and the Depositor.
"Losses" means (a) any actual out-of-pocket damages incurred by the party
entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 7 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.
"Offering Document" means the Prospectus Supplement dated March 25, 1996 in
respect of the Securities, which Prospectus Supplement supplements the
Prospectus dated December 2, 1994, and any other material or documents delivered
by the Underwriter to any Person in connection with the offer or sale of the
Securities.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).
"Policy" means the financial guaranty insurance policy number 50450-N
delivered by Financial Security with respect to the Securities.
"Registration Statement" means the Registration Statement (No. 33-84918) on
Form S-3 and all amendments thereto.
"Securities" means the Emergent Auto Receivables Trust 1996-A 6.55% Asset
Backed Certificates, Class A, described in the Offering Document and covered by
the Policy.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Spread Account Agreement" means the Master Spread Account Agreement dated
as of March 1, 1996 among the Emergent Companies, Emergent Auto Holdings Corp.,
Bankers Trust Company,
2
<PAGE>
as Trustee and as Spread Account Trustee and Financial Security, as the same may
be amended, supplemented or otherwise modified in accordance with the terms
thereof.
"State Securities Laws" means any state, local or foreign statute, and any
rule or regulation thereunder, regulating (i) transactions and dealings in
securities, (ii) any Person or entity engaging in such transactions or advising
with respect to securities or (iii) investment companies.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as of
March 1, 1996, among Emergent, Financial Security and Bankers Trust Company.
"Underwriter" means Prudential Securities Incorporated.
"Underwriter Information" has the meaning provided in Section 3(c) hereof.
"Underwriter Party" means the Underwriter and its parents, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Act) of any of the foregoing.
"Underwriting Agreement" means the Agreement between the Depositor and the
Underwriter with respect to the sale of the Securities dated March 25, 1996.
Section 2. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees with the parties
hereto as follows:
(a) Organization, Etc. Financial Security is a stock insurance company
duly organized, validly existing and authorized to transact financial
guaranty insurance business under the laws of the State of New York.
(b) Authorization, Etc. The Policy and the Financial Security
Agreements have been duly authorized, executed and delivered by Financial
Security.
(c) Validity, Etc. The Policy and the Financial Security Agreements
constitute valid and binding obligations of Financial Security, enforceable
against Financial Security in accordance with their terms, subject, as to
the enforcement of remedies, to bankruptcy, insolvency, reorganization,
rehabilitation, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of
the bankruptcy or insolvency of Financial Security and to the application
3
<PAGE>
of general principles of equity and subject, in the case of this Agreement,
to principles of public policy limiting the right to enforce the
indemnification provisions contained herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by Financial
Security of the Policy or the Financial Security Agreements, nor the
performance by Financial Security of its obligations thereunder, will
conflict with any provision of the certificate of incorporation or the
bylaws of Financial Security nor result in a breach of, or constitute a
default under, any material agreement or other instrument to which
Financial Security is a party or by which any of its property is bound nor
violate any judgment, order or decree applicable to Financial Security of
any governmental or regulatory body, administrative agency, court or
arbitrator having jurisdiction over Financial Security (except that, in the
published opinion of the Securities and Exchange Commission, the
indemnification provisions of this Agreement, insofar as they relate to
indemnification for liabilities arising under the Securities Act, are
against public policy as expressed in the Securities Act and are therefore
unenforceable).
(f) Financial Information. The consolidated balance sheet of Financial
Security as of December 31, 1994 and the related consolidated statement of
income, changes in shareholder's equity and cash flows for the fiscal year
then ended and the interim consolidated balance sheet of Financial Security
as of September 30, 1995, and the related statements of income, changes in
shareholder's equity and cash flows for the interim period then ended,
incorporated in the Offering Document by reference to the documents filed
by Financial Security Assurance Holdings Ltd. pursuant to Section 13(a), 14
or 15(d) of the Securities Act of 1934, as amended, fairly present in all
material respects the financial condition of Financial Security as of such
dates and for such periods in accordance with generally accepted accounting
principles consistently applied (subject as to interim statements to normal
year-end adjustments) and since the date of the most current interim
consolidated balance sheet referred to above there has been no change in
the financial condition of Financial Security which would materially and
adversely affect its ability to perform its obligations under the Policy.
4
<PAGE>
(g) Financial Security Information. The information in the Offering
Document set forth under the captions "The Certificate Insurer" (as revised
from time to time in accordance with the provisions hereof, the "Financial
Security Information") is limited and does not purport to provide the scope
of disclosure required to be included in a prospectus with respect to a
registrant in connection with the offer and sale of securities of such
registrant registered under the Securities Act. Within such limited scope
of disclosure, however, as of the date of the Offering Document and as of
the date hereof, the Financial Security Information does not contain any
untrue statement of a material fact, or omit to state a material fact
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(h) Additional Information. Financial Security will furnish to the
Underwriter, Emergent or the Depositor, upon request of the Underwriter,
Emergent or the Depositor, as the case may be, copies of Financial
Security's most recent financial statements (annual or interim, as the case
may be) which fairly present in all material respects the financial
condition of Financial Security as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied except as noted therein (subject, as to interim
statements, to normal year-end adjustments). In addition, if the delivery
of an Offering Document relating to the Securities is required at any time
prior to the expiration of nine months after the time of issue of the
Offering Document in connection with the offering or sale of the
Securities, the Depositor, Emergent or the Underwriter will notify
Financial Security of such requirement to deliver an Offering Document and
Financial Security will promptly provide the Depositor, Emergent or the
Underwriter with any revisions to the Financial Security Information that
are in the judgment of Financial Security necessary to prepare an amended
Offering Document or a supplement to the Offering Document.
(i) Opinion of Counsel. Financial Security will furnish to the
Depositor, Emergent and the Underwriter on the closing date for the sale of
the Securities an opinion of its Assistant General Counsel, to the effect
set forth in Exhibit A attached hereto, dated such closing date and
addressed to the Depositor, Emergent and the Underwriter.
5
<PAGE>
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Depositor, Emergent and the Underwriter, upon
request, as comfort from its independent accountants in respect of its
financial condition, (i) at the expense of the Person specified in the
Insurance Agreement, a copy of the Offering Document, including either a
manually signed consent or a manually signed report of Financial Security's
independent accountants and (ii) the quarterly review letter by Financial
Security's independent accountants in respect of the most recent interim
financial statements of Financial Security.
Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its claims-paying ability by Moody's
Investors Service, Inc. or Standard & Poor's Corporation or any other rating
agency (collectively, the "Rating Agencies"). The Rating Agencies, in assigning
such ratings, take into account facts and assumptions not described in the
Offering Document and the facts and assumptions which are considered by the
Rating Agencies, and the ratings issued thereby, are subject to change over
time.
Section 3. Representations, Warranties and Agreements of the Underwriter.
The Underwriter represents, warrants and agrees with the other parties hereto as
follows:
(a) Compliance With Laws. The Underwriter will comply in all material
respects with all legal requirements in connection with offers and sales of
the Securities and make such offers and sales in the manner provided in the
Offering Document.
(b) Offering Document. The Underwriter will not use, or distribute to
other broker-dealers for use, any Offering Document in connection with the
offer and sale of the Securities unless such Offering Document includes
such information as has been furnished by Financial Security for inclusion
therein and the information therein concerning Financial Security has been
approved by Financial Security in writing. Financial Security hereby
consents to the Financial Security Information included in the Offering
Document and the financial statements of Financial Security incorporated by
reference therein. Each Offering Document will include the following
statement:
"The Policy is not covered by the property/casualty insurance security
fund specified in Article 76 of the New York Insurance Law".
6
<PAGE>
Each Offering Document including financial information with respect to
Financial Security prepared in accordance with generally accepted
accounting principles will include the following statement immediately
preceding such financial information (unless such financial
information is incorporated by reference):
"The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting the
financial condition and results of operations of an insurance
company, for determining its solvency under the New York
Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its stockholders.
No consideration is given by the New York State Insurance
Department to financial statements prepared in accordance with
generally accepted accounting principles in making such
determinations."
(c) Underwriting Information. All material provided by the Underwriter
for inclusion in the Offering Document (as revised from time to time, the
"Underwriter Information"), insofar as such information relates to the
Underwriter, is true and correct in all material respects. In respect of
the Offering Document, the Underwriter Information is limited to the
information set forth under the caption "Underwriting" in the Offering
Document.
Section 4. Representations, Warranties and Agreements of the Depositor. The
Depositor represents, warrants and agrees with respect to itself as follows:
(a) The offer and sale of the Securities comply in all material
respects with all requirements of law, including all applicable securities
laws.
(b) Without limitation of the representation set forth in (a) above,
the Registration Statement and the Offering Document do not contain any
untrue statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading; provided that no representation is made with respect to (i) the
Underwriter Information and (ii) the Financial Security Information.
Section 5. Indemnification.
7
<PAGE>
(a) Financial Security agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Depositor Party, each Emergent Party and each Underwriter Party against (i)
any and all Losses incurred by them with respect to the offer and sale of
the Securities and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof and
(ii) any and all Losses to which any Depositor Party, Emergent Party or
Underwriter Party may become subject, under the Securities Act or
otherwise, insofar as such Losses arise out of or result from an untrue
statement of a material fact contained in any Offering Document or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or omission
was made in the Financial Security Information included therein in
accordance with the provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party, each Emergent Party and each Depositor Party
against (i) any and all Losses incurred by them with respect to the offer
and sale of the Securities and resulting from the Underwriter's or any
Depositor Party's or Underwriter Party's breach of any of its
representations, warranties or agreements set forth in Section 3 hereof and
(ii) any and all Losses to which any Financial Security Party may become
subject, under the Securities Act or otherwise, insofar as such Losses
arise out of or result from an untrue statement of a material fact
contained in any Offering Document or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or omission was made in the
Underwriter Information included therein and to the extent of any fee paid
to Prudential Securities Incorporated by the Depositor under the
Underwriting Agreement.
(c) Upon the incurrence of any Losses for which a party is entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party to
the Indemnifying Party of the Losses incurred.
Section 6. Indemnification Procedures. Except as provided below in Section
7 with respect to contribution, the indemnification provided herein by an
8
<PAGE>
Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach and in the case of a breach by Prudential
Securities Incorporated, to the extent that damages sought to be recovered do
not exceed the fee paid to Prudential Securities Incorporated by the Depositor
under the Underwriting Agreement. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel satisfactory to the Indemnified Party in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that (A) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party and
(B) the representation of the Indemnifying Party and the Indemnified Party by
the same counsel would be inappropriate or contrary to prudent practice (in
which case, if the Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all
Depositor Parties, one such firm for all Emergent Parties, one such firm for all
Underwriter Parties, and one such firm for all Financial Security Parties, as
the case may be, which firm shall be designated in writing by the Depositor in
respect of the Depositor Parties, by Emergent in respect of the Emergent
9
<PAGE>
Parties, by the Underwriter in respect of the Underwriter Parties, and by
Financial Security in respect of the Financial Security Parties). The
Indemnifying Party shall not be liable for any settlement of any such claim or
action unless the Indemnifying Party shall have consented thereto or be in
default in its obligations hereunder. Any failure by an Indemnified Party to
comply with the provisions of this Section shall relieve the Indemnifying Party
of liability only if such failure is prejudicial to the position of the
Indemnifying Party and then only to the extent of such prejudice.
Section 7. Contribution.
(a) To provide for just and equitable contribution if the indemnification
provided by any Indemnifying Party is determined to be unavailable for any
Indemnified Party (other than due to application of this Section), each
Indemnifying Party shall contribute to the Losses arising from any breach of any
of its representations, warranties or agreements contained in this Agreement on
the basis of the relative fault of each of the parties as set forth in Section
7(b) below; provided, however, that an Indemnifying Party shall in no event be
required to contribute to all Indemnified Parties an aggregate amount in excess
of the Losses incurred by such Indemnified Parties resulting from the breach of
representations, warranties or agreements contained in this Agreement.
(b) The relative fault of each Indemnifying Party, on the one hand, and of
each Indemnified Party, on the other, shall be determined by reference to, among
other things, whether the breach of, or alleged breach of, any representations,
warranties or agreements contained in this Agreement relates to information
supplied by, or action within the control of, the Indemnifying Party or the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.
(c) The parties agree that Financial Security shall be solely responsible
for the Financial Security Information and the financial statements of Financial
Security incorporated by reference in the Offering Document, the Underwriter
shall be solely responsible for the Underwriter Information therein, the
Emergent Companies shall be solely responsible for the information provided by
the Emergent Companies for inclusion therein under the captions "The Servicer
and The Originators" and "The Receivables" and that the balance of each Offering
Document shall be the responsibility of the Depositor (other than the
information provided by the Trustee for inclusion therein under the caption "The
Trustee").
(d) Notwithstanding anything in this Section 6 to the contrary (i) the
Underwriter Party shall not be required to contribute an amount in excess of the
fee paid to Prudential
10
<PAGE>
Securities Incorporated by the Depositor under the Underwriting Agreement in
respect of any breach by the Underwriter of its representations or warranties
contained in Section 3 hereof, and (ii) Financial Security shall not be required
to contribute an amount in excess of the amount by which the total premiums
received by Financial Security exceeds the amount of any damages that Financial
Security has otherwise been required to pay in respect of any breach by
Financial Security of its representations or warranties contained in Section 2
hereof.
(e) 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.
(f) Upon the incurrence of any Losses entitled to contribution hereunder,
the contributor shall reimburse the party entitled to contribution promptly upon
establishment by the party entitled to contribution to the contributor of the
Losses incurred.
Section 8. Miscellaneous.
(a) Notices. All notices and other communications provided for under this
Agreement shall be delivered to the address set forth below or to such other
address as shall be designated by the recipient in a written notice to the other
party or parties hereto:
If to Financial Security:
Financial Security Assurance Inc.
350 Park Avenue New York, New York 10022
Attention: Surveillance Department
Re: Emergent Auto Receivables Trust, 6.55% Auto Receivables
Backed Certificates, Series 1996-A
Confirmation: (212) 826-0100
Facsimile Nos. : (212) 339-3518,
(212) 339-3529
(in each case in which notice or other communication to Financial Security
refers to an Event of Default, a claim on the Policy or with respect to
which failure on the part of Financial Security to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and the Head-Financial Guaranty Group and shall be marked to
indicate "URGENT MATERIAL ENCLOSED.")
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If to the Depositor:
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
Telephone: (212) 778-4114
If to the Underwriter:
Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10292
If to Emergent:
Emergent Group, Inc.
15 South Main Street, Suite 750
Greenville, South Carolina 29601
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party without
the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing signed by
each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements contained in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Indemnifying Party, (ii)
the issuance of the Securities or (iii) any termination of this Agreement or the
Policy. The indemnification provided in this Agreement will be in addition to
any liability which the parties may otherwise have and shall in no way limit any
obligations of the parties to the Placement Agent or the Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:/s/ Bryan Townsend
--------------------------
Name: Bryan Townsend
Title: Managing Director
EMERGENT GROUP, INC.
By:/s/ Kevin Mast
--------------------------
Name: Kevin J. Mast
Title: Treasurer
THE LOAN PRO$, INC.
By:/s/ Kevin Mast
--------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
PREMIER FINANCIAL SERVICES, INC.
By:/s/ Kevin Mast
--------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
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EMERGENT AUTO HOLDINGS CORP.
By:/s/ Kevin Mast
--------------------------
Name: Kevin Mast
Title: Vice President/Treasurer
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/ Glen Stein
--------------------------
Name: Glen Stein
Title: Vice President
PRUDENTIAL SECURITIES INCORPORATED
By:/s/ Glen Stein
--------------------------
Name: Glen Stein
Title: Vice President
14
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EXHIBIT A
OPINION OF ASSISTANT GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized, validly
existing and authorized to transact financial guaranty insurance business under
the laws of the State of New York.
2. The Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. The Policy and the Financial Security Agreements constitute valid and
binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.
4. The Policy is exempt from registration under the Securities Act of 1933,
as amended (the "Act").
5. Neither the execution or delivery by Financial Security of the Policy or
the Financial Security Agreements, nor the performance by Financial Security of
its obligations thereunder, will conflict with any provision of the certificate
of incorporation or the bylaws of Financial Security or violate any law or
regulation, which violation would impair the binding effect or enforceability of
the Policy or any of the Agreements or, to the best of my knowledge (after due
inquiry), result in a breach of, or constitute a default under, any agreement or
other instrument to which Financial Security is a party or by which it or any of
its property is bound or, to the best of my knowledge (after due inquiry),
violate any judgment, order or decree applicable to Financial Security of any
governmental or regulatory body, administrative agency, court or arbitrator
having jurisdiction over Financial Security (except that in the published
opinion of the Securities and Exchange Commission the indemnification provisions
of the Indemnification Agreement, insofar as they relate to indemnification for
liabilities arising under the Act, are against public policy as expressed in the
Act and are therefore unenforceable).
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In addition, please be advised that I have reviewed the description of
Financial Security under the caption "The Certificate Insurer" in the Prospectus
Supplement dated March 25, 1996 which supplements the Prospectus dated December
2, 1994, of the Depositor (the "Offering Document") with respect to the
Securities. The information provided in the Offering Document with respect to
Financial Security is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a registrant
under the Act in connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, however, there has not come
to my attention any information which would cause me to believe that the
description of Financial Security referred to above, as of the date of the
Offering Document or as of the date of this opinion, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that I express no opinion
with respect to any financial statements or other financial information
contained or incorporated by reference therein).
16
EXHIBIT 10.5
STOCK PLEDGE AND COLLATERAL AGENCY AGREEMENT
THE STOCK PLEDGE AGREEMENT dated as of March 1, 1996 (the "Pledge
Agreement") among The Loan Pro$, Inc., a South Carolina corporation, and Premier
Financial Services, Inc., a South Carolina corporation (together, the
"Pledgors"), as owners of all of the outstanding capital stock in Emergent Auto
Holdings Corp., a Delaware corporation (the "Subsidiary"), the Subsidiary,
Emergent Group, Inc., a South Carolina corporation, Financial Security Assurance
Inc., a New York stock insurance company ("Financial Security") and Bankers
Trust Company, a New York banking corporation, as collateral agent (the
"Collateral Agent") on behalf of Financial Security.
The Pledgors, the Subsidiary and Emergent Group, Inc. are herein
collectively referred to as "Emergent".
INTRODUCTORY STATEMENTS
The Pledgors are the joint shareholders of the Subsidiary (the "Pledged
Entity"). Each Pledgor will sell certain automobile receivables to the
Subsidiary. The Subsidiary intends to enter into the Unaffiliated Seller's
Agreement for the purpose of selling the automobile receivables to Prudential
Securities Secured Financing Corporation (the "Depositor"). The Depositor will
enter into the Pooling and Servicing Agreement for the purpose of issuing the
Class A Certificates. The timely distribution of principal and interest payable
with respect to the Class A Certificates will be guaranteed by Financial
Security under a policy of insurance (the "Policy") issued pursuant to the
Insurance Agreement (defined below). In addition, Financial Security may issue
additional policies (such policies together with the Policy, the "Policies")
with respect to certain guaranteed distributions and guaranteed payments on the
corresponding additional series of certificates or notes (collectively, the
"Series"). To secure the Insurer Obligations (as defined in the Spread Account
Agreement referred to below) with respect to each Series, the Pledgors have
agreed to pledge all of their interests as joint shareholders of the Subsidiary
to the Collateral Agent on behalf of Financial Security, all such interests
represented by the stock certificates listed on attached Schedule A (the
"Pledged Shares").
In consideration of the premises and of the agreements herein contained,
the Pledgors, the Subsidiary, Emergent Group, Inc., Financial Security and the
Collateral Agent agree as follows:
<PAGE>
Section 1. Definitions. Capitalized terms used but not otherwise defined in
this Pledge Agreement shall have the meanings specified therefor in the
Insurance and Indemnity Agreement dated as of March 1, 1996 among Financial
Security, the Depositor and Emergent (the "Insurance Agreement") and the Master
Spread Account Agreement dated as of March 1, 1996 among the Subsidiary, the
Pledgors, Emergent Group, Inc., Financial Security and the Spread Account
Trustee.
Section 2. Security Interest. As security for the full and complete
performance of all the Insurer Obligations with respect to each Series (the
"Obligations"), the Pledgors hereby deliver, pledge and assign to the Collateral
Agent on behalf of Financial Security, and create in the Collateral Agent on
behalf of Financial Security, a first priority security interest in all of the
Pledgors' right, title and interest in and to the Pledged Shares together with
all of the Pledgors' rights and privileges with respect thereto, all proceeds,
income and profits thereof and all property received in exchange thereof or in
substitution therefor (the "Collateral").
Section 3. Stock Dividends, Options, or Other Adjustments. Until the
occurrence of the last Insurer Termination Date with respect to any Series, the
Pledgors shall deliver as Collateral to the Collateral Agent, any and all
additional shares of stock or any other property of any kind distributable on or
by reason of the Collateral, whether in the form of or by way of stock
dividends, warrants, total or partial liquidation, conversion, prepayments,
redemptions or otherwise, with the sole exception of cash dividends or cash
interest payments, as the case may be, which absent default, may be retained by
the Pledgors, subject to the provisions of Section 8 hereof. If any additional
shares of capital stock, instruments, or other property, a security interest in
which can only be perfected by possession by the Collateral Agent, which are
distributable on or by reason of the Collateral pledged hereunder, shall come
into the possession or control of the Pledgors, the Pledgors shall forthwith
transfer and deliver such property to the Collateral Agent, as Collateral
hereunder.
Section 4. Delivery of Share Certificates; Stock Powers. Simultaneously
with the delivery of this Pledge Agreement, the Pledgors are delivering to the
Collateral Agent all instruments and stock certificates representing the
Collateral, together with stock powers duly executed in blank by the Pledgors.
The Pledgors shall promptly deliver to the Collateral Agent, or cause the
Company or any other entity issuing the Collateral to deliver directly to the
Collateral Agent, share certificates or other instruments representing any
Collateral acquired or received after the date of this Pledge Agreement with a
stock or bond power duly executed by
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the Pledgors. If at any time either the Collateral Agent or Financial Security
notifies the Pledgors that it requires additional stock powers endorsed in
blank, the Pledgors shall promptly execute in blank and deliver the requested
power to the requesting party.
Section 5. Power of Attorney. The Pledgors hereby constitute and
irrevocably appoint the Collateral Agent and Financial Security, or either one
acting alone, with full power of substitution and revocation, as the Pledgors'
true and lawful attorney-in-fact, with the power, after the occurrence of a
Stock Pledge Event (as defined in Section 11 hereof), to the full extent
permitted by law, to affix to any certificates and documents representing the
Collateral, the stock or bond powers delivered with respect thereto, and to
transfer or cause the transfer of the Collateral, or any part thereof, on the
books of the Subsidiary or other entity issuing such Collateral, to the name of
the Collateral Agent or Financial Security or any of their respective nominees,
and thereafter to exercise with respect to such Collateral, all the rights,
powers and remedies of an owner. The power of attorney granted pursuant to this
Pledge Agreement and all authority hereby conferred are granted and conferred
solely to protect Financial Security's interest in the Collateral and shall not
impose any duty upon the Collateral Agent or Financial Security to exercise any
power. This power of attorney shall be irrevocable as one coupled with an
interest until the occurrence of the last Insurer Termination Date with respect
to any Series.
Section 6. Inducing Representations of the Pledgors. The Pledgors represent
and warrant to Financial Security that:
(a) The Pledged Shares are validly issued, fully paid for and
non-assessable.
(b) The Pledged Shares represent all of the issued and outstanding
capital stock of the Subsidiary.
(c) The Pledgors are the joint legal and beneficial owners of, and
have good and marketable title to, the Pledged Shares, free and clear of
all pledges, liens, security interests and other encumbrances other than
the security interest created by this Pledge Agreement, and the Pledgors
have the unqualified right and authority to execute and perform this Pledge
Agreement.
(d) Except for the Transaction Documents, no options, warrants or
other agreements with respect to the Collateral are outstanding.
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<PAGE>
(e) Any consent, approval or authorization of or designation or filing
with any authority on the part of the Pledgors which is required in
connection with the pledge and security interest granted under this Pledge
Agreement has been effected.
(f) None of the execution and delivery of this Pledge Agreement by the
Pledgors, the consummation of the transaction contemplated hereby or the
satisfaction of the terms and conditions of this Pledge Agreement:
(i) conflicts with or results in any breach or violation of any
provision of the articles of incorporation or bylaws of the Pledgors
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to the Pledgors or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Pledgors;
(ii) conflicts with, constitutes a default (or an event which
with the giving of notice or the passage of time, or both, would
constitute a default) by the Pledgors under, or a breach of or
contravenes any provision of, the Transaction Documents related to any
Series, any loan agreement, mortgage, indenture or other agreement or
instrument to which the Pledgors or any of their Subsidiaries is a
party or by which they or any of their properties is or may be bound
or affected; or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Pledgors's assets except the Lien created by
this Pledge Agreement.
(g) Upon the Pledgors' delivery of the Pledged Shares to the
Collateral Agent, the Collateral Agent, on behalf of Financial Security,
will have a valid, perfected first priority Lien on the Collateral,
enforceable as such against all creditors of the Pledgors and against all
Persons purporting to purchase any of the Collateral from the Pledgors.
Section 7. Obligations of the Pledgors. The Pledgors further represent,
warrant and covenant to Financial Security and the Collateral Agent that:
(a) The Pledgors will not sell, transfer or convey any interest in, or
suffer or permit any Lien or encumbrance to be created upon or with respect
to, any of the Collateral (other than as created under this Pledge
Agreement) during the term of this Pledge Agreement.
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<PAGE>
(b) The Pledgors will, at their own expense, at any time and from time
to time at the request of the Collateral Agent or Financial Security, do,
make, procure, execute and deliver all acts, things, writings, assurances
and other documents as may be proposed by the Collateral Agent or Financial
Security to preserve, establish, demonstrate or enforce the Collateral
Agent's rights, interests and remedies as created by, provided in, or
emanating from the Pledge Agreement.
(c) The Pledgors will not take any action which would cause the
Subsidiary to issue any other capital stock, without the prior written
consent of Financial Security so long as no Insurer Default has occurred
and is continuing. Any such issuance shall be subject to this Pledge
Agreement.
(d) The Pledgors will not consent to any amendment of the Subsidiary's
certificate of incorporation without the prior written consent of Financial
Security so long as no Insurer Default has occurred and is continuing.
Section 8. Dividends. Pledgors agree that they shall not cause the
Subsidiary to declare or make payment of (i) any dividend or other distribution
on any shares of its capital stock, or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of any option, warrant or other
right to acquire shares of its capital stock, unless (in each case) at the time
of such declaration or payment (and after giving effect thereto) no amount
payable by the Subsidiary or Pledgors under any Transaction Document with
respect to any Series is then due and owing but unpaid.
Section 9. Voting Proxy. The Pledgors hereby grant to the Collateral Agent
on behalf of Financial Security an irrevocable proxy to vote the Pledged Shares
with respect to the matters contained in Articles Seventh, Ninth and Eleventh of
the Subsidiary's certificate of incorporation, which proxy shall continue, so
long as no Insurer Default has occurred and is continuing, until the occurrence
of the last Insurer Termination Date with respect to any Series. The Pledgors
represent and warrant that they have directed the Subsidiary, in accordance with
the Delaware General Corporation Law, to reflect the Collateral Agent's right to
vote the Collateral, on behalf of Financial Security, on the Subsidiary's books.
Upon the request of the Collateral Agent or Financial Security, the Pledgors
shall deliver to the Collateral Agent such further evidence of such irrevocable
proxy or such further irrevocable proxy to vote the Collateral as the Collateral
Agent or Financial Security may request. The Collateral Agent shall exercise all
such rights to vote the Collateral granted hereunder in accordance with the
written directions given by Financial Security.
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Section 10. Rights of the Collateral Agent and Financial Security. At any
time and without notice, Financial Security, so long as no Insurer Default with
respect to any Series has occurred and is continuing, may, upon providing the
Collateral Agent with the full amount necessary to carry out such direction,
direct the Collateral Agent in writing to discharge any tax, liens, security
interests or other encumbrances levied or placed on the Collateral, pay for the
maintenance and preservation of the Collateral, or pay for insurance on the
Collateral; the amount of such payments, plus any and all fees, costs and
expenses of the Collateral Agent and Financial Security (including attorneys'
fees and disbursements) in connection therewith, shall, at the option of the
Collateral Agent or Financial Security, as appropriate, be reimbursed by the
Pledgors on demand, with interest thereon from the date paid at the Late Payment
Rate. The Collateral Agent shall have no duty or obligation to follow any
direction provided in this Section 10, unless Financial Security has provided
the Collateral Agent with the full amount necessary to carry out such direction,
including all fees and expenses required by and indemnification reasonably
satisfactory to the Collateral Agent, which shall be at the expense of the
Pledgors.
Section 11. Remedies Upon Event of Default.
(a) Upon the occurrence of an "Event of Default" under and as defined in
the Insurance Agreement relating to any Series currently outstanding or issued
hereafter, which "Event of Default" is not defined as a "Portfolio Performance
Event of Default" in such Insurance Agreement (a "Stock Pledge Event"),
Financial Security, so long as no Insurer Default with respect to any Series has
occurred and is continuing, may directly or through the Collateral Agent,
without notice to the Pledgors,
(i) cause the Collateral to be transferred to the Collateral Agent's
name or Financial Security's name or in the name of nominees of either and
thereafter exercise as to such Collateral all of the rights, powers and
remedies of an owner;
(ii) collect by legal proceedings or otherwise all dividends,
interest, principal payments, capital distributions and other sums now or
hereafter payable on account of the Collateral, and hold all such sums as
part of the Collateral, or apply such sums to the payment of the
Obligations in such manner and order as Financial Security may decide, in
its sole discretion;
(iii) enter into any extension, subordination, reorganization,
deposit, merger, or consolidation agreement, or any other agreement
relating
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to or affecting the Collateral, and in connection therewith deposit or
surrender control of the Collateral thereunder, and accept other property
in exchange therefor and hold and apply such property or money so received
in accordance with the provisions hereof; and
(b) In addition to all the rights and remedies of a secured party under the
Uniform Commercial Code, Financial Security shall have the right, and without
demand of performance or other demand, advertisement or notice of any kind,
except as specified below, to or upon the Pledgors or any other person (all and
each of which demands, advertisements and/or notices are hereby expressly waived
to the extent permitted by law), to proceed forthwith, or direct the Collateral
Agent to proceed forthwith, to collect, receive, appropriate and realize upon
the Collateral, or any party thereof and to proceed forthwith to sell, assign,
give an option or options to purchase, contract to sell, or otherwise dispose of
and deliver the Collateral or any part thereof in one or more parcels in
accordance with applicable securities laws and in a manner designed to ensure
that such sale will not result in a distribution of the Pledged Shares in
violation of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act") and on such terms (including, without limitation, a
requirement that any purchaser of all or any part of the Collateral shall be
required to purchase any securities constituting the Collateral solely for
investment and without any intention to make a distribution thereof) as
Financial Security, in its sole and absolute discretion deems appropriate
without any liability for any loss due to decrease in the market value of the
Collateral during the period held. If any notification of intended disposition
of the Collateral is required by law, such notification shall be deemed
reasonable and properly given if mailed to the Pledgors, postage prepaid, at
least ten (10) days before any such deposition at the address indicated by the
Pledgors's signature. Any disposition of the Collateral or any part thereof may
be for cash or on credit or for future delivery without assumption of any credit
risk, with the right of Financial Security to purchase all or any part of the
Collateral so sold at any such sale or sales, public or private, free of any
equity or right of redemption in the Pledgors, which right of equity is, to the
extent permitted by applicable law, hereby expressly waived or released by the
Pledgors.
(c) Financial Security, in its sole discretion, may elect to obtain or
cause the Collateral Agent to obtain the advice of any independent nationally
known investment banking firm, which is a member firm of the New York Stock
Exchange, with respect to the method and manner of sale or other disposition of
any of the Collateral, the best price reasonably obtainable therefor, the
consideration of
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cash and/or credit terms, or any other details concerning such sale or
disposition; costs and expenses of obtaining such advice shall be for the
account of Financial Security. Financial Security, in its sole discretion, may
elect to sell or cause the Collateral Agent to sell, the Collateral on any
credit terms which it deems reasonable, the out-of-pocket costs and expenses of
such sale shall be for the account of Financial Security. The sale of any of the
Collateral on credit terms shall not relieve the Pledgors of their liability
with respect to the Obligations. All payments received by the Collateral Agent,
if any, and Financial Security in respect of any sale of the Collateral shall be
applied to the Obligations as and when such payments are received. The Pledgors
shall have no obligation to register the Pledged Shares under the Securities Act
of 1933 or any state securities laws.
(d) The Pledgors recognize that it may not be feasible to effect a public
sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act, and that it may be necessary to sell privately
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view for the distribution or resale thereof. The Pledgors agree that
private sales may be at prices and other terms less favorable to the seller than
if the Collateral were sold at public sale, and that neither the Collateral
Agent nor Financial Security has any obligation to delay the sale of any
Collateral for the period of time necessary to permit the registration of the
Collateral for public sale under the Securities Act, provided that any private
sale or sales shall not be made in a commercially unreasonable manner.
(e) If any consent, approval or authorization of any state, municipal or
other governmental department, agency or authority shall be necessary to
effectuate any sale or other disposition of the Collateral, or any partial
disposition of the Collateral, the Pledgors will execute all such applications
and other instruments as may be required in connection with securing any such
consent, approval or authorization, and will otherwise use their best efforts to
secure the same.
(f) Upon any sale or other disposition, the Collateral Agent acting at the
written direction of Financial Security or Financial Security shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold or disposed of. Each purchaser at any such sale or other disposition
(including Financial Security) shall hold the Collateral free from any claim or
right of whatever kind, including any equity or right of redemption of the
Pledgors. The Pledgors specifically waive, to the extent permitted by applicable
law, all rights of redemption, stay or
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appraisal which it may have under any rule of law or statute now existing or
hereafter adopted.
(g) Neither the Collateral Agent nor Financial Security shall be obligated
to make any sale or other disposition of the Collateral, unless the terms
thereof shall be satisfactory to Financial Security. The Collateral Agent or
Financial Security may, without notice or publication, adjourn any private or
public sale, and, upon ten (10) days prior notice to the Pledgors, hold such
sale at any time or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or future delivery, the
Collateral so sold may be retained by the Collateral Agent or Financial Security
until the selling price is paid by the purchaser thereof, but neither the
Collateral Agent nor Financial Security shall incur any liability in case of the
failure of such purchaser to take up and pay for the property so sold and, in
case of any such failure, such property may again be sold as herein provided.
(h) All of the rights and remedies granted to the Collateral Agent and
Financial Security, including but not limited to the foregoing, shall be
cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as Financial Security may deem expedient.
Section 12. Limitation on Liability.
(a) Neither the Collateral Agent nor Financial Security, nor any of their
respective directors, officers or employees, shall be liable to Emergent for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Collateral Agent and Financial Security shall each be
liable for its own negligence, bad faith or willful misconduct.
(b) The Collateral Agent shall incur no liability to Financial Security
except for the Collateral Agent's gross negligence or willful misconduct in
carrying out its duties hereunder.
(c) The Collateral Agent shall be protected and shall incur no liability to
any party in relying upon the accuracy, acting in reliance upon the contents,
and assuming the genuineness of any notice, demand, certificate, signature,
instrument or other document the Collateral Agent reasonably believes to be
genuine and to have been duly executed by the appropriate signatory, and (absent
actual knowledge by a Responsible Officer (as defined in the Pooling and
Servicing Agreement dated as of March 1, 1996 between the Depositor, Emergent
Group, Inc., as Servicer and the Collateral Agent, as Trustee) of the Collateral
Agent to the contrary) the Collateral Agent shall not be required to make any
independent
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investigation with respect thereto. The Collateral Agent shall at all times be
free independently to establish to its reasonable satisfaction, but shall have
no duty to independently verify, the existence or nonexistence of facts that are
a condition to the exercise or enforcement of any right or remedy hereunder.
(d) The Collateral Agent may consult with counsel, financial advisors or
accountants and shall not be liable for any action taken or omitted to be taken
by it hereunder in good faith and in accordance with the advice of such counsel,
financial advisors or accountants.
(e) The Collateral Agent shall not be under any obligation to exercise any
of the rights, powers or duties vested in it by this Pledge Agreement unless it
shall have received security or indemnity satisfactory to the Collateral Agent
against the costs, expenses (including reasonable legal fees and expenses) and
liabilities which it might incur.
(f) The Collateral Agent shall not be liable for any loss on the sale of
the Collateral.
Section 13. Performance of Duties. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Pledge
Agreement and the Spread Account Agreement, subject to the provisions of this
Pledge Agreement and the Spread Account Agreement, or as directed in writing by
Financial Security in accordance with this Pledge Agreement or the Spread
Account Agreement.
Section 14. Appointment and Powers. Subject to the terms and conditions
hereof, Financial Security appoints Bankers Trust Company as its Collateral
Agent and Bankers Trust Company accepts such appointment and agrees to act as
Collateral Agent on behalf of Financial Security to maintain custody and
possession of the Collateral and to perform the other duties of the Collateral
Agent in accordance with the provisions of this Pledge Agreement. The Collateral
Agent shall, subject to the other terms and provisions of this Pledge Agreement,
only act upon and in compliance with Financial Security's written instructions
delivered pursuant to this Pledge Agreement in a timely fashion following
receipt of such written instructions. Receipt of written instructions shall not
be a condition to the exercise by the Collateral Agent of its express duties
hereunder, unless this Pledge Agreement provides that the Collateral Agent is
permitted to act only following receipt of such instructions.
Section 15. Successor Collateral Agent.
(a) Merger. Any Person into which the Collateral Agent may be converted or
merged, or with which it
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may be consolidated, or to which it may sell or transfer its trust business and
assets as a whole or substantially as a whole, or any Person resulting from any
such conversion, merger, consolidation, sale or transfer to which the Collateral
Agent is a party, shall (provided it is otherwise qualified to serve as the
Collateral Agent hereunder) be and become a successor Collateral Agent hereunder
and be vested with all of the title to and interest in the Collateral and all of
the trusts, powers, immunities, privileges and other matters as was its
predecessor without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
(b) Resignation. The Collateral Agent and any successor Collateral Agent
may resign only (i) with the prior written consent of Financial Security (which
consent will not be unreasonably withheld) or (ii) if the Collateral Agent is
unable to perform its duties hereunder as a matter of law as evidenced by an
opinion of counsel acceptable to Financial Security. Upon the occurrence of (i)
or (ii) above, the Collateral Agent shall give notice of its resignation by
registered or certified mail to the Pledgors (with a copy to Financial
Security). Any resignation by the Collateral Agent shall take effect only upon
the date which is the later of (x) the effective date of the appointment by
Financial Security of a successor Collateral Agent and the acceptance in writing
by such successor Collateral Agent of such appointment and (y) the date on which
the Collateral is delivered to the successor Collateral Agent. Notwithstanding
the preceding sentence, if by the contemplated date of resignation specified in
the written notice of resignation delivered (as described above) no successor
Collateral Agent has been appointed Collateral Agent or becomes the Collateral
Agent pursuant to the subsection (d) below, the resigning Collateral Agent may
petition a court of competent jurisdiction for the appointment of a successor.
The Collateral Agent shall not be liable for the acts or omissions of any
successor collateral agent.
(c) Removal. The Collateral Agent may be removed by Financial Security at
any time, with or without cause, by an instrument or concurrent instruments in
writing delivered to the Collateral Agent. Any removal pursuant to the
provisions of this subsection (c) shall take effect only upon the later to occur
of (i) the effective date of the appointment of a successor Collateral Agent and
the acceptance in writing by such successor Collateral Agent of such appointment
and of its obligation to perform its duties hereunder in accordance with the
provisions hereof and (ii) the date on which the Collateral is delivered to the
successor Collateral Agent. In the event of any removal of the Collateral Agent,
the Pledgors shall pay the Collateral Agent
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all of its fees, expenses and indemnities then due and owing in accordance with
Section 19 hereof.
(d) Appointment of and Acceptance by Successor.
(i) Financial Security shall have the sole right to appoint each
successor Collateral Agent. Every successor Collateral Agent appointed
hereunder shall execute, acknowledge and deliver to its predecessor, to
Financial Security and to the Pledgors an instrument in writing accepting
such appointment hereunder and the relevant predecessor shall execute,
acknowledge and deliver such other documents and instruments as will
effectuate the delivery of all Collateral to the successor Collateral
Agent, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessor. Such predecessor
shall, nevertheless, on the written request of Financial Security, execute
and deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder.
(ii) Every predecessor Collateral Agent shall assign, transfer and
deliver all Collateral held by it as Collateral Agent hereunder to its
successor as Collateral Agent.
(iii) Should any instrument in writing from the Pledgors or the
Subsidiary be reasonably required by a successor Collateral Agent for more
fully and certainly vesting in such successor the estates, properties,
rights, powers, duties and obligations vested or intended to be vested
hereunder in the Collateral Agent, any and all such written instruments
shall, at the request of the successor Collateral Agent, be forthwith
executed, acknowledged and delivered by the Pledgors or the Subsidiary, as
the case may be.
(iv) The designation of any successor Collateral Agent and the
instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for
herein, shall be maintained with the records relating to the Collateral
and, to the extent required by applicable law, filed or recorded by the
successor Collateral Agent in each place where such filing or recording is
necessary to effect the transfer of the Collateral to the successor
Collateral Agent or to protect and preserve and security interests granted
hereunder.
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Section 16. Indemnification. Emergent and Financial Security, jointly and
severally, shall indemnify the Collateral Agent, its directors, officers,
employees, custodians, nominees and its authorized agents for, and hold the
Collateral Agent, its directors, officers, employees, nominees and its
authorized agents harmless against, any loss, liability or expense (including
the reasonable costs and expenses of defending against any claim of liability)
arising out of or in connection with the Collateral Agent's acting as Collateral
Agent hereunder, except such loss, liability or expense as shall result from the
negligence, bad faith or willful misconduct of the Collateral Agent or its
directors, officers, employees, nominees or authorized agents. The obligation of
Emergent under this Section shall survive the termination of this Agreement and
the resignation or removal of the Collateral Agent.
Section 17. Representations and Warranties of the Collateral Agent. The
Collateral Agent represents and warrants to the Pledgors and to Financial
Security as follows:
(a) Due Organization. The Collateral Agent is a New York banking
corporation, duly organized, validly existing and in good standing under
the laws of New York and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(b) Corporate Power. The Collateral Agent has all requisite right,
power and authority to execute and deliver this Pledge Agreement and the
other Transaction Documents to which it is a party and to perform all of
its duties as Collateral Agent hereunder and thereunder.
(c) Due Authorization. The execution and delivery by the Collateral
Agent of this Pledge Agreement and the other Transaction Documents to which
it is a party, and the performance by the Collateral Agent of its duties
hereunder and thereunder, have been duly authorized by all necessary
corporate proceedings and no further approvals or filings, including any
governmental approvals, are required for the valid execution and delivery
by the Collateral Agent, or the performance by the Collateral Agent, of
this Pledge Agreement and such other Transaction Documents.
(d) Valid and Binding Agreements. The Collateral Agent has duly
executed and delivered this Pledge Agreement and each other Transaction
Document to which it is a party, and each of this Pledge Agreement and each
such other Transaction Document constitutes the legal, valid and binding
obligation of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as (i) such enforceability may
be denied by the bankruptcy, insolvency, reorganization and similar laws
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relating to or affecting the enforcement of creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
Section 18. Termination. This Pledge Agreement shall continue in full force
and effect until the date which is the last Insurer Termination Date with
respect to any Series. Subject to any sale or other disposition by the
Collateral Agent or Financial Security of the Collateral or any part thereof
pursuant to and in accordance with this Pledge Agreement, the Collateral shall
be returned to the Pledgors on the date which is the last Insurer Termination
Date with respect to any Series upon written request.
Section 19. Compensation and Reimbursement. Emergent, jointly and
severally, agrees for the benefit of Financial Security and as part of the
Insurer Obligations (a) to pay to the Collateral Agent, from time to time,
reasonable and customary compensation for all services rendered by it hereunder;
and (b) to reimburse the Collateral Agent upon its request for all reasonable
expenses, disbursement and advances incurred or made by the Collateral Agent in
accordance with any provision of, or carrying out its duties and obligations
under, this Agreement (including the reasonable compensation and fees and the
expenses and disbursements of its agents, any independent certified public
accountants and independent counsel), except any expense, disbursement or
advances as may be attributable to negligence, bad faith or willful misconduct
on the part of the Collateral Agent.
Section 20. Foreclosure Expenses of the Collateral Agent and Financial
Security. All expenses (including reasonable fees and disbursements of counsel)
incurred by the Collateral Agent or Financial Security permitted by this
Agreement and in connection with any actual or attempted sale, exchange of or
any enforcement, collection, compromise or settlement respecting, this Agreement
or the Collateral, or any other action taken by Financial Security hereunder
whether directly or as attorney-in-fact pursuant to a power of attorney or other
authorization herein conferred, for the purpose of satisfaction of the
Obligations shall be deemed an Obligation for all purposes of this Pledge
Agreement, and an Insurer Secured Obligation for all purposes of the Spread
Account Agreement, and the Collateral Agent (with the consent of Financial
Security) and Financial Security may apply the Collateral to payment of or
reimbursement of itself for such liability.
Section 21. Notices. Any notice or other communication given hereunder
shall be in writing and shall be sent by registered mail, postage prepaid, or
personally delivered or telecopied to the recipient as follows:
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(a) To the Collateral Agent:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn: Corporate Trust and Agency Group-
Structural Finance Team
Confirmation: (212) 250-6439
(b) To Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(c) To the Pledgors:
The Loan Pro$, Inc.
15 South Main Street, Suite 750
Greenville, SC 29601
Premier Financial Services, Inc.
15 South Main Street, Suite 750
Greenville, SC 29601
Section 22. General Provisions.
(a) The Collateral Agent on behalf of Financial Security and its successors
and assigns shall have no obligation in respect of the Collateral, except as set
forth in this Agreement and except to use reasonable care in holding the
Collateral and to hold and dispose of the same in accordance with the terms of
this Pledge Agreement.
(b) The failure of the Collateral Agent or Financial Security to exercise,
or delay in exercising, any right, power or remedy hereunder, shall not operate
as a waiver thereof, nor shall any single or partial exercise by the Collateral
Agent or Financial Security of any right, power or remedy hereunder preclude any
other or future exercise thereof, or the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law or any other agreement.
(c) The representations, covenants and agreements of the Pledgors herein
contained shall survive the date hereof.
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(d) Neither this Pledge Agreement nor the provisions hereof can be changed,
waived or terminated orally. This Pledge Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns. If any provision of this Pledge Agreement
shall be invalid or unenforceable in any respect or in any jurisdiction, the
remaining provisions shall remain in full force and effect and shall be
enforceable to the maximum extent permitted by law.
(e) This Pledge Agreement may be executed in counterparts, each of which
shall constitute an original but all of which, when taken together, shall
constitute one instrument.
(f) Each of the parties hereto waives, to the fullest extent permitted by
law, any right it may have to a trial by jury in respect of any litigation
arising directly or indirectly out of, under or in connection with this
Agreement or any of the transactions contemplated hereunder or thereunder. Each
of the parties hereto (i) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(ii) acknowledges that it has been induced to enter into this Agreement and the
other Transaction Documents to which it is a party, by among other things, this
waiver.
(g) This Agreement shall be governed by and construed, and the obligations,
rights and remedies of the parties hereunder shall be determined, in accordance
with the laws of the State of New York.
(h) Each Company comprising Emergent irrevocably submits to the
nonexclusive jurisdiction of the United States District Court of the Southern
District of New York, any court in the State of New York located in the city and
county of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it and related to or in connection with this
Agreement, the other Transaction Documents or the transaction contemplated
hereunder or thereunder or for recognition or enforcement of any judgment and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such suit or action or proceeding may be heard or
determined in such New York State court or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, each of the parties hereby
waives and agrees not to assert by way of motion, as a
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defense or otherwise in any such suit, action or proceeding, any claim that is
not personally subject to the jurisdiction of such courts, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or any of the other
Transaction Documents or the subject matter hereof or thereof may not be
litigated in or by such courts. Each Company comprising Emergent irrevocably
appoints and designates The Prentice-Hall Corporation System, Inc., whose
address is 15 Columbus Circle, New York, New York 10023, as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process.
Each Company comprising Emergent agrees that service of such process upon such
Person shall constitute personal service of such process upon it. Nothing
contained in this Agreement shall limit or affect the rights of any party hereto
to serve process in any other manner permitted by law or to start legal
proceedings related to any of the Transaction Documents against each Company
comprising Emergent or its respective property in the courts of any
jurisdiction.
(i) The Collateral Agent, by the execution hereof, acknowledges receipt of
the Pledged Shares on behalf of Financial Security.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge Agreement on the date first above written.
BANKERS TRUST COMPANY
as Collateral Agent
By:/s/ Linda A. Rakolta
------------------------------
Name: Linda Rakolta
Title: Vice President
FINANCIAL SECURITY ASSURANCE INC.
By:/s/ Scott Gordon
------------------------------
Name: Scott Gordon
Title: Managing Director
EMERGENT GROUP, INC.
By:/s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: Treasurer
THE LOAN PRO$, INC.
By:/s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
PREMIER FINANCIAL SERVICES, INC.
By:/s/ Kevin Mast
------------------------------
Name: Kevin J. Mast
Title: CFO/Treasurer
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EMERGENT AUTO HOLDINGS CORP.
By:/s/ Kevin Mast
------------------------------
Name: Kevin Mast
Title: Vice President/Treasurer
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SCHEDULE A TO STOCK PLEDGE AGREEMENT
PLEDGED SHARES
Certificate No. 1, 50 Shares of the Common Stock of Emergent
Auto Holdings Corp.
Certificate No. 2, 50 Shares of the Common Stock of Emergent
Auto Holdings Corp.
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